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PRACTICING DEPSITE SUSPENSION

Republic of the Philippines


Supreme Court
Manila

EN BANC

LIGAYA MANIAGO, Complainant,

- versus -

ATTY. LOURDES I. DE DIOS, Respondent.

A.C. No. 7472

Present:
PUNO, C.J.,*
CARPIO,**
CORONA,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ, and
MENDOZA, JJ.

Promulgated:

March 30, 2010


x-----------------------------------------------------------------------------------------x

RESOLUTION

1
NACHURA, J.:

The instant case arose from an Affidavit-Complaint dated April 2, 2007 filed by Ligaya Maniago,
seeking the disbarment of Atty. Lourdes I. de Dios for engaging in the practice of law despite
having been suspended by the Court.
Complainant alleged that she filed a criminal case against Hiroshi Miyata, a Japanese national,
before the Regional Trial Court (RTC), Olongapo City, Branch 73, for violation of Presidential
Decree No. 603, docketed as Criminal Case No. 699-2002. The accused was represented by
Atty. De Dios, with office address at 22 Magsaysay Drive, Olongapo City. Complainant then
learned from the RTC staff that Atty. De Dios had an outstanding suspension order from the
Supreme Court since 2001, and was, therefore, prohibited from appearing in court.
Complainant further alleges that there is a civil case (Civil Case No. 355-0-2005) and another
case (Special Proceeding No. M-6153) filed against Miyata before the RTC, Makati City,
Branch 134, where Atty. De Dios appeared as his counsel. Complainant averred that Atty. De
Dios ought to be disbarred from the practice of law for her flagrant violation and deliberate
disobedience of a lawful order of the Supreme Court.

In her Comment, Atty. De Dios admitted that there were cases filed against her client, Miyata.
She, however, denied that she was under suspension when she appeared as his counsel in the
cases.

Respondent explained that an administrative case was indeed filed against her by Diana de
Guzman, docketed as A.C. No. 4943, where she was meted the penalty of 6-month
suspension. She served the suspension immediately upon receipt of the Courts Resolution on
May 16, 2001 up to November 16, 2001. In a Manifestation filed on October 19, 2001,
respondent formally informed the Court that she was resuming her practice of law on
November 17, 2001, which she actually did.

A problem arose when Judge Josefina Farrales, in her capacity as Acting Executive Judge of
the RTC, Olongapo City, erroneously issued a directive on March 15, 2007, ordering
respondent to desist from practicing law and revoking her notarial commission for the years
2007 and 2008. Knowing that the directive was rather questionable, respondent, nonetheless,
desisted from law practice in due deference to the court order. Thereafter, respondent filed a
Motion for Clarification with the Supreme Court on account of Judge Farrales letters to all
courts in Olongapo City and to some municipalities in Zambales, which gave the impression
that Atty. De Dios is not yet allowed to resume her practice of law and that her notarial
commission for the years 2007 and 2008 is revoked. Acting on the said motion, the Court
issued a resolution on April 23, 2007 in this wise:

A.C. No. 4943 (Diana de Guzman v. Atty. Lourdes I. De Dios) Respondents Urgent Motion for
Clarification dated 14 March 2007 praying that the Court declare her to have served her six (6)
months (sic) suspension and her resumption of law practice on 17 November 2001 onwards as
proper is NOTED.

Considering the motion for clarification, the Court resolves to DEEM Atty. Lourdes I. De Dios to
have SERVED her six (6) month suspension and her recommencement of law practice on 17
November 2001 as PROPER pursuant to the Resolution dated 30 January 2002.

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Respondent averred that for the period stated in the affidavit of complainant Maniago, during
which she allegedly practiced law, she was neither suspended nor in any way prohibited from
practice. The complaint, she added, was baseless and malicious, and should be dismissed
outright.
In the Resolution dated September 12, 2007, the Court referred the matter to the Office of the
Bar Confidant (OBC) for evaluation, report and recommendation. Initially, the OBC directed the
complainant to file a supplemental affidavit, stating therein the exact period of appearances of
Atty. De Dios and the particular courts where respondent appeared as counsel in the following
cases: (1) Criminal Case No. 699-2002; (2) Civil Case No. 355-0-2005; and (3) Sp. Proc. No.
M-6153.

In compliance therewith, complainant submitted a Supplemental Affidavit in the vernacular,


which reads:

2. Sa Criminal Case No. 699-2002 entitled People of the Philippines vs. Hiroshi Miyata ay
[nagsimulang] mag[-]appear si Atty. Lourdes de Dios mula April 9, 2003, na [naka-]attach ang
Certification mula sa Branch 73[,] Regional Trial Court[,] Olongapo City.

3. Sa Civil Case No. 355-0-2006 ay [nagsimulang] mag[-]appear si Atty. de Dios noong


October 10, 2005, nakasaad din ito sa Certification mula sa Branch 73, Regional Trial Court of
Olongapo City. At sa Sp. Proc. No. M-6153 ay ito ay na[-]ifile ni Atty. de Dios noong September
26, 2005 at hanggang ngayon ay pending pa sa Court of Appeals.

4. Bilang karagdagan po ay naka[-]attach ang Certified Xerox Copy ng Minutes of the Session
ng Subic Municipal Trial Court na kung saan ay nag[-]appear si Atty. de Dios sa Civil Case No.
042-01 entitled Andrea Lorenzo, plaintiff, -versus- Simeon Pullido noong December 14, 2001.

5. At makikita rin po sa Annex A-5 ng Comment ni Atty. de Dios, x x x -

5.[a.] Nag file ng kaso si Atty. Lourdes de Dios noong May 17, 2001 entitled Shirley
Pagaduan vs. Danilo Pagaduan[,] Civil Case No. 234-0-2001. Ito ay ginawa ni Atty. de
Dios isang (1) araw pa lamang mula magsimula ang kanyang suspension noon[g] May
16, 2001.

5.b. Nag file din ng kaso si Atty. de Dios noong May 18, 2001 entitled Filmixco versus Dr.
Ma. Perla Tabasondra-Ramos and Dr. Ricardo Ramos Civil Case No. 236-0-2001. Ito ay
dalawang (2) araw mula magsimula ang suspension ni Atty. de Dios noong May 16, 2001.

5.c. At nag notaryo si Atty. de Dios ng isang (a) affidavit executed by Carolina C.
Bautista noong May 16, 2001, (b) Affidavit executed by Jessica Morales-Mesa on May 17,
2001 at (c) isang Statement of non-liability of Alfredo C. Diaz on May 16, 2001. Ang mga
pag notaryo na ito ay ginawa noong nagsimula na ang suspension ni Atty. de Dios
noong May 16, 2001.

6. Ginawa ko ang Supplemental Affidavit na ito bilang patunay sa mga nakasaad base sa aking
personal na kaalamanan at mga dokumentong hawak ko upang ipakita na nilabag ni Atty. de
Dios ang kanyang suspension base sa sulat ni Deputy Clerk of Court and Bar Confidant Ma.
3
Cristina B. Layusa na may petsang 12 February 2007 at sa admission ni Atty. de Dios na
nagsimula ang kanyang suspension noong May 16, 2001.

A Supplemental Comment was thereafter filed by respondent, stating that there were no new
matters raised in the Supplemental Affidavit, and asserting that the opinion of Bar Confidant,
Atty. Ma. Cristina B. Layusa, as contained in her letter dated 12 February 2007, cannot
supersede the Resolution dated April 23, 2007 of this Honorable Court. According to her, the
resolution should be the final nail to the coffin of this case.
On November 18, 2008, the OBC submitted its Memorandum for the Courts consideration.

The OBC explained that the letter adverted to by complainant in her affidavit was the OBCs
reply to an inquiry made by the Office of the Court Administrator regarding the status of Atty.
De Dios.[1] Therein, the OBC made it clear that the lifting of the suspension order was not
automatic, following the pronouncement of the Court in J.K. Mercado and Sons Agricultural
Enterprises, Inc. and Spouses Jesus and Rosario K. Mercado, complainants v. Atty. Eduardo
de Vera and Jose Rongkales Bandalan, et al. and Atty. Eduardo C. de Vera v. Atty. Mervyn G.
Encanto, et al., which states:

The Statement of the Court that his suspension stands until he would have satisfactorily shown
his compliance with the Courts resolution is a caveat that his suspension could thereby extend
for more than six months. The lifting of a lawyers suspension is not automatic upon the end of
the period stated in the Courts decision, and an order from the Court lifting the suspension at
the end of the period is necessary in order to enable [him] to resume the practice of his
profession.[2]

Thus, according to the OBC, a suspended lawyer must first present proof(s) of his
compliance by submitting certifications from the Integrated Bar of the Philippines and
from the Executive Judge that he has indeed desisted from the practice of law during the
period of suspension. Thereafter, the Court, after evaluation, and upon a favorable
recommendation from the OBC, will issue a resolution lifting the order of suspension
and thus allow him to resume the practice of law. The OBC alleged that it was
unfortunate that this procedure was overlooked in A.C. No. 4943, where Atty. De Dios
was able to resume her practice of law without submitting the required certifications and
passing through the OBC for evaluation. In order to avoid confusion and conflicting
directives from the Court, the OBC recommended that the Court adopt a uniform policy on the
matter of the lifting of the order of suspension of a lawyer from the practice of law.

The Court notes the Report and Recommendation of the OBC.

It must be remembered that the practice of law is not a right but a mere privilege and, as
such, must bow to the inherent regulatory power of the Supreme Court to exact
compliance with the lawyers public responsibilities.[3] Whenever it is made to appear that
an attorney is no longer worthy of the trust and confidence of his clients and of the public, it
becomes not only the right but also the duty of the Supreme Court, which made him one of its
officers and gave him the privilege of ministering within its Bar, to withdraw that privilege.[4]
However, as much as the Court will not hesitate to discipline an erring lawyer, it should, at the

4
same time, also ensure that a lawyer may not be deprived of the freedom and right to exercise
his profession unreasonably.

IN LIGHT OF THE FOREGOING, it is hereby RESOLVED that the following guidelines be


observed in the matter of the lifting of an order suspending a lawyer from the practice of law:
1) After a finding that respondent lawyer must be suspended from the
practice of law, the Court shall render a decision imposing the penalty;

2) Unless the Court explicitly states that the decision is immediately


executory upon receipt thereof, respondent has 15 days within which to file a motion for
reconsideration thereof. The denial of said motion shall render the decision final and
executory;
3) Upon the expiration of the period of suspension, respondent shall file a
Sworn Statement with the Court, through the Office of the Bar Confidant, stating therein
that he or she has desisted from the practice of law and has not appeared in any court
during the period of his or her suspension;

4) Copies of the Sworn Statement shall be furnished to the Local Chapter


of the IBP and to the Executive Judge of the courts where respondent has pending
cases handled by him or her, and/or where he or she has appeared as counsel;

5) The Sworn Statement shall be considered as proof of respondents


compliance with the order of suspension;

6) Any finding or report contrary to the statements made by the lawyer


under oath shall be a ground for the imposition of a more severe punishment, or
disbarment, as may be warranted.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA


Associate Justice

WE CONCUR:
Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

A.C. No. 5377 June 30, 2014

VICTOR C. LINGAN, Complainant,


5
vs.
ATTYS. ROMEO CALUBAQUIB and JIMMY P. BALIGA, Respondents.

RESOLUTION

LEONEN, J.:

This court has the exclusive jurisdiction to regulate the practice of law. When this court orders
a lawyer suspended from the practice of law, the lawyer must desist from performing all
functions requiring the application of legal knowledge within the period of suspension.
This includes desisting from holding a position in government requiring the authority to
practice law.

For our resolution is respondent Atty. Jimmy P. Baliga's motion to lift one-year
suspension from the practice of law.1

In the resolution2 dated June 15, 2006, this court found Attys. Romeo I. Calubaquib and Jimmy
P. Baliga guilty of violating Rule 1.01, Canon 1 of the Code of Professional Responsibility3 and
of the Lawyer's Oath.4 Respondents allowed their secretaries to notarize documents in their
stead, in violation of Sections 2455 and 2466 of the Notarial Law. This court suspended
respondents from the practice of law for one year, revoked their notarial commissions, and
disqualified them from reappointment as notaries public for two years.

Complainant Victor C. Lingan filed his motion for reconsideration,7 praying that respondents be
disbarred, not merely suspended from the practice of law. In the resolution8 dated September
6, 2006, this court denied complainant Lingan's motion for reconsideration for lack of merit.

On March 22, 2007, Atty. Baliga, also the Regional Director of the Commission on Human
Rights Regional Office for Region II, filed the undated ex parte clarificatory pleading with leave
of court.9

In his ex parte clarificatory pleading, Atty. Baliga alleged that on July 14, 2006, complainant
Lingan wrote the Commission on Human Rights. Lingan requested the Commission to
investigate Atty. Baliga following the latter's suspension from the practice of law.

After this court had suspended Atty. Baliga from the practice of law, the Commission on Human
Rights En Banc issued the resolution10 dated January 16, 2007, suspending him from his
position as Director/Attorney VI of the. Commission on Human Rights Regional Office for
Region II. According to the Commission on Human Rights En Banc, Atty. Baliga's suspension
from the practice of law "prevent[ed] [him] from assuming his post [as Regional Director] for
want of eligibility in the meantime that his authority to practice law is suspended."11

6
Atty. Baliga · argued that he cannot be suspended for acts not connected with his functions as
Commission on Human Rights Regional Director. According to Atty. Baliga, his suspension
from the practice of law did not include his suspension from public office. He prayed for
clarification of this court's resolution dated June 15, 2006 "to prevent further injury and
prejudice to [his] rights."12

This court noted without action Atty. Baliga's ex parte clarificatory pleading as this court does
not render advisory opinions.13

On May 8, 2009, this court received ·a letter from complainant Lingan. In his letter14 dated May
4, 2009, Lingan alleged that Atty. Baliga continued practicing law and discharging his
functions as Commission on Human Rights Regional Director, in violation of this court's
order of suspension.

Complainant Lingan allegedly received a copy of the Commission on Human Rights En Banc 's
resolution suspending Atty. Baliga as Regional Director. On Atty. Baliga's motion, the
ommission reconsidered Atty. Baliga's suspension and instead admonished him for "[violating]
the conditions of his commission as a notary public."15 According to complainant Lingan, he
was not served a copy of Atty. Baliga's motion for reconsideration.16

Complainant Lingan claimed that the discharge of the functions of a Commission on Human
Rights Regional Director necessarily required the practice of law. A Commission on Human
Rights Regional Director must be a member of the bar and is designated as Attorney VI. Since
this court suspended Atty. Baliga from the practice of law, Atty. Baliga was in effect "a non-
lawyer . . . and [was] disqualified to hold the position of [Regional Director] [during the effectivity
of the order of suspension]."17 The Commission on Human Rights, according to complainant
Lingan, should have ordered Atty. Baliga to desist from performing his functions as Regional
Director. Complainant Lingan prayed that this court give "favorable attention and action on the
matter."18

This court endorsed complainant Lingan's letter to the Office of the Bar Confidant for report and
recommendation.19

In its report and recommendation20 dated June 29, 2009, the Office of the Bar Confidant
found that the period of suspension of Attys. Calubaquib and Baliga had already lapsed.
It recommended that respondents be required to file their respective motions to lift order
of suspension with certifications from the Integrated Bar of the Philippines and the
Executive Judge of the court where they might appear as counsel and state that they
desisted from practicing law during the period of suspension.

On the claim that the Commission on Human Rights allowed Atty. Baliga to perform his
functions as Regional Director during the period of suspension, the Office of the Bar Confidant
7
said that the Commission "deliberate[ly] disregard[ed]"21 this court's order of suspension.
According to the Office of the Bar Confidant, the Commission on Human Rights had no power
to "[alter, modify, or set aside any of this court's resolutions] which [have] become final and
executory. "22

Thus, with respect to Atty. Baliga, the Office of the Bar Confidant recommended that this court
require him to submit a certification from the Commission on Human Rights stating that he
desisted from performing his functions as Regional Director while he was suspended from the
practice of law.23

The Office of the Bar Confidant further recommended that Atty. Baliga and the
Commission .on Human Rights be required to comment on complainant Lingan's
allegation that Atty. Baliga continued to perform his functions as Regional Director while
he was suspended from the practice of law.

On July 17, 2009, Atty. Baliga filed a manifestation,24 arguing that his suspension from the
practice of law did not include his suspension from public office. Atty. Baliga said, "[t]o stretch
the coverage of [his suspension from the practice of law] to [his] public office would be
tantamount to [violating] his constitutional rights [sic] to due process and to the statutory
principle in law that what is not included is deemed excluded."25

In the resolution26 dated September 23, 2009, this court required respondents to file their
respective motions to lift order of suspension considering the lapse of the period of suspension.
This court further ordered Atty. Baliga and the Commission on Human Rights to comment on
complainant Lingari's allegation that Atty. Baliga continued performing his functions as
Regional Director while he was suspended from the practice of law. The resolution dated
September 23, 2009 provides:

Considering that the period of suspension from the practice of law and disqualification from
being commissioned as notary public imposed on respondents have [sic] already elapsed, this
Court resolves:

(1) to require both respondents, within ten (10) days from notice, to FILE their respective
motions to lift relative to their suspension and disqualification from being commissioned as
notary public and SUBMIT certifications from the Integrated Bar of the Philippines and
Executive Judge of the Court where they may appear as counsel, stating that respondents
have actually ceased and desisted from the practice of law during the entire period of their
suspension and disqualification, unless already complied with in the meantime;

(2) to require Atty. Jimmy P. Baliga to SUBMIT a certification from the Commission on Human
Rights [CHR] stating that he has been suspended from office and has stopped from the

8
performance of his functions for the period stated in the order of suspension and
disqualification, within ten (10) days from notice hereof;

(3) to require respondent Atty. Baliga and the CHR to COMMENT on the allegations of
complainant against them, both within ten (10) days from receipt of notice hereof; ...27
(Emphasis in the original)

In compliance with this court's order, Attys. Calubaquib and Baliga filed their respective motions
to lift order of suspension.28 Atty. Baliga also filed his comment on complainant Lingan's
allegation that he continued performing his functions as Regional Director during his
suspension from the practice of law.

In his comment29 dated November 13, 2009, Atty. Baliga alleged that as Regional Director,
he "perform[ed], generally, managerial functions,"30 which did not require the practice
of law. These managerial functions allegedly included ."[supervising] ... the day to day
operations of the regional office and its personnel";31 "monitoring progress of investigations
conducted by the [Commission on Human Rights] Investigation Unit";32 "monitoring the
implementation of all other services and assistance programs of the [Commission on Human
Rights] by the different units at the regional level";33 and "[supervising] . . . the budgetary
requirement preparation and disbursement of funds and expenditure of the [Regional
Office]."34 The Commission allegedly has its own "legal services unit which takes care of the
legal services matters of the [Commission]."35

Stating that his functions as Regional Director did not require the practice of law, Atty.
Baliga claimed thaf he "faithful[ly] [complied] with [this court's resolution suspending
him from the practice of law]."36

The Commission on Human Rights filed its comment37 dated November 27, 2009. It argued
that "the penalty imposed upon Atty. Baliga as a member of the bar is separate and
distinct from any penalty that may be imposed upon him as a public official for the same
acts."38 According to the Commission, Atty. Baliga's suspension from the practice of law is a
"bar matter"39 while the imposition of penalty upon a Commission on Human Rights official "is
an entirely different thing, falling as it does within the exclusive authority of the [Commission as]
disciplining body."40

Nevertheless, the Commission manifested that it would defer to this court's resolution of the
issue and would "abide by whatever ruling or decision [this court] arrives at on [the] matter. "41
In reply42 to Atty. Baliga's comment, complainant Lingan argued that Atty. Baliga again
disobeyed this. court. Atty. Baliga failed to submit a certification from the Commission on
Human Rights stating that he was suspended from office and desisted from performing his
functions as Regional Director.

9
As to Atty. Baliga's claim that he did not practice law while he held his position as Regional
Director and only performed generally managerial functions, complainant Lingan countered that
Atty. Baliga admitted to defying the order of suspension. Atty. Baliga admitted to performing the
functions of a "lawyer-manager,"43 which under the landmark case of Cayetano v. Monsod44
constituted practice of law. Complainant Lingan reiterated that the position of Regional Director/
Attorney VI requires the officer "to be a lawyer [in] good standing."45 Moreover, as admitted by
Atty. Baliga, he had supervision and control over Attorneys III, IV, and V. Being a "lawyer-
manager," Atty. Baliga practiced law while he held his position as Regional Director.

With respect to Atty. Baliga's claim that he was in good faith in reassuming his position
as Regional Director, complainant Lingan countered that if Atty. Baliga were really in
good faith, he should have followed the initial resolution of the Commission on Human
Rights suspending him from office. Atty. Baliga did not even furnish this court a copy of his
motion for reconsideration of the Commission on Human Right's resolution suspending him
from office. By "playing ignorant on what is 'practice of law', twisting facts and
philosophizing,"46 complainant Lingan argued that Atty. Baliga "[no longer has that]
moral vitality imperative to the title of an attorney."47 Compfainant Lingan prayed that
Atty. Baliga be disbarred.

On February 17, 2010, this court lifted the order of suspension of Atty. Calubaquib.48 He
was allowed to resume his practice of law and perform notarial acts subject to
compliance with the requirements for issuance of a notarial commission.

On the other hand, this court referred to the Office of the Bar Confidant for evaluation, report,
and recommendation Atty. Baliga's motion to lift one-year suspension and the respective
comments of Atty. Baliga and the Commission on Human Rights.49

In its report and recommendation50 dated October 18, 2010, the Office of the Bar Confidant
stated that Atty. Baliga "should not [have been] allowed to perform his functions, duties, and
responsibilities [as Regional Director] which [required acts constituting] practice .of law."51
Considering that Atty. Baliga claimed that he did not perform his functions as Regional Director
which required the practice of law, the Office of the Bar Confidant recommended that the
Commission on Human Rights be required to comment on this claim. The Office of the Bar
Confidant also recommended holding in abeyance the resolution of Atty. Baliga's motion to lift
suspension "pending [the Commission on Human Right's filing of comment]."52

In the resolution53 dated January 12, 2011, this court held in abeyance the resolution of Atty.
Baliga's motion to lift one-year suspension. The Commission on Human Rights was ordered to
comment on Atty. Baliga's claim that he did not practice law while he held his position as
Regional Director.

10
In its comment54 dated April 6, 2011, the Commission on Human Rights reiterated that the
penalty imposed on Atty. Baliga as a member of the bar is separate from the penalty that
might be imposed on him as Regional Director. The Commission added that it is "of
honest belief that the position of [Regional Director] is managerial and does not [require
the practice of law]."55 It again manifested that it will "abide by whatever ruling or
decision [this court] arrives on [the] matter."56

The issue for our resolution is whether Atty. Baliga's motion to lift order of suspension
should be granted.

We find that Atty. Baliga violated this court's order of suspension. We, therefore, suspend him
further from the practice of law for six months.

Practice of law is "any activity, in or out of court, which requires the application of law, legal
procedure, knowledge, training and experience."57 It includes "[performing] acts which are
characteristics of the [legal] profession"58 or "[rendering any kind of] service [which] requires
the use in any degree of legal knowledge or skill."59

Work in government that requires the use of legal knowledge is considered practice. of law. In
Cayetano v. Monsod,60 this court cited the deliberations of the 1986 Constitutional
Commission and agreed that work rendered by lawyers in the Commission on Audit requiring
"[the use of] legal knowledge or legal talent"61 is practice of law.

The Commission on Human Rights is an independent office created under the Constitution with
power to investigate "all forms of human rights violations involving civil and political rights[.]"62
It is divided into regional offices with each office having primary responsibility to investigate
human rights violations in its territorial jurisdiction.63 Each regional office is headed by the
Regional Director who is given the position of Attorney VI.

Under the Guidelines and Procedures in the Investigation and Monitoring of Human Rights
Violations and Abuses, and the Provision of CHR Assistance,64 the Regional Director has the
following powers and functions:

a. To administer oaths or affirmations with respect to "[Commission on Human Rights]


matters;"65

b. To issue mission orders in their respective regional offices;66

c. To conduct preliminary evaluation or initial investigation of human rights complaints in the


absence of the legal officer or investigator;67

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d. To conduct dialogues or preliminary conferences among parties and discuss "immediate
courses of action and protection remedies and/or possible submission of the matter to an
alternative dispute resolution";68

e. To issue Commission on Human Rights processes, including notices, letter-invitations,


orders, or subpoenas within the territorial jurisdiction of the regional office;69 and

f. To review and approve draft resolutions of human rights cases prepared by the legal
officer.70

These powers and functions are characteristics of the legal profession. Oaths and affirmations
are usually performed by members of the judiciary and notaries public71 - officers who are
necessarily members of the bar.72 Investigating human rights complaints are performed
primarily by the Commission's legal officer.73 Discussing immediate courses of action and
protection remedies and reviewing and approving draft resolutions of human rights cases
prepared by the legal officer require the use of extensive legal knowledge.

The exercise of the powers and functions of a Commission on Human Rights Regional Director
constitutes practice of law. Thus, the Regional Director must be an attorney - a member of the
bar in good standing and authorized to practice law.74 When the Regional Director loses this
authority, such as when he or she is disbarred or suspended from the practice of law, the
Regional Director loses a necessary qualification to the position he or she is holding. The
disbarred or suspended lawyer must desist from holding the position of Regional Director.

This court suspended Atty. Baliga from the practice of law for one year on June 15, 2006,
"effective immediately."75 From the time Atty. Baliga received the court's order of suspension
on July 5, 2006,76 he has been without authority to practice law. He lacked a necessary
qualification to his position as Commission on Human Rights Regional Director/ Attorney VI. As
the Commission on Human Rights correctly resolved in its resolution dated January 16, 2007:

WHEREAS, this suspension under ethical standards, in effect, prevents Atty. Baliga from
assuming his post, for want of eligibility in the meantime that his authority to practice law is
suspended. This is without prejudice to the investigation to be conducted to the practice of law
of Atty. Baliga, which in the case of all Regional Human Rights Directors is not generally
allowed by the Commission;

WHEREFORE, in the light of the foregoing, the Commission on Human Rights of the
Philippines resolved to put into effect and implement the legal implications of the SC decision
by decreeing the suspension of Atty. Jimmy P. Baliga in the discharge of his functions and
responsibilities as Director/Attorney VI of CHRP-Region II in Tuguegarao City for the period for
which the Supreme Court Resolution is in effect.77 (Emphasis in the original)

12
In ordering Atty. Baliga suspended from office as Regional Director, the Commission on
Human Rights did not violate Atty. Baliga's right to due process. First, he was only
suspended after: investigation by the Commission on Human Rights Legal and
Investigation Office.78 Second, the Commission gave Atty. Baliga an opportunity to be
heard when he filed his motion for reconsideration.

Atty. Baliga's performance of generally managerial functions was not supported by the
record. It was also immaterial.1âwphi1 He held the position of Commission on Human
Rights Regional Director because of his authority to practice law. Without this authority,
Atty. Baliga was disqualified to hold that position.

All told, performing the functions of a Commission on Human Rights Regional Director
constituted practice of law. Atty. Baliga should have desisted from holding his position as
Regional Director.

Under Section 27, Rule 138 of the Rules of Court, willful disobedience to any lawful order of a
superior court is a ground for disbarment or suspension from the practice of law:

SEC. 27. Disbarment or suspension of attorneys by Supreme Court; grounds therefor. - A


member of the bar may be disbarred or suspended from his office as attorney by the Supreme
Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral
conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation
of the oath which he is required to take before admission to practice, or for a willful
disobedience of any lawful order of a superior court, or for corruptly or willfully appearing as an
attorney for a party to a case without authority so to do. The practice of soliciting cases at law
for the purpose of gain, either personally or through paid agents or brokers, constitutes
malpractice.

In Molina v. Atty. Magat,79 this court suspended further Atty. Ceferino R. Magat from the
practice of law for six months for practicing his profession despite this court's previous order of
suspension.

We impose the same penalty on Atty. Baliga for holding his position as Regional Director
despite lack.of authority to practice law.1âwphi1

We note that the Commission on Human Rights En Banc issued the resolution dated April 13,
2007, reconsidering its first resolution suspending Atty. Baliga as Regional Director/ Attorney
VI. Instead, the Commission admonished Atty. Baliga and sternly warned him that repeating
the same offense will cause his dismissal from the service. The resolution with CHR (III) No.
A2007-045 dated April 13, 2007 reads:

13
In his Motion for Reconsideration dated March 15, 2007, respondent Atty. Jimmy P. Baliga
prays before the Honorable Commission to recall and annul his suspension as Regional
Director/ Attorney VI of the Commission on Human Rights - Regional Office No. II, per 16
January 2007 Commission en Banc Resolution CHR (III) No. A2007-013.

The grounds relied upon the motion are not sufficient to convince the Commission that Atty.
Jimmy P. Baliga is totally blameless and should not suffer the appropriate penalty for breach of
the Code of Professional Responsibility and his Lawyer's oath.

The Commission, in the exercise of its authority to discipline, is concerned with the
transgression by Atty. Baliga of his oath of office as government employee. As records have it,
the Commission granted Atty. Baliga authority to secure a commission as a notary public. With
this, he is mandated to act as a notary public in accordance with the rules and regulations, to
include the conditions expressly set forth by the Commission.

With the findings clearly enunciated in the Supreme Court resolution in SC Administrative Case
No. 5277 dated 15 June 2006, the Commission cannot close its eyes to the act of Atty.
Baliga that is clearly repugnant to the conduct of an officer reposed with public trust.

