A. M. No.

1008 January 22, 1980

PASAY LAW AND CONSCIENCE UNION, INC., complainant,

vs.
ATTY. DAVID D.C. PAZ, respondent.

FERNANDEZ, J.:

On June 5, 1971, the Pasay Law and Conscience Union, Inc. (PLACU) filed this disbarment case against David D.C. Paz, a member of the Philippine Bar. The
complainant charged the respondent with malpractice, gross misconduct in office, gross immoral conduct and/or disloyalty to the Republic of the Philippines. 1
2
In a resolution dated June 22, 1971, this Court required the respondent to file an answer to the complaint against him.

After the respondent had filed his answer 3 and the complainant had submitted a reply, 4 this administrative case was referred to the Solicitor General for investigation,
report and recommendation. 5

On January 23, 1973, the Solicitor General, having found sufficient grounds to proceed against the respondent after due investigation of the administrative case
against him, submitted, among others sixteen copies, in a sealed envelope, of his complaint against the respondent, together with the transcript of stenographic
notes taken during the investigation of the case, the folder of exhibits, the record of the investigation not the case and the original Supreme Court record. 6

The Solicitor General charged Atty. D.C. Paz with representing clients with conflicting interests and gross misconduct in office.

Regarding the charge of representing clients with conflicting interests, the complainant alleged that in 1969, in the course of the investigation then being conducted
by the "Charlie Division" of the Presidential Agency on Reforms and Government Operations, otherwise known as the PARGO, on the complaint of Dr. Irineo P. Sia
for anti-graft against the then ex-Mayor Pablo Cuneta of Pasay City, the respondent, David D.C. Paz, was then PARGO's Legal Officer and Chief Prosecutor, as
well as the head of the aforesaid "Charlie Division"; that in the series of follow-ups made with PARGO by Dr. Irineo P. Sia himself and at times in company of Atty.
Galileo P. Brion, President of the complainant, PLACU, of the aforesaid anti-graft complaint against the then ex-Mayor Pablo Cuneta, the respondent enlisted the
help of Dr. Irineo P. Sia and Atty. Galilee P. Brion in the gathering of evidence which included PLACU's copies of the records of Civil Case No. 72967 of the Court
of First Instance of Manila, entitled "Vicente D. Isip vs. The Pasay City Government, et al."; that in the course of the investigation by the PARGO of the aforesaid
anti-graft complaint, but prior to September 10, 1969, the respondent even administered oaths to some persons who had given written statements before the PARGO
investigators; that on September 10, 1969, the respondent was detailed by the then PARGO Secretary Ramon D. Bagatsing as Executive and Police Adviser to the
Mayor of Makati, Rizal; that on the same day, the respondent designated as division-in-charge Atty. Rodolfo Navarro, who was then Team Leader of Charlie-two
under PARGO's "Charlie Division" to act for and in respondent's behalf while not in office and while performing his duties and functions as such adviser in Makati,
Rizal; that later on, after respondent had resigned from the PARGO sometime in January 1970 and on the basis of the investigation conducted by the PARGO on
the aforementioned anti-graft complaint of Dr. Sia, the PARGO's successor, the Complaints and Investigation Office (CIO) filed an anti-graft charge and another
charge for technical malversation both against Pablo Cuneta and others with the Pasay City Fiscal's Office, docketed therein as I.S. Nos. 71712 and 71712-A.
respectively; that on November 13 and 23, 1970, during the preliminary investigation by the Pasay City Fiscal's Office of I.S. Nos. 71712 and 71712-A, the respondent
entered his appearance, participated and orally argued therein as one of the counsels of Pablo Cuneta; that while in subsequent hearings thereof, the respondent
no longer appeared as counsel for Cuneta, it was only after his appearance had been questioned by Atty. Brion; that inasmuch as at least up to September 10, 1969,
the respondent was then PARGO's Legal Officer and Chief Prosecutor, as well as head of PARGO's "Charlie Division", he had access to, and necessarily acquired,
directly or indirectly, knowledge of the facts of the said anti-graft case, its weak as well as its strong points, and such knowledge is confidential and should be guarded
with great care, lest it jeopardizes PARGO, an agency and instrumentality of the Republic of the Philippines whose interest respondent swore to serve and protect
without any mental reservation, in the ultimate prosecution of the said case; that there was, therefore, then a relationship of attorney and client between respondent
and the government; that for having appeared twice, participated and orally argued as counsel for Pablo Cuneta during the preliminary investigation of the charges
for anti-graft and technical malversation filed by the CIO, successor of PARGO, against said Pablo Cuneta and others before the Pasay City Fiscal's Office, the
respondent violated Section 6 of the Canons of Legal Ethics and Section 20 (e) of Rule 138 of the Revised Rules of Court; and that the alleged withdrawal of the
respondent as counsel for Pablo Cuneta, although in this connection there is nothing reflected in the records of the preliminary investigation, is of no moment for he
had already violated the aforesaid Canons of Legal Ethics and that respondent's having appeared twice as Counsel for Cuneta in the preliminary investigation of the
aforesaid charge constitutes clear attempts on respondent's part to damage CIO's cause against Cuneta.

On the charge of gross misconduct in office, the complaint stated that in the course of the investigation by the PARGO of Dr. Sia's anti-graft complaint against the
then ex-Mayor Pablo Cuneta of Pasay City, but prior to September 10, 1969, the respondent borrowed and received from Atty. Brion the PLACU's copies of the
record or expedients of Civil Case No. 72967 of the Court of First Instance of Manila entitled Vicente D. Isip vs. The Pasay City Government, et al.," in the presence
of Dr. Sia and Atty. Alidio for the purpose of making xerox copies of such relevant documents therein to be utilized as evidence in the said anti-graft case; that
notwithstanding repeated requests by Atty. Brion, the respondent never returned to the former the aforesaid PLACU's copies of the record or expedients, and when
Atty. Brion manifested before Pasay City Fiscal Pineda during the preliminary investigation on November 13, 1970 of the anti-graft and technical malversation
charges against Pablo Cuneta and others about the non-return to him of said expediente, respondent denied having borrowed and received the same, to the prejudice
of PARGO's prosecution of the said charges, so that PARGO, through Atty. Brion, had to reconstitute the answer and its seventeen annexes which formed part of
the said record or expedients, and it was only then that these documents were presented in the aforementioned preliminary investigation; and that the respondent's
conduct in this regard tended to prevent and obstruct the administration of justice by concealing evidence, thus constituting gross misconduct in office.7

In his answer filed on February 24, 1973, respondent, David D.C. Paz, specifically denied the allegation contained in paragraphs 1 to 9 of the complaint on
representing clients with conflicting interests, the same being contrary to the evidence of record submitted to the investigation conducted by Solicitor Eulogio Racquel
Santos and averred that the respondent, Paz did not participation the investigation of the Cuneta anti-graft case except to swear the witnesses; that the Secretary
of PARGO issued Mission Order No. 362 directing Atty. Rodolfo Navarro and Engineers Platon Chaves, Ventura Villarosa, Gabriel Abellada, Jr. and agents Lysias
G. Manalo and Edilberto Arguelles, Jr. and Henry C. Consina to undertake a special mission and carry out instructions given by the Secretary in connection with the
confidential investigation being undertaken by PARGO; that a g to the affidavit Of Lysias Manalo of the Philippine Constabulary, the Secretary of PARGO, by virtue
of Mission Order No. 362, the continuance of the re-investigation of the complaint of Dr. Irineo P. Sia, against the ex-Mayor Pablo Cuneta and they for violation of
the Anti-Graft and Corrupt Practices Act; that in fact, in 1969, the respondent Paz was on detail as police ad. viser of the Mayor of Makati, Rizal and in 1970, he from
PARGO and transferred to Congress; that except for the self-serving declarations of Atty. Brion and Dr. Irineo Sia, no other evidence was presented to prove that
the respondent Paz investigated the said anti-graft case in the PARGO; that it is true that respondent Paz appeared among a battery of lawyers for Mayor Cuneta
but when his appearance was questioned by Atty. Brion, it was withdrawn; and that the anti-graft case against Mayor Cuneta was finally dismissed.

Anent the charge of gross misconduct in office, the respondent denied the allegation in paragraphs 1 to 6 of the second count, the same being contrary to the
evidence of record and alleged that the charge is a fabrication; that Atty, Brion was also a special assistant in the PARGO; that when the respondent Paz resigned
from the PARGO, he was granted a clearance dated January 2, 1970 clearing him from any record or money accountability; that Hector Lumba, Docket Officer of
PARGO who was presented by Atty. Brion as a witness, admitted on cross-examination that the respondent Paz had been cleared of accountabilities by the Docket
Section; and that at the time the clearance was granted, the respondent had no pending cases in his possession that Atty. Brion admit" that the alleged expediente
supposedly borrowed by the respondent Paz was merely his lawyer's file as intervenor in Civil Case No. 72967; that his motion for intervention was, however, denied;
that the lawyer's file was allegedly finally reconstituted and presented in the preliminary investigation of the anti-graft case against Pablo Cuneta; and Atty. Brion
declared that the respondent Paz "receipted" for the same expediente but during the investigation conducted by Solicitor Racquel Santos, Atty. Brion could not
produce any receipt; that neither could Atty. Brion present any proof that he addressed a written complaint or demand to PARGO for the return of the alleged
expediente and Dr. Sia admitted that the evidence gathered were turned over to Atty. Cuaresma and Mangase, not to respondent Paz.
On the charge representing clients with conflicting interests, the evidence has duly established that the respondent, David D.C. Paz, as PARGO's Legal Officer and
Legal Prosecutor and head of the "Charlie Division", took part in the investigation of the anti-graft case against ex-Mayor Cuneta by administering oaths to witnesses
and gathering evidence. He acquired knowledge of the facts and circumstances surrounding the anti-graft case. The respondent obtained confidential information
and learned of the evidence of the PARGO against ex-Mayor Cuneta. There was undoubtedly a relationship of attorney and client between the respondent David
D.C. Paz and the PARGO.

It is also a fact that at the early stages of the preliminary investigation conducted by the City Fiscal of Pasay of the anti-graft case against ex-Mayor Pablo Cuneta,
the respondent appeared as counsel for said Cuneta. This is the same anti-graft case investigated by the PARGO when the respondent was head of the "Charlie
Division" thereof. That the respondent later withdrew his appearances as counsel of Cuneta is of no moment. He had already violated the Canons of Legal Ethics
and Sec. 20(e) of Rule 138, Revised Rules of Court which provides:

Sec. 20. Duties of attorneys. — It is the duty of an attorney:

xxx xxx xxx

(e) To maintain inviolate the confidence, and at a every peril to himself, to preserve the secrets of his client, and to accept no compensation in connection with his
client's business except from him or with his knowledge and approval;

xxx xxx xxx

The respondent has displayed a lack concern for his duties as a lawyer and an office of the court. In Nombrando vs. Hernandez,8 this court said:

The Solicitor General is of the opinion, and we find no reason to disagree with him, that even if respondent did not use against his client any information or
evidence acquired by ham as counsel it cannot be denied that he did become privy to information regarding the ownership of the parcel of land which was
later litigated in the forcible entry case, for it was the dispute over the land that triggered the mauling incident which gave rise to the criminal action for
physical injuries. This Court's remarks in Hilado vs. David, 84 Phil. 571, are apropos:

Communications between attorney and client are, in a great number of litigations, a complicated affair, consisting of entangled relevant and irrelevant, secret and
well known facts. In the complexity of what is said in the course of dealings between an attorney and client, inquiry of the nature suggested would lead to the
revelation, in advance of the trial of other matters that might only further prejudice the complainant's cause

Whatever may be said as to whether or not respondent utilized against his former client information given to him in a professional capacity, the mere fact of their
previous relationship should have precluded him from appearing as counsel for the other side in the forcible entry case. In the same cast of Hilado vs. David, supra,
this Tribunal further said:

Hence the necessity of setting down the existence of the bare relationship of attorney and client as the yardstick for testing incompatibility of interest. This stern rule
is designed not alone to prevent the dishonest practitioner from fraudulent conduct, but as wok to protect the honest lawyer from unfounded suspicion of
unprofessional practice. ... It is founded on principles of public policy of good taste. As has been said in another case, the n 43 not necessarily one of the rights of
the parties, but as to whether attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like 's Ceasar's wife, not
only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double dealing. Only thus can litigants be encouraged to entrust their
secrets to their attorneys which is of paramount importance in the administration of justice. 9

Under the circumstances, the respondent should be punished by suspension from the practice of law for two (2) months, 10 with a warning that a repetition of the
same offense wig be dealt with more drastically.
There is no sufficient evidence that the respondent had borrowed the record of Civil Case No. 72967 of the Court of First Instance of Manila entitled "Vicente D. Isip
vs. The Pasay City Government, et al. According to Atty. Galilee Brion, the respondent issued a receipt for the record. However, no such receipt could be presented
at the investigation. Moreover, Dr. Irineo Sia admitted that the evidence in connection with the Cuneta anti-graft case was turned over to Attys. Mangase and
Cuaresma, both of the PARGO. In view thereof, the respondent cannot be held guilty of the charge of serious misconduct.

WHEREFORE, the respondent is found guilty of representing clients with conflicting interests and he is hereby suspended from the practice of law for two (2) months,
with a warning that a repetition of the same offense win be dealt with i more drastically. The respondent is exonerated of the charge of g TOSS misconduct in office.

SO ORDERED.

[G.R. No. 123810. January 20, 1999]

CONSOLIDATED RURAL BANK (Cagayan Valley), INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and ANTONIA L. SANCHEZ, respondents.

DECISION

BELLOSILLO, J.:

This is a special civil action for certiorari filed by Consolidated Rural Bank (Cagayan Valley), Inc. (CONSOLBANK for short), [1] assailing the Resolution of the National Labor Relations
Commission (NLRC) dated 9 November 1995 in NLRC NCR CN. II-01-00002-94, Antonia
L. Sanchez v. Consolidated Rural Bank, which affirmed the decision of Labor Arbiter Ricardo N. Olairez that Antonia
L. Sanchez was illegally dismissed as well as its Resolution of 30 January 1996 denying petitioners motion for reconsideration.

Private respondent Antonia L. Sanchez was Branch Manager of petitioners Ilagan Branch, Ilagan, Isabela, when she was terminated effective 7 August 1993 for lack of
diligence, gross negligence, insubordination, and violation of existing bank policies resulting to loss. [2] Her termination arose from the following incident: Sometime in May 1992 a certain Rosalinda Rodriguez presented
six (6) US Treasury Warrants (USTW) for deposit with CONSOLBANKs Ilagan Branch with a total value of $13,966.74 or P335,201.76. As Branch Manager private respondent referred the checks to her superiors at

CONSOLBANKs Head Office in Santiago City who accepted and deposited the checks for clearing at PCIBank, CONSOLBANKs depositary bank. On 21 July 1992 CONSOLBANK
Head Office was informed by PCIBank that the checks were cleared prompting the Head Office to withdraw the amount of the checks which it used as cash assistance from
CONSOLBANK Ilagan. On 31 July 1992 the Head Office credited Ilagan Branch with P1,805.97 as interest income for the cash assistance. In the meantime Rosalinda Rodriguez
withdrew on different dates the total amount of P314,00.00 from her account at CONSOLBANK Ilagan. However, six (6) months after the USTWs were cleared CONSOLBANK
was informed by PCIBank that the checks had been dishonored for having been altered and was consequently requested t deposit the amount it had previously withdrawn to cover
the cost of the altered USTWs inclusive of interest charges amounting to P391,687.87.

The Board of Directors of CONSOLBANK, in order to determine responsibility for the loss, created a fact-finding committee to delve on facts as it (sic) happened.[3] In its Report
dated 27 March 1993 the Committee recommended the imposition of the penalty of 30 days suspension each for Head Office General Manager Ramon T. Cocson, Treasury Department Manager Ginajane Espina, and herein private respondent. Private respondent was
found liable for having accepted the USTWs when she should have known that CONSOLBANK was not authorized to accept dollar checks. Her participation however was found mitigated by the fact that she consulted Head Office first before acting and that she relied
heavily on Head Office actions on said TWs.

The Fact-Finding Committee the required private respondent to comment on the charge of willful disobedience of company rules, regulations and instructions, to wit: (a)
acceptance of six (6) USTWs for deposit knowing fully well that CONSOLBANK was not authorized to accept dollar checks; (b) allowing withdrawal by depositor even before
clearance of said checks; and,(c) denying that she was instructed by her superior, the then President/General Manager Ramon T. Cocson to retain the USTWs. [4]

In her comment, private respondent denied that she was ever informed of CONSOLBANKs alleged policy of not accepting dollar checks/treasury warrants. Neither did her
superiors at the Head Office advise her against accepting the particular USTWs in question as in fact they even accepted the checks, deposited them with CONSOLBANKs depositary
bank for clearing, and used the amount as cash assistance from Ilagan Branch for which it was credited with interest income. Private respondent denied that she authorized any
withdrawal on the checks before they were cleared.

In June 1993 an Executive Committee composed of the Vice-Chairman of the Board of Directors of CONSOLBANK as Chairman, and four other Members of the Board of
Directors conducted further investigation on the matter. After six (6) hearings held on June 10, 11, 14, 28, July 3 and 6, 1993, the Board of Directors issued on 7 August 1993 Board
Resolution No. 93-256, to wit:

WHEREAS, the findings of fact of the Fact-finding committee and the result of hearings and examination of documentary evidences made by the Executive Committee have
shown that Mrs. Antonia L. Sanchez, Branch Manager of Ilagan Branch, has committed lack of diligence, gross negligence, insubordination and violation of existing bank policies
resulting to loss;

WHEREFORE, premises considered, be it: RESOLVED, as it is hereby RESOLVED, that Mrs. Antonia L Sanchez be dismissed for cause effective August 07, 1993 x x x x

On 10 January 1994 private respondnet sued CONSOLBANK for illegal dismissal with prayer for reinstatement, backwages and other benefits as well as P500,000.00 in
damages.

In his decision dated 22 July 1994 the Labor Arbiter ruled in favor of private respondent thus-

WHEREFORE x x x we find complainant illegally and unjustly dismissed and she should be reinstated to her former or substantially equivalent position without loss of seniority
rights with full backwages and other benefits which she could have enjoyed had she not been illegally dismissed, computed as of July 30, 1994 as follows:

P69,700.00 Basic Pay including 13th month pay (August 1992 to July 31, 1994)

P4, 380.00 COLA for one year (365 days x 12 mos)

P18,000.00 Gasoline allowance (P1,500 x 12 mos)

P14,400.00 Car allowance (P1,200 x 12 mos)

P12,000.00 Additional representation allowance (P1,000.00 x 12 mos) and

P2,500.00 Clothing allowance for one year

_________

P120,980.00 Total

Respondent is likewise ordered to pay complainant P500,000.00 as moral damages plus ten percent attorneys fees of the total monetary award.

In case reinstatement is no longer feasible, complainant is given the option to be paid separation pay in the total amount of P148,830.00 (P6,765.00 x 22) for her twenty years of
service in addition to her backwages or a total amount of P269,810.00, in lieu of reinstatement x x x x

The Labor Arbiter found that private respondent could not be considered guilty of lack of diligence, gross negligence or of having violated bank policies because she merely
referred the USTWs to her superiors at the Head Office who were the ones who accepted the checks and deposited them. The alleged warning not to accept the checks given by the
Head Offices General Manager Ramon T. Cocson to private respondent was not given credence because his subsequent actions revealed his knowledge of the acceptance and deposit
of the USTWs by the Treasury Department of the Head Office itself. In addition to finding private respondents dismissal as tainted with bad faith because she was deliberately made
a sacrificial lamb or scapegoat of the Head Offices General manager and Treasurer who were meted relatively light penalties, the Labor Arbiter ruled that private respondent was
denied due process as she was neither informed of petitioners intention to dismiss her nor given the opportunity to defend herself.

CONSOLBANK appealed to the NLRC which affirmed the conclusions of the Labor Arbiter that no valid cause existed for private respondents dismissal and that she was
denied due process.[5] A subsequent motion for reconsideration by CONSOLBANK was similarly denied in the second questioned resolution dated 30 January 1996;[6] hence, this petition.

Petitioner assails the questioned resolutions of the NLRC on both procedural and substantive grounds. On procedural grounds, petitioner contends that public respondent
committed grave abuse of discretion in affirming the Labor Arbiters decision which was rendered with indecent haste without giving petitioner further opportunity to present its
evidence. Petitioner takes particular exception to the fact that the Labor Arbiter rendered his decision only two (2) days after the hearing of 19 July 1994 wherein only private
respondent was present. He brands that hearing as a give-away to private respondent and therefore asks that this case be remanded to the Labor Arbiter for further reception of
evidence.

Petitioners avowal of denial of procedural due process must fail, and so with its prayer for a remand. The fact that counsel for petitioner was not present during the clarificatory
hearing on 19 July 1994, hence, unable to rebut the testimony given by private respondent could hardly be attributed to anybody elses fault but its own. Records show that notice
was given to the parties with warning that failure to attend would be construed as a waiver of the opportunity to be heard. [7] However, while counsel for private respondent filed his Manifestation
begging off from the hearing on ground of a prior engagement, counsel for petitioner on the other hand simply chose not to appear on the assumption that the hearing would be
postponed on account of opposing counsels absence thus negligently and completely overlooking the assurance in the very same Manifestation that private respondent would
nevertheless appear on her own. Hence, the fact that the Labor Arbiter proceeded with the hearing as scheduled could not be branded as an arbitrary act depriving petitioner of its
right to present evidence. Petitioner lost this additional opportunity entirely through its own fault and negligence.

Similarly, the decision of the Labor Arbiter not to schedule the case for another hearing could not be considered as a grave abuse of discretion. First of all, it is well-settled that
the holding of a hearing is discretionary with the Labor Arbiter and is something which the parties cannot demand as a matter of right. [8] It is entirely within the bounds of the Labor Arbiters authority to
decide a case based on mere position papers and supporting documents without a formal trial or hearing as is sanctioned by the The New Rules of Procedure of the National Labor Relations Commission.[9] Thus we have consistently
held that the requirements of due process are satisfied when the parties are given the opportunity to submit position papers[10] wherein they are supposed to attach all the documents that would prove their claim in case it be decided that no hearing should be conducted or
was necessary.[11] Secondly, we note that petitioner and private respondent themselves agreed during the hearing of 3 March 1994 to forego with a formal trial and opted instead to file only their respective replies to each others position paper.[12] Given these circumstances,
petitioner certainly cannot now be heard to have been deprived of due process.

On the merits, petitioner assails public respondents conclusion that private respondent was denied due process and that there was no valid cause for her dismissal. The NLRC
and the Labor Arbiter concluded that private respondent was deprived due process because she was not informed of petitioners intention to dismiss her. As regards this point, we
agree with petitioner that the minimum requirements of due process have been substantially complied with when private respondent, with the assistance of counsel, was duly
investigated by petitioners Executive Committee and given opportunities to answer the charges levelled against her. [13] However, we are unable to agree with petitioners proposition that valid cause exists for
private respondents dismissal.

