Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-22018 January 17, 1968

APOLONIO GALOFA, plaintiff-appellee, vs. NEE BON SING, defendant-appellant. Madrid Law Office for plaintiff-appellee. Salvador Nee-Estuye for defendant-appellant. REYES, J.B.L., J.: Direct appeal from a judgment on the pleadings in Civil Case No. 145 (No. 1737-Sorsogon) of the Court of First Instance of Sorsogon on the issue of whether or not the defendant's answer to the complaint tendered a genuine issue. The plaintiff-appellee Apolonio Galofa filed a complaint against the defendant-appellant Nee Bon Sing 1 for the recovery of possession of and to quiet title over a certain parcel of land in Sta. Lourdes, Barcelona, Sorsogon, alleging therein the prior ownership and possession of the land by his late father, Francisco Galofa, and its adjudication in favor of the plaintiff in an oral partition among his co-heirs. The complaint alleges further: 4. That plaintiff however, despite the foregoing, was unable to take actual possession of the above-described property due to an unwarranted adverse claim of rights of ownership and possession by the defendant and/or his tenant or encargado, Abion Pantilone, alleging sale by a certain Fe Nicolas of said property to defendant, which if true, had no right whatsoever to legally dispose the above-described property not being the owner thereof, aside from the fact that the defendant is not allowed under the law to own and possess real properties being an alien, pursuant to the Constitution and/or the Krivenko case; xxx xxx xxx xxx xxx xxx

9. That as a result thereof, plaintiff was compelled to ventilate this case to court and in so doing has to retain the services of counsel for the contracted amount of no less than P1,500.00 and/or spent or will spend the sum of P500.00 because of this case which could have been avoided had the defendants been more fair and just in his dealings with your plaintiff. xxx xxx xxx

In his answer corresponding to the above-quoted allegations in the complaint, the defendantappellant Nee Bon Sing manifested as follows:

3. That the defendant denies the material averments contained in paragraph 4 of the Complaint, the truth being, that the defendant never asserted title of ownership to the property described in the Complaint to anybody, much less to the herein plaintiff in virtue of any deed of conveyance executed in favor of the defendant by one Fe Nicolas, nor claimed any right over the said property, either by himself or through another: xxx xxx xxx

5. That if in fact the plaintiff had contracted, as alleged in paragraph 8 of the Complaint, the services of counsel and will spend the amounts therein specified occasioned by the institution of the action, the same is his own personal responsibility, for defendant denies any part and assumes no liability therefor in any manner whatsoever; xxx xxx xxx

Upon motion by the plaintiff that the defendant's answer failed to tender an issue, the lower court rendered judgment on the pleadings, declaring the plaintiff the owner of the property "free from any cloud arising from any assertion of adverse claim or interest whatsoever on the part of the defendant", ordering the defendant to deliver possession of the property to the plaintiff, and to pay attorney's fees and costs. We find that the lower court committed no reversible error in ordering the appealed judgment. It is to be noted that, to the plaintiff's allegation of his inability to take actual possession of the parcel of land due to "an unwarranted adverse claim of rights of ownership and possession by the defendant . . .", followed by an allegation of how such claim was exercised, the defendant's denial is as to "the materials averments contained in paragraph 4 of the Complaint, . . ." conjoined with his disclaimer or dominical or possessory rights in the manner alleged in the complaint. The defendant's denial is, therefore, a negative pregnant, which is equivalent to an admission. A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be ascertained whether it is the fact or only the qualification that is intended to be denied. (41 Am. Jur. 429) Where a fact is alleged with some qualifying or modifying language, and the denial is conjunctive, a "negative pregnant" exists, and only the qualification or modification is denied, while the fact itself is admitted. Ison v. Ison, 115 SW 2d. 330, 272 Ky. 836. (28 Words & Phrases 314) As to the plaintiff's allegations of his having contracted a lawyer for a fee, the defendant does not deny thealleged fact; what he denies in his liability therefor, which is an issue of law. Since the defendant neither denies nor admits the material allegation about the services of plaintiff's counsel, judgment on the pleadings is proper. (Alemany vs. Sweeney, 3 Phil. 114) The defendant, however, had specifically denied the plaintiff's allegations in paragraphs 5, 6 and 7 of the complaint. He traversed these allegations in his answer by stating that he "does not possess any knowledge or information sufficient to form a belief as to the truth of the allegations contained in paragraphs 5, 6 and 7 of the (original) Complaint and therefore, denies the same." But paragraphs 6 and 7 of the Complaint referred to damages, while paragraph 5 of the complaint merely alleged a conclusion (that by defendant's acts a cloud over plaintiff's title had been raised) so that the defendant's specific denials served no purpose at all. As to the amount of damages, alleged in paragraph 6 of the complaint (P2,000.00 per agricultural year) and specifically denied by the

defendant, as aforesaid, a specific denial is not required by the Rules. (Sec. 1, Rule 9, Rules of Court) At any rate, the appealed judgment did not condemn the defendant-appellant to pay damages. The defendant should have no complaint about the Court's finding, described in his second assignment of error, that the lower court erred in concluding that the allegations in defendant-appellant's answer to paragraphs 5, 6 and 7 of the complaint are mere general denials and not specific denials under the Rules of Court because, aside from what has been previously stated, the plaintiff is barred from recovery of his alleged damages for having prayed for a judgment on the pleadings, as thereby he is deemed to have admitted the truth of the defendant's denial on the alleged damages and to have rested his motion for judgment on those allegations taken together with such of his own as are admitted in the pleadings. (Bauermann v. Casas, 10 Phil. 386; Evangelista v. De la Rosa, et al., 76 Phil. 115) The defendant's motion for reconsideration and/or new trial furnished no justification to the lower court to set aside or reconsider its judgment. Said motion prayed that the defendant be allowed to amend his answer, but annexed to it is the defendant's own affidavit (Annex A, Rec. on Appeal, p. 57) reiterating that he had "no real right or interest whatsoever not having been involved in any way with any transaction affecting the title or possession of the same. Definitely, therefore, there was no issue to be tried and the court's denial of the motion was proper. And why should the defendant resist the judgment when he simultaneously asserts that he has no right to the land? FOR THE FOREGOING REASONS, the appealed judgment is hereby affirmed, with costs against the appellant. So ordered.

GALOFA vs. NEE BON SING FACTS: In this case a recovery of possession the defendant denied parts of the complaint of the plaintiff. The defendant denied all the facts that could lead for his right of possession of the property and had denied that he deprive the plaintiff of the possession of the property. And defendant still filed a motion of reconsideration. Issue: Despite the denial is there still an issue? RULING: No. The defendant's motion for reconsideration and/or new trial furnished no justification to the lower court to set aside or reconsider its judgment. Said motion prayed that the defendant be allowed to amend his answer, but annexed to it is the defendant's own affidavit (Annex A, Rec. on Appeal, p. 57) reiterating that he had "no real right or interest whatsoever not having been involved in any way with any transaction affecting the title or possession of the same. Definitely, therefore, there was no issue to be tried and the court's denial of the motion was proper. And why should the defendant resist the

judgment when he simultaneously asserts that he has no right to the land? It is to be noted that, to the plaintiff's allegation of his inability to take actual possession of the parcel of land due to "an unwarranted adverse claim of rights of ownership and possession by the defendant . . .", followed by an allegation of how such claim was exercised, the defendant's denial is as to "the materials averments contained in paragraph 4 of the Complaint, . . ." conjoined with his disclaimer or dominical or possessory rights in the manner alleged in the complaint. The defendant's denial is, therefore, a negative pregnant, which is equivalent to an admission. As to the plaintiff's allegations of his having contracted a lawyer for a fee, the defendant does not deny the alleged fact; what he denies in his liability therefor, which is an issue of law. Since the defendant neither denies nor admits the material allegation about the services of plaintiff's counsel, judgment on the pleadings is proper. (Alemany vs. Sweeney, 3 Phil. 114) The defendant, however, had specifically denied the plaintiff's allegations in paragraphs 5, 6 and 7 of the complaint. He traversed these allegations in his answer by stating that he "does not possess any knowledge or information sufficient to form a belief as to the truth of the allegations contained in paragraphs 5, 6 and 7 of the (original) Complaint and therefore, denies the same." But paragraphs 6 and 7 of the Complaint referred to damages, while paragraph 5 of the complaint merely alleged a conclusion (that by defendant's acts a cloud over plaintiff's title had been raised) so that the defendant's specific denials served no purpose at all. As to the amount of damages, alleged in paragraph 6 of the complaint (P2,000.00 per agricultural year) and specifically denied by the defendant, as aforesaid, a specific denial is not required by the Rules. (Sec. 1, Rule 9, Rules of Court) At any rate, the appealed judgment did not condemn the defendant-appellant to pay damages. A denial in the form of a negative pregnant is an ambiguous pleading, since it cannot be ascertained whether it is the fact or only the qualification that is intended to be denied.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

