A.M. No. 2361 February 9, 1989 LEONILA vs. ATTY. MANUEL L. MELO, respondent.

PER CURIAM: An affidavit-complaint, dated November 11, 1981, was filed by Leonila J. Licuanan with the Office of the Court Administrator on 5 February 1982 against respondent, Atty. Manuel L. Melo, for breach of professional ethics, alleging that respondent, who was her counsel in an ejectment case filed against her tenant, failed to remit to her the rentals collected by respondent on different dates over a twelve-month period, much less did he report to her the receipt of said amounts. It was only after approximately a year from actual receipt that respondent turned over his collections to complainant after the latter, through another counsel, acquired knowledge of the payment and had demanded the same. In his Comment on the complaint, respondent admitted having received the payment of rentals from complainant's tenant, Aida Pineda, as alleged in the complaint, but explained that he kept this matter from the complainant for the purpose of surprising her with his success in collecting the rentals. We forwarded the case to the Office of the Solicitor General, for investigation, report and recommendation. Hearings were conducted and the parties presented their respective evidence. After investigation, the Solicitor General submitted the following Findings and Recommendation: Findings: The issue to be resolved is whether there was unreasonable delay on the part of the respondent in accounting for the funds collected by him for his former client, the complainant herein, for which unprofessional conduct respondent should be disciplined. A lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. Under paragraph 11 of the Canons of Legal Ethics, he is obligated to report promptly the money of client that has come to his possession and should not commingle it with his private property or use it for his personal purpose without his client's consent viz: Money of the client or other trust property coming into the possession of the lawyer should be reported promptly, and except with the client's know and consent should not be commingled with his private or be used by him. And paragraph 32 of the Canons of Legal Ethics further requires a lawyer to maintain a reputation for honesty and fidelity to private trust: ... But above all, a lawyer will find his highest honor in a deserved reputation for fidelity to private trust and to public duty, as an honest man and as a patriotic and loyal citizen. In the instant case, respondent failed to observe his oath of office. It is undisputed that the relation of attorney and client existed between Licuanan and Melo at the time the incident in question took place. The records disclose that on August 8, 1979, respondent, as Licuanan's attorney, obtained judgment in Licuanan's favor against Aida Pineda whereby the latter was directed by the City Court of Manila to pay Licuanan all her monthly rentals from October, 1978 and succeeding months thereafter. When several months had elapsed without them hearing a word from Pineda, respondent decided to send her a letter on February 4, 1980, demanding that she pay the monthly rental of her apartment otherwise he will be constrained to take the necessary legal action against her to protect the interest of his client (Exhibit "A", p. 8, record). On February 11, 1980, Pineda yielded to the demand of Melo. She went to respondent's office and paid him P3,060.00 for which respondent gave her a receipt for the said amount representing her rental payments for October, 1978 to February, 1980 at the rate of P180.00 per month (Exh. "B", p. 9, Ibid.) At the end of March 31,1980, Pineda again went back to respondent and paid the rentals of her apartment for the months of March and April, 1980 in the sum of P360.00 (Exh. "C" p. 10, Ibid.). Not only that, respondent again received from Pineda on June 30, 1980 rental payments covering the months of May, June and July, 1980 in the total sum of J. LICUANAN, complainant,

P540.00 (Exh. "D" p. 11, Ibid.). And, on September 29, 1980, he received and issued Pineda a receipt for P540.00 covering rental payments for the months of August, September and October, 1980. (Exh. "E", Ibid.). After four months had elapsed, or on January 23, 1981, he collected again from Pineda the total sum of P720.00 covering the months of October, November, December, 1980 and January 1981 (Exh. "F", p. 12, Ibid.). During the entire twelve-month period that respondent had been receiving the said rental payments of Pineda, he did not bother to inform or report to complainant about the said payments and instead unnecessarily retained the money. He allowed the money to accumulate for a year and kept complainant in the dark as to the progress of the case. He did not even attempt to tell her about the money that had come into his possession notwithstanding the fact that complainant used to call him and inquire regarding the case (pp. 14-15, tsn., Sept. 10, 1985). It was only when Atty. Ponciano B. Jacinto, the new counsel retained by complainant, wrote respondent a letter on May 4, 1981, advising him to surrender the money to complainant that he accounted for it (Exh. "H", p. 15, Ibid.). But this was rather late because as early as April 27, 1981, complainant, not knowing that respondent had been receiving the rental payments of Pineda, instituted an administrative case against her (Aida Pineda) before the Chief of the Philippine Tuberculosis Society accusing her of "moral turpitude" arising from her alleged failure to pay the rent of her apartment as ordered by the City Court of Manila in Civil Case No. 037276 and claiming that she has ignored and refused to pay her just obligation (Exh. "G", p. 14, Ibid.). This led therefore Pineda to bring an action against her (Licuanan) for damages before the then Court of First Instance of Manila, for she allegedly suffered mental anguish, besmirched reputation, wounded feelings and social humiliation arising from the unfounded administrative case Licuanan filed against her (Aida Pineda), since as borne out by the records, she had been paying her obligation religiously to the lawyer of Licuanan, herein respondent (pp. 48-52, record). Clearly, this unfortunate incident would not have happened had respondent been only true to his oath as a lawyer, i.e., to be honest and candid towards his client. Thus, we find it hard to believe respondent's defense that he kept the money of complainant for a year merely because he wanted to surprise her with his success in collecting the rental payments from Pineda. On the contrary, it is very much discernible that he did not surrender immediately the money to complainant because he was using it for his own benefit. Common sense dictates that by unnecessarily withholding the money of complainant for such length of time, respondent deprived her of the use of the same. It is therefore too credulous to believe his explanation, which is flimsy and incredible Respondent's actuation casts doubt on his honesty and integrity. He must know that the "highly fiduciary" and "confidential relation" of attorney and client requires that the attorney should promptly account for all funds and property received or held by him for the client's benefit, and failure to do so constitutes professional misconduct, as succinctly held by the Honorable Supreme Court in the case of Fermina Legaspi Daroy, et al., vs. Atty. Ramon Chaves Legaspi, Adm. Case No. 936, July 25, 1975, 65 SCRA 304, to wit: A lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. He is obligated to report promptly the money of his clients that has come into his possession. He should not commingle it with his private property or use it for his personal purposes without his client's consent. He should maintain a reputation for honesty and fidelity to private trust (Pars. 11 and 32, Canons of Legal Ethics). Money collected by a lawyer in pursuance of a judgment in favor of his clients is held in trust and must be immediately turned over to them (Aya vs. Bigonia, 57 Phil. 8, 11). xxx xxx xxx A lawyer may be disbarred for any deceit, malpractice or other gross misconduct in his office as attorney or for any violation of the lawyer's oath (Ibid, sec. 27). The relation between an attorney and his client is highly fiduciary in its nature and of a very delicate, exacting and confidential in character, requiring a high degree of fidelity and good faith (7 Am. Jur. 2d 105). In view of that special relationship, 'lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct. The fact that a lawyer has a lien for fees on money in his hands collected for his clients does not relieve him from the duty of promptly accounting for the funds received. (Emphasis supplied).

In fine, we are convinced that respondent is guilty of breach of trust reposed in him by his client. Not only has he degraded himself but as an unfaithful lawyer he has besmirched the fair name of an honorable profession (In re Paraiso, 41 Phil. 24, 25; In re David, 84 Phil. 627; Manaloto vs. Reyes, Adm. Case No. 503, October 29, 1965, 15 SCRA 131). By his deceitful conduct, he placed his client in jeopardy by becoming a defendant in a damage suit; thus, instead of being a help to his client, he became the cause of her misery. He, therefore, deserves a severe punishment for it. (Aya vs. Bigornia, 57 Phil. 8, 11; In re Bamberger, April 17, 1924, 49 Phil. 962; Daroy, et al., vs. Atty. Ramon Chaves Legaspi, supra.) Clearly, respondent is guilty of professional misconduct in the discharge of his duty as a lawyer. RECOMMENDATION WHEREFORE, we respectfully recommend that respondent be suspended from the practice of law for a period of not less than one (1) year, and that he be strongly admonished to strictly and faithfully observe his duties to his clients. (pp. 78-85, Rollo) We find the foregoing findings well considered and adopt the same but differ with the recommendation. The actuations of respondent in retaining for his personal benefit over a one-year period, the amount of P5,220.00 received by him on behalf of his client, the complainant herein, depriving her of its use, and withholding information on the same despite inquiries made by her, is glaringly a breach of the Lawyer's Oath to which he swore observance, and an evident transgression of the Canons of Professional Ethics particularly: 11. DEALING WITH TRUST PROPERTY The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client. Money of the client or collected for the client of other trust property coming into the possession of the lawyer should be reported and accounted for promptly, and should not under any circumstance be commingled with his own or be used by him. * Indeed, by his professional misconduct, respondent has breached the trust reposed in him by his client. He has shown himself unfit for the confidence and trust which should characterize an attorney-client relationship and the practice of law. By reason thereof complainant was compelled to file a groundless suit against her tenant for non-payment of rentals thereby exposing her to jeopardy by becoming a defendant in a damage suit filed by said tenant against her By force of circumstances, complainant was further compelled to engage the services of another counsel in order to recover the amount rightfully due her but which respondent had unjustifiedly withheld from her. Respondent's unprofessional actuations considered, we are constrained to find him guilty of deceit, malpractice and gross misconduct in office. He has displayed lack of honesty and good moral character. He has violated his oath not to delay any man for money or malice, besmirched the name of an honorable profession and has proven himself unworthy of the trust reposed in him by law as an officer of the Court. He deserves the severest punishment. WHEREFORE, consistent with the crying need to maintain the high traditions and standards of the legal profession and to preserve undiminished public faith in attorneys-at-law, the Court Resolved to DISBAR respondent, Atty. Manuel L. Melo, from the practice of law. His name is hereby ordered stricken from the Roll of Attorneys. Copies of this Resolution shall be circulated to all Courts of the country and spread on the personal record of respondent Atty. Manuel L. Melo. SO ORDERED.