Private respondent was dismissed for lack of diligence, gross negligence, insubordination, and violation of existing bank policies resulting to loss.[14] However, we find no grave abuse of
discretion on the part of public respondents in concluding that these charges were not substantially proved. As they have correctly observed, private respondent could not fairly be considered lacking in diligence or grossly negligent in her actuations with respect to the six
(6) USTWs. Petitioner itself does not deny that private respondent merely referred the checks to the Head Office.[15] That she may have been previously warned by the Manager of Metrobank not to accept such checks as alleged by petitioner does not erase the fact that
it was still the Head Office which ultimately decided on accepting and depositing the USTWs for clearing.

On the charge of violating bank policies, while private respondent was accused of having violated CONSOLBANKs alleged policy of not accepting dollar checks for deposit,
it was nonetheless established during the investigation that CONSOLBANK had in fact no such written policy and accepting dollar checks was actually a tolerated practice among
its branches.[16]
 The charge of insubordination to the alleged instruction of General Manager Ramon T. Cocson to private respondent not to accept the checks was correctly disregarded
considering Cocsons actuations inescapably demonstrating his knowledge of the acceptance of the USTWs, the most notable of which was his signing of the Inter-Office Memo No.
7030 crediting Ilagan Branch with P1,805.97 as interest income for the value of the USTWs which the head Office used as cash assistance from CONSOLBANK Ilagan.[17]

The other charges against private respondent, i. e., allowing Rosalinda Rodriguez to withdraw from her dollar account before the USTWs were cleared and granting a
commercial loan to Rodriguez secured by the uncleared USTWs, were not substantiated as in fact they were not even included in the findings of fact of petitioners Fact-Finding
Committee, hence, they may not now be invoked to justify private respondents dismissal.

However, in addition to back wages, the NLRC sustained the Labor Arbiters awards of reinstatement or payment of separation pay in lieu thereof, P500,000.00 moral damages
and attorneys fees equivalent to 10% of the total monetary award.

Petitioner objects to the inclusion of gasoline, car and representation allowances in the computation of back wages on the ground that these are but operating expenses to the
company. However, while these may be operating expenses to petitioner they are, on the other hand, still allowances/benefits to private respondent and hence included in the
computation of her back wages under Art. 279 of the Labor Code, to wit:

x x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement x x x and to his full back wages, inclusive of allowances, and to his other benefits or
their monetary equivalent from the time his compensation was withheld from him up to the time of his actual reinstatement (underscoring ours).

On the matter of payment of separation pay in lieu of reinstatement, we adopt public respondents factual finding that private respondent was employed by petitioner for twenty-
two (22) years or from October 1971 until her termination on 7 August 1983 for failure of petitioner to prove its affirmative allegation that it was incorporated only in June 1983.

With respect to the award of moral damages we ascribe no grave abuse of discretion on the part of the NLRC and the Labor Arbiter who found private respondent entitled
thereto for having been made the sacrificial lamb or scapegoat of the Head Offices General Manager and Treasurer who got away with light penalties. In addition, the arbitrary
manner by which petitioner dismissed private respondent, i.e., notifying her on 25 August 1993 of her dismissal which took effect some eighteen (18) days earlier or on 7 August
1993 as well as petitioners persistent failure despite repeated requests from private respondents counsel and assurances by CONSOLBANKs President himself to furnish private
respondent with the Executive Committee decision made the basis of her dismissal, constitutes further justification for the award of moral damages. It is well-settled that moral
damages are recoverable where the dismissal was attended by bad faith or constituted an act contrary to labor, or was done in a manner contrary to morals, good customs or public
policy.[18]

Lastly, petitioner objects to the award of attorneys fees on the ground that it was not claimed by private respondent in her complaint for illegal dismissal. However, it is settled
that in actions for recovery of wages or where an employee was forced to litigate and thus incur expenses to protect her rights and interests, even if not so claimed, an award of
attorneys fees equivalent to ten percent (10%) of the total award is legally and morally justifiable. [19]

WHEREFORE, finding no grave abuse of discretion on the part of public respondent National Labor Relations Commission, the instant petition is DISMISSED and the
questioned Resolutions of 9 November 1995 and 30 January 1996 are AFFIRMED with the clarification that the award of damages should be reckoned not from August 1992 but
from 7 August 1993, the date of private respondents actual termination from the service as found by the Labor Arbiter [20] and the NLRC[21] and supported by the evidence.

SO ORDERED.

G.R. No. 104600 July 2, 1999

RILLORAZA, AFRICA, DE OCAMPO and AFRICA, petitioner,
vs.
EASTERN TELECOMMUNICATIONS PHILS., INC. and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, respondents.

PARDO, J.:

The basic issue submitted for consideration of the Court is whether or not petitioner is entitled to recover attorney's fees amounting to Twenty Six Million Three
Hundred Fifty Thousand Seven Hundred Seventy Nine Pesos and Ninety One Centavos (P26,350,779.91) for handling the case for its client Eastern
Telecommunications Philippines, Inc. filed with the Regional Trial Court, Makati, though its services were terminated in midstream and the client directly compromised
the case with the adverse party.

The Facts

In giving due course to the petition, we carefully considered the facts attendant to the case. On August 28, 1987, Eastern Telecommunications Philippines, Inc.
(ETPI) represented by the law firm San Juan, Africa, Gonzales and San Agustin (SAGA), filed with the Regional Trial Court, Makati, a complaint for recovery of
revenue shares against Philippine Long Distance Telephone Company (PLDT). Atty. Francisco D. Rilloraza, a partner of the firm appeared for ETPI.

After ETPI rested its case, it paid SAGA the billed amount of One Hundred Thousand Pesos (P100,000.00). On September 18, 1987, the trial court issued a resolution
granting ETPI's application for preliminary restrictive and mandatory injunctions. During this period, SAGA was dissolved and four of the junior partners formed the
law firm Rilloraza, Africa, De Ocampo & Africa (RADA), which took over as counsel in the case for ETPI. The latter signed a retainer agreement with counsel dated
October 1, 1987. 1

Petitioners presented the three aspects of the main case in the trial court. First, the traffic revenue shares which ETPI sought to recover from PLDT in accordance
with the contract between them. Second, ETPI sought preventive injunctive relief against the PLDT's threats to deny ETPI access to the Philippines international
gateway switch. Third, ETPI called this the "foreign correspondentships aspect" where ETPI sought preventive injunctive relief against PLDT's incursions and
inducements directed at ETPI's foreign correspondents in Hongkong, Taiwan and Singapore, to break their correspondentship contracts with PLDT, using the threat
of denying them access to the international gateway as leverage.

In this connection, ETPI filed with the trial court two urgent motions for restraining order, one on October 30, 1987 and another on November 4, 1987. As the
applications were not acted upon, ETPI brought the case up to the Court of Appeals by petition for certiorari.

On June 28, 1988, petitioner received a letter from ETPI signed by E. M. Villanueva, President and Chief Executive Officer. In substance, the letter stated that ETPI
was terminating the retainer contract dated October 1, 1987, effective June 30, 1988.

On June 29, 1988, petitioner filed with the Regional Trial Court a notice of attorney's lien, furnishing copies to the plaintiff ETPI, to the signatory of the termination
letter and PLDT. On the same date, petitioner additionally sent a letter to ETPI attaching its partial billing statement. In its notice, RADA informed the court that there
were negotiations towards a compromise between ETPI and PLDT.

In April 1990, petitioner confirmed that indeed the parties arrived at an amicable settlement and that the same was entered as a judgment. On April 26, 1990,
petitioner filed a motion for the enforcement of attorney's lien with the Regional Trial Court of Makati and then appraised the Supreme Court thereof by manifestation.
2 We noted the manifestation in a resolution dated July 23, 1990.
On May 24, 1990, PLDT filed with the trial court a manifestation that it is not a party to nor in any manner involved in the attorney's lien being asserted by Atty.
Rilloraza for and in behalf of the law firm, 3 while ETPI filed its opposition thereto on June 11, 1990.

The Lower Court's Ruling

The trial court in its resolution dated September 14, 1990 denied the motion for enforcement of attorney's lien. Thus:

WHEREFORE, premises considered, the court finds that the Notice of Attorney's Lien filed by the law firm of Rilloraza, Africa, De Ocampo and Africa has
no basis in fact and in law, and therefore denies the Motion for Enforcement of Attorney's Lien.

SO ORDERED.

Makati, Metro Manila, September 4, 1990.

(s/t) ZEUS C, ABROGAR

Judge 4

On October 10, 1990, petitioner filed with the trial court a notice of appeal from the above-mentioned order to the Supreme Court. On November 6, 1990, ETPI filed
a Motion to Dismiss Appeal contending that the case could be brought to the Supreme Court only via a petition for review on certiorari, not by a mere notice of
appeal. In an order dated January 16, 1991, the trial court dismissed RADA's appeal.

The trial court said:

There is no more regular appeal from the Regional Trial Court to the Supreme Court. Under the amendment of Section 17 of the Judiciary Act by R.A. 5440,
orders and judgments of the Regional Trial Court may be elevated to the Supreme Court only by petition for review on certiorari.

xxx xxx xxx

Wherefore, premises considered, the order dated September 14, 1990 is hereby reconsidered and set aside. The Notice of Appeal filed by movant RADA is
dismissed.

SO ORDERED.

Given this 16th day of January, 1991, at Makati, Metro Manila.

(s/t) ZEUS C, ABROGAR

Judge 5

Hence, on February 9, 1991, petitioner filed a petition for certiorari with the Supreme Court, which we remanded to the Court of Appeals. The latter dismissed the
petition in a decision promulgated on November 14, 1991, 6ruling that the judge committed no abuse of discretion in denying petitioner's motion for enforcement of
attorney's lien. Thus:

We therefore rule that respondent judge committed no abuse of discretion, much less a grave one, in denying petitioner's motion for enforcement of
attorney's lien.
Assuming that respondent judge committed an error in denying petitioner's motion for enforcement of attorney's lien, it cannot be corrected by certiorari.

WHEREFORE, the writs prayed for are DENIED, and the petition is hereby DISMISSED, with cost against petitioner.

SO ORDERED.

(s/t) REGINA G. ORDOÑEZ-BENITEZ

Associate Justice

WE CONCUR:

(s/t) JOSE A. R. MELO (s/t) EMETERIO C, CUI

7
Associate Justice Associate Justice

DISCUSSION

A. The Procedural Aspect

There is nothing sacrosanct about procedural rules, which are liberally construed in order to promote their objectives and assist the parties in obtaining just, speedy
and inexpensive determination of every action or proceeding. 8 In analogous case, 9 we ruled that where the rigid application of the rules would frustrate substantial
justice 10, or bar the vindication of a legitimate grievance, the courts are justified in exempting a particular case from the operation of the rules .

In A-One Feeds, Inc. vs. Court of Appeals, we said —

Litigations should, as much as possible, be decided on the merits and not on technicality. Dismissal of appeals purely on technical grounds is frowned upon,
and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice and
thereby defeat their very claims. As has been the constant ruling of this Court, every party litigant should be afforded the amplest opportunity for the proper
and just determination of his cause, free from the constraints of technicalities. 11
12 This
A basic legal principle is that no one shall be unjustly enriched at the expense of another. principle is one of the mainstays of every legal system for centuries
and which the Civil Code echoes:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense
of the latter without just or legal ground, shall return the same to him. 13

The Code Commission, its report, emphasized that:

It is most needful that this ancient principle be clearly and specifically consecrated in the proposed Civil Code to the end that in cases not foreseen by the
lawmaker, no one may unjustly benefit himself to the prejudice of another. The German Civil Code has a similar provision (Art. 812). 14

With this in mind, one could easily understand why, despite technical deficiencies, we resolved to give due course to this petition. More importantly, the case on its
face appears to be impressed with merit.

B. The Attorney's Fees

We understand that Atty. Francisco Rilloraza handled the case from its inception until ETPI terminated the law firm's services in 1988. Petitioner's claim for attorney's
fees hinges on two grounds: first, the fact that Atty. Rilloraza personally handled the case when he was working for SAGA; and second, the retainer agreement dated
October 1, 1987.

We agree that petitioners are entitled to attorneys' fees. We, however, are not convinced with the petitioner's arguments that the services RADA rendered merit the
amount they are claiming.

First, petitioner contends that Atty. Rilloraza initiated the filing of the complaint. When a client employs the services of a law firm, he does not employ the services of
the lawyer who is assigned to personally handle the case. Rather, he employs the entire law firm. In the event that the counsel appearing for the client resigns, the
firm is bound to provide a replacement. Thus, RADA could not claim to have initiated the filing of the complaint considering that ETPI hired SAGA. What is more, on
September 17, 1987, ETPI paid SAGA the amount of One Hundred Thousand Pesos (P100,00.00) 15 representing services performed prior to September 17, 1987.
SAGA assigned one of its associates, Atty. Francisco Rilloraza, to handle the case for the firm. Although Atty. Rilloraza handled the case personally, he did so for
and in behalf of SAGA.

Second, petitioner claims that under the retainer agreement, which provides:

6.2 B.Court Cases:

Should recourse to judicial action be necessary to effect collection or judicial action be taken by adverse party, our attorney's fees shall be fifteen percent (15%) of
the amounts collected or the value of the property acquired or liability saved. 16

the firm is entitled to the fees agreed upon.

However, the retainer agreement has been terminated. True, Attorney Rilloraza played a vital role during the inception of the case and in the course of the trial. We
cannot also ignore the fact that an attorney-client relationship between petitioner and respondent no longer existed during its culmination by amicable agreement.
To award the attorneys' fees amounting to 15% of the sum of One Hundred Twenty Five Million Six Hundred Seventy One Thousand Eight Hundred Eighty Six
Pesos and Four Centavos (P125,671,886.04) plus Fifty Million Pesos (P50,000,000.00) paid by PLDT to ETPI would be too unconscionable.1âwphi1.nêt

"In any case, whether there is an agreement or not, the courts shall fix a reasonable compensation which lawyers may receive for their professional services. " 17 "A
lawyer has the right to be paid for the legal services he has extended to his client, which compensation must be reasonable." 18 A lawyer would be entitled to receive
what he merits for his services. Otherwise stated, the amount must be determined on a quantum meruit basis.

"Quantum meruit, meaning 'as much as he deserved' is used as a basis for determining the lawyer's professional fees in the absence of a contract but recoverable
by him from his client. 19 Recovery of attorney's fees on the basis of quantum meruit is authorized when (1) there is no express contract for payment of attorney's
fees agreed upon between the lawyer and the client; (2) when although there is a formal contract for attorney's fees, the fees stipulated are found unconscionable
or unreasonable by the court; and (3) when the contract for attorney's fee's is void due to purely formal defects of execution; (4) when the counsel, for justifiable
cause, was not able to finish the case to its conclusion; (5) when lawyer and client disregard the contract for attorney's
fees, 20

In fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be considered are generally (1) the
importance of the subject matter in controversy, (2) the extent of services rendered, and (3) the professional standing of the lawyer. A determination of these factors
would indispensably require nothing less than a full-blown trial where private respondents can adduce evidence to establish the right to lawful attorney's fees and
for petitioner to oppose or refute the same. 21 The trial court has the principal task of fixing the amount of attorney's fees. 22 Hence, the necessity of a hearing is
beyond cavil.
 C. Charging Lien

Petitioner contends that pursuant to Rule 138 of the Revised Rules of Court, it is entitled to a charging lien. The rule provides:

Sec. 37. Attorney's liens. — An attorney shall have a lien upon the funds, documents and papers of his client, which have lawfully come into his possession
and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have
a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a
litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court
rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and
he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just
fees and disbursements." (Emphasis supplied).

We do not agree. A charging lien to be enforceable as security for the payment of attorney's fees requires as a condition sine qua non a judgment for money and
execution in pursuance of such judgment secured in the main action by the attorney in favor of his client 23. A charging lien presupposes that the attorney has secured
a favorable money judgment for his client. 24 From the facts of the case it would seem that petitioner had no hand in the settlement that occurred, nor did it ever
obtain a favorable judgment for ETPI.

ETPI entered into a compromise agreement when it ended the services of petitioner and through the effort of ETPI's new lawyers, the law firm Romulo, Mabanta,
Buenaventura, Sayoc and De los Angeles. Whether there was bad faith in the substitution of the lawyers to avoid compliance with the retainer agreement could only
be determined after a trial of the case on the merits.

This decision, however, should not be interpreted as to impose upon petitioner any additional burden in collecting its attorney's fees. The petitioner must avail itself
of the proper remedy in order to forestall the possibility of any injustice on or unjust enrichment of any of the parties.

The Judgment (Fallo)

ACCORDINGLY, the Court GRANTS the petition, REVERSES the decision of the Court of Appeals in CA-G. R. SP No. 24463 and REMANDS the case to the court
of origin for the determination of the amount of attorney's fees to which petitioner is entitled.

No costs.

SO ORDERED

G.R. No. 98149 September 26, 1994

JOSE V. DEL ROSARIO, petitioner,
vs.
HON. COURT OF APPEALS and DE DIOS MARIKINA TRANSPORTATION CO., INC., respondents.

Ponce Enrile, Cayetano, Reyes & Manalastas for petitioner.

Orlando B. Braga for private respondent.
VITUG, J.:
Petitioner suffered physical injuries, requiring two (2) major operations, when he fell from, and then was dragged along the asphalted road
by, a passenger bus operated by private respondent transportation company. The incident occurred when the bus driver bolted forward at
high speed while petitioner was still clinging on the bus door's handle bar that caused the latter to lose his grip and balance. The refusal of
private respondent to settled petitioner's claim for damages constrained petitioner to file, on 26 June 1985, a complaint for damages against
private respondent.
After the reception of evidence, the trial court, on 11 December 1989, rendered its decision, the dispositive portion reading thusly:
WHEREFORE, judgment is hereby rendered dismissing defendant De Dios Marikina Transportation Co., Inc.'s counterclaim for lack
of merit and ordering said defendant to pay plaintiff Jose V. Del Rosario: (a) the sum of P76,944.41, as actual and compensatory
damages; (b) the sum of P15,000.00, as moral and exemplary damages; and (c) the sum of P33,641.50, as attorney's fees, a s well
as to pay the costs of suit; and, as regards the third-party complaint herein, ordering third-party defendant First Quezon City Insurance
Co., Inc. to indemnify third-party plaintiff
De Dios Marikina Transportation Co., Inc. in the sum of P12,000.00, with interest thereon at the legal rate from date of filing of the
third-party complaint on August 20, 1985, until full payment thereof. Further, there being no satisfactory warrant, therefor, the Court
hereby dismisses the rest of the claims in the complaint and third-party complaint herein.
IT IS SO ORDERED.
On appeal to it, the Court of Appeals affirmed in toto the findings of fact of the trial court, as well as the grant to petitioner of damages, but it
reduced the award for attorney's fees from P33,641.50 to P5,000.00. Petitioner's motion for reconsideration questioning the reduction of
attorney's fees was denied by the appellate court. Hence, this petition raising this sole issue.
We see merit in the petition.
There is no question that a court may, whenever it deems it just and equitable, allow the recovery by the prevailing party of attorneys fees. 1

In determining the reasonableness of such fees, this Court in a number of cases has provided various criteria which, for convenient guidance,
2

we might collate thusly:

a) the quantity and character of the services rendered;
b) the labor, time and trouble involved;
c) the nature and importance of the litigation;
d) the amount of money or the value of the property affected by the controversy;
e) the novelty and difficulty of questions involved;
f) the responsibility imposed on counsel;

g) the skill and experience called for in the performance of the service;
h) the professional character and social standing of the lawyer;
i) the customary charges of the bar for similar services;
j) the character of employment, whether casual or for establishment client;
k) whether the fee is absolute or contingent (it being the rule that an attorney may properly charge a higher fee when it is contingent than
when it is absolute); and

1) the results secured.

In this instance, the complaint for damages was instituted by petitioner in June 1985, following the refusal of private respondent to settle
petitioner's claim, and the decision thereon was promulgated by the court a quo only in December 1989 or about four years and six months
later. Several pleadings were filed and no less than twenty appearances were made by petitioner's counsel, not counting the various other
pleadings ultimately filed with the Court of Appeals and now before this Court. Given the nature of the case, the amount of damages involved,
and the evident effort exerted by petitioner's counsel, the trial court's award of attorney's fees for P33,641.50 would appear to us to be just
and reasonable.
WHEREFORE, the instant petition is hereby GRANTED, and the decision of the Court of Appeals is MODIFIED by REINSTATING the trial
court's award of attorney's fees.
SO ORDERED

G.R. No. 91958 January 24, 1991

WILFREDO D. LICUDAN and CRISTINA LICUDAN-CAMPOS, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and ATTY. TEODORO O. DOMALANTA, respondents.
Arnold V. Guerrero & Associates for petitioners.
Teodoro O. Domalanta for and on his behalf as private respondent.
GUTIERREZ, JR., J.:
The practice of law is a profession rather than trade. Courts must guard against the charging of unconscionable and excessive fees by
lawyers for their services when engaged as counsel. Whether or not the award of attorney's fees in this case is reasonable, being in the
nature of contingent fees, is the principal issue.
This petition for review on certiorari assails:
1) The Decision of the public respondent dated September 12, 1989 which dismissed the petitioners' appeal thereby upholding the
reasonableness of the respondent lawyer's lien as attorney's fees over the properties of his clients; and
2) The Resolution of the public respondent dated January 30, 1990 which denied the petitioners' motion for reconsideration.
The grounds relied upon by the petitioners are as follows:
The respondent Court, in upholding the entitlement of private respondent-attorney on the attorney's fees he claimed, decided the question in
a manner not in accord with law or with the applicable decisions of this Honorable Tribunal.
The respondent Court, in refusing to review and determine the propriety, reasonableness and validity of the attorney's fees claimed by the
private respondent-attorney, departed from the usual course of judicial proceedings.
The respondent Court, in failing to declare the attorney's fees claimed by the private respondent-attorney as unconscionable, excessive,
unreasonable, immoral and unethical, decided the question in a way not in accord with law and with applicable decisions of this Honorable
Tribunal. (Petition, pp. 12-13; Rollo, pp. 16-17)
The following are the antecedent facts pertinent to the case at bar:

The respondent lawyer was retained as counsel by his brother-in-law and sister, the now deceased petitioners' parents, spouses Aurelio and
Felicidad Licudan. His services as counsel pertained to two related civil cases docketed as Civil Case No. Q-12254 for partition and Civil
Case No. Q-28655 for a sum of money in connection with the redemption of the property subject matter of the two cases covered by Transfer
Certificate of Title No. 818 of the Register of Deeds of Quezon City. In both cases, the respondent lawyer obtained a judgment in favor of his
clients.
On August 13,1979, the respondent lawyer filed a Petition for Attorney's Lien with Notification to his Clients which substantially alleged that
his clients executed two written contracts for professional services in his favor which provided that:
a) The undersigned counsel is entitled to own 97.5 square meters of the plaintiff's share of the lot in question.
b) The undersigned counsel shall have a usufructuary right for a period of ten (10) years of plaintiffs' share of the lot in question.
c) And that all damages accruing to plaintiffs to be paid by the defendant is for the undersigned counsel.(Annex "H" of the Petition, Rollo, p.
54)
On September 19, 1979, the trial court handling Civil Case No. Q-12254 ordered the annotation at the back of TCT No. 818 of the Register
of Deeds of Quezon City of the respondent lawyer's Contract for Professional Services dated August 30, 1979 signed by petitioner Wilfredo
Licudan and Aurelio Licudan on his own behalf and on behalf of his daughter, petitioner Cristina Licudan-Campos. The said trial court's Order,
being one of two Orders being essentially challenged in this petition, is reproduced below:
Before the court for consideration is a Petition for Attorney's Lien filed by Atty. Teodoro D. Domalanta, counsel for the plaintiff, praying that
his attorney's fees be annotated as a lien at the back of Transfer Certificate of Title No. 818 of the Register of Deeds of Quezon City, subject
matter of this case.
For the protection of the plaintiffs, the court required the plaintiff Aurelio Licudan as well as his son to appear this morning. Plaintiff Aurelio
Licudan together with his son Wilfredo Licudan, who appears to be intelligent and in fact he speaks (the) English language well, appeared.
Both Aurelio and Wilfredo Licudan manifested that they have freely and voluntarily signed the Contract for Professional Services, dated
August 30, 1979 and notarized before Notary Public Amado Garrovillas as Doc. No. 32, Page 8, Book No. XIX, Series of 1979.
Considering the manifestation of plaintiff, Aurelio Licudan and Alfredo (sic) Licudan that they have entered freely and voluntarily in the said
contract of professional services, let the same be annotated at the back of TCT 818 of the Register of Deeds of Quezon City, upon payment
of the required legal fees. (CA Decision, pp. 7-8; Rollo, pp. 36-37)
The Contract for Professional Services dated August 30, 1979 differs from the earlier contractual provisions in that it entitled the respondent
lawyer to one-third (1/3) of the subject property or 90.5 square meters and provided for usufructuary rights over the entire lot in question in
favor of the respondent lawyer's son, Teodoro M. Domalanta, Jr. for an agreed consideration. (Annex "J" of the Petition; Rollo, p. 59)
On July 25, 1985, the respondent lawyer filed a motion ex parte to amend the Order dated September 19, 1979 so as to conform with an
additional professional fee covering 31 square meters more of the lot for services rendered in Civil Case No. Q-28655 as evidenced by a
Deed of Absolute Sale dated May 1, 1983 executed by Aurelio Licudan in favor of the respondent lawyer.