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 enumerated in their contract. 1 Parenthetically, said retainer agreement was terminated by the union on April 4, 1990. 2 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 Relations Commission (NLRC) on March 24, 1987 and docketed as NLRC-NCR Certified Case No. 0466. 3 On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the employees, awarding them holiday pay differential, mid-year bonus differential, and year-end bonus differential. 4 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 Arbiter Oswald Lorenzo. 5 However, pending the hearing of the application for the writ of execution, TRB challenged the decision of the NLRC before the Supreme Court. The Court, in its decision promulgated on August 30, 1990, 6 modified the decision of the NLRC by deleting the award of mid-year and year-end bonus differentials while affirming the award of holiday pay differential. 7 The bank voluntarily complied with such final judgment and determined the holiday pay differential to be in the amount of P175,794.32. Petitioner never contested the amount thus found by TRB. 8 The latter duly paid its concerned employees their respective entitlement in said sum through their payroll. 9 After private respondent received the above decision of the Supreme Court on September 18, 1990, 10 he notified the petitioner union, the TRB management and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential through a letter dated October 8, 1990. 11 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 and remit said amount to him. 12 The TRB management manifested before the labor arbiter that they did not wish to oppose or comment on private respondent's motion as the claim was directed against the union, 13 while petitioner union filed a comment and opposition to said motion on July 15, 1991. 14 After considering the position of the parties, the labor arbiter issued an order 15 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 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 order. 16 On October 19, 1994, the First Division of the NLRC promulgated a resolution affirming the order of the labor arbiter. 17 The motion for reconsideration filed by petitioner was denied by the NLRC in a resolution dated May 23, 1995, 18 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 and void, 19 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. 20 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. As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent's present claim for attorney's fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney's fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action. 21 With respect to the first situation, the remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. 22 Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. 23 While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. 24 Of course, a petition for attorney's fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client. 25 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 represent and serve the interests of the client, he should have a reasonable compensation for such services. 26 It will thus be appropriate, at this juncture, to determine if private respondent is entitled to an additional remuneration under the retainer agreement 27 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-to-day 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 quasi-judicial 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 retainer. 28 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 the attorney, such contract is conclusive as to the amount of compensation. 30 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. 31 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 embodied in our law, 32 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 us under the same circumstances. 33

As early as 1903, we allowed the payment of reasonable professional fees to an interpreter, notwithstanding the lack of understanding with his client as to his remuneration, on the basis of quasi-contract. 34 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 services. 35 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, there is at least the innominate contract of facio ut des (I do that you may give). 36 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 compensation which lawyers should receive for their professional services. 37However, 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 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 that may thus be granted. 39 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 than the ten percent (10%) ceiling prescribed by the article when circumstances warrant it. 40 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 the basis for determining the lawyer's professional fees in the absence of a contract, 41but 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 meruit basis. In such a case, he would be entitled to receive what he merits for his services. 42

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 based on the equitable postulate that it is unjust for a person to retain benefit without paying for it. 43 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 P17,574.43. 44 Observe the conclusion stated in his order. 45 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. 46 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 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.

FACTS:Petitioner Union and private respondent Atty Cruz entered into a retainer agreement whereby the former obligated itself topay the latter a monthly retainer fee of P3,000 in consideration of the Atty Cruz's undertaking to render the services enumerated in their contract. Petitioner Union referred to Atty Cruz the claims of its members for Holiday, mid year and year-end bonuses against their employer Traders Royal Bank (TRB). NLRC rendered a decision in favor of the union members. On appeal to the SC, the court modified the decision of the NLRC by deleting the award of mid year and year-end bonus. Bank complied with such decision. Atty Cruz, thereafter, notified the union , the TRB management and the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay. He demanded the payment of 10% of the total award. Union opposed the demand. NLRC ruled in favor of Atty Cruz. The union insists that it is not guilty of unjust enrichment because all attorney's fees due to Atty Cruz were covered by the retainer fee of P3,000 which it has been regularly paying to Atty Cruz under their retainer agreement. To be entitiled to additional attorney's fees, it contends that there must be separate mutual agreement prior to the performance of theadditional services of the counsel. Issue:W/n Atty Cruz is entitled to compensation other than the P3,000 retainer fee. HELD: YES. He is entitled to P10,000.An attorney is entitiled 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 represent and serve the interests of the client, he should have a reasonable compensation for such services. The P3,000 which the union pays monthly does not cover the services the counsel actually rendered before the labor arbiter and the NLRC. The monthly fee is intended merely as a consideration for the counsel's commitment to render the services. The P3,000 was a general retainer. It is not payment for counsel's execution or performance of the services of the counsel. The fact that petitioner union and counsel failed to reach a meeting of the minds with regard to the payment of professional fees for special services will not absolve the client of civil liability for the corresponding remuneration. A quasi contract arose between the union and counsel, from the counsel's lawful, voluntary and unilateral prosecution of union's cause. Equity and fair play dictate that petitioner should pay the same after it accepted and benefited from counsel's services. The measure of compensation should be addressed by the rule of quantum meruit, meaning "as much as he deserves".

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 152072 January 31, 2006

ROMEO G. ROXAS and SANTIAGO N. PASTOR, Petitioners, vs. ANTONIO DE ZUZUARREGUI, JR., ENRIQUE DE ZUZUARREGUI, PACITA JAVIER, ELIZABETH R. GONZALES, JOSEFINA R. DAZA, ELIAS REYES, NATIVIDAD REYES, TERESITA REYES, JOSE REYES and ANTONIO REYES, Respondents. x----------------------------------x G.R. No. 152104 January 31, 2006

ANTONIO DE ZUZUARREGUI, JR., ENRIQUE DE ZUZUARREGUI, PACITA JAVIER, ELIZABETH R. GONZALES, JOSEFINA R. DAZA, ELIAS REYES, NATIVIDAD REYES, TERESITA REYES, JOSE REYES and ANTONIO REYES, Petitioners, vs. THE NATIONAL HOUSING AUTHORITY, JOSE B. H. PEDROSA, ROMEO G. ROXAS and SANTIAGO N. PASTOR, Respondents. DECISION CHICO-NAZARIO, J.: Before Us are two petitions for review on certiorari1 which were consolidated per Resolution2 of this Court dated 27 November 2002. The petitioners in G.R. No. 152072, Attys. Romeo G. Roxas and Santiago N. Pastor, seek the reversal and annulment of the Decision3 and Resolution4 of the Court of Appeals dated 25 June 2001 and 06 February 2002, respectively. The petitioners in G.R. No. 152104, the Zuzuarreguis, on the other hand, pray that the said Decision and Resolution of the Court of Appeals be modified. Said Decision and Resolution reversed and set aside the decision of the Regional Trial Court (RTC), Branch 98, Quezon City, dated 03 January 1994. THE ANTECEDENTS The instant cases had their beginnings in 1977 when the National Housing Authority (NHA) filed expropriation proceedings against the Zuzuarreguis, petitioners in G.R. No. 152104, for parcels of land belonging to the latter situated in Antipolo, Rizal, with a total land area of 1,790,570.36 square meters, more or less. This case was lodged before the RTC, Branch 141, Municipality of Makati,5 docketed therein as Civil Case No. 26804 entitled, "National Housing Authority v. Pilar Ibaez Vda. De Zuzuarregui, et al." On 25 May 1983, said case was ordered archived6 by Branch 141. About a month before the aforecited case was ordered archived, the Zuzuarreguis engaged the legal services of Attys. Romeo G. Roxas and Santiago N. Pastor, to represent them in Civil Case No.

26804. This was sealed by a Letter-Agreement dated 22 April 1983, which is partly reproduced hereunder: April 22, 1983 Mr. Antonio de Zuzuarregui, Jr. Mrs. Pacita Javier (as heir to the late Jose de Zuzuarregui) Mr. Antonio de Zuzuarregui ( as heir to the late Pilar Y. vda. De Zuzuarregui) Dear Sir and Madam: This is to confirm in writing our verbal negotiations for us to represent you in the expropriation proceedings filed by the National Housing Authority against your goodselves before the Court of First Instance of Rizal (now the Regional Trial Court) and docketed as Civil Case No. 26804. Our representation shall also include the areas taken over by the Ministry of Public Works and Highways which now formed part of the Marcos Highway at Antipolo, Rizal. The areas affected are the following: xxxx We shall endeavor to secure the just compensation with the National Housing Authority and other governmental agencies at a price of ELEVEN PESOS (P11.00) or more per square meter. Any lower amount shall not entitle us to any attorneys fees. At such price of P11.00 per square meter or more our contingent fee[s] is THIRTY PERCENT (30%) of the just compensation. The other terms and conditions of our proposal are: xxxx 5. You are willing to accept NHA 5-year bonds as part payment up to 75% of the total compensation. In the event of your desire to discount the bonds, we shall assist to have them discounted at 75% of its face value. 6. Our lawyers fees shall be in the proportion of the cash/bonds ratio of the just compensation. Likewise our fees are subject to 10% withholding tax. xxxx Should the above proposal be acceptable to your goodselves, kindly signify your formal acceptance as (sic) the space hereunder provided. Very truly yours, (Sgd.) SANTIAGO N. PASTOR Lawyer (Sgd.) ROMEO G. ROXAS Lawyer