[A.C. No. 4349. December 22, 1997] LOURDES R. BUSIOS, complainant, vs. ATTY. FRANCISCO RICAFORT, respondent. RESOLUTION
PER CURIAM: In a sworn complaint for disbarment dated 31 October 1994 but received by us on 21 November 1994, complainant Lourdes R. Busios charged respondent Atty. Francisco Ricafort, a practicing lawyer in Oas, Albay, with having committed the crime of estafa under Article 315 (1) (b) of the Revised Penal Code by misappropriating the sum of P32,000.00. Of this amount,P30,000.00 was entrusted to respondent for deposit in the bank account of complainants husband, while P2,000.00 represented the amount respondent demanded from complainant supposedly for a bond in Civil Case No. 5814, when no such bond was required. In the resolution of 18 January 1995, we required respondent to comment on the complaint. Despite his receipt of a copy of the resolution, respondent did not comply, compelling us in the resolution of 17 July 1995 to require him to show cause why he should not be disciplinarily dealt with or held in contempt for such failure. Again respondent failed to comply. Hence in the resolution of 25 September 1996, we ordered him once more to file his comment within ten (10) days from notice, and within the same period, to pay a fine of P1,000.00 or suffer imprisonment of ten (10) days should he fail to so pay. In a Compliance and Motion dated 24 October 196, respondent transmitted the fine of P1,000.00 by way of postal money order, but asked for five (5) days from date to file his comment. As respondent still failed to so file, we then declared, in the resolution of 2 December 1996, that respondent was deemed to have waived his right to file his comment, and referred the complaint to the Office of the Bar Confidant for reception of complainants evidence and submission of a report and recommendation thereon. On 16 October 1997, the Bar Confidant, Atty. Erlinda C. Verzosa, submitted her Report and Recommendation, material portions of which read as follows: Respondent Atty. Francisco Ricafort stands charged with having misappropriated the sum of P30,000.00 intended for his clients as well as having deceived his clients into giving him the sum of P2,000.00 purportedly to be deposited as a bond in the case he was handling. Complainant Lourdes R. Busios is one of the heirs of Pedro Rodrigo who are the defendants in Civil Case No. 1584, apparently a case involving the properties of the late Pedro Rodrigo, father of herein complainant. Respondent was the counsel of record for the defendants in the said case. On July 10, 1994, complainant representing her co-heirs, executed a special power of attorney, appointing and constituting respondent and/or Pedro Rodrigo, Jr. to be her true and lawful attorney-in-fact with the following powers: 1. To attend to and represent me, testify, or otherwise enter into compromise during the pre-trial stage or other proceedings in Civil Case No. 1584, entitled Heirs of Rosario Rodrigo-Reantaso, vs. Heirs of Pedro Rodrigo Sr., et al. now pending before the Regional Trial Court, Branch 12, Ligao, Albay; 2 To demand, collect and receipt for any and all sums of money that may now be deposited in said court by the defendant Oas Standard High School or hereafter be deposited by said defendant, due and owing to me or said Heirs of Pedro Rodrigo Sr., representing the rentals of said defendants for the lease of the property involved in said case; and 3 To sign, authenticate, issue and deliver any and all deeds, instruments, papers and other records necessary and pertinent to the above stated transactions. On August 10, 1994, the Regional Trial Court of Ligao, Albay, Br. 12 issued an order, directing the Clerk of Court to release any and all deposits of rentals made in connection with this case (Civil Case No. 1584) to the defendants Heirs of Pedro Rodrigo through Lourdes Rodrigo Businos who were receiving the rentals from Oas Standard High School prior to the institution of this case. In a letter dated August 10, 1994, the Clerk of Court of RTC, Ligao informed herein complainant that respondent had already received the rental deposit of P25,000.00 on eve date (see Annex C to the complaint). Respondent also received from Oas Standard High School on August 17, 1994 the sum of P5,000.00 as payment for rental of school site for the month of July 1994 (See Annex D to the complaint). The said sum was entrusted to respondent with an obligation on his part to deposit the same in the account of complainants husband at PNB, Ligao Branch. Instead, however, of depositing the money, respondent converted the money to his own personal use, and despite several demands, he failed to return the same to complainant. She was thus constrained to file a criminal case for estafa and an administrative case

for disbarment against him. Thus, on November 21, 1994, complainant filed the instant administrative case against respondent. Complainant further accuses respondent for demanding and receiving P2,000.00 from her which he said will be used for the bond in Civil Case No. 1584, but said amount was never used as intended since no bond was required in the said case. Thus, respondent merely pocketed the said amount. xxx xxx xxx

Complainant, upon questioning by the undersigned, testified that: She authorized respondent to withdraw the money amounting to P35,000.00 representing the rental fee paid by Oas Standard High School from the Clerk of Court, with the instruction to deposit the same in her savings account at the PNB. After she was informed by the court that respondent had already withdrawn the money, she expected in vain to receive the money a week later in Tarlac as respondent failed to effect the deposit of the said sum in her account. She demanded from him to give her the money, but he informed her that he had already spent the same. He promised, though to pay her the said amount. (pp. 7-8, TSN, Reception of Evidence, April 18, 1997). She clarified that respondent withdrew only the sum of P30,000.00 from the Clerk of Court, while the P5,000.00 was withdrawn by respondent from Oas Standard High School (TSN, p. 8). Despite several demands, both from her and her lawyer, respondent failed to make good his promise to give her the money he withdrew from the Clerk of Court and Oas Standard High School (TSN, pp. 11-13). She was then constrained to file a criminal case for estafa and an administrative case against respondent sometime in November of 1994 to recover the money in question (TSN, pp. 14-16).On their third hearing of the estafa case sometime in 1995, respondent came with the money and paid complainant inside the courtroom (TSN, pp. 15, 19-20). Because of this development, she did not anymore pursue the estafa case against respondent (TSN, p. 17). She has no intention, however, of withdrawing the instant complaint (TSN, p. 18). She further testified that respondent demanded from her the sum of P2,000.00 for the bond required in the civil case. (TSN, p. 18). Respondent did not give her a receipt for the said amount. (TSN, p. 19). Respondent gave back the P2,000.00 to complainant. He paid complainant a total of P60,000.00 representing the money he withdrew from the Clerk of Court and Oas Standard High School, the P2,000.00 he got from complainant and attorneys fees, which he undertook to foot as a way of settlement. (TSN, p. 19). Although complainant failed to submit the original or certified true copies of the documents in support of her complaint against respondent, respondents repeated failure to comply with several resolutions of the Court requiring him to comment on the complaint lends credence to the allegations of the complainant. It manifests his tacit admission thereto. We have no other alternative, therefore, but to accept the said documents at their [sic] face value. There is no doubt that respondent is guilty of having used the money of his clients without their consent. As the evidentiary value of the documents should be given more weight than the oral testimony of complainant, we place the amount illegally used by respondent at P30,000.00 and not P35,000.00 as claimed by complainant. Respondents illegal use of his clients money is made more manifest [by] his letters to complainant, all promising the latter to make good his promise to pay the money he withdrew from the Clerk of Court and Oas Standard High School (See Annex E to the complaint). It bears emphasis that a lawyer, under his oath, pledges himself not to delay any man for money or malice and is bound to conduct himself with all good fidelity to his clients. He is obligated to report promptly the money of his client that has come into his possession. He should not commingle it with his private property or use it for his personal purposes without his cllients [sic] consent. He should maintain a reputation for honesty and fidelity to private trust (Daroy vs. Legaspi, 65 SCRA 304). Money collected by a lawyer in pursuance of a judgment in favor of his clients is held in trust and must be immediately turned over to them (Aya vs. Bigornia, 57 Phil. 8). Respondent, by converting the money of his clients to his own personal use without their consent , and by deceiving the complainant into giving him the amount of P2,000.00 purportedly to be used as a bond which was not required, is, undoubtedly, guilty of deceit, malpractice and gross misconduct. By so doing, he betrays the confidence reposed in him by his clients. Not only has he degraded himself but as an unfaithful lawyer he has besmirched the fair name of an honorable profession.

His belated payment of the amount he illegally used and fraudulently obtained do not relieve him from any liability if only to impress upon him that the relation between an attorney and his client is highly fiduciary in its nature and of a very delicate, exacting and confidential character, requiring high degree of fidelity and good faith. In view of that special relationship, lawyers are bound to promptly account for money or property received by them on behalf of their clients and failure to do so constitutes professional misconduct (Daroy vs. Legaspi, supra). Moreover, his repeated failure to comply with the resolutions of the Court, requiring him to comment on the complaint indicate the high degree of irresponsibility of respondent. PREMISES CONSIDERED, it is respectfully recommended that respondent Atty.Francisco Ricafort be SUSPENDED from the practice of law for a period of ONE (1) YEAR. While the findings are in order, the penalty recommended is not commensurate to respondents infractions. Plainly, respondent breached Section 25 of Rule 138 of the Rules of Court, Rule 1.01 of Canon 1 and Rules 16.01, 16.02 and 16.03 of Canon 16 of the Code of Professional Responsibility which read: SEC. 25 Unlawful retention of clients funds; contempt.--When an attorney unjustly retains in his hands money of his client after it has been demanded he may be punished for contempt as an officer of the Court who has misbehaved in his official transactions; but proceedings under this section shall not be a bar to a criminal prosecution. CANON 1- A LAWYER 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. CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS POSSESSION. Rule 16.01-- A lawyer shall account for all money or property collected or received for or from the client. Rule 16.02-- A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him. Rule 16.03-- A lawyer shall deliver the funds and property of his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court. Respondents transgressions manifested dishonesty and amounted to grave misconduct and grossly unethical behavior which caused dishonor, not merely to respondent, but to the noble profession to which he belongs, for it cannot be denied that the respect of litigants for the profession is inexorably diminished whenever a member of the Bar betrays their trust and confidence. This Court has been nothing short of exacting in its demand for integrity and good moral character from members of the Bar. In Marcelo v. Javier (A.C. No. 3248, 18 September 1992, 214 SCRA 1, 12-13), reiterated in Fernandez v. Grecia, (A.C. No. 3694, 17 June 1993, 223 SCRA 425, 434), this Court declared: A lawyer shall at all times uphold the integrity and dignity of the legal profession. The trust and confidence necessarily reposed by clients require in the attorney a high standard and appreciation of his duty to his clients, his profession, the courts and the public. The bar should maintain a high standard of legal proficiency as well as of honesty and fair dealing . Generally speaking, a lawyer can do honor to the legal profession by faithfully performing his duties to society, to the bar, to the courts and to his clients. To this end, nothing should be done by any member of the legal fraternity which might tend to lessen in any degree the confidence of the public in the fidelity, honesty and integrity of the profession. Here, respondent chose to forget that by swearing the lawyers oath, he became a guardian of truth and the rule of law and an indispensable instrument in the fair and impartial administration of justice -- a vital function of democracy a failure of which is disastrous to society.

Any departure from the path which a lawyer must follow as demanded by the virtues of his profession shall not be tolerated by this Court as the disciplining authority. This is specially so, as here, where respondent even deliberately defied the lawful orders of the Court for him to file his comment on the complaint, thereby transgressing Canon 11 of the Code of Professional Responsibility which requires a lawyer to observe and maintain the respect due the courts. WHEREFORE, for dishonesty, grave misconduct, grossly unethical behavior in palpable disregard of Section 25 of Rule 138 of the Rules of Court, Rule 1.01 of Canon 1 and Rules 16.01, 16.02 and 16.03 of Canon 16 of the Code of Professional Responsibility, aggravated by a violation of Canon 11 thereof, and consistent with the urgent need to maintain the esteemed traditions and high standards of the legal profession and to preserve undiminished public faith in the members of the Philippine Bar, the Court Resolves to DISBAR respondent ATTY. FRANCISCO RICAFORT from the practice law. His name is hereby stricken from the Roll of Attorneys. This resolution shall take effect immediately and copies thereof furnished the Office of the Bar Confidant, to be appended to respondents personal record; the National Office and the Albay Chapter of the Integrated bar of the Philippines; the Philippines Judges Association; and all courts of the land for their information and guidance. SO ORDERED.

A.C. No. 5162 March 20, 2003 EMILIANO COURT TOWNHOUSES HOMEOWNERS ASSOCIATION, complainant, vs. ATTY. MICHAEL DIONEDA, respondent.
BELLOSILLO, J.: A LAWYER OWES FIDELITY to the cause of his client mindful always of the trust and confidence reposed in him. An 2 attorney-at-law must serve his client with competence and diligence at all times, and never neglect a legal matter 3 entrusted to him, for it is his sworn duty to delay no man for money or malice and to conduct himself in a proper manner not just to his client, but also to the court, the legal profession and society at large. This is an administrative complaint for disbarment filed by the EMILIANO COURT TOWNHOUSES HOMEOWNERS ASSOCIATION (ECTHA) against ATTY. MICHAEL DIONEDA. On 29 September 1997 ECTHA and respondent Dioneda entered into a Retainers Agreement wherein respondent lawyer agreed to handle the case of the complainant against LVF Realty, Mr. Tinsay and BPI Family Savings Bank by way of filing a Complaint-in-Intervention in the Regional Trial Court of Valenzuela, Metro Manila, docketed as Civil Case No. 4 4890-V-96, for P20,000.00 as attorneys fees and P1,000.00 as appearance fee per hearing. It was further agreed that 5 respondent lawyer would update the complaint and work on the development of the case. In its Complaint ECTHA alleged that Atty. Dioneda, after receiving the amount of P20,000.00, did nothing for the development of the case and to update the complaint on the status of ECTHAs intended Complaint-in-Intervention. Due to the insistence of the members of the Association, Mr. Fernando Garcia, ECTHA President, was compelled to check the records of the case in the Regional Trial Court of Valenzuela, Branch 75, and secured a certification from the Branch 6 Clerk of Court dated 5 July 1999 that there was no motion for intervention filed in the case. On behalf of ECTHA Mr. Garcia repeatedly made oral demands for respondent to return the amount of P20,000.00 because he did not do anything to protect the rights and interests of the Association. Respondent Dioneda only made oral promises to pay, and in August 1999 he could no longer be contacted and the personnel in his office simply made 7 excuses to Mr. Garcia. Through Mr. Garcia ECTHA referred the matter to Atty. Antonio L. Umali, who contacted respondent by telephone. Still, no response was made by respondent. On 18 August 1999 a letter dated 17 August 1999 was sent to Dioneda, but again 8 there was no response. In his Comment filed before this Court, respondent Dioneda admitted that he and ECTHA entered into a Retainers Agreement; however, he averred that the Agreement did not cover only the Complaint-in-Intervention as adverted to by the complainant. It also included the case before the Housing and Land Use Regulatory Board (HLURB) that the complainant filed against the developer of Emiliano Court Townhouses who refused to release to the members of the ECTHA their respective Deeds of Sale.
1