On September 6, 1985, the trial court ordered the respondent lawyer to submit a subdivision plan in conformity with his attorney's fees contract
under which one-third (1/3) of the property or 90.5 square meters was alloted to him.

On September 23, 1985, the respondent lawyer filed a motion for reconsideration praying for the amendment of the Order dated September
19, 1979 to conform with the Deed of Absolute Sale dated May 1, 1983 which was executed after the annotation of the original attorney's lien
of 90.5 square meters.
On September 30, 1985, the trial court denied the motion on the ground that the respondent lawyer cannot collect attorney's fees for other
cases in the action for partition.
On October 4, 1985, the respondent lawyer filed a second motion for reconsideration of the Order dated September 6, 1985 explaining that
what he sought to be included in the Order dated September 19, 1979 is the additional attorney's fees for handling the redemption case which
was but a mere offshoot of the partition case and further manifesting that the additional 31 square meters as compensation for the redemption
case must be merged with the 90.5 square meters for the partition case to enable the said respondent lawyer to comply with the Order dated
September 6,1985 which directed him to submit a subdivision plan as required.
On October 21, 1985, the trial court issued the second Order being assailed in this petition. The said Order reads:

Acting on the "Second Motion for Reconsideration" filed by Atty. Teodoro Domalanta and finding the same to be justified, let an attorney's
lien be annotated in the title of the property for 31 square meters as attorney's fees of said Atty. Teodoro Domalanta in addition to the original
90.5 square meters. (CA Decision, p. 8; Rollo, p. 37)
On August 22, 1986, more than ten (10) months after the Orders of September 6, 1985 and October 21, 1985 had become final and executory,
the petitioners as substituted heirs of the respondent lawyers' deceased clients filed a motion to set aside orders on the ground that the award
of professional fees covering 121.5 square meters of the 271.5 square meter lot is unconscionable and excessive.
After the respondent lawyer filed his Opposition to the above petitioners' motion, the lower court, on August 29, 1986, finding that the
petitioners as substituted plaintiffs are not in full agreement with the respondent lawyer's claim for attorney's fees, set aside its Orders dated
September 6, 1985 and October 21, 1985.
On September 16, 1986, the respondent lawyer filed a motion for reconsideration stressing the fact that the payment of the professional
services was pursuant to a contract which could no longer be disturbed or set aside because it has already been implemented and had since
then become final. This motion was denied on October 3, 1986.
On November 15, 1986, the respondent lawyer filed a motion to set aside the orders dated August 29, 1986 and October 3, 1986 reiterating
his position that the Orders of September 6, 1985 and October 21, 1985 have become final and are already implemented. The respondent
lawyer further asked for the modification of the October 21, 1985 Order to reflect 60.32 square meters instead of 31 square meters only since
the stipulation in the Additional Contract for Professional Services entitled him to 60.32 square meters.
After the petitioners' Opposition to the said motion was filed, the trial court, on February 26, 1987, rendered an Order with the following
dispositive portion:
WHEREFORE, this Court has no alternative but to set aside its orders of 29 August 1986 and 3 October 1986 and declare its Orders of 19
September 1979 and 21 October 1985 irrevocably final and executory. (CA Decision, p. 5; Rollo, p. 34)
On Appeal, the Court of Appeals ruled in favor of the respondent lawyer by dismissing the appeal and the prayed for writ of preliminary
injunction. Their subsequent motion for reconsideration having been denied', the petitioners filed the instant petition.
The petitioners fault the respondent Court for its failure to exercise its inherent power to review and determine the propriety of the stipulated
attorney's fees in favor of the respondent lawyer and accuse the respondent lawyer of having committed an unfair advantage or legal fraud
by virtue of the Contract for Professional Services devised by him after the trial court awarded him attorney's fees for P1,000.00 only instead
of respecting the trust and confidence of the highest level reposed on him considering the close blood and affinal relationship between him
and his clients.
The petitioners contend that under the award for professional services, they may have won the case but would lose the entire property won
in litigation to their uncle-lawyer. They would be totally deprived of their house and lot and the recovered damages considering that of the
271.5 square meters of the subject lot, the respondent lawyer is claiming 121.5 square meters and the remaining portion of 150 square
meters would also go to attorney's fees since the said portion pertains to the lawyer's son by way of usufruct for ten (10) years.
The aforesaid submissions by the petitioners merit our consideration.

It is a well-entrenched rule that attorney's fees may be claimed in the very action in which the services in question have been rendered or as
an incident of the main action. The fees may be properly adjudged after such litigation is terminated and the subject of recovery is at the
disposition of the court. (see Camacho v. Court of Appeals, 179 SCRA 604 [1989]; Quirante v. Intermediate Appellate Court, 169 SCRA 769
[1989]).

It is an equally deeply-rooted rule that contingent fees are not per se prohibited by law. They are sanctioned by Canon 13 of the Canons of
Professional Ethics and Canon 20, Rule 20.01 of the recently promulgated Code of Professional Responsibility. However, as we have held
in the case of Tanhueco v. De Dumo (172 SCRA 760 [1989]):
. . . When it is shown that a contract for a contingent fee was obtained by undue influence exercised by the attorney upon his client or by any
fraud or imposition, or that the compensation is clearly excessive, the Court must and will protect the aggrieved party. (Ulanday v. Manila
Railroad Co., 45 Phil. 540 [1923]; Grey v. Insular Lumber Co., 97 Phil. 833 [1955]).
In the case at bar, the respondent lawyer caused the annotation of his attorney's fees lien in the main action for partition docketed as Civil
Case No. Q-12254 on the basis of a Contract for Professional Services dated August 30, 1979. We find reversible error in the Court of
Appeals' holding that:
When the reasonableness of the appellee's lien as attorney's fees over the properties of his clients awarded to him by the trial court had not
been questioned by the client, and the said orders had already become final and executory, the same could no longer be disturbed, not even
by the court which rendered them (Tañada v. Court of Appeals, 139 SCRA 419). (CA Decision p. 7; Rollo, p. 36)
On the contrary, we rule that the questioned Orders dated September 19, 1979 and October 21, 1985 cannot become final as they pertain to
a contract for a contingent fee which is always subject to the supervision of the Court with regard to its reasonableness as unequivocally
provided in Section 13 of the Canons of Professional Ethics which reads:
13. Contingent Fees.—

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. (Emphasis supplied).
There is no dispute in the instant case that the attorney's fees claimed by the respondent lawyer are in the nature of a contingent fee. There
is nothing irregular about the execution of a written contract for professional services even after the termination of a case as long as it is
based on a previous agreement on contingent fees by the parties concerned and as long as the said contract does not contain stipulations
which are contrary to law, good morals, good customs, public policy or public order.
Although the Contract for Professional Services dated August 30, 1979 was apparently voluntarily signed by the late Aurelio Licudan for
himself and on behalf of his daughter, petitioner Cristina Licudan-Campos and by the petitioner Wilfredo Licudan who both manifested in
open court that they gave their free and willing consent to the said contract we cannot allow the said contract to stand as the law between
the parties involved considering that the rule that in the presence of a contract for professional services duly executed by the parties thereto,
the same becomes the law between the said parties is not absolute but admits an exception—that the stipulations therein are not contrary to
law, good morals, good customs, public policy or public order (see Philippine American Life Insurance Company v. Pineda, 175 SCRA 416
[1989]; Syjuco v. Court of Appeals, 172 SCRA 111 [1989]).
Under Canon 20 of the Code of Professional Responsibility, a lawyer shall charge only fair and reasonable fees.1âwphi1In determining whether
or not the lawyer fees are fair and reasonable, Rule 20-01 of the same Code enumerates the factors to be considered in resolving the said
issue. They are as follows:

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 proferred 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.
A similar provision is contained under Section 24, Rule 138 of the Revised Rules of Court which partly states that:

Sec. 24. Compensation of attorneys; 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. . . . A written contract for services shall control the amount to be paid therefor unless
found by the court to be unconscionable or unreasonable.

All that the respondent lawyer handled for his deceased sister and brother-in-law was a simple case of partition which necessitated no special
skill nor any unusual effort in its preparation. The subsequent case for redemption was admittedly but an offshot of the partition case.
Considering the close blood and affinal relationship between the respondent lawyer and his clients, there is no doubt that Atty. Domalanta
took advantage of the situation to promote his own personal interests instead of protecting the legal interests of his clients. A careful perusal
of the provisions of the contract for professional services in question readily shows that what the petitioners won was a pyrrhic victory on
account of the fact that despite the successful turnout of the partition case, they are now practically left with nothing of the whole subject lot
won in the litigation. This is because aside from the 121.5 square meters awarded to Atty. Domalanta as attorney's fees, the said contract for
professional services provides that the remaining portion shall pertain to the respondent lawyer's son by way of usufruct for ten (10) years.
There should never be an instance where a lawyer gets as attorney's fees the entire property involved in the litigation. It is unconscionable
for the victor in litigation to lose everything he won to the fees of his own lawyer.
The respondent lawyer's argument that it is not he but his son Teodoro M. Domalanta, Jr. who is claiming the usufructuary right over the
remaining portion of the subject lot is inaccurate. The records show that the matter of usufruct is tied up with this case since the basis for the
said usufructuary right is the contract for professional services the reasonableness of which is being questioned in this petition. We find the
ten-year usufruct over the subject lot part and parcel of the attorney's fees being claimed by the respondent lawyer.
In resolving the issue of reasonableness of the attorney's fees, we uphold the time-honoured legal maxim that a lawyer shall at all times
uphold the integrity and dignity of the legal profession so that his basic ideal becomes one of rendering service and securing justice, not
money-making. For the worst scenario that can ever happen to a client is to lose the litigated property to his lawyer in whom an trust and
confidence were bestowed at the very inception of the legal controversy. We find the Contract for Professional Services dated August 30,
1979, unconscionable and unreasonable. The amount of P20,000.00 as attorney's fees, in lieu of the 121.5 square meters awarded to the
respondent lawyer and the ten-year usufructuary right over the remaining portion of 150 square meters by the respondent lawyer's son, is, in
the opinion of this Court, commensurate to the services rendered by Atty. Domalanta.
WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The Court of Appeals' decision of September 12, 1989 is
hereby REVERSED and SET ASIDE. Atty. Domalanta is awarded reasonable attorney's fees in the amount of P20,000.00.
SO ORDERED.
G.R. No. 86100-03 January 23, 1990
METROPOLITAN BANK AND TRUST COMPANY, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and ARTURO ALAFRIZ and ASSOCIATES, respondents.
Bautista, Picazo, Buyco, Tan & Fider for petitioner.
Arturo A. Alafriz & Associates for and in their own behalf.

REGALADO, J.:

This petition for review on certiorari impugns the decision of the Court of Appeals in CA-G.R. Nos. 08265-08268 1 affirming the order of Branch 168, Regional Trial Court, National Capital

Judicial Region, in Civil Cases Nos. 19123-28, 19136 and 19144, fixing attorney's fees and directing herein petitioner Metropolitan Bank and Trust Company (Metrobank, for brevity), as defendant in s aid civil cases, to pay its attorneys, herein private respondent Arturo Alafriz and Associates, movant therein, the amount of P936,000.00 as attorney's fees on a

quantum meruit basis.

The records show that from March, 1974 to September, 1983, private respondent handled the above-mentioned civil cases before the then
Court of First Instance of Pasig (Branches I, II, VI, X, XIII, XIX, XX AND XXIV) in behalf of petitioner. 2 The civil cases were all for the declaration of nullity of certain deeds of sale, with damages.

The antecedental facts 3 which spawned the filing of said actions are undisputed and are hereinunder set forth as found by the trial court and adopted substantially in the decision of respondent court. A certain Celedonio Javier bought seven (7) parcels of land owned by Eustaquio Alejandro, et al., with a total area of about ten

(10) hectares. These properties were thereafter mortgaged by Javier with the petitioner to secure a loan obligation of one Felix Angelo Bautista and/or International Hotel Corporation. The obligors having defaulted, petitioner foreclosed the mortgages after which certificates of sale were issued by the provincial sheriff in its favor as purchaser thereof Subsequently,

Alejandro, alleging deceit, fraud and misrepresentation committed against him by Javier in the sale of the parcels of land, brought suits against Javier et al., and included petitioner as defendant therein.

It was during the pendency of these suits that these parcels of land were sold by petitioner to its sister corporation, Service Leasing
Corporation on March 23, 1983 for the purported price of P600,000.00. On the same day, the properties were resold by the latter to Herby
Commercial and Construction Corporation for the purported price of P2,500,000.00. Three months later, or on June 7, 1983, Herby mortgaged
the same properties with Banco de Oro for P9,200,000.00. The lower court found that private respondent, did not have knowledge of these
transfers and transactions.
As a consequence of the transfer of said parcels of land to Service Leasing Corporation, petitioner filed an urgent motion for substitution of
party on July 28, 1983. Private respondent, on its part, filed on August 16, 1983 a verified motion to enter in the records of the aforesaid civil
cases its charging lien, pursuant to Section 37, Rule 138 of the Rules of Court, equivalent to twenty-five percent (25%) of the actual and
current market values of the litigated properties as its attorney's fees. Despite due notice, petitioner failed to appear and oppose said motion,
as a result of which the lower court granted the same and ordered the, Register of Deeds of Rizal to annotate the attorney's liens on the
certificates of title of the parcels of land.
Meanwhile, the plaintiffs Alejandro, et al. in the aforesaid civil cases, which had been consolidated and were pending before the Regional
Trial Court of Pasig, filed a motion to dismiss their complaints therein, which motion the lower court granted with prejudice in its order dated
September 5, 1983. On December 29, 1983, the same court ordered the Register of Deeds to annotate the attorney's liens of private
respondent on the derivative titles which cancelled Transfer Certificates of Title Nos. 453093 to 453099 of the original seven (7) parcels of
land hereinbefore adverted to.

On May 28,1984, private respondent filed a motion to fix its attorney's fees, based on quantum meruit, which motion precipitated an exchange
of arguments between the parties. On May 30, 1984, petitioner manifested that it had fully paid private respondent; the latter, in turn, countered
that the amount of P50,000.00 given by petitioner could not be considered as full payment but merely a cash advance, including the amount
of P14,000.00 paid to it on December 15, 1980. It further appears that private respondent attempted to arrange a compromise with petitioner
in order to avoid suit, offering a compromise amount of P600,000.00 but the negotiations were unsuccessful.
Finally, on October 15,1984, the court a quo issued the order assailed on appeal before respondent court, granting payment of attorney's
fees to private respondent, under the following dispositive portion:
PREMISES CONSIDERED, the motion is hereby granted and the Metropolitan Bank and Trust Company (METROBANK) and Herby
Commercial and Construction Corporation 4 are hereby ordered to pay the movant Arturo Alafriz and Associates the amount of P936,000.00 as its proper, just and reasonable attorney's fees in these cases. 5

On appeal, respondent court affirmed the order of the trial court in its decision promulgated on February 11, 1988. A motion for
reconsideration, dated March 3, 1988, was filed by petitioner but the same was denied in a resolution promulgated on November 19, 1988,
hence the present recourse.
The issues raised and submitted for determination in the present petition may be formulated thus: (1) whether or not private respondent is
entitled to the enforcement of its charging lien for payment of its attorney's fees; (2) whether or not a separate civil suit is necessary for the
enforcement of such lien and (3) whether or not private respondent is entitled to twenty-five (25%) of the actual and current market values of
the litigated properties on a quantum meruit basis.
On the first issue, petitioner avers that private respondent has no enforceable attorney's charging lien in the civil cases before the court below
because the dismissal of the complaints therein were not, in the words of Section 37, Rule 138, judgments for the payment of money or
executions issued in pursuance of such judgments. 6

We agree with petitioner.

On the matter of attorney's liens Section 37, Rule 138 provides:
. . . He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such
judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of
such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written
notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and
executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.
Consequent to such provision, a charging lien, to be enforceable as security for the payment of attorney's fees, requires as a condition sine
qua non a judgment for money and execution in pursuance of such judgment secured in the main action by the attorney in favor of his client.
A lawyer may enforce his right to fees by filing the necessary petition as an incident in the main action in which his services were rendered
when something is due his client in the action from which the fee is to be paid. 7

In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs "in view of the frill satisfaction of their claims." 8 The

dismissal order neither provided for any money judgment nor made any monetary award to any litigant, much less in favor of petitioner who was a defendant therein. This being so, private respondent's supposed charging lien is, under our rule, without any legal basis. It is flawed by the fact that there is nothing to generate it and to which it can attach in the same

manner as an ordinary lien arises and attaches to real or personal property.

In point is Morente vs. Firmalino, 9 cited by petitioner in support of its position. In that case, movant-appellant attorney sought the payment of his fees from his client who was the defendant in a complaint for injunction which w as dismissed by the trial court after the approval of an agreement entered into by the

litigants. This Court held:

. . . The defendant having suffered no actual damage by virtue of the issuance of a preliminary injunction, it follows that no sum can be
awarded the defendant for damages. It becomes apparent, too, that no amount having been awarded the defendant, herein appellant's lien
could not be enforced. The appellant, could, by appropriate action, collect his fees as attorney.
Private respondent would nevertheless insist that the lien attaches to the "proceeds of a judgment of whatever nature," 10relying on the case of
Bacolod-
Murcia Milling Co. Inc. vs. Henares 11 and some American cases holding that the lien attaches to the judgment recovered by an attorney and the proceeds in whatever form they may be. 12

The contention is without merit just as its reliance is misplaced. It is true that there are some American cases holding that the lien attaches
even to properties in litigation. However, the statutory rules on which they are based and the factual situations involved therein are neither
explained nor may it be said that they are of continuing validity as to be applicable in this jurisdiction. It cannot be gainsaid that legal concepts
of foreign origin undergo a number of variegations or nuances upon adoption by other jurisdictions, especially those with variant legal systems.
In fact, the same source from which private respondent culled the American cases it cited expressly declares that "in the absence of a statute
or of a special agreement providing otherwise, the general rule is that an attorney has no lien on the land of his client, notwithstanding such
attorney has, with respect to the land in question, successfully prosecuted a suit to establish the title of his client thereto, recovered title or
possession in a suit prosecuted by such client, or defended successfully such client's right and title against an unjust claim or an unwarranted
attack," 13 as is the situation in the case at bar. This is an inescapable recognition that a contrary rule obtains in other jurisdictions thereby resulting in doctrinal rulings of converse or modulated import.

To repeat, since in our jurisdiction the applicable rule provides that a charging lien attaches only to judgments for money and executions in
pursuance of such judgment, then it must be taken in haec verba. The language of the law is clear and unequivocal and, therefore, it must
be taken to mean exactly what it says, barring any necessity for elaborate interpretation. 14

Notably, the interpretation, literal as it may appear to be, is not without support in Philippine case law despite the dearth of cases on all fours
with the present case. In Caina et al. vs. Victoriano, et al., Ampil 15 the Court had the occasion to rule that "the lien of respondent is not of a nature which attaches to the property in litigati on but is at most a personal claim enforceable by a writ of execution." In
vs. Juliano-Agrava, et al., 16 the Court once again declared that a charging lien "presupposes that the attorney has secured a favorable money judgment for his client . . ." Further, in
Director of Lands vs. Ababa, et al., 17 we held that "(a) charging lien under Section

37, Rule 138 of the Revised Rules of Court is limited only to money judgments and not to judgments for the annulment of a contract or for delivery of real property as in the instant case."

Even in the Bacolod-Murcia Milling case, which we previously noted as cited by private respondent, there was an express declaration that "in
this jurisdiction, the lien does not attach to the property in litigation."
Indeed, an attorney may acquire a lien for his compensation upon money due his client from the adverse party in any action or proceeding in
which the attorney is employed, but such lien does not extend to land which is the subject matter of the litigation. 18 More specifically, an attorney merely defeating recovery against his

client as a defendant is not entitled to a lien on the property involved in litigation for fees and the court has no power to fix the fee of an attorney defending the client's title to property already in the client's

possession. 19

While a client cannot defeat an attorney's right to his charging lien by dismissing the case, terminating the services of his counsel, waiving
his cause or interest in favor of the adverse party or compromising his action, 20 this rule cannot find application here as the termination of the cases below was not at the instance of private respondent's client but of the opposing party.