This is enough just cause to have this piece of word, short of being enraged, and censure Atty.
Baliga for having contravened the conditions of his commission as a notary public. What was
granted to Atty. Baliga is merely a privilege, the exercise of which requires such high esteem to
be in equal footing with the constitutional mandate of the Commission. Clearly, Atty. Baliga
should keep in mind that the Commission exacts commensurate solicitude from whatever
privilege the Commission grants of every official and employee.

The Commission notes that by now Atty. Baliga is serving the one year suspension imposed on
him pursuant to the Supreme Court resolution. The Commission believes that the further
suspension of Atty. Baliga from the office may be too harsh in the meantime that the Supreme
Court penalty is being served. This Commission is prevailed upon that the admonition of Atty.
Baliga as above expressed is sufficient to complete the cycle of penalizing an erring public
officer.

WHEREFORE, the Commission hereby modifies its ruling in Resolution CHR (III) No. A2007-
013 and imposes the penalty of admonition with a stem warning that a repetition of the same
will merit a penalty of dismissal from the service.80 (Emphasis in the original)

The Commission on Human Rights erred in issuing the resolution dated April 13, 2007. This
resolution caused Atty. Baliga to reassume his position as Regional Director/ Attorney VI
despite lack of authority to practice law.

14
We remind the Commission on Human Rights that we have the exclusive jurisdiction to
regulate the practice of law.81 The Commission cannot, by mere resolutions and .other
issuances, modify or defy this court's orders of suspension from the practice of law. Although
the Commission on Human Rights has the power to appoint its officers and employees,82 it
can only retain those with the necessary qualifications in the positions they are holding.

As for Atty. Baliga, we remind him that the practice of law is a "privilege burdened with
conditions."83 To enjoy the privileges of practicing law, lawyers must "[adhere] to the rigid
standards of mental fitness, [maintain] the highest degree of morality[,] and [faithfully comply]
with the rules of [the] legal profession."84

WHEREFORE, we further SUSPEND Atty. Jimmy P. Baliga from the practice of law for six ( 6)
months. Atty. Baliga shall serve a total of one (1) year and six (6) months of suspension from
the practice of law, effective upon service on Atty. Baliga of a copy of this resolution.

SERVE copies of this resolution to the Integrated Bar of the Philippines, the Office of the Bar
Confidant, and the Commission on Human Rights.

SO ORDERED.

MARVIC MARIO VICTOR F. LEONEN


Associate Justice

WE CONCUR:

PILAR IBANA-ANDRADE and CLARE SINFOROSA ANDRADE, - versus - ATTY. EVA PAITA-MOYA,

This is an administrative case filed against Atty. Eva Paita-Moya by Pilar Ibana-Andrade and Clare
Sinforosa Andrade-Casilihan. On 7 December 2009, this Court, through the First Division, issued a
Resolution 1 referring the case to the Integrated Bar of the Philippines (IBP) for investigation, report
and recommendation or decision within ninety (90) days from the receipt of records. •On leave. 1
Rollo, p. 51. ( Decision 2 A.C. No. 8313 After the proceedings, the IBP Commission on Bar Discipline
transmitted to the Supreme Court on 18 November 2013 its Notice of Resolution,2 alongside the
Records of the case. The IBP Board of Governors also passed a Resolution3 on 13 February 2013
adopting and approving the Report and Recommendation4 of the Investigating Commissioner for this
case. The Report and Recommendation summarizes the facts of this case as follows: Here is
complainants’ version. On October 3, 2007, complainant Pilar Andrade, stockholder and Treasurer of
Mabini College Inc. filed Civil Case No. 7617 for Injunction, Mandamus and Damages before the
Regional Trial Court of Daet, Camarines Norte when she was illegally suspended by Luz Ibana-Garcia,
Marcel Lukban and respondent Atty. Eva Paita-Moya. In the said case then pending before the
15
Honorable Executive Judge Arniel Dating, respondent Atty. Eva Paita-Moya appeared as counsel for all
respondents. Complainant Clare Sinforosa I. Andrade-Casilihan likewise filed an illegal dismissal case
against Mabini College Inc. and now pending before the Honorable Court of Appeals. In the said labor
case, respondent stood as counsel for Mabini College, Inc. and co-respondent Luz I. Garcia and Marcel
Lukban. In another illegal dismissal case filed by Alven Bernardo I. Andrade on September 28, 2005
currently pending before the Court of Appeals, respondent acted as counsel for Mabini College, Inc. Luz
I. Garcia and Marcel Lukban. After the aforementioned cases were filed, complainants had found out
that on June 27, 2008, the Honorable Supreme Court promulgated a resolution in the case entitled
Wilson Cham versus Atty. Eva Paita-Moya docketed as A.C. No. 7484 suspending respondent from the
practice of law for one month. Complainants were surprised. They later got a copy of the Office of the
Bar Confidant’s certification confirming that until date (apparently May 6, 2009, the dare [sic] OR No.
0304748 was issued) respondent’s suspension order has not yet been lifted. On June 2, 2009,
complainants were able to obtain a copy of the Supreme Court Circular No. 51-2009 informing all courts
that respondent was suspended from the practice of law for one month and said suspension was
received by respondent on June 15, 2008. However, despite of the subject June 27, 2009 Resolution on
July 15, 2008 and despite knowledge of her suspension from the practice of law, the said resolution
having been further posted in the website of the Supreme Court and is available in CD Asia’s Lex Libris,
respondent continued to practice law in wilful disobedience of the Supreme Court’s suspension order in
A.C. No. 7494. 2 Id. at 149. 3 Id. at 151. 4 Id. at 152-158. Decision 3 A.C. No. 8313 In fact from June 27,
2008 until May 2009, respondent filed the following papers and pleadings as counsel in Civil Case No.
7617, to wit: Comment to Motion for Voluntary Inhibition dated July 15, 2008. Motion to Admit Answer
which was undated but submitted on November 12, 2008. An undated Comments/Opposition to the
Petitioner’s Formal Offer of Evidence in Support of the Application for Writ of Preliminary Mandatory
Injunction which was received by petitioners’ counsel on November 26, 2008.Motion to Admit
Amended Motion for Reconsideration dated February 9, 2009 which was received by petitioners’
counsel on February 12, 2009. Motion for Reconsideration dated January 23, 2009. Motion to File
Position Paper dated April 13, 2009; and Pre-Trial Brief for Respondents dated May 13, 2009. Also in
connection with complainant Casahilan’s Petition for Certiorari with the Court of Appeals, respondent
never withdrew her appearance. The same is true in the case of Alven Bernardo Andrade. Respondent
never withdrew her appearance therein. Likewise and notwithstanding such suspension, respondent
continued to practice law and respondent clients in other cases before the four (4) branches of the
Regional Trial Court in Daet, Camarines Norte. Supporting this truthful assertion are the following:
CERTIFICATION dated May 29, 2009 issued by Atty. Michael Angelo S. Rieo, Branch Clerk of Court,
Branch 38, Regional Trial Court, Daet, Camarines Norte. CERTIFICATION dated November 24, 2009
issued by Atty. Elaine Gay R. Belen, Branch Clerk of Court, Branch 39, Regional Trial Court, Daet,
Camarines Norte. CERTIFICATION dated November 19, 2009 issued by Mr. Eddie E. Balonzo, Acting
Clerk of Court, Branch 40, Regional Trial Court, Daet, Camarines Norte; and CERTIFICATION dated
November 5, 2009 issued by Mr. Chito B. Pacao, OIC/Legal Researcher II, Branch 41, Regional Trial
Court, Daet, Camarines Norte. And per the November 5, 2009 letter of Atty. Michael Mortimer G.
Pajarillo, Chapter President, Integrated Bar of the Philippines, Camarines Norte Chapter, Daet,
Camarines Norte, respondent “xxx Atty. Eva PaitaMoya has not complied with the order of the Supreme
Court relative to her suspension from the practice of law from June 27, 2008 up to the present.5
Respondent’s version, as stated in the Report,6 is that she started serving the suspension order on 20
May 2009. This was also her position in 5 Id. at 153-157. 6 Id. at 155. Decision 4 A.C. No. 8313 her
Manifestation and Motion to Suspend Proceedings7 dated 30 September 2010. She likewise alleged
16
therein that she had filed with the Supreme Court in December 2009 an Urgent Motion to Lift Order of
Suspension with the Supreme Court, which was unresolved as of the date of her Manifestation.8
Additionally, she argued that the resolution of the initial administrative case docketed as A.M. No. 7464
was material to her position in this particular case.9 The issue in this case falls solely on the question of
whether Respondent engaged in the unauthorized practice of law, that is, the practice of law despite
the clear language of this Court’s suspension order. The Report and Recommendation recommended
that Respondent be found liable. We adopt the same, with modification. The suspension order was
received by Respondent on July 15, 2008.10 Despite this, she continued to practice law in various cases,
as shown by the pleadings she filed and the certifications noted by the Report.11 In fact, she continued
receiving various fees for her services throughout the duration of her suspension.12 It is important to
note that her defense consists of an admission that she was indeed suspended, and allegedly served
her suspension.13 She claimed that she never received the resolution that had allegedly suspended
her.14 By logical inference therefore, her sole defense is ignorance of the resolution that suspended
her. However, the records of this very Court belie her statements. Office of the Court Administrator
Circular No. 51-2009 stated the following: For your information and guidance, quoted hereunder is the
dispositive portion of the Resolution of the Third Division dated 27 June 2008, in Administrative Case
No. 7494 entitled, “Wilson Cham vs. Atty. Eva Paita-Moya”, to wit: WHEREFORE, Atty. Eva Paita-Moya is
found guilty of gross misconduct and hereby SUSPENDED for one month from the practice of law,
effective upon her receipt of this Decision. She is warned that a repetition of the same or a similar act
will be dealt with more severely. 7 Id. at 140-142. 8 Id. at 140. 9 Id. at 141. 10Id. at 65. 11 Id. at 156-
157. 12 Id. at 96-138. 13 Id. at 47. 14 Id. at 43-44. Decision 5 A.C. No. 8313 On 15 July 2008, Atty. Moya
received the said resolution as per Registry Return Receipt No. 2320. (Emphases supplied)15 Moreover,
the Office of the Bar Confidant issued a Certification dated 8 May 2009 that the suspension of Atty.
Paita-Moya in A.C. No. 7494 had not yet been lifted. 16 We had laid down guidelines in Maniago v. De
Dios, IN LIGHT OF THE FOREGOING, it is hereby RESOLVED that the following guidelines be observed in
the matter of the lifting of an order suspending a lawyer from the practice of law: 1) After a finding that
respondent lawyer must be suspended from the practice of law, the Court shall render a decision
imposing the penalty; 2) Unless the Court explicitly states that the decision is immediately executory
upon receipt thereof, respondent has 15 days within which to file a motion for reconsideration thereof.
The denial of said motion shall render the decision final and executory; 3) Upon the expiration of the
period of suspension, respondent shall file a Sworn Statement with the Court, through the Office of the
Bar Confidant, stating therein that he or she has desisted from the practice of law and has not appeared
in any court during the period of his or her suspension; 4) Copies of the Sworn Statement shall be
furnished to the Local Chapter of the IBP and to the Executive Judge of the courts where respondent
has pending cases handled by him or her, and/or where he or she has appeared as counsel; 5) The
Sworn Statement shall be considered as proof of respondents compliance with the order of suspension;
6) Any finding or report contrary to the statements made by the lawyer under oath shall be a ground
for the imposition of a more severe punishment, or disbarment, as may be warranted. 17 This case is
not without precedent.18 Previously, we had already stated the standard for discipline upon erring
lawyers who continue practicing despite being suspended by the Court, viz: Under Section 27, Rule 138
of the Rules of Court, willful disobedience to any lawful order of a superior court is a ground for
disbarment or suspension from the practice of law: SEC. 27. Disbarment or suspension of attorneys by
Supreme Court; grounds therefor. — A member of the bar may be disbarred or suspended 15 OCA
Circular No. 51-2009. 16 Rollo, at 7. 17 A.C. No. 7472, 30 March 2010. 18 Feliciano v. Bautista-Lozada,
A.C. No. 7593, 11 March 2015. Decision 6 A.C. No. 8313 from his office as attorney by the Supreme
17
Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral conduct, or
by reason of his conviction of a crime involving moral turpitude, or for any violation of the oath which
he is required to take before admission to practice, or for a willful disobedience of any lawful order of a
superior court, or for corruptly or willfully appearing as an attorney for a party to a case without
authority so to do. The practice of soliciting cases at law for the purpose of gain, either personally or
through paid agents or brokers, constitutes malpractice. In Molina v. Atty. Magat, this court suspended
further Atty. Ceferino R. Magat from the practice of law for six months for practicing his profession
despite this court's previous order of suspension. We impose the same penalty on Atty. Baliga for
holding his position as Regional Director despite lack of authority to practice law. 19 The Commissioner
recommended the suspension of respondent from the active practice of law for six ( 6) months with
stem warning that any similar infraction in the future would be dealt with more severely. 20 In light of
this and the jurisprudence already cited, we adopt the recommendation. WHEREFORE, premises
considered, ATTY. EVA PAITA-MOYA is found GUILTY of violating Section 27, Rule 138 of the Rules of
Court, and is hereby SUSPENDED from the practice of law for an additional period of six ( 6) months
from her one ( 1) month suspension, totaling seven (7) months from service of this resolution, with a
WARNING that a repetition of the same or similar offense will warrant a more severe penalty. Let
copies of this Decision be furnished all courts, the Office of the Bar Confidant and the Integrated Bar of
the Philippines for their information and guidance. The Office of the Bar Confidant is DIRECTED to
append a copy of this Decision to respondent's record as member of the Bar. Atty. Paita-Moya is
DIRECTED to infonn the Court of the date of her receipt of this Decision, to determine the reckoning
point when her suspension shall take effect. This Decision is immediately executory. SO ORDERED.
MARIA LOURDES P.A. SERENO Chief Justice 19 Lingan v. Calubaquib, A.C. No. 5377, 30 June 2014. 20
Rollo, p. 158. Decision WE CONCUR: (On leave) ANTONIO T. CARPIO Associate Justice TERESITAJ. ~~A~
LEONARDO-DE CASTRO Associate Justice MARIANO C. DEL CASTILLO Associate Justice (On leave)
BIENVENIDO L. REYES Associate Justice MARVIC1\1.V.F. LEONEN / A . J . ssociate ustlce .- 7 A.C. No.
8313 (On leave) ARTURO D. BRION Associate Justice ~~ ._ JR. Associate J us END OZA h.f1._ ~ ESTELA
M.JpERLAS-BERNABE Associate Justice (On leave) FRANCIS H. JARDELEZA Associate Justice CERTIFIED
XEROX COPY: .-·- .. ~reL~i;AM~ CLERK OF COURT, EN BANC SUPREME COURT

THIRD DIVISION

A.C. No. 7593, March 11, 2015

ALVIN S. FELICIANO, Complainant, v. ATTY. CARMELITA BAUTISTA-LOZADA,


Respondents.

DECISION

PERALTA, J.:

Before us is a Petition for Disbarment1 dated August 2, 2007 filed by Alvin S. Feliciano
(complainant) against respondent Atty. Carmelita Bautista-Lozada (Atty. Lozada) for violation of
Section 27,2 Rule 138 of the Rules of Court.

The facts of the case, as culled from the records, are as follows:chanRoblesvirtualLawlibrary
18
On December 13, 2005, the Court en banc promulgated a Resolution in A.C. No. 6656 entitled
“Bobie Rose V. Frias vs. Atty. Carmencita Bautista Lozada”3 suspending Atty. Lozada for
violation of Rules 15.03 and 16.04 of the Code of Professional Responsibility, the dispositive
portion of which reads:chanRoblesvirtualLawlibrary
WHEREFORE, respondent Atty. Carmencita Bautista Lozada is hereby found guilty of violating
Rules 15.03 and 16.04 of the Code of Professional Responsibility and of willfully disobeying a
final and executory decision of the Court of Appeals. She is hereby SUSPENDED from the
practice of law for a period of two (2) years from notice, with a STERN WARNING that a
repetition of the same or similar acts will be dealt with more severely.

Let copies of this Resolution be furnished all courts of the land, the Integrated Bar of the
Philippines, as well as the Office of the Bar Confidant, for their information and guidance, and
let it be entered in respondent's personal records.

SO ORDERED.4
On May 4, 2006, the Court denied with finality Atty. Lozada's motion for
reconsideration.5chanroblesvirtuallawlibrary

However, on June 5, 2007, in an action for injunction with prayer for issuance of a temporary
restraining order and/or writ of preliminary injunction docketed as Civil Case no. 101-V-07
entitled “EdilbertoLozada, et.al. vs. Alvin S. Feliciano, et al.,” where complainant was one of the
respondents, complainant lamented that Atty. Lozada appeared as counsel for the plaintiff and
her husband, EdilbertoLozada, and actively participated in the proceedings of the case before
Branch 75 of the Regional Trial Court of Valenzuela City. To prove his allegation, complainant
submitted certified true copies of the minutes of the hearings, dated June 12, 2007, July 3,
2007 and July 6, 2007, wherein Atty. Lozada signed her name as one of the counsels,6 as well
as the transcript of stenographic notes showing that Atty. Lozada conducted direct examination
and cross-examination of the witnesses during the trial
proceedings.7chanroblesvirtuallawlibrary

Complainant argued that the act of Atty. Lozada in appearing as counsel while still
suspended from the practice of law constitutes willfull disobedience to the resolutions
of the Court which suspended her from the practice of law for two (2) years.

On September 12, 2007, the Court resolved to require Atty. Lozada to comment on the
complaint against him.8chanroblesvirtuallawlibrary

In her Comment9 dated November 19, 2007, Atty. Lozada explained that she was forced by
circumstances and her desire to defend the rights of her husband who is embroiled in a
legal dispute. She claimed that she believed in good faith that her appearance as wife of
EdilbertoLozada is not within the prohibition to practice law, considering that she is
defending her husband and not a client. She insisted that her husband is a victim of grave
injustice, and his reputation and honor are at stake; thus, she has no choice but to give him
legal assistance.10chanroblesvirtuallawlibrary

On January 30, 2008, the Court referred the instant case to the Integrated Bar of the
Philippines for investigation, report and recommendation.11chanroblesvirtuallawlibrary
19
In its Report and Recommendation12 dated March 9, 2009, the Integrated Bar of the
Philippines-Commission on Bar Discipline (IBP-CBD) found Atty. Lozada guilty of violating Rule
1.01 & 1.02, Rule 18.01 of the Code of Professional Responsibility and the terms of her
suspension from the practice of law as imposed by the Court. Thus, the IBP-CBD
recommended the disbarment of Atty. Lozada.

On May 14, 2011, however, the IBP-Board of Governors resolved to adopt and approve with
modification the report and recommendation of the IBP-CBD such that it recommended instead
that Atty. Lozada be suspended from the practice of law for three (3) months.

RULING

We adopt the ruling of the IBP-Board of Governors with modification.

Indeed, this Court has the exclusive jurisdiction to regulate the practice of law. When this
Court orders a lawyer suspended from the practice of law, as in the instant case, the
lawyer must desist from performing all functions requiring the application of legal
knowledge within the period of suspension.13chanroblesvirtuallawlibrary

Suffice it to say that practice of law embraces "any activity, in or out of court, which requires the
application of law, legal procedure, knowledge, training and experience." It includes
"[performing] acts which are characteristics of the [legal] profession" or "[rendering any kind of]
service [which] requires the use in any degree of legal knowledge or
skill.”14chanroblesvirtuallawlibrary

In the instant case, Atty. Lozada's guilt is undisputed. Based on the records, there is no
doubt that Atty. Lozada's actuations, that is, in appearing and signing as counsel for and
in behalf of her husband, conducting or offering stipulation/admission of facts,
conducting direct and cross-examination, all constitute practice of law. Furthermore, the
findings of the IBP would disclose that such actuations of Atty. Lozada of actively
engaging in the practice of law in June-July 2007 were done within the period of her two
(2)-year suspension considering that she was suspended from the practice of law by
this Court in May 4, 2006. It would then appear that, at the very least, Atty. Lozada
cannot practice law from 2006 to 2008. Thus, it is clear that when Atty. Lozada appeared
for and in behalf of her husband in Civil Case No. 101-V-07 and actively participated in
the proceedings therein in June-July 2007, or within the two (2)-year suspension, she,
therefore, engaged in the unauthorized practice of law.

Atty. Lozada'sdefense of good faith fails to convince. She knew very well that at the time she
represented her husband, she is still serving her two (2)-year suspension order. Yet, she failed
to inform the court about it. Neither did she seek any clearance or clarification from the Court if
she can represent her husband. While we understand her devotion and desire to defend her
husband whom she believed has suffered grave injustice, Atty. Lozada should not forget that
she is first and foremost, an officer of the court who is bound to obey the lawful order of the
Court.

20
Under Section 27, Rule 138 of the Revised Rules of Court, as amended, willful
disobedience to any lawful order of a superior court is a ground for disbarment or
suspension from the practice of law:chanRoblesvirtualLawlibrary
SEC. 27. Disbarment or suspension of attorneys by Supreme Court; grounds therefor. - A
member of the bar may be disbarred or suspended from his office as attorney by the Supreme
Court for any deceit, malpractice, or other gross misconduct in such office, grossly immoral
conduct, or by reason of his conviction of a crime involving moral turpitude, or for any violation
of the oath which he is required to take before admission to practice, or for a willful
disobedience of any lawful order of a superior court, or for corruptly or willfully appearing as an
attorney for a party to a case without authority to do so. The practice of soliciting cases at law
for the purpose of gain, either personally or through paid agents or brokers, constitutes
malpractice.15
Atty. Lozada would have deserved a harsher penalty, but this Court recognizes the fact that it is
part of the Filipino culture that amid an adversity, families will always look out and extend a
helping hand to a family member, more so, in this case, to a spouse. Thus, considering that
Atty. Lozada's actuation was prompted by her affection to her husband and that in essence,
she was not representing a client but rather a spouse, we deem it proper to mitigate the
severeness of her penalty.

Following the recent case of Victor C. Lingan v. Atty. Romeo Calubaquib and Jimmy P.
Baliga,16 citing Molina v. Atty. Magat,17 where this Court suspended further respondents from
the practice of law for six (6) months for practicing their profession despite this court's previous
order of suspension, we, thus, impose the same penalty on Atty. Lozada for representing her
husband as counsel despite lack of authority to practice law.

Disbarment of lawyers is a proceeding that aims to purge the law profession of unworthy
members of the bar. It is intended to preserve the nobility and honor of the legal profession.
While the Supreme Court has the plenary power to discipline erring lawyers through this kind of
proceedings, it does so in the most vigilant manner so as not to frustrate its preservative
principle. The Court, in the exercise of its sound judicial discretion, is inclined to impose a less
severe punishment if, through it, the end desire of reforming the errant lawyer is
possible.18chanroblesvirtuallawlibrary

WHEREFORE, premises considered, Atty. Carmelita S. Bautista-Lozada is found GUILTY of


violating Section 27,19 Rule 138 of the Rules of Court, and is hereby SUSPENDED for a period
of six (6) months from the practice of law, with a WARNING that a repetition of the same or
similar offense will warrant a more severe penalty.

Let copies of this Decision be furnished all courts, the Office of the Bar Confidant and the
Integrated Bar of the Philippines for their information and guidance. The Office of the Bar
Confidant is DIRECTED to append a copy of this Decision to respondent’s record as member
of the Bar.

Atty. Lozada is DIRECTED to inform the Court of the date of her receipt of this Decision, so
that we can determine the reckoning point when her suspension shall take effect.

This Decision is immediately executory.

21
SO ORDERED.

ATTY.’S FEES/ATTY. - CLIENT RELATIONSHIP

Republic of the Philippines


SUPREME COURT
Manila

EN BANC

G.R. No. L-961 September 21, 1949

BLANDINA GAMBOA HILADO, petitioner,


vs.
JOSE GUTIERREZ DAVID, VICENTE J. FRANCISCO, JACOB ASSAD and SELIM JACOB
ASSAD, respondents.

Delgado, Dizon and Flores for petitioner.


Vicente J. Francisco for respondents.

TUASON, J.:

It appears that on April 23, 1945, Blandina Gamboa Hilado brought an action against Selim
Jacob Assad to annul the sale of several houses and lot executed during the Japanese
occupation by Mrs.Hilado's now deceased husband.

On May 14, Attorneys Ohnick, Velilla and Balonkita filed an answer on behalf of the defendant;
and on June 15, Attorneys Delgado, Dizon, Flores and Rodrigo registered their appearance as
counsel for the plaintiff. On October 5, these attorneys filed an amended complaint by including
Jacob Assad as party defendant.

On January 28, 1946, Attorney Francisco entered his appearance as attorney of record for the
defendant in substitution for Attorney Ohnick, Velilla and Balonkita who had withdrawn from the
case.

22
On May 29, Attorney Dizon, in the name of his firm, wrote Attorney Francisco urging him
to discontinue representing the defendants on the ground that their client had consulted
with him about her case, on which occasion, it was alleged, "she turned over the
papers" to Attorney Francisco, and the latter sent her a written opinion. Not receiving any
answer to this suggestion, Attorney Delgado, Dizon, Flores and Rodrigo on June 3, 1946, filed
a formal motion with the court, wherein the case was and is pending, to disqualify Attorney
Francisco.

Attorney Francisco's letter to plaintiff, mentioned above and identified as Exhibit A, is in full as
follows:

VICENTE J. FRANCISCO
Attorney-at-Law
1462 Estrada, Manila

July 13, 1945.

Mrs.BlandinaGamboaHilado
Manila, Philippines

My dear Mrs.Hilado:

From the papers you submitted to me in connection with civil case No. 70075 of the Court of
First Instance of Manila, entitled "BlandinaGamboaHilado vs. S. J. Assad," I find that the basic
facts which brought about the controversy between you and the defendant therein are as
follows:

(a) That you were the equitable owner of the property described in the complaint, as the
same was purchased and/or built with funds exclusively belonging to you, that is to say, the
houses and lot pertained to your paraphernal estate;

(b) That on May 3, 1943, the legal title to the property was with your husband, Mr.Serafin P.
Hilado; and

(c) That the property was sold by Mr.Hilado without your knowledge on the aforesaid date of
May 3, 1943.

Upon the foregoing facts, I am of the opinion that your action against Mr. Assad will not
ordinarily prosper. Mr. Assad had the right to presume that your husband had the legal right to
dispose of the property as the transfer certificate of title was in his name. Moreover, the price of
P110,000 in Japanese military notes, as of May 3, 1943, does not quite strike me as so grossly
inadequate as to warrant the annulment of the sale. I believe, lastly, that the transaction cannot
be avoided merely because it was made during the Japanese occupation, nor on the simple
allegation that the real purchaser was not a citizen of the Philippines. On his last point,
furthermore, I expect that you will have great difficulty in proving that the real purchaser was
other than Mr. Assad, considering that death has already sealed your husband's lips and he
cannot now testify as to the circumstances of the sale.

23
For the foregoing reasons, I regret to advise you that I cannot appear in the proceedings in
your behalf. The records of the case you loaned to me are herewith returned.

Yours very truly,

(Sgd.) VICENTE J. FRANCISCO

VJF/Rag.

In his answer to plaintiff's attorneys' complaint, Attorney Francisco alleged that about May,
1945, a real estate broker came to his office in connection with the legal separation of a woman
who had been deserted by her husband, and also told him (Francisco) that there was a
pending suit brought by Mrs.Hilado against a certain Syrian to annul the sale of a real estate
which the deceased SerafinHilado had made to the Syrian during the Japanese occupation;
that this woman asked him if he was willing to accept the case if the Syrian should give it to
him; that he told the woman that the sales of real property during the Japanese regime were
valid even though it was paid for in Japanese military notes; that this being his opinion, he told
his visitor he would have no objection to defending the Syrian;

That one month afterwards, Mrs.Hilado came to see him about a suit she had instituted against
a certain Syrian to annul the conveyance of a real estate which her husband had made; that
according to her the case was in the hands of Attorneys Delgado and Dizon, but she wanted to
take it away from them; that as he had known the plaintiff's deceased husband he did not
hesitate to tell her frankly that hers was a lost case for the same reason he had told the broker;
that Mrs.Hilado retorted that the basis of her action was not that the money paid her husband
was Japanese military notes, but that the premises were her private and exclusive property;
that she requested him to read the complaint to be convinced that this was the theory of her
suit; that he then asked Mrs.Hilado if there was a Torrens title to the property and she
answered yes, in the name of her husband; that he told Mrs.Hilado that if the property was
registered in her husband's favor, her case would not prosper either;

That some days afterward, upon arrival at his law office on Estrada street, he was informed by
Attorney Federico Agrava, his assistant, that Mrs.Hilado had dropped in looking for him and
that when he, Agrava, learned that Mrs.Hilado's visit concerned legal matters he attended to
her and requested her to leave the "expediente" which she was carrying, and she did; that he
told Attorney Agrava that the firm should not handle Mrs.Hilado's case and he should return the
papers, calling Agrava's attention to what he (Francisco) already had said to Mrs.Hilado;

That several days later, the stenographer in his law office, TeofiloRagodon, showed him a letter
which had been dictated in English by Mr.Agrava, returning the "expedients" to Mrs.Hilado; that
Ragodon told him (Attorney Francisco) upon Attorney Agrava's request that Agrava thought it
more proper to explain to Mrs.Hilado the reasons why her case was rejected; that he forthwith
signed the letter without reading it and without keeping it for a minute in his possession; that he
never saw Mrs.Hilado since their last meeting until she talked to him at the Manila Hotel about
a proposed extrajudicial settlement of the case;

24
That in January, 1946, Assad was in his office to request him to handle his case stating that his
American lawyer had gone to the States and left the case in the hands of other attorneys; that
he accepted the retainer and on January 28, 1946, entered his appearance.