CONFORME: (Sgd.) ANTONIO DE ZUZUARREGUI, JR. In my behalf and as heir to the late Pilar Y. vda. De Zuzuarregui as heir to the late Jose De Zuzuarregui7 (Sgd.) PACITA JAVIER

A Motion to Set Case for Hearing,8 dated 14 February 1984, was filed by Attys. Roxas and Pastor in Civil Case No. 26804, praying that the case be revived and be set for hearing by the court at the earliest date available in its calendar. The appropriate proceedings thereafter ensued. On 29 October 1984, a Partial Decision was rendered by Branch 141 in Civil Case No. 26804 fixing the just compensation to be paid to the Zuzuarreguis at P30.00 per square meter. The NHA filed a Motion for Reconsideration9 dated 23 November 1984 praying that the Partial Decision be reconsidered and set aside, and a new one rendered lowering the amount of just compensation in accordance with applicable laws. Pending resolution thereof, a Joint Special Power of Attorney was executed by Antonio De Zuzuarregui, Jr., Enrique De Zuzuarregui and Pacita Javier, in favor of Attys. Roxas and Pastor, viz:

JOINT SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That We, ANTONIO DE ZUZUARREGUI, JR., ENRIQUE DE ZUZUARREGUI and PACITA JAVIER, all of legal age, , do hereby appoint, name and constitute ATTYS. ROMEO G. ROXAS and SANTIAGO PASTOR, to be our true and lawful attorneys to act in our names and on our behalves to do and execute all or any of the following acts and deeds subject to our approval: xxxx (2) To represent us in the negotiations for a compromise with the National Housing Authority for our properties subject of the above case; (3) To negotiate for and in our behalves for the settlement of the just compensation of our properties payable in cash or in bonds; (4) To sign and prepare all papers relative to the preparation of a Compromise Agreement or any papers and communications which

shall eventually bear our signatures; and (5) That this Special Power of Attorney is enforce (sic) as long as ATTYS. ROMEO G. ROXAS AND SANTIAGO PASTOR are our lawyers in Civil Case No. 26804 before the Regional Trial Court, Makati, Branch CXLI. HEREBY GIVING AND GRANTING unto our said attorneys full power and authority whatsoever requisite or necessary or proper to be done in or about the premises, as fully to all intents and purposes as we might or could lawfully do if personally present, and hereby ratifying and confirming all that our said attorneys shall do or cause to be done under and by virtue of these presents. IN WITNESS WHEREOF, We have hereunto set our hands this 26th day of August, 1985, in Makati, M. M., Philippines. (Sgd.) ANTONIO DE ZUZUARREGUI, JR. (Sgd.) ENRIQUE DE ZUZUARREGUI (Sgd.) PACITA JAVIER10

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On 22 November 1985, a Special Power of Attorney was executed by Beatriz Zuzuarregui vda. De Reyes in favor of Attys. Romeo G. Roxas, Santiago Pastor and Basilio H. Toquero, quoted as follows:

SPECIAL POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That I, BEATRIZ ZUZUARREGUI VDA. DE REYES, Filipino, of legal age, widow, and a resident of E. Rodriguez Ave., Quezon City, Philippines do hereby appoint, name and constitute ATTYS. ROMEO G. ROXAS, SANTIAGO PASTOR and BASILIO H. TOQUERO, to be my true and lawful attorneys : 1. To represent me in the negotiation for a Compromise with the National Housing Authority for my properties subject to my approval in CIVIL CASE No. 26804, entitled "National Housing Authority vs. Pilar

Ibaez de Zuzuarregui, et al., before the Regional Trial Court, Makati, Branch CXLI; 2. To negotiate for and in my behalf for the settlement of the just compensation of my properties payable in cash or in bond, subject to my approval; 3. To sign and prepare all papers relative to the preparation of a Compromise Agreement or any papers and communications which shall eventually bear my signature; 4. To accept for and in my behalf payments for my properties after the Compromise Agreement is duly approved by the Court, the actual receipts of which payments shall be signed by me. HEREBY GIVING AND GRANTING unto my said attorneys full power and authority whatsoever requisite, necessary or proper to be done under and by virtue of these presents. IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of November 1985, in the City of Manila, Philippines. (Sgd.) BEATRIZ ZUZUARREGUI VDA. DE REYES11

On 10 December 1985, a Letter-Agreement was executed by and between Antonio Zuzuarregui, Jr., Pacita Javier and Enrique De Zuzuarregui, on the one hand, and Attys. Romeo G. Roxas and Santiago Pastor, on the other. The said Letter-Agreement reads: December 10, 1985 Atty. Romeo G. Roxas Atty. Santiago Pastor Makati Executive Center Salcedo Village, Makati Dear Atty. Roxas & Atty. Pastor: This will confirm an amendment to our agreement regarding your attorneys fees as our lawyers and counsels for the Zuzuarreguis properties expropriated by National Housing Authority covering ONE HUNDRED SEVENTY-NINE (179) HECTARES, more or less, covered by TCT Nos. 138340, 85633 and 85634 and filed as Civil Case No. 26804. We hereby confirm and agree that we are willing to accept as final and complete settlement for our 179 hectares expropriated by NHA a price of SEVENTEEN PESOS (P17.00) per square meter, or for a total of THIRTY MILLION FOUR HUNDRED THOUSAND PESOS (P30.4 Million), all payable in NHA Bonds.

We also agree and confirm that for and in consideration of your services as our lawyers and counsels in the said expropriation case, we commit and bind ourselves to pay to you, your heirs or assignees-in-interest, as your contingent attorneys fees any and all amount in excess of the SEVENTEEN PESOS (P17.00) per square meter payable in NHA bonds as mentioned above. This Letter Agreement serves also as your authority to collect directly from NHA the amount pertaining to you as your contingent attorneys fees. This Letter Agreement hereby amends and supersedes our previous agreement regarding your attorneys fees as our lawyers and counsels in the above-mentioned expropriation case. Very truly yours, (Sgd.) ANTONIO DE ZUZUARREGUI, JR. In my behalf as heir to the late Pilar I. vda. de Zuzuarregui (Sgd.)PACITA JAVIER As heir to the late Jose De Zuzuarregui (Sgd.) ENRIQUE DE ZUZUARREGUI CONFORME: (Sgd.)ATTY. ROMEO G. ROXAS (Sgd.)ATTY. SANTIAGO PASTOR12 Resolution No. 117413 dated 16 December 1985 was issued by the NHA stating that the Zuzuarregui property would be acquired at a cost of P19.50 per square meter; that the Zuzuarreguis would be paid in NHA Bonds, subject to the availability of funds; and that the yield on the bonds to be paid to the Zuzuarreguis shall be based on the Central Bank rate at the time of payment. As a result of the aforesaid NHA Resolution, a Compromise Agreement was executed between the Zuzuarreguis and the NHA in Civil Case No. 26804. The Compromise Agreement, stipulated among other things, that the just compensation of the Zuzuarregui properties would be at P19.50 per square meter payable in NHA Bonds. In a Decision dated 20 December 1985, the RTC, Branch 141, Makati, approved the Compromise Agreement submitted by the parties. On 27 December 1985, the NHA Legal Department, through Atty. Jose B. H. Pedrosa, released to Atty. Romeo G. Roxas, in behalf of the Zuzuarreguis, the amount of P20,000,000.00 in NHA Bearer Bonds as "partial payment for several parcels of land with a total area of 1,790,570.36 square meters located in Antipolo, Rizal."14 On even date, Atty. Romeo G. Roxas delivered NHA Bonds to Antonio De Zuzuarregui in the amount of P15,000,000.00.15On 04 February 1986, the amount of P34,500,000.00 in Bearer Bonds was again released by the NHA to Atty. Romeo G. Roxas in behalf of the Zuzuarreguis.16 On 14 February 1986, the Zuzuarreguis issued a receipt17 for receiving the amount of P30,070,000.00. This receipt included the P15,000,000.00 given to them last 27 December 1985. Again on 17 February 1986, the Zuzuarreguis, through Beatriz Zuzuarregui vda. De Reyes, issued another receipt for the amount of P450,000.00 in NHA bonds.18 The total amount in NHA bonds released to Atty. Romeo G. Roxas in behalf of the Zuzuarreguis amounted