At the time his legal services were engaged, Atty. Dioneda alleged that there was already a decision in favor of the complainant. Thereafter, respondent entered his appearance and filed a Motion for Execution with the HLURB. According to respondent Mr. Garcia would go with him and follow up the issuance of the Writ of Execution with the HLURB National Office. Respondent Dioneda further alleged that he wanted to pursue the Writ of Execution since he would attach it to the Complaint-in-Intervention, and that this was explained to the members of ECTHA. Respondent claimed that there was delay in the filing of the Complaint-in-Intervention because there was delay in the issuance by the HLURB of the Writ of Execution. Respondent further averred that Mr. Garcia would call him at his residence and "spew invectives" at him. There would be no day that Mr. Garcia would not call respondent and hurl expletives at him and his parents. Respondent denied the allegation that ECTHA had made several demands on him and that he promised to pay sometime August 1999. After receiving the demand letter of ECTHA respondent immediately called up the residence of Mr. Garcia and informed him that he could get the money and the records of the case at his office. However, respondent informed ECTHA that a portion of the amount to be returned would be deducted as a reasonable fee for the efforts exerted by him. According to respondent, no representative of the complainant showed up at his law office. Respondent Dioneda denied the charge that he never attended to the case of the complainant and that he did nothing to protect the interest of its members. He asserted that there was no intention on his part to defraud them. The matter was referred to the Integrated Bar of the Philippines for investigation. Hearings were set on at least five (5) separate dates. Despite due notice, respondent never attended the IBP administrative hearings. Thus the IBP Commission on Bar Discipline allowed the presentation of complainants evidence ex-parte against respondent on the 14 9 December 2001 hearing. On 13 February 2002 the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP), through the designated Commissioner, recommended that respondent be found guilty of violating the Code of Professional 10 Responsibility, specifically Canons 17 and 18. The IBP held that the act of receiving professional fees and thereafter failing to render the corresponding legal service is a violation of the Canons. The penalty of three (3) months suspension from the practice of law and an order for Dioneda to return the amount of P20,000.00 to his client in the interest of justice were recommended. On 29 June 2002, Resolution No. XV-2002-252 was passed by the IBP Board of Governors adopting and approving the report and recommendation of the Investigating Commissioner. The sole issue in this case is whether Atty. Dioneda violated Canons 17 and 18 of the Code of Professional Responsibility. Admittedly respondent received the amount of P20,000.00 as acceptance fee for handling a case to be filed in behalf of ECTHA. Despite receipt of the aforementioned fee, respondent allegedly failed to render the corresponding legal services to the complainant. We agree with the Report of IBP Commissioner Wilfredo E.J.E. Reyes as approved and adopted by the IBP Board of Governors. The Complaint-in-Intervention was never filed and despite the pronouncement of respondent that he would return the attorneys fees to complainant, he never did. The issuance of the Writ of Execution in the HLURB should never have been a requirement imposed by respondent before a Complaint-in-Intervention could be filed. Before the IBP Commission on Bar Discipline, respondent Dioneda did not attend a single hearing to defend himself. Despite due notice, he did not attend the hearings scheduled on 19 March, 9 May, 20 June, 8 August and 14 December 2001. The parties were ordered to submit their respective position papers in the Order of 9 May 2001 of the CBD-IBP. Respondent never complied with the Order. Respondents lamentable attitude towards his clients case is clearly evident from his apparent disinterest in his own case for disbarment. Dioneda never bothered to present evidence in his defense. He disregarded all notices sent to him by the IBP Commission on Bar Discipline, which were personally served at his office address. He never appeared before the Commission despite several opportunities to do so and explain his side. It is reasonable to conclude that under the doctrine of res ipsa loquitur, respondent committed an infringement of ethical standards. The act of receiving money as acceptance fee for legal services in handling the case of complainant ECTHA against LVF Realty, Mr. Tinsay and BPI Family Bank and subsequently failing to render such service is a clear violation of Canons 17 and 18 of the Code of Professional Responsibility. Not only that. The acts of inexcusable negligence in legal

matters entrusted to him and disloyalty to his client constitute major breaches of respondents oath as a lawyer. acts that are inimical to his clients interests render respondent liable.

11

These

A member of the legal profession owes his client entire devotion to his genuine interest, warm zeal in the maintenance 12 and defense of his rights and the exertion of his utmost learning and ability. Public interest demands that an attorney exert his best efforts and ability to preserve his clients cause, for the unwavering loyalty displayed to his client likewise serves the ends of justice. Verily, the entrusted privilege to practice law carries with it the corresponding duties not only to the client but also to the court, to the bar and to the public. A lawyers inability to properly discharge his duty to his client may also mean a violation of his correlative obligations to the court, to his profession and to the general public. The duty of a lawyer to safeguard his clients interests commences from his retainer until his effective discharge from the case or the final disposition of the entire subject matter of litigation. Acceptance of money from a client establishes an attorney-client relationship and gives rise to the duty of fidelity to the clients cause. The canons of the legal profession require that once an attorney agrees to handle a case, he should undertake the task with zeal, care and utmost devotion. Indeed, respondent neglected a legal matter entrusted to him by failing to file theComplaint-in-Intervention he undertook to handle, thus making him liable under Rule 18.03 of Canon 18. In Santos v. Lazaro this Court recognized Rule 18.03 of the Code of Professional Responsibility as a basic postulate in legal ethics stating that when a lawyer takes a clients cause, he covenants that he will exercise due diligence in 13 protecting his rights. The failure to exercise that degree of vigilance and attention expected of a good father of a family makes such lawyer unworthy of the trust reposed in him by his client and makes him answerable not just to his client but 14 also to the legal profession, the courts and society. However, the recommended penalty by the IBP is not commensurate to the acts complained of. Jurisprudence shows that heavier sanctions have been imposed for ethical violations of this nature, taking into consideration the gravity of the offense and the necessity of preserving the integrity of the legal profession. Following the latest rulings of this Court on disciplinary proceedings against erring attorneys, those found guilty of the same or similar acts were suspended for not less than six (6) months from the practice of law. The facts of Sencio v. Calvadores bear a striking similarity to the present case. The respondent lawyer in Senciodid not return the money to the complainant after a demand therefor was made following his failure to file the case. This Court took to task the respondents attitude of not answering the complaint and in deliberately disregarding the orders and notices of the IBP on many occasions, holding that this attitude showed a character or disposition which stains the nobility 16 of the legal profession as he chose not to appear at the scheduled hearings despite due notice and warnings given. The 17 IBP-appointed Commissioner had no other recourse but to receive the evidence of the complainant ex-parte. Accordingly, the respondent in Sencio was found guilty of violation of the lawyers oath, malpractice and gross misconduct, suspended for six (6) months, and ordered to return to his client the amount of P12,000.00 with interest at 18 12% per annum from the date of the promulgation of the resolution until the return of the amount. This Court in Garcia v. Manuel suspended the respondent lawyer from the practice of law for six (6) months and ordered 19 him to render an accounting of all monies he received from the complainant. The counselor-at-law was found guilty of gross misconduct, especially for ineffectively handling the case of his client and failing to return the money given by that same client. In Rabanal v. Tugade and Galen v. Paguirigan, the respondent lawyers who failed to file a brief to the detriment of their respective clients were suspended by this Court for six (6) months on the first offense. The respondent attorney in Aromin v. Boncavil was found to have violated Canons 15, 17 and 18 of the Code of 22 Professional Responsibility. He was suspended for six (6) months and warned that a repetition of a similar offense would be dealt with more severely. As to the amount of Atty. Dionedas compensation for his legal services, the general rule as to the conclusiveness of a valid written contract fixing attorneys fees cannot find application in the case at bar. This is due largely to the complainants request for a full refund of the attorneys fees given, and the respondents counter-proposal that a portion of the amount be deducted as a reasonable fee for the efforts exerted by him. In a situation where both parties are deemed to have impliedly disregarded the contract and placed themselves in the position as though there was no express 23 stipulation as to the attorneys fees, the lawyers compensation shall be determined on the basis of quantum meruit.
20 21 15

Despite this settled principle of law on the compensation of an attorney for legal services, we rule against respondent lawyer in the present case. To deserve compensation for his legal services based on quantum meruit, respondent Dioneda must prove by substantial evidence that he is entitled to a reasonable fee for his efforts in pursuing the complainants case with the Court taking into 24 account certain factors in fixing the amount of his fees. However, due to respondents conspicuous absence at the administrative hearings for his disbarment set by the IBPs Commission on Bar Discipline on at least five (5) different occasions, and the apparent lack of findings of fact to support the position of respondent, evidence required to establish attorneys fees was never adduced. For having missed several opportunities to present evidence in his favor without any satisfactory explanation as to his non-appearance, we are constrained to deny him compensation for his legal services on the basis of quantum meruit due to the lack of any factual basis to determine the value of his work as complainants counsel. Finally, Rivera v. Corral reiterates the purpose of administrative cases against lawyers in this manner The primary objective of administrative cases against lawyers is not only to punish and discipline the erring individual lawyers but also to safeguard the administration of justice by protecting the courts and the public from the misconduct of lawyers, and to remove from the legal profession persons whose utter disregard of their lawyer's oath has proven them unfit to continue discharging the trust reposed in them as members of the bar. A lawyer may be disbarred or suspended for misconduct, whether in his professional or private capacity, which shows him to be wanting in moral character, honesty, probity and good demeanor or unworthy to continue as an officer of the court. It must be stressed that the power to discipline advocates of the law should be exercised with extreme care, primarily on the notion of preserving the nobility of the law as a profession rather than on the incidental purpose of vindicating the rights of private parties against erring lawyers. The indispensable duty of this Court as the guardian of the bench and bar remains that of maintaining the peoples respect for the rule of law and the efficient administration of justice, while at the same time restoring the communitys faith in the legal profession. WHEREFORE, respondent Atty. Michael Dioneda is SUSPENDED from the practice of law for six (6) months, which shall take effect from the date of notice of receipt of the finality of this Decision, with a WARNING that repetition of the same or similar acts will merit a more severe penalty, and is ORDERED to RETURN to complainant Emiliano Court Townhouses Homeowners Association the amount of Twenty Thousand Pesos (P20,000.00), with interest of twelve percent (12%) per annum from the date of promulgation of this Decision until the full amount as directed, is returned. Let copy of this Decision be furnished all courts of the land, the Integrated Bar of the Philippines, the Office of the Bar Confidant, and entered into respondents personal records as an attorney and as a member of the Philippine Bar. SO ORDERED.
25

A.C. No. 3294 February 17, 1993 MARIO S. MARIVELES, complainant, vs. ATTY. ODILON C. MALLARI, respondent.
Rodolfo B. Ta-asan for complainant.

PER CURIAM: On January 11, 1989, Mario S. Mariveles of Davao City filed an administrative complaint against his former counsel, Attorney Odilon C. Mallari, whose legal services he had engaged in 1984 to handle his defense in Criminal Case No. 6608 of the Regional Trial Court of Davao City where he was charged with violation of B.P. Blg. 22, otherwise known as the Bouncing Checks Law. After an adverse decision was rendered on December 26, 1986, Mariveles instructed Attorney Mallari to appeal the trial court's decision to the Court of Appeals, which the respondent did.