Attorney Francisco filed an affidavit of stenographer Ragodon in corroboration of his answer.

The judge trying the case, Honorable Jose Gutierrez David, later promoted to the Court of
Appeals, dismissed the complaint. His Honor believed that no information other than that
already alleged in plaintiff's complaint in the main cause was conveyed to Attorney Francisco,
and concluded that the intercourse between the plaintiff and the respondent did not attain the
point of creating the relation of attorney and client.

Stripped of disputed details and collateral matters, this much is undoubted: That Attorney
Francisco's law firm mailed to the plaintiff a written opinion over his signature on the merits of
her case; that this opinion was reached on the basis of papers she had submitted at his office;
that Mrs.Hilado's purpose in submitting those papers was to secure Attorney Francisco's
professional services. Granting the facts to be no more than these, we agree with petitioner's
counsel that the relation of attorney and client between Attorney Francisco and
Mrs.Hilado ensued. The following rules accord with the ethics of the legal profession and meet
with our approval:

In order to constitute the relation (of attorney and client) a professional one and not merely one
of principal and agent, the attorneys must be employed either to give advice upon a legal point,
to prosecute or defend an action in court of justice, or to prepare and draft, in legal form such
papers as deeds, bills, contracts and the like. (Atkinson vs. Howlett, 11 Ky. Law Rep.
(abstract), 364; cited in Vol. 88, A. L. R., p. 6.)

To constitute professional employment it is not essential that the client should have
employed the attorney professionally on any previous occasion. . . . It is not necessary
that any retainer should have been paid, promised, or charged for; neither is it material
that the attorney consulted did not afterward undertake the case about which the
consultation was had. If a person, in respect to his business affairs or troubles of any
kind, consults with his attorney in his professional capacity with the view to obtaining
professional advice or assistance, and the attorney voluntarily permits or acquiesces in
such consultation, then the professional employment must be regarded as established. .
. . (5 Jones Commentaries on Evidence, pp. 4118-4119.)

An attorney is employed-that is, he is engaged in his professional capacity as a lawyer or


counselor-when he is listening to his client's preliminary statement of his case, or when he is
giving advice thereon, just as truly as when he is drawing his client's pleadings, or advocating
his client's cause in open court. (Denver Tramway Co. vs. Owens, 20 Colo., 107; 36 P., 848.)

Formality is not an essential element of the employment of an attorney. The contract may be
express or implied and it is sufficient that the advice and assistance of the attorney is sought
and received, in matters pertinent to his profession. An acceptance of the relation is implied on
the part of the attorney from his acting in behalf of his client in pursuance of a request by the
latter. (7 C. J. S., 848-849; see Hirach Bros. and Co. vs. R. E. Kennington Co., 88 A. L. R., 1.)

25
Section 26 (e), Rule 123 of the Rules of Court provides that "an attorney cannot, without the
consent of his client, be examined as to any communication made by the client to him, or his
advice given thereon in the course of professional employment;" and section 19 (e) of Rule 127
imposes upon an attorney the duty "to maintain inviolate the confidence, and at every peril to
himself, to preserve the secrets of his client." There is no law or provision in the Rules of Court
prohibiting attorneys in express terms from acting on behalf of both parties to a controversy
whose interests are opposed to each other, but such prohibition is necessarily implied in the
injunctions above quoted. (In re De la Rosa, 27 Phil., 258.) In fact the prohibition derives
validity from sources higher than written laws and rules. As has been aptly said in In re Merron,
22 N. M., 252, L.R.A., 1917B, 378, "information so received is sacred to the employment to
which it pertains," and "to permit it to be used in the interest of another, or, worse still, in the
interest of the adverse party, is to strike at the element of confidence which lies at the basis of,
and affords the essential security in, the relation of attorney and client."

That only copies of pleadings already filed in court were furnished to Attorney Agrava and that,
this being so, no secret communication was transmitted to him by the plaintiff, would not vary
the situation even if we should discard Mrs.Hilado's statement that other papers, personal and
private in character, were turned in by her. Precedents are at hand to support the doctrine that
the mere relation of attorney and client ought to preclude the attorney from accepting the
opposite party's retainer in the same litigation regardless of what information was received by
him from his first client.

The principle which forbids an attorney who has been engaged to represent a client from
thereafter appearing on behalf of the client's opponent applies equally even though during the
continuance of the employment nothing of a confidential nature was revealed to the attorney by
the client. (Christian vs. Waialua Agricultural Co., 30 Hawaii, 553, Footnote 7, C. J. S., 828.)

Where it appeared that an attorney, representing one party in litigation, had formerly
represented the adverse party with respect to the same matter involved in the litigation, the
court need not inquire as to how much knowledge the attorney acquired from his former during
that relationship, before refusing to permit the attorney to represent the adverse party. (Brown
vs. Miller, 52 App. D. C. 330; 286, F. 994.)

In order that a court may prevent an attorney from appearing against a former client, it is
unnecessary that the ascertain in detail the extent to which the former client's affairs might
have a bearing on the matters involved in the subsequent litigation on the attorney's knowledge
thereof. (Boyd vs. Second Judicial Dist. Court, 274 P., 7; 51 Nev., 264.)

This rule has been so strictly that it has been held an attorney, on terminating his employment,
cannot thereafter act as counsel against his client in the same general matter, even though,
while acting for his former client, he acquired no knowledge which could operate to his client's
disadvantage in the subsequent adverse employment. (Pierce vs. Palmer [1910], 31 R. I., 432;
77 Atl., 201, Ann. Cas., 1912S, 181.)

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 the dealings between an attorney and a client,
inquiry of the nature suggested would lead to the revelation, in advance of the trial, of other
26
matters that might only further prejudice the complainant's cause. And the theory would be
productive of other un salutary results. To make the passing of confidential communication a
condition precedent; i.e., to make the employment conditioned on the scope and character of
the knowledge acquired by an attorney in determining his right to change sides, would not
enhance the freedom of litigants, which is to be sedulously fostered, to consult with lawyers
upon what they believe are their rights in litigation. The condition would of necessity call for an
investigation of what information the attorney has received and in what way it is or it is not in
conflict with his new position. Litigants would in consequence be wary in going to an attorney,
lest by an unfortunate turn of the proceedings, if an investigation be held, the court should
accept the attorney's inaccurate version of the facts that came to him. "Now the abstinence
from seeking legal advice in a good cause is by hypothesis an evil which is fatal to the
administration of justice." (John H. Wigmore's Evidence, 1923, Section 2285, 2290, 2291.)

Hence the necessity of setting down the existence of the bare relationship of attorney and client
as the yardstick for testing incompatibility of interests. This stern rule is designed not alone to
prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest
lawyer from unfounded suspicion of unprofessional practice. (Strong vs. Int. Bldg., etc.; Ass'n,
183 Ill., 97; 47 L.R.A., 792.) It is founded on principles of public policy, on good taste. As has
been said in another case, the question is not necessarily one of the rights of the parties, but as
to whether the attorney has adhered to proper professional standard. With these thoughts in
mind, it behooves attorneys, like Caesar'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.

So without impugning respondent's good faith, we nevertheless can not sanction his taking up
the cause of the adversary of the party who had sought and obtained legal advice from his firm;
this, not necessarily to prevent any injustice to the plaintiff but to keep above reproach the
honor and integrity of the courts and of the bar. Without condemning the respondents conduct
as dishonest, corrupt, or fraudulent, we do believe that upon the admitted facts it is highly in
expedient. It had the tendency to bring the profession, of which he is a distinguished member,
"into public disrepute and suspicion and undermine the integrity of justice."

There is in legal practice what called "retaining fee," the purpose of which stems from the
realization that the attorney is disabled from acting as counsel for the other side after he has
given professional advice to the opposite party, even if he should decline to perform the
contemplated services on behalf of the latter. It is to prevent undue hardship on the attorney
resulting from the rigid observance of the rule that a separate and independent fee for
consultation and advice was conceived and authorized. "A retaining fee is a preliminary fee
given to an attorney or counsel to insure and secure his future services, and induce him to act
for the client. It is intended to remunerate counsel for being deprived, by being retained by one
party, of the opportunity of rendering services to the other and of receiving pay from him, and
the payment of such fee, in the absence of an express understanding to the contrary, is neither
made nor received in payment of the services contemplated; its payment has no relation to the
obligation of the client to pay his attorney for the services which he has retained him to
perform." (7 C.J.S., 1019.)

27
The defense that Attorney Agrava wrote the letter Exhibit A and that Attorney Francisco did not
take the trouble of reading it, would not take the case out of the interdiction. If this letter was
written under the circumstances explained by Attorney Francisco and he was unaware of its
contents, the fact remains that his firm did give Mrs.Hilado a formal professional advice from
which, as heretofore demonstrated, emerged the relation of attorney and client. This letter
binds and estop him in the same manner and to the same degree as if he personally had
written it. An information obtained from a client by a member or assistant of a law firm is
information imparted to the firm. (6 C. J., 628; 7 C. J. S., 986.) This is not a mere fiction or an
arbitrary rule; for such member or assistant, as in our case, not only acts in the name and
interest of the firm, but his information, by the nature of his connection with the firm is available
to his associates or employers. The rule is all the more to be adhered to where, as in the
present instance, the opinion was actually signed by the head of the firm and carries his initials
intended to convey the impression that it was dictated by him personally. No progress could be
hoped for in "the public policy that the client in consulting his legal adviser ought to be free from
apprehension of disclosure of his confidence," if the prohibition were not extended to the
attorney's partners, employers or assistants.

The fact that petitioner did not object until after four months had passed from the date
Attorney Francisco first appeared for the defendants does not operate as a waiver of her
right to ask for his disqualification. In one case, objection to the appearance of an attorney
was allowed even on appeal as a ground for reversal of the judgment. In that case, in which
throughout the conduct of the cause in the court below the attorney had been suffered so to act
without objection, the court said: "We are all of the one mind, that the right of the appellee to
make his objection has not lapsed by reason of failure to make it sooner; that professional
confidence once reposed can never be divested by expiration of professional employment."
(Nickels vs. Griffin, 1 Wash. Terr., 374, 321 A. L. R. 1316.)

The complaint that petitioner's remedy is by appeal and not by certiorari deserves scant
attention. The courts have summary jurisdiction to protect the rights of the parties and the
public from any conduct of attorneys prejudicial to the administration of the justice. The
summary jurisdiction of the courts over attorneys is not confined to requiring them to pay over
money collected by them but embraces authority to compel them to do whatever specific acts
may be incumbent upon them in their capacity of attorneys to perform. The courts from the
general principles of equity and policy, will always look into the dealings between attorneys and
clients and guard the latter from any undue consequences resulting from a situation in which
they may stand unequal. The courts acts on the same principles whether the undertaking is to
appear, or, for that matter, not to appear, to answer declaration, etc. (6 C.J., 718 C.J.S., 1005.)
This summary remedy against attorneys flows from the facts that they are officers of the court
where they practice, forming a part of the machinery of the law for the administration of justice
and as such subject to the disciplinary authority of the courts and to its orders and directions
with respect to their relations to the court as well as to their clients. (Charest vs. Bishop, 137
Minn., 102; 162, N.W., 1062, Note 26, 7 C. J. S., 1007.) Attorney stand on the same footing as
sheriffs and other court officers in respect of matters just mentioned.

We conclude therefore that the motion for disqualification should be allowed. It is so ordered,
without costs.

28
Moran, C.J., Ozaeta, Paras, Feria, Bengzon, Padilla, Montemayor, Reyes and Torres, JJ.,
concur.

SHIRLEY LORIA TOLEDO and ROSIE LORIA DAJAC, complainants, vs. JUDGE
ALFREDO E. KALLOS, respondent.

RESOLUTION
DAVIDE, JR., C.J.:

For our resolution is the verified complaint, written in the vernacular and dated 21 August
2002, of siblings Shirley Loria Toledo and Rosie Loria Dajac against respondent Judge Alfredo
E. Kallos, Presiding Judge of the Regional Trial Court (RTC) of Legazpi City, Branch 10, for
violation of the Code of Judicial Conduct, the Code of Professional Responsibility, and Article
1491 (5) of the Civil Code.
Prior to his appointment as a judge in March 1995,[1] Judge Kallos was complainants
counsel of record in Civil Case No. 4879 filed with the RTC of Legazpi City, Branch 4, involving
the recovery of hereditary shares with damages. On 25 March 1979, a judgment was rendered
ordering the defendants to, among other things, turn over to herein complainants, the plaintiffs
therein, the possession and ownership of the total area of 4,514 square meters of lot 2082
Albay Cadastre. On appeal, the decision was affirmed by the Court of Appeals and became
final and executory on 16 December 1985.[2]
Several years thereafter, or in February 2002, the respondent filed in the same action, Civil
Case No. 4879, before the RTC of Legazpi, Branch 4, an Omnibus Motion[3] praying, inter alia,
for the issuance an order constituting in his favor an attorneys lien to the extent of one-third
over the lot awarded in favor of the complainants representing his attorneys fee. He based his
motion on a written contingency agreement on attorneys fees for professional services
rendered whereby he is entitled to one-third share of what would be awarded to the
complainants. He claimed that this agreement had already been implemented when one of the
three (3) lots levied upon by the sheriff to answer for the award of damages was given to (him)
as his one-third share while the other two lots went to the plaintiffs as their two-third share [as]
evidenced by the Definite Deed of Sale and Transfer Certificate of Titles Nos. T-77728, T-
77458 and T-77459. However, he misplaced a copy of said written agreement.
In the meantime, or on 5 September 2002, the complainants filed before this Court, through
the Office of the Court Administrator, the subject verified complaint. Here, complainants pray
for three things. First, they pray for an order directing the respondent to stop demanding his 1/3
share attorneys fees. They assert that the respondent has no basis for his claim because he
failed to show in court proof of the alleged written contingency fee agreement. They also belie
respondents insistence in his Omnibus Motion that the said agreement had already been
implemented when, on execution, one of three lots levied upon by the sheriff was given to him
as his 1/3 share. They emphasize that all the lots levied by the sheriff were given to them.
29
However, the respondent forced them to sign a Deed of Absolute Sale on 16 January 1990
involving a parcel of land valued in the document at P10,000, but actually worth more
than P500,000, in payment of his attorneys fees. While they did not want to sign the document
because respondent appeared in their case only during execution, they were constrained to do
so for fear that something adverse might happen to their case, as the respondent so warned
them. The latter told them that they would not have won the case were it not for his services.
The complainants thus seek, as their second prayer, the recovery of the property involved
in said Deed of Absolute Sale. They argue that pursuant to Article 1491(5) of the Civil Code,
lawyers are prohibited from buying their clients properties when the same are still the object of
litigation. To prove that the respondent was still their counsel when the sale took place, the
complainants attached to their complaint the Motion to Terminate Services dated 23 June
1994, which was based on respondents being remiss in his duties and responsibilities as their
lawyer, and the Order of the court dated 29 June 1994, approving the termination.
Third, the complainants pray for the removal of the respondent from his position as RTC
judge for his alleged abusive conduct unbecoming a judge.
In his Comment dated 25 November 2002, the respondent denies the allegations against
him and asserts that he is only claiming what is due him. He vehemently denies that he
appeared in the case only during the execution stage, pointing to the Minutes of Hearing and
the Order, both dated 05 October 1973, which show that he entered his appearance as counsel
for the complainants as early as 5 October 1973, or two months after the complaint was filed.
He continuously handled the case from then on, as shown by copies of the minutes of the
hearings and orders issued by the RTC, until a favorable judgment was rendered on 25 March
1979 and the subject properties were levied upon on execution to satisfy the judgment. He
insists that he was never remiss in the performance of his duties and responsibilities as
complainants counsel.
The respondent further alleges that the existence of the agreement on attorneys fees was
admitted by complainant Shirley Loria Toledo as evidenced by the order issued by the court on
01 March 2002, which states that Ms. Toledo came to the court informally informing it that she
had a copy of the contract on attorneys fees.[4]
As regards the Deed of Absolute Sale, respondent admits that he was still complainants
lawyer when the lot was transferred in his name. The lot was given to him by the complainants
and their mother, pursuant to their written contingency agreement, as his 1/3 share in the three
parcels of land levied upon by the sheriff to settle the accrued rentals awarded in the second
paragraph of the dispositive portion of the decision. He did not pay for it. The figure appearing
on the document was written only to facilitate the transaction. He never compelled the
complainants and their mother to sell to him the parcel of land. Neither did he tell them that
nothing would happen to their case without him.
Finally, the respondent asserts that his claim for attorneys fees is still being litigated in Civil
Case No. 4879. Thus, the instant complaint is premature.
In their Rejoinder dated 7 January 2003, the complainants insist that there is no basis for
respondents claim for attorneys fees for the following reasons: (1) the respondent failed to
present the agreement on attorneys fees; (2) attorneys fees were not awarded by the RTC or
the Court of Appeals; and (3) Civil Case No. 4879 is in its execution stage.

30
After evaluating the pleadings submitted by the parties, the Court Administrator found[5] that
respondent was, indeed, complainants counsel in Civil Case No. 4879, and he should therefore
be compensated for his services. The act of demanding payment for his attorneys fees is not a
ground for administrative liability. However, he can be allowed only fair and reasonable
attorneys fees under Canon 20 of the Code of Professional Responsibility. As to this, the Court
Administrator stated:
On the question of whether respondent violated Article 1491(5) of the Civil Code, the Court
Administrator found that this may be fairly resolved in an investigation, there being a factual
dispute, and recommended that the complaint be referred to an Associate Justice of the Court
of Appeals pursuant to Section 3, Rule 140 of the Rules of Court. On the basis of this
recommendation, we referred the matter to Associate Justice Jose Mendoza of the Court of
Appeals for investigation, report, and recommendation.
In his Report,[6] Justice Mendoza found that the respondent indeed represented the
complainants in Civil Case No. 4879. Like the Court Administrator, he expresses the view that
the act of demanding attorneys fees for services rendered is not a ground for administrative
sanction. He finds that when the respondent made the demand, he did so as a lawyer who
obtained a favorable judgment for his client, and not as a judge. As a lawyer, it is but just that
he be fairly compensated for his services. And his filing of a claim for attorneys fees in Civil
Case No. 4879 was an appropriate legal remedy. Considering the pendency of such claim,
Justice Mendoza recommends the suspension of the determination of the instant administrative
complaint until the rendition of a final judicial ruling on the matter of respondents attorneys fees;
thus:

As the said issue is still being litigated in the Regional Trial Court in Civil Case No. 4879, it is the view
of the undersigned that the complaint is still premature .

In other words, the complaint is not yet ripe for administrative evaluation. The hearing on the matter
being conducted by the court below should be allowed to run its course as that court is the appropriate
forum for a ruling on the dispute.

To make a determination at this time on whether the respondent violated Article 1491 (A) would be to
preempt the lower court in its resolution of the issue. Any recommendation by the undersigned in this
administrative case and subsequent resolution by the Honorable Supreme Court on the matter would
certainly affect or influence the thinking of the trial court before which the matter is pending. In such a
case, it will be unfair to either party. At any rate, the party who would feel aggrieved might still elevate
the decision to the higher courts.

This recommendation is not without precedent. In the case of Spouses De Leon v. Hon. Bonifacio, Adm.
Case No. 4467, October 10, 1997, the then Deputy Court Administrator, Hon. Reynaldo Suarez,
recommended the dismissal of the case for being judicial in nature or, at least, premature.

In this case, the respondent is not being charged for his acts or decisions as a judge. Rather, he has been
charged for dealing with the property of his client which is prohibited by law. Nevertheless, the principle
is the same, in that, the matter is still judicial in nature.

We agree with Justice Mendoza.

31
It is fundamental that a claim for attorneys fees may be asserted either in the very action in
which the services of a lawyer had been rendered or in a separate action.[7] The respondent
chose to file his claim for attorneys fees in the same case in which he served as counsel for the
complainants. As mentioned, this is a proper remedy under our jurisdiction and is preferred to
an independent action as it avoids multiplicity of suits. Besides, the right to recover attorneys
fees is but an incident of the case in which the services of counsel have been rendered.
Moreover, the court trying the case is to a certain degree already familiar with the nature and
extent of the lawyers services[8] and is in a better position to decide the question of fees.
Undisputably, respondents claim for attorneys fees is under litigation. We find in the records
an Order dated 7 January 2004 issued in Civil Case No. 4879 which granted respondents
prayer for 1/3 share of attorneys fees in the proceeds of litigation as claimed in his Omnibus
Motion dated 14 February 2002. This Order is the subject of a motion for reconsideration by the
complainants, as stated in respondents Manifestation dated 24 January 2004[9] filed in the
investigation proceedings conducted by Justice Mendoza. Also part of the records is
respondents Affidavit dated 1 December 2003, filed in the same investigation proceedings,
alluding to the complainants filing of a Petition for Certiorari and Mandamus in the Court of
Appeals, docketed as CA-G.R. SP No. 80090, seeking to reverse the Order of the trial court
denying complainants Motion to Dismiss respondents Omnibus Motion.
We, therefore, find no cogent reason for us to resolve complainants first two issues raised
in the verified complaint, for they are inextricably inherent in the claim of the respondent in his
Omnibus Motion, which is pending judicial determination. Since respondents claim for attorneys
fees in the main case has not yet become final, the objection of prematurity obtains, as a
contrary holding may be preemptive of a final judicial determination of factual and evidentiary
matters inherent in the claim.[10] Clearly, the reliefs asked by the complainants are judicial in
nature.[11] And, if only for an orderly administration of justice, the proceedings in Civil Case No.
4879 should be allowed to continue and take its course, and the claim of the respondent
judicially settled first.
But while we give deference to the wisdom of the trial court to initially decide respondents
claim for attorneys fees, we deem it appropriate to reiterate certain principles governing the
payment of attorneys fees and impart our observations on the instant claim. Foremost of these
principles is that the act of demanding attorneys fees for services rendered is not a ground for
an administrative sanction. On the contrary, Canon 20 of the Code of Professional
Responsibility allows lawyers to charge fair and reasonable fees. As long as a lawyer honestly
and in good faith serves and represents the interest of the client, he should have a reasonable
compensation for his service.[12]
Lawyers are thus as much entitled to judicial protection against injustice on the part of their
clients as the clients are against abuses on the part of counsel. The duty of the court is not only
to see that lawyers act in a proper and lawful manner, but also to see that lawyers are paid
their just and lawful fees.[13] Thus, in J.K. Mercado and Sons Agricultural Enterprises, Inc. v. De
Vera,[14] citing Albano v. Coloma,[15] we stressed:

While, indeed, the practice of law is not a business venture, a lawyer, nevertheless, is entitled to be duly
compensated for professional services rendered. So, also, he must be protected against clients who
wrongly refuse to give him his just due. In Albano vs. Coloma, this Court has said:

32
Counsel, any counsel, who is worthy of his hire, is entitled to be fully recompensed for his services. With
his capital consisting solely of his brains and with his skill, acquired at tremendous cost not only in
money but in the expenditure of time and energy, he is entitled to the protection of any judicial tribunal
against any attempt on the part of a client to escape payment of his fees. It is indeed ironic if after putting
forth the best that is in him to secure justice for the party he represents, he himself would not get his due.
Such an eventuality this Court is determined to avoid. It views with disapproval any and every effort of
those benefited by counsels services to deprive him of his hard-earned honorarium. Such an attitude
deserves condemnation.

It should be stressed in this connection that the absence of a written contract will not
preclude the finding that there was a professional relationship that justifies the collection of
attorneys fees for professional services rendered. Documentary formalism is not an essential
element in the employment of an attorney; the contract may be express or implied. To establish
the relation, it is sufficient that the advice and assistance of an attorney is sought and received
in any matter pertinent to his profession.[16] Hence, with or without a contingency agreement
between the complainants and the respondent, the trial court must determine the propriety of
respondents claim for attorneys fees and the reasonable amount thereof.
The third issue raised in the verified complaint deserves a short shrift. No evidence was
presented to prove respondents alleged abusive conduct unbecoming a judge. The
complainants do not dispute the fact that the respondent was not yet a judge when the assailed
action or conduct was allegedly committed by him. As such, and to that extent, there is no
reason to bind him by the strict standards of the Code of Judicial Conduct for acts committed
as counsel to a case prior to his appointment as a judge.
WHEREFORE, the instant administrative complaint is DISMISSED for being premature and
for lack of merit.
SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

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.

33
SARMIENTO, J.:p

Before the Court is Atty. RaymundoArmovit'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 AttyPacificoYadao" 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 fo sthe hearing of hsi 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, RomualdoBengson 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 comply faithfully with
their respective obligations.

SO ORDERED. 2

However, upon the turnover of the money to the private respondent, Mrs. Brenda Bengson
(wife of RomualdoBengzon) delivered to Atty. Armovit the sum of P300,000.00 only. Armovit

34
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 an 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.

35
The private respondent alleged that Atty. Armovit had been 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:
36
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. PacificoYadao, 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.
37
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; 19 however, 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.

Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

THIRD DIVISION

38
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
39
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 WilfredoLicudan, who
appears to be intelligent and in fact he speaks (the) English language well, appeared. Both
Aurelio and WilfredoLicudan 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)

40
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. TeodoroDomalanta 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. TeodoroDomalanta 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

41
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]):
42
. . . 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 WilfredoLicudan 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]).

43
Under Canon 20 of the Code of Professional Responsibility, a lawyer shall charge only fair and
reasonable fees.1âwphi1 In 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.
44
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.

Fernan, C.J., Feliciano and Bidin, JJ., concur.

45
Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 97006 February 9, 1993

ERNESTO F. ROLDAN and MARIETTA A. ROLDAN, petitioners,


vs.
THE COURT OF APPEALS and COMMERCIAL CREDIT CORPORATION OF DAVAO,
respondents.

Rodolfo B. Ta-asan for petitioners.

Honesto A. Cabarroguis for private respondent.

NOCON, J.:

While in bed the sick man's lying,


While in Court your client's cause you're trying,
That's the time to get your fee.
For, when the sick man has recovered.
And the lawsuit's won or smothered
He will never think of thee. 1

Petitioners spouses Ernesto and Marietta Roldan claim that the attorney's fees claimed by the
private respondent, Commercial Credit Corporation of Davao City, being gargantuan,
exhorbitant and unconscionable, should be proportionately reduced on the basis of quantum
meruit. Private respondent Commercial Credit Corporation of Davao demurs and states that the
amount is reasonable or conscionable considering the difficulty it has encountered in collecting
from the petitioners.

Culled from private respondent's statement of facts are the following antecedents of this case.
On June 7, 1971, petitioners purchased fifteen (15) trucks on installment basis for
P1,250,000.00 from private respondent. Since they could not fully pay their obligation, private
respondent sued them on November 21, 1981. On July 28, 1987, the trial court rendered its
decision, which in its dispositive portion reads as follows:

IN VIEW WHEREOF, judgment is hereby rendered ordering the defendants to pay in solidum
the plaintiff the following sums:

46
1. Five Hundred Seventy Nine Thousand Five Hundred Sixty Seven Pesos and Thirteen
Centavos representing the principal balance with interest at 12% to be computed from
November 24, 1981 until fully paid;

2. Twenty Thousand Two Hundred Eighty Five and Forty Three Centavos representing the
past due charges as of November 23, 1981 with interest of 12% per annum to be computed
from November 24, 1981 until fully paid;

3. One Hundred Ninety Three Thousand One Hundred Sixty Nine Pesos and Seventy Two
Centavos representing liquidated damages as of November 23, 1981 with interest of 12% per
annum to be computed from November 24, 1981 until fully paid;

4. Attorney's fees equivalent to 25% of the total amount due in favor of the plaintiff;

5. Two Hundred Fifty Pesos and Seventy Five Centavos representing the value of the
check which was drawn by the defendant, accepted by the plaintiff and dishonored by the
drawee bank.

6. Costs of suit.

SO ORDERED. 2

Seeking appellate review, the matter was elevated to the Court of Appeals which dismissed
petitioners' appeal for lack of merit 3 and so with their Motion for Reconsideration. 4

Hence, this petition.

Petitioners do not dispute the facts but only that portion of the findings of fact of the trial court,
as affirmed by the appellate court on the alleged exhorbitant attorney's fees, excessive
liquidated damages and usurious interest on the loan.

Settled is the rule, that in petitions for review under Rule 45 of the Rules of Court, only
questions of law may be raised since factual findings of the Court of Appeals are deemed
conclusive on the Supreme Court subject to certain exceptions. 5

Thus, the issues raised by petitioners on (1) the alleged lack of basis for liquidated damages
imposed as a penalty for litigation as determined by the trial court and (2) the alleged usurious
interests rate they were charged on the contract of loan as evidenced by the promissory note
has been disposed of by the trial court and the Court of Appeals. Thus, the findings of fact are
binding on Us.

The matter, however, of the attorney's fees — gargantuan, exhorbitant and unconscionable as
alleged by petitioners — is what this Court will rule upon.

This is not the first time that the amount of attorney's fees has been questioned. In Radiowealth
Finance Co., Inc. vs. International Corporate Bank, 6 petitioner Radiowealth questioned the
reasonableness of the amount of attorney's fees therein and asked whether this Court has the

47
power to modify the attorney's fees previously agreed upon by the parties under a valid
contractual stipulation.