to P54,500,000.00. Out of this amount, the records show that the amount turned over to the Zuzuarreguis by Atty. Roxas amounted to P30,520,000.00 in NHA bonds. Computed at P19.50 per square meter, the 1,790,570.36 square meters property of the Zuzuarreguis was expropriated at a total price of P34,916,122.00. The total amount released by the NHA was P54,500,000.00. The difference of P19,583,878.00 is, undoubtedly, the yield on the bonds. On 25 August 1987, a letter19 was sent by the Zuzuarreguis new counsel, Jose F. Gonzalez, to Attys. Roxas and Pastor, demanding that the latter deliver to the Zuzuarreguis the yield corresponding to bonds paid by the NHA within a period of 10 days from receipt, under pain of administrative, civil and/or criminal action. Attys. Roxas and Pastor answered via a letter dated 21 September 1987 explaining their side of the story. They stated therein, among other things, that the amount that they got seems huge from the surface, but it just actually passed their hands, as it did not really go to them.20 On 29 September 1987, a letter21 was sent by the Zuzuarreguis through Antonio De Zuzuarregui, Jr., to Attys. Romeo G. Roxas and Santiago N. Pastor, informing the latter that their services as counsels of the Zuzuarreguis (except Betty) in the expropriation proceedings filed by the NHA, docketed as Civil Case No. 26804, was being formally terminated. Apparently unsatisfied with the explanation of Attys. Roxas and Pastor, the Zuzuarreguis filed a civil action for Sum of Money and Damages on 14 November 1989 before the RTC, Quezon City, Branch 98, docketed as Civil Case No. Q-89-4013, against the NHA, Jose B. H. Pedrosa, Atty. Romeo G. Roxas and Atty. Santiago N. Pastor. The Zuzuarreguis demanded that the yield on the NHA bonds be turned over to them. After due hearing, a Decision22 in Civil Case No. Q-89-4013 was rendered on 03 January 1994, dismissing the Complaint. The dispositive portion reads: WHEREFORE, in view of the foregoing consideration[s], judgment is hereby rendered ordering the dismissal of the complaint against all the defendants; and, further ordering plaintiffs, jointly and solidarily, to: 1. Pay each of the defendants Romeo G. Roxas, Santiago Pastor and Jose B. H. Perdosa, the amount of P200,000.00, P200,000.00 and P100,000.00, respectively, as moral damages; 2. Pay each of the defendants Roxas, Pastor and Pedrosa, the amount of P50,000.00, P50,000.00, and P25,000.00, respectively as exemplary damages; 3. Pay attorneys fees to defendants Roxas and Pastor in the amount of P20,000.00; and 4. Pay the costs of this suit. A Notice of Appeal23 dated 10 February 1994 was filed by the Zuzuarreguis. Subsequently, on 26 April 1995, the Zuzuarreguis filed their appeal brief with the Court of Appeals. The case was docketed as CA-G.R. CV No. 45732. A Decision24 was eventually promulgated by the Fifteenth Division of the Court of Appeals on 25 June 2001, reversing and setting aside the ruling of Branch 98, viz:

Therefore, We find that the amount of P4,476,426.275 is, in the opinion of this Court, commensurate to the services rendered by defendants-appellees. This amount has been arrived at by giving to defendants-appellees P2.50 per square meter of the 1,790,570.51 square meter expropriated properties of herein plaintiffs-appellants. WHEREFORE, IN VIEW OF THE FOREGOING, the decision dated January 3, 1994 of the Regional Trial Court, National Capital Judicial Region, Branch 98, Quezon City in Civil Case No. 89-4013 entitled "Antonio Zuzuarregui, Jr., et al. versus National Housing Authority, et al." for "Sum of Money and Damages," is hereby REVERSED and SET ASIDE. Defendants-Appellees Roxas and Pastor are hereby ordered to return to plaintiffs-appellants the amount of P12,596,696.425, the balance from the P17,073,122.70, received as yield from NHA bonds after deducting the reasonable attorneys fees in the amount of P4,476,426.275.25 Attys. Roxas and Pastor filed a Motion for Reconsideration26 on 25 July 2001. The Zuzuarreguis also filed a Motion for Reconsideration27 on 30 July 2001, not having been satisfied with the award, while the NHA and Pedrosa filed their Motions for Reconsideration28 on 03 August 2001. In a Resolution dated 06 February 2002, the Court of Appeals denied for lack of merit all the Motions for Reconsideration. On 05 March 2002, Attys. Roxas and Pastor filed a Petition for Review on Certiorari29 assailing the Decision of the Court of Appeals, docketed as G.R. No. 152072. Likewise, on 21 March 2002, the Zuzuarreguis filed their own Petition for Review on Certiorari30 assailing the same Decision, docketed as G.R. No. 152104.
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ASSIGNMENT OF ERRORS Attys. Roxas and Pastor, petitioners in G.R. No. 152072, assign as errors the following: I THE HONORABLE COURT OF APPEALS GRAVELY ERRED ON A QUESTION OF LAW IN HOLDING THAT THE LETTER-AGREEMENT DATED DECEMBER 10, 1985 CANNOT BE ALLOWED TO STAND AS THE LAW BETWEEN THE PARTIES; and II THE HONORABLE COURT OF APPEALS GRAVELY ERRED ON A QUESTION OF LAW IN HOLDING THAT DEFENDANTS-APPELLANTS, HEREIN PETITIONERS, CONCEALED TO THE PLAINTIFFS-APPELLEES, HEREIN RESPONDENTS, THE YIELD OF THE NHA BONDS 31 The Zuzuarreguis, petitioners in G.R. No. 152101, on the other hand, assign as errors the following: I THE COURT OF APPEALS ERRED IN AWARDING TO PETITIONERS THE PRINCIPAL AMOUNT OF ONLY P12,596,696.425 AND NOT P17,073,122.70 MAKING A DIFFERENCE OF P4,476,426.28 II

THE RESPONDENTS SHOULD BE HELD LIABLE FOR INTEREST FROM THE DATE OF THE FILING OF THE COMPLAINT UNTIL FULLY PAID III THE RESPONDENTS SHOULD BE HELD LIABE FOR MORAL AND EXEMPLARY DAMAGES AND ATTORNEYS FEES IV THE RESPONDENTS NHA AND JOSE B.H. PEDROSA ARE JOINTLY AND SEVERALLY LIABLE WITH RESPONDENTS ROXAS AND PASTOR32 ISSUE FOR RESOLUTION Drawn from the above assignment of errors, it is patent that the principal issue that must be addressed by this Court is: WHETHER OR NOT THE LETTER-AGREEMENT DATED 10 DECEMBER 1985, EXECUTED BY THE ZUZUARREGUIS, AND ATTYS. ROXAS AND PASTOR, FIXING THE EXACT AMOUNT THAT MUST GO TO THE FORMER, SHOULD STAND AS LAW BETWEEN THE PARTIES. THE COURTS RULING Attys. Roxas and Pastor, petitioners in G.R. No. 152072, contend in the main that the Zuzuarreguis are only entitled to the amount of P17.00 per square meter for the 1,790,570.36 square meters expropriated by the government. This was, according to them, embodied in the Letter-Agreement dated 10 December 1985, wherein the Zuzuarreguis agreed to accept the price of P17.00 per square meter. Besides, Attys. Roxas and Pastor contend that the price of P17.00 was even way above the P11.00 that the Zuzuarreguis were willing to accept for their properties under the Letter of Engagement executed by the parties earlier on 22 April 1983. Computed atP17.00 per square meter, they stress that the amount that should go to the Zuzuarreguis for their 1,790,570.36 square meters property should be P30,439,696.10, and that in fact the Zuzuarreguis have receivedP30,520,000.00. The Letter-Agreement dated 10 December 1985 should thus stand as law between the parties. Since this Letter-Agreement, which was "as plain and simple as can be such that there is no need for any further construction," already fixed the amount that would go to the Zuzuarreguis (P17.00 per square meter), then it should be so. Attys. Roxas and Pastor further assert that the receipts issued by the Zuzuarreguis dated 14 February 1986 and 17 February 1986 indicated that the amounts received by the latter were in "full and final payment" for the subject properties. The NHA, for its part, insists that there was no conspiracy between Attys. Roxas and Pastor on the one hand, and the NHA and Atty. Pedrosa on the other, on the application of yields from NHA bonds.33 The Zuzuarreguis, according to the NHA, "miserably failed to substantiate and establish conspiracy" between them. The Zuzuarreguis, for their part, though they were triumphant in the Court of Appeals, insist that the amounts awarded them were not enough. According to them, the P12,596,696.425 awarded by the Court of Appeals was not correct. They should have been awarded the amount of P17,073,122.70. Quoting the Zuzuarreguis:

Respondents Roxas and Pastor retained for themselves the amount of P3,980,000.00 which represented the agreed attorneys fees of Roxas and Pastor at P2.50 per square meter. The amount of P20,000,000.00 representing the yield of all the bearer bonds was, in the words of the Court of Appeals, "deliberately hidden" by respondents Roxas and Pastor from petitioners. By mathematical computation, the P20,000,000.00 yield should be proportionately divided at the ratio of P17.00 (petitioners) and P2.50 (share of respondents Roxas and Pastor). Following this ratio of division, of the P20,000,000.00 yield, P17,073,122.70 should pertain to petitioners and the balance of P2,926,877.30 to respondents Roxas and Pastor. Add this amount to the total of P3,980,000.00 at the agreed rate of P2.50 per square meter, the total attorneys fees of respondents Roxas and Pastor should be P6,906,877.30, not bad, again in the words of the Court of Appeals, for handling "a simple expropriation case which ended up in a compromise agreement." It was, therefore, in error to still deduct the amount of P4,476,426.28 from petitioners share in the yield in the amount of P17,073,122.70 leaving then only P12,596,696.42. What was done, however, is that the product of 1,790,570.36 sq m. (area of the expropriated land of petitioners) and P2.50 which is 4,476,426.28 was again deducted from the P17,073,122.70 which is the corresponding share of the petitioners out of the total yield of P20,000,000.00. If this were a criminal case, petitioners were being sentenced twice for the same offense.34 The Zuzuarreguis further insist that legal interest on the amount of P17,073,122.70 be imposed from the date of the filing of the complaint, including moral and exemplary damages, and attorneys fees. We sustain the Court of Appeals, but with modification in the computation. A contract is a meeting of the minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.35 Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present.36 Under Article 1318 of the Civil Code, there are three essential requisites which must concur in order to give rise to a binding contract: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.37 All these requisites were present in the execution of the Letter-Agreement. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.38 The Zuzuarreguis, in entering into the Letter-Agreement, fully gave their consent thereto. In fact, it was them (the Zuzuarreguis) who sent the said letter to Attys. Roxas and Pastor, for the purpose of confirming all the matters which they had agreed upon previously. There is absolutely no evidence to show that anybody was forced into entering into the Letter-Agreement. Verily, its existence, due execution and contents were admitted by the Zuzuarreguis themselves.39 The second requisite is the object certain. The objects in this case are twofold. One is the money that will go to the Zuzuarreguis (P17.00 per square meter), and two, the money that will go to Attys. Roxas and Pastor (any and all amount in excess of P17.00 per square meter). There was certainty as to the amount that will go to the Zuzuarreguis, and there was likewise certainty as to what amount will go to Attys. Roxas and Pastor. The cause is the legal service that was provided by Attys. Roxas and Pastor. In general, cause is the why of the contract or the essential reason which moves the contracting parties to enter into the contract.40

It is basic that a contract is the law between the parties.41 Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Unless the stipulations in a contract are contrary to law, morals, good customs, public order or public policy, the same are binding as between the parties.42 In Licudan v. Court of Appeals,43 we did not allow the Contract for Professional Services between the counsel and his client to stand as the law between them as the stipulation for the lawyers compensation was unconscionable and unreasonable. We said: Although the Contract for Professional Services dated August 30, 1979 was apparently voluntarily signed by the late Aurelio Licudan for himself and on behalf of his daughter, petitioner Cristina Licudan-Campos and by the petitioner Wilfredo Licudan who both manifested in open court that they gave their free and willing consent to the said contract, we cannot allow the said contract to stand as the law between the parties involved considering that the rule that in the presence of a contract for professional services duly executed by the parties thereto, the same becomes the law between the said parties is not absolute but admits an exception that the stipulations therein are not contrary to law, good morals, good customs, public policy or public order.44 Under the contract in question, Attys. Roxas and Pastor are to receive contingent fees45 for their professional services. It is a deeply-rooted rule that contingent fees are not per se prohibited by law. They are sanctioned by Canon 13 of the Canons of Professional Ethics, viz: 13. Contingent Fees. A contract for contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the case including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness. and Canon 20, Rule 20.01 of the Code of Professional Responsibility,46 viz: CANON 20 A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES. Rule 20.01. A lawyer shall be guided by the following factors in determining his fees: (a) The time spent and the extent of the services rendered or required; (b) The novelty and difficulty of the question involved; (c) The importance of the subject matter; (d) The skill demanded; (e) The probability of losing other employment as a result of acceptance of the proffered case; (f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs; (g) The amount involved in the controversy and the benefits resulting to the client from the service;

(h) The contingency or certainty of compensation; (i) The character of the employment, whether occasional or established; and (j) The professional standing of the lawyer. However, in cases where contingent fees are sanctioned by law, the same should be reasonable under all the circumstances of the case, and should always be subject to the supervision of a court, as to its reasonableness,47such that under Canon 20 of the Code of Professional Responsibility, a lawyer is tasked to charge only fair and reasonable fees. Indubitably entwined with the lawyers duty to charge only reasonable fees is the power of this Court to reduce the amount of attorneys fees if the same is excessive and unconscionable.48 Thus, Section 24, Rule 138 of the Rules of Court partly states: SEC. 24. Compensation of attorneys; agreement as to fees. An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. x x x. A written contract for services shall control the amount to be paid therefore unless found by the court to be unconscionable or unreasonable. Attorneys fees are unconscionable if they affront ones sense of justice, decency or reasonableness.49 It becomes axiomatic therefore, that power to determine the reasonableness or the, unconscionable character of attorney's fees stipulated by the parties is a matter falling within the regulatory prerogative of the courts.50 In the instant case, Attys. Roxas and Pastor received an amount which was equal to forty-four percent (44%) of the just compensation paid (including the yield on the bonds) by the NHA to the Zuzuarreguis, or an amount equivalent to P23,980,000.00 of the P54,500,000.00. Considering that there was no full blown hearing in the expropriation case, ending as it did in a Compromise Agreement, the 44% is, undeniably, unconscionable and excessive under the circumstances. Its reduction is, therefore, in order. This is in accordance with our ruling in the earlier case of Tanhueco v. De Dumo51, where we reduced the amount of attorneys fees from sixty percent (60%) to fifteen percent (15%), for being excessive and unreasonable. It is imperative that the contingent fees received by Attys. Roxas and Pastor must be equitably reduced. In the opinion of this Court, the yield that corresponds to the percentage share of the Zuzuarreguis in the P19.50 per square meter just compensation paid by the NHA must be returned by Attys. Roxas and Pastor.
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The yield on the NHA bonds amounted to P19,583,878.00. This amount must therefore be divided between the Zuzuarreguis, on the one hand, and Attys. Roxas and Pastor, on the other. The division must be pro rata. The amount of P17.00 that should go to the Zuzuarreguis represents 87.18% of the P19.50 per square meter just compensation, The P2.50 per square meter that was to go to Attys. Roxas and Pastor, on the other hand, represents 12.82%. The Zuzuarreguis are entitled to the yield equal to 87.18% of the P19,583,878.00, while Attys. Roxas and Pastor are entitled to 12.82% of said amount. The amount corresponding to 87.17% of P19,583,878.00 is P17,073,224.84. This is the yield that the Zuzuarreguis are entitled to. Attys. Roxas and Pastor, on the other hand, are entitled to P2,510,653.16.

Attys. Roxas and Pastor, in the opinion of this Court, were not shortchanged for their efforts for they would still be earning or actually earned attorneys fees in the amount of P6,987,078.75 (P4,476,425.59 + P2,510,653.16). The amount of P17,073,224.84 must therefore be returned by Attys. Roxas and Pastor to the Zuzuarreguis. They can take this out from the yield in the amount of P19,583,878.00 which they have appropriated for themselves. On the issue of moral and exemplary damages, we cannot award the same for there was no direct showing of bad faith on the part of Attys. Roxas and Pastor, for as we said earlier, contingency fees are not per se prohibited by law. It is only necessary that it be reduced when excessive and unconscionable, which we have already done. We likewise cannot hold the NHA and Atty. Pedrosa jointly and severally liable to the Zuzuarreguis for there is no evidence to show conspiracy between them. WHEREFORE, in view of all the foregoing considerations, the Decision and Resolution of the Court of Appeals dated 25 June 2001 and 06 February 2002, respectively, are AFFIRMED but with the MODIFICATION that Attys. Romeo G. Roxas and Santiago N. Pastor are hereby ordered to return to the Zuzuarreguis the amount of P17,073,224.84. No costs. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 155224 August 23, 2006 VINSON B. PINEDA, Petitioner, vs. ATTY. CLODUALDO C. DE JESUS, ATTY. CARLOS AMBROSIO and ATTY. EMMANUEL MARIANO,Respondents. DECISION CORONA, J.: The subject of this petition for review is the April 30, 2002 decision1 of the Court of Appeals in CAG.R. CV No. 68080 which modified the order2 of the Regional Trial Court (RTC) of Pasig City, Branch 151, in JDRC Case No. 2568 entitled Ma. Aurora D. Pineda v. Vinson B. Pineda. The facts follow. On April 6, 1993, Aurora Pineda filed an action for declaration of nullity of marriage against petitioner Vinson Pineda in the RTC of Pasig City, Branch 151, docketed as JDRC Case No. 2568. Petitioner