The resolution of the second issue is accordingly subsumed in the preceding discussion which amply demonstrates that private respondent
is not entitled to the enforcement of its charging lien.
Nonetheless, it bears mention at this juncture that an enforceable charging lien, duly recorded, is within the jurisdiction of the court trying the
main case and this jurisdiction subsists until the lien is settled. 21 There is certainly no valid reason why the trial court cannot pass upon a petition to determine attorney's fees if the rule against multiplicity of suits is to be activated. 22 These decisional rules, however,

apply only where the charging lien is valid and enforceable under the rules.

On the last issue, the Court refrains from resolving the same so as not to preempt or interfere with the authority and adjudicative facility of
the proper court to hear and decide the controversy in a proper proceeding which may be brought by private respondent.
A petition for recovery of attorney's fees, either as a separate civil suit or as an incident in the main action, has to be prosecuted and the
allegations therein established as any other money claim. The persons who are entitled to or who must pay attorney's fees have the right to
be heard upon the question of their propriety or amount. 23 Hence, the obvious necessity of a hearing is beyond cavil.

Besides, in fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be
considered are generally (1) the importance of the subject matter in controversy, (2) the extent of the services rendered, and (3) the
professional standing of the lawyer. 24 These are aside from the several other considerations laid down by this Court in a number of decisions as pointed out by respondent court. 25 A determination of all these factors would indispensably require nothing less than a full-blown trial where private respondent

can adduce evidence to establish its right to lawful attorney's fees and for petitioner to oppose or refute the same.

Nothing in this decision should, however, be misconstrued as imposing an unnecessary burden on private respondent in collecting the fees
to which it may rightfully be entitled. But, as in the exercise of any other right conferred by law, the proper legal remedy should be availed of
and the procedural rules duly observed to forestall and obviate the possibility of abuse or prejudice, or what may be misunderstood to be
such, often to the undeserved discredit of the legal profession.
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 government interference, is impressed with public
interest, for which it is subject to State regulation. 26
ACCORDINGLY, the instant petition for review is hereby GRANTED and the decision of respondent Court of Appeals of February 11, 1988
affirming the order of the trial court is hereby REVERSED and SET ASIDE, without prejudice to such appropriate proceedings as may be
brought by private respondent to establish its right to attorney's fees and the amount thereof.
SO ORDERED.

GATCHALIAN PROMOTIONS TALENTS POOL, INC., complainant, vs. ATTY. PRIMO R. NALDOZA,
respondent.
DECISION
PER CURIAM:

On April 19, 1993, Gatchalian Promotions Talents Pool, Inc., filed before this Court a Petition for disbarment against Attorney
Primo R. Naldoza. The precursor of this Petition was the action of respondent, as counsel for complainant, appealing a Decision of the
Philippine Overseas Employment Agency (POEA). In relation to the appeal, complainant asserts that respondent should be disbarred
for the following acts:
1. Appealing a decision, knowing that the same was already final and executory
2. Deceitfully obtaining two thousand, five hundred and fifty-five US dollars (US$2,555) from complainant, allegedly for cash bond in the appealed
case
3. Issuing a spurious receipt to conceal his illegal act.[1]

In his Answer,[2] respondent denies that he persuaded complainant to file an appeal. On the contrary, he asserts that it was the complainant who insisted on appealing the case in order to delay the execution of the POEA Decision.[3]
He also controverts complainants allegation that he asked for a cash bond and that he issued the fake receipt.[4]

In a Resolution dated May 17, 1993, this Court referred the case to the Integrated Bar of the Philippines (IBP) for investigation,
report and recommendation.
The pertinent portions of the complaint were summarized by the IBP in this wise:
Under its petition, complainant alleges that the respondent was given the task to defend the interest of the complainant corporation in POEA Case No. 8888-06-468, entitled Olano,
et al. versus Gatchalian Promotions Talents Pool, Inc., et al.; that when the said case was resolved in favor of the complainant therein on October 5, 1992, the respondent Atty.
Naldoza knowing fully well that the said decision had already become final and unappealable[,] through malpractice in [an] apparent desire to collect or to bleed his client of several
thousand pesos of attorneys fees, convinced the complainant to appeal the case before the Supreme Court. Thus, on December 14, 1992, the respondent filed with the Supreme Court
a Petition for Review which was docketed as G.R. No. 107984 and that two (2) days thereafter misrepresented to the complainant corporation that the complainant ha[d] to pay,
which it did, [a] Cash Bond in UNITED STATES DOLLAR amounting to TWO THOUSAND FIVE HUNDRED FIFTY FIVE (U.S. $2,555.00) to the Supreme Court in order that
the said appealed case could be heard or acted upon by the Supreme Court. The said amount was given to the respondent.

x x x [S]ubsequently the complainant corporation came to know that the fees to be paid to the Supreme Court consist[ed] only of normal filing and docket fees for such kind of
appeal but in order to cover up respondents misrepresentation, Atty. Naldoza presented complainant a fake xerox copy of an alleged Supreme court receipt representing payment of
U.S. $2,555.00.

Subsequent verification from the Supreme Court made by the complainant corporation revealed that the said receipt issued by the treasurers office of the Supreme Court x x x [was]
spurious, meaning a fake receipt.The said verification revealed that what was only paid by the respondent to the Supreme court was the amount of P622.00 as shown by the enumerated
legal fees of the Supreme Court Docket-Receiving Section showing the handwritten name of the respondent for purpose of showing that the said computation was requested by and
addressed to the respondent.[5] (citations omitted)

Meanwhile, a criminal case[6] for estafa based on the same facts was filed against herein respondent before the Regional Trial Court (RTC) of Makati City, Branch 141. Although acquitted on reasonable doubt, he was
declared civilly liable in the amount of US$ 2,555.

Thereafter, respondent filed before the IBP a Manifestation with Motion to Dismiss on July 22, 1996, on the ground that he had
already been acquitted in the criminal case for estafa. Complainant opposed the Motion.[7]
On February 16, 1998, this Court received the IBP Board of Governors Resolution, which approved the investigating commissioners
report[8] and recommendation that respondent be suspended from the practice of law for one (1) year. In his Report, Investigating Commissioner Plaridel Jose justified his recommendation in this manner:
x x x [R]espondent fails to rebut the position of the complainant that the signature [on the receipt for the amount of $2,555.00] was his. Hence, respondent anchors his position on a
mere denial that it is not his signature. Likewise, the respondent denies the check voucher dated December 15, 1992, and the encircled signature of the respondent, which x x x
according to him is falsified and irregular. No evidence, however, was presented by the respondent that his signature therein was falsified and irregular. [As to the altered Supreme
Court Official Receipt, the respondent denied] that he ha[d] anything to do with it because it was the complainant who signed the Petition for Review and tried to explain that his
name appear[ed] to be the payee because he [was] the counsel of record of the petitioner. But while it is true that the affiant in the said Petition for Review [was] Mr. Rogelio G.
Gatchalian, president of the complainant company, the respondent does not deny that he signed the said petition as counsel of the petitioner corporation and that he was actually the
one who prepared the same and the notary public before whom the affiant subscribed and [swore] as the one who caused the preparation of the said petition.

The legal form (Exh. G) of the legal fees for the Petition for Review re G.R. 107984 was denied by the respondent because according to him he was never given a chance to cross-
examine the person who issued the [certification] x x x. However, respondent does not deny that he is the person referred to by the handwritten name P.R. Naldoza who paid the
legal fees of P622.00.

In addition to the said respondents Formal Offer of Evidence, he submitted to this Commission as his most important piece of evidence the Decision of acquittal in Criminal Case
No. 93-8748 entitled People of the Philippines versus Primo R. Naldoza, the copy of which Decision is appended to his Manifestation with Motion to Dismiss dated July 22, 1996
praying for the dismissal of the present administrative case in view of his being exonerated in the said criminal case based on the same facts and evidence. [9] (citations omitted)

Commissioner Jose brushed aside respondents contention that his acquittal in the companion criminal case should result in the
dismissal of this administrative complaint. The commissioner emphasized that the criminal case for estafa [10] was completely different from the proceedings
before him; acquittal in the former did not exonerate respondent in the latter.[11] He further noted that the RTC Decision itself hinted at the administrative liability of respondent, since it found him civilly liable to herein complainant for $2,555.[12]
 We agree with the IBP Board of Governors that respondent should be sanctioned. However, the recommended penalty is not
commensurate to the gravity of the wrong perpetrated.
At the outset, the Court agrees with the IBP that respondents Motion to Dismiss should be denied. In that Motion, he maintains that
he should be cleared of administrative liability, because he has been acquitted of estafa which involved the same facts. He argues that
the issue involved there was the very same issue litigated in this case,[13] and that his exoneration was a result a full blown trial on the merits of this case.[14]
In a similar case, we have said:
x x x The acquittal of respondent Ramos [of] the criminal charge is not a bar to these [administrative] proceedings. The standards of legal profession are not satisfied by conduct
which merely enables one to escape the penalties of xxx criminal law. Moreover, this Court in disbarment proceedings is acting in an entirely different capacity from that which
courts assume in trying criminal cases.[15]

Administrative cases against lawyers belong to a class of their own.[16] They are distinct from and they may proceed independently of civil and criminal cases.
The burden of proof for these types of cases differ. In a criminal case, proof beyond reasonable doubt is necessary;[17] in an administrative case
for disbarment or suspension, clearly preponderant evidence is all that is required.[18] Thus, a criminal prosecution will not constitute a prejudicial question even if the same facts and circumstances are attendant in the administrative proceedings.[19]

It should be emphasized that a finding of guilt in the criminal case will not necessarily result in a finding of liability in the
administrative case.[20] Conversely, respondents acquittal does not necessarily exculpate him administratively. In the same vein, the trial courts finding of civil liability against the respondent will not inexorably lead to a similar
finding in the administrative action before this Court. Neither will a favorable disposition in the civil action absolve the administrative liability of the lawyer.[21] The basic premise is that criminal and civil cases are altogether different from

administrative matters, such that the disposition in the first two will not inevitably govern the third and vice versa. For this reason, it would be well to remember the Courts ruling in
In re Almacen,[22] which we quote:
x x x Disciplinary proceedings against lawyers are sui generis. Neither purely civil nor purely criminal, they do not involve a trial of an action or a suit, but are rather investigations
by the Court into the conduct of one of its officers. Not being intended to inflict punishment, [they are] in no sense a criminal prosecution. Accordingly, there is neither a plaintiff
nor a prosecutor therein. [They] may be initiated by the Court motu proprio. Public interest is [their] primary objective, and the real question for determination is whether or not the
attorney is still a fit person to be allowed the privileges as such. Hence, in the exercise of its disciplinary powers, the Court merely calls upon a member of the Bar to account for his
actuations as an officer of the Court with the end in view of preserving the purity of the legal profession and the proper and honest administration of justice by purging the profession
of members who by their misconduct have prove[n] themselves no longer worthy to be entrusted with the duties and responsibilities pertaining to the office of an attorney. x x x
(emphasis ours)

We shall now discuss seriatim the specific charges against respondent.

First. Complainant alleges that respondent appealed the POEA Decision, despite knowing that it had already become final and
executory. The IBP investigating commissioner had no explicit finding on this point. Rogelio G. Gatchalian testified that during the
pendency of the appeal, his company had received from the POEA a Writ of Execution which led him to the conlcusion that they [had]
lost the case before the Supreme Court.[23] This, however, does not substantiate the charge.
 Complainant has failed to present proof regarding the status of the appeal. Neither has there been any showing that the appeal was
dismissed on the ground that the POEA Decision had become final and executory. Worse, there has been no evidence that respondent
knew that the case was unappealable. Indeed, the records of this Court shows that the Petition for Review was dismissed for petitioners
failure to submit an Affidavit of Service and a legible duplicate of the assailed Order. Clearly, this charge has no leg to stand on.
Second. Be that as it may, we agree with the IBP that respondent obtained from complainant the amount of $2,555, on the false
representation that it was needed for the appeal before this Court. According to Gatchalian,[24] respondent explained that the amount would cover all the expenses to be
incurred in the Petition for Review with the Supreme Court and which amount also will answer for the payment as sort of deposit so that if our case is lost, the money will be given or paid to the complainant in that case so that our deposit with the
bank would not be garnished.[25] Corroborating Gatchalians testimony, Edna Deles declared that respondent received the amount on the representation that it would be paid to the Supreme Court in connection with the Olano case.[26]

The defense of denial proferred by respondent is not convincing. Quite the contrary, when he paid P10,000 and issued a check to
complainant as his moral obligation, he indirectly admitted the charge.Normally, this is not the actuation of one who is falsely accused
of appropriating the money of another. This is an admission of misconduct.[27] In his Answer submitted to this Court, he declared:
(8). That I have no knowledge, information or belief as to truthfulness of the allegation of the Petitioner, on his allegation no. 8 and no. 9, the truth being that in all the cases and
assignments made by the Petitioner to me, I was made to report to him personally and to his Board of Directors the progress of the cases both orally and in writing. I even [went] to
the extent of paying him P10,000.00 as my moral obligation only to find after accounting that he still owes me P180,000.00 as attorneys fee [to] which I am entitled under rule 130
of the rules of court sec. 24, and under sec. 37 of the above-cited rules, I have the right to apply the funds received from Gatchalian in satisfaction of my claim for Professional
Services, otherwise known as Attorneys Lien, as shown in my Service Billings and Statement of Accounts.[28] (emphasis ours)

Contrary to respondents claim, the amount of $2,555 was not a part of his attorneys lien. He demanded the money from his client
on the pretext that it was needed for the Petition before the Supreme Court, but he actually converted it to his personal gain. This act
clearly constitutes malpractice.[29] The claim that respondent merely applied his lien over the funds of his client is just an afterthought, the accounting being madeafter the fact. It is settled that the
conversion by a lawyer of funds entrusted to him is a gross violation of professional ethics and a betrayal of public confidence in the
legal profession.[30]
Third. In an effort to conceal his misappropriation of the money entrusted to him, respondent gave complainant a photocopy of a
receipt purportedly showing that the Supreme Court had received the sum of $2,555 from him. Again, the testimonies of Gatchalian[31]
and Deles[32] were equally clear on this point. After respondent had presented the false receipt, Gatchalian learned that no such payment was made. Ms Araceli Bayuga of the Supreme Court Cash Collection and Disbursement Division issued a
certification that respondent had paid the amount of P622 only, not $2,555. In fact, the records of the said case[33] contain no indication at all the Court has required the payment of the latter sum, or that it has been paid at all.

Juxtaposed to the complainants evidence, the bare denials of respondent cannot overturn the IBPs findings that he has indeed
presented a false receipt to conceal his misappropriation of his clients money. We agree with the IBP that it is unbelievable that the
complainant in the person of Rogelio Gatchalian, being a layman as he is without any knowledge in the procedure of filing a case before
the Supreme court, could spuriously weave such documents which are denied by the respondent.[34]
 In view of the foregoing, respondent has clearly failed the standards of his noble profession. As we have stated in Resurrecion v.
Sayson:[35]
[L]awyers must at all times conduct themselves, especially in their dealings with their clients and the public at large, with honesty and integrity in a manner beyond reproach.

Clearly reprehensible are the established facts that he demanded money from his client for a bogus reason, misappropriated the
same, and then issued a fake receipt to hide his deed. In Dumadag v. Lumaya,[36]the Court ordered the indefinite suspension of a lawyer for not remitting to his client the amount he
had received pursuant to an execution,
viz.:
[E]ven as respondent consistently denied liability to Dumadag, his former client, the records abundantly point to his receipt of and failure to deliver the amount of P4,344.00 to his
client, the herein complainant, a clear breach of the canons of professional responsibility.

In Obia v. Catimbang,[37] we meted out the same penalty to a lawyer who had misappropriated the money entrusted to him:
The acts committed by respondent definitely constitute malpractice and gross misconduct in his office as attorney. These acts are noted with disapproval by the Court; they are in
violation of his duty, as a lawyer, to uphold the integrity and dignity of the legal profession and to engage in no conduct that adversely reflects on his fitness to practice law. Such
misconduct discredits the legal profession."

Respondents acts are more despicable. Not only did he misappropriate the money entrusted to him; he also faked a reason to cajole
his client to part with his money. Worse, he had the gall to falsify an official receipt of this Court to cover up his misdeeds. Clearly, he
does not deserve to continue being a member of the bar.
WHEREFORE, Primo R. Naldoza is hereby DISBARRED. The Office of the Clerk of Court is directed to strike out his name from
the Roll of Attorneys and to inform all courts of this Decision.
SO ORDERED.

G.R. No. 90983 September 27, 1991

LAW FIRM OF RAYMUNDO A. ARMOVIT, petitioner

vs.
COURT OF APPEALS, JUDGE GENARO C. GINES, Presiding Judge of Branch XXVI, Regional Trial Court, First Judicial Region, San
Fernando, La Union, and BENGSON COMMERCIAL BUILDING, INC.,respondents.

Raymundo A. Armovit and Rafael R. Armovit for petitioner.

Pacifico C. Yadao for private respondent.
SARMIENTO, J.:
Before the Court is Atty. Raymundo Armovit's claim for attorney's fees against the private respondent.
It appears that Atty. Armovit was engaged as counsel for the private respondent in a complaint to have an extrajudicial foreclosure of certain
properties by the Government Service Insurance System declared null and void; that the parties allegedly agreed that the private respondent
shall pay P15,000.00 as initial compensation and twenty percent in contingent fees; that after trial, the defunct Court of First Instance rendered
judgment annulling foreclosure and ordering the Government Service Insurance System to restructure the private respondent's loan; that
thereafter, the System appealed; the on appeal, the Court of Appeals affirmed the decision of lower court; and that the Appellate Court's
judgment has since attained finality.
It also appears that when Atty. Armovit sought execution with the court a quo, he was informed by Romualdo Bengson president of the
respondent corporation, that the firm has retained the services of Atty. Pacifico Yadao. He was also informed that the company would pay
him the agreed compensation and that Atty. Yadao's fees were covered by a separate agreement. The private respondent, however, later
ignored his billings and over the phone, directed him allegedly not to take part in the execution proceedings. Forthwith, he sought the entry
of an attorney's lien in the records of the case. The lower court allegedly refused to make the entry and on the contrary issued an order
ordering the Philippine National Bank to "release to the custody of Mr. Romualdo F. Bengzon and/or Atty Pacifico Yadao" 1 the sum of P2,760,000.00 (ordered by the Court

of Appeals as rentals payable by the Government Service Insurance System).

Atty. Armovit then moved, apparently for the hearing of hi motion to recognize attorney's lien, and thereafter, the trial court. issued an order
in the tenor as follows:
When this case was called for hearing on the petition to record attorney's charging lien, Attys. Armovit and Aglipay appeared for the petitioners.
Atty. Armovit informed the Court that they are withdrawing the petition considering that they are in the process of amicably settling their
differences with the plaintiff, which manifestation was confirmed by Atty. Yadao as well as the plaintiffs, Romualdo Bengson and Brenda
Bengson, who are present today.

In view of this development, the petition to record attorney charging lien, the same being in order and not contrary to law, moral and public
policy, as prayed for by Attys. Armovit and Aglipay, it hereby withdrawn. The parties, therefore are hereby directed to co ply faithfully with
their respective obligations.
SO ORDERED. 2

However, upon the turnover of the money to the private respondent, Mrs. Brenda Bengson (wife of Romualdo Bengzon delivered to Atty.
Armovit the sum of P300,000.00 only. Armovit protested and demanded the amount of P552,000.0 twenty percent of P2,760,000.00), for
which Mrs. Bengzon made assurances that he will be paid the balance.
On November 4, 1988, however, Atty. Armovit received a order emanating from the trial court in the tenor as follows:
During the hearing on the petition to record attorney's charge lien on October 11, 1988, Attys. Armovit and Aglipay withdrew their petition to
record attorney's charging lien, which was duly approve petition to recordby the Court, after which the Court directed the parties to comp
faithfully with their respective obligations.

In compliance with the Order of this Court, the plaintiff submitted a pleading denominated as compliance alleging that petition (Atty. Armovit)
has already received from the plaintiff the sum P300,000.00, Philippine Currency, as and by way of attorney's fees With the receipt by the
petitioner from the plaintiff of this amount, the latter has faithfully complied with its obligation.
WHEREFORE, the Order of this Court dated October 11, 1988 approving the withdrawal of the petition to record attorney's charging lien, on
motion of the petitioner, is now final.
SO ORDERED. 3

Reconsideration having been denied, Atty. Armovit went the Court of Appeals on a petition for certiorari and prohibition.
On August 25, 1989, the Court of Appeals 4 rendered judgment dismissing the petition. Reconsideration having been likewise denied by the Appellate Court, Atty. Armovit instituted the instant appeal.

Shortly thereafter, we required the private respondent comment.

The private respondent did not materially traverse Atty. Armorvit's chronicle of events but added: that the private respondent hired the
petitioner after the Government Service Insurance System had answered and that it was Atty. Benjam Bernardino who prepared the complaint;
that for his appearances, Atty. Armovit was paid a total of P108,000.00, not to mention "beach resort accommodations"; 5 that Atty. Armovit did not inform the private respondent

that the court had rendered judgment which they would have appealed; that they lost an appeal on account of Atty. Armovit's indiscretion; that the forthwith engaged the services of another lawyer, Atty. Yadao; and that it was the latter who prepared the brief in the Court Appeals (on GSIS's appeal).

The private respondent also alleged that it opposed Atty. Armovit's effort to record his attorney's lien on grounds of allege nullity of the retainer
agreement, Atty. Armovit's negligence and because of excessive fees demanded.
The private respondent also insisted that the retainer agreement was signed by only one of seven directors, and it could no bind the
corporation. Atty. Armovit, in any event, had also been allegedly more than sufficiently compensated.
The private respondent alleged that Atty. Armovit had bee paid P300,000.00 — an amount approved by the court, and an amount he accepted
and for which he is allegedly estoppel from claiming a higher amount. The order of the court has the effect of res judicata, the private
respondent claimed, as well as a compromise agreement which is immediately executory.

The disposition of the Court of Appeals was that since the receipt evidencing payment to Atty. Armovit of the sum P300,000.00 "was without
any qualification as 'advance' 'partial' or 'incomplete'," 6 the intention of the parties was that was full payment. The Appellate Court also noted Atty. Armorvit's withdrawal of his motion to record attorney's lien and figured that Atty. Armovit was satisfied with the payment P300,000,00.

The only issue is whether or not Atty. Armovit is entitled to the sum of P252,000.00 more, in addition to the sum P300,000.00 already paid
him by the private respondent.There is no question that the parties had agreed on a compensation as follows:
a) P15,000.00 by way of acceptance and study fee, payable within five (5) days from date;
b) 20% contingent fee computed on the value to be recovered b favorable judgment in the cases; and
c) the execution and signing of a final retainer agreement complete with all necessary details. 7

(While the parties' agreement speaks of "a final retain agreement" 8 to be executed later, it does not appear that the parties did enter into a "final" agreement thereafter.)