However, in the Court of Appeals, despite numerous extensions of time, totalling 245 days, which he obtained from the Court, Attorney Mallari failed to file the appellant's brief, resulting in the dismissal of the appeal. Complainant discovered his lawyer's desertion only when he was subpoenaed by the trial court to appear before it for the execution of the decision which had become final. Through new counsel, complainant filed a Petition for Reinstatement of Appeal, Cancellation of Entry of Judgment and Admission of Appellant's Brief in CA-G.R. CR No. 04482, but it was denied by the appellate court. He sought relief in this court (G.R. No. 85964, "Mario S. Mariveles vs. Court of Appeal, et al.") which, on March 13, 1989, granted his petition, ordered the Court of Appeals to cancel the entry of judgment in CA-G.R. CR No. 04482, reinstate the appeal, and admit the appellant's brief filed by his new counsel. The Court said: It is true that the failure of counsel to file brief for the appellant which led to the dismissal of the appeal does not necessarily warrant the reinstatement thereof. However, where the negligence of counsel is so great that the rights of accused are prejudiced and he is prevented from presenting his defense, especially where the appellant raises issues which place in serious doubt the correctness of the trial court's judgment of conviction, the aforesaid rule must not be rigidly applied to avoid a miscarriage of justice. These teachings of jurisprudence are present in the case at bar. On the first aspect, the failure of petitioner's former counsel to file the brief, for reasons unknown and without any cause imputable to petitioner, amounted to deliberate abandonment of his client's interest and justifies reinstatement with consequent due consideration of petitioner's appeal through a new counsel. (pp. 106-107, Rollo). On February 15, 1989, the administrative complaint was referred to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation. The IBP's Committee on Bar Discipline investigated the complaint and held hearings. On March 3, 1992, it submitted to this Court a report/resolution finding: In sum, what was committed by the respondent is a blatant violation of our Code of Professional Responsibility. xxx xxx xxx Rule 12.03 A lawyer shall not, after obtaining extensions of time to file pleadings, memoranda or briefs, let the period lapse without submitting the same or offering an explanation for his failure to do so. Rule 18.03 A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable. Suffice it to state that a lawyer has no business practicing his profession if in the course of that practice, he will eventually wreck and destroy the future and reputation of his client and thus disgrace the law profession. The last thing that his peers in the law profession and the Integrated Bar of the Philippines would do is to disrobe a member of the profession, for he has worked for the attainment of his career burning the midnight oil throughout school and passing the bar. The undersigned, however, could not find any mitigating circumstances to recommend a lighter penalty. Disbarment is the only recourse to remove a rotten apple if only to instill and maintain the respect and confidence of all and sundry to the noble profession. (pp. 249-250, Rollo) The Court concurs with the above observations. The respondent demonstrated not only appalling indifference and lack of responsibility to the courts and his client but also a shameless disregard for his duties as a lawyer. He is unfit for membership in this noble profession. WHEREFORE, the Court finds respondent Attorney Odilon C. Mallari guilty of abandonment and dereliction of duty toward his client and hereby orders him DISBARRED from the legal profession and to immediately cease and desist from the

practice of law. Let the Office of the Court Administrator and the Executive Judges of the Ninth, Tenth, Eleventh and Twelfth Judicial Regions, be furnished with copies of this resolution for dissemination to all the courts in those regions. SO ORDERED.

ELSIE B. AROMIN, FE B. YABUT, TIBURCIO B. BALLESTEROS, JR., and JULIAN B. BALLESTEROS, complainants, vs. ATTY. VALENTIN O. BONCAVIL,respondent. DECISION
MENDOZA, J.: This is a complaint filed by Elsie B. Aromin, Fe B. Yabut, Tiburcio B. Ballesteros, Jr., and Julian B. Ballesteros against Atty. Valentin O. Boncavil for violation of the Code of Professional Responsibility. Complainants allege that their late father, Tiburcio Ballesteros, engaged the services of respondent as counsel in two cadastral cases then pending in the Regional Trial Court, Branch 18, Pagadian City, to wit: Cadastral Case No. N-14, LRC CAD RMC No. N-475, Lot No. 6576, Pls-119, entitled The Director of Lands, Petitioner, v. Faustina Calibo, Claimant, v. Tiburcio Ballesteros, Claimant, and Cadastral Case No. N-14, LRC CAD. REG. No. N-475, Lot No. 7098, Pls-119, entitled The Director of Lands, Petitioner, v. Belinda Tagailo-Bariuan, Claimant, v. Tiburcio Ballesteros, Claimant; that despite receipt of the adverse decision in the two cases on August 8, 1991, respondent did not inform herein complainants of the same nor file either a motion for reconsideration or a notice of appeal to prevent the decision from becoming final; that respondent did not file either a written offer of evidence despite the trial courts directive for him to do so; and that it took respondent four years from the time complainants father died before he filed a motion to substitute herein complainants in the trial court. The foregoing acts and omissions of respondent are alleged to be in violation of the following provisions of the Code of Professional Responsibility: CANON 15 - A LAWYER SHALL OBSERVE CANDOR, FAIRNESS AND LOYALTY IN ALL HIS DEALINGS AND TRANSACTIONS WITH HIS CLIENT. CANON 17 - A LAWYER OWES FIDELITY TO THE CAUSE OF HIS CLIENT AND HE SHALL BE MINDFUL OF THE TRUST AND CONFIDENCE REPOSED IN HIM. CANON 18 - A LAWYER SHALL SERVE HIS CLIENT WITH COMPETENCE AND DILIGENCE. Rule 18.03 - A lawyer shall not neglect a legal matter entrusted to him, and his negligence in connection therewith shall render him liable. Rule 18.04 - A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the clients request for information. Complainants pray that such disciplinary sanctions as may be appropriate be imposed against Atty. Valentin Boncavil. In his answer, respondent alleges that the day before the cadastral court rendered its decision, he met by chance herein complainant Julian Ballesteros, who, after inquiring as to the status of the cadastral cases and learning that the same had already been submitted for resolution, told him You are too busy to attend to our case, it would be better if somebody else would take over, to which, according to respondent, he replied, It is all right with me, it is your privilege; that as a self-respecting legal practitioner, he did not want to continue rendering unwanted legal services to a client who has lost faith in his counsel; that he thus considered himself discharged as counsel in the two cadastral cases and relieved of the obligation either to move for a reconsideration of the decision or to file a notice of appeal and to notify herein complainants of the decision against them; that, contrary to complainants assertion, he did make an offer of evidence, although he reserved the right to submit authenticated copies of the documentary evidence from the Bureau of Lands in Manila; that the delay in the substitution of Tiburcio Ballesteros with his heirs was because neither the heirs nor the administrator of the intestate estate of Tiburcio Ballesteros informed him of the latters death despite the heirs knowledge that he was the counsel in the two cadastral cases. On June 8, 1994, complainants moved for a judgment on the pleadings, alleging that the facts are not in dispute and [3] the respondents answer admits the material allegations of the complaint. On June 13, 1994, IBP Commissioner Plaridel C. Jose required respondent to comment on the foregoing motion [4] [5] within five (5) days from notice. On October 12, 1995, he set the case for hearing on November 17, 1995.
[2] [1]

On November 17, 1995, however, only complainants Tiburcio Ballesteros, Jr. and Fe Yabut and their counsel appeared. This fact, together with respondents failure to comment on complainants motion submitting the case for [6] resolution on the basis of the pleadings, prompted Commissioner Jose to grant complainants motion. On June 21, 1996, Commissioner Jose submitted his report recommending that respondent be suspended from the practice of law for six months with warning that repetition of the same or similar acts shall be dealt with more severely. On May 17, 1997, the IBP Board of Governors passed Resolution No. XII-97-16 approving Commissioner Joses report and recommendation. After due consideration of the records of this case, the Court finds the recommendation of the IBP to be well taken. The facts clearly show that respondent violated Canon 18 of the Code of Professional Responsibility which provides that a lawyer shall serve his client with competence and diligence. By abandoning complainants cases, respondent violated Rule 18.03 of the same Code which requires that a lawyer not neglect a legal matter entrusted to him, and his [7] negligence in connection therewith shall render him liable. As stated in Santiago v. Fojas: Once he agrees to take up the cause of a client, the lawyer owes fidelity to such cause and must always be mindful of the trust and confidence reposed in him. He must serve the client with competence and diligence, and champion the latters cause with wholehearted fidelity, care, and devotion. Elsewise stated, he owes entire devotion to the interest of the client, warm zeal in the maintenance and defense of his clients rights, and the exertion of his utmost learning and ability to the end that nothing be taken or withheld from his client, save by the rules of law, legally applied. This simply means that his client is entitled to the benefit of any and every remedy and defense that is authorized by the law of the land and he may expect his lawyer to assert every such remedy or defense. If much is demanded from an attorney, it is because the entrusted privilege to practice law carries with it the correlative duties not only to the client but also to the court, to the bar, and to the public. A lawyer who performs his duty with diligence and candor not only protects the interest of his client; he also serves the ends of justice, does honor to the bar, and helps maintain the respect of the community to the legal profession. Nor can we sustain respondents claim that he did not file either a motion for reconsideration or a notice of appeal from the decision in the two cases because he was under the impression from the remark of Julian Ballesteros that complainants no longer wanted to retain his services. As a member of the bar, he ought to know that the only way to be relieved as counsel in a case is to have either the written conformity of his client or an order from the court relieving him as counsel. Thus, Rule 138, 26 of the Rules of Court provides: An attorney may retire at any time from any action or special proceeding, by the written consent of his client filed in court. He may also retire at any time from an action or special proceeding, without the consent of his client, should the court, on notice to the client and attorney, and on hearing, determine that he ought to be allowed to retire. In case of substitution, the name of the attorney newly employed shall be entered on the docket of the court in place of the former one, and written notice of the change shall be given to the adverse party. As a matter of fact, Julian Ballesteros, who allegedly made the remarks which became the basis for respondents [8] inaction, denied ever having made those statements, much less having discharged respondent as counsel. Moreover, Julian Ballesteros is only one of the heirs of Tiburcio Ballesteros, and it has not been shown that he was speaking on behalf of the other heirs when he allegedly relieved respondent of his services. In any case, if respondent had really been discharged as counsel, although not in accordance with the Rules of Court, he should have informed the trial court and [9] asked that he be allowed to withdraw from the cases. Until his dismissal or withdrawal is made of record, any judicial notice sent to him was binding upon his clients even though as between them the professional relationship may have [10] been terminated. He cannot validly claim that, in any case, the decision has not yet become final for want of service on the Solicitor General, for the period within which complainants can file a motion for reconsideration or notice of appeal is counted from receipt of the decision by their counsel of record. Nor is this the first time that respondent is remiss in his professional obligation toward complainants. In his answer, he practically admits that he was late in moving for the substitution of Tiburcio Ballesteros by herein complainant heirs. Respondents excuse that he was not immediately informed by complainants of their fathers death is without merit. Four years after the death of complainants father is simply too long a period for him not to have known of his clients death, especially as it appears that he and complainants live in close proximity with each other. During those four years, surely occasions would have arisen where respondent had to confer with Tiburcio Ballesteros regarding the cases. Respondent also, in effect, admits that he failed to file a written offer of evidence as required by the court in its order, dated June 21, 1983. What he actually filed was only a provisional written offer of evidence because the documents [11] offered were not certified true copies. What the Court makes of respondents garbled explanation for this lapse is that he could not bother to go to the Bureau of Lands in Manila to get certified true copies because a check with the Bureau of

Lands in Pagadian City showed the same documentary evidence to be substantially the same true copies. If that were the case, respondent did not explain why he did not then go to the Pagadian City branch of the Bureau of Lands to get the certified true copies of his documentary evidence. The recommended penalty of suspension from the practice of law for six months for respondents gross negligence in [12] the handling of the two cadastral cases is in accordance with our decisions. WHEREFORE, the Court RESOLVED to suspend respondent Atty. Valentin O. Boncavil from the practice of law for six (6) months from notice with a warning that a repetition of a similar offense will be dealt with more severely. Let a copy of this decision be attached to Atty. Boncavils personal record in the Office of the Bar Confidant and copies be furnished to all chapters of the Integrated Bar of the Philippines (IBP) and to all the courts in the land. SO ORDERED.