was represented by respondents Attys. Clodualdo de Jesus, Carlos Ambrosio and Emmanuel Mariano. During the pendency of the case, Aurora proposed a settlement to petitioner regarding her visitation rights over their minor child and the separation of their properties. The proposal was accepted by petitioner and both parties subsequently filed a motion for approval of their agreement. This was approved by the trial court. On November 25, 1998, the marriage between petitioner and Aurora Pineda was declared null and void. Throughout the proceedings, respondent counsels were well-compensated.3 They, including their relatives and friends, even availed of free products and treatments from petitioners dermatology clinic. This notwithstanding, they billed petitioner additional legal fees amounting to P16.5 million4 which the latter, however, refused to pay. Instead, petitioner issued them several checks totaling P1.12 million5 as "full payment for settlement."6 Still not satisfied, respondents filed in the same trial court7 a motion for payment of lawyers fees for P50 million.8 On April 14, 2000, the trial court ordered petitioner to pay P5 million to Atty. de Jesus, P2 million to Atty. Ambrosio and P2 million to Atty. Mariano. On appeal, the Court of Appeals reduced the amount as follows: P1 million to Atty. de Jesus, P500,000 to Atty. Ambrosio and P500,000 to Atty. Mariano. The motion for reconsideration was denied. Hence, this recourse. The issues raised in this petition are: (1) whether the Pasig RTC, Branch 151 had jurisdiction over the claim for additional legal fees and (2) whether respondents were entitled to additional legal fees. First, a lawyer may enforce his right to his fees by filing the necessary petition as an incident of the main action in which his services were rendered or in an independent suit against his client. The former is preferable to avoid multiplicity of suits.9 The Pasig RTC, Branch 151, where the case for the declaration of nullity of marriage was filed, had jurisdiction over the motion for the payment of legal fees. Respondents sought to collect P50 million which was equivalent to 10% of the value of the properties awarded to petitioner in that case. Clearly, what respondents were demanding was additional payment for legal services rendered in the same case. Second, the professional engagement between petitioner and respondents was governed by the principle ofquantum meruit which means "as much as the lawyer deserves."10 The recovery of attorneys fees on this basis is permitted, as in this case, where there is no express agreement for the payment of attorneys fees. Basically, it is a legal mechanism which prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it. In the same vein, it avoids unjust enrichment on the part of the lawyer himself. Further, Rule 20.4 of the Code of Professional Responsibility advises lawyers to avoid controversies with clients concerning their compensation and to resort to judicial action only to prevent imposition,

injustice or fraud. Suits to collect fees should be avoided and should be filed only when circumstances force lawyers to resort to it.11 In the case at bar, respondents motion for payment of their lawyers fees was not meant to collect what was justly due them; the fact was, they had already been adequately paid. Demanding P50 million on top of the generous sums and perks already given to them was an act of unconscionable greed which is shocking to this Court. As lawyers, respondents should be reminded that they are members of an honorable profession, the primary vision of which is justice. It is respondents despicable behavior which gives lawyering a bad name in the minds of some people. The vernacular has a word for it: nagsasamantala. The practice of law is a decent profession and not a money-making trade. Compensation should be but a mere incident.12 Respondents claim for additional legal fees was not justified. They could not charge petitioner a fee based on percentage, absent an express agreement to that effect. The payments to them in cash, checks, free products and services from petitioners business all of which were not denied by respondents more than sufficed for the work they did. The "full payment for settlement"13 should have discharged petitioners obligation to them. The power of this Court to reduce or even delete the award of attorneys fees cannot be denied. Lawyers are officers of the Court and they participate in the fundamental function of administering justice.14 When they took their oath, they submitted themselves to the authority of the Court and subjected their professional fees to judicial control. 15 WHEREFORE, the petition is hereby PARTIALLY GRANTED. The decision of the Court of Appeals dated April 30, 2002 in CAG.R. CV No. 68080 is hereby MODIFIED. The award of additional attorneys fees in favor of respondents is hereby DELETED. SO ORDERED.

Director vs AbabaG.R. No. L-26096 February 27, 1979 FACTS: This is an appeal from the order of the Court of First Instance of Cebu denying the petition for the cancellation of an adverse claim registered by the adverse claimant on the transfer certificate of title of the petitioners. Atty. Alberto B. Fernandez was retained as counsel by petitioner, Maximo Abarquez, in a Civil Case of the Court of First Instance of Cebu for the annulment of a contract of sale with right of repurchase and for the recovery of the land which was the subject matter thereof.The Court of Appeals in a decision promulgated on August 27, 1963 reversed the decision of the lower court and annulled the dead of pacto deretro. Appellee Agripina Abarquez filed a motion for reconsideration but the same was denied in a resolution dated January 7, 1964 (p. 66, Record on Appeal; p. 13, Rec.) and the judgment became finaland executory on January 22,1964. Subsequently, Transfer Certificate of Title No.31841 was issued on May 19,1965 in the name of Maximo Abarquez, married to Anastacia Cabigas,over his adjudged share in Lots Nos. 5600 and 5602containing an area of 4,085 square meters (p. 110,ROA; p. 13, rec.). These parcels of land later by the subject matter of the adverse claim filed by the claimant. The case having been resolved and title having been issued to petitioner, adverse claimant waited for petitioner to comply with hIS obligation under the document executed by him on June 10,

1961 by delivering the one-half () portion of the said parcels of land. Petitioner refused to comply with his obligation and instead offered to sell the whole parcels of land covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and Marta C. de Larrazabal. Upon being informed of the intention of the petitioner, adverse claimant immediately took steps to protecthis interest by filing with the trial court a motion to annotate attorney's lien on TCT No. 31841 on June10, 1965 and by notifying the prospective buyers of his claim over the one-half portion of the parcels of land. By virtue of the petition of mid affidavit the adverse claim for one-half () of the lots covered by the June 10, 1961 document was annotated on TCT No.31841. ISSUE: RULING: The contract for a contingent fee, being valid, vested in Atty Fernandez an interest or right over the lots in question to the extent of one-half thereof. Said interest became vested in Atty. Fernandez after the case was won on appeal because only then did the assignment of the one-half () portion of the lots in question became effective and binding. So that when he filed his affidavit of adverse claim his interest was already an existing one. There was therefore a valid interest in the lots to be registered in favor of Atty. Fernandez adverse to Mo Abarquez.In the 1967 case of Albano vs. Ramos (20 SCRA 171[19671), the attorney was allowed to recover in a separate action her attomey's fee of one-third (1/3)of the lands and damages recovered as stipulated in the contingent fee contract. And this Court in the recent case of Rosario Vda de Laig vs. Court of Appeals, et al. (supra), which involved a contingent fee of one-half () of the property in question, held than, contingent fees are recognized in this i jurisdiction (Canon 13 of the Canons of Professional Ethics adopted by the Philippine Bar association in1917 [Appendix B, Revised Rules of Court)), which contingent fees may be a portion of the property in litigation."In resolving now the issue of the validity or nullity for the registration of the adverse claim, Section110 of the Land Registration Act (Act 496) should be considered. Under d section, an adverse claim maybe registered only by..Whoever claims any part or interest in registered land adverse to the registered owner, arising subsequent to the date of the o registration ... if no other provision is made in this Act for registering the same ...Moreover, the interest or claim of Atty. Fernandez in the lots in question arose long after the original petition which took place many years ago. And, there is no other provision of the Land RegistrationAct under which the interest or claim may be registered except as an adverse claim under Section110 thereof. The interest or claim cannot be registered as an attorney's charging lien. The lower court was correct in denying the motion to annotate the attomey's lien. 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. Said Section provides that: Section 37. An attorney shall have a lien upon the funds, documents and papers of his client which have lawfully come into his oppossession 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 ... (emphasis supplied).Therefore, as an interest in registered

land, the only adequate remedy open to Atty. Fernandez is to register such interest as an adverse claim. Consequently, there being a substantial compliance with Section 110 of Act 496, the registration of the adverse claim is held to be valid. Being valid, its registration should not be cancelled because as WE have already stated, "it is only when such claim is found unmeritorious that the registration thereof may be cancelled" (Paz Ty Sin Tei vs. Jose Lee Dy Piao 103 Phil. 867 [1958]).The one-half () interest of Atty. Fernandez in the lots in question should therefore be respected. Indeed, he has a better right than petitioner-spouses, Juan Larrazabal and Marta C. de Larrazabal. They purchased their two-thirds (2/3)interest in the lots in question with the knowledgeof the adverse claim of Atty. Fernandez. The adverse claim was annotated on the old transfer certificate of title and was later annotated on the new transfer certificate of title issued to them. Asheld by this Court: The annotation of an adverse claim is a measure designed to protect the interest of a person over a piece of real property where the registration of such interest or right is not otherwise provided for by the Land Registration Act, and serves as a notice and warning to third parties dealing with said property that someone is claiming an interest on the same or a better right than the registered owner thereof (Sanchez, Jr. vs. Court of Appeals, 69 SCRA 332 [1976];Paz Ty Sin Tei vs. Jose Le Dy Piaosupra).Having purchased the property with the knowledge of the adverse claim, they are therefore in bad faith.Consequently, they are estopped from questioning the validity of the adverse claim.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 86100-03 January 23, 1990 METROPOLITAN BANK AND TRUST COMPANY, petitioner, vs. THE HONORABLE COURT OF APPEALS and ARTURO ALAFRIZ and ASSOCIATES, respondents. Bautista, Picazo, Buyco, Tan & Fider for petitioner. Arturo A. Alafriz & Associates for and in their own behalf.