The Court ruled there as follows:

As a basic premise, the contention of petitioners that this Court may alter, modify or change
even an admittedly valid stipulation between the parties regarding attorney's fees is conceded.
The high standards of the legal profession as prescribed by law and the Canons of
Professional Ethics regulate if not limit the lawyer's freedom in fixing his professional fees. The
moment he takes his oath, ready to undertake his duties first, as a practitioner in the exercise
of his profession, and second, as an officer of the court in the administration of justice, the
lawyer submits himself to the authority of the court. It becomes axiomatic therefore, that power
to determine the reasonableness or the unconscionable character of attorney's fees stipulated
by the parties is a matter falling within the regulatory prerogative of the courts (Panay Electric
Co., Inc. vs. Court of Appeals, 119 SCRA 456 [1982]; De Santos vs. City of Manila, 45 SCRA
409 [1972]; Rolando vs. Luz, 34 SCRA 337 [1970]; Cruz vs. Court of Industrial Relations, 8
SCRA 826 [1963]). And this Court has consistently ruled that even with the presence of an
agreement between the parties, the court may nevertheless reduce attorney's fees though fixed
in the contract when the amount thereof appears to be unconscionable or unreasonable
(Borcena vs. Intermediate Appellate Court, 147 SCRA 111 [1987]; Mutual Paper Inc. vs.
Eastern Scott Paper Co., 110 SCRA 481 [1981]; Gorospe vs. Gochango, 106 Phil. 425 [1959];
Turner vs. Casabar, 65 Phil. 490 [1938]; F.M. Yap Tico& Co. vs. Alejano, 53 Phil. 986 [1929]).
For the law recognizes the validity of stipulations included in documents such as negotiable
instruments and mortgages with respect to attorney's fees in the form of penalty provided that
they are not unreasonable or unconscionable (Philippine Engineering Co. vs. Green, 48 Phil.
466). 7 (Emphasis supplied)

Before We proceed any further, it is worthwhile recalling what Polytrade vs. Blanco 8 has to say
on the matter of attorney's fees, to wit:

To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the
attorneys' fees recoverable as between attorney and client spoken of and regulated by the
Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the
stipulation therefor is aptly called a penal clause. It has been said that so long as such
stipulation does not contravene law, morals, or public order, it is strictly binding upon
defendant. The attorney's fees so provided are awarded in favor of the litigant, not his counsel.
It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by
execution. 9 (Emphasis supplied).

Private respondent's counsel must have forgotten this as evident from the following exchange
of letters between the parties, as follows:

1. Letter of Atty. Ta-asan to Atty. Cabarroguis dated November 16, 1990: 10

ATTY. HONESTO A. CABARROGUIS


Hacalex Bldg., Brokenshire
Complex, A. Pichon St.,
Davao City, Philippines
48
Dear Atty. Cabarroguis,

Greetings:

This is with reference to CA-G.R. CV No. 15939 entitled Commercial Credit Corporation of
Davao vs. Ernesto F. Roldan and Marietta A. Roldan. My client, Mr.&Mrs.Roldan, have sought
my intercession instructing me to present to you a proposal to amicably settle the above
entitled case.

My client wishes to make the following proposal:

xxx xxx xxx

2. To pay P50,000.00 pesos cash downpayment and balance with real properties located in
M'lang, Cotabato, Philippines to be paid to the plaintiff's counsel for his attorney's fees and
other legal fees.

xxx xxx xxx

It is my client's fervent wish and desire that your client will favorably consider our proposal to
satisfy their respective claims and interests.

xxx xxx xxx

2. Reply of Atty. Cabarroguis of even date: 11

Atty. R. Taa-san
Brgly Bldg. Davao City

Re: Your letter (Roldan Case) can we meet over coffee tomorrow at JALTAN Coffee Shop
along A. Pichon St? Please confirm.

Regards.

H Cabarroguis
11-16-90

3. Letter of Atty. Ta-asan to petitioner Marietta A. Roldan dated November 17, 1990: 12

MRS. MARIETTA A. ROLDAN


MacArthur Highway, Matina,
Davao City, Philippines

Dear Mrs.Roldan,

I wish to inform you of the outcome of my conference with

49
Atty. Honesto A. Cabarroguis, legal counsel of the Commercial Credit Corporation (CCC), last
Saturday November 17, 1990. During the conference, we made known to Atty. Cabarroguis
your previous proposal which I laid down in writing. However, Atty. Cabarroguis suggested
some modifications. He has made the following proposal:

xxx xxx xxx

2. The attorney's fees of Atty. Cabarroquis has not been altered. He is to be paid the full
amount of P577,320.20 with P100,000.00 as initial down payment. The remaining balance can
be paid in installments. You can make a proposal as to when you can fully satisfy his fees
provided that you put up either a surety bond or real property located in Davao City
commensurate to the amount of your obligation;

xxx xxx xxx

4. Letter of Atty. Cabarroquis to Atty. Ta-asan dated November 29, 1990: 13

Atty. Rodolfo Ta-asan, Jr.


Davao City.

Re: CCC of Davao vs. Ernesto


Roldanet. als.

Dear Atty. Ta-asan,

Further to our conference yesterday afternoon and previous ones in connection with captioned
case, I just came back from the office of the Register of Deeds of Davao City where I checked
the partial list of 334-titles in the name of Marietta A. Roldan which was furnished me by said
office and which I showed you yesterday.

xxx xxx xxx

May I suggest that the amount of One Hundred Thousand (P100,000.00) which is ready and
available be paid to me immediately by your clients, in partial payment of my fees from them
and from my client. In turn, I could do a lot to help them get the waivers they are requesting
from my clients through me. However, with all of these lots available in Davao City to be levied
upon on execution or to be the subject-matter of your proposed settlement, we shall in the
meantime disregard their offer of lots in M'lang to settle an otherwise favorable judgment
already by the Court of Appeals.

xxx xxx xxx

Private respondent's counsel glaring cupidity is beyond Us. It could be that private respondent
might have contracted with its counsel that the latter would get the 25% attorney's fees
stipulated in the promissory note as his attorney's fees. 14 The record however, does not show
such an agreement. But even if this were so, it is no excuse for Atty. Cabarroguis, private
respondent's counsel, to act in such a manner as to evoke disgust from non-members of the
Bar.
50
A lawyer is to uphold the integrity and dignity of the legal profession 15 and one who acts like a
middleman always out on grabs for what he can get certainly lessens the dignity of the legal
profession.

The trial court found:

4. That one of the terms of Promissory Note is that in case of litigation, ". . . the makers and
indorsers shall in addition pay 25% of the amount due as attorney's fees and 33 1/3 more of the
principal due and unpaid as liquidated damages . . ." (Exh. "F-2").

Twenty-five (25%) percent of the balance of the Promissory Note due which the trial court
pegged at P579,576.13 is P579,576.13 x 0.25 = P144,894.03, which amount would be due the
private respondent — NOT its counsel — as attorney's fees. It is clear that the liquidated
damages and other charges are not to be included for computation of the attorney's fees. The
reason why respondent's counsel came up with his attorney's fees of P577,320.20 is that he
erroneously added the liquidated damages and other charges and interests due to the balance
of the promissory note to get the total due to which he applied the 25% stipulated fee.

WHEREFORE, in view of the foregoing, this Petition is partially granted. The private
respondent is hereby AWARDED attorney's fees in the amount of ONE HUNDRED FORTY
FOUR THOUSAND, EIGHT HUNDRED NINETY FOUR PESOS AND THREE CENTAVOS
(P144,894.03). The other awards of the trial court, as affirmed by the respondent Court of
Appeals, are hereby RETAINED.

SO ORDERED.

Narvasa, C.J., Feliciano, Regalado and Campos, Jr., JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 160334 September 11, 2006

GUENTER BACH, petitioner,


vs.
ONGKIKO KALAW MANHIT & ACORDA LAW OFFICES, respondent.

DECISION

CHICO-NAZARIO, J.:

51
This Petition for Review on Certiorari seeks to reverse the Decision1 dated 8 October 2003 of
the Court of Appeals in CA-G.R. CV No. 74445, entitled, "OngkikoKalawManhit&Accorda Law
Offices v. Guenter Bach."

The facts as culled from the records of the case are as follows:

On 7 November 1994, petitioner Guenter Bach engaged the services of respondent law firm
OngkikoKalawManhit&Accorda Law Offices to represent him in a Petition for Declaration of
Nullity of Marriage filed before the Regional Trial Court (RTC) of Makati City, Branch 143,
docketed as Civil Case No. 95-224. The parties signed a "Fee Agreement," for the legal
services to be rendered by respondent. The provision for payment of the legal services reads:

(a) seven and one-half (7 ½ % ) of all cash recoveries, including damages, interests, attorney's
fees and costs; as well as

(b) five percent (5 %) of the market value of all properties awarded to [the petitioner] by the
court or obtained through the compromise agreement, valued at the time of recovery.2

However, on 5 December 1995, respondent withdrew its appearance as counsel of petitioner,


due to policy differences. On 18 December 1995, respondent sent the termination billing3 for
the services they rendered and billed petitioner the total amount of P1,000,000.00 plus 2%
interest for every month of delay in payment, based on the provision for termination of services
stated in their Fee Agreement, thus:

(C) Interest for late payment

All fees mentioned herein are payable within seven (7) days from receipt of our statement of
account. It is understood that all late payments shall be subject to interest payment at the rate
of 2 % per month of delay, a fraction of a month being considered as one month, counted from
the date the fees shall fall due, without need of prior demand.

x xxx

(F) Termination Clause

It is understood that you may terminate our services at any time. In such an event, we shall be
entitled to collect fees for legal services already performed and results obtained based on
quantum meruit."4

On 7 March 1996, respondent filed with the RTC a Notice5 of Charging Lien over the properties
of the spouses Bach.

On 5 February 1997, the RTC issued an Order6 directing the annotation of the charging lien in
the amount of P1,000,000.00 on all the titles of the spouses Bach's personal and real
properties enumerated in the notice of charging lien.

On 11 February 1999, respondent received a copy of the Order7 dated 8 June 1998, granting
petitioner's Motion to Withdraw his petition in Civil Case No. 95-224.
52
Despite respondent's demands for his legal fees, petitioner failed and refused to pay. Thus,
respondent filed a Complaint8 for a sum of money also before the RTC of Makati, Branch 148,
docketed as Civil Case No. 99-514. Respondent prayed for the payment of the following:
P1,000,000.00 as the latter's lawful fees for services rendered in Civil Case No. 95-224, plus
2% interest from date of final demand until paid; P250,000.00 as exemplary damages;
P200,000.00 representing billable time spent in prosecuting the case, plus another
P150,000.00 for any appeal taken; and P50,000.00 as litigation expenses and the cost of suit.

Within the period for filing an Answer, petitioner filed a Motion9 to dismiss on the ground that
respondent's claim had already been paid, waived, abandoned or otherwise extinguished.
Petitioner contended that prior to respondent's withdrawal as counsel in Civil Case No. 95-224,
petitioner had already paid respondent's services in the total amount of P200,000.00. On 9
August 1999, the Motion to Dismiss was denied10 by the RTC for lack of merit. Petitioner failed
to file his Answer; thus, he was declared in default and respondent was allowed to present its
evidence ex parte.11

On 24 January 2002, the RTC rendered its judgment in favor of the respondent, the dispositive
portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendant and the latter is hereby ordered to pay the following:

1. The amount of P750,000.00 as plaintiff's lawful fees for services rendered under Civil Case
No. 95-224, plus interest at the rate of 2% per month from the date of demand until paid;

2. P700,000.00 representing billable time which was spent in prosecuting this case;

3. P50,000.00 as and litigation expenses, and

4. Costs of suit.12

Not satisfied, petitioner appealed to the Court of Appeals, which modified the RTC Decision,
thus:

WHEREFORE, Based on the foregoing premises, the instant appeal is PARTLY GRANTED
and the appealed January 24, 2002 Decision of the Regional Trial Court of Makati City-Branch
148 in Civil Case No. 99-514 is hereby MODIFIED. Accordingly, the award of P700,000.00
representing billable time allegedly spent in the prosecution of the case a quo is hereby
DELETED. All other aspects of the appealed DECISION are UPHELD.13

Hence, this Petition filed by petitioner Guenter Bach raising the following issues to wit:

WHETHER OR NOT UNDER THE CONCEPT OF QUANTUM MERUIT, THE AMOUNT OF


P750,000.00 AS FEES FOR SERVICES RENDERED WITH INTEREST PEGGED AT 2% A
MONTH FROM DATE OF DEMAND UNTIL FULLY PAID IS REASONABLE

53
WHETHER OR NOT THERE IS LEGAL BASIS TO AWARD P50,000.00 AS AND FOR
LITIGATION EXPENSES AND COSTS OF SUIT.14

On the first issue, petitioner contends that the P750,000.00 awarded to the respondent by way
of quantum meruit, with interest of 2% a month from date of demand until fully paid, is
excessive, unreasonable and confiscatory. Thus, petitioner prays for reduction of the same.

Both the Court of Appeals and the trial court approved the attorney's fees in the total amounts
of P750,000.00 plus 2 % interest for the services rendered by respondent in Civil Case No. 95-
224. In this regard, the rule is that the issue of the reasonableness of attorney's fees based on
quantum meruit is a question of fact, and well-settled is the rule that conclusions and findings of
fact by the lower courts are entitled to great weight on appeal and will not be disturbed except
for strong and cogent reasons. The findings of the Court of Appeals by itself, which are
supported by substantial evidence, are almost beyond the power of review by the Supreme
Court.15 Thus, in the exercise of the Supreme Court's power of review the findings of facts of
the Court of Appeals are conclusive and binding on the Supreme Court. There are, however,
recognized exceptions to this rule, namely: (1) when the findings are grounded entirely on
speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken,
absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is
based on misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in
making the findings the Court of Appeals went beyond the issues of the case, or its findings are
contrary to the admissions of both the appellee and the appellant; (7) when the findings are
contrary to the trial court; (8) when the findings are conclusions without citation of specific
evidence on which they are based; (9) when the facts set forth in the petition as well as in the
petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of
facts are premised on the supposed absence of evidence and contradicted by the evidence on
record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not
disputed by the parties, which if properly considered, would justify a different conclusion.16
Exceptions (4) and (11) are present in the case at bar, and so this Court shall make its own
determination of the facts relevant for the resolution of the case.

Ordinarily, therefore, we would have remanded this case for further reception of evidence as to
the extent and value of the services rendered by respondent to petitioner. However, so as not
to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and
equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of
respondent.

There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the
reasonable compensation paid to a lawyer by his client for the legal services rendered to the
latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the
court as indemnity for damages to be paid by the losing party to the prevailing party.17

The issue in this case concerns attorney's fees in the ordinary concept. Generally, the amount
of attorney's fees due is that stipulated in the retainer agreement which is conclusive as to the
amount of the lawyer's compensation. In the absence thereof, the amount of attorney's fees is
fixed on the basis of quantum meruit, i.e., the reasonable worth of the attorney's services.
Courts may ascertain also if the attorney's fees are found to be excessive, what is reasonable
under the circumstances.18 In no case, however, must a lawyer be allowed to recover more
54
than what is reasonable, pursuant to Section 24, Rule 138 of the Rules of Court, which
provides:

SEC. 24. Compensation of attorney's fees; agreement as to fees.- An attorney shall be entitled
to have and recover from his client no more than a reasonable compensation for his services,
with a view to the importance of the subject - matter of the controversy, the extent of the
services rendered, and the professional standing of the attorney. No court shall be bound by
the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard
such testimony and base its conclusion on its own professional knowledge. A written contract
for services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable. (Underscoring supplied.)

We have identified the circumstances to be considered in determining the reasonableness of a


claim for attorney's fees as follows: (1) the amount and character of the service rendered; (2)
labor, time, and trouble involved; (3) the nature and importance of the litigation or business in
which the services were rendered; (4) the responsibility imposed; (5) the amount of money or
the value of the property affected by the controversy or involved in the employment; (6) the skill
and experience called for in the performance of the services; (7) the professional character and
social standing of the attorney; (8) the results secured; and (9) whether the fee is absolute or
contingent, it being recognized that an attorney may properly charge a much larger fee when it
is contingent than when it is not.19

Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the following
factors which should guide a lawyer in determining his fees:

(a) the time spent and extent of 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 the acceptance of the proffered
case;

(f) the customary charges for similar services and the schedule of fees of the IBP Chapter to
which he belongs;

(g) the amount involved in the controversy and the benefits resulting to the client from the
service;

(h) the contingency or certainty of compensation;

(i) the character of the employment, whether occasional or established; and

(j) the professional standing of the lawyer.

55
In determining a reasonable fee to be paid to respondent as compensation for their services on
quantum meruit, based on the factors above quoted, it is proper to consider all the facts and
circumstances obtaining in this case.

It is undisputed that respondent firm had rendered services as counsel for the petitioners in
Civil Case No. 95-244. The services rendered consist of the following:

1. Respondent was able to annotate a notice20 of lis pendens on the property of Spouses Bach
in Caloocan City covered by TCT No. C-12112, thereby preventing easy disposition of the
property by Luzviminda Bach;

2. Respondent was likewise able to annotate a notice21 of lis pendens on the property of
Spouses Bach in Pasig City covered by TCT No. 48223, thereby preventing disposition of the
property by Luzviminda Bach;

3. Further, respondent annotated a notice22 of lispendens on the property of Spouses Bach in


Dasmarinas, Cavite covered by TCT No. T-339282, thereby preventing disposition of the
property by Luzviminda Bach;

4. Additionally, respondent annotated a notice23 of lispendens on the property of Spouses


Bach in Tanza, Cavite, covered by TCT No. T-255263, thereby preventing disposition of the
property by Luzviminda Bach;

5. Respondent also worked on the annotation of the notice24 of lispendens on the property of
Spouses Bach in Makati, covered by TCT No. S-62541, thereby preventing disposition of the
property by Luzviminda Bach;

6. Respondent worked on the annotation of a notice of lispendens on the property of Spouses


Bach in Dasmariñas, Cavite, covered by TCT No. T-380848, thereby preventing disposition of
the property by Luzviminda Bach;

7. Respondent annotated a notice25 of lispendens on the property of Spouses Bach situated in


Tagaytay City, covered by TCT No. P-705, thereby preventing disposition of the property by
Luzviminda Bach;

8. Respondent filed the Petition26 for Declaration of Nullity of Marriage and Dissolution of the
Conjugal Partnership of Gains of petitioner with his wife;

9. Respondent prepared an affidavit27 in favor of petitioner attesting to the fact of petitioner's


marriage and their properties acquired during his marriage with Luzviminda Bach:

10. Respondent prepared an ex parte motion28 to declare petitioner's wife to have waived her
right to file answer for failure to file the same within the period granted by law and to direct the
public prosecutor to determine whether or not a collusion exist;

11. Respondent prepared a Petition29 for appointment of a receiver and to compel petitioner's
wife to render an accounting;

56
12. Other services included the filling of several oppositions30 to certain motions filed by
petitioner's wife;

13. Respondent filed a motion31 to set the case for preliminary investigation;

14. Respondent filed an ex parte motion32 to declare petitioner's wife in default;

15. Respondent submitted a supplemental comment33 on the motion for leave to withdraw
funds from Certificate of Participation filed by petitioner's wife;

16. Respondent filed a manifestation and motion34 praying the court to direct petitioner's wife
to designate her lead counsel in the case;

17. Respondent prepared a Reply35 to comments on opposition of petitioner;

18. Respondent was able to secure an Order36 from the said court freezing the United
Coconut Planters Bank (UCPB) account in the name of petitioner's wife, Luzviminda Bach,
containing about P6,500,000.00, representing the balance of the proceeds from the sale of
their conjugal property in Pasig City;

19. Respondent represented petitioner in numerous hearings in Civil Case No. 95-224,
evidenced by the signatures of the lawyers of respondent Law Firm in the minutes dated 25
April 1995, 27 April, 1995, 14 June 1995, 27 June 1995, 1 August 1995, 11 August 1995, 22
September 1995,10 October 1995, 17 October 1995, 1 December 1995, 7 December 1995, 29
March 1996 and 16 January 1997;37

20. Conducted several preliminary and post litigation conferences in the proceedings for
preliminary injunction leading to the freezing of the bank account of the parties; and

21. Prepared and sent out numerous letters to third parties and entities to protect the interest of
petitioner and notices to petitioner updating him of the status of the case and the courses of
action taken by respondent Law Firm.38

In sum, the services rendered by the respondent as enumerated above and as admitted39 by
Atty. Mario Ongkiko during the ex parte hearing, consist of annotating notice of lispendens on
the conjugal properties of petitioner and his wife; filing the Petition for Declaration of Nullity of
Marriage; preparing and filing various pleadings and documents relevant to the case; obtaining
a freeze order of petitioner's funds in the UCPB; attending hearings in Civil Case No. 05-224,
and sending notices to petitioner updating the latter of the status of the case. Nothing in Civil
Case No. 95-224 so far appears complicated and no extra ordinary skill was needed for
lawyers of respondent Law Firm to accomplish what they had done in the case before they
withdrew their appearance. We do not find herein a situation so intricate that demands more
than a careful scrutiny of the legal matters involved. These are simply the normal duties of a
lawyer that he is bound by law to render to his clients with utmost fidelity for which his client
must not be burdened to pay an extra price. It bears stressing that at the time respondent firm
withdrew their appearance due to policy differences with petitioner, the case was still in its
initial stage.

57
Guided by the above yardstick and so much of the pertinent data as are extant in the records of
this case and in the exercise of our sound discretion, we hold that the amount of P500,000.00
is a reasonable and fair compensation for the legal services rendered by respondent to the
petitioner.

The imposition of legal interest on the amount payable to private respondent as attorney's fees
is unwarranted. Even as we agree that parties can freely stipulate on the terms of payment, still
the imposition of interest in the payment of attorney's fees is not justified. In the case of Cortes
v. Court of Appeals,40 we ruled that Article 220941 of the Civil Code does not even justify the
imposition of legal interest on the payment of attorney's fees as it is a provision of law
governing ordinary obligations and contracts. It deleted the 6% interest imposed by the
appellate court on the payment of attorney's fees. It ratiocinated by citing Mambulao Lumber
Co. v. Philippine National Bank,42 thus:

Contracts for attorney's services in this jurisdiction stands upon an entirely different footing from
contracts for the payment of compensation for any other services. x xx [A]n attorney is not
entitled in the absence of express contract to recover more than a reasonable compensation
for his services; and even when an express contract is made, the court can ignore it and limit
the recovery to reasonable compensation if the amount of the stipulated fee is found by the
court to be unreasonable. This is a very different rule from that announced in section 1091 of
the Civil Code with reference to the obligation of contracts in general, where it is said that such
obligation has the force of law between the contracting parties. Had the plaintiff herein made an
express contract to pay his attorney an uncontingent fee of P2,115.25 for the services to be
rendered in reducing the note here in suit to judgment, it would not have been enforced against
him had he seen fit to oppose it, as such a fee is obviously far greater than is necessary to
remunerate the attorney for the work involved and is therefore unreasonable. In order to enable
the court to ignore an express contract for attorney's fees, it is necessary to show, as in other
contracts, that it is contrary to morality or public policy (Art.1255, Civil Code). It is enough that it
is unreasonable or unconscionable. (Emphases supplied.)

We have held that lawyering is not a moneymaking venture and lawyers are not merchants.43
Law advocacy, it has been stressed, is not capital that yields profits. The returns it births are
simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits
which enjoy a greater deal of freedom from governmental interference, is impressed with a
public interest, for which it is subject to State regulation.44

A lawyer is not merely the defender of his client's cause and a trustee of his client's cause of
action and assets; he is also, and first and foremost, an officer of the court and participates in
the fundamental function of administering justice in society.45 It follows that a lawyer's
compensation for professional services rendered are subject to the supervision of the court, not
just to guarantee that the fees he charges and receives remain reasonable and commensurate
with the services rendered, but also to maintain the dignity and integrity of the legal profession
to which he belongs. Upon taking his attorney's oath as an officer of the court, a lawyer submits
himself to the authority of the courts to regulate his right to charge professional fees.46

Though we reduced the award of attorney's fees and disallowed the imposition of interest
thereon, the fact that an attorney plays a vital role in the administration of justice underscores
the need to secure to him his honorarium lawfully earned as a means to preserve the decorum
58
and respectability of the legal profession. A lawyer is as much entitled to judicial protection
against injustice, imposition of fraud on the part of his client as the client against abuse on the
part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and
lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his capital
consisting only of his brains and with his skill acquired at tremendous cost not only in money
but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal
against any attempt on the part of his client to escape payment of his just compensation. It
would be ironic if after putting forth the best in him to secure justice for his client, he himself
would not get his due.47

Thus, the Court of Appeals did not err in awarding expenses of litigation. Article 2208,
paragraphs 2, 5 and 11, of the Civil Code, authorize the recovery of such fees "(2) When the
defendant's act or omission has compelled the plaintiff to litigate x xx or to incur expenses to
protect his interest; x xx (5) Where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiff's plainly valid, just and demandable claim; x xx and (11) In any
other case where the court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered." Considering the fact that respondent was drawn into this
litigation by petitioner to protect and defend their interest and taking into account the services
already rendered by respondent to petitioner, the sum of P30,000.00 as expenses of litigation
and cost of suit would be reasonable under the premises.

WHEREFORE, the Decision appealed from is AFFIRMED WITH MODIFICATIONS to the effect
that the attorney's fees awarded to respondent is REDUCED to P500,000.00, the legal interest
of 2% on the amount due to respondent is DELETED, and the award of litigation expenses is
REDUCED to P30,000.00.

SO ORDERED.

Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Callejo, Sr., J.J., concur.

THIRD DIVISION

EVANGELINA MASMUD (as substitute complainant for ALEXANDER J. MASMUD),


Petitioner,

- versus -

NATIONAL LABOR RELATIONS COMMISSION (First Division) and ATTY. ROLANDO B.


GO, JR.,
Respondents.

G.R. No. 183385

Present:

YNARES-SANTIAGO, J.,
59
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
PERALTA, JJ.

Promulgated:

February 13, 2009

x------------------------------------------------------------------------------------x

RESOLUTION

NACHURA, J.:

Before the Court is a petition for review on certiorari[1] assailing the Decision[2] dated October
31, 2007 and the Resolution dated June 6, 2008 of the Court of Appeals (CA) in CA-G.R. SP
No. 96279.

The facts of the case are as follows:

On July 9, 2003, Evangelina Masmuds (Evangelina) husband, the late Alexander J. Masmud
(Alexander), filed a complaint[3] against First Victory Shipping Services and Angelakos (Hellas)
S.A. for non-payment of permanent disability benefits, medical expenses, sickness allowance,
moral and exemplary damages, and attorneys fees. Alexander engaged the services of Atty.
Rolando B. Go, Jr. (Atty. Go) as his counsel.

In consideration of Atty. Gos legal services, Alexander agreed to pay attorneys fees on a
contingent basis, as follows: twenty percent (20%) of total monetary claims as settled or paid
and an additional ten percent (10%) in case of appeal. It was likewise agreed that any award of
attorneys fees shall pertain to respondents law firm as compensation.

On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary
claims of Alexander. The dispositive portion of the decision, as quoted in the CA Decision,
reads:

WHEREFORE, foregoing considered, judgment is rendered finding the [First Victory Shipping
Services and Angelakos (Hellas) S.A.] jointly and severally liable to pay [Alexanders] total
permanent disability benefits in the amount of US$60,000.00 and his sickness allowance of
60
US$2,348.00, both in Philippine currency at the prevailing rate of exchange at the time of
payment; and to pay further the amount of P200,000.00 as moral damages, P100,000.00 as
exemplary damages and attorneys fees equivalent to ten percent (10%) of the total monetary
award.
[Alexanders] claim for payment of medical expenses is dismissed for lack of basis.

SO ORDERED.[4]

Alexanders employer filed an appeal before the National Labor Relations Commission (NLRC).
During the pendency of the proceedings before the NLRC, Alexander died. After explaining the
terms of the lawyers fees to Evangelina, Atty. Go caused her substitution as complainant. On
April 30, 2004, the NLRC rendered a Decision dismissing the appeal of Alexanders employer.
The employer subsequently filed a motion for reconsideration. The NLRC denied the same in
an Order dated October 26, 2004.

On appeal before the CA, the decision of the LA was affirmed with modification. The award of
moral and exemplary damages was deleted.[5] Alexanders employers filed a petition for
certiorari[6] before this Court. On February 6, 2006, the Court issued a Resolution dismissing
the case for lack of merit.

Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the
execution of the NLRC decision, which was later granted by the LA. The surety bond of the
employer was garnished. Upon motion of Atty. Go, the surety company delivered to the NLRC
Cashier, through the NLRC Sheriff, the check amounting to P3,454,079.20. Thereafter, Atty.
Go moved for the release of the said amount to Evangelina.

On January 10, 2005, the LA directed the NLRC Cashier to release the amount of
P3,454,079.20 to Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum of
P680,000.00.

Dissatisfied, Atty. Go filed a motion to record and enforce the attorneys lien alleging that
Evangelina reneged on their contingent fee agreement. Evangelina paid only the amount of
P680,000.00, equivalent to 20% of the award as attorneys fees, thus, leaving a balance of
10%, plus the award pertaining to the counsel as attorneys fees.

In response to the motion filed by Atty. Go, Evangelina filed a comment with motion to release
the amount deposited with the NLRC Cashier. In her comment, Evangelina manifested that
Atty. Gos claim for attorneys fees of 40% of the total monetary award was null and void based
on Article 111 of the Labor Code.
On February 14, 2005, the LA issued an Order[7] granting Atty. Gos motion, the fallo of which
reads:

WHEREFORE, premises considered, and further considering the substitute complainants initial
payment of 20% to movant-counsel of the monetary claims as paid, let the balance or unpaid
twenty (20%) per cent of attorneys fees due movant-counsel (or the amount of P839,587.39)
be recorded as lien upon all the monies that may still be paid to substitute complainant
Evangelina Masmud.
61
Accordingly, the NLRC Cashier is directed to pay movant-counsel the amount of P677,589.96
which is currently deposited therein to partially satisfy the lien.