G.R. No. 120592 March 14, 1997 TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL NOEL A. CRUZ, respondents.
REGALADO, J.: Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer agreement on February 26, 1987 whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration of the law firm's undertaking to render the services 1 2 enumerated in their contract. Parenthetically, said retainer agreement was terminated by the union on April 4, 1990. During the existence of that agreement, petitioner union referred to private respondent the claims of its members for holiday, mid-year and year-end bonuses against their employer, Traders Royal Bank (TRB). After the appropriate complaint was filed by private respondent, the case was certified by the Secretary of Labor to the National Labor 3 Relations Commission (NLRC) on March 24, 1987 and docketed as NLRC-NCR Certified Case No. 0466. On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the employees, awarding them 4 holiday pay differential, mid-year bonus differential, and year-end bonus differential. The NLRC, acting on a motion for the issuance of a writ of execution filed by private respondent as counsel for petitioner union, raffled the case to Labor 5 Arbiter Oswald Lorenzo. However, pending the hearing of the application for the writ of execution, TRB challenged the decision of the NLRC before 6 the Supreme Court. The Court, in its decision promulgated on August 30, 1990, modified the decision of the NLRC by 7 deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of 8 P175,794.32. Petitioner never contested the amount thus found by TRB. The latter duly paid its concerned employees 9 their respective entitlement in said sum through their payroll. After private respondent received the above decision of the Supreme Court on September 18, 1990, he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's lien over the 11 award of holiday pay differential through a letter dated October 8, 1990. Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his attorney's fees, praying that ten percent (10%) of the total award for holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay 12 and remit said amount to him. The TRB management manifested before the labor arbiter that they did not wish to oppose or comment on private 13 respondent's motion as the claim was directed against the union, while petitioner union filed a comment and opposition 14 15 to said motion on July 15, 1991. After considering the position of the parties, the labor arbiter issued an order on November 26, 1991 granting the motion of private respondent, as follows: WHEREFORE, premises considered, it is hereby ordered that the TRADERS ROYAL BANK EMPLOYEES UNION with offices at Kanlaon Towers, Roxas Boulevard is hereby ordered (sic) to pay without delay the attorney's fees due the movant law firm, E.N.A. CRUZ and ASSOCIATES the amount of
10

P17,574.43 or ten (10%) per cent of the P175,794.32 awarded by the Supreme Court to the members of the former. This constrained petitioner to file an appeal with the NLRC on December 27, 1991, seeking a reversal of that 16 order. On October 19, 1994, the First Division of the NLRC promulgated a resolution affirming the order of the labor 17 arbiter. The motion for reconsideration filed by petitioner was denied by the NLRC in a resolution dated May 23, 18 1995, hence the petition at bar. Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in violation of the retainer agreement; and that the challenged resolution of the NLRC is null 19 and void, for the reasons hereunder stated. Although petitioner union concedes that the NLRC has jurisdiction to decide claims for attorney's fees, it contends that the award for attorney's fees should have been incorporated in the main case and not after the Supreme Court had already reviewed and passed upon the decision of the NLRC. Since the claim for attorney's fees by private respondent was neither taken up nor approved by the Supreme Court, no attorney's fees should have been allowed by the NLRC. Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of attorney's fees, as said act constituted a modification of a final and executory judgment of the Supreme Court which did not award attorney's fees. It then cited decisions of the Court declaring that a decision which has become final and executory can no longer be altered or modified even by the court which rendered the same. On the other hand, private respondent maintains that his motion to determine attorney's fees was just an incident of the main case where petitioner was awarded its money claims. The grant of attorney's fees was the consequence of his exercise of his attorney's lien. Such lien resulted from and corresponds to the services he rendered in the action wherein the favorable judgment was obtained. To include the award of the attorney's fees in the main case presupposes that the fees will be paid by TRB to the adverse party. All that the non-inclusion of attorney's fees in the award means is that the Supreme Court did not order TRB to pay the opposing party attorney's fees in the concept of damages. He is not therefore precluded from filing his motion to have his own professional fees adjudicated. In view of the substance of the arguments submitted by petitioner and private respondent on this score, it appears necessary to explain and consequently clarify the nature of the attorney's fees subject of this petition, in order to dissipate the apparent confusion between and the conflicting views of the parties. There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept, an attorney's fee is the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his agreement with the client. In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the court to be paid by the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made, such as those authorized in Article 2208, Civil Code, and 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. It is the first type of attorney's fees which private respondent demanded before the labor arbiter. Also, the present controversy stems from petitioner's apparent misperception that the NLRC has jurisdiction over claims for attorney's fees only before its judgment is reviewed and ruled upon by the Supreme Court, and that thereafter the former may no longer entertain claims for attorney's fees. It will be noted that no claim for attorney's fees was filed by private respondent before the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when it reviewed the decision of the NLRC. It was only after the High Tribunal modified the judgment of the NLRC awarding the differentials that private respondent filed his claim before the NLRC for a percentage thereof as attorney's fees. It would obviously have been impossible, if not improper, for the NLRC in the first instance and for the Supreme Court thereafter to make an award for attorney's fees when no claim therefor was pending before them. Courts generally rule only on issues and claims presented to them for adjudication. Accordingly, when the labor arbiter ordered the payment of attorney's fees, he did not in any way modify the judgment of the Supreme Court.
20

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 21 action. With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may be 22 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 23 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 24 premature. Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or 25 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. Assailing the rulings of the labor arbiter and the NLRC, petitioner union insists that it is not guilty of unjust enrichment because all attorney's fees due to private respondent were covered by the retainer fee of P3,000.00 which it has been regularly paying to private respondent under their retainer agreement. To be entitled to the additional attorney's fees as provided in Part D (Special Billings) of the agreement, it avers that there must be a separate mutual agreement between the union and the law firm prior to the performance of the additional services by the latter. Since there was no agreement as to the payment of the additional attorney's fees, then it is considered waived. En contra, private respondent contends that a retainer fee is not the attorney's fees contemplated for and commensurate to the services he rendered to petitioner. He asserts that although there was no express agreement as to the amount of his fees for services rendered in the case for recovery of differential pay, Article 111 of the Labor Code supplants this omission by providing for an award of ten percent (10%) of a money judgment in a labor case as attorney's fees. It is elementary that an attorney is entitled to have and receive a just and reasonable compensation for services performed at the special instance and request of his client. As long as the lawyer was in good faith and honestly trying to 26 represent and serve the interests of the client, he should have a reasonable compensation for such services. It will thus be appropriate, at this juncture, to determine if private respondent is entitled to an additional remuneration under the 27 retainer agreement entered into by him and petitioner. The parties subscribed therein to the following stipulations: xxx xxx xxx The Law Firm shall handle cases and extend legal services under the parameters of the following terms and conditions: A. GENERAL SERVICES 1. Assurance that an Associate of the Law Firm shall be designated and be available on a day-to-day basis depending on the Union's needs; 2. Legal consultation, advice and render opinion on any actual and/or anticipatory situation confronting any matter within the client's normal course of business; 3. Proper documentation and notarization of any or all transactions entered into by the Union in its day-today course of business;

4. Review all contracts, deeds, agreements or any other legal document to which the union is a party signatory thereto but prepared or caused to be prepared by any other third party; 5. Represent the Union in any case wherein the Union is a party litigant in any court of law or quasijudicial body subject to certain fees as qualified hereinafter; 6. Lia(i)se with and/or follow-up any pending application or any papers with any government agency and/or any private institution which is directly related to any legal matter referred to the Law Firm. B. SPECIAL LEGAL SERVICES 1. Documentation of any contract and other legal instrument/documents arising and/or required by your Union which do not fall under the category of its ordinary course of business activity but requires a special, exhaustive or detailed study and preparation; 2. Conduct or undertake researches and/or studies on special projects of the Union; 3. Render active and actual participation or assistance in conference table negotiations with TRB management or any other third person(s), juridical or natural, wherein the presence of counsel is not for mere consultation except CBA negotiations which shall be subject to a specific agreement (pursuant to PD 1391 and in relation to BP 130 & 227); 4. Preparation of Position Paper(s), Memoranda or any other pleading for and in behalf of the Union; 5. Prosecution or defense of any case instituted by or against the Union; and, 6. Represent any member of the Union in any proceeding provided that the particular member must give his/her assent and that prior consent be granted by the principal officers. Further, the member must conform to the rules and policies of the Law Firm. C. FEE STRUCTURE In consideration of our commitment to render the services enumerated above when required or necessary, your Union shall pay a monthly retainer fee of THREE THOUSAND PESOS (PHP 3,000.00), payable in advance on or before the fifth day of every month. An Appearance Fee which shall be negotiable on a case-to-case basis. Any and all Attorney's Fees collected from the adverse party by virtue of a successful litigation shall belong exclusively to the Law Firm. It is further understood that the foregoing shall be without prejudice to our claim for reimbursement of all out-of-pocket expenses covering filing fees, transportation, publication costs, expenses covering reproduction or authentication of documents related to any matter referred to the Law Firm or that which redound to the benefit of the Union. D. SPECIAL BILLINGS In the event that the Union avails of the services duly enumerated in Title B, the Union shall pay the Law Firm an amount mutually agreed upon PRIOR to the performance of such services. The sum agreed upon shall be based on actual time and effort spent by the counsel in relation to the importance and magnitude of the matter referred to by the Union. However, charges may be WAIVEDby the Law Firm if it finds that time and efforts expended on the particular services are inconsequential but such right of waiver is duly reserved for the Law Firm. xxx xxx xxx

The provisions of the above contract are clear and need no further interpretation; all that is required to be done in the instant controversy is its application. The P3,000.00 which petitioner pays monthly to private respondent does not cover the services the latter actually rendered before the labor arbiter and the NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is intended merely as a consideration for the law firm'scommitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. The difference between a compensation for a commitment to render legal services and a remuneration for legal services actually rendered can better be appreciated with a discussion of the two kinds of retainer fees a client may pay his lawyer. These are a general retainer, or a retaining fee, and a special 28 retainer. A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services as general counsel for any ordinary legal problem that may arise in the routinary business of the client and referred to him for legal action. The future services of the lawyer are secured and committed to the retaining client. For this, the client pays the lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their arrangement. The fees are paid whether or not there are cases referred to the lawyer. The reason for the remuneration is that the lawyer is deprived of the opportunity of rendering services for a fee to the opposing party or other parties. In fine, it is a compensation for lost opportunities. A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client. A client may have several cases demanding special or individual attention. If for every case there is a separate and independent contract for attorney's fees, each fee is considered a special retainer. As to the first kind of fee, the Court has had the occasion to expound on its concept in Hilado vs. David
29

in this wise:

There is in legal practice what is called a "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 for which he has retained him to perform." (Emphasis supplied). Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee covers only the law firm's pledge, or as expressly stated therein, its "commitment to render the legal services enumerated." The fee is not payment for private respondent's execution or performance of the services listed in the contract, subject to some particular qualifications or permutations stated there. Generally speaking, where the employment of an attorney is under an express valid contract fixing the compensation for 30 the attorney, such contract is conclusive as to the amount of compensation. We cannot, however, apply the foregoing rule in the instant petition and treat the fixed fee of P3,000.00 as full and sufficient consideration for private respondent's services, as petitioner would have it. We have already shown that the P3,000.00 is independent and different from the compensation which private respondent should receive in payment for his services. While petitioner and private respondent were able to fix a fee for the latter's promise to extend services, they were not able to come into agreement as to the law firm's actual performance of services in favor of the union. Hence, the retainer agreement cannot control the measure of remuneration for private respondent's services. We, therefore, cannot favorably consider the suggestion of petitioner that private respondent had already waived his right to charge additional fees because of their failure to come to an agreement as to its payment. Firstly, there is no showing that private respondent unequivocally opted to waive the additional charges in consonance with Part D of the agreement. Secondly, the prompt actions taken by private respondent, i.e., serving notice of charging lien and filing of motion to determine attorney's fees, belie any intention on his part to renounce his right to compensation for prosecuting the labor case instituted by the union. And, lastly, to adopt such theory of petitioner may frustrate private respondent's right to attorney's fees, as the former may simply and unreasonably refuse to enter into any special

agreement with the latter and conveniently claim later that the law firm had relinquished its right because of the absence of the same. The fact that petitioner and private respondent failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the former of civil liability for the corresponding remuneration therefor in favor of the latter. Obligations do not emanate only from contracts. One of the sources of extra-contractual obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that nemo cum alterius detrimento locupletari protest. As 32 embodied in our law, certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. A quasi-contract between the parties in the case at bar arose from private respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the latter's consent and approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private respondent's actual rendition of legal services is not compensable merely by said amount. Private respondent is entitled to an additional remuneration for pursuing legal action in the interest of petitioner before the labor arbiter and the NLRC, on top of the P3,000.00 retainer fee he received monthly from petitioner. The law firm's services are decidedly worth more than such basic fee in the retainer agreement. Thus, in Part C thereof on "Fee Structure," it is even provided that all attorney's fees collected from the adverse party by virtue of a successful litigation shall belong exclusively to private respondent, aside from petitioner's liability for appearance fees and reimbursement of the items of costs and expenses enumerated therein. A quasi-contract is based on the presumed will or intent of the obligor dictated by equity and by the principles of absolute justice. Some of these principles are: (1) It is presumed that a person agrees to that which will benefit him; (2) Nobody wants to enrich himself unjustly at the expense of another; and (3) We must do unto others what we want them to do unto 33 us under the same circumstances. As early as 1903, we allowed the payment of reasonable professional fees to an interpreter, notwithstanding the lack of 34 understanding with his client as to his remuneration, on the basis of quasi-contract. Hence, it is not necessary that the parties agree on a definite fee for the special services rendered by private respondent in order that petitioner may be obligated to pay compensation to the former. Equity and fair play dictate that petitioner should pay the same after it accepted, availed itself of, and benefited from private respondent's services. We are not unaware of the old ruling that a person who had no knowledge of, nor consented to, or protested against the lawyer's representation may not be held liable for attorney's fees even though he benefited from the lawyer's 35 services. But this doctrine may not be applied in the present case as petitioner did not object to private respondent's appearance before the NLRC in the case for differentials. Viewed from another aspect, since it is claimed that petitioner obtained respondent's legal services and assistance regarding its claims against the bank, only they did not enter into a special contract regarding the compensation therefor, 36 there is at least the innominate contract of facio ut des (I do that you may give). This rule of law, likewise founded on the principle against unjust enrichment, would also warrant payment for the services of private respondent which proved beneficial to petitioner's members. In any case, whether there is an agreement or not, the courts can fix a reasonable 37 compensation which lawyers should receive for their professional services. However, the value of private respondent's legal services should not be established on the basis of Article 111 of the Labor Code alone. Said article 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. xxx xxx xxx The implementing provision
38 31

of the foregoing article further states:

Sec. 11. Attorney's fees. Attorney's fees in any judicial or administrative proceedings for the recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from the total amount due the winning party.

In the first place, the fees mentioned here are the extraordinary attorney's fees recoverable as indemnity for damages sustained by and payable to the prevailing part. In the second place, the ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is the maximum of the award 39 that may thus be granted. Article 111 thus fixes only the limit on the amount of attorney's fees the victorious party may recover in any judicial or administrative proceedings and it does not even prevent the NLRC from fixing an amount lower 40 than the ten percent (10%) ceiling prescribed by the article when circumstances warrant it. The measure of compensation for private respondent's services as against his client should properly be addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum meruit, meaning "as much as he deserves," is used as 41 the basis for determining the lawyer's professional fees in the absence of a contract, but recoverable by him from his client. Where a lawyer is employed without a price for his services being agreed upon, the courts shall fix the amount onquantum 42 meruit basis. In such a case, he would be entitled to receive what he merits for his services. It is essential for the proper operation of the principle that there is an acceptance of the benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer performing the task was expecting to be paid compensation therefor. The doctrine of quantum meruit is a device to prevent undue enrichment 43 based on the equitable postulate that it is unjust for a person to retain benefit without paying for it. Over the years and through numerous decisions, this Court has laid down guidelines in ascertaining the real worth of a lawyer's services. These factors are now codified in Rule 20.01, Canon 20 of the Code of Professional Responsibility and should be considered in fixing a reasonable compensation for services rendered by a lawyer on the basis of quantum meruit. These are: (a) the time spent and the 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 acceptance of the proffered case; (f) the customary charges for similar services and the schedule of fees of the IBP chapter to which the lawyer belongs; (g) the amount involved in the controversy and the benefits resulting to the client from the services; (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. Here, then, is the flaw we find in the award for attorney's fees in favor of private respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of Article 111 when he fixed the amount of attorney's fees at 44 45 P17,574.43. Observe the conclusion stated in his order. xxx xxx xxx FIRST. Art. 111 of the Labor Code, as amended, clearly declares movant's right to a ten (10%) per cent of the award due its client. In addition, this right to ten (10%) per cent attorney's fees is supplemented by Sec. 111, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code, as amended. xxx xxx xxx As already stated, Article 111 of the Labor Code 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 therefore, as the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct the instantaneous and automatic award of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in questions and circumstances similar to those in the case at bar, involving a conflict between lawyer and client, to observe the above guidelines in cases calling for the operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing for the proper determination of attorney's fees. The criteria found in the Code of Professional Responsibility are to be considered, and not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees. It is axiomatic that the reasonableness of attorney's fees is a question of fact. Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by private 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 private
46

respondent. For that purpose, we have duly taken into account the accepted guidelines therefor and so much of the pertinent data as are extant in the records of this case which are assistive in that regard. On such premises and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a reasonable and fair compensation for the legal services rendered by private respondent to petitioner before the labor arbiter and the NLRC. WHEREFORE, the impugned resolution of respondent National Labor Relations Commission affirming the order of the labor arbiter is MODIFIED, and petitioner is hereby ORDERED to pay the amount of TEN THOUSAND PESOS (P10,000.00) as attorney's fees to private respondent for the latter's legal services rendered to the former. SO ORDERED. G.R. No. 86100-03 January 23, 1990 METROPOLITAN BANK AND TRUST COMPANY, Petitioner, vs. THE HONORABLE COURT OF APPEALS and ARTURO ALAFRIZ and ASSOCIATES, Respondents. REGALADO, J.: This petition for review on certiorari impugns the decision of the Court of Appeals in CA-G.R. Nos. 082651 08268 affirming the order of Branch 168, Regional Trial Court, National Capital Judicial Region, in Civil Cases Nos. 19123-28, 19136 and 19144, fixing attorney's fees and directing herein petitioner Metropolitan Bank and Trust Company (Metrobank, for brevity), as defendant in said civil cases, to pay its attorneys, herein private respondent Arturo Alafriz and Associates, movant therein, the amount of P936,000.00 as attorney's fees on aquantum meruit basis.chanroblesvirtualawlibrary chanrobles virtual law library The records show that from March, 1974 to September, 1983, private respondent handled the above-mentioned civil cases before the then Court of First Instance of Pasig (Branches I, II, VI, X, XIII, XIX, XX AND XXIV) in behalf of 2 petitioner. The civil cases were all for the declaration of nullity of certain deeds of sale, with damages.chanroblesvirtualawlibrary chanrobles virtual law library The antecedental facts which spawned the filing of said actions are undisputed and are hereinunder set forth as found by the trial court and adopted substantially in the decision of respondent court. A certain Celedonio Javier bought seven (7) parcels of land owned by Eustaquio Alejandro, et al., with a total area of about ten (10) hectares. These properties were thereafter mortgaged by Javier with the petitioner to secure a loan obligation of one Felix Angelo Bautista and/or International Hotel Corporation. The obligors having defaulted, petitioner foreclosed the mortgages after which certificates of sale were issued by the provincial sheriff in its favor as purchaser thereof Subsequently, Alejandro, alleging deceit, fraud and misrepresentation committed against him by Javier in the sale of the parcels of land, brought suits against Javier et al., and included petitioner as defendant therein.chanroblesvirtualawlibrary chanrobles virtual law library It was during the pendency of these suits that these parcels of land were sold by petitioner to its sister corporation, Service Leasing Corporation on March 23, 1983 for the purported price of P600,000.00. On the same day, the properties were resold by the latter to Herby Commercial and Construction Corporation for the purported price of P2,500,000.00. Three months later, or on June 7, 1983, Herby mortgaged the same properties with Banco de Oro for P9,200,000.00. The lower court found that private respondent, did not have knowledge of these transfers and transactions.chanroblesvirtualawlibrary chanrobles virtual law library As a consequence of the transfer of said parcels of land to Service Leasing Corporation, petitioner filed an urgent motion for substitution of party on July 28, 1983. Private respondent, on its part, filed on August 16, 1983 a verified motion to enter in the records of the aforesaid civil cases its charging lien, pursuant to Section 37, Rule 138 of the Rules of Court, equivalent to twenty-five percent (25%) of the actual and current market values of the litigated properties as its attorney's fees. Despite due notice, petitioner failed to appear and oppose said motion, as a result of which the lower court granted the same and ordered the, Register of Deeds of Rizal to annotate the attorney's liens on the certificates of title of the parcels of land.chanroblesvirtualawlibrary chanrobles virtual law library Meanwhile, the plaintiffs Alejandro, et al. in the aforesaid civil cases, which had been consolidated and were pending before the Regional Trial Court of Pasig, filed a motion to dismiss their complaints therein, which motion the lower court granted with prejudice in its order dated September 5, 1983. On December 29, 1983, the same court ordered the Register of Deeds to annotate the attorney's liens of private respondent on the derivative titles which cancelled Transfer Certificates of Title Nos. 453093 to 453099 of the original seven (7) parcels of land hereinbefore adverted to.chanroblesvirtualawlibrary chanrobles virtual law library
3

On May 28,1984, private respondent filed a motion to fix its attorney's fees, based on quantum meruit, which motion precipitated an exchange of arguments between the parties. On May 30, 1984, petitioner manifested that it had fully paid private respondent; the latter, in turn, countered that the amount of P50,000.00 given by petitioner could not be considered as full payment but merely a cash advance, including the amount of P14,000.00 paid to it on December 15, 1980. It further appears that private respondent attempted to arrange a compromise with petitioner in order to avoid suit, offering a compromise amount of P600,000.00 but the negotiations were unsuccessful.chanroblesvirtualawlibrary chanrobles virtual law library Finally, on October 15,1984, the court a quo issued the order assailed on appeal before respondent court, granting payment of attorney's fees to private respondent, under the following dispositive portion: PREMISES CONSIDERED, the motion is hereby granted and the Metropolitan Bank and Trust Company (METROBANK) 4 and Herby Commercial and Construction Corporation are hereby ordered to pay the movant Arturo Alafriz and 5 Associates the amount of P936,000.00 as its proper, just and reasonable attorney's fees in these cases. chanrobles virtual law library On appeal, respondent court affirmed the order of the trial court in its decision promulgated on February 11, 1988. A motion for reconsideration, dated March 3, 1988, was filed by petitioner but the same was denied in a resolution promulgated on November 19, 1988, hence the present recourse.chanroblesvirtualawlibrary chanrobles virtual law library The issues raised and submitted for determination in the present petition may be formulated thus: (1) whether or not private respondent is entitled to the enforcement of its charging lien for payment of its attorney's fees; (2) whether or not a separate civil suit is necessary for the enforcement of such lien and (3) whether or not private respondent is entitled to twenty-five (25%) of the actual and current market values of the litigated properties on a quantum meruit basis.chanroblesvirtualawlibrary chanrobles virtual law library On the first issue, petitioner avers that private respondent has no enforceable attorney's charging lien in the civil cases before the court below because the dismissal of the complaints therein were not, in the words of Section 37, Rule 138, 6 judgments for the payment of money or executions issued in pursuance of such judgments. chanrobles virtual law library We agree with petitioner.chanroblesvirtualawlibrary chanrobles virtual law library On the matter of attorney's liens Section 37, Rule 138 provides: . . . He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements. Consequent to such provision, a charging lien, to be enforceable as security for the payment of attorney's fees, requires as a conditionsine qua non a judgment for money and execution in pursuance of such judgment secured in the main action by the attorney in favor of his client. A lawyer may enforce his right to fees by filing the necessary petition as an incident in the main action in which his services were rendered when something is due his client in the action from which 7 the fee is to be paid. chanrobles virtual law library In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs "in view of the frill satisfaction of 8 their claims." The dismissal order neither provided for any money judgment nor made any monetary award to any litigant, much less in favor of petitioner who was a defendant therein. This being so, private respondent's supposed charging lien is, under our rule, without any legal basis. It is flawed by the fact that there is nothing to generate it and to which it can attach in the same manner as an ordinary lien arises and attaches to real or personal property.chanroblesvirtualawlibrary chanrobles virtual law library In point is Morente vs. Firmalino, cited by petitioner in support of its position. In that case, movant-appellant attorney sought the payment of his fees from his client who was the defendant in a complaint for injunction which was dismissed by the trial court after the approval of an agreement entered into by the litigants. This Court held: . . . The defendant having suffered no actual damage by virtue of the issuance of a preliminary injunction, it follows that no sum can be awarded the defendant for damages. It becomes apparent, too, that no amount having been awarded the
9