The private respondent's version however is that while it may be true that the agreed compensation was twenty percent of all recoveries, the
parties later agreed on a compromise sum approved allegedly by the trial court, per its Order of October 11, 1988.
The Court is inclined to believe that Atty. Armovit never agreed on the compromise sum of P300,000.00. It is true that he did agree to withdraw
his motion to annotate attorney's lien, but because the parties were "in the process of amicably settling their differences" 9 and not because Atty. Armovit had agreed to accept

a lower amount as full payment. There is nothing, on top of that, Atty. Armovit's manifestation that would suggest that he was accepting the sum of P300,00.00 as agreed final payment, other than the fact that an agreement was supposedly certain. We quote:

ATTY. ARMOVIT:
Your Honor, we would like to manifest in Court that we served notice to the counsel of the plaintiff, Bengson Commercial Building, a copy of
the petition to record attorney's charging lien, and together with the president of the corporation, Mr. Romualdo Bengson, and his wife, Mrs.
Brenda Bengson, we have discussed the problem and we all agreed upon is an earnest one at this time, this representation is withdrawing
his petition to record charging lien.
ATTY. YADAO:
No objection, Your Honor, because we have to agree with Atty. Armovit. I am in full accord with this. 10

There is nothing there that would indicate Atty. Armovit's willingness to accept, in fact, a lower figure in consideration of his withdrawal of his
request to enter attorney's lien. What the Court takes his statement to mean is that he was withdrawing his request on the certainty that the
private respondent would pay him the money, presumably, under more becoming circumstances.
The Court does not therefore see how the private respondent can hold Atty. Armovit to have been in estoppel.
The fact that Atty. Armovit did not, after all, accept the sum of P300,000.00 as final compensation is indeed indicated by the behavior of the
private respondent, through Mrs. Romualdo Bengson, when she assured Atty. Armovit that the balance was forthcoming. 11 According to Mrs. Bengson, she wished the rest

of the Bengsons to witness the final payment and when the occasion was present, wished for a postponement on account of "All Saints Day."12

The parties never therefore amended their original agreement, and what appears to the Court is a clear effort on the part of a client, with the
apparent approval of the trial court, to renege on a valid agreement with its lawyer.
The Court believes that the trial court, in accepting the private respondent's "compliance" as a final payment of Atty. Armovit's fees, was guilty
of a grave abuse of discretion. The private respondent had nothing with which to comply, and the parties, as manifested by Atty. Armovit,
were "in the process [merely] of amicably settling their differences." 13
It is apparent furthermore that the trial judge himself was out to deny Atty. Armovit the agreed compensation. In his order of October 4, 1988,
he commanded:
The PNB is hereby ordered and directed to release to the custody of Mr. Romualdo F. Bengson and /or Atty. Pacifico Yadao, counsel for the
plaintiff, the sum of Two Million Seven Hundred Sixty Thousand Pesos (P2,760,000.00), Philippine Currency for the satisfaction of the rentals
of the Bengson Building against the GSIS. 14

in spite of the fact that Atty. Armovit had remained the private respondent's counsel of record. It is fundamental that unless a lawyer has been
validly discharged, his authority to act for his client continues and should be recognized by the court. 15

The fact that the receipt evidencing payment by the private respondent of the amount of P300,000.00 "was without any qualification as
'advance' or 'partial' or 'incomplete'," 16 as the Court of Appeals noted and the Court of Appeals took to mean "full payment", will not weaken Atty. Armovit's demand for the balance. There is nothing in the receipt that will suggest that will suggest that it was full payment either, and the fact that Atty. Armovit

accepted it does not mean that he was satisfied that it was final payment. The fact of the matter is that the private respondent had assured him that the balance was forthcoming.

The private respondent can not justifiably downplay Atty. Armovit as negligent (for failing to appeal) or his demand for fees excessive (that
he had been paid enough). Atty. Armovit, after all, succeeded in obtaining a favorable decision for his client, an although his prayer for various
damages were denied, he secceeded in obtaining a substantial award (P1,900,00.00 in unpaid rentals) for his client. On appeal, the Court of
Appeals sustained his theory. It should be noted that the private respondent had in fact stood to lose substantial properties on foreclosure —
Atty. Armovit not only restored to the private respondent its foreclosured properties, he succeeded in having the private respondent's loans
restructed and the Government Service Insurance System pay rentals. No client can ask a better result from a lawyer.
Obviously, the private respondent's effort to downgrade Atty. Armovit's performance is a wild, if not cheap, shot of a client out to evade its
obligations to its lawyer. The fact that Atty. Armovit may have been paid substantially (in initial fees) while the case was dragging is no
justification for denying him the full amount under their agreement. It has been held that initial fees and fees paid in the progress of litigation
are independent of the contingent fees. 17

That the retainer agreement was never approved by the board of the corporation is also a poor excuse because the fact of the matter is that
the private respondent did deliver to Atty. Armovit the sum of P300,000.00 in partial payment, and the private respondent can not now deny
him the balance bay alleging lack of authority of the Bengson spouses.

Contingent fees are valid in this jurisdiction. 18 It is true that attorney's fees must at all times be reasonable;19however, we do not find Atty. Armovit's claim for "twenty percent of all recoveries" to be unreasonable. In the case of
Aro v. Nañawa, 20 decided in 1969, this Court

awarded the agreed fees amid the efforts of the client to deny him fees by terminating his services. In parallel vein, we are upholding Atty. Armovit's claim for P252,000.00 more — pursuant to the contingent fee agreement — amid the private respondent's own endeavours to evade its obligations.

Several times, we have come down hard on erring practitioners. We will not however be slow either, in coming to the rescue of aggrieved
brother-lawyers in protecting the integrity of the bar from unscrupulous litigants.
WHEREFORE, premises considered, the petition is GRANTED. The private respondent is ORDERED to pay the petitioner the sum of
P252,000.00. Costs against the private respondent.
IT IS SO ORDERED.
G.R. No. L-24163 April 28, 1969
REGINO B. ARO, petitioner,
vs.
THE HON. ARSENIO NAÑAWA, Presiding Judge of Branch IV, Court of First Instance of Laguna, LUIS MAGTIBAY, PABLO MAGTIBAY,
AURELLO MARTINEZ, GREGORIO LONTOK, MARIA MENDOZA, MAXIMO PORTO and ROSARlO ANDAYA, respondents.
Regino B. Aro in his own behalf as petitioner.
Enrique C. Villanueva for respondents.
BARREDO, J.:
Original petition: (1) for certiorari to annul the order of the Court of First Instance of Laguna, dated November 21, 1964, dismissing its Civil
Case No. SC-525 "without prejudice to the right of Atty. Regino B. Aro (petitioner herein) to file a separate action against both the plaintiffs
and defendants (private respondents herein) with respect to his alleged attorney's fees", as well as its order dated January 9, 1965, denying
petitioner's motion for reconsideration thereof for lack of merit and (2) for mandamus to compel respondent Judge to take cognizance of
petitioner's opposition and countermotion or petition dated November 3, 1964 and to resolve the same on the merits.

There appears to be no dispute as to the following facts alleged in the petition:

2. That the services of herein petitioner, as practising attorney, was engaged by respondents Luis Magtibay and Pablo Magtibay for the
prosecution of their claim, as heirs, in the estate of their deceased uncle Lucio Magtibay, consisting of properties which were in the possession
of the respondents Aurelia Martinez,1spouses Gregorio Lontok and Maria Mendoza and spouses Maximo Porto and Rosario Andaya.
3. That being without means to prosecute their claim against the persons concerned, respondents Luis Magtibay and Pablo Magtibay agreed
with herein petitioner to avail of his services and entrust the prosecution of their claim on a contingent basis as shown in the agreement, copy
of which is hereto attached as Annex 'A' and is made an integral part hereof.2

4. That by virtue of said agreement, herein petitioner took the necessary steps to gather the needed papers and documents for the filing of a
petition to litigate as pauper and a complaint in the Court of First Instance of Laguna, in which respondents Luis Magtibay and Pablo Magtibay
were the plaintiffs and the other respondents, excepting the respondent Judge, were the defendants, ....
5. That said petition to litigate as pauper filed by herein petitioner for respondents Luis Magtibay and Pablo Magtibay was granted by the
respondent Judge as per the order dated September 10, 1964, .....
6. That to plaintiffs' complaint in Civil Case No. SC-525, the defendants in said case interposed a motion to dismiss dated September 29,
1964....3
7. That to the said motion to dismiss herein petitioner, as attorney for the plaintiffs (now respondents Luis Magtibay and Pablo Magtibay) filed
an opposition dated October 5, 1964.....4
8. That after the hearing of the motion to dismiss filed by the defendants and the opposition thereto by the plaintiffs, which finally took place
on October 24, 1964, the respondent Judge issued its resolution or order dated October 24, 1964, denying the motion to dismiss, ....5

9. That on the very day of and after the hearing of the motion to dismiss, or on October 24, 1964, before receipt of a copy of the said order
(Annex 'G'), there was a conversation which took place between herein petitioner and the attorney of the defendants, Atty. Rustico de los
Reyes, Jr., in the civil case and one who was then acting as a sort of spokesman for the defendants (Ex-Mayor Cordova of Sta. Maria,
Laguna) for the amicable settlement of the case between the plaintiffs and the defendants to the effect that a certain property of the spouses
Lucio Magtibay (deceased) and respondent Aurelia Martinez, worth P3,000.00, would be given to the plaintiffs in full settlement of their claim,
as share in the properties left by their deceased uncle Lucio Magtibay, it having been agreed by herein petitioner and Atty. de los Reyes and
the spokesman of the defendants that for the purpose of said amicable settlement, the plaintiffs or one of them and herein petitioner would
go to Sta. Maria, Laguna, on October 23, 1964.
10. That having given notice to the plaintiffs (now respondents Luis Magtibay and Pablo Magtibay) at their given address in Calauag, Quezon
to come to Candelaria for the purpose of going to Sta. Maria, Laguna on October 23, 1964, petitioner had waited for said plaintiffs to go to
his office on or before said date for the engagement mentioned, but due to their (plaintiffs') failure to come to Candelaria, petitioner had to
send a telegram to Ex-Mayor Cordova notifying him of his (petitioner's) and plaintiffs' not being able to go to Sta. Maria because of the failure
of any of the plaintiffs to come to Candelria, ....

11. That it was only on October 28, 1964, when herein petitioner received a copy of the order dated October 24, 1964 (Annex "G") and to his
surprise he also received on the said day a second motion to dismiss dated October 26, 1964; together with Annex "A" of said motion, which
is entitled KASULATAN NG PAGHAHATIAN NA LABAS SA HUKUMAN AT PAGPAPALABI, dated October 23, 1964 at Sta. Cruz, Laguna
and signed by the plaintiffs and defendant Aurelia Martinez (the three being now respondents in this case), it having been made to appear in
said Annex "A" of the second motion to dismiss, among others, that the plaintiffs and defendant Aurelia Martinez had made an extrajudicial
partition of the properties of the deceased Lucio Magtibay and the said Aurelia Martinez adjudicating to the plaintiffs one-fourth (¼) share in
the properties of the spouses and three-fourth (3/4) share of the defendant Aurelia Martinez, but making it appear also that said plaintiffs
waived their share in favor of Aurelia Martinez, ..., thru which fraudulent waiver, herein petitioner was deprived of his contingent fees, agreed
upon, as evidenced by Annex "A" of this petition.6
xxx xxx xxx

14. That petitioner filed by registered mail, on November 4, 1964, his "OPPOSITION TO THE SECOND MOTION TO DISMISS AND
COUNTER-MOTION OR PETITION TO SET ASIDE DEED OF EXTRAJUDICIAL PARTITION AND WAIVER DATED OCTOBER 23, 1964
AND TO RECORD ATTORNEY'S LIEN", dated November 3, 1964, wherein he (petitioner) prayed, among others, invoking the provisions of
Section 5(d) and Section 6, Rule 135 of the Revised Rules of Court, for the protection of the rights of herein petitioner as an officer of the
Court, to wit:
 (a) to deny the second motion to dismiss and get aside and annul the deed of extrajudicial partition and waiver dated October 23,
1964;
(b) to fix the compensation of herein counsel in the proportion of one-third (1/3) of the shares of plaintiffs, if in land, or in the amount of
P1,000.00, if in cash, and to record the same and expenses advanced by him for the plaintiffs in the sum of P22.15 as lien in favor of herein
claimant-petitioner over the properties in litigation, particularly over the one-fourth (1/4) share of the plaintiffs in all the properties of the
spouses;
xxx xxx xxx
(d) as an alternative to prayer (a) above, to grant the second motion to dismiss, subjecting, however, the properties in litigation and
subject-matters of the extrajudicial partition and waiver to the lien for attorney's fees and expenses in favor of herein claimant-
petitioner, after fixing said attorney's fees as prayed for in (b) above.
xxx xxx xxx

15. That on the day f finally set for the hearing of the second motion to dismiss, as well as of the counter-motion or petition, or on November
21, 1964, because of the inquiries or interpellation made by respondent Judge to herein petitioner as to whether there is a Philippine precedent
which allows or directs the protection by the Court of the rights of any of its officers (lawyer) against any collusion perpetrated by the parties
in a case to defraud or cheat an attorney of his compensation agreed upon by him and his clients, and his answer that insofar as his researches
were concerned, he could not find any, although there are a number of cases to that effect in American jurisdiction, the respondent Judge
had opined in open court that the claim for and the fixing of the attorney's fees should better be done in a separate action and, in spite of
petitioner's memorandum citing American authorities to the effect that,
Though a party may without the consent of his attorney money make a bona fide adjustment with the adverse party and dismiss an
action or suit before a judgment or a decree has been rendered thereon, if it appears, however, that such settlement was collosive
and consummated pursuant to the intent of both parties to defraud the attorney, the court in which the action was pending may
interfere to protect him as one of its officers, by setting aside the order of dismissal, .... (Jackson vs. Stearns, 48 Ore. 25, 84 Pac.
798).
... the respondent Judge, instead of denying the second motion to dismiss and fixing his attorney's fees in the said case and recording the
same as lien, ... dismissed the case and refused to give herein petitioner any kind of immediate protection to safeguard his rights ... in said
Civil Case No. SC-525 of the Court of First Instance of Laguna.
16. That by the express terms of the agreement, Annex "A" of this petition, plaintiffs in Civil Case No. SC-525 had expressly ceded to herein
petitioner one-half (½) [later verbally reduced to one-third (1/3) or P1,000.00] or whatever share they would get from the estate of their
deceased uncle Lucio Magtibay, and the defendants in said Civil Case had full knowledge of said right of herein petitioner in the properties
in controversy from and after the time they were served with summons and copies of the complaint in said civil case — because of the
allegations contained in par. 10 thereof. 7 [Emphasis by the Court]
18. That on December 5, 1964, herein petitioner filed his motion for reconsideration dated December 4, 1664 asking for the reconsideration
of the order dated November 21, 1964, ....
19. That the motion for reconsideration was denied by the court, thru the respondent Judge, as per the order dated January 9, 1965, ....
Upon these facts, petitioner tries to make out before this Court a case of certiorari for grave abuse of discretion on the part of respondent
Judge in dismissing the case on the basis of the compromise agreement of the parties, entered into at the back of petitioner notwithstanding
the reservation made in his favor to file an action against both parties "with respect to his alleged attorney's fees", as well as a case of
mandamus "to order and command the said respondent judge" to take cognizance of and resolve his opposition and counter-motion for the
court to fix the compensation he should be paid. Unable to find any local precedent to support his position, he cites American authorities thus:

In the American jurisdiction, it would seem that, even without the specific provisions of the rules of court cited above, courts had always
intervened, in the mere exercise of their inherent powers, to protect attorneys against collusive agreements or fraudulent settlements entered
into by the parties in a case to cheat attorneys out of their costs or of their fees. Thus, it was held or had been stated in:
(a) Coughlin vs. N.Y. Cont. & H.R.R. Co., 71 N.Y. 443, 27 Am. Rep. 75.
... But since the time of Lord Mansfield, it has been the practice of courts to intervene to protect attorneys against settlement made to
cheat them out of their costs. If an attorney has commenced an action, and his client settles it with the opposite party before judgment,
collusively, to deprive him of his costs, the court will permit the attorney to go on with the suit for the purpose of collecting his costs.
Swain v. Senate, 5 Bos. & Pul. 99; Cole v. Bennett, 6 Price, 15; Moore v. Cook, 13 Id. 473; Talcott v. Bronson, 4 Paige, 501; Rusquin
v. The Knickerbocker Stage Col., 12 Abb. Pr 324; Ward v. Syme, 9 How. Pr. 16; McDonald v. Napier, 14 Ga. 89.
There are many cases where this had been allowed to be done. It is impossible to ascertain precisely when this practice commenced, nor
how originated, nor upon what principle it was based. It was not upon the principle of a lien, because an attorney has no lien upon the cause
of as it upon the action before judgment for his costs; nor was it upon principle that his services had produced the money paid his client upon
the settlement, because that could not be known, and in fact no money may have been paid upon the settlement. So far as I can perceive, it
was based upon no principle. It was a mere arbitrary exercise of power by the courts; not arbitrary in the sense that it was unjust or improper,
but in the sense that it was not based upon any right or principle recognized in other cases. The parties being in court, and a suit commenced
and pending, for the purpose of protecting attorneys who were their officers and subject to their control, the courts invented this practice and
assumed this extraordinary power to defeat attempts to cheat the attorneys out of their costs. The attorney's fees were fixed in definite sums,
easily determined by taxation and this power was exercised to secure them their fees. (pp. 76-77)
(b) Randall v. Van Wagenan et al., 22 N.E. 361, 362.lawphi1.nêt
... But where such settlement is made collusively for the purpose of defrauding the attorney out of his costs, courts have been
accustomed to intervene, and to protect the attorney by permitting him to proceed with the suit, and, if he is able to establish a right
to recover on the cause of action as it originally stood, to permit such recovery to the extent of his costs in the action. Coughlin v.
Railroad Co., 71 N. Y. 443, and pages cited. And the court will set aside an order of discontinuance if it stands in the way. This is an
 adequate remedy, and we think the exclusive remedy where the suit has been fraudulently settled by the parties before judgment to
cheat the attorney out of his costs. We have found no case of an equitable action to enforce the inchoate right of an attorney, under
such circumstances, and no such precedent ought, we think, to be established.
(c) Jackson v. Stearns, et al., 43 Ore 25, 84 Pac. 798.

... Though a party may, without the consent of his attorney, make a bona fide adjustment with the adverse party, and dismiss an
action or suit before a judgment or a decree has been rendered therein, if it appears, however, that such settlement was collusive
and consummated pursuant to the intent of both parties to defraud the attorney, the court in which the action or suit was pending may
interfere to protect him, as one of its officers, by setting aside the order of dismissal and permitting him to proceed in the cause in the
name of his client to final determination to ascertain what sum of money, or interest in the subject-matter, if any, is due him for his
services when fully performed. Jones v. Morgage 99 Am. Dec. 458; Randall v. Van Wagenen (N.Y.) 22 N.E. 361, 12 Am. St. Rep.
828. (p. 800)
Before a court will set aside an order dismissing a suit or an action, made upon stipulation of the parties, without the consent of plaintiff's
attorney, and allow the latter to proceed with the cause in the name of his client, to determine the amount of fees due him, it must appear that
the defendant participated in the fraudulent intent to deprive the attorney of his compensation. Courtney v. McGavock, 25 Wis. 619. When
no adequate consideration is given by the defendant for the settlement and discharge of an action or a suit, the insufficiency of the inducement
to the contract affords evidence of his bad faith. Young v. Dearborn, 27 N.E. 324. It will be remembered that the complaint alleges that the
value of the real property in question is $3,000.00, and that Stearns executed to Wilson a deed to the premises for a nominal consideration.
This is a sufficient averment of the defendant's intent to deprive the plaintiff of his compensation thereby imputing to Wilson bad faith. (p. 800)
(d) Desaman v. Butler Bros., 188 Minn. 198, 136 N.W. 747.
We have recently held that a client has always the right to settle his cause of action and stop litigation at any stage of the proceeding,
subject, however, to the right of the attorney to receive compensation for services rendered. Burho v. Camichael 135 N.W. 386. It is
therefore contended by defendant that a litigant retains the unrestricted right to determine for what amount the cause of action may
be settled, and, having so done, the lien of his attorney for services is measured by the amount determined on and actually settled
for. Conceding, without deciding, that this may be true of any time prior to the rendition of a verdict in the action which the attorney
has been employed to bring, we are of opinion that after verdict fixing the amount of a plaintiff's cause of action a secret and collusive
compromise between parties litigant does not affect the amount of the attorney's lien...; but therein is also clearly indicated by Mr.
Justice Brown that, if there be fraud and collusion to deprive the attorney of his lien, the settlement will not be permitted to accomplish
such result. (p. 748)
To be sure, these authorities are quite persuasive, but contrary to petitioner's impression, there is already a precedent setting decision of this
Court handed down way back in 1922 in a case very similar to his, that in Rustia vs. the Judge of the Court of First Instance of Batangas, et
al., 44 Phil. 62. As it is very brief, it can be quoted in full:
This is a petition for a writ of certiorari, the petitioner alleging that the respondent Judge of the Court of First Instance exceeded his jurisdiction
in dismissing a pending action at the instance of the parties but without the intervention of the attorney for the plaintiff in the case, the herein
petitioner.
It appears from the record that on July 31, 1921, the respondent Justo Porcuna, for himself and on behalf of his wife, the respondent Rosa
H. de Porcuna, by means of a written contract, retained the petitioner to represent them as their lawyer in case No. 1435 then pending in the
Court of First Instance of Batangas and in which Rosa H. de Porcuna was the plaintiff and one Eulalia Magsombol was the defendant. The
contract fixed the petitioner's fee at P200 in advance with an additional contingent fee of P1,300. It was also provided in the contract that
Justo Porcuna should not compromise the claim against the defendant in the case without express consent of his lawyer, the herein petitioner.
After trial, the petitioner then being plaintiff's attorney of record, the Court of First Instance, under date of December 24, 1921, rendered
judgment in favor of Justo Porcuna and Rosa H. de Porcuna ordering the defendant Eulalia Magsombol to return to them 602 pieces of cloth
or in default thereof to pay to them the sum of P3,250. On January 14, 1922, Eulalia Magsombol filed her exception to the judgment and on
the following day presented a motion for a new trial, which was denied on the 21st of the same month. She thereupon gave notice of appeal
and presented a bill of exceptions which was approved on February 20, 1922. On March 2, 1922, and before the transmission of the bill of
exceptions to this court, the plaintiffs presented the following motion in the Court of First Instance:
The plaintiffs, without any further intervention of their attorney, now appear before this Honorable Court and respectfully aver:
That, through Mr. Miguel Olgado they already settled this case with the herein defendant.