SO ORDERED.[8]

Evangelina questioned the February 14, 2005 Order of the LA before the NLRC. On January
31, 2006, the NLRC issued a Resolution[9] dismissing the appeal for lack of merit.

Evangelina then elevated the case to the CA via a petition for certiorari.[10] On October 31,
2007, the CA rendered a Decision[11] partially granting the petition. The dispositive portion of
the decision reads:

WHEREFORE, the petition is PARTIALLY GRANTED. The Resolutions dated January 31,
2006 and July 18, 2006 are hereby AFFIRMED with MODIFICATION in that the Attorneys fees
of respondent Atty. Rolando B. Go, Jr. is declared fully compensated by the amount of
P1,347,950.11 that he has already received.
SO ORDERED.[12]

Evangelina filed a motion for reconsideration. However, on June 6, 2008, the CA issued a
Resolution[13] denying the motion for reconsideration for lack of merit.

Hence, the instant petition.

Evangelina presented this issue, viz.:

THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR OF LAW IN


ITS DECISION DATED 31 OCTOBER 2007 AND RESOLUTION DATED 6 JUNE 2008
INSOFAR AS IT UPHOLDS RESPONDENT LAWYERS CLAIM OF FORTY PERCENT (40%)
OF THE MONETARY AWARD IN A LABOR CASE AS ATTORNEYS FEES.[14]

In effect, petitioner seeks affirmance of her conviction that the legal compensation of a lawyer
in a labor proceeding should be based on Article 111 of the Labor Code.

There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the
reasonable compensation paid to a lawyer by his client for the legal services rendered to the
latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the
court as indemnity for damages to be paid by the losing party to the prevailing party,[15] such
that, in any of the cases provided by law where such award can be made, e.g., those
authorized in Article 2208 of the Civil Code, the amount is payable not to the lawyer but to the
client, unless they have agreed that the award shall pertain to the lawyer as additional
compensation or as part thereof.[16]

62
Here, we apply the ordinary concept of attorneys fees, or the compensation that Atty. Go is
entitled to receive for representing Evangelina, in substitution of her husband, before the labor
tribunals and before the court.

Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Gos
compensation as her counsel and assiduously opposes their agreed retainer contract.

Article 111 of the said Code provides:

ART. 111. Attorney's fees. (a) In cases of unlawful withholding of wages the culpable party may
be assessed attorney's fees equivalent to ten percent of the amount of the wages recovered.

Contrary to Evangelinas proposition, Article 111 of the Labor Code deals with the extraordinary
concept of attorneys fees. It regulates the amount recoverable as attorney's fees in the nature
of damages sustained by and awarded to the prevailing party. It may not be used as the
standard in fixing the amount payable to the lawyer by his client for the legal services he
rendered.[17]

In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining
Atty. Gos compensation. The said Rule provides:

SEC. 24.Compensation of attorney's; agreement as to fees. An attorney shall be entitled to


have and recover from his client no more than a reasonable compensation for his services, with
a view to the importance of the subject matter of the controversy, the extent of the services
rendered, and the professional standing of the attorney. No court shall be bound by the opinion
of attorneys as expert witnesses as to the proper compensation, but may disregard such
testimony and base its conclusion on its own professional knowledge. A written contract for
services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.[18]

The retainer contract between Atty. Go and Evangelina provides for a contingent fee. The
contract shall control in the determination of the amount to be paid, unless found by the court to
be unconscionable or unreasonable.[19] Attorney's fees are unconscionable if they affront
one's sense of justice, decency or reasonableness.[20] The decree of unconscionability or
unreasonableness of a stipulated amount in a contingent fee contract will not preclude
recovery. It merely justifies the fixing by the court of a reasonable compensation for the
lawyer's services.[21]

The criteria found in the Code of Professional Responsibility are also to be considered in
assessing the proper amount of compensation that a lawyer should receive. Canon 20, Rule
20.01 of the said Code provides:

CANON 20 A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01. A lawyer shall be guided by the following factors in determining his fees:

63
(a) The time spent and the extent of the services rendered or required;

(b) The novelty and difficulty of the question involved;

(c) The importance of the subject matter;

(d) The skill demanded;

(e) The probability of losing other employment as a result of acceptance of the proffered case;

(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to
which he belongs;

(g) The amount involved in the controversy and the benefits resulting to the client from the
service;

(h) The contingency or certainty of compensation;

(i) The character of the employment, whether occasional or established; and

(j) The professional standing of the lawyer.

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order
that clients may be protected from unjust charges.[22] The amount of contingent fees agreed
upon by the parties is subject to the stipulation that counsel will be paid for his legal services
only if the suit or litigation prospers. A much higher compensation is allowed as contingent fees
because of the risk that the lawyer may get nothing if the suit fails.[23] The Court finds nothing
illegal in the contingent fee contract between Atty. Go and Evangelinas husband. The CA
committed no error of law when it awarded the attorneys fees of Atty. Go and allowed him to
receive an equivalent of 39% of the monetary award.

The issue of the reasonableness of attorney's fees is a question of fact. Well-settled is the rule
that conclusions and findings of fact of the CA are entitled to great weight on appeal and will
not be disturbed except for strong and cogent reasons which are absent in the case at bench.
The findings of the CA, which are supported by substantial evidence, are almost beyond the
power of review by the Supreme Court.[24]
Considering that Atty. Go successfully represented his client, it is only proper that he should
receive adequate compensation for his efforts. Even as we agree with the reduction of the
award of attorney's fees by the CA, the fact that a lawyer plays a vital role in the administration
of justice emphasizes the need to secure to him his honorarium lawfully earned as a means to
preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to
judicial protection against injustice or imposition of fraud on the part of his client as the client is
against abuse on the part of his counsel. The duty of the court is not alone to ensure that a
lawyer acts in a proper and lawful manner, but also to see that a lawyer is paid his just fees.
With his capital consisting of his brains and with his skill acquired at tremendous cost not only
in money but in expenditure of time and energy, he is entitled to the protection of any judicial
tribunal against any attempt on the part of his client to escape payment of his just
64
compensation. It would be ironic if after putting forth the best in him to secure justice for his
client, he himself would not get his due.[25]

WHEREFORE, in view of the foregoing, the Decision dated October 31, 2007 and the
Resolution dated June 6, 2008 of the Court of Appeals in CA-G.R. SP No. 96279 are hereby
AFFIRMED.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA


Associate Justice

THIRD DIVISION

G.R. No. 191247, July 10, 2013

FRANCISCO L. ROSARIO, JR., Petitioner, v. LELLANI DE GUZMAN, ARLEEN DE


GUZMAN, PHILIP RYAN DE GUZMAN, AND ROSELLA DE GUZMAN- BAUTISTA,
Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the
November 23, 20091 and the February 11, 20102 Orders of the Regional Trial Court, Branch 7,
Manila (RTC), in Civil Case No. 89-50138, entitled "Loreta A. Chong v. Sps. Pedro and Rosita
de Guzman," denying the Motion to Determine Attorney's Fees filed by the petitioner.

The Facts

Sometime in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de Guzman)
engaged the legal services of Atty. Francisco L. Rosario, Jr. (petitioner) as defense counsel in
the complaint filed against them by one Loreta A. Chong (Chong) for annulment of contract and
recovery of possession with damages involving a parcel of land in Parañaque City, covered by
Transfer Certificate of Title (TCT) No. 1292, with an area of 266 square meters, more or less.
Petitioner’s legal services commenced from the RTC and ended up in this Court.3 Spouses de
Guzman, represented by petitioner, won their case at all levels. While the case was pending
before this Court, Spouses de Guzman died in a vehicular accident. Thereafter, they were
substituted by their children, namely: Rosella de Guzman-Bautista, Lellani de Guzman, Arleen
de Guzman, and Philip Ryan de Guzman (respondents).4

65
On September 8, 2009, petitioner filed the Motion to Determine Attorney’s Fees5 before the
RTC. He alleged, among others, that he had a verbal agreement with the deceased Spouses
de Guzman that he would get 25% of the market value of the subject land if the complaint filed
against them by Chong would be dismissed. Despite the fact that he had successfully
represented them, respondents refused his written demand for payment of the contracted
attorney’s fees. Petitioner insisted that he was entitled to an amount equivalent to 25% percent
of the value of the subject land on the basis of quantum meruit.

On November 23, 2009, the RTC rendered the assailed order denying petitioner’s motion on
the ground that it was filed out of time. The RTC stated that the said motion was filed after the
judgment rendered in the subject case, as affirmed by this Court, had long become final and
executory on October 31, 2007. The RTC wrote that considering that the motion was filed too
late, it had already lost jurisdiction over the case because a final decision could not be
amended or corrected except for clerical errors or mistakes. There would be a variance of the
judgment rendered if his claim for attorney’s fees would still be included.

Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of merit.
Hence, this petition.

The Issues

This petition is anchored on the following grounds:cralavvonlinelawlibrary

THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE MOTION TO


DETERMINE ATTORNEY’S FEES ON THE GROUND THAT IT LOST JURISDICTION OVER
THE CASE SINCE THE JUDGMENT IN THE CASE HAS BECOME FINAL AND
EXECUTORY;chanroblesvirtualawlibrary

II

THE TRIAL COURT SERIOUSLY ERRED IN DECLARING THAT PETITIONER’S CLAIM FOR
ATTORNEY’S FEES WOULD RESULT IN A VARIANCE OF THE JUDGMENT THAT HAS
LONG BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary

III

THE TRIAL COURT ERRED IN NOT DECLARING THAT THE FINALITY OF THE DECISION
DID NOT BAR PETITIONER FROM FILING THE MOTION TO RECOVER HIS ATTORNEY’S
FEES.6nadcralavvonlinelawlibrary

Petitioner claims that Spouses de Guzman engaged his legal services and orally agreed to pay
him 25% of the market value of the subject land. He argues that a motion to recover attorney’s
fees can be filed and entertained by the court before and after the judgment becomes final.
Moreover, his oral contract with the deceased spouses can be considered a quasi-contract
upon which an action can be commenced within six (6) years, pursuant to Article 1145 of the

66
Civil Code. Because his motion was filed on September 8, 2009, he insists that it was not yet
barred by prescription.7

For their part, respondents counter that the motion was belatedly filed and, as such, it could no
longer be granted. In addition, the RTC had already resolved the issue when it awarded the
amount of ?10,000.00 as attorney’s fees. Respondents further assert that the law, specifically
Article 2208 of the Civil Code, allows the recovery of attorney’s fees under a written agreement.
The alleged understanding between their deceased parents and petitioner, however, was never
put in writing. They also aver that they did not have any knowledge or information about the
existence of an oral contract, contrary to petitioner’s claims. At any rate, the respondents
believe that the amount of 25% of the market value of the lot is excessive and
unconscionable.8

The Court’s Ruling

Preliminarily, the Court notes that the petitioner filed this petition for review on certiorari under
Rule 45 of the Rules of Court because of the denial of his motion to determine attorney’s fees
by the RTC. Apparently, the petitioner pursued the wrong remedy. Instead of a petition for
review under Rule 45, he should have filed a petition for certiorari under Rule 65 because this
case involves an error of jurisdiction or grave abuse of discretion on the part of the trial court.

Moreover, petitioner violated the doctrine of hierarchy of courts which prohibits direct resort to
this Court unless the appropriate remedy cannot be obtained in the lower tribunals.9 In this
case, petitioner should have first elevated the case to the Court of Appeals (CA) which has
concurrent jurisdiction, together with this Court, over special civil actions for certiorari.10 Even
so, this principle is not absolute and admits of certain exceptions, such as in this case, when it
is demanded by the broader interest of justice.11

Indeed, on several occasions, this Court has allowed a petition to prosper despite the utilization
of an improper remedy with the reasoning that the inflexibility or rigidity of the application of the
rules of procedure must give way to serve the higher ends of justice. The strict application of
procedural technicalities should not hinder the speedy disposition of the case on the merits.12
Thus, this Court deems it expedient to consider this petition as having been filed under Rule
65.

With respect to the merits of the case, the Court finds in favor of petitioner.

In order to resolve the issues in this case, it is necessary to discuss the two concepts of
attorney’s fees – ordinary and extraordinary. In its ordinary sense, it is the reasonable
compensation paid to a lawyer by his client for legal services rendered. In its extraordinary
concept, it is awarded by the court to the successful litigant to be paid by the losing party as
indemnity for damages.13 Although both concepts are similar in some respects, they differ from
each other, as further explained below:cralavvonlinelawlibrary

The attorney’s fee which a court may, in proper cases, award to a winning litigant is, strictly
speaking, an item of damages. It differs from that which a client pays his counsel for the latter’s
professional services. However, the two concepts have many things in common that a
treatment of the subject is necessary. The award that the court may grant to a successful party
67
by way of attorney’s fee is an indemnity for damages sustained by him in prosecuting or
defending, through counsel, his cause in court. It may be decreed in favor of the party, not his
lawyer, in any of the instances authorized by law. On the other hand, the attorney’s fee which a
client pays his counsel refers to the compensation for the latter’s services. The losing party
against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his
liability dependent upon, the fee arrangement of the prevailing party with his lawyer. The
amount stipulated in such fee arrangement may, however, be taken into account by the court in
fixing the amount of counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms
part of his judgment recoveries against the losing party. The client and his lawyer may,
however, agree that whatever attorney’s fee as an element of damages the court may award
shall pertain to the lawyer as his compensation or as part thereof. In such a case, the court
upon proper motion may require the losing party to pay such fee directly to the lawyer of the
prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as a
prerequisite to their grant, the intervention of or the rendition of professional services by a
lawyer. As a client may not be held liable for counsel fees in favor of his lawyer who never
rendered services, so too may a party be not held liable for attorney’s fees as damages in favor
of the winning party who enforced his rights without the assistance of counsel. Moreover, both
fees are subject to judicial control and modification. And the rules governing the determination
of their reasonable amount are applicable in one as in the other.14 [Emphases and
underscoring supplied]

In the case at bench, the attorney’s fees being claimed by the petitioner refers to the
compensation for professional services rendered, and not as indemnity for damages. He is
demanding payment from respondents for having successfully handled the civil case filed by
Chong against Spouses de Guzman. The award of attorney’s fees by the RTC in the amount of
P10,000.00 in favor of Spouses de Guzman, which was subsequently affirmed by the CA and
this Court, is of no moment. The said award, made in its extraordinary concept as indemnity for
damages, forms part of the judgment recoverable against the losing party and is to be paid
directly to Spouses de Guzman (substituted by respondents) and not to petitioner. Thus, to
grant petitioner’s motion to determine attorney’s fees would not result in a double award of
attorney’s fees. And, contrary to the RTC ruling, there would be no amendment of a final and
executory decision or variance in judgment.

The Court now addresses two (2) important questions: (1) How can attorney’s fees for
professional services be recovered? (2) When can an action for attorney’s fees for professional
services be filed? The case of Traders Royal Bank Employees Union-Independent v. NLRC15
is instructive:cralavvonlinelawlibrary

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR
Certified Case No. 0466, private respondent’s present claim for attorney’s fees may be filed
before the NLRC even though or, better stated, especially after its earlier decision had been
reviewed and partially affirmed. It is well settled that a claim for attorney’s fees may be asserted
either in the very action in which the services of a lawyer had been rendered or in a separate
action.
68
With respect to the first situation, the remedy for recovering attorney’s fees as an incident of the
main action may be availed of only when something is due to the client. Attorney’s fees cannot
be determined until after the main litigation has been decided and the subject of the recovery is
at the disposition of the court. The issue over attorney’s fees only arises when something has
been recovered from which the fee is to be paid.

While a claim for attorney’s fees may be filed before the judgment is rendered, the
determination as to the propriety of the fees or as to the amount thereof will have to be held in
abeyance until the main case from which the lawyer’s claim for attorney’s fees may arise has
become final. Otherwise, the determination to be made by the courts will be premature. Of
course, a petition for attorney’s fees may be filed before the judgment in favor of the client is
satisfied or the proceeds thereof delivered to the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his
claim for professional fees. Hence, private respondent was well within his rights when he made
his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it
ahead of the award’s complete resolution. To declare that a lawyer may file a claim for fees in
the same action only before the judgment is reviewed by a higher tribunal would deprive him of
his aforestated options and render ineffective the foregoing pronouncements of this Court.
[Emphases and underscoring supplied]

In this case, petitioner opted to file his claim as an incident in the main action, which is
permitted by the rules. As to the timeliness of the filing, this Court holds that the questioned
motion to determine attorney’s fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on
October 31, 2007. There is no dispute that petitioner filed his Motion to Determine Attorney’s
Fees on September 8, 2009, which was only about one (1) year and eleven (11) months from
the finality of the RTC decision. Because petitioner claims to have had an oral contract of
attorney’s fees with the deceased spouses, Article 1145 of the Civil Code16 allows him a
period of six (6) years within which to file an action to recover professional fees for services
rendered. Respondents never asserted or provided any evidence that Spouses de Guzman
refused petitioner’s legal representation. For this reason, petitioner’s cause of action began to
run only from the time the respondents refused to pay him his attorney’s fees, as similarly held
in the case of Anido v. Negado:17

In the case at bar, private respondent’s allegation in the complaint that petitioners refused to
sign the contract for legal services in October 1978, and his filing of the complaint only on
November 23, 1987 or more than nine years after his cause of action arising from the breach of
the oral contract between him and petitioners point to the conclusion that the six-year
prescriptive period within which to file an action based on such oral contract under Article 1145
of the Civil Code had already lapsed.

As a lawyer, private respondent should have known that he only had six years from the time
petitioners refused to sign the contract for legal services and to acknowledge that they had
engaged his services for the settlement of their parents’ estate within which to file his complaint

69
for collection of legal fees for the services which he rendered in their favor. [Emphases
supplied]

At this juncture, having established that petitioner is entitled to attorney’s fees and that he filed
his claim well within the prescribed period, the proper remedy is to remand the case to the RTC
for the determination of the correct amount of attorney’s fees. Such a procedural route,
however, would only contribute to the delay of the final disposition of the controversy as any
ruling by the trial court on the matter would still be open for questioning before the CA and this
Court. In the interest of justice, this Court deems it prudent to suspend the rules and simply
resolve the matter at this level. The Court has previously exercised its discretion in the same
way in National Power Corporation v. Heirs of Macabangkit Sangkay:18

In the event of a dispute as to the amount of fees between the attorney and his client, and the
intervention of the courts is sought, the determination requires that there be evidence to prove
the amount of fees and the extent and value of the services rendered, taking into account the
facts determinative thereof. Ordinarily, therefore, the determination of the attorney’s fees on
quantum meruit is remanded to the lower court for the purpose. However, it will be just and
equitable to now assess and fix the attorney’s fees of both attorneys in order that the resolution
of “a comparatively simple controversy,” as Justice Regalado put it in Traders Royal Bank
Employees Union-Independent v. NLRC, would not be needlessly prolonged, by taking into due
consideration the accepted guidelines and so much of the pertinent data as are extant in the
records.19 [Emphasis supplied]

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s
considered view that he is deserving of it and that the amount should be based on quantum
meruit.

Quantum meruit – literally meaning as much as he deserves – is used as basis for determining
an attorney’s professional fees in the absence of an express agreement. The recovery of
attorney’s fees on the basis of quantum meruit is a device that prevents an unscrupulous client
from running away with the fruits of the legal services of counsel without paying for it and also
avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is
entitled to reasonable compensation for the effort in pursuing the client’s cause, taking into
account certain factors in fixing the amount of legal fees.20

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the
proper amount of attorney fees, to wit:cralavvonlinelawlibrary

Rule 20.1 – A lawyer shall be guided by the following factors in determining his
fees:cralavvonlinelawlibrary

a) The time spent and the extent of the services rendered or


required;chanroblesvirtualawlibrary

b) The novelty and difficulty of the questions involved;chanroblesvirtualawlibrary

c) The importance of the subject matter;chanroblesvirtualawlibrary

70
d) The skill demanded;chanroblesvirtualawlibrary

e) The probability of losing other employment as a result of acceptance of the proffered


case;chanroblesvirtualawlibrary

f) The customary charges for similar services and the schedule of fees of the IBP chapter to
which he belongs;chanroblesvirtualawlibrary

g) The amount involved in the controversy and the benefits resulting to the client from the
service;chanroblesvirtualawlibrary

h) The contingency or certainty of compensation;chanroblesvirtualawlibrary

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

Petitioner unquestionably rendered legal services for respondents’ deceased parents in the civil
case for annulment of contract and recovery of possession with damages. He successfully
represented Spouses de Guzman from the trial court level in 1990 up to this Court in 2007, for
a lengthy period of 17 years. After their tragic death in 2003, petitioner filed a notice of death
and a motion for substitution of parties with entry of appearance and motion to resolve the case
before this Court.21 As a consequence of his efforts, the respondents were substituted in the
place of their parents and were benefited by the favorable outcome of the case.

As earlier mentioned, petitioner served as defense counsel for deceased Spouses de Guzman
and respondents for almost seventeen (17) years. The Court is certain that it was not an easy
task for petitioner to defend his clients’ cause for such a long period of time, considering the
heavy and demanding legal workload of petitioner which included the research and preparation
of pleadings, the gathering of documentary proof, the court appearances, and the various legal
work necessary to the defense of Spouses de Guzman. It cannot be denied that petitioner
devoted much time and energy in handling the case for respondents. Given the considerable
amount of time spent, the diligent effort exerted by petitioner, and the quality of work shown by
him in ensuring the successful defense of his clients, petitioner clearly deserves to be awarded
reasonable attorney’s fees for services rendered. Justice and equity dictate that petitioner be
paid his professional fee based on quantum meruit.

The fact that the practice of law is not a business and the attorney plays a vital role in the
administration of justice underscores the need to secure him his honorarium lawfully earned as
a means to preserve the decorum and respectability of the legal profession. A layer is as much
entitled to judicial protection against injustice, imposition or fraud on the part of his client as the
client against abuse on the part of his counsel. The duty of the court is not alone to see that a
lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just
fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not
only in money but in expenditure of time and energy, he is entitled to the protection of any
judicial tribunal against any attempt on the part of his client to escape payment of his just
compensation. It would be ironic if after putting forth the best in him to secure justice for his
client he himself would not get his due.22
71
The Court, however, is resistant in granting petitioner's prayer for an award of 25% attorney's
fees based on the value of the property subject of litigation because petitioner failed to clearly
substantiate the details of his oral agreement with Spouses de Guzman. A fair and reasonable
amount of attorney's fees should be 15% of the market value of the property.

WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion to
Determine Attorney's Fees filed by petitioner Atty. Francisco L. Rosario, Jr. Based on quantum
meruit, the amount of attorney's fees is at the rate of 15% of the market value of the parcel of
land, covered by Transfer Certificate of Title No. 1292, at the time of payment.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Abad, and Leonen, JJ., concur.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 158361 April 10, 2013

INTERNATIONAL HOTEL CORPORATION, Petitioner,


vs.
FRANCISCO B. JOAQUIN, JR. and RAFAEL SUAREZ, Respondents.

DECISION

BERSAMIN, J.:

To avoid unjust enrichment to a party from resulting out of a substantially performed contract,
the principle of quantum meruit may be used to determine his compensation in the absence of
a written agreement for that purpose. The principle of quantum meruit justifies the payment of
the reasonable value of the services rendered by him.

The Case

Under review is the decision the Court of Appeals (CA) promulgated on November 8, 2002,1
disposing:

WHEREFORE, premises considered, the decision dated August 26, 1993 of the Regional Trial
Court, Branch 13, Manila in Civil Case No. R-82-2434 is AFFIRMED with Modification as to the
amounts awarded as follows: defendant-appellant IHC is ordered to pay plaintiff-appellant
Joaquin P700,000.00 and plaintiff-appellant Suarez P200,000.00, both to be paid in cash.

SO ORDERED.
72
Antecedents

On February 1, 1969, respondent Francisco B. Joaquin, Jr. submitted a proposal to the Board
of Directors of the International Hotel Corporation (IHC) for him to render technical assistance
in securing a foreign loan for the construction of a hotel, to be guaranteed by the Development
Bank of the Philippines (DBP).2 The proposal encompassed nine phases, namely: (1) the
preparation of a new project study; (2) the settlement of the unregistered mortgage prior to the
submission of the application for guaranty for processing by DBP; (3) the preparation of papers
necessary to the application for guaranty; (4) the securing of a foreign financier for the project;
(5) the securing of the approval of the DBP Board of Governors; (6) the actual follow up of the
application with DBP3; (7) the overall coordination in implementing the projections of the
project study; (8) the preparation of the staff for actual hotel operations; and (9) the actual hotel
operations.4

The IHC Board of Directors approved phase one to phase six of the proposal during the special
board meeting on February 11, 1969, and earmarked P2,000,000.00 for the project.5 Anent the
financing, IHC applied with DBP for a foreign loan guaranty. DBP processed the application,6
and approved it on October 24, 1969 subject to several conditions.7

On July 11, 1969, shortly after submitting the application to DBP, Joaquin wrote to IHC to
request the payment of his fees in the amount of P500,000.00 for the services that he had
provided and would be providing to IHC in relation to the hotel project that were outside the
scope of the technical proposal. Joaquin intimated his amenability to receive shares of stock
instead of cash in view of IHC’s financial situation.8

On July 11, 1969, the stockholders of IHC met and granted Joaquin’s request, allowing the
payment for both Joaquin and Rafael Suarez for their services in implementing the proposal.9

On June 20, 1970, Joaquin presented to the IHC Board of Directors the results of his
negotiations with potential foreign financiers. He narrowed the financiers to Roger Dunn &
Company and Materials Handling Corporation. He recommended that the Board of Directors
consider Materials Handling Corporation based on the more beneficial terms it had offered. His
recommendation was accepted.10

Negotiations with Materials Handling Corporation and, later on, with its principal, Barnes
International (Barnes), ensued. While the negotiations with Barnes were ongoing, Joaquin and
Jose Valero, the Executive Director of IHC, met with another financier, the Weston International
Corporation (Weston), to explore possible financing.11 When Barnes failed to deliver the
needed loan, IHC informed DBP that it would submit Weston for DBP’s consideration.12 As a
result, DBP cancelled its previous guaranty through a letter dated December 6, 1971.13

On December 13, 1971, IHC entered into an agreement with Weston, and communicated this
development to DBP on June 26, 1972. However, DBP denied the application for guaranty for
failure to comply with the conditions contained in its November 12, 1971 letter.14

Due to Joaquin’s failure to secure the needed loan, IHC, through its President Bautista,
canceled the 17,000 shares of stock previously issued to Joaquin and Suarez as payment for
73
their services. The latter requested a reconsideration of the cancellation, but their request was
rejected.

Consequently, Joaquin and Suarez commenced this action for specific performance,
annulment, damages and injunction by a complaint dated December 6, 1973 in the Regional
Trial Court in Manila (RTC), impleading IHC and the members of its Board of Directors, namely,
Felix Angelo Bautista, Sergio O. Rustia, Ephraim G. Gochangco, Mario B. Julian, Benjamin J.
Bautista, Basilio L. Lirag, Danilo R. Lacerna and Hermenegildo R. Reyes.15 The complaint
alleged that the cancellation of the shares had been illegal, and had deprived them of their right
to participate in the meetings and elections held by IHC; that Barnes had been recommended
by IHC President Bautista, not by Joaquin; that they had failed to meet their obligation because
President Bautista and his son had intervened and negotiated with Barnes instead of Weston;
that DBP had canceled the guaranty because Barnes had failed to release the loan; and that
IHC had agreed to compensate their services with 17,000 shares of the common stock plus
cash of P1,000,000.00.16

IHC, together with Felix Angelo Bautista, Sergio O. Rustia, Mario B. Julian and Benjamin J.
Bautista, filed an answer claiming that the shares issued to Joaquin and Suarez as
compensation for their "past and future services" had been issued in violation of Section 16 of
the Corporation Code; that Joaquin and Suarez had not provided a foreign financier acceptable
to DBP; and that they had already received P96,350.00 as payment for their services.17

On their part, Lirag and Lacerna denied any knowledge of or participation in the cancellation of
the shares.18

Similarly, Gochangco and Reyes denied any knowledge of or participation in the cancellation of
the shares, and clarified that they were not directors of IHC.19 In the course of the
proceedings, Reyes died and was substituted by Consorcia P. Reyes, the administratrix of his
estate.20

Ruling of the RTC

Under its decision rendered on August 26, 1993, the RTC held IHC liable pursuant to the
second paragraph of Article 1284 of the Civil Code, disposing thusly:

WHEREFORE, in the light of the above facts, law and jurisprudence, the Court hereby orders
the defendant International Hotel Corporation to pay plaintiff Francisco B. Joaquin, the amount
of Two Hundred Thousand Pesos (P200,000.00) and to pay plaintiff Rafael Suarez the amount
of Fifty Thousand Pesos (P50,000.00); that the said defendant IHC likewise pay the co-
plaintiffs, attorney’s fees of P20,000.00, and costs of suit.

IT IS SO ORDERED.21

The RTC found that Joaquin and Suarez had failed to meet their obligations when IHC had
chosen to negotiate with Barnes rather than with Weston, the financier that Joaquin had
recommended; and that the cancellation of the shares of stock had been proper under Section
68 of the Corporation Code, which allowed such transfer of shares to compensate only past
services, not future ones.
74
Ruling of the CA

Both parties appealed.22

Joaquin and Suarez assigned the following errors, to wit:

DESPITE HAVING CORRECTLY ACKNOWLEDGED THAT PLAINTIFFS-APPELLANTS


FULLY PERFORMED ALL THAT WAS INCUMBENT UPON THEM, THE HONORABLE
JUDGE ERRED IN NOT ORDERING THAT:

A. DEFENDANTS WERE UNJUSTIFIED IN CANCELLING THE SHARES OF STOCK


PREVIOUSLY ISSUED TO PLAINTIFFS-APPELLANTS; AND

B. DEFENDANTS PAY PLAINTIFFS-APPELLANTS TWO MILLION SEVEN HUNDRED


PESOS (sic) (P2,700,000.00), INCLUDING INTEREST THEREON FROM 1973,
REPRESENTING THE TOTAL OBLIGATION DUE PLAINTIFFS-APPELLANTS.23

On the other hand, IHC attributed errors to the RTC, as follows:

I.

THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLANTS HAVE


NOTBEEN COMPLETELY PAID FOR THEIR SERVICES, AND IN ORDERING THE
DEFENDANT-APPELLANT TO PAY TWO HUNDRED THOUSAND PESOS (P200,000.00)
AND FIFTY THOUSAND PESOS (P50,000.00) TO PLAINTIFFS-APPELLANTS FRANCISCO
B. JOAQUIN AND RAFAEL SUAREZ, RESPECTIVELY.

II.

THE LOWER COURT ERRED IN AWARDING PLAINTIFFS-APPELLANTS ATTORNEY’S


FEES AND COSTS OF SUIT.24

In its questioned decision promulgated on November 8, 2002, the CA concurred with the RTC,
upholding IHC’s liability under Article 1186 of the Civil Code. It ruled that in the context of
Article 1234 of the Civil Code, Joaquin had substantially performed his obligations and had
become entitled to be paid for his services; and that the issuance of the shares of stock was
ultra vires for having been issued as consideration for future services.

Anent how much was due to Joaquin and Suarez, the CA explained thusly:

This Court does not subscribe to plaintiffs-appellants’ view that defendant-appellant IHC agreed
to pay them P2,000,000.00. Plaintiff-appellant Joaquin’s letter to defendant-appellee F.A.
Bautista, quoting defendant-appellant IHC’s board resolutions which supposedly authorized the
payment of such amount cannot be sustained. The resolutions are quite clear and when taken
together show that said amount was only the "estimated maximum expenses" which defendant-
appellant IHC expected to incur in accomplishing phases 1 to 6, not exclusively to plaintiffs-

75
appellants’ compensation.This conclusion finds support in an unnumbered board resolution of
defendant-appellant IHC dated July 11, 1969:

"Incidentally, it was also taken up the necessity of giving the Technical Group a portion of the
compensation that was authorized by this corporation in its Resolution of February 11, 1969
considering that the assistance so far given the corporation by said Technical Group in
continuing our project with the DBP and its request for guaranty for a foreign loan is 70%
completed leaving only some details which are now being processed. It is estimated that
P400,000.00 worth of Common Stock would be reasonable for the present accomplishments
and to this effect, the President is authorized to issue the same in the name of the Technical
Group, as follows:

P200,000.00 in common stock to Rafael Suarez, as associate in the Technical Group, and
P200,000.00 in common stock to Francisco G. Joaquin, Jr., also a member of the Technical
Group.

It is apparent that not all of the P2,000,000.00 was allocated exclusively to compensate
plaintiffs-appellants. Rather, it was intended to fund the whole undertaking including their
compensation. On the same date, defendant-appellant IHC also authorized its president to pay-
appellant Joaquin P500,000.00 either in cash or in stock or both.

The amount awarded by the lower court was therefore less than what defendant-appellant IHC
agreed to pay plaintiffs-appellants. While this Court cannot decree that the cancelled shares be
restored, for they are without a doubt null and void, still and all, defendant-appellant IHC cannot
now put up its own ultra vires act as an excuse to escape obligation to plaintiffs-appellants.
Instead of shares of stock, defendant-appellant IHC is ordered to pay plaintiff-appellant Joaquin
a total of P700,000.00 and plaintiff-appellant Suarez P200,000.00, both to be paid in cash.

Although the lower court failed to explain why it was granting the attorney’s fees, this Court
nonetheless finds its award proper given defendant-appellant IHC’s actions.25

Issues

In this appeal, the IHC raises as issues for our consideration and resolution the following:

WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN AWARDING


COMPENSATION AND EVEN MODIFYING THE PAYMENT TO HEREIN RESPONDENTS
DESPITE NON-FULFILLMENT OF THEIR OBLIGATION TO HEREIN PETITIONER

II

WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN AWARDING ATTORNEY’S


FEES TO RESPONDENTS26

IHC maintains that Article 1186 of the Civil Code was erroneously applied; that it had no
intention of preventing Joaquin from complying with his obligations when it adopted his
76
recommendation to negotiate with Barnes; that Article 1234 of the Civil Code applied only if
there was a merely slight deviation from the obligation, and the omission or defect was
technical and unimportant; that substantial compliance was unacceptable because the foreign
loan was material and was, in fact, the ultimate goal of its contract with Joaquin and Suarez;
that because the obligation was indivisible and subject to a suspensive condition, Article 1181
of the Civil Code27 applied, under which a partial performance was equivalent to non-
performance; and that the award of attorney’s fees should be deleted for lack of legal and
factual bases.

On the part of respondents, only Joaquin filed a comment,28 arguing that the petition was
fatally defective for raising questions of fact; that the obligation was divisible and capable of
partial performance; and that the suspensive condition was deemed fulfilled through IHC’s own
actions.29

Ruling

We deny the petition for review on certiorari subject to the ensuing disquisitions.

1.

IHC raises questions of law

We first consider and resolve whether IHC’s petition improperly raised questions of fact.

A question of law exists when there is doubt as to what the law is on a certain state of facts,
but, in contrast, a question of fact exists when the doubt arises as to the truth or falsity of the
facts alleged. A question of law does not involve an examination of the probative value of the
evidence presented by the litigants or by any of them; the resolution of the issue must rest
solely on what the law provides on the given set of circumstances.30 When there is no dispute
as to the facts, the question of whether or not the conclusion drawn from the facts is correct is a
question of law.31

Considering that what IHC seeks to review is the CA’s application of the law on the facts
presented therein, there is no doubt that IHC raises questions of law. The basic issue posed
here is whether the conclusions drawn by the CA were correct under the pertinent laws.

2.

Article 1186 and Article 1234 of the Civil Code cannot be the source of IHC’s obligation to pay
respondents IHC argues that it should not be held liable because: (a) it was Joaquin who had
recommended Barnes; and (b) IHC’s negotiation with Barnes had been neither intentional nor
willfully intended to prevent Joaquin from complying with his obligations.

IHC’s argument is meritorious.

Article 1186 of the Civil Code reads:

77
Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment.

This provision refers to the constructive fulfillment of a suspensive condition,32 whose


application calls for two requisites, namely: (a) the intent of the obligor to prevent the fulfillment
of the condition, and (b) the actual prevention of the fulfillment. Mere intention of the debtor to
prevent the happening of the condition, or to place ineffective obstacles to its compliance,
without actually preventing the fulfillment, is insufficient.33

The error lies in the CA’s failure to determine IHC’s intent to pre-empt Joaquin from meeting his
obligations. The June 20, 1970 minutes of IHC’s special board meeting discloses that Joaquin
impressed upon the members of the Board that Materials Handling was offering more favorable
terms for IHC, to wit:

x xxx

At the meeting all the members of the Board of Directors of the International Hotel Corporation
were present with the exception of Directors Benjamin J. Bautista and Sergio O. Rustia who
asked to be excused because of previous engagements. In that meeting, the President called
on Mr. Francisco G. Joaquin, Jr. to explain the different negotiations he had conducted relative
to obtaining the needed financing for the hotel project in keeping with the authority given to him
in a resolution approved by the Board of Directors.

Mr. Joaquin presently explained that he contacted several local and foreign financiers through
different brokers and after examining the different offers he narrowed down his choice to two
(2), to wit: the foreign financier recommended by George Wright of the Roger Dunn & Company
and the offer made by the Materials Handling Corporation.

After explaining the advantages and disadvantages to our corporation of the two (2) offers
specifically with regard to the terms and repayment of the loan and the rate of interest
requested by them, he concluded that the offer made by the Materials Handling Corporation is
much more advantageous because the terms and conditions of payment as well as the rate of
interest are much more reasonable and would be much less onerous to our corporation.
However, he explained that the corporation accepted, in principle, the offer of Roger Dunn, per
the corporation’s telegrams to Mr. Rudolph Meir of the Private Bank of Zurich, Switzerland, and
until such time as the corporation’s negotiations with Roger Dunn is terminated, we are
committed, on one way or the other, to their financing.

It was decided by the Directors that, should the negotiations with Roger Dunn materialize, at
the same time as the offer of Materials Handling Corporation, that the funds committed by
Roger Dunn may be diverted to other borrowers of the Development Bank of the Philippines.
With this condition, Director Joaquin showed the advantages of the offer of Materials Handling
Corporation. Mr. Joaquin also informed the corporation that, as of this date, the bank
confirmation of Roger Dunn & Company has not been received. In view of the fact that the
corporation is racing against time in securing its financing, he recommended that the
corporation entertain other offers.

78
After a brief exchange of views on the part of the Directors present and after hearing the
clarification and explanation made by Mr. C. M. Javier who was present and who represented
the Materials Handling Corporation, the Directors present approved unanimously the
recommendation of Mr. Joaquin to entertain the offer of Materials Handling Corporation.34

Evidently, IHC only relied on the opinion of its consultant in deciding to transact with Materials
Handling and, later on, with Barnes. In negotiating with Barnes, IHC had no intention, willful or
otherwise, to prevent Joaquin and Suarez from meeting their undertaking. Such absence of any
intention negated the basis for the CA’s reliance on Article 1186 of the Civil Code.

Nor do we agree with the CA’s upholding of IHC’s liability by virtue of Joaquin and Suarez’s
substantial performance. In so ruling, the CA applied Article 1234 of the Civil Code, which
states:

Article 1234. If the obligation has been substantially performed in good faith, the obligor may
recover as though there had been a strict and complete fulfillment, less damages suffered by
the obligee.

It is well to note that Article 1234 applies only when an obligor admits breaching the contract35
after honestly and faithfully performing all the material elements thereof except for some
technical aspects that cause no serious harm to the obligee.36 IHC correctly submits that the
provision refers to an omission or deviation that is slight, or technical and unimportant, and
does not affect the real purpose of the contract.

Tolentino explains the character of the obligor’s breach under Article 1234 in the following
manner, to wit:

In order that there may be substantial performance of an obligation, there must have been an
attempt in good faith to perform, without any willful or intentional departure therefrom. The
deviation from the obligation must be slight, and the omission or defect must be technical and
unimportant, and must not pervade the whole or be so material that the object which the parties
intended to accomplish in a particular manner is not attained. The non-performance of a
material part of a contract will prevent the performance from amounting to a substantial
compliance.

The party claiming substantial performance must show that he has attempted in good faith to
perform his contract, but has through oversight, misunderstanding or any excusable neglect
failed to completely perform in certain negligible respects, for which the other party may be
adequately indemnified by an allowance and deduction from the contract price or by an award
of damages. But a party who knowingly and wilfully fails to perform his contract in any respect,
or omits to perform a material part of it, cannot be permitted, under the protection of this rule, to
compel the other party, and the trend of the more recent decisions is to hold that the
percentage of omitted or irregular performance may in and of itself be sufficient to show that
there had not been a substantial performance.37

By reason of the inconsequential nature of the breach or omission, the law deems the
performance as substantial, making it the obligee’s duty to pay.38 The compulsion of payment
is predicated on the substantial benefit derived by the obligee from the partial performance.
79
Although compelled to pay, the obligee is nonetheless entitled to an allowance for the sum
required to remedy omissions or defects and to complete the work agreed upon.39

Conversely, the principle of substantial performance is inappropriate when the incomplete


performance constitutes a material breach of the contract. A contractual breach is material if it
will adversely affect the nature of the obligation that the obligor promised to deliver, the benefits
that the obligee expects to receive after full compliance, and the extent that the non-
performance defeated the purposes of the contract.40 Accordingly, for the principle embodied
in Article 1234 to apply, the failure of Joaquin and Suarez to comply with their commitment
should not defeat the ultimate purpose of the contract.

The primary objective of the parties in entering into the services agreement was to obtain a
foreign loan to finance the construction of IHC’s hotel project. This objective could be inferred
from IHC’s approval of phase 1 to phase 6 of the proposal. Phase 1 and phase 2, respectively
the preparation of a new project study and the settlement of the unregistered mortgage, would
pave the way for Joaquin and Suarez to render assistance to IHC in applying for the DBP
guaranty and thereafter to look for an able and willing foreign financial institution acceptable to
DBP. All the steps that Joaquin and Suarez undertook to accomplish had a single objective – to
secure a loan to fund the construction and eventual operations of the hotel of IHC. In that
regard, Joaquin himself admitted that his assistance was specifically sought to seek financing
for IHC’s hotel project.41

Needless to say, finding the foreign financier that DBP would guarantee was the essence of the
parties’ contract, so that the failure to completely satisfy such obligation could not be
characterized as slight and unimportant as to have resulted in Joaquin and Suarez’s substantial
performance that consequentially benefitted IHC. Whatever benefits IHC gained from their
services could only be minimal, and were even probably outweighed by whatever losses IHC
suffered from the delayed construction of its hotel. Consequently, Article 1234 did not apply.

3.

IHC is nonetheless liable to pay under the rule on constructive fulfillment of a mixed conditional
obligation

Notwithstanding the inapplicability of Article 1186 and Article 1234 of the Civil Code, IHC was
liable based on the nature of the obligation.

Considering that the agreement between the parties was not circumscribed by a definite period,
its termination was subject to a condition – the happening of a future and uncertain event.42
The prevailing rule in conditional obligations is that the acquisition of rights, as well as the
extinguishment or loss of those already acquired, shall depend upon the happening of the
event that constitutes the condition.43

To recall, both the RTC and the CA held that Joaquin and Suarez’s obligation was subject to
the suspensive condition of successfully securing a foreign loan guaranteed by DBP. IHC
agrees with both lower courts, and even argues that the obligation with a suspensive condition
did not arise when the event or occurrence did not happen. In that instance, partial

80
performance of the contract subject to the suspensive condition was tantamount to no
performance at all. As such, the respondents were not entitled to any compensation.

We have to disagree with IHC’s argument.

To secure a DBP-guaranteed foreign loan did not solely depend on the diligence or the sole will
of the respondents because it required the action and discretion of third persons – an able and
willing foreign financial institution to provide the needed funds, and the DBP Board of
Governors to guarantee the loan. Such third persons could not be legally compelled to act in a
manner favorable to IHC. There is no question that when the fulfillment of a condition is
dependent partly on the will of one of the contracting parties,44 or of the obligor, and partly on
chance, hazard or the will of a third person, the obligation is mixed.45 The existing rule in a
mixed conditional obligation is that when the condition was not fulfilled but the obligor did all in
his power to comply with the obligation, the condition should be deemed satisfied.46

Considering that the respondents were able to secure an agreement with Weston, and
subsequently tried to reverse the prior cancellation of the guaranty by DBP, we rule that they
thereby constructively fulfilled their obligation.

4.

Quantum meruit should apply in the absence of an express agreement on the fees

The next issue to resolve is the amount of the fees that IHC should pay to Joaquin and Suarez.

Joaquin claimed that aside from the approved P2,000,000.00 fee to implement phase 1 to
phase 6, the IHC Board of Directors had approved an additional P500,000.00 as payment for
his services. The RTC declared that he and Suarez were entitled to P200,000.00 each, but the
CA revised the amounts to P700,000.00 for Joaquin and P200,000.00 for Suarez.

Anent the P2,000,000.00, the CA rightly concluded that the full amount of P2,000,000.00 could
not be awarded to respondents because such amount was not allocated exclusively to
compensate respondents, but was intended to be the estimated maximum to fund the
expenses in undertaking phase 6 of the scope of services. Its conclusion was unquestionably
borne out by the minutes of the February 11, 1969 meeting, viz:

x xxx

II

The preparation of the necessary papers for the DBP including the preparation of the
application, the presentation of the mechanics of financing, the actual follow up with the
different departments of the DBP which includes the explanation of the feasibility studies up to
the approval of the loan, conditioned on the DBP’s acceptance of the project as feasible. The
estimated expenses for this particular phase would be contingent, i.e. upon DBP’s approval of
the plan now being studied and prepared, is somewhere around P2,000,000.00.

81
After a brief discussion on the matter, the Board on motion duly made and seconded,
unanimously adopted a resolution of the following tenor:

RESOLUTION NO. ______


(Series of 1969)

"RESOLVED, as it is hereby RESOLVED, that if the Reparations allocation and the plan being
negotiated with the DBP is realized the estimated maximum expenses of P2,000,000.00 for this
phase is hereby authorized subject to the sound discretion of the committee composed of
Justice Felix Angelo Bautista, Jose N. Valero and Ephraim G. Gochangco."47 (Emphasis
supplied)

Joaquin’s claim for the additional sum of P500,000.00 was similarly without factual and legal
bases. He had requested the payment of that amount to cover services rendered and still to be
rendered to IHC separately from those covered by the first six phases of the scope of work.
However, there is no reason to hold IHC liable for that amount due to his failure to present
sufficient proof of the services rendered towards that end. Furthermore, his July 11, 1969 letter
revealed that the additional services that he had supposedly rendered were identical to those
enumerated in the technical proposal, thus:

The Board of Directors

International Hotel Corporation

Thru: Justice Felix Angelo Bautista


President & Chairman of the Board

Gentlemen:

I have the honor to request this Body for its deliberation and action on the fees for my services
rendered and to be rendered to the hotel project and to the corporation. These fees are
separate from the fees you have approved in your previous Board Resolution, since my fees
are separate. I realize the position of the corporation at present, in that it is not in a financial
position to pay my services in cash, therefore, I am requesting this Body to consider payment
of my fees even in the form of shares of stock, as you have done to the other technical men
and for other services rendered to the corporation by other people.

Inasmuch as my fees are contingent on the successful implementation of this project, I request
that my fees be based on a percentage of the total project cost. The fees which I consider
reasonable for the services that I have rendered to the project up to the completion of its
construction is P500,000.00. I believe said amount is reasonable since this is approximately
only ¾ of 1% of the total project cost.

So far, I have accomplished Phases 1-5 of my report dated February 1, 1969 and which you
authorized us to do under Board Resolution of February 11, 1969. It is only Phase 6 which now
remains to be implemented. For my appointment as Consultant dated May 12, 1969 and the
Board Resolution dated June 23, 1969 wherein I was appointed to the Technical Committee, it
now follows that I have been also authorized to implement part of Phases 7 & 8.
82
A brief summary of my accomplished work has been as follows:

1. I have revised and made the new Project Study of your hotel project, making it bankable and
feasible.

2. I have reduced the total cost of your project by approximately P24,735,000.00.

3. I have seen to it that a registered mortgage with the Reparations Commission did not affect
the application with the IBP for approval to processing.

4. I have prepared the application papers acceptable to the DBP by means of an advance
analysis and the presentation of the financial mechanics, which was accepted by the DBP.

5. I have presented the financial mechanics of the loan wherein the requirement of the DBP for
an additional P19,000,000.00 in equity from the corporation became unnecessary.

6. The explanation of the financial mechanics and the justification of this project was
instrumental in changing the original recommendation of the Investment Banking Department of
the DBP, which recommended disapproval of this application, to the present recommendation
of the Real Estate Department which is for the approval of this project for proceeding.

7. I have submitted to you several offers already of foreign financiers which are in your files.
We are presently arranging the said financiers to confirm their funds to the DBP for our project,

8. We have secured the approval of the DBP to process the loan application of this corporation
as per its letter July 2, 1969.

9. We have performed other services for the corporation which led to the cooperation and
understanding of the different factions of this corporation.

I have rendered services to your corporation for the past 6 months with no clear understanding
as to the compensation of my services. All I have drawn from the corporation is the amount of
P500.00 dated May 12, 1969 and personal payment advanced by Justice Felix Angelo Bautista
in the amount of P1,000.00.

I am, therefore, requesting this Body for their approval of my fees. I have shown my good faith
and willingness to render services to your corporation which is evidenced by my continued
services in the past 6 months as well as the accomplishments above mentioned. I believe that
the final completion of this hotel, at least for the processing of the DBP up to the completion of
the construction, will take approximately another 2 ½ years. In view of the above, I again
reiterate my request for your approval of my fees. When the corporation is in a better financial
position, I will request for a withdrawal of a monthly allowance, said amount to be determined
by this Body.

Very truly yours,

(Sgd.)
83
Francisco G., Joaquin, Jr.48
(Emphasis supplied)

Joaquin could not even rest his claim on the approval by IHC’s Board of Directors. The
approval apparently arose from the confusion between the supposedly separate services that
Joaquin had rendered and those to be done under the technical proposal. The minutes of the
July 11, 1969 board meeting (when the Board of Directors allowed the payment for Joaquin’s
past services and for the 70% project completion by the technical group) showed as follows:

III

The Third order of business is the compensation of Mr. Francisco G. Joaquin, Jr. for his
services in the corporation.

After a brief discussion that ensued, upon motion duly made and seconded, the stockholders
unanimously approved a resolution of the following tenor:

RESOLUTION NO. ___


(Series of 1969)

"RESOLVED that Mr. Francisco G. Joaquin, Jr. be granted a compensation in the amount of
Five Hundred Thousand (P500,000.00) Pesos for his past services and services still to be
rendered in the future to the corporation up to the completion of the Project.1âwphi1 The
President is given full discretion to discuss with Mr. Joaquin the manner of payment of said
compensation, authorizing him to pay part in stock and part in cash."

Incidentally, it was also taken up the necessity of giving the Technical Group a portion of the
compensation that was authorized by this corporation in its Resolution of February 11, 1969
considering that the assistance so far given the corporation by said Technical Group in
continuing our project with the DBP and its request for guaranty for a foreign loan is 70%
completed leaving only some details which are now being processed. It is estimated that
P400,000.00 worth of Common Stock would be reasonable for the present accomplishments
and to this effect, the President is authorized to issue the same in the name of the Technical
Group, as follows:

P200,000.00 in Common Stock to Rafael Suarez, an associate in the Technical Group, and
P200,000.00 in Common stock to Francisco G. Joaquin, Jr., also a member of the Technical
Group.49

Lastly, the amount purportedly included services still to be rendered that supposedly extended
until the completion of the construction of the hotel. It is basic, however, that in obligations to
do, there can be no payment unless the obligation has been completely rendered.50

It is notable that the confusion on the amounts of compensation arose from the parties’ inability
to agree on the fees that respondents should receive. Considering the absence of an
agreement, and in view of respondents’ constructive fulfillment of their obligation, the Court has
to apply the principle of quantum meruit in determining how much was still due and owing to
respondents. Under the principle of quantum meruit, a contractor is allowed to recover the
84
reasonable value of the services rendered despite the lack of a written contract.51 The
measure of recovery under the principle should relate to the reasonable value of the services
performed.52 The principle prevents undue enrichment based on the equitable postulate that it
is unjust for a person to retain any benefit without paying for it. Being predicated on equity, the
principle should only be applied if no express contract was entered into, and no specific
statutory provision was applicable.53

Under the established circumstances, we deem the total amount of P200,000.00 to be


reasonable compensation for respondents’ services under the principle of quantum meruit.

Finally, we sustain IHC’s position that the grant of attorney’s fees lacked factual or legal basis.
Attorney’s fees are not awarded every time a party prevails in a suit because of the policy that
no premium should be placed on the right to litigate. There should be factual or legal support in
the records before the award of such fees is sustained. It is not enough justification for the
award simply because respondents were compelled to protect their rights.54

ACCORDINGLY, the Court DENIES the petition for review on certiorari; and AFFIRMS the
decision of the Court of Appeals promulgated on November 8, 2002 in C.A.-G.R. No. 47094
subject to the MODIFICATIONS that: (a) International Hotel Corporation is ordered to. pay
Francisco G. Joaquin, Jr. and Rafael Suarez P100,000.00 each as compensation for their
services, and (b) the award of P20,000.00 as attorney's fees is deleted.

No costs of suit.

SO ORDERED.

THIRD DIVISION
[G.R. No. 124074. January 27, 1997]

RESEARCH and SERVICES REALTY, INC., petitioner, vs. COURT OF APPEALS and
MANUEL S. FONACIER, JR., respondents.
DECISION
DAVIDE, JR., J.:

This petition for review on certiorari under Rule 45 of the Rules of Court questions the propriety
of the award for, and the reasonableness of the amount of, attorney's fees granted in favor of
the private respondent by the Regional Trial Court (RTC) of Makati City, Branch 64,[1] in Civil
Case No. 612,[2] which the Court of Appeals affirmed in its decision[3] of 31 March 1995 in CA-
G.R. CV No. 44839.

The undisputed facts are as follows:

On 3 November 1969, the petitioner entered into a Joint Venture Agreement with Jose, Fidel,
and Antonia Carreon. Under the said agreement, the petitioner undertook to develop,
subdivide, administer, and promote the sale of the parcels of land owned by the Carreons. The
proceeds of the sale of the lots were to be paid to the Philippine National Bank (PNB) for the
landowner's mortgage obligation, and the net profits to be shared by the contracting parties on
a 50-50 basis.
85
On 4 April 1983, the Carreons and a certain Patricio C. Sarile instituted before the RTC of
Makati City an action against the petitioner for rescission of the Joint Venture Agreement. They
prayed therein that pending the hearing of the case, a writ of preliminary injunction be issued to
enjoin the petitioner from selling the lots subject of the agreement and that after hearing, the
writ be made permanent; the agreement be rescinded; and the petitioner be ordered to pay the
PNB the stipulated 15% per annum of the outstanding obligation and to pay the plaintiffs
attorney's fees, exemplary damages, expenses of litigation, and costs of suit. This case was
docketed as Civil Case No. 612 at Branch 64 of the said court.

In its answer, which was prepared and signed by Atty. Apolonio G. Reyes, the petitioner sought
the denial of the writ of preliminary injunction, the dismissal of the complaint, and payment in its
favor of (a) P10 million by way of actual damages; (b) P5 million by way of return to the
petitioner of the amount advanced to the Carreons, payments to the PNB, and cost of the work
on the subdivision; (c) P100,000.00 by way of exemplary damages; (d) any and all damages up
to the amount of P4,638,420.00 which the petitioner may suffer under the terms of its
Performance Bond in favor of the National Housing Authority; (e) P50,000.00 as attorney's
fees; and (f) costs of suit.

On 9 April 1985, the petitioner engaged the services of private respondent Atty. Manuel S.
Fonacier, Jr., [4] who then entered his appearance in Civil Case No. 612.

While the said case was pending, or on 24 July 1992, the petitioner, without the knowledge of
the private respondent, entered into a Memorandum of Agreement (MOA)[5] with another land
developer, Filstream International, Inc. (hereinafter Filstream). Under this MOA, the former
assigned its rights and obligations under the Joint Venture Agreement in favor of the latter for a
consideration of P28 million, payable within twenty-four months.

On 31 March 1993, the petitioner terminated the legal services of the private respondent. At the
time the petitioner had already received P7 million from Filstream.

Upon knowing the existence of the MOA, the private respondent filed in Civil Case No. 612 an
Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien
praying, among other things, that the petitioner be ordered to pay him the sum of P700,000.00
as his contingent fee in the case.[6]

After hearing the motion, the trial court issued an order dated 11 October 1993 directing the
petitioner to pay the private respondent the sum of P600,000.00 as attorney's fees on the basis
of quantum meruit.

The trial court justified the award in this manner:

Insofar as material to the resolution of this Motion the records of this case show that movant
Atty. Fonacier became the counsel of defendant Research in May 1985 while this case has
been in progress. (Records, p.770). By this time also, the defendant Research has been
enjoined by the Court from executing Contracts To Sell involving Saranay Homes Subdivision .
. . . (Order dated December 3, 1984, Records pp. 625-626). However, the said counsel for
defendant Research prepared for the latter various pleadings and represented it in Court (See
86
Records after May 1985). Until his services were terminated the lawyer client relationship
between Atty. Fonacier and Research was governed by a "contract" embodied in a letter
addressed to Atty. Fonacier on April 19, 1985 [sic], the pertinent portion of which is reproduced
below, as follows . . .

x xx

Soon after said letter, cases were referred to him including this case. In accordance with their
agreement, there were instances that Research gave Atty. Fonacier ten (10%) percent of the
amount received as the latter's attorney's fees pursuant to their agreement.

The instant case in which defendant is praying to be awarded attorney's fees, is an action for
rescission of the Joint Venture Agreement between plaintiffs, PatricioSarile, et al., as owners of
a parcel of land and defendant Research & Service Realty, Inc., as developer of the land. At
the time Atty. Fonacier entered his appearance as counsel for defendant Research, the Court
has issued a preliminary injunction against Research. Thus all developmental and commercial
activities of defendant had to stop. In this regard, Atty. Fonacier did spade work towards
persuading the plaintiffs to agree to the relaxation of the effects of the injunction to pave the
way to a negotiation with a third-party, the Filstream. Atty. Fonancier's efforts were
complemented by the efforts of his counterpart in the plaintiff's side. The third-party Filstream
Inc., became the assignee of defendant Research. In this connection, a memorandum of
agreement was entered into between them. By the terms of agreement, defendant Research
will be receiving from the third party Filstream International, Inc. (Filstream) the following
amount. . . .

x xx

The termination of the legal services of Atty. Fonacier was made definite on March 31, 1993 at
which time the Memorandum of Agreement which Research entered into with Filstream, Inc.,
has already been effective. By this time also, defendant Research has already received the first
two stipulated consideration of the agreement in the total sum of Six Million (P6,000,000.00).
The necessary and legal consequence of said "Memorandum of Agreement" is the termination
of the case insofar as plaintiff PatricioSarile, et al. and defendant Research is concerned. The
conclusion of the Memorandum of Agreement insofar as the cause of Research is concerned,
is a legal victory for defendant Research. What could have been a loss in investment has been
turned to a legal victory. Atty. Fonancier's effort contributed to defendant's victory, albeit
outside the Court which would not have been possible without the legal maneuvering of a
lawyer.