defendant, herein appellant's lien could not be enforced. The appellant, could, by appropriate action, collect his fees as attorney. Private respondent would nevertheless insist that the lien attaches to the "proceeds of a judgment of whatever 10 11 nature," relying on the case of Bacolod-Murcia Milling Co. Inc. vs. Henares and some American cases holding that 12 the lien attaches to the judgment recovered by an attorney and the proceeds in whatever form they may be. chanrobles virtual law library The contention is without merit just as its reliance is misplaced. It is true that there are some American cases holding that the lien attaches even to properties in litigation. However, the statutory rules on which they are based and the factual situations involved therein are neither explained nor may it be said that they are of continuing validity as to be applicable in this jurisdiction. It cannot be gainsaid that legal concepts of foreign origin undergo a number of variegations or nuances upon adoption by other jurisdictions, especially those with variant legal systems.chanroblesvirtualawlibrary chanrobles virtual law library In fact, the same source from which private respondent culled the American cases it cited expressly declares that "in the absence of a statute or of a special agreement providing otherwise, the general rule is that an attorney has no lien on the land of his client, notwithstanding such attorney has, with respect to the land in question, successfully prosecuted a suit to establish the title of his client thereto, recovered title or possession in a suit prosecuted by such client, or defended 13 successfully such client's right and title against an unjust claim or an unwarranted attack," as is the situation in the case at bar. This is an inescapable recognition that a contrary rule obtains in other jurisdictions thereby resulting in doctrinal rulings of converse or modulated import.chanroblesvirtualawlibrary chanrobles virtual law library To repeat, since in our jurisdiction the applicable rule provides that a charging lien attaches only to judgments for money and executions in pursuance of such judgment, then it must be taken in haec verba. The language of the law is clear and unequivocal and, therefore, it must be taken to mean exactly what it says, barring any necessity for elaborate 14 interpretation. chanrobles virtual law library Notably, the interpretation, literal as it may appear to be, is not without support in Philippine case law despite the dearth of 15 cases on all fours with the present case. In Caina et al. vs. Victoriano, et al., the Court had the occasion to rule that "the lien of respondent is not of a nature which attaches to the property in litigation but is at most a personal claim enforceable 16 by a writ of execution." In Ampil vs.Juliano-Agrava, et al., the Court once again declared that a charging lien "presupposes that the attorney has secured a favorable money judgment for his client . . ." Further, in Director of Lands 17 vs. Ababa, et al., we held that "(a) charging lien under Section 37, Rule 138 of the Revised Rules of Court is limited only to money judgments and not to judgments for the annulment of a contract or for delivery of real property as in the instant case." chanrobles virtual law library Even in the Bacolod-Murcia Milling case, which we previously noted as cited by private respondent, there was an express declaration that "in this jurisdiction, the lien does not attach to the property in litigation." chanrobles virtual law library Indeed, an attorney may acquire a lien for his compensation upon money due his client from the adverse party in any action or proceeding in which the attorney is employed, but such lien does not extend to land which is the subject matter 18 of the litigation. More specifically, an attorney merely defeating recovery against his client as a defendant is not entitled to a lien on the property involved in litigation for fees and the court has no power to fix the fee of an attorney defending the client's title to property already in the client's 19 possession. chanrobles virtual law library While a client cannot defeat an attorney's right to his charging lien by dismissing the case, terminating the services of his 20 counsel, waiving his cause or interest in favor of the adverse party or compromising his action, this rule cannot find application here as the termination of the cases below was not at the instance of private respondent's client but of the opposing party.chanroblesvirtualawlibrary chanrobles virtual law library The resolution of the second issue is accordingly subsumed in the preceding discussion which amply demonstrates that private respondent is not entitled to the enforcement of its charging lien.chanroblesvirtualawlibrary chanrobles virtual law library Nonetheless, it bears mention at this juncture that an enforceable charging lien, duly recorded, is within the jurisdiction of 21 the court trying the main case and this jurisdiction subsists until the lien is settled. There is certainly no valid reason why the trial court cannot pass upon a petition to determine attorney's fees if the rule against multiplicity of suits is to be

activated. These decisional rules, however, apply only where the charging lien is valid and enforceable under the rules.chanroblesvirtualawlibrary chanrobles virtual law library On the last issue, the Court refrains from resolving the same so as not to preempt or interfere with the authority and adjudicative facility of the proper court to hear and decide the controversy in a proper proceeding which may be brought by private respondent.chanroblesvirtualawlibrary chanrobles virtual law library A petition for recovery of attorney's fees, either as a separate civil suit or as an incident in the main action, has to be prosecuted and the allegations therein established as any other money claim. The persons who are entitled to or who 23 must pay attorney's fees have the right to be heard upon the question of their propriety or amount. Hence, the obvious necessity of a hearing is beyond cavil.chanroblesvirtualawlibrary chanrobles virtual law library Besides, in fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be considered are generally (1) the importance of the subject matter in controversy, (2) the extent of the 24 services rendered, and (3) the professional standing of the lawyer. These are aside from the several other 25 considerations laid down by this Court in a number of decisions as pointed out by respondent court. A determination of all these factors would indispensably require nothing less than a full-blown trial where private respondent can adduce evidence to establish its right to lawful attorney's fees and for petitioner to oppose or refute the same.chanroblesvirtualawlibrary chanrobles virtual law library Nothing in this decision should, however, be misconstrued as imposing an unnecessary burden on private respondent in collecting the fees to which it may rightfully be entitled. But, as in the exercise of any other right conferred by law, the proper legal remedy should be availed of and the procedural rules duly observed to forestall and obviate the possibility of abuse or prejudice, or what may be misunderstood to be such, often to the undeserved discredit of the legal profession.chanroblesvirtualawlibrary chanrobles virtual law library 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 26 government interference, is impressed with public interest, for which it is subject to State regulation. chanrobles virtual law library ACCORDINGLY, the instant petition for review is hereby GRANTED and the decision of respondent Court of Appeals of February 11, 1988 affirming the order of the trial court is hereby REVERSED and SET ASIDE, without prejudice to such appropriate proceedings as may be brought by private respondent to establish its right to attorney's fees and the amount thereof.chanroblesvirtualawlibrary chanrobles virtual law library SO ORDERED. A.M. No. 1437 April 25, 1989 HILARIA vs. JUSTINIANO G. DE DUMO, respondent. A.M. No. 1683 April 25, 1989 HILARIA vs. JUSTINIANO G. DE DUMO, respondent. R E S O L U T I ON

22

TANHUECO, complainant,

TANHUECO, complainant,

PER CURIAM: On 24 February 1975, complainant Hilaria Tanhueco filed before the Court a Petition for Disbarment (docketed as Administrative Case No. 1437) against respondent Justiniano G. de Dumo for having violated the Canons of Professional Ethics by his (a) refusal to remit to her money collected by him from debtors of the complainant; and (b) refusal to return documents entrusted to him as counsel of complainant in certain collection cases. In his Answer and Counter-Petition 1 filed on 3 April 1975, respondent denied the charges. Complainant filed a Rejoinder [should be Reply] to Answer with Counter-Petition, on 18 April 1975. By a Resolution 2 dated 16 June 1975, the Court referred this case to the Solicitor General for investigation, report and recommendation. A year later, on 25 June 1976, one Jose Florencio N. Tanhueco claiming to be the nephew and representative of the complainant, addressed a sworn letter complaint to Mrs. Imelda R. Marcos against the respondent for (a) refusal to remit the money collected by respondent from debtors of complainant's aunt, Mrs. Hilaria Tanhueco Vda. de David; (b) refusal to return documents entrusted to him in his capacity as counsel in certain cases; and (c) abandonment of cases in respect

of which his professional services had been engaged. On 24 August 1976, the letter complaint was forwarded by the then Public Information Assistance Staff, Department of Public Information, to this Court for appropriate action (and docketed as Administrative Case No. 1683). After respondent had filed his Answer, the Court, by a Resolution 3 dated 9 December 1976, referred this case to then Acting Judicial Consultant Ricardo C. Puno for study, report and recommendation. Since Administrative Case No. 1683 and Administrative Case No. 1437 involved the same parties and the same subject matter, Hon. Ricardo C. Puno referred the former case to the Office of the Solicitor General for consolidation with the latter one. The Office of the Solicitor General held two (2) hearings, one on 3 December 1975 and another on 18 April 1988. In the first hearing, respondent de Dumo was absent although he had been notified thereof. At the end of the first hearing, continuation of the hearing of the case was set for 14 January 1976. The records show that the second hearing took place on 18 April 1988 but do not indicate the reason for the 12-year interregnum. By then, complainant Tanhueco had died. There was no appearance at the second hearing by complainant Jose Florencio Tanhueco but respondent de Dumo was then present. The report of the Solicitor General, dated June 15, 1988 in Administrative Case No. 1437 summarized the evidence for the complainant in the following manner: EVIDENCE FOR COMPLAINANT Complainant Hilaria Tanhueco testified that she secured the legal services of respondent to collect indebtedness from her different debtors. Although she offered to execute a document evidencing their lawyer-client relationship, respondent told her that it was not necessary. She nonetheless offered to give him 15% of what he may be able to collect from the debtors (pp. 4-7. tsn, Dec. 3, 1975). Complainant also declared that respondent borrowed from her P2,000.00, Pl,300.00, and P3,000.00 on three separate occasions, but she could not remember when she gave those amounts. Respondent did not pay those loans (pp. 8-9, tsn, Id.). She confirmed that respondent filed cases against her debtors and that one of them, Constancia Maosca paid P12,500.00 to respondent. Informed of such payment by Maosca herself, complainant confronted respondent but the latter denied having received payment from any of her debtors. Complainant then brought the matter to the attention of Malacaang which referred her to Camp Crame. Notwithstanding subsequent demands of complainant for the money, respondent had refused to give her the amount (pp. 11 -15, tsn, Id.). The Solicitor General then summed up the evidence for the respondent in the following terms: EVIDENCE FOR RESPONDENT Respondent Atty. Justiniano G. de Dumo testified that complainant indeed secured his legal services to collect from her debtors, with the agreement that he gets 50% of what he may be able to collect. He thus filed collection cases against Tipace Maosca Morena, Jr., and others, and was able to obtain favorable judgment in the cases against Maosca, Tipace, and Leonila Mendoza. The initial payments made by these judgment-debtors were all given to complainant. With respect to Maosca respondent obtained a judgment for P19,000.00 although the debt was only P12,000.00 (pp. 3-9, tsn, April 18, 1988). Respondent also declared that complainant, who was then already old and sickly, was influenced by her debtors, who were also her friends into distrusting him. Ultimately, because complainant filed a complaint against him with Malacaang which referred the matter to Camp Crame, he terminated his relationship with complainant and demanded his attorney's fees equivalent to 50% of what he had collected. Complainant refused to pay him, hence, he did not also turn over to her the P12,000.00 initial payment of Maosca which he considered, or applied, as part payment of his attorney's fee (pp. 919, tsn., Id.). Respondent estimated his attorney's fee due from complainant in the amount of P17,000.00 (p. 20, tsn, Id.) Respondent denied having borrowed the amounts of P2,000.00, P1,300.00, P3,000.00 and P1,000.00, pointing out that complainant did not even have money to pay him so that he handled the cases for her on contingent basis (p. 17, tsn, Id.) He also denied having received documentary evidence from complainant. What evidence he had were all gathered by him on his initiative (pp. 4-7, tsn, Id.). The Solicitor General then set out the following: FINDINGS There is in the case at bar clear admissions by both complainant and respondent of an attorney-client relationship between them, specifically in the collection of debts owing complainant. Respondent also admitted, in his answer to the complaint and in his testimony, having received P12,000.00 from indebtor Constancia Manosca without turning over the amount to his client, complainant herein, and applying it instead as part of his attorney's fees. It has been held that the money collected by a lawyer in pursuance of a judgement in favor of his client held in trust (Aya v. Bigonia,57 Phil.8;Daroy v..Legaspi 65 SCRA 304), and that the attorney should promptly account for all funds and property received or held by him for the client's benefit (Daroy v. Legaspi, supra; In re Bamberger, 49 Phil. 962). The circumstance that an attorney 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 (Domingo l v. Doming[o] G.R. No. 30573, Oct. 29, 1971; Daroy v. Legaspi, supra). Undoubtedly, respondent's failure to account for the P12,000.00, representing payment of the judgement debt of Maosca constitutes unprofessional conductand subjects him to disciplinary action. Nonetheless, it has likewise been recognized that a lawyer is as much entitled to judicial protection against injustice, imposition or fraud on the part of his client; and that the attorney is entitled to be paid his just fees. The attorney should be protected against any attempt on