That the basis of the compromise is that we, the plaintiffs, finally agree that we should be paid the amount of eight hundred pesos (P800) in
two installments; P300 to be paid on this same date, and the remaining five hundred pesos (P500) at the end of March, 1922.
That we, the plaintiffs, recognize not to have any further rights in this case than to the aforesaid amount of eight hundred pesos (P800) and
that this is the total amount the defendant Eulalia Magsombol should pay us, and we have no right whatever to any other amount than the
aforementioned.
That we have not sold to any other person our rights as plaintiffs in this case.
Wherefore, the plaintiffs respectfully request the dismissal of this case, without any pronouncement as to costs, and that the appeal interposed
by the defendant be further dismissed.
Batangas, Batangas, P.I., March 2, 1922.

(Sgd) ROSA H. PORCUNA

Plaintiff
 JUSTO M. PORCUNA
Plaintiff
The defendant, through her attorney, Jose Mayo Librea, having signified her assent to the motion, the Court of First Instance on the same
day, March 2, dismissed the action without notice to counsel for the plaintiffs.
The petitioner alleges that he did not discover the dismissal of the action until April 4, 1922. After an unsuccessful effort to obtain a
reconsideration of the order of dismissal from the trial court, he filed the present petition for a writ of certiorari. By resolution dated October
24, 1922, this court denied the petition and upon motion of the petitioner we shall now briefly state our reasons for such denial.
The burden of the petitioner's contention is (1) that he, as attorney of record, was entitled to notice of his client's motion to dismiss the case,
and (2) that after the approval of the bill of exceptions the lower court had lost jurisdiction of the case and had no power to dismiss it. A
moment's reflection should make it clear that neither of these propositions is tenable.

Both at the common law and under section 32 of the Code of Civil Procedure a client may dismiss his lawyer at any time or at any stage of
the proceedings and there is nothing to prevent a litigant from appearing before the court to conduct his own litigation. (Sec. 34, Code of Civil
Procedure.) The client has also an undoubted right to compromise a suit without the intervention of his lawyer.
Though there is a valid agreement for the payment to the attorney of a large proportion of the sum recovered in case of success this
does not give the attorney such an interest in the cause of action that it prevents plaintiff from compromising the suit. (4 Cyc. 990,
and authorities cited in Note 6; see also Louque vs. Dejan 129 La. 519; Price vs. Western Loan & Savings Co., 19 Am. Cas. 589 and
Note.)
In the present instance the clients did nothing that they did not have a perfect right to do. By appearing personally and presenting a motion
they impliedly dismissed their lawyer. The petitioner's contingent interests in the judgment rendered did not appear of record. Neither as a
party in interest nor as and attorney was he therefore entitled to notice of the motion.
As to the second proposition that the court below could not dismiss the case after the bill of exceptions had been approved, it is very true that
upon such approval the lower court loses its jurisdiction over all contentious matters connected with the issues in the case. But there is
nothing to prevent all of the parties by agreement to withdraw the bill of exceptions with the consent of said court and resubmit the case to
the jurisdiction of the court. That was all that was done in this case. A valid agreement between the parties to a case is the law of the case in
everything covered by the agreement. (Civil Code, art. 1091; Compania General de Tabacos vs. Obed, 13 Phil. 391.) The petitioner might
have protected his interests by entering an attorney's lien under section 37 of the Code of Civil Procedure.
The petition for a writ of certiorari was therefore properly denied. So ordered.
The difference We perceive, however, between petitioner's case, on the one hand, and that of Atty. Rustia, in the above decision, on the
other, is that in the latter's case, neither the court nor the party adverse to his clients were aware of the exact agreement as to his fees,
whereas in the case of petitioner, both the court and the other parties knew the terms of the contract for professional services between
petitioner and his clients, the Magtibay brothers, because the written contract therefor, Annex A, was made part of the complaint, and none
seriously disputes its authenticity. Besides, the court had already dismissed the case when Atty. Rustia raised the question of his fees before
the court; in petitioner's instance, he opposed the motion to dismiss and pleaded with the court to protect his rights as officer of the court
before the first order in question was issued by respondent judge. Were it not for these differences, We would have inclined towards denying
the herein petition in line with the Rustia ruling that, in any event, certiorari is not the appropriate remedy, the American authorities cited by
petitioner not withstanding.
Withal, there is another Philippine case which Us to sustain petitioner. In the case of Recto vs. Harden, 100 Phil. 440, Atty. Claro M. Recto
found himself practically in the same situation as petitioner herein. After Atty. Recto had rendered services to Mrs. Esperanza P. de Harden
in a protracted suit against her husband for the purposes of securing an increase of her and her daughter's monthly support, (the spouses
were separated), to P10,000.00 and of protecting and preserving her rights in the properties of the conjugal partnership, which suit lasted
from 1941 to 1949, and after the Court of First Instance of Manila had rendered a judgment favorable to Mrs. Harden acknowledging, inter
alia, her rights to the assets of the conjugal partnership, which turned out to be P4,000,000, and awarding her a monthly support of P2,500,
practically as prayed for in Atty. Recto's pleadings, while the case was already pending on appeal before this Court, Mrs. Harden and her
husband, Mr. Fred Harden, entered into a compromise of their case, without the knowledge of Atty. Recto, whereby said spouses "purportedly
agreed to settle their differences in consideration of the sum of P5,000 paid by Mr. Harden to Mrs. Harden, and a monthly pension of $500 to
be paid by him to her; (2) Mr. Harden created a trust fund of $20,000 from which said monthly pension of $500 would be taken; and (3) Mr.
and Mrs. Harden had mutually released and forever discharged each other from all actions, debts, duties, accounts, demands and claims to
the conjugal partnership, in consideration of the sum of $1." (p. 435)

Whereupon Atty. Recto filed a motion with this Court praying that:
a) Pending the resolution of this motion, the receiver appointed herein be authorized to continue holding the properties above mentioned in
his custody in order not to defeat the undersigned's inchoate lien on them;

b) A day set aside to receive the evidence of the undersigned and those of the plaintiff and the defendant Fred M. Harden, in order to
determine the amount of fees due to the undersigned, by the appointment of a referee or commissioner for the reception of such evidence;
c) After due hearing, the undersigned be declared entitled to the sum of P400,000 as his fees for services rendered in behalf of the plaintiff
in this case, under paragraph 3 of the contract, Annex "A" and to that end a charging lien therefore be established upon the properties above-
mentioned;
d) And the receiver be ordered to pay to the undersigned the full amount of the fees to which the latter is found to be entitled.
This motion was objected to by Mr. Hardens counsel, who in turn, moved for the dismissal of the case, to which Atty. Recto objected. Under
these circumstances, this Court acceded to Atty. Recto's prayer that the case be not dismissed, that the receivership be maintained except
as to certain properties not material to mention here, and that the case be remanded to the lower court so that his fees may be determined
and ordered paid. Upon the remand of the case to the lower court, a commissioner was appointed to hear the matter of the amount of the
fees in question, and after the commissioner had submitted a report recommending the payment to Atty. Recto of the 20,70 attorney's fees
stipulated in the contract for his services, equivalent to P369,410.04, the court rendered judgment as follows:
The contingent fee to which the claimant is entitled under paragraph 3 of the contract, Exhibit JJJ or 20, is 20% of P1,920,554.85 or the sum
of P384,110.97.
WHEREFORE, this Court hereby approves the recommendation of the Commissioner with the above-stated modification, and finds that
Attorney Claro M. Recto is entitled to the sum of THREE HUNDRED EIGHTY-FOUR THOUSAND ONE HUNDRED AND TEN PESOS AND
NINETY-SEVEN CENTAVOS (P384,110.97), representing 20% of Esperanza P. de Harden's share in the conjugal properties owned by her
and her husband, Fred M. Harden, as contingent fee stipulated in paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20,
and the said Esperanza P. de Harden is hereby ordered to pay the said amount above-stated.

On appeal from this judgment to this Court, the same was affirmed, the decision stating pertinently in part:
The last objection is based upon principles of equity, but, pursuant thereto, one who seeks equity must come with clean hands (Bastida et al.
vs. Dy Buncio & Co., 93 Phil. 195; 30 C.J.S. 475), and appellants have not done so, for the circumstances surrounding the case show, to our
satisfaction, that their aforementioned agreements, ostensibly for the settlement of the differences between husband and wife, were made
for the purpose of circumventing or defeating the rights of herein appellee, under his above-quoted contract of services with Mrs. Harden.
Indeed, having secured a judgment in her favor, acknowledging her rights to the assets of the conjugal partnership, which turned out to be
worth almost P4,000,000 in addition to litis expensae in the sum of P175,000, it is inconceivable that Mrs. Harden would have waived such
rights, as well as the benefits of all orders and judgments in her favor, in consideration of the paltry sum of $5,000 allegedly paid to her by
Mr. Harden and the additional sum of $20,000 to be paid by him in installments, at the rate of $500 a month. In fact, no explanation has been
given for this moat unusual avowed settlement between Mr. and Mrs. Harden. One can not even consider the possibility of a reconciliation
between the spouses, the same being inconsistent with the monetary consideration for said alleged settlement. What is more, the records
show that the relations between said spouses — which were bad indeed, not only in July, 1941, when Mrs. Harden engaged the services of
the appellee, but, even, before, for Mr. and Mrs. Harden were separated since 1938 — had worsened considerably thereafter, as evidenced
by an action for divorce filed by Mr. Harden in New Jersey, in July 1948, upon the ground of repeated acts of infidelity allegedly committed
by Mrs. Harden in 1940 and 1941.
On the same considerations of equity, and for the better protection of lawyers, who, trusting in the good faith of their clients, render
professional services on contingent basis, and so that it may not be said that this Court, sanctions in any way the questionable practice of
clients of compromising their cases at the back of their counsel with the consequence that the stipulated contingent fees of the lawyer are
either unreasonably reduced or even completely rendered without basis, as in this case — wherein the clients waived the whole of their rights
in favor of their opponent after the latter had acknowledged, in effect, the correctness of said clients' contention — We have decided to grant
the herein petition, in so far as the rights of petitioner have been prejudiced by the questioned compromise agreement. While We here reaffirm
the rule that "the client has an undoubted right to compromise a suit without the intervention of his lawyer", 8 We hold that when such
compromise is entered into in fraud of the lawyer, with intent to deprive him of the fees justly due him, the compromise must be subject to the
said fees, and that when it is evident that the said fraud is committed in confabulation with the adverse party who had knowledge of the
lawyer's contingent interest or such interest appears of record and who would benefit under such compromise, the better practice is to settle
the matter of the attorney's fees in the same proceeding, after hearing all the affected parties and without prejudice to the finality of the
compromise in so far as it does not adversely affect the rights of the lawyer. Surely, "the client cannot, by setting, compromising or dismissing
his suit during its pendency, deprive the attorney of his compensation for the agreed amount, unless the lawyer consents to such settlement,
compromise or dismissal", (Legal and Judicial Ethics by Martin, 1967 Rev. Ed p. 121) for the, attorney is or "Shall be entitled to have and
recover from his client - a reasonable compensation (not more) 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", (Sec. 24, Rule 138, on Attorney and Admission
to Bar) albeit, under Canon 12 of the Canons of Professional Ethics, "in fixing fees, it should not be forgotten that the profession is a branch
of the administration of justice and not a mere money-getting trade."
True it is also that "a client may, at anytime, dismiss his attorney or substitute another in his place", (Sec. 26, Rule 138) but it must be
emphasized that the same provision, which is an incorporation of Republic Act 636 into the Rules of Court, also provides that "if the contract
between client and attorney had been reduced to writing and the dismissal of the attorney was without justifiable cause, he shall be entitled
to recover from the client full compensation ..." In the case at bar, by entering into the compromise agreement in question and even inserting
therein a prayer to the court to dismiss their case filed by petitioner, (see footnote 6, ante) petitioner's clients impliedly dismissed him. (Rustia
vs. the Court, etc., supra.) Such implied dismissal appears to Us to have been made without justifiable cause, none is urged anywhere in the
record, and so, the above-quoted provision of Section 26, Rule 138 applies here. The terms of the compromise in question, as spelled out in
Annex A of Annex I of the petition, indicate clearly that Aurelia Martinez, the defendant aunt in-law of petitioner's clients, acknowledged that
the rights of said clients were practically as alleged by petitioner in the complaint he filed for them. In other words, through the services of
petitioner, his clients secured, in effect, a recognition, which had been previously denied by their aunt-in-law, that they were entitled to a ¼
share in the estate left by their uncle. We hold that under these circumstances, and since it appears that said clients have no other means to
pay petitioner, since they instituted their case as paupers, and that their aunt-in-law was aware of the terms of their contract of professional
services with petitioner', said clients had no right to waive the portion of their such acknowledged rights in favor of their opponent to the extent
that such waiver would prejudice the stipulated contingent interest of their lawyer and their aunt-in-law had no right to accept such waiver
unqualified. The Civil Code enjoins that:
ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.
Under the circumstance extant in the record, it is clear that the compromise agreement in question falls short of the moral requirements of
this quoted article of the Civil Code. If for this reason alone, it should not be allowed to prejudice the rights of petitioner. Accordingly, as all of
these circumstances were presented to respondent judge before he issued the challenged order of dismissal and all the parties were heard
thereon, it was incumbent upon His Honor, in equity and to avoid multiplicity of suits, particularly, because the amount claimed by petitioner
is only P1,000.00, to have directly passed upon petitioner's claim, and not having done so, it would appear that the court a quo abused its
discretion gravely enough to warrant the writ of certiorari herein prayed for in so far as the questioned orders prejudiced petitioner's right to
the fees for the professional services which appear to have been creditably rendered by him. Respondents allege that the judgment of
dismissal in question is already final because no appeal was taken therefrom, but since We hold that the same was rendered with enough
grave abuse of discretion to warrant the certiorari prayed for, such alleged finality could not have materialized; obviously, petitioner could not
have appealed, not being a party in the case.
IN VIEW OF THE FOREGOING, the orders of the respondent court dated November 21, 1964 and January 9, 1965 in Civil Case No. SC-
525 are hereby set aside in so far as they prejudice the payment of petitioner's claim of attorney's fees in the form of either one-third of the
¼ share acknowledged as his clients in the compromise in question or P1,000.00, which should constitute as a lien on the said share, in spite
of the waiver thereof in favor of respondent Aurelia Martinez. It is unnecessary to consider the petition for mandamus. Costs against, private
respondents.
G.R. No. L-24163 April 28, 1969

REGINO B. ARO, petitioner,

vs.
THE HON. ARSENIO NAÑAWA, Presiding Judge of Branch IV, Court of First Instance of Laguna, LUIS MAGTIBAY, PABLO MAGTIBAY,
AURELLO MARTINEZ, GREGORIO LONTOK, MARIA MENDOZA, MAXIMO PORTO and ROSARlO ANDAYA, respondents.

Regino B. Aro in his own behalf as petitioner.

Enrique C. Villanueva for respondents.
BARREDO, J.:

Original petition: (1) for certiorari to annul the order of the Court of First Instance of Laguna, dated November 21, 1964, dismissing its Civil
Case No. SC-525 "without prejudice to the right of Atty. Regino B. Aro (petitioner herein) to file a separate action against both the plaintiffs
and defendants (private respondents herein) with respect to his alleged attorney's fees", as well as its order dated January 9, 1965, denying
petitioner's motion for reconsideration thereof for lack of merit and (2) for mandamus to compel respondent Judge to take cognizance of
petitioner's opposition and countermotion or petition dated November 3, 1964 and to resolve the same on the merits.
There appears to be no dispute as to the following facts alleged in the petition:
2. That the services of herein petitioner, as practising attorney, was engaged by respondents Luis Magtibay and Pablo Magtibay for the
prosecution of their claim, as heirs, in the estate of their deceased uncle Lucio Magtibay, consisting of properties which were in the possession
of the respondents Aurelia Martinez,1spouses Gregorio Lontok and Maria Mendoza and spouses Maximo Porto and Rosario Andaya.
3. That being without means to prosecute their claim against the persons concerned, respondents Luis Magtibay and Pablo Magtibay agreed
with herein petitioner to avail of his services and entrust the prosecution of their claim on a contingent basis as shown in the agreement, copy
of which is hereto attached as Annex 'A' and is made an integral part hereof.2
4. That by virtue of said agreement, herein petitioner took the necessary steps to gather the needed papers and documents for the filing of a
petition to litigate as pauper and a complaint in the Court of First Instance of Laguna, in which respondents Luis Magtibay and Pablo Magtibay
were the plaintiffs and the other respondents, excepting the respondent Judge, were the defendants, ....
5. That said petition to litigate as pauper filed by herein petitioner for respondents Luis Magtibay and Pablo Magtibay was granted by the
respondent Judge as per the order dated September 10, 1964, .....

6. That to plaintiffs' complaint in Civil Case No. SC-525, the defendants in said case interposed a motion to dismiss dated September 29,
1964....3
7. That to the said motion to dismiss herein petitioner, as attorney for the plaintiffs (now respondents Luis Magtibay and Pablo Magtibay) filed
an opposition dated October 5, 1964.....4
8. That after the hearing of the motion to dismiss filed by the defendants and the opposition thereto by the plaintiffs, which finally took place
on October 24, 1964, the respondent Judge issued its resolution or order dated October 24, 1964, denying the motion to dismiss, ....5
9. That on the very day of and after the hearing of the motion to dismiss, or on October 24, 1964, before receipt of a copy of the said order
(Annex 'G'), there was a conversation which took place between herein petitioner and the attorney of the defendants, Atty. Rustico de los
Reyes, Jr., in the civil case and one who was then acting as a sort of spokesman for the defendants (Ex-Mayor Cordova of Sta. Maria,
Laguna) for the amicable settlement of the case between the plaintiffs and the defendants to the effect that a certain property of the spouses
Lucio Magtibay (deceased) and respondent Aurelia Martinez, worth P3,000.00, would be given to the plaintiffs in full settlement of their claim,
as share in the properties left by their deceased uncle Lucio Magtibay, it having been agreed by herein petitioner and Atty. de los Reyes and
the spokesman of the defendants that for the purpose of said amicable settlement, the plaintiffs or one of them and herein petitioner would
go to Sta. Maria, Laguna, on October 23, 1964.
10. That having given notice to the plaintiffs (now respondents Luis Magtibay and Pablo Magtibay) at their given address in Calauag, Quezon
to come to Candelaria for the purpose of going to Sta. Maria, Laguna on October 23, 1964, petitioner had waited for said plaintiffs to go to
his office on or before said date for the engagement mentioned, but due to their (plaintiffs') failure to come to Candelaria, petitioner had to
send a telegram to Ex-Mayor Cordova notifying him of his (petitioner's) and plaintiffs' not being able to go to Sta. Maria because of the failure
of any of the plaintiffs to come to Candelria, ....
11. That it was only on October 28, 1964, when herein petitioner received a copy of the order dated October 24, 1964 (Annex "G") and to his
surprise he also received on the said day a second motion to dismiss dated October 26, 1964; together with Annex "A" of said motion, which
is entitled KASULATAN NG PAGHAHATIAN NA LABAS SA HUKUMAN AT PAGPAPALABI, dated October 23, 1964 at Sta. Cruz, Laguna
and signed by the plaintiffs and defendant Aurelia Martinez (the three being now respondents in this case), it having been made to appear in
said Annex "A" of the second motion to dismiss, among others, that the plaintiffs and defendant Aurelia Martinez had made an extrajudicial
partition of the properties of the deceased Lucio Magtibay and the said Aurelia Martinez adjudicating to the plaintiffs one-fourth (¼) share in
the properties of the spouses and three-fourth (3/4) share of the defendant Aurelia Martinez, but making it appear also that said plaintiffs
waived their share in favor of Aurelia Martinez, ..., thru which fraudulent waiver, herein petitioner was deprived of his contingent fees, agreed
upon, as evidenced by Annex "A" of this petition.6

xxx xxx xxx

14. That petitioner filed by registered mail, on November 4, 1964, his "OPPOSITION TO THE SECOND MOTION TO DISMISS AND
COUNTER-MOTION OR PETITION TO SET ASIDE DEED OF EXTRAJUDICIAL PARTITION AND WAIVER DATED OCTOBER 23, 1964
AND TO RECORD ATTORNEY'S LIEN", dated November 3, 1964, wherein he (petitioner) prayed, among others, invoking the provisions of
Section 5(d) and Section 6, Rule 135 of the Revised Rules of Court, for the protection of the rights of herein petitioner as an officer of the
Court, to wit:
(a) to deny the second motion to dismiss and get aside and annul the deed of extrajudicial partition and waiver dated October 23,
1964;
(b) to fix the compensation of herein counsel in the proportion of one-third (1/3) of the shares of plaintiffs, if in land, or in the amount of
P1,000.00, if in cash, and to record the same and expenses advanced by him for the plaintiffs in the sum of P22.15 as lien in favor of herein
claimant-petitioner over the properties in litigation, particularly over the one-fourth (1/4) share of the plaintiffs in all the properties of the
spouses;
xxx xxx xxx
(d) as an alternative to prayer (a) above, to grant the second motion to dismiss, subjecting, however, the properties in litigation and
subject-matters of the extrajudicial partition and waiver to the lien for attorney's fees and expenses in favor of herein claimant-
petitioner, after fixing said attorney's fees as prayed for in (b) above.
xxx xxx xxx
15. That on the day f finally set for the hearing of the second motion to dismiss, as well as of the counter-motion or petition, or on November
21, 1964, because of the inquiries or interpellation made by respondent Judge to herein petitioner as to whether there is a Philippine precedent
which allows or directs the protection by the Court of the rights of any of its officers (lawyer) against any collusion perpetrated by the parties
in a case to defraud or cheat an attorney of his compensation agreed upon by him and his clients, and his answer that insofar as his researches
were concerned, he could not find any, although there are a number of cases to that effect in American jurisdiction, the respondent Judge
had opined in open court that the claim for and the fixing of the attorney's fees should better be done in a separate action and, in spite of
petitioner's memorandum citing American authorities to the effect that,
 Though a party may without the consent of his attorney money make a bona fide adjustment with the adverse party and dismiss an
action or suit before a judgment or a decree has been rendered thereon, if it appears, however, that such settlement was collosive
and consummated pursuant to the intent of both parties to defraud the attorney, the court in which the action was pending may
interfere to protect him as one of its officers, by setting aside the order of dismissal, .... (Jackson vs. Stearns, 48 Ore. 25, 84 Pac.
798).

... the respondent Judge, instead of denying the second motion to dismiss and fixing his attorney's fees in the said case and recording the
same as lien, ... dismissed the case and refused to give herein petitioner any kind of immediate protection to safeguard his rights ... in said
Civil Case No. SC-525 of the Court of First Instance of Laguna.
16. That by the express terms of the agreement, Annex "A" of this petition, plaintiffs in Civil Case No. SC-525 had expressly ceded to herein
petitioner one-half (½) [later verbally reduced to one-third (1/3) or P1,000.00] or whatever share they would get from the estate of their
deceased uncle Lucio Magtibay, and the defendants in said Civil Case had full knowledge of said right of herein petitioner in the properties
in controversy from and after the time they were served with summons and copies of the complaint in said civil case — because of the
allegations contained in par. 10 thereof. 7 [Emphasis by the Court]

18. That on December 5, 1964, herein petitioner filed his motion for reconsideration dated December 4, 1664 asking for the reconsideration
of the order dated November 21, 1964, ....
19. That the motion for reconsideration was denied by the court, thru the respondent Judge, as per the order dated January 9, 1965, ....