REGALADO, J.: This petition for review on certiorari impugns the decision of the Court of Appeals in CA-G.R. Nos. 08265-08268 1affirming 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 a quantum meruitbasis. The records show that from March, 1974 to September, 1983, private respondent handled the above-mentioned civil cases before the then Court of First Instance of Pasig (Branches I, II, VI, X, XIII, XIX, XX AND XXIV) in behalf of petitioner. 2 The civil cases were all for the declaration of nullity of certain deeds of sale, with damages. The antecedental facts 3 which spawned the filing of said actions are undisputed and are hereinunder set forth as found by the trial court and adopted substantially in the decision of respondent court. A certain Celedonio Javier bought seven (7) parcels of land owned by Eustaquio Alejandro, et al., with a total area of about ten (10) hectares. These properties were thereafter mortgaged by Javier with the petitioner to secure a loan obligation of one Felix Angelo Bautista and/or International Hotel Corporation. The obligors having defaulted, petitioner foreclosed the mortgages after which certificates of sale were issued by the provincial sheriff in its favor as purchaser thereof Subsequently, Alejandro, alleging deceit, fraud and misrepresentation committed against him by Javier in the sale of the parcels of land, brought suits against Javier et al., and included petitioner as defendant therein. It was during the pendency of these suits that these parcels of land were sold by petitioner to its sister corporation, Service Leasing Corporation on March 23, 1983 for the purported price of P600,000.00. On the same day, the properties were resold by the latter to Herby Commercial and Construction Corporation for the purported price of P2,500,000.00. Three months later, or on June 7, 1983, Herby mortgaged the same properties with Banco de Oro for P9,200,000.00. The lower court found that private respondent, did not have knowledge of these transfers and transactions. As a consequence of the transfer of said parcels of land to Service Leasing Corporation, petitioner filed an urgent motion for substitution of party on July 28, 1983. Private respondent, on its part, filed on August 16, 1983 a verified motion to enter in the records of the aforesaid civil cases its charging lien, pursuant to Section 37, Rule 138 of the Rules of Court, equivalent to twenty-five percent (25%) of the actual and current market values of the litigated properties as its attorney's fees. Despite due notice, petitioner failed to appear and oppose said motion, as a result of which the lower court granted the same and ordered the, Register of Deeds of Rizal to annotate the attorney's liens on the certificates of title of the parcels of land. Meanwhile, the plaintiffs Alejandro, et al. in the aforesaid civil cases, which had been consolidated and were pending before the Regional Trial Court of Pasig, filed a motion to dismiss their complaints therein, which motion the lower court granted with prejudice in its order dated September 5, 1983. On December 29, 1983, the same court ordered the Register of Deeds to annotate the attorney's liens of private respondent on the derivative titles which cancelled Transfer Certificates of Title Nos. 453093 to 453099 of the original seven (7) parcels of land hereinbefore adverted to. On May 28,1984, private respondent filed a motion to fix its attorney's fees, based on quantum meruit, which motion precipitated an exchange of arguments between the parties. On May 30, 1984, petitioner manifested that it had fully paid private respondent; the latter, in turn, countered that the amount of P50,000.00 given by petitioner could not be considered as full payment but merely a cash advance, including the amount of P14,000.00 paid to it on December 15, 1980. It further appears that private respondent attempted to arrange a compromise with petitioner in order to avoid suit, offering a compromise amount of P600,000.00 but the negotiations were unsuccessful.

Finally, on October 15,1984, the court a quo issued the order assailed on appeal before respondent court, granting payment of attorney's fees to private respondent, under the following dispositive portion:
PREMISES CONSIDERED, the motion is hereby granted and the Metropolitan Bank and Trust Company (METROBANK) and Herby Commercial and Construction Corporation 4 are hereby ordered to pay the movant Arturo Alafriz and Associates the amount of P936,000.00 as its proper, just and reasonable attorney's fees in these cases. 5

On appeal, respondent court affirmed the order of the trial court in its decision promulgated on February 11, 1988. A motion for reconsideration, dated March 3, 1988, was filed by petitioner but the same was denied in a resolution promulgated on November 19, 1988, hence the present recourse. The issues raised and submitted for determination in the present petition may be formulated thus: (1) whether or not private respondent is entitled to the enforcement of its charging lien for payment of its attorney's fees; (2) whether or not a separate civil suit is necessary for the enforcement of such lien and (3) whether or not private respondent is entitled to twenty-five (25%) of the actual and current market values of the litigated properties on aquantum meruit basis. On the first issue, petitioner avers that private respondent has no enforceable attorney's charging lien in the civil cases before the court below because the dismissal of the complaints therein were not, in the words of Section 37, Rule 138, judgments for the payment of money or executions issued in pursuance of such judgments. 6 We agree with petitioner. On the matter of attorney's liens Section 37, Rule 138 provides: . . . He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements. Consequent to such provision, a charging lien, to be enforceable as security for the payment of attorney's fees, requires as a condition sine qua non a judgment for money and execution in pursuance of such judgment secured in the main action by the attorney in favor of his client. A lawyer may enforce his right to fees by filing the necessary petition as an incident in the main action in which his services were rendered when something is due his client in the action from which the fee is to be paid. 7 In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs "in view of the frill satisfaction of their claims." 8 The dismissal order neither provided for any money judgment nor made any monetary award to any litigant, much less in favor of petitioner who was a defendant therein. This being so, private respondent's supposed charging lien is, under our rule, without any legal basis. It is flawed by the fact that there is nothing to generate it and to which it can attach in the same manner as an ordinary lien arises and attaches to real or personal property.

In point is Morente vs. Firmalino, 9 cited by petitioner in support of its position. In that case, movantappellant 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 defendant, herein appellant's lien could not be enforced. The appellant, could, by appropriate action, collect his fees as attorney. Private respondent would nevertheless insist that the lien attaches to the "proceeds of a judgment of whatever nature," 10 relying on the case of Bacolod-Murcia Milling Co. Inc. vs. Henares 11 and some American cases holding that the lien attaches to the judgment recovered by an attorney and the proceeds in whatever form they may be. 12 The contention is without merit just as its reliance is misplaced. It is true that there are some American cases holding that the lien attaches even to properties in litigation. However, the statutory rules on which they are based and the factual situations involved therein are neither explained nor may it be said that they are of continuing validity as to be applicable in this jurisdiction. It cannot be gainsaid that legal concepts of foreign origin undergo a number of variegations or nuances upon adoption by other jurisdictions, especially those with variant legal systems. In fact, the same source from which private respondent culled the American cases it cited expressly declares that "in the absence of a statute or of a special agreement providing otherwise, the general rule is that an attorney has no lien on the land of his client, notwithstanding such attorney has, with respect to the land in question, successfully prosecuted a suit to establish the title of his client thereto, recovered title or possession in a suit prosecuted by such client, or defended successfully such client's right and title against an unjust claim or an unwarranted attack," 13 as is the situation in the case at bar. This is an inescapable recognition that a contrary rule obtains in other jurisdictions thereby resulting in doctrinal rulings of converse or modulated import. To repeat, since in our jurisdiction the applicable rule provides that a charging lien attaches only to judgments for money and executions in pursuance of such judgment, then it must be taken in haec verba. The language of the law is clear and unequivocal and, therefore, it must be taken to mean exactly what it says, barring any necessity for elaborate interpretation. 14 Notably, the interpretation, literal as it may appear to be, is not without support in Philippine case law despite the dearth of cases on all fours with the present case. In Caina et al. vs. Victoriano, et al., 15 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 by a writ of execution." In Ampil vs. Juliano-Agrava, et al., 16 the Court once again declared that a charging lien "presupposes that the attorney has secured a favorable money judgment for his client . . ." Further, in Director of Lands vs. Ababa, et al., 17 we held that "(a) charging lien under Section 37, Rule 138 of the Revised Rules of Court is limited only to money judgments and not to judgments for the annulment of a contract or for delivery of real property as in the instant case." Even in the Bacolod-Murcia Milling case, which we previously noted as cited by private respondent, there was an express declaration that "in this jurisdiction, the lien does not attach to the property in litigation."