the part of his client to escape payment of his just compensation (Fernandez v. Bello, 107 Phil. 1140; Albano v. Coloma, G.R. Adm. Case No. 528, Oct. 11, 1967). This countervailing rule mitigates the actions of respondent. As regards the charges that respondent received documents evidencing the debts to complainant and had refused to return them to the latter, and that respondent also borrowed some amounts from her, there [is] no competent, conclusive evidence to support them. Perforce, such allegations have no factual basis. (Emphasis supplied) The Solicitor General then recommended that: For failure to turn over the amount of P12,000.00 to the complainant, and applying it as his attorney's fees, respondent Atty. Justiniano G. de Dumo be severely reprimanded and admonished that repetition of the same or similar offense will be dealt with more severely. We find the findings of fact of the Solicitor General supported by the evidence of record. We are, however, unable to accept his recommendation. Moneys collected by an attorney on a judgment rendered in favor of his client, constitute trust funds and must, be immediately paid over to the client. 4 Canon 11 of the Canons of Professional Ethics 5 then in force, provides as follows: 11. Dealing with trust property. The lawyer should refrain from any action whereby for his personal benefit or gain he abuses or takes advantage of the confidence reposed in him by his client. Money of the client or collected for the client or other trust property coming into the possession of the lawyer should be reported and accounted for promptly and should not under any circumstance be comingled with his own or be used by him. (Emphasis supplied) When respondent withheld and refused to deliver the money received by him for his client, the deceased complainant Hilaria Tanhueco, he breached the trust reposed upon him.The claim of the respondent that complainant had failed to pay his attorney's fees, is not an excuse for respondent's failure to deliver any amount to the complainants. 6 It is of course true that under Section 37 of Rule 138 of the Revised Rules of Court, an attorney hasa 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. The fact that a lawyer has a lien for fees on moneys in his hands collected for his client, does not relieve him from his duty promptly to account for the moneys received; his failure to do so constitutes professional misconduct. 7 In the present case, what respondent could have properly done was to make an account with his client, the complainant, deduct his attorney's fees due in respect of the amount actually collected by him, and turn over the remaining balance to the complainant. The Court notes that the services of respondent de Dumo were engaged by the complainant on a number of cases and that these were on differing stages of completion. Respondent was not entitled to hold on to the entire amount of P12,000.00 collected by him until all his fees for the other cases had also been paid and received by him. There was not enough evidence in the record to show how much money, if any, respondent had in fact previously (i.e., other than the P12,000.00 from Maosca) collected for and turned over to complainant (thereby waiving his lien thereon) without deducting therefrom his claimed contingent fees in respect of such collections. The relationship of attorney and client has always been rightly regarded as one of special trust and confidence. An attorney must exercise the utmost good faith and fairness in all his relationships vis-a-vis his client. Respondent fell far short of this standard when he failed to render an accounting for the amount actually received by him and when he refused to turn over any portion of such amount received by him on behalf of his client upon the pretext that his attorney's fees had not all been paid. Respondent had in fact placed his private and personal interest above that of his client. Respondent's act constitutes a breach of his lawyer's oath and a mere reprimand is not an adequate sanction. There is another aspect to this case which the Court cannot gloss over. Respondent claimed that he charged complainant, his client, a contingent fee of fifty percent (50%) of the amount collected by him, plus interest and whatever attorney's fees may be awarded by the trial court chargeable to the other party. In this jurisdiction, contingent fees are not per se prohibited by law. 8 But when it is shown that a contract for a contingent fee are 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. 9 From the Answer of respondent de Dumo it appears that in three (3) collection cases filed by him for the complainant and which were decided in favor of the complainant, the awards totalled P31,390.00. Respondent asserted that he was entitled to attorney's fees amounting to Pl8,840. 00 out of the aggregate total of P31,390.00: 7. That the understanding between Hilaria Tanhueco and me was a fifty- fifty on collected principal and interests. The lawyer has the right to charge attorney's fees to the other party-defendant and that Hilaria Tanhueco shall not interfere nor be included in the computation. That of the cases filed, the following made payments: a. Hilaria Tanhueco vs. Constancia Maosca Amount Collectible (principal)........................................ P12,000.00

Interest added from May 1972 o Nov/73 at 1% a month.... P 2,280.00 Attorney's fees charged to the defendant and not to be included in the computation................ P 4,720.00 TOTAL and Amount specified in the Compromise Agreement and Subject of the Decision. P19,000.00 b. Hilaria Tanhueco vs. Melchor Tipace et al. Principal amount collectible...................... P7,100.00 Interest at 1 % per month starting June/71 to Sept./74........................ 2,840.00 Attorney's fees charged to the defendant and not included in the computation.......................... 1,450.00 TOTAL P ll,390.00. c. Hilaria Tanhueco vs. Estimo Principal Amount collectible..................... Pl,000.00 SUMMATION OF THE THREE CASES FILED AND AMOUNTS RECEIVABLE BY THE UNDERSIGNED INCLUDING ATTORNEY'S FEES: MAOSCA CASE: Attorney's fees to be paid by Maosca and not to be included in the computation................... P 4,840.00 Fifty per cent on the principal amount collectible plus interests......................................... . P 7,080.00 TOTAL AMOUNT RECEIVABLE P11,920.00 TIPACES CASE: Attorney's fees to be paid by Tipace and not to be included in the computation............................. Pl,450.00 Fifty per cent on the principal amount collectible from Tipace plus interests.................................. 4,970.00 TOTAL AMOUNT RECEIVABLE............. P6,420.00 8. The total amount which I ought to receive as attorney's fees under paragraph seven, sub-paragraph a, b and c is: Pll,920. 00 P6,420.00 P500. 00 P18,840. 00 TOTAL 10 We note that respondent attorney claimed as his contingent fee the following: 1) fifty percent (50%) of the sum of principal and interest collectible from different debtors; and 2) attorney's fees charged to the defendant (presumably under promissory notes or written agreements) and "not to be included in the computation." Under this scheme, respondent was actually collecting as attorney's fees sixty percent (60%) or more than half of the total amount due from defendant debtors; indeed, he was appropriating for himself more than what he was, according to him, to turn over to his client. We believe and so hold that the contingent fee here claimed was, under the facts obtaining in this case, grossly excessive and unconscionable. 11 Such a fee structure, when considered in conjunction with the circumstances of this case, also shows that an unfair advantage was taken of the client and legal fraud and imposition perpetrated upon her. The complainant was an old and sickly woman and, in respondent's own words, "penniless." She was at the time she filed her complaint in 1976, already seventy-six (76) years old. In her circumstances, and given her understandable desire to realize upon debts owed to her before death overtook her, she would easily succumb to the demands of respondent attorney regarding his attorney's fees. It must be stressed that the mere fact that an agreement had been reached between attorney and client fixing the amount of the attorney's fees, does not insulate such agreement from review and modification by the Court where the fees clearly appear to be excessive or unreasonable. In Mambulao Lumber Company v. Philippine National Bank, et al., 12 this Court stressed: The principle that courts should reduce stipulated attorney's fees whenever it is found under the circumstances of the case that the same is unreasonable, is now deeply rooted in this jurisdiction to entertain any serious objection to it. Thus, this Court has explained: But the principle that it may be lawfully stipulated that the legal expenses involved in the collection of a debt shall be defrayed by the debtor does not imply that such stipulations must be enforced in accordance with the terms, no matter how injurious or oppressive they may be. The lawful purpose to be accomplished by such a stipulation is to permit the creditor to receive the amount due him under his contract without a deduction of the expenses caused by the delinquency of the debtor. It should not be permitted for him to convert such a stipulation into a source of speculative profit at the expense of the debtor. xxx xxx xxx Since then this Court has invariably fixed counsel fees on a quantum meruit basis whenever the fees stipulated appear excessive, unconscionable, or unreasonable, because a lawyer is primarily a court officer charged with the duty of assisting the court in administering impartial justice between the parties, and hence,the fees should be subject to judicial control. Nor should it be ignored that sound public policy demands that courts disregard stipulations for counsel fees, whenever they appear to be a source of speculative profit at the expense of the debtor or mortgagor (See, Gorospe, et al. v. Gochangco, supra). And it is not material that the present action is between attorney and client.As courts have power to fix the fee as between attorney and client,it must necessarily have the right to say whether a stipulation like this, inserted in a mortgage contract, is valid (Bachrach vs. Golingco, supra). xxx xxx xxx 13

This Court has power to guard a client, 14 especially an aged and necessitous client, 15 against such a contract. We hold that on a quantum meruit basis, no circumstances of special difficulty attending the collection cases having been shown by respondent, respondent attorney's fees should be reduced from sixty percent (60%) to ten percent (15%) of the total amount (including attorney's fees stipulated as chargeable to the debtors) collected by him on behalf of his client. With respect to charges of refusal to return documents entrusted to respondent lawyer and abandonment of cases in which his services had been engaged, we accept the findings of the Solicitor General that the evidence of record is not sufficient to prove these allegations. WHEREFORE, the Court Resolved that: 1. respondent is guilty of violation of the attorneys' oath and of serious professional misconduct and shall be SUSPENDED from the practice law for six (6) months and WARNED that repetition of the same or similar offense will be more severely dealt with; 2. the attorney's fees that respondent is entitled to in respect of the collection cases here involved shall be an amount equivalent to fifteen percent (15%) of the total amount collected by respondent from the debtors in those cases; 3. respondent shall return forthwith to the estate of complainant Hilaria Tanhueco the P12,000.00 respondent received on behalf of his client less attorney's fees due to him in respect of that amount (P l2,000.00 less fifteen percent [15%] thereof) or a net amount of P10,200.00; and 4. respondent shall return to the estate of complainant Hilaria Tanhueco any documents and papers received by him from the deceased complainant in connection with the collection cases for which he was retained. If he has in fact made any other collections from deceased complainant's debtors, he shall promptly account therefor to complainant's estate and shall be entitled to receive in respect thereof the fifteen percent (15%) attorney's fees provided for herein. Let a copy of this Resolution be furnished each to the Bar Confidant and spread on the personal record of respondent attorney, and to the Integrated Bar of the Philippines.