Upon these facts, petitioner tries to make out before this Court a case of certiorari for grave abuse of discretion on the part of respondent
Judge in dismissing the case on the basis of the compromise agreement of the parties, entered into at the back of petitioner notwithstanding
the reservation made in his favor to file an action against both parties "with respect to his alleged attorney's fees", as well as a case of
mandamus "to order and command the said respondent judge" to take cognizance of and resolve his opposition and counter-motion for the
court to fix the compensation he should be paid. Unable to find any local precedent to support his position, he cites American authorities thus:
In the American jurisdiction, it would seem that, even without the specific provisions of the rules of court cited above, courts had always
intervened, in the mere exercise of their inherent powers, to protect attorneys against collusive agreements or fraudulent settlements entered
into by the parties in a case to cheat attorneys out of their costs or of their fees. Thus, it was held or had been stated in:

(a) Coughlin vs. N.Y. Cont. & H.R.R. Co., 71 N.Y. 443, 27 Am. Rep. 75.
... But since the time of Lord Mansfield, it has been the practice of courts to intervene to protect attorneys against settlement made to
cheat them out of their costs. If an attorney has commenced an action, and his client settles it with the opposite party before judgment,
collusively, to deprive him of his costs, the court will permit the attorney to go on with the suit for the purpose of collecting his costs.
Swain v. Senate, 5 Bos. & Pul. 99; Cole v. Bennett, 6 Price, 15; Moore v. Cook, 13 Id. 473; Talcott v. Bronson, 4 Paige, 501; Rusquin
v. The Knickerbocker Stage Col., 12 Abb. Pr 324; Ward v. Syme, 9 How. Pr. 16; McDonald v. Napier, 14 Ga. 89.
There are many cases where this had been allowed to be done. It is impossible to ascertain precisely when this practice commenced, nor
how originated, nor upon what principle it was based. It was not upon the principle of a lien, because an attorney has no lien upon the cause
of as it upon the action before judgment for his costs; nor was it upon principle that his services had produced the money paid his client upon
the settlement, because that could not be known, and in fact no money may have been paid upon the settlement. So far as I can perceive, it
was based upon no principle. It was a mere arbitrary exercise of power by the courts; not arbitrary in the sense that it was unjust or improper,
but in the sense that it was not based upon any right or principle recognized in other cases. The parties being in court, and a suit commenced
and pending, for the purpose of protecting attorneys who were their officers and subject to their control, the courts invented this practice and
assumed this extraordinary power to defeat attempts to cheat the attorneys out of their costs. The attorney's fees were fixed in definite sums,
easily determined by taxation and this power was exercised to secure them their fees. (pp. 76-77)
(b) Randall v. Van Wagenan et al., 22 N.E. 361, 362.lawphi1.nêt
... But where such settlement is made collusively for the purpose of defrauding the attorney out of his costs, courts have been
accustomed to intervene, and to protect the attorney by permitting him to proceed with the suit, and, if he is able to establish a right
to recover on the cause of action as it originally stood, to permit such recovery to the extent of his costs in the action. Coughlin v.
Railroad Co., 71 N. Y. 443, and pages cited. And the court will set aside an order of discontinuance if it stands in the way. This is an
adequate remedy, and we think the exclusive remedy where the suit has been fraudulently settled by the parties before judgment to
cheat the attorney out of his costs. We have found no case of an equitable action to enforce the inchoate right of an attorney, under
such circumstances, and no such precedent ought, we think, to be established.
(c) Jackson v. Stearns, et al., 43 Ore 25, 84 Pac. 798.
... Though a party may, without the consent of his attorney, make a bona fide adjustment with the adverse party, and dismiss an
action or suit before a judgment or a decree has been rendered therein, if it appears, however, that such settlement was collusive
and consummated pursuant to the intent of both parties to defraud the attorney, the court in which the action or suit was pending may
interfere to protect him, as one of its officers, by setting aside the order of dismissal and permitting him to proceed in the cause in the
name of his client to final determination to ascertain what sum of money, or interest in the subject-matter, if any, is due him for his
services when fully performed. Jones v. Morgage 99 Am. Dec. 458; Randall v. Van Wagenen (N.Y.) 22 N.E. 361, 12 Am. St. Rep.
828. (p. 800)
Before a court will set aside an order dismissing a suit or an action, made upon stipulation of the parties, without the consent of plaintiff's
attorney, and allow the latter to proceed with the cause in the name of his client, to determine the amount of fees due him, it must appear that
the defendant participated in the fraudulent intent to deprive the attorney of his compensation. Courtney v. McGavock, 25 Wis. 619. When
no adequate consideration is given by the defendant for the settlement and discharge of an action or a suit, the insufficiency of the inducement
to the contract affords evidence of his bad faith. Young v. Dearborn, 27 N.E. 324. It will be remembered that the complaint alleges that the
value of the real property in question is $3,000.00, and that Stearns executed to Wilson a deed to the premises for a nominal consideration.
This is a sufficient averment of the defendant's intent to deprive the plaintiff of his compensation thereby imputing to Wilson bad faith. (p. 800)
(d) Desaman v. Butler Bros., 188 Minn. 198, 136 N.W. 747.
We have recently held that a client has always the right to settle his cause of action and stop litigation at any stage of the proceeding,
subject, however, to the right of the attorney to receive compensation for services rendered. Burho v. Camichael 135 N.W. 386. It is
therefore contended by defendant that a litigant retains the unrestricted right to determine for what amount the cause of action may
be settled, and, having so done, the lien of his attorney for services is measured by the amount determined on and actually settled
for. Conceding, without deciding, that this may be true of any time prior to the rendition of a verdict in the action which the attorney
has been employed to bring, we are of opinion that after verdict fixing the amount of a plaintiff's cause of action a secret and collusive
compromise between parties litigant does not affect the amount of the attorney's lien...; but therein is also clearly indicated by Mr.
Justice Brown that, if there be fraud and collusion to deprive the attorney of his lien, the settlement will not be permitted to accomplish
such result. (p. 748)
To be sure, these authorities are quite persuasive, but contrary to petitioner's impression, there is already a precedent setting decision of this
Court handed down way back in 1922 in a case very similar to his, that in Rustia vs. the Judge of the Court of First Instance of Batangas, et
al., 44 Phil. 62. As it is very brief, it can be quoted in full:

This is a petition for a writ of certiorari, the petitioner alleging that the respondent Judge of the Court of First Instance exceeded his jurisdiction
in dismissing a pending action at the instance of the parties but without the intervention of the attorney for the plaintiff in the case, the herein
petitioner.
It appears from the record that on July 31, 1921, the respondent Justo Porcuna, for himself and on behalf of his wife, the respondent Rosa
H. de Porcuna, by means of a written contract, retained the petitioner to represent them as their lawyer in case No. 1435 then pending in the
Court of First Instance of Batangas and in which Rosa H. de Porcuna was the plaintiff and one Eulalia Magsombol was the defendant. The
contract fixed the petitioner's fee at P200 in advance with an additional contingent fee of P1,300. It was also provided in the contract that
Justo Porcuna should not compromise the claim against the defendant in the case without express consent of his lawyer, the herein petitioner.

After trial, the petitioner then being plaintiff's attorney of record, the Court of First Instance, under date of December 24, 1921, rendered
judgment in favor of Justo Porcuna and Rosa H. de Porcuna ordering the defendant Eulalia Magsombol to return to them 602 pieces of cloth
or in default thereof to pay to them the sum of P3,250. On January 14, 1922, Eulalia Magsombol filed her exception to the judgment and on
the following day presented a motion for a new trial, which was denied on the 21st of the same month. She thereupon gave notice of appeal
and presented a bill of exceptions which was approved on February 20, 1922. On March 2, 1922, and before the transmission of the bill of
exceptions to this court, the plaintiffs presented the following motion in the Court of First Instance:

The plaintiffs, without any further intervention of their attorney, now appear before this Honorable Court and respectfully aver:
That, through Mr. Miguel Olgado they already settled this case with the herein defendant.
That the basis of the compromise is that we, the plaintiffs, finally agree that we should be paid the amount of eight hundred pesos (P800) in
two installments; P300 to be paid on this same date, and the remaining five hundred pesos (P500) at the end of March, 1922.
That we, the plaintiffs, recognize not to have any further rights in this case than to the aforesaid amount of eight hundred pesos (P800) and
that this is the total amount the defendant Eulalia Magsombol should pay us, and we have no right whatever to any other amount than the
aforementioned.
That we have not sold to any other person our rights as plaintiffs in this case.

Wherefore, the plaintiffs respectfully request the dismissal of this case, without any pronouncement as to costs, and that the appeal interposed
by the defendant be further dismissed.
Batangas, Batangas, P.I., March 2, 1922.

(Sgd) ROSA H. PORCUNA

Plaintiff

JUSTO M. PORCUNA
Plaintiff
The defendant, through her attorney, Jose Mayo Librea, having signified her assent to the motion, the Court of First Instance on the same
day, March 2, dismissed the action without notice to counsel for the plaintiffs.

The petitioner alleges that he did not discover the dismissal of the action until April 4, 1922. After an unsuccessful effort to obtain a
reconsideration of the order of dismissal from the trial court, he filed the present petition for a writ of certiorari. By resolution dated October
24, 1922, this court denied the petition and upon motion of the petitioner we shall now briefly state our reasons for such denial.
The burden of the petitioner's contention is (1) that he, as attorney of record, was entitled to notice of his client's motion to dismiss the case,
and (2) that after the approval of the bill of exceptions the lower court had lost jurisdiction of the case and had no power to dismiss it. A
moment's reflection should make it clear that neither of these propositions is tenable.
Both at the common law and under section 32 of the Code of Civil Procedure a client may dismiss his lawyer at any time or at any stage of
the proceedings and there is nothing to prevent a litigant from appearing before the court to conduct his own litigation. (Sec. 34, Code of Civil
Procedure.) The client has also an undoubted right to compromise a suit without the intervention of his lawyer.
Though there is a valid agreement for the payment to the attorney of a large proportion of the sum recovered in case of success this
does not give the attorney such an interest in the cause of action that it prevents plaintiff from compromising the suit. (4 Cyc. 990,
 and authorities cited in Note 6; see also Louque vs. Dejan 129 La. 519; Price vs. Western Loan & Savings Co., 19 Am. Cas. 589 and
Note.)
In the present instance the clients did nothing that they did not have a perfect right to do. By appearing personally and presenting a motion
they impliedly dismissed their lawyer. The petitioner's contingent interests in the judgment rendered did not appear of record. Neither as a
party in interest nor as and attorney was he therefore entitled to notice of the motion.
As to the second proposition that the court below could not dismiss the case after the bill of exceptions had been approved, it is very true that
upon such approval the lower court loses its jurisdiction over all contentious matters connected with the issues in the case. But there is
nothing to prevent all of the parties by agreement to withdraw the bill of exceptions with the consent of said court and resubmit the case to
the jurisdiction of the court. That was all that was done in this case. A valid agreement between the parties to a case is the law of the case in
everything covered by the agreement. (Civil Code, art. 1091; Compania General de Tabacos vs. Obed, 13 Phil. 391.) The petitioner might
have protected his interests by entering an attorney's lien under section 37 of the Code of Civil Procedure.
The petition for a writ of certiorari was therefore properly denied. So ordered.

The difference We perceive, however, between petitioner's case, on the one hand, and that of Atty. Rustia, in the above decision, on the
other, is that in the latter's case, neither the court nor the party adverse to his clients were aware of the exact agreement as to his fees,
whereas in the case of petitioner, both the court and the other parties knew the terms of the contract for professional services between
petitioner and his clients, the Magtibay brothers, because the written contract therefor, Annex A, was made part of the complaint, and none
seriously disputes its authenticity. Besides, the court had already dismissed the case when Atty. Rustia raised the question of his fees before
the court; in petitioner's instance, he opposed the motion to dismiss and pleaded with the court to protect his rights as officer of the court
before the first order in question was issued by respondent judge. Were it not for these differences, We would have inclined towards denying
the herein petition in line with the Rustia ruling that, in any event, certiorari is not the appropriate remedy, the American authorities cited by
petitioner not withstanding.

Withal, there is another Philippine case which Us to sustain petitioner. In the case of Recto vs. Harden, 100 Phil. 440, Atty. Claro M. Recto
found himself practically in the same situation as petitioner herein. After Atty. Recto had rendered services to Mrs. Esperanza P. de Harden
in a protracted suit against her husband for the purposes of securing an increase of her and her daughter's monthly support, (the spouses
were separated), to P10,000.00 and of protecting and preserving her rights in the properties of the conjugal partnership, which suit lasted
from 1941 to 1949, and after the Court of First Instance of Manila had rendered a judgment favorable to Mrs. Harden acknowledging, inter
alia, her rights to the assets of the conjugal partnership, which turned out to be P4,000,000, and awarding her a monthly support of P2,500,
practically as prayed for in Atty. Recto's pleadings, while the case was already pending on appeal before this Court, Mrs. Harden and her
husband, Mr. Fred Harden, entered into a compromise of their case, without the knowledge of Atty. Recto, whereby said spouses "purportedly
agreed to settle their differences in consideration of the sum of P5,000 paid by Mr. Harden to Mrs. Harden, and a monthly pension of $500 to
be paid by him to her; (2) Mr. Harden created a trust fund of $20,000 from which said monthly pension of $500 would be taken; and (3) Mr.
and Mrs. Harden had mutually released and forever discharged each other from all actions, debts, duties, accounts, demands and claims to
the conjugal partnership, in consideration of the sum of $1." (p. 435)
Whereupon Atty. Recto filed a motion with this Court praying that:
a) Pending the resolution of this motion, the receiver appointed herein be authorized to continue holding the properties above mentioned in
his custody in order not to defeat the undersigned's inchoate lien on them;
b) A day set aside to receive the evidence of the undersigned and those of the plaintiff and the defendant Fred M. Harden, in order to
determine the amount of fees due to the undersigned, by the appointment of a referee or commissioner for the reception of such evidence;

c) After due hearing, the undersigned be declared entitled to the sum of P400,000 as his fees for services rendered in behalf of the plaintiff
in this case, under paragraph 3 of the contract, Annex "A" and to that end a charging lien therefore be established upon the properties above-
mentioned;
d) And the receiver be ordered to pay to the undersigned the full amount of the fees to which the latter is found to be entitled.
This motion was objected to by Mr. Hardens counsel, who in turn, moved for the dismissal of the case, to which Atty. Recto objected. Under
these circumstances, this Court acceded to Atty. Recto's prayer that the case be not dismissed, that the receivership be maintained except
as to certain properties not material to mention here, and that the case be remanded to the lower court so that his fees may be determined
and ordered paid. Upon the remand of the case to the lower court, a commissioner was appointed to hear the matter of the amount of the
fees in question, and after the commissioner had submitted a report recommending the payment to Atty. Recto of the 20,70 attorney's fees
stipulated in the contract for his services, equivalent to P369,410.04, the court rendered judgment as follows:

The contingent fee to which the claimant is entitled under paragraph 3 of the contract, Exhibit JJJ or 20, is 20% of P1,920,554.85 or the sum
of P384,110.97.
WHEREFORE, this Court hereby approves the recommendation of the Commissioner with the above-stated modification, and finds that
Attorney Claro M. Recto is entitled to the sum of THREE HUNDRED EIGHTY-FOUR THOUSAND ONE HUNDRED AND TEN PESOS AND
NINETY-SEVEN CENTAVOS (P384,110.97), representing 20% of Esperanza P. de Harden's share in the conjugal properties owned by her
and her husband, Fred M. Harden, as contingent fee stipulated in paragraph 3 of the Contract of Professional Services, Exhibit JJJ or 20,
and the said Esperanza P. de Harden is hereby ordered to pay the said amount above-stated.
On appeal from this judgment to this Court, the same was affirmed, the decision stating pertinently in part:
The last objection is based upon principles of equity, but, pursuant thereto, one who seeks equity must come with clean hands (Bastida et al.
vs. Dy Buncio & Co., 93 Phil. 195; 30 C.J.S. 475), and appellants have not done so, for the circumstances surrounding the case show, to our
satisfaction, that their aforementioned agreements, ostensibly for the settlement of the differences between husband and wife, were made
for the purpose of circumventing or defeating the rights of herein appellee, under his above-quoted contract of services with Mrs. Harden.
Indeed, having secured a judgment in her favor, acknowledging her rights to the assets of the conjugal partnership, which turned out to be
worth almost P4,000,000 in addition to litis expensae in the sum of P175,000, it is inconceivable that Mrs. Harden would have waived such
rights, as well as the benefits of all orders and judgments in her favor, in consideration of the paltry sum of $5,000 allegedly paid to her by
Mr. Harden and the additional sum of $20,000 to be paid by him in installments, at the rate of $500 a month. In fact, no explanation has been
given for this moat unusual avowed settlement between Mr. and Mrs. Harden. One can not even consider the possibility of a reconciliation
between the spouses, the same being inconsistent with the monetary consideration for said alleged settlement. What is more, the records
show that the relations between said spouses — which were bad indeed, not only in July, 1941, when Mrs. Harden engaged the services of
the appellee, but, even, before, for Mr. and Mrs. Harden were separated since 1938 — had worsened considerably thereafter, as evidenced
by an action for divorce filed by Mr. Harden in New Jersey, in July 1948, upon the ground of repeated acts of infidelity allegedly committed
by Mrs. Harden in 1940 and 1941.
On the same considerations of equity, and for the better protection of lawyers, who, trusting in the good faith of their clients, render
professional services on contingent basis, and so that it may not be said that this Court, sanctions in any way the questionable practice of
clients of compromising their cases at the back of their counsel with the consequence that the stipulated contingent fees of the lawyer are
either unreasonably reduced or even completely rendered without basis, as in this case — wherein the clients waived the whole of their rights
in favor of their opponent after the latter had acknowledged, in effect, the correctness of said clients' contention — We have decided to grant
the herein petition, in so far as the rights of petitioner have been prejudiced by the questioned compromise agreement. While We here reaffirm
the rule that "the client has an undoubted right to compromise a suit without the intervention of his lawyer", 8 We hold that when such
compromise is entered into in fraud of the lawyer, with intent to deprive him of the fees justly due him, the compromise must be subject to the
said fees, and that when it is evident that the said fraud is committed in confabulation with the adverse party who had knowledge of the
lawyer's contingent interest or such interest appears of record and who would benefit under such compromise, the better practice is to settle
the matter of the attorney's fees in the same proceeding, after hearing all the affected parties and without prejudice to the finality of the
compromise in so far as it does not adversely affect the rights of the lawyer. Surely, "the client cannot, by setting, compromising or dismissing
his suit during its pendency, deprive the attorney of his compensation for the agreed amount, unless the lawyer consents to such settlement,
compromise or dismissal", (Legal and Judicial Ethics by Martin, 1967 Rev. Ed p. 121) for the, attorney is or "Shall be entitled to have and
recover from his client - a reasonable compensation (not more) 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", (Sec. 24, Rule 138, on Attorney and Admission
to Bar) albeit, under Canon 12 of the Canons of Professional Ethics, "in fixing fees, it should not be forgotten that the profession is a branch
of the administration of justice and not a mere money-getting trade."

True it is also that "a client may, at anytime, dismiss his attorney or substitute another in his place", (Sec. 26, Rule 138) but it must be
emphasized that the same provision, which is an incorporation of Republic Act 636 into the Rules of Court, also provides that "if the contract
between client and attorney had been reduced to writing and the dismissal of the attorney was without justifiable cause, he shall be entitled
to recover from the client full compensation ..." In the case at bar, by entering into the compromise agreement in question and even inserting
therein a prayer to the court to dismiss their case filed by petitioner, (see footnote 6, ante) petitioner's clients impliedly dismissed him. (Rustia
vs. the Court, etc., supra.) Such implied dismissal appears to Us to have been made without justifiable cause, none is urged anywhere in the
record, and so, the above-quoted provision of Section 26, Rule 138 applies here. The terms of the compromise in question, as spelled out in
Annex A of Annex I of the petition, indicate clearly that Aurelia Martinez, the defendant aunt in-law of petitioner's clients, acknowledged that
the rights of said clients were practically as alleged by petitioner in the complaint he filed for them. In other words, through the services of
petitioner, his clients secured, in effect, a recognition, which had been previously denied by their aunt-in-law, that they were entitled to a ¼
share in the estate left by their uncle. We hold that under these circumstances, and since it appears that said clients have no other means to
pay petitioner, since they instituted their case as paupers, and that their aunt-in-law was aware of the terms of their contract of professional
services with petitioner', said clients had no right to waive the portion of their such acknowledged rights in favor of their opponent to the extent
that such waiver would prejudice the stipulated contingent interest of their lawyer and their aunt-in-law had no right to accept such waiver
unqualified. The Civil Code enjoins that:
ART. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and
observe honesty and good faith.

Under the circumstance extant in the record, it is clear that the compromise agreement in question falls short of the moral requirements of
this quoted article of the Civil Code. If for this reason alone, it should not be allowed to prejudice the rights of petitioner. Accordingly, as all of
these circumstances were presented to respondent judge before he issued the challenged order of dismissal and all the parties were heard
thereon, it was incumbent upon His Honor, in equity and to avoid multiplicity of suits, particularly, because the amount claimed by petitioner
is only P1,000.00, to have directly passed upon petitioner's claim, and not having done so, it would appear that the court a quo abused its
discretion gravely enough to warrant the writ of certiorari herein prayed for in so far as the questioned orders prejudiced petitioner's right to
the fees for the professional services which appear to have been creditably rendered by him. Respondents allege that the judgment of
dismissal in question is already final because no appeal was taken therefrom, but since We hold that the same was rendered with enough
grave abuse of discretion to warrant the certiorari prayed for, such alleged finality could not have materialized; obviously, petitioner could not
have appealed, not being a party in the case.
IN VIEW OF THE FOREGOING, the orders of the respondent court dated November 21, 1964 and January 9, 1965 in Civil Case No. SC-
525 are hereby set aside in so far as they prejudice the payment of petitioner's claim of attorney's fees in the form of either one-third of the
¼ share acknowledged as his clients in the compromise in question or P1,000.00, which should constitute as a lien on the said share, in spite
of the waiver thereof in favor of respondent Aurelia Martinez. It is unnecessary to consider the petition for mandamus. Costs against, private
respondents.

MIRANDA VS CARPIO

DECISION

PERALTA, J.:
This is a disbarment case against Atty. Macario D. Carpio filed by Valentin C. Miranda.[1]

The facts, as culled from the records, are as follows:

Complainant Valentin C. Miranda is one of the owners of a parcel of land consisting of 1,890 square meters located
at Barangay Lupang Uno, Las Pias, Metro Manila. In 1994, complainant initiated Land Registration Commission
(LRC) Case No. M-226 for the registration of the aforesaid property. The case was filed before the Regional Trial
Court ofLas Pias City, Branch 275. During the course of the proceedings, complainant engaged the services of
respondent Atty. Carpio as counsel in the said case when his original counsel, Atty. Samuel Marquez, figured in a
vehicular accident.