The dismissal of the case before this Court will come in a matter of time considering that
plaintiffs, with the assumption by the third party, Filstream Inc., of what were supposed to be
the obligations to them of defendant Research pursuant to their Joint Venture Agreement, is no
longer interested in pursuing the rescission.

It is a matter of record that Atty. Fonacier is the last of the three lawyers who handled this case.
Moreover it is Atty. Fonacier who contributed to the forging of the memorandum of agreement
as testified to by Atty. RogelAtienza one of the two retained counsels of plaintiffs.

87
Considering the importance which is attached to this case, certainly it would not be fair for Atty.
Fonacier if his attorney's fees in this case would be equated only to the measly monthly
allowance of (P800.00) Pesos and office space and other office facilities provided by defendant
Research. Ten (10%) per cent of the amount which Research had received from Filstream at
the time of the termination of a lawyer-client relationship between Atty. Fonacier and Research
or P600,000.00 will be a just and equitable compensation for Atty. Fonancier's legal services,
by way of quantum meruit (See Cabildo v. Provincial Treasurer, IlocosNorte, et al., 54 SCRA
26).[7]

In its Order[8] of 12 January 1994, the trial court denied the petitioner's motion for
reconsideration of the above order.

The petitioner appealed to the Court of Appeals. In its Appellant's Brief,[9] the petitioner alleged
that the private respondent was not entitled to attorney's fees under the retainer contract.
Moreover, the private respondent did not exert any effort to amicably settle the case, nor was
he even present during the negotiations for the settlement of the same. There was, therefore,
no legal and factual justification for the private respondent's "fantastic and unreasonable claim
for attorney's fees of P600,000.00."

On the other hand, the private respondent asserted that he was assured by the petitioner that
non-collection cases were included in the contingent fee arrangement specified in the retainer
contract wherein there was to be contingent compensation for any award arising from any
lawsuit handled by him. According to him, Civil Case No. 612 was not the only "non-collection"
case he handled for the petitioner. There was a "right of way" dispute where the petitioner was
awarded P50,000.00, and the latter paid him P5,000.00, or 10% of the award as attorney's
fees. He thus stressed that since under the memorandum of agreement the petitioner was to
receive P28 million, he should be entitled to 10% thereof or P2.8 million as attorney's fees.

In its decision [10] of 31 March 1995, the Court of Appeals affirmed the challenged order of the
trial court. It ratiocinated as follows:

Movant-appellee, on the other hand, correctly argues that it was the clear intention of appellant
and counsel to compensate the latter for any legal services rendered by him to the former.
Stated otherwise, it was never the intention of the parties in the instant appeal that counsel's
services shall be free or to be rendered ex gratia.

xxx

It must in addition be underscored that the retainer contract of April 9, 1985 is the law that
governs the relationship between appellant and appellee. In fact, the following provisions
squarely and categorically supports the award of P600,000.00 to counsel, to wit:

Minimal allowance of P800 per month plus contingent fees and collection cases (case to case
basis) aside from the attorney's fee recovered from any law suit.

(Paragraph 3, Retainer Contract)

88
In an American jurisprudence on this point cited in local annotation on the Canon of
Professional Ethics, it was held that "if a lawyer renders valuable services to one who receives
the benefits thereof, a promise to pay a reasonable value is presumed, unless such services
were intended to be gratuitous" (Young vs. Buere, 78 Cal. Am. 127) In effect, to compensate a
lawyer, we are faced with the pivotal question: "was the legal services intended to be free or
not?" If it is not free, then, appellant must simply pay. The 10% contingent fee of the amount
collected and/or to be collected in Civil Case No. 612 of the lower court, is, to Our mind fair and
reasonable. As ruled by the Supreme Court in the case of Cosmopolitan Insurance Co. vs.
Angel Reyes (G.R. L-20199, Nov. 23, 1965) 15% was even deemed reasonable. [11]

The petitioner filed a motion for reconsideration [12] on the ground among other things, that the
decision is contrary to the evidence, as the trial court granted the claim for attorney's fees
based on quantum meruit, yet, the Court of Appeals granted the same on a contingent basis
which it based on an erroneous quotation and comprehension of the following provision of the
retainer contract:

Minimal allowance of P800.00 per month plus contingent fees on collection cases (case to case
basis) aside from the attorney's fees recovered from any law suit. (underscoring ours) [13]

In its decision, the Court of Appeals substituted the word "on" after "contingent fees" with the
word "and." Under the aforequoted paragraph, the private respondent was entitled to attorney's
fees on contingent basis in collection cases only. In non collection cases, he was entitled only
to the attorney's fees that might be recovered in the lawsuit. [14] Since Civil Case No. 612 is
not a collection case but an action for rescission of a contract, then the aforequoted paragraph
is not applicable as a basis for awarding attorney's fees to the private respondent. [15]

Finding nothing new in the motion for reconsideration, the Court of Appeals denied it in the re-
solution [16] of 15 February 1996.

The petitioner then came to us via this petition for review wherein it contends that

RESPONDENT COURT OF APPEALS HAD DECIDED THE CASE NOT IN ACCORD WITH
LAW AND THE UNDISPUTED FACTS OF THE CASE.

II

RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN


AWARDING ON CONTINGENT BASIS RESPONDENT-APPELLEE'S ATTORNEY'S FEES ON
THE BASIS OF A MEMORANDUM OF AGREEMENT IN WHICH HE HAD NO
PARTICIPATION IN THE NEGOTIATION AND PREPARATION THEREOF.

III

RESPONDENT COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN AWARDING


EXCESSIVE AND UNREASONABLE ATTORNEY'S FEES.

89
IV

THE TRIAL COURT AND THE RESPONDENT COURT OF APPEALS HAVE NO


JURISDICTION TO SATISFY ATTORNEY'S CHARGING LIEN ON A SUM OF MONEY THAT
THE COURT HAD NO AUTHORITY TO DISPOSE OF AND OVER WHICH THE TRIAL
COURT HAD MADE NO FINAL ADJUDICATION.

The petitioner's more important argument in support of the first error is the Court of Appeals'
misquotation of the provision in the retainer contract regarding attorney's fees on contingent
basis, which the petitioner had stressed in its motion for reconsideration. The petitioner
maintains that under the contract, attorney's fees on contingent basis could only be awarded in
collection cases, and Civil Case No. 612 is not a collection case. Hence, the Court of Appeals
erred in affirming the award on that basis, while the trial court was correct in applying the
principle of quantum meruit.

In its second assigned error, the petitioner asserts that the private respondent admitted in his
Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien
that he had not participated in the negotiations and preparation of the memorandum of
agreement, thus:

Despite the dishonest concealment, by the light of Providence coupled with a streak of good
luck, counsel discovered in the first week of March 1993 that the parties had respectively
entered into a meaningful agreement with a third-party as early as July 27, 1992, which in the
case of client, case in the form of a "Memorandum of Agreement" (MOA) . . . . [17]

The third assigned error is but a logical consequence of the second, and the petitioner
maintains that since the private respondent "did not do anything spectacular or out of the
ordinary" in Civil Case No. 612, "except to ask for the suspension or postponement of the
proceedings thereof from 1985 to 1993," the P600,000.00 attorney's fees, whether on
contingent basis or quantum meruit, is excessive and unreasonable.

In the fourth imputed error, the petitioner argues that the memorandum of agreement was
never submitted to the trial court, and the trial court never made any disposition or adjudication
over the proceeds of the said agreement. What would eventually happen then is the dismissal
of Civil Case No. 612, as the trial court itself had intimated in its challenged order. Necessarily
then, there would be no money adjudication in favor of the petitioner as the defendant therein.
Since such lien is collectible only from an award of money that a court would adjudicate in a
judgment rendered in favor of the attorney's client pursuant to Section 37, Rule 138 of the
Rules of Court, it would follow that no attorney's charging lien could be validly entered.

We uphold the petitioner, but not necessarily on the strength of it arguments.

The parties are in agreement that the lawyer-client relationship between the petitioner and the
private respondent, Atty. Manuel S. Fonacier, Jr., was governed by a retainer contract dated 9
April 1985. The petitioner's undertakings thereunder are outlined as follows:

I. CORPORAT[ION]:

90
1. Corporation will provide the following:

a. Office space airconditioned


b. Furnishings, tables, executive chairs, visitor's chair & steel filing cabinet
c. Telephone facilities and partial secretarial services.

2. Legal service referrals by the corporation to its clients for additional income of the lawyer.

3. Minimal allowance of P800 per month plus contingent fees on contingent fees on collection
cases (case to case basis) aside from the attorney's fees recovered from any lawsuit.

4. That in case of legal problems to be attended to outside Metro Manila and Suburbs, the
corporation shall defray expenses for transportation, lodging and other legal expenses
incidental in the case. [18]

An analysis of the contract clearly shows that it was a general retainer, since its primary
purpose was to secure beforehand the services of the private respondent for any legal problem
which might afterward arise. [19] The fixed retaining fee was P800.00 a month. A retaining fee
is a preliminary fee paid to ensure and secure a lawyer's future services, to remunerate him for
being deprived, by being retained by one party, of the opportunity of rendering services to the
other party and of receiving pay from him. In the absence of an agreement to the contrary, the
retaining fee is neither made nor received in consideration of the services contemplated; it is
apart from what the client has agreed to pay for the services which he has retained him to
perform. [20]

In the retainer contract in question, there was no intention to make the retaining fee as the
attorney's fees for the services contemplated. This is evident from the provision allowing
additional attorney's fees in collection cases consisting of (1) a "contingent fee" and (2)
whatever the petitioner might recover as attorney's fees in each case. The latter could only
refer to the attorney's fees which the court might award to the petitioner in appropriate cases.

While the contract did not mention non-collection cases, it is, nevertheless, clear therefrom that
such cases were not excluded from the retainership, as borne out by the provision requiring the
private respondent to "make appearances in Court for cases involving the corporation or any
allied cases pertaining to the latter." As to such cases, there was no specific stipulation of
additional attorney's fees. Nevertheless, nothing therein shows that the private respondent
agreed to render professional service in such cases gratuitously. The absence then of the
stipulation of additional attorney's fees cannot be construed as a bar to the collection of
additional attorney's fees in non-collection cases.

Two basic principles come into play. The first is as stated earlier, viz., that the retaining fee is
neither made nor received in consideration of the services contemplated unless the contract
itself so provides. The second is that, unless expressly stipulated, rendition of professional
services by a lawyer is for a fee or compensation and is not gratuitous. This is implicit from the
opening clause of Section 24, Rule 138 of the Rules of Court, which states that "[a]n attorney
shall be entitled to have and recover from his client no more than a reasonable compensation
for his services . . .," and by virtue of the innominate contract of faciout des (I do and you give),
as enunciated by this Court in Corpus v. Court of Appeals, [21] thus:
91
Moreover, the payment of attorney's fees . . . may also be justified by virtue of the innominate
contract of faciout des (I do and you give) which is based on the principle that "no one shall
unjustly enrich himself at the expense of another." Innominate contracts have been elevated to
a codal provision in the New Civil Code by providing under Article 1307 that such contracts
shall be regulated by the stipulations of the parties, by the general provisions or principles of
obligations and contracts, by the rules governing the most analogous nominate contracts, and
by the customs of the people. The rationale of this article was stated in the 1903 case of Perez
vs. Pomar (2 Phil. 682).

In Perez v. Pomar, [22] this Court stated:

[B]ut whether the plaintiff's services were solicited or whether they were offered to the
defendant for his assistance, inasmuch as these services were accepted and made use of by
the latter, we must consider that there was a tacit and mutual consent as to the rendition of the
services. This gives rise to the obligation upon the person benefited by the services to make
compensation therefor, since the bilateral obligation to render service as interpreter, on the one
hand, and on the other to pay for the services rendered, is thereby incurred. (Arts. 1088, 1089,
and 1262 of the Civil Code).

Accordingly, as to non-collection cases where the petitioner was either a plaintiff or a


defendant, the private respondent could still collect attorney's fees, apart from his regular
retaining fee, on the basis of any-supplemental agreement or, in its absence, under the
principle of quantum meruit. There was no such supplemental agreement in this case.

We cannot sustain the private respondent's theory that he could collect attorney's fees on
contingent basis because in the other "non-collection" cases he handled for the petitioner' he
was paid on contingent basis at the rate of 10% of what was awarded to the petitioner. In the
first place, Civil Case No. 612 is still unresolved, and no judgment has yet been rendered in
favor of the petitioner. The amount in the memorandum of agreement could not be made the
basis of a "contingent fee" in the said case for at least three reasons. First, in his own Urgent
Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien, the
private respondent based the contingent fee not only in Civil Case No. 612 but in a "multitude
of peripheral cases," and the contingent fee would become due and collectible only if and when
the petitioner obtains a judgment in his favor in Civil Case No. 612. The second paragraph of
page 3 of the said motion reads as follows:

Hence, from May 1985 and continuously thru the years without interruption and surviving a
series of no less than five (5) changes of Presiding Judges, the undersigned counsel labored
tirelessly in handling the defense of client. In addition to the instant lawsuit, a multitude of
peripheral cases, civil, criminal and administrative, arising from the non-delivery of titles by
client on fully paid lots in the subdivision project were also filed as a consequence, not only
against defendant but also against its President and Chief Executive Officer (CEO). Needless
to state, the undersigned was designated to handle majority of these cases for both, where he
appeared and conducted trial without any "appearance fees" for more than eight (8) long years
solely relying on the contingent fee in case of recovery in the instant main case. [23]
(underscoring supplied for emphasis)

92
Second, the amount of P28 million, which Filstream agreed to pay the petitioner, was not a
judgment or award in favor of the petitioner in Civil Case No. 612. It was the consideration of
the assignment, transfer, and conveyance to Filstream of all the petitioner's "rights, interest and
participation embodied and specified in the Joint Venture Agreement (Annex "A") and in all the
eight hundred seventy-five (875) parcels of land comprising the SARANAY HOMES
subdivision. . . ." The plaintiffs in Civil Case No. 612 were not parties to the memorandum of
agreement, and there is no showing that they agreed to the assignment of the petitioner's
rights, interest, and participation in the Joint Venture Agreement. While paragraph 10 of the
memorandum of agreement provides that the petitioner

shall cause to sign a JOINT MOTION TO DISMISS, together with the CARREONS regarding
Civil Case No. 612 of the Regional Trial Court of Makati and to further DISMISS, the case filed
against PNB docketed as Civil Case No. 6918 of the Regional Trial Court of Makati . . . [and]
shall obtain the dismissal of all cases filed by lot buyers against it now pending with the HLURB

the fact remains that no such motion to dismiss has been filed yet in Civil Case No. 612, and
there is no assurance whatsoever that the plaintiffs therein will sign a joint motion to dismiss.
Third, as correctly posited by the petitioner, the private respondent had no participation in the
negotiations leading to, and in the preparation of, the memorandum of agreement.

Indisputably then, the private respondent's attorney's fee on "contingent basis" in Civil Case
No. 612 is unwarranted. If at all, he could only be entitled to attorney's fees on quantum meruit
basis as of the expiration of his retainer contract on 31 March 1993.

Quantum meruit simply means "as much as he deserves." [24] In no case, however, must a
lawyer be allowed to recover more than what is reasonable pursuant to Section 24, Rule 138 of
the Rules of Court, which provides:

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. No court shall be bound by the opinion
of attorneys as expert witnesses as to the proper compensation, but may disregard such
testimony and base its conclusion on its own professional knowledge. A written contract for
services shall control the amount to be paid therefor unless found by the court to be
unconscionable or unreasonable.

This Court had earlier declared the following as circumstances to be considered in determining
the reasonableness of a claim for attorney's fees: (1) the amount and character of the service
rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or
business in which the services were rendered; (4) the responsibility imposed; (5) the amount of
money or the value of the property affected by the controversy or involved in the employment;
(6) the skill and experience called for in the performance of the services; (7) the professional
character and social standing of the attorney; (8) the results secured; and (9) whether the fee is
absolute or contingent, it being recognized that an attorney may properly charge a much larger
fee when it is contingent than when it is not. [25]

93
Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the following
factors which should guide a lawyer in determining his fees:

(a) The time spent and the extent of the services rendered or required;
(b) The novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered case;
(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to
which he belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the
service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.

It was incumbent upon the private respondent to prove the reasonable amount of attorney's
fees, taking into account the foregoing factors or circumstances. The records before us and the
trial court's 11 October 1993 order do not confirm that the private respondent proved by either
testimonial or documentary evidence that the award of P600,000.00 was reasonable. The
private respondent's testimony thereon was crucial. Yet, it does not appear from the 11 October
1993 order that he took the witness stand. From the Minutes of the trial court attached to the
Rollo of CA-G.R. CV No. 44839, [26] it appears that only Atty. Atienza and Mr.Suazo gave oral
testimony on the motion.

It necessarily follows then that the 11 October 1993 order has insufficient factual basis, and the
trial court committed grave abuse of discretion in arbitrarily fixing the private respondent's
attorney's fees at P600,000.00. The affirmance of the said order by the Court of Appeals
premised on the provision in the retainer contract regarding contingent fee is thus fatally
flawed.

The interest for both the petitioner and the private respondent demands that the trial court
should conduct further proceedings in Civil Case No. 612 relative to the private respondent's
motion for the payment of attorney's fees and, thereafter, fix it in light of Section 24, Rule 138 of
the Rules of Court; Rule 20.1, Canon 20 of the Code of Professional Responsibility; and the
jurisprudentially established guiding principles in determining attorney's fees on quantum meruit
basis.

WHEREFORE, the instant petition is GRANTED. The challenged Decision of 31 March 1995 of
the Court of Appeals in CA-G.R. CV No. 44839 and the Order of 11 October 1993 of the
Regional Trial Court of Makati, Branch 64, in Civil Case No. 612 are hereby SET ASIDE. The
trial court is further DIRECTED to set for further hearing the private respondent's Urgent Motion
to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien and thereafter to
fix the private respondent's attorney's fees in Civil Case No. 612 as of 31 March 1993 when his
contract with the petitioner was effectively terminated, taking into account Section 24, Rule 138
of the Rules of Court; Rule 20.1, Canon 20 of the Code of Professional Responsibility; and the
jurisprudentially established guiding principles in determining attorney's fees on quantum meruit
basis.
94
No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

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.

95
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.
96
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, 6 ruling 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.
97
SO ORDERED.

(s/t) REGINA G. ORDOÑEZ-BENITEZ

Associate Justice

WE CONCUR:

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

Associate Justice Associate Justice 7

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

A basic legal principle is that no one shall be unjustly enriched at the expense of another. 12
This 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

98
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

99
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.

100
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

THIRD DIVISION
[G.R. No. 137680. February 6, 2004]

CONCEPT PLACEMENT RESOURCES, INC., petitioner, vs. RICHARD V. FUNK,


respondent.

DECISION
SANDOVAL-GUTIERREZ, J.:

This is a petition for review on certiorari assailing the Decision[1] dated February 18, 1999 of
the Court of Appeals in CA-G.R. SP No. 46703, entitled Richard V. Funk vs. Hon. Santiago
Ranada, Jr., Presiding Judge of RTC, Makati, Branch 137 and Concept Placement Resources,
Inc.

The antecedent facts giving rise to the controversy at bar are as follows:

On June 25, 1994, Concept Placement Resources, Inc., petitioner, engaged the legal services
of Atty. Richard V. Funk, respondent.

On July 1, 1994, the parties executed a retainer contract wherein they agreed that respondent
will be paid regular retainer fee for various legal services, except litigation, quasi-judicial and
administrative proceedings and similar actions. In these services, there will be separate billings.

101
Meanwhile, one Isidro A. Felosopo filed with the Philippine Overseas Employment
Administration (POEA) a complaint for illegal dismissal against petitioner, docketed as POEA
Case No. 94-08-2370. Petitioner referred this labor case to respondent for legal action.

Immediately, respondent, as counsel for petitioner, filed with the POEA its answer with
counterclaim for P30,000.00 as damages and P60,000.00 as attorneys fees.

On March 1, 1995, while the labor case was still pending, petitioner terminated its retainer
agreement with respondent. Nevertheless, respondent continued handling the case.

On October 30, 1995, the POEA rendered a Decision dismissing Felosopos complaint with
prejudice. The POEA, however, failed to rule on petitioners counterclaim for damages and
attorneys fees. Thereafter, the Decision became final and executory.

On December 8, 1995, respondent advised petitioner of the POEAs favorable Decision and
requested payment of his attorneys fees.

In reply, petitioner rejected respondents request for the following reasons: (1) the retainer
agreement was terminated as early as March 1995; (2) there is no separate agreement for the
handling of the labor case; and (3) the POEA did not rule on petitioners counterclaim for
attorneys fees. This prompted respondent to file with the Metropolitan Trial Court (MTC),
Branch 67, Makati City a complaint for sum of money (attorneys fees) and damages against
petitioner, docketed as Civil Case No. 51552.

During the pre-trial on September 3, 1996, the MTC, upon respondents motion, declared
petitioner as in default. Its motion for reconsideration was denied in an Order dated September
13, 1996. Forthwith, respondent was allowed to present his evidence ex-parte.

On October 27, 1996, the MTC rendered a Decision[2] ordering petitioner to pay respondent
P50,000.00 as attorneys fees.

On appeal, the Regional Trial Court (RTC), Branch 137, Makati City, reversed the MTC
Decision, holding inter alia that since the MTC, in the same Decision, did not resolve petitioners
counterclaim for attorneys fees, which constitutes res judicata, respondent is not entitled
thereto.

Respondent filed a motion for reconsideration but was denied by the RTC in an Order[3] dated
December 29, 1997.

Thus, respondent filed with the Court of Appeals a petition for review ascribing to the RTC the
following errors: (1) in reversing the MTC Decision on the ground of res judicata; and (2) in
disregarding the compulsory counterclaim as basis for respondents action for attorneys fees.
102
In due course, the Court of Appeals promulgated its Decision[4] dated February 18, 1999
reversing the assailed RTC Decision and affirming the MTC Decision, thereby sustaining the
award to respondent of his attorneys fees in the amount of P50,000.00.

Hence, this petition for review on certiorari wherein petitioner raises the following assignments
of error:

I. A QUESTION OF LAW IS BEING RAISED ON WHETHER AN ALLEGATION IN PLEADING


DRAFTED BY COUNSEL ON BEHALF OF HIS CLIENT FILED IN A LABOR CASE CAN BE
USED AS THE SOLE BASIS OF A COLLECTION SUIT BY COUNSEL IN THE ABSENCE OF
ANY WRITTEN CONTRACT; AND,

II. ON A QUESTION OF LAW ON WHETHER THERE IS A DISTINCTION BETWEEN THE


PRINCIPLE OF RES JUDICATA PER SE FROM THE PRINCIPLE THAT THE DISMISSAL OF
THE MAIN CASE CARRIES WITH IT THE DISMISSAL OF THE COMPULSORY
COUNTERCLAIM AND SAID DISMISSAL CONSTITUTES RES JUDICATA WITH RESPECT
TO THE COMPULSORY COUNTERCLAIM.[5]

The basic issue to be resolved is whether or not respondent is entitled to attorneys fees for
assisting petitioner as counsel in the labor case.

While it is true that the retainer contract between the parties expired during the pendency of the
said labor case, it does not follow that petitioner has no more obligation to pay respondent his
attorneys fees. The Court of Appeals found that petitioner engaged the legal services of
respondent and agreed to pay him accordingly, thus:

Anent the first issue, the Petitioner resolutely avers that he and the Private Respondent had
agreed on the latter paying him the amount of P60,000.00 by way of attorneys fees for his
professional services as its counsel in POEA Case No. 94-08-2370 the Petitioner relying on his
Retainer Agreement in tandem with the Compulsory Counterclaim of the Private Respondent to
the complaint of Isidro Felosopo.

We agree with the Petitioners pose. It bears stressing that the Retainer Agreement of the
Petitioner and the Private Respondent (Exhibit A) envisaged two (2) species of professional
services of the Petitioner, namely, those professional services covered by the regular retainer
fee and those covered by separate billings. Petitioners services not covered by the regular
retainer fee and, hence, subject to separate billing include:

x xx

5. Services not covered by the regular retainer fee and therefore, subject to separate billing:
103
a) litigation, quasi-judicial proceedings, administrative investigation, and similar proceedings
legal in nature;

x xx

x xx While admittedly, the Petitioner and the Private Respondent did not execute a written
agreement on Petitioners fees in said case apart from the Retainer Agreement, however, the
Private Respondent did categorically and unequivocally admit in its Compulsory Counterclaim
embodied in its Answer to the Complaint, in POEA Case No. 94-08-2370, that it engaged the
services of the Petitioner as its counsel For a fee in the amount of P60,000.00, Etc.:

COMPULSORY COUNTERCLAIM

1. Respondent reproduces herein by reference all the material allegations in the foregoing
Answer.

2. As shown by the allegation in the Answer the complaint is factually and legally unfounded.
To defend itself against this baseless suit, respondent suffered and continues to suffer actual
damage in the amount of P30,000.00 and was compelled to hire the services of counsel for a
fee in the amount of P60,000.00 plus P1,500.00 honorarium per appearance and litigation
expenses in the amount of not less than P10,000.00 plus cost of

3. suit. (Exhibit B-1: underscoring supplied)

Petitioner, in order to evade its obligation, invoked the principle of res judicata. Citing BA
Finance Corporation vs. Co[6], petitioner contends that since the complaint in the labor case
was dismissed, the counterclaim for attorneys fees was likewise dismissed. Consequently, the
dismissal of the counterclaim has the effect of res judicata on respondents complaint for
attorneys fees. Necessarily, it must also be dismissed.

Petitioners invocation of res judicata[7] is utterly misplaced. The labor case and the instant
complaint for collection of attorneys fees are entirely different. Obviously, in the two cases,
there is no identity of parties, identity of subject matter, and identity of causes of action. Also,
the Order in the labor case dismissing the complaint with prejudice is not on the merits.

Significantly, in German Marine Agencies, Inc. vs. NLRC,[8] we held that there must always be
a factual basis for the award of attorneys fees. Here, since petitioner agreed to be represented
by respondent as counsel in the labor case and to pay him his attorneys fees, it must abide
with its agreement which has the force of law between them.[9]

104
We observe, however, that respondent did not encounter difficulty in representing petitioner.
The complaint against it was dismissed with prejudice. All that respondent did was to prepare
the answer with counterclaim and possibly petitioners position paper. Considering respondents
limited legal services and the case involved is not complicated, the award of P50,000.00 as
attorneys fees is a bit excessive. In First Metro Investment Corporation vs. Este del Sol
Mountain Reserve, Inc.,[10] we ruled that courts are empowered to reduce the amount of
attorneys fees if the same is iniquitous or unconscionable. Under the circumstances obtaining
in this case, we consider the amount of P20,000.00 reasonable.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is
AFFIRMED with MODIFICATION in the sense that the award of P50,000.00 as attorneys fees
to herein respondent is reduced to only P10,000.00. No costs.

SO ORDERED.

Vitug, (Chairman), Corona, and Carpio-Morales, JJ., concur.

SECOND DIVISION

A.C. No. 7337, September 29, 2014

ROLANDO VIRAY, Complainant, v. ATTY. EUGENIO T. SANICAS, Respondent.

RESOLUTION

DEL CASTILLO, J.:

This is a verified Complaint for Disbarment/Gross Immoral Conduct1 filed with this Court on
September 18, 2006 by complainant Rolando Viray (complainant) against respondent Atty.
Eugenio T. Sanicas (respondent).

Factual Antecedents

Complainant alleges that he engaged the services of respondent relative to a labor case2 he
filed against Ester Lopez and Teodoro Lopez III (spouses Lopez). On February 26, 2001, the
Labor Arbiter ruled in favor of complainant and disposed of the case as
follows:ChanRoblesVirtualawlibrary

WHEREFORE, premises considered, judgment is hereby rendered ordering respondents Ester


Lopez and Teodoro Lopez III to pay complainant Rolando Viray of the following, to wit:
1. Backwages……………….……..P146,726.67
2. Separation Pay………………….…24,000.00
3. Service Incentive Leave Pay……….1,538.46
4. Attorney’s Fees………………...….17,226.51

105
or a total amount of One Hundred Eighty Nine Thousand Four Hundred Ninety One Pesos &
64/100 (P189,491.60) [sic] to be deposited with the Cashier of this Office, within ten (10) days
from receipt hereof.

All other claims are hereby denied for lack of merit.

SO ORDERED.3

Subsequently, an Alias Writ of Execution4 was issued relative to aforesaid decision. During the
implementation of said writ, however, complainant discovered that respondent had already
collected the total amount of P95,000.00 from spouses Lopez. Respondent received said
amount in the following manner:ChanRoblesVirtualawlibrary

Date
Voucher No.
Amount
Purpose
02/05/2004
7802
P 20,000.00
Attorney’s fees
02/13/2004
7833
10,000.00
Partial payment for judgment
02/26/2004
7848
10,000.00
Partial payment for judgment
03/12/2004
7894
20,000.00
Partial payment for judgment
04/02/2004
7932
5,000.00
Partial payment for judgment
04/06/2004
7941
5,000.00
Partial payment for judgment
04/13/2004
7944
5,000.00
Partial payment for judgment
04/16/2004
7954
10,000.00
106
Partial payment for judgment
04/30/2004
7977
10,000.00
Partial payment for judgment
Total Amount:
P 95,000.00

Complainant also discovered that respondent misrepresented to spouses Lopez that he is


authorized to receive payments on his behalf, when in truth and in fact he is not.
Consequently, complainant made several verbal demands to the respondent to remit to him the
amount of P95,000.00, less his attorney’s fees of P20,000.00. But respondent did not budge.
Thus, complainant lodged a complaint before the Office of the Punong Barangay of Brgy.
Felisa, Bacolod City. Respondent, however, ignored the summons to attend a conference
before the barangay to resolve the issues.