In complainant's Affidavit,[2] complainant and respondent agreed that complainant was to pay respondent Twenty Thousand Pesos (PhP20,000.00) as acceptance fee
and Two Thousand Pesos (PhP2,000.00) as appearance fee. Complainant paid respondent the amounts due him, as evidenced by receipts duly signed by the latter. During the last

hearing of the case, respondent demanded the additional amount of Ten Thousand Pesos (PhP10,000.00) for the preparation of a memorandum, which he said would further strengthen

complainant's position in the case, plus twenty percent (20%) of the total area of the subject property as additional fees for his services.

Complainant did not accede to respondent's demand for it was contrary to their agreement. Moreover, complainant
co-owned the subject property with his siblings, and he could not have agreed to the amount being demanded by
respondent without the knowledge and approval of his co-heirs. As a result of complainant's refusal to satisfy
respondent's demands, the latter became furious and their relationship became sore.

On January 12, 1998, a Decision was rendered in LRC Case No. M-226, granting the petition for registration, which
Decision was declared final and executory in an Order dated June 5, 1998. On March 24, 2000, the Land Registration
Authority (LRA) sent complainant a copy of the letter addressed to the Register of Deeds (RD) of Las Pias City,
which transmitted the decree of registration and the original and owner's duplicate of the title of the property.

On April 3, 2000, complainant went to the RD to get the owner's duplicate of the Original Certificate of Title (OCT)
bearing No. 0-94. He was surprised to discover that the same had already been claimed by and released to respondent
on March 29, 2000. On May 4, 2000, complainant talked to respondent on the phone and asked him to turn over the
owner's duplicate of the OCT, which he had claimed without complainant's knowledge, consent and authority.
Respondent insisted that complainant first pay him the PhP10,000.00 and the 20% share in the property equivalent
to 378 square meters, in exchange for which, respondent would deliver the owner's duplicate of the OCT. Once again,
complainant refused the demand, for not having been agreed upon.

In a letter[3] dated May 24, 2000, complainant reiterated his demand for the return of the owner's duplicate of the OCT. On June 11, 2000, complainant made the same demand
on respondent over the telephone. Respondent reiterated his previous demand and angrily told complainant to comply, and threatened to have the OCT cancelled if the latter refused

to pay him.

On June 26, 2000, complainant learned that on April 6, 2000, respondent registered an adverse claim on the subject
OCT wherein he claimed that the agreement on the payment of his legal services was 20% of the property and/or
actual market value. To date, respondent has not returned the owner's duplicate of OCT No. 0-94 to complainant and
his co-heirs despite repeated demands to effect the same.

In seeking the disbarment or the imposition of the appropriate penalty upon respondent, complainant invokes the
following provisions of the Code of Professional Responsibility:
Canon 20. A lawyer shall charge only fair and reasonable fees.
Canon 16. A lawyer shall hold in trust all moneys and properties of his client that may come into his possession.
Canon 16.03. A lawyer shall deliver the funds and properties of his client when due or upon demand. x x x

In defense of his actions, respondent relied on his alleged retaining lien over the owner's duplicate of OCT No. 0-94.
Respondent admitted that he did not turn over to complainant the owner's duplicate of OCT No. 0-94 because of
complainant's refusal, notwithstanding repeated demands, to complete payment of his agreed professional fee
consisting of 20% of the total area of the property covered by the title, i.e., 378 square meters out of 1,890 square
meters, or its equivalent market value at the rate of PhP7,000.00 per square meter, thus, yielding a sum of
PhP2,646,000.00 for the entire 378-square-meter portion and that he was ready and willing to turn over the owner's
duplicate of OCT No. 0-94, should complainant pay him completely the aforesaid professional fee.

Respondent admitted the receipt of the amount of PhP32,000.00, however, he alleged that the amount earlier paid to
him will be deducted from the 20% of the current value of the subject lot. He alleged that the agreement was not
reduced into writing, because the parties believed each other based on their mutual trust. He denied that he demanded
the payment of PhP10,000.00 for the preparation of a memorandum, since he considered the same unnecessary.
In addition to the alleged agreement between him and complainant for the payment of the 20% professional fees,
respondent invoked the principle of quantum meruit to justify the amount being demanded by him.

In its Report and Recommendation[4] dated June 9, 2005, the Integrated Bar of the Philippines-Commission on Bar Discipline (IBP-CBD) recommended
that respondent be suspended from the practice of law for a period of six (6) months for unjustly withholding from complainant the owner's duplicate of OCT No. 0-94 in the exercise

of his so-called attorney's lien. In Resolution No. XVII-2005-173,[5] dated December 17, 2005, the IBP Board of Governors adopted and approved the Report and Recommendation

of the IBP-CBD.

Respondent filed a motion for reconsideration of the resolution of the IBP Board of Governors adopting the report
and recommendation of the IBP-CBD. Pending the resolution of his motion for reconsideration, respondent filed a
petition for review[6] with this Court. The Court, in a Resolution[7] dated August 16, 2006, directed that the case be remanded to the IBP for proper disposition, pursuant
to this Court's resolution in
Noriel J. Ramientas v. Atty. Jocelyn P. Reyala.[8]

In Notice of Resolution No. XVIII-2008-672, dated December 11, 2008, the IBP Board of Governors affirmed
Resolution No. XVII-2005-173, dated December 17, 2005, with modification that respondent is ordered to return the
complainant's owner's duplicate of OCT No. 0-94 within fifteen days from receipt of notice. Hence, the present
petition.

The Court sustains the resolution of the IBP Board of Governors, which affirmed with modification the findings and
recommendations of the IBP-CBD. Respondent's claim for his unpaid professional fees that would legally give him
the right to retain the property of his client until he receives what is allegedly due him has been paid has no basis
and, thus, is invalid.

Section 37, Rule 138 of the Rules of Court specifically provides:

Section 37. Attorneys liens. An attorney shall have a lien upon the funds, documents and papers of his client, which have lawfully come
into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the
satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in
pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a
statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and
shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power
over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.

An attorney's retaining lien is fully recognized if the presence of the following elements concur: (1) lawyer-client
relationship; (2) lawful possession of the client's funds, documents and papers; and (3) unsatisfied claim for attorney's
fees.[9] Further, the attorney's retaining lien is a general lien for the balance of the account between the attorney and his client, and applies to the documents and funds of the client
which may come into the attorney's possession in the course of his employment.[10]
In the present case, complainant claims that there is no such agreement for the payment of professional fee consisting
of 20% of the total area of the subject property and submits that their agreement was only for the payment of the
acceptance fee and the appearance fees.

As correctly found by the IBP-CBD, there was no proof of any agreement between the complainant and the
respondent that the latter is entitled to an additional professional fee consisting of 20% of the total area covered by
OCT No. 0-94. The agreement between the parties only shows that respondent will be paid the acceptance fee and
the appearance fees, which the respondent has duly received. Clearly, there is no unsatisfied claim for attorney's fees
that would entitle respondent to retain his client's property. Hence, respondent could not validly withhold the title of
his client absence a clear and justifiable claim.

Respondent's unjustified act of holding on to complainant's title with the obvious aim of forcing complainant to agree
to the amount of attorney's fees sought is an alarming abuse by respondent of the exercise of an attorney's retaining
lien, which by no means is an absolute right, and cannot at all justify inordinate delay in the delivery of money
andproperty to his client when due or upon demand.[11]

Atty. Carpio failed to live up to his duties as a lawyer by unlawfully withholding and failing to deliver the title of the
complainant, despite repeated demands, in the guise of an alleged entitlement to additional professional fees. He has
breached Rule 1.01 of Canon 1 and Rule 16.03 of Canon 16 of the Code of Professional Responsibility, which read:
CANON 1 - A LAWYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE LAND AND PROMOTE
RESPECT FOR LAW AND LEGAL PROCESS.

Rule 1.01 - A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY COME
INTO HIS POSSESSION.

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.

Further, in collecting from complainant exorbitant fees, respondent violated Canon 20 of the Code of Professional
Responsibility, which mandates that a lawyer shall charge only fair and reasonable fees. It is highly improper for a
lawyer to impose additional professional fees upon his client which were never mentioned nor agreed upon at the
time of the engagement of his services. At the outset, respondent should have informed the complainant of all the
fees or possible fees that he would charge before handling the case and not towards the near conclusion of the case.
This is essential in order for the complainant to determine if he has the financial capacity to pay respondent before
engaging his services.
Respondent's further submission that he is entitled to the payment of additional professional fees on the basis of the
principle of quantum meruit has no merit. "Quantum meruit, meaning `as much as he deserved' is used as a basis for
determining the lawyer's professional fees in the absence of a contract but recoverable by him from his client."[12] The
principle of
quantum meruit applies if a lawyer is employed without a price agreed upon for his services. In such a case,
he would be entitled to receive what he merits for his services, as much as he has earned. [13] In the present case, the parties had
already entered into an agreement as to the attorney's fees of the respondent, and thus, the principle of
quantum meruit does not fully find application
because the respondent is already compensated by such agreement.

The Court notes that respondent did not inform complainant that he will be the one to secure the owner's duplicate
of the OCT from the RD and failed to immediately inform complainant that the title was already in his possession.
Complainant, on April 3, 2000, went to the RD of Las Pias City to get the owner's duplicate of OCT No. 0-94, only
to be surprised that the said title had already been claimed by, and released to, respondent on March 29, 2000. A
lawyer must conduct himself, especially in his dealings with his clients, with integrity in a manner that is beyond
reproach. His relationship with his clients should be characterized by the highest degree of good faith and fairness. [14]
By keeping secret with the client his acquisition of the title, respondent was not fair in his dealing with his client. Respondent could have easily informed the complainant immediately

of his receipt of the owner's duplicate of the OCT on March 29, 2000, in order to save his client the time and effort in going to the RD to get the title.

Respondent's inexcusable act of withholding the property belonging to his client and imposing unwarranted fees in
exchange for the release of said title deserve the imposition of disciplinary sanction. Hence, the ruling of the IBP
Board of Governors, adopting and approving with modification the report and recommendation of the IBP-CBD that
respondent be suspended from the practice of law for a period of six (6) months and that respondent be ordered to
return the complainant's owner's duplicate of OCT No. 0-94 is hereby affirmed. However, the fifteen-day period
from notice given to respondent within which to return the title should be modified and, instead, respondent should
return the same immediately upon receipt of the Court's decision.

WHEREFORE, Atty. Macario D. Carpio is SUSPENDED from the practice of law for a period of six (6) months,
effective upon receipt of this Decision. He is ordered toRETURN to the complainant the owner's duplicate of OCT
No. 0-94 immediately upon receipt of this decision. He is WARNED that a repetition of the same or similar act shall
be dealt with more severely.

A.C. No. 9532 October 8, 2013

MARIA CRISTINA ZABALJAUREGUI PITCHER, Complainant,

vs.
ATTY. RUSTICO B. GAGATE, Respondent.
DECISION
PERLAS-BERNABE, J.:

For the Court s resolution is an administrative complaint1 filed by Maria Cristina Zabaljauregui Pitcher (complainant) against Atty. Rustico B. Gagate (respondent), . charging him for gross ignorance of the
law and unethical practice of law.

The facts
Complainant claimed to be the legal wife of David B. Pitcher (David),2 a British national who passed away on June 18, 2004.3 Prior to his death, David was engaged in business in the Philippines
and owned, among others, 40% of the shareholdings in Consulting Edge, Inc.4 (Consulting Edge), a domestic corporation. In order to settle the affairs of her deceased husband, complainant engaged the services of respondent.5

On June 22, 2004, complainant and respondent met with Katherine Moscoso Bantegui Bantegui),6 a major stockholder of Consulting Edge,7 in order to discuss the settlement
of David’s interest in the company.8 They agreed to another meeting which was, however, postponed by Bantegui. Suspecting that the latter was merely stalling for time in order to hide something, respondent insisted that the appointment proceed
as scheduled.9

Eventually, the parties agreed to meet at the company premises on June 28, 2004. However, prior to the scheduled meeting, complainant
was prevailed upon by respondent to put a paper seal on the door of the said premises, assuring her that the same was legal.10
On the scheduled meeting, Bantegui expressed disappointment over the actions of complainant and respondent, which impelled her to just
leave the matter for the court to settle. She then asked them to leave, locked the office and refused to give them a duplicate key.11
Subsequently, however, respondent, without the consent of Bantegui, caused the change in the lock of the Consulting Edge office door,12 which
prevented the employees thereof from entering and carrying on the operations of the company. This prompted Bantegui to file before the Office of the City Prosecutor of Makati (Prosecutor’s Office) a complaint for grave coercion against complainant
and respondent.13 In turn, respondent advised complainant that criminal and civil cases should be initiated against Bantegui for the recovery of David's personal records/business interests in Consulting Edge.14 Thus, on January 17, 2005, the
two entered in Memorandum of Agreement,15 whereby respondent undertook the filing of the cases against Bantegui, for which complainant paid the amount of ₱150,000.00 as acceptance fee and committed herself to pay respondent ₱1,000.00
for every court hearing.16

On November 18, 2004, the Prosecutor’s Office issued a Resolution17 dated October 13, 2004, finding probable cause to charge complainant and respondent for grave coercion. The corresponding
Information was filed before the Metropolitan Trial Court of Makati City, Branch 63, docketed as Criminal Case No. 337985 (grave coercion case), and, as a matter of course, warrants of arrest were issued against them.18 Due to the foregoing,
respondent advised complainant to go into hiding until he had filed the necessary motions in court. Eventually, however, respondent abandoned the grave coercion case and stopped communicating with complainant.19Failing to reach respondent
despite diligent efforts,20 complainant filed the instant administrative case before the Integrated Bar of the Philippines (IBP) - Commission on Bar Discipline (CBD), docketed as CBD Case No. 06-1689.

Despite a directive21 from the IBP-CBD, respondent failed to file his answer to the complaint. The case was set for mandatory conference on November 24, 2006,22 which was reset twice,23 on January 12, 2007 and February 2,
2007, due to the absence of respondent. The last notice sent to respondent, however, was returned unserved for the reason "moved out."24 In view thereof, Investigating Commissioner Tranquil S. Salvador III declared the mandatory conference
terminated and required the parties to submit their position papers, supporting documents, and affidavits.25

The IBP’s Report and Recommendation

On March 18, 2009, Investigating Commissioner Pedro A. Magpayo, Jr. (Commissioner Magpayo) issued a Report and Recommendation,26
observing that respondent failed to safeguard complainant's legitimate interest and abandoned her in the grave coercion case. Commissioner Magpayo pointed out that Bantegui is not legally obliged to honor complainant as subrogee of David
because complainant has yet to establish her kinship with David and, consequently, her interest in Consulting Edge.27 Hence, the actions taken by respondent, such as the placing of paper seal on the door of the company premises and the
changing of its lock, were all uncalled for. Worse, when faced with the counter legal measures to his actions, he abandoned his client's cause.28Commissioner Magpayo found that respondent’s acts evinced a lack of adequate preparation and
mastery of the applicable laws on his part, in violation of Canon 529 of the Code of Professional Responsibity (Code), warranting his suspension from the practice of law for a period of six months.30

The IBP Board of Governors adopted and approved the aforementioned Report and Recommendation in Resolution No. XX-2011-261 dated
November 19, 2011 (November 19, 2011 Resolution), finding the same to be fully supported by the evidence on record and the applicable
laws and rules.31
In a Resolution32 dated October 8, 2012, the Court noted the Notice of the IBP’s November 19, 2011 Resolution, and referred the case to the Office of the Bar Confidant (OBC) for evaluation, report and recommendation.33

The OBC's Report and Recommendation

On February 11, 2013, the OBC submitted a Report and Recommendation34 dated February 6, 2013, concluding that respondent grossly neglected his duties to his client and failed to
safeguard the latter's rights and interests in wanton disregard of his duties as a lawyer.35 It deemed that the six-month suspension from the practice of law as suggested by the IBP was an insufficient penalty and, in lieu thereof, recommended
that respondent be suspended for three years.36 Likewise, it ordered respondent to return the ₱150,000.00 he received from complainant as acceptance fee.37

The Court's Ruling

After a careful perusal of the records, the Court concurs with and adopts the findings and conclusions of the OBC.
The Court has repeatedly emphasized that the relationship between a lawyer and his client is one imbued with utmost trust and confidence.
In this regard, clients are led to expect that lawyers would be ever-mindful of their cause and accordingly exercise the required degree of
diligence in handling their affairs. For his part, the lawyer is expected to maintain at all times a high standard of legal proficiency, and to
devote his full attention, skill, and competence to the case, regardless of its importance and whether he accepts it for a fee or for free.38 To this
end, he is enjoined to employ only fair and honest means to attain lawful objectives.39 These principles are embodied in Canon 17, Rule 18.03 of Canon 18, and Rule 19.01 of Canon 19 of the Code which respectively state:

CANON 17 - A lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him.
CANON 18 – A lawyer shall serve his client with competence and diligence.

xxxx
Rule 18.03 – A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable.
xxxx
CANON 19 – A lawyer shall represent his client with zeal within the bounds of the law.

Rule 19.01 – A lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in
presenting or threaten to present unfounded criminal charges to obtain an improper advantage in any case or proceeding.
xxxx

Keeping with the foregoing rules, the Court finds that respondent failed to exercise the required diligence in handling complainant’s cause
since he: first, failed to represent her competently and diligently by acting and proffering professional advice beyond the proper bounds of
law; and, second, abandoned his client’s cause while the grave coercion case against them was pending.
Anent the first infraction, it bears emphasis that complainant's right over the properties of her deceased husband, David, has yet to be
sufficiently established. As such, the high-handed action taken by respondent to enforce complainant's claim of ownership over the latter’s
interest in Consulting Edge – i.e., causing the change of the office door lock which thereby prevented the free ingress and egress of the
employees of the said company – was highly improper. Verily, a person cannot take the law into his own hands, regardless of the merits of
his theory. In the same light, respondent's act of advising complainant to go into hiding in order to evade arrest in the criminal case can hardly
be maintained as proper legal advice since the same constitutes transgression of the ordinary processes of law. By virtue of the foregoing,
respondent clearly violated his duty to his client to use peaceful and lawful methods in seeking justice, 40 in violation of Rule 19.01, Canon 19 of the Code as above-
quoted. To note further, since such courses of action were not only improper but also erroneous, respondent equally failed to serve his client with competence and diligence in violation of Canon 18 of the Code. In the same regard, he also remained
unmindful of his client’s trust in him – in particular, her trust that respondent would only provide her with the proper legal advice in pursuing her interests – thereby violating Canon 17 of the Code.

With respect to the second infraction, records definitively bear out that respondent completely abandoned complainant during the pendency
of the grave coercion case against them; this notwithstanding petitioner’s efforts to reach him as well as his receipt of the ₱150,000.00
acceptance fee. It is hornbook principle that a lawyer’s duty of competence and diligence includes not merely reviewing the cases entrusted
to his care or giving sound legal advice, but also consists of properly representing the client before any court or tribunal, attending scheduled
hearings or conferences, preparing and filing the required pleadings, prosecuting the handled cases with reasonable dispatch, and urging
their termination even without prodding from the client or the court.41 Hence, considering respondent’s gross and inexcusable neglect by leaving his client totally unrepresented in a criminal case,
it cannot be doubted that he violated Canon 17, Rule 18.03 of Canon 18, and Rule 19.01 of Canon 19 of the Code.

In addition, it must be pointed out that respondent failed to file his answer to the complaint despite due notice. 1âwphi1This demonstrates not
only his lack of responsibility but also his lack of interest in clearing his name, which, as case law directs, is constitutive of an implied admission
of the charges leveled against him.42 In fine, respondent should be held administratively liable for his infractions as herein discussed. That said, the Court now proceeds to determine the appropriate penalty to be imposed
against respondent.

Several cases show that lawyers who have been held liable for gross negligence for infractions similar to those committed by respondent
were suspended from the practice of law for a period of two years. In Jinon v. Jiz,43 a lawyer who neglected his client's case, misappropriated the client's funds and disobeyed the IBP’s
directives to submit his pleadings and attend the hearings was suspended from the practice of law for two years. In Small v. Banares,44 the Court meted a similar penalty against a lawyer who failed to render any legal service even after receiving
money from the complainant; to return the money and documents he received despite demand; to update his client on the status of her case and respond to her requests for information; and to file an answer and attend the mandatory conference
before the IBP. Also, in Villanueva v. Gonzales,45 a lawyer who neglected complainant’s cause; refused to immediately account for his client’s money and to return the documents received; failed to update his client on the status of her case and
to respond to her requests for information; and failed to submit his answer and to attend the mandatory conference before the IBP was suspended from the practice of law for two years. However, the Court observes that, in the present case,
complainant was subjected to a graver injury as she was prosecuted for the crime of grave coercion largely due to the improper and erroneous advice of respondent. Were it not for respond ent’s imprudent counseling, not to mention his act of
abandoning his client during the proceedings, complainant would not have unduly suffered the harbors of a criminal prosecution. Thus, considering the superior degree of the prejudice caused to complainant, the Court finds it apt to impose against
respondent a higher penalty of suspension from the practice of law for a period of three years as recommended by the OBC.

In the same light, the Court sustains the OBC’s recommendation for the return of the ₱150,000.00 acceptance fee received by respondent
from complainant since the same is intrinsically linked to his professional engagement. While the Court has previously held that disciplinary
proceedings should only revolve around the determination of the respondent-lawyer’s administrative and not his civil liability,46 it must be clarified that
this rule remains applicable only to claimed liabilities which are purely civil in nature – for instance, when the claim involves moneys received by the lawyer from his client in a transaction separate and distinct and not intrinsically linked to his
professional engagement (such as the acceptance fee in this case). Hence, considering further that the fact of respondent’s receipt of the ₱150,000.00 acceptance fee from complainant remains undisputed,47 the Court finds the return of the said
fee, as recommended by the OBC, to be in order.

WHEREFORE respondent Atty. Rustico B. Gagate is found guilty of violating Canon 17 Rule 18.03 of Canon 18 and Rule 19.01 of Canon 19
of the Code of Professional Responsibility. Accordingly, he is hereby SUSPENDED from the practice of law for a period of three 3) years,
effective upon the finality of this Decision, with a stem warning that a repetition of the same or similar acts will be dealt with more severely.
Further, respondent is ORDERED to return to complainant Maria Cristina Zabaljauregui Pitcher the ₱150,000.00 acceptance fee he received
from the latter within ninety (90) days from the finality of this Decision. Failure to comply with the foregoing directive will warrant the imposition
of a more severe penalty.

Let a copy of this Decision be furnished the Office of the Bar Confidant, the Integrated Bar of the Philippines, and the Office of the Court
Administrator for circulation to all the courts.
SO ORDERED.