In his Comment,5 respondent admits that he received P95,000.00 from spouses Lopez on
installments, but denies that he was not authorized to accept it. He explains that complainant
agreed to pay him additional attorney’s fees equivalent to 25% of the total monetary award, on
top of the attorney’s fees that may be awarded by the labor tribunal, and to refund all expenses
respondent incurred relative to the case. Thus, from the total award of P189,491.60, the sum
of P17,226.57 representing respondent’s professional fees has to be deducted, leaving a
balance of P172,275.13.6 Then from said amount, complainant proposed that he will get
P100,000.00 and the balance of P72,275.13 shall belong to respondent as and for his
additional 25% attorney’s fees and reimbursement for all expenses he incurred while handling
the case. However, after receiving the amount of P95,000.00 and deducting therefrom the
amounts of P20,000.007 attorney’s fees, P17,000.00 earlier given to complainant, and
P2,000.00 paid to the sheriff, what was left to respondent was only P56,000.00. Respondent
whines that this amount is way below the promised 25% attorney’s fees and refund of
expenses in the total amount of P72,275.13.

Respondent asserts that, in any event, complainant will still be receiving a sum greater than
what he expects to receive. He avers that complainant is still entitled to receive from spouses
Lopez the sum of P93,491.60. Adding the P17,000.00 respondent previously remitted to
complainant, the latter will get a total amount of P110,491.60. This amount, according to
respondent, exceeds the amount of P100,000.00 complainant agreed to and expected to
receive.

IBP’s Report and Recommendation

On February 26, 2007,8 we referred this case to the Integrated Bar of the Philippines (IBP) for
investigation, report and recommendation. On January 31, 2011, the Investigating
Commissioner issued his Report and Recommendation9 with the following recommendation:

In view of the foregoing, it is respectfully recommended that the respondent be meted the
penalty of two (2) years suspension. Respondent is also ordered to return, in restitution all the
amounts in his possession which are due to complainant, less his rightful attorney’s fees.10

107
On October 28, 2011, the IBP Board of Governors adopted Resolution No. XX-2011-139,11
which approved the Report and Recommendation of the Investigating Commissioner
suspending respondent from the practice of law for two years, but with the modification that
respondent should restitute the sum of P85,500.0012 to the complainant.

Issue

The essential issue in this case is whether the respondent is guilty of gross misconduct for his
failure to promptly account to his client the funds received in the course of his professional
engagement and return the same upon demand.

The Court’s Ruling

“The Code of Professional Responsibility demands the utmost degree of fidelity and good faith
in dealing with the moneys entrusted to lawyers because of their fiduciary relationship.”13
Specifically, Rule 16.01 of the Code imposes upon the lawyer the duty to “account for all
money or property collected or received for or from the client.” Rule 16.03 thereof, on the other
hand, mandates that “[a] lawyer shall deliver the funds x xx of his client when due or upon
demand.”

In this case, respondent on nine separate occasions from February 5, 2004 to April 30, 2004
received payments for attorney’s fees and partial payments for monetary awards on behalf of
complainant from spouses Lopez. But despite the number of times over close to three months
he had been receiving payment, respondent neither informed the complainant of such fact nor
rendered an accounting thereon. It was only when an Alias Writ of Execution was issued and
being implemented when complainant discovered that spouses Lopez had already given
respondent the total amount of P95,000.00 as partial payment for the monetary awards granted
to him by the labor tribunal.

To make matters worse, respondent withheld and refused to deliver to the complainant said
amount, which he merely received on behalf of his client, even after demand. Complainant
brought the matter before the barangay, but respondent simply ignored the same. Such failure
and inordinate refusal on the part of the respondent to render an accounting and return the
money after demand raises the presumption that he converted it to his own use.14 His
unjustified withholding of the funds also warrants the imposition of disciplinary action against
him.15cralawred

Respondent justifies his action by asserting that complainant authorized him to receive
payment. He implies that he is also authorized to apply the sum of money he received from
spouses Lopez to his additional 25% attorney’s fees and reimbursement for all expenses he
incurred for the case, in the total amount of P72,275.13. However, after deducting from the
amount of P95,000.00 the amounts of P20,000.00, P17,000.00, and P2,000.00, what was left
to respondent, to his dismay was only P56,000.00.

The Court is not impressed. As aptly observed by the Investigating Commissioner, other than
his self-serving statements, there is nothing in the records which would support respondent’s
claim that he was authorized to receive the payments. Neither is there proof that complainant
agreed to pay him additional 25% attorney’s fees and reimburse him for all expenses he
108
allegedly incurred in connection with the case. Respondent did not present any document,
retainer’s agreement, or itemized breakdown of the amount to be reimbursed to support his
claim. In any event, even assuming that respondent was authorized to receive payments, the
same does not exempt him from his duty of promptly informing his client of the amounts he
received in the course of his professional employment. “The fiduciary nature of the relationship
between counsel and client imposes on a lawyer the duty to account for the money or property
collected or received for or from the client. He is obliged to render a prompt accounting of all
the property and money he has collected for his client.” 16 “The fact that a lawyer has a lien for
his attorney’s fees on the money in his hands collected for his client does not relieve him from
the obligation to make a prompt accounting.”17 Moreover, a lawyer has no right “to unilaterally
appropriate his client’s money for himself by the mere fact alone that the client owes him
attorney’s fees.”18cralawred

In sum, “[r]espondent’s failure to immediately account for and return the money when due and
upon demand violated the trust reposed in him, demonstrated his lack of integrity and moral
soundness, and warrants the imposition of disciplinary action.”19cralawred

The Penalty

“The penalty for gross misconduct consisting in the failure or refusal despite demand of a
lawyer to account for and to return money or property belonging to a client has been
suspension from the practice of law for two years.”20 Thus, the IBP Board of Governors did
not err in recommending the imposable penalty. Considering, however, that this is
respondent’s first offense and he is already a nonagenarian,21 the Court, in the exercise of its
compassionate judicial discretion, finds that a penalty of one year suspension is sufficient.

WHEREFORE, the Court finds respondent Atty. Eugenio T. Sanicas GUILTY of gross
misconduct and accordingly SUSPENDS him from the practice of law for one (1) year upon the
finality of this Resolution, with a warning that a repetition of the same or similar act or offense
shall be dealt with more severely.

Atty. Sanicas is ordered to return to complainant, within 90 days from finality of this Resolution,
the net amount of P85,500.00 with interest at the rate of 6% per annum from finality of this
Resolution until the full amount is returned. Failure to comply with the foregoing directive will
warrant the imposition of a more severe penalty.

Let copies of this Resolution be furnished the Office of the Bar Confidant and noted in Atty.
Sanicas’ record as a member of the Bar.

SO ORDERED.

A.C. No. 10868


[Formerly CBD Case No. 07-2041]

CHERYLE. VASCO-TAMARAY, Complainant,


vs.
ATTY. DEBORAH Z. DAQUIS, Respondent.
109
RESOLUTION

PERCURIAM:

Pretending to be counsel for a party in a case and using a forged signature in a pleading merit
the penalty of disbarment.

Cheryl E. Vasco-Tamaray (Vasco-Tamaray) filed a ComplaintAffidavit before the Integrated Bar


of the Philippines on July 30, 2007, alleging that respondent Atty. Deborah Z. Daquis (Atty.
Daquis) filed, on her behalf, a Petition for Declaration of Nullity of Marriage without her consent
and forged her signature on the Petition.1 She also alleged that Atty. Daquis signed the Petition
for Declaration of Nullity of Marriage as "counsel for petitioner," referring to Vasco-Tamaray.2

Vasco-Tamaray stated that Atty. Daquis was not her counsel but that of her husband, Leomarte
Regala Tamaray.3 To support her allegation, she attached the Affidavit4 of Maritess Marquez-
Guerrero. The Affidavit states:

1. Sometime in October 2006, I accompanied Cheryl Tamaray in going to East Cafe at


Rustan's Makati to meet with her husband Leomarte Tamaray;

2. We arrived at the said place at around 7:00 pm and Leomarte introduced to us (Cheryl
and I) Atty. Deborah Z. Daquis as his lawyer. He further told us that Atty. Daquis'
husband also worked in Japan and that's how he got to know the latter and got her
services;

3. Among other things, Leomarte told Cheryl that the reason for that meeting and the
presence of Atty. Daquis was because he had decided to file a case to annul his
marriage with Cheryl;

4. Cheryl was shocked and just cried. After awhile [sic], Leomarte's brother arrived and
shortly after, the group left;

5. The next instance that I saw Atty. Daquis was when we (Cheryl and I) went to
McDonald's-Greenbelt where Atty. Daquis tried to convince her not to oppose Leomarte's
decision to have their marriage annulled[.]5(Emphasis supplied)

Vasco-Tamaray narrated that in December 2006, Atty. Daquis informed her "that a Petition for
Declaration of Nullity of Marriage was filed before the Regional Trial Court of Muntinlupa
City."6 In February 2007, Atty. Daquis asked her to appear before the City Prosecutor's Office
of Muntinlupa City.7

On March 5, 2007, Vasco-Tamaray appeared before the City Prosecutor's Office and met Atty.
Daquis. She asked Atty. Daquis to give her a copy of the Petition but Atty. Daquis refused.8

Vasco-Tamaray stated that she obtained a copy of the Petition for Declaration of Nullity of
Marriage from Branch 207 of the Regional Trial Court of Muntinlupa City. She was surprised to
see that the Petition was allegedly signed and filed by her.9

110
Vasco-Tamaray alleged that she did not file the Petition, that her signature was forged by Atty.
Daquis, and that her purported community tax certificate appearing on the jurat was not hers
because she never resided in Muntinlupa City.10 She attached a Certification issued by the
Sangguniang Barangay of Putatan, Muntinlupa City stating that she was "never . . . a resident
of #9 Daang Hari Street, Umali Compound, Summitville Subdivision, Barangay Putatan." 11She
also attached a Certification issued by Barangay Talipapa stating that she has been a resident
of "#484-J Saguittarius St., Solville Subd., Barangay Talipapa, Novaliches, Quezon City... from
2000 till present."12

Vasco-Tamaray also alleged that the Petition for Declaration of Nullity of Marriage was Atty.
Daquis' idea, consented to by Leomarte Tamaray.13

She further alleged that she had never received any court process. The Petition states that her
postal address is "09 Daang Hari St., Umali Comp., Summitville Subd., Putatan, Muntinlupa
City[,]"14 which is the address of her husband's family. The return slips of the notices sent by
the trial court were received by Encarnacion T. Coletraba and Almencis Cumigad, relatives
ofLeomarte Tamaray.15

Atty. Daquis filed an Answer countering that her client was Vasco-Tamaray, complainant
herself, and not complainant's husband. She alleged that Vasco-Tamaray knew of the Petition
as early as October 2006, not December 2006.16

With regard to the community tax certificate, Atty. Daquis explained that when she notarized
the Petition, the community tax certificate number was supplied by Vasco-Tamaray.17 Atty.
Daquis' allegation was supported by the Joint Affidavit of her staff, Ma. Dolor E. Purawan
(Purawan) and Ludy Lorena (Lorena).18

Purawan and Lorena detailed in their Joint Affidavit that they knew Vasco-Tamaray to be a
client of Atty. Daquis and that they never saw Atty. Daquis forge Vasco-Tamaray's signature.
Purawan stated that she typed the Petition for Declaration of Nullity of Marriage and that the
community tax certificate was provided by Vasco-Tamaray.19

Atty. Daquis alleged that Vasco-Tamaray wanted her to call and demand money from Leomarte
Tamaray but she refused to do so.20

Atty. Daquis argued that Vasco-Tamaray had a copy of the Petition. When Vasco-Tamaray
requested another copy on March 5, 2007, Atty. Daquis was unable to grant her client's request
because she did not have a copy of the Petition with her at that time.21

Atty. Daquis further alleged that Vasco-Tamaray conceived an illegitimate son with a certain
Reuel Pablo Aranda. The illegitimate son was named Charles Dino Vasco. Reuel Pablo Aranda
signed the Affidavit of Acknowledgment/ Admission of Paternity portion of the birth certificate.22

The Commission on Bar Discipline required the parties to submit their position papers,23 but
based on the record, only Vasco-Tamaray complied.24

The Commission on Bar Discipline recommended the dismissal of the Complaint because
Vasco-Tamaray failed to prove her allegations. The Commission on Bar Discipline noted that

111
Vasco-Tamaray should have questioned the Petition or informed the prosecutor that she never
filed any petition, but she failed to do so.25

The Board of Governors of the Integrated Bar of the Philippines adopted and approved the
Report and Recommendation of the Commission on Bar Discipline in the Resolution dated
September 27, 2014.26

The issue for resolution is whether respondent Atty. Deborah Z. Daquis should be held
administratively liable for making it appear that she is counsel for complainant Cheryl Vasco-
Tamaray and for the alleged use of a forged signature on the Petition for Declaration of Nullity
of Marriage.

This court finds that respondent violated Canons 1, 7, 10, and 17 of the Code of Professional
Responsibility. The charge against respondent for violation of Canon 15 is dismissed.

By pretending to be counsel for complainant, respondent violated Canon 1, Rule 1.01 of the
Code of Professional Responsibility and failed to uphold her duty of doing no falsehood nor
consent to the doing of any falsehood in court as stated in the Lawyer's Oath. 27

Canon 1, Rule 1.01 of the Code of Professional Responsibility provides:

CANON 1 - A lawyer shall uphold the constitution, obey the laws of the land and promote
respect for law and for legal processes.

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

In this case, respondent merely denied complainant's allegation that she was Leomarte
Tamaray's counsel28 but was unable to rebut the other allegations against her.

Respondent admitted that she met complainant in October 2006,29 but did not refute30 the
statement in Maritess Marquez-Guerrero's Affidavit that Leomarte Tamaray introduced her as
his lawyer.31 Likewise, respondent admitted that she met with complainant subsequently, 32 but
did not refute Maritess Marquez-Guerrero's statement that in one of the meetings, she tried to
convince complainant not to oppose Leomarte Tamaray's decision to annul their marriage.33

Respondent argued in her Answer that she was the counsel for complainant.34 Yet, there is no
explanation how she was referred to complainant or how they were introduced. It appears,
then, that respondent was contacted by Leomarte Tamaray to file a Petition for Declaration of
Nullity of Marriage on the ground of bigamy. As stated in Maritess Marquez-Guerrero's
Affidavit, "Leomarte told Cheryl that the reason for that meeting and the presence of Atty.
Daquis was because he had decided to file a case to annul his marriage with Cheryl[. ]"35

Based on this, it seems Leomarte Tamaray intended to file the petition for declaration of nullity
of marriage. However, respondent made it appear that complainant, not her client Leomarte
Tamaray, was the petitioner. There is a probability that respondent did not want Leomarte
Tamaray to be the petitioner because he would have to admit that he entered into a bigamous
marriage, the admission of which may subject him to criminal liability.
112
In addition, if it is true that complainant was respondent's client, then there appears to be no
reason for respondent to advise her "not to oppose Leomarte's decision to have their marriage
annulled."36

The records of this case also support complainant's allegation that she never received any
court process because her purported address in the Petition is the address of Leomarte
Tamaray. The Petition states that complainant is "of legal age, Filipino citizen, married with
postal address at 09 Daang Hari St., Umali Comp., Summitville Subd., Putatan, Muntinlupa
City[.]"37

The Certificate of Marriage of complainant and Leomarte Tamaray states that Leomarte's
residence is at "Summitvil[l]e Subv [sic], Muntinlupa," while complainant's residence is at
"Hermosa St. Gagalangin, Tondo, Manila."38 Assuming that complainant lived with her husband
after they were married, complainant most likely did not receive court processes because she
left their home before the filing of the Petition for Declaration of Nullity of Marriage. As written in
the Minutes of the meeting before the Office of the City Prosecutor:

P[etitioner] & R[espondent] met sometime in 1993 through his secretary. They became
sweethearts in 1993 and their relationship as steadies lasted until 1996;

During the 3 years of their union, petitioner knew respondent's family as she even sleeps in
their house; Theirs was also a long distance relationship as respondent worked in Japan;

Upon respondents [sic] return to the Philippines they got married in Feb, 1996. They had no
children, as respondent immediately left for Japan on March 11, 1996;

Respondent returned to the Philippines but unfortunately he brought another woman. As a


result, petitioner left their house.39 (Emphasis supplied)

Further, complainant cannot be faulted for her failure to inform the prosecutor that she did not
file any petition for declaration of nullity of marriage because during the meeting on March 5,
2007, complainant had no knowledge that the Petition was filed in her name.40 She obtained a
copy of the Petition after the March 5, 2007 meeting.41

In Yupangco-Nakpil v. Uy,42 this court discussed Canon 1, Rule 1.01, as follows:

Rule 1.01, Canon 1 of the Code, as it is applied to the members of the legal professions,
engraves an overriding prohibition against any form of misconduct, viz:

CANON 1 - A LA WYER SHALL UPHOLD THE CONSTITUTION, OBEY THE LAWS OF THE
LAND AND PROMOTE RESPECT FOR LAW AND LEGAL PROCESSES

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

The gravity of the misconduct- determinative as it is of the errant lawyer's penalty- depends on
the factual circumstances of each case .

....

113
. . . Verily, members of the Bar are expected at all times to uphold the integrity and dignity of
the legal profession and refrain from any act or omission which might lessen the trust and
confidence reposed by the public in the fidelity, honesty, and integrity of the legal profession.
By no insignificant measure, respondent blemished not only his integrity as a member of the
Bar, but also that of the legal profession. In other words, his conduct fell short of the exacting
standards expected of him as a guardian of law and justice.43

When respondent filed the Petition as counsel for complainant when the truth was otherwise,
she committed a falsehood against the trial court and complainant.

II

Respondent violated Canon 7, Rule 7.03 and Canon 10, Rule 10.01 when she allowed the use
of a forged signature on a petition she prepared and notarized.44

Complainant alleged that her signature on the Petition was forged.45 Respondent merely
denied complainant's allegation.46

The Petition for Declaration of Nullity of Marriage was signed by a certain "CVasco."47 The
records of this case show that complainant has used two signatures. In her identification cards
issued by the University of the East, she used a signature that spelled out "CVasco."48 In her
Complaint-Affidavit against respondent, complainant used a signature that spelled out
"CTamaray."49

A comparison of the signatures appearing on the Petition for Declaration of Nullity of Marriage
and on complainant's identification cards show a difference in the stroke of the letters "c" and
"o." Further, complainant's signatures in the documents50 attached to the records consistently
appear to be of the same height. On the other hand, her alleged signature on the Petition for
Declaration of Nullity of Marriage has a big letter "c."51 Hence, it seems that complainant's
signature on the Petition for Declaration ofNullity of Marriage was forged.

While there is no evidence to prove that respondent forged complainant's signature, the fact
remains that respondent allowed a forged signature to be used on a petition she prepared and
notarized.52 In doing so, respondent violated Canon 7, Rule 7.03 and Canon 10, Rule 10.01.
These canons state:

CANON 7 - A lawyer shall at all times uphold the integrity and dignity of the legal profession,
and support the activities of the integrated bar.

RULE 7.03 - A lawyer shall not engage in conduct that adversely reflects on his fitness to
practice law, nor shall he, whether in public or private life, behave in a scandalous manner to
the discredit of the legal profession.

....

CANON 10 - A lawyer owes candor, fairness and good faith to the court.

RULE 10.01 -A lawyer shall not do any falsehood, nor consent to the doing of any in Court; nor
shall he mislead or allow the Court to be misled by any artifice.
114
In Embido v. Pe, Jr.,53 Assistant Provincial Prosecutor Salvador N. Pe, Jr. was found guilty of
violating Canon 7, Rule 7.03 and was meted the penalty of disbarment for falsifying a court
decision "in a non-existent court proceeding."54 This court discussed that:

Gross immorality, conviction of a crime involving moral turpitude, or fraudulent transactions can
justify a lawyer's disbarment or suspension from the practice of law. Specifically, the deliberate
falsification of the court decision by the respondent was an act that reflected a high degree of
moral turpitude on his part. Worse, the act made a mockery of the administration of justice in
this country, given the purpose of the falsification, which was to mislead a foreign tribunal on
the personal status of a person. He thereby became unworthy of continuing as a member of the
Bar.55

In a similar manner, respondent's act of allowing the use of a forged signature on a petition she
prepared and notarized demonstrates a lack of moral fiber on her part.

Other acts that this court has found violative of Canon 7, Rule 7.03 are: engaging in a scuffle
inside court chambers;56 openly doubting paternity of his own son;57 hurling invectives at a
Clerk of Court;58 harassing occupants of a property;59 using intemperate language;60 and
engaging in an extramarital affair.61

Furthermore, allowing the use of a forged signature on a petition filed before a court is
tantamount to consenting to the commission of a falsehood before courts, in violation of Canon
10.

In Spouses Umaguing v. De Vera,62 this court discussed the importance of Canon 10, Rule
10.01, as follows:

The Lawyer's Oath enjoins every lawyer not only to obey the laws of the land but also to refrain
from doing any falsehood in or out of court or from consenting to the doing of any in court, and
to conduct himself according to the best of his knowledge and discretion with all good fidelity to
the courts as well as to his clients. Every lawyer is a servant of the law, and has to observe and
maintain the rule of law as well as be an exemplar worthy of emulation by others. It is by no
means a coincidence, therefore, that the core values of honesty, integrity, and trustworthiness
are emphatically reiterated by the Code of Professional Responsibility. In this light, Rule 10.01,
Canon 10 of the Code of Professional Responsibility provides that "[a] lawyer shall not do any
falsehood, nor consent to the doing of any in Court; nor shall he mislead, or allow the Court to
be misled by any artifice."63 (Emphasis supplied)

III

This court further finds that respondent violated Canon 17, which states:

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.

Respondent failed to protect the interests of her client when she represented complainant, who
is the opposing party of her client Leomarte Tamaray, in the same case.

The responsibilities of a lawyer under Canon 17 were discussed in Penilla v. Alcid, Jr.:64
115
The legal profession dictates that it is not a mere duty, but an obligation, of a lawyer to accord
the highest degree of fidelity, zeal and fervor in the protection of the client's interest. The most
thorough groundwork and study must be undertaken in order to safeguard the interest of the
client. The honor bestowed on his person to carry the title of a lawyer does not end upon taking
the Lawyer's Oath and signing the Roll of Attorneys. Rather, such honor attaches to him for the
entire duration of his practice of law and carries with it the consequent responsibility of not only
satisfying the basic requirements but also going the extra mile in the protection of the interests
of the client and the pursuit of justice[. ]65

Respondent is reminded of the duties and responsibilities of members of the legal profession,
as discussed in Tenoso v. Echanez:66

Time and again, this Court emphasizes that the practice of law is imbued with public interest
and that "a lawyer owes substantial duties not only to his client, but also to his brethren in the
profession, to the courts, and to the nation, and takes part in one of the most important
functions of the State-the administration of justice-as an officer of the court." Accordingly,
"[l]awyers are bound to maintain not only a high standard of legal proficiency, but also of
morality, honesty, integrity and fair dealing. "67 (Citations omitted)

IV

This court notes that respondent may have violated Canon 15, Rule 15.03 when she entered
her appearance as counsel for complainant68 even though she was engaged as counsel by
Leomarte Tamaray.69 Canon 15, Rule 15.03 of the Code of Professional Responsibility
provides:

CANON 15 - A lawyer shall observe candor, fairness and loyalty in all his dealings and
transactions with his client.

....

Rule 15.03 - A lawyer shall not represent conflicting interests except by written consent of all
concerned given after a full disclosure of the facts.

The rationale for Canon 15 was discussed in Samson v. Era:70

The rule prohibiting conflict of interest was fashioned to prevent situations wherein a lawyer
would be representing a client whose interest is directly adverse to any of his present or former
clients. In the same way, a lawyer may only be allowed to represent a client involving the same
or a substantially related matter that is materially adverse to the former client only if the former
client consents to it after consultation. The rule is grounded in the fiduciary obligation of loyalty.
Throughout the course of a lawyer-client relationship, the lawyer learns all the facts connected
with the client's case, including the weak and strong points of the case. Knowledge and
information gathered in the course of the relationship must be treated as sacred and guarded
with care. It behooves lawyers not only to keep inviolate the client's confidence, but also to
avoid the appearance of treachery and double-dealing, for only then can litigants be
encouraged to entrust their secrets to their lawyers, which is paramount in the administration of
justice. The nature of that relationship is, therefore, one of trust and confidence of the highest
degree .
116
....

. . . The spirit behind this rule is that the client's confidence once given should not be stripped
by the mere expiration of the professional employment.1âwphi1 Even after the severance of
the relation, a lawyer should not do anything that will injuriously affect his former client in any
matter in which the lawyer previously represented the client. Nor should the lawyer disclose or
use any of the client's confidences acquired in the previous relation. In this regard, Canon 17 of
the Code of Professional Responsibility expressly declares that: "A lawyer owes fidelity to the
cause of his client and he shall be mindful of the trust and confidence reposed in him."

The lawyer's highest and most unquestioned duty is to protect the client at all hazards and
costs even to himself. The protection given to the client is perpetual and does not cease with
the termination of the litigation, nor is it affected by the client's ceasing to employ the attorney
and retaining another, or by any other change of relation between them. It even survives the
death of the client.71

The test to determine whether conflict of interest exists was discussed in Hornilla v. Salunat:72

There is conflict of interest when a lawyer represents inconsistent interests of two or more
opposing parties. The test is "whether or not in behalf of one client, it is the lawyer's duty to
fight for an issue or claim, but it is his duty to oppose it for the other client. In brief, if he argues
for one client, this argument will be opposed by him when he argues for the other client." This
rule covers not only cases in which confidential communications have been confided, but also
those in which no confidence has been bestowed or will be used. Also, there is conflict of
interests if the acceptance of the new retainer will require the attorney to perform an act which
will injuriously affect his first client in any matter in which he represents him and also whether
he will be called upon in his new relation to use against his first client any knowledge acquired
through their connection. Another test of the inconsistency of interests is whether the
acceptance of a new relation will prevent an attorney from the full discharge of his duty of
undivided fidelity and loyalty to his client or invite suspicion of unfaithfulness or double dealing
in the performance thereof.73 (Emphasis supplied, citations omitted)

Respondent was engaged by Leomarte Tamaray to be his counsel.74 When the Petition for
Declaration of Nullity of Marriage was filed, respondent signed the Petition as counsel for
complainant.75 If respondent was indeed engaged as counsel by complainant, then there is
conflict of interest, in violation of Canon 15, Rule 15.03.

However, there is nothing on record to show that respondent was engaged as counsel by
complainant. Hence, this court finds that respondent did not commit conflict of interest.

On a final note, Rule 139-B has been amended by Bar Matter No. 1645 dated October 13,
2015. Section 12 of Rule 139-B now provides that:

Rule 139-B. Disbarment and Discipline of Attorneys

....

117
Section 12. Review and recommendation by the Board of Governors.

(a) Every case heard by an investigator shall be reviewed by the IBP Board of Governors
upon the record and evidence transmitted to it by the Investigator with his report.

(b) After its review, the Board, by the vote of a majority of its total membership, shall
recommend to the Supreme Court the dismissal of the complaint or the imposition of
disciplinary action against the respondent. The Board shall issue a resolution setting
forth its findings and recommendations, clearly and distinctly stating the facts and the
reasons on which it is based. The resolution shall be issued within a period not
exceeding thirty (30) days from the next meeting of the Board following the submission of
the Investigator's report.

(c) The Board's resolution, together with the entire records and all evidence presented
and submitted, shall be transmitted to the Supreme Court for final action within ten (10)
days from issuance of the resolution.

(d) Notice of the resolution shall be given to all parties through their counsel, if any. 76

Under the old rule, the Board of Governors of the Integrated Bar of the Philippines was given
the power to "issue a decision"77 if the lawyer complained of was exonerated or meted a
penalty of "less than suspension or disbarment."78 In addition, the case would be deemed
terminated unless an interested party filed a petition before this court.79

The amendments to Rule 139-B is a reiteration that only this court has the power to impose
disciplinary action on members of the bar. The factual findings and recommendations of the
Commission on Bar Discipline and the Board of Governors of the Integrated Bar of the
Philippines are recommendatory, subject to review by this court.80

WHEREFORE, respondent Atty. Deborah Z. Daquis is found GUILTY of violating Canon 1,


Rule 1.01, Canon 7, Rule 7.03, Canon 10, Rule 10.01, and Canon 17 of the Code of
Professional Responsibility.

The charge for violation of Canon 15, Rule 15.03 against respondent Atty. Deborah Z. Daquis
is DISMISSED.

The penalty of DISBARMENT is imposed upon respondent Atty. Deborah Z. Daquis. The
Office of the Bar Confidant is directed to remove the name of Deborah Z. Daquis from the Roll
of Attorneys.

Let a copy of this Resolution be furnished to the Office of the Bar Confidant to be appended to
respondent's personal record as attorney, to the Integrated Bar of the Philippines, and to the
Office of the Court Administrator for dissemination to all courts throughout the country for their
information and guidance.

This Resolution takes effect immediately.

SO ORDERED.

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