Indeed, an attorney may acquire a lien for his compensation upon money due his client from the adverse party in any action or proceeding in which the attorney is employed, but such lien does not extend to land which is the subject matter of the litigation. 18 More specifically, an attorney merely defeating recovery against his client as a defendant is not entitled to a lien on the property involved in litigation for fees and the court has no power to fix the fee of an attorney defending the client's title to property already in the client's possession. 19 While a client cannot defeat an attorney's right to his charging lien by dismissing the case, terminating the services of his counsel, waiving his cause or interest in favor of the adverse party or compromising his action, 20 this rule cannot find application here as the termination of the cases below was not at the instance of private respondent's client but of the opposing party. The resolution of the second issue is accordingly subsumed in the preceding discussion which amply demonstrates that private respondent is not entitled to the enforcement of its charging lien. Nonetheless, it bears mention at this juncture that an enforceable charging lien, duly recorded, is within the jurisdiction of the court trying the main case and this jurisdiction subsists until the lien is settled. 21 There is certainly no valid reason why the trial court cannot pass upon a petition to determine attorney's fees if the rule against multiplicity of suits is to be activated. 22 These decisional rules, however, apply only where the charging lien is valid and enforceable under the rules. On the last issue, the Court refrains from resolving the same so as not to preempt or interfere with the authority and adjudicative facility of the proper court to hear and decide the controversy in a proper proceeding which may be brought by private respondent. A petition for recovery of attorney's fees, either as a separate civil suit or as an incident in the main action, has to be prosecuted and the allegations therein established as any other money claim. The persons who are entitled to or who must pay attorney's fees have the right to be heard upon the question of their propriety or amount. 23Hence, the obvious necessity of a hearing is beyond cavil. Besides, in fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be considered are generally (1) the importance of the subject matter in controversy, (2) the extent of the services rendered, and (3) the professional standing of the lawyer. 24 These are aside from the several other considerations laid down by this Court in a number of decisions as pointed out by respondent court.25 A determination of all these factors would indispensably require nothing less than a full-blown trial where private respondent can adduce evidence to establish its right to lawful attorney's fees and for petitioner to oppose or refute the same. Nothing in this decision should, however, be misconstrued as imposing an unnecessary burden on private respondent in collecting the fees to which it may rightfully be entitled. But, as in the exercise of any other right conferred by law, the proper legal remedy should be availed of and the procedural rules duly observed to forestall and obviate the possibility of abuse or prejudice, or what may be misunderstood to be such, often to the undeserved discredit of the legal profession. Law advocacy, it has been stressed, is not capital that yields profits. The returns it births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government interference, is impressed with public interest, for which it is subject to State regulation. 26

ACCORDINGLY, the instant petition for review is hereby GRANTED and the decision of respondent Court of Appeals of February 11, 1988 affirming the order of the trial court is hereby REVERSED and SET ASIDE, without prejudice to such appropriate proceedings as may be brought by private respondent to establish its right to attorney's fees and the amount thereof. SO ORDERED.

METROPOLITAN BANK V. CA 194 SCRA 169

FACTS:
Gomez opened an account with Golden Savings bank and deposited 38 treasury warrants. All these warrants were indorsed by the cashier of Golden Savings, and deposited it to the savings account in a Metrobank branch. They were sent later on for clearing by the branch office to the principal office of Metrobank, which forwarded them to the Bureau of Treasury for special clearing. On persistent inquiries on whether the warrants have been cleared, the branch manager allowed withdrawal of the warrants, only to find out later on that the treasury warrants have been dishonored.

HELD:
The treasury warrants were not negotiable instruments. Clearly, it is indicated that it was nonnegotiable and of equal significance is the indication that they are payable from a particular fund, Fund 501. This indication as the source of payment to be made on the treasury warrant makes the promise to pay conditional and the warrants themselves non-negotiable. Metrobank then cannot contend that by indorsing the warrants in general, GS assumed that they were genuine and in all respects what they purport it to be, in accordance to Section 66 of the NIL. The simple reason is that the law isnt applicable to the non-negotiable treasury warrants. The indorsement was made for the purpose of merely depositing them with Metrobank for clearing. It was in fact Metrobank which stamped on the back of the warrants: All prior indorsements and/or lack of endorsements guaranteed

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

A.C. No. 3773 September 24, 1997 ANGELITA C. ORCINO, complainant, vs. ATTY. JOSUE GASPAR, respondent.

PUNO, J.: On June 14, 1992, complainant Angelita C. Orcino filed with this Court a letter-complaint dated December 10, 1991 against respondent Atty. Josue Gaspar, her former counsel. Complainant prayed that this Court impose disciplinary sanctions on respondent for abandoning his duties and for failing to return the legal fees she fully paid for his services. The complaint arose from the following facts: Complainant engaged the services of respondent to prosecute a criminal case she intended to file against several suspects in the slaying of her husband. In consideration thereof, complainant bound herself to pay respondent legal fees of P20,000.00 P10,000.00 to be paid upon signing of the contract and the balance to be paid on or before the conclusion of the case. Complainant was also to pay P500.00 per appearance of respondent before the court and fiscal. This agreement was embodied in a contract executed on February 22, 1991. 1 In accordance with the contract, complainant paid respondent the sum of P5,000.00 on February 25, 1991, 2another P5,000.00 on March 31, 1991, 3 and P10,000.00 on May 21, 1991, 4 for a total of P20,000.00. Forthwith, respondent entered into his duties. He interviewed witnesses and gathered evidence to build a case against the suspects. He drew up the necessary sworn statements and dutifully attended the preliminary investigation. The case was thereafter filed with the Regional Trial Court, Branch 37, Baloc, Sto. Domingo, Nueva Ecija. 5 As private prosecutor, respondent religiously attended the bail hearings for the accused although these hearings were postponed on motion of the accused's counsel. Respondent however failed to attend the hearing scheduled in August 1991. It was at this nearing that the court, over complainant's objections, granted bail to all the accused. After the hearing, complainant immediately went to respondent's residence and confronted him with his absence. 6Respondent explained that he did not receive formal notice of the hearing. 7 Complainant became belligerent and started accusing him of jeopardizing the case by his absence. Respondent said that her suspicions were based on rumors and intrigues fed to her by her relatives. 8 Complainant, however, continued accusing him belligerently. She asked for the records of the case saying that she could refer them to another lawyer. Stung by her words, respondent gave her the records. 9 Complainant never returned the records nor did she see respondent. On September 18, 1991, respondent filed before the trial court a "Motion to Withdraw as Counsel." 10 The motion did not bear the consent of complainant. On October 23, 1991, the court issued an order directing respondent to secure complainant's consent to the motion "and his appearance as private prosecutor shall continue until he has secured this consent." 11 Complainant refused to sign her conformity to respondent's withdrawal. 12 Meanwhile, the hearings in the criminal case continued. Respondent did not appear at the hearings nor did he contact complainant. Complainant was thus compelled to engage the services of another lawyer. Hence, the letter-complaint. We referred the letter-complaint to the Integrated Bar of the Philippines, Commission on Bar Discipline, for investigation, report and recommendation.

The rule in this jurisdiction is that a client has the absolute right to terminate the attorney-client relation at any time with or without cause. 13 The right of an attorney to withdraw or terminate the relation other than for sufficient cause is, however, considerably restricted. 14 Among the fundamental rules of ethics is the principle that an attorney who undertakes to conduct an action impliedly stipulates to carry it to its conclusion. 15 He is not at liberty to abandon it without reasonable cause. 16 A lawyer's right to withdraw from a case before its final adjudication arises only from the client's written consent or from a good cause. 17 Section 26 of Rule 138 of the Revised Rules of Court provides: Sec. 26. Change of attorneys 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. xxx xxx xxx A lawyer may retire at any time from any action special proceeding with the written consent of his client filed in court and copy thereof served upon the adverse party. Should the client refuse to give his consent, the lawyer must file an application with the court. The court, on notice to the client and adverse party, shall determine whether he ought to be allowed to retire. The application for withdrawal must be based on a good cause. 18 In the instant case, complainant did not give her written consent to respondent's withdrawal. The court thus ordered respondent to secure this consent. Respondent allegedly informed the court that complainant had become hostile and refused to sign his motion. 19 He, however, did not file an application with the court for it to determine whether he should be allowed to withdraw. Granting that respondent's motion without complainant's consent was an application for withdrawal with the court, we find that this reason is insufficient to justify his withdrawal from the case. Respondent's withdrawal was made on the ground that "there no longer exist[ed] the . . . confidence" between them and that there had been "serious differences between them relating to the manner of private prosecution." 20 Rule 22.01 of Canon 22 of the Code of Professional Responsibility provides: CANON 22 A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR GOOD CAUSE AND UPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES. Rule 22.01 A lawyer may withdraw his services in any of the following cases: a) When the client pursues an illegal or immoral course of conduct in connection with the matter he is handling; b) When the client insists that the lawyer pursue conduct violative of these canons and rules;

c) When his inability to work with co-counsel will not promote the best interest of the client; d) When the mental or physical condition of the lawyer renders it difficult for him to carry out the employment effectively; e) When the client deliberately fails to pay the fees for the services or fails to comply with the retainer agreement; f) When the lawyer is elected or appointed to public office; and g) Other similar cases. A lawyer may withdraw his services from his client only in the following instances: (a) when a client insists upon an unjust or immoral conduct of his case; (b) when the client insists that the lawyer pursue conduct violative of the Code of Professional Responsibility; (c) when the client has two or more retained lawyers and the lawyers could not get along to the detriment of the case; (d) when the mental or physical condition of the lawyer makes him incapable of handling the case effectively; (e) when the client deliberately fails to pay the attorney's fees agreed upon; (f) when the lawyer is elected or appointed to public office; (g) other similar cases. The instant case does not fall under any of the grounds mentioned. Neither can this be considered analogous to the grounds enumerated. As found by the Commission on Bar Discipline, this case arose from a simple misunderstanding between complainant and respondent. Complainant was upset by respondent's absence at the hearing where bail was granted to the suspected killers of her husband. She vehemently opposed the grant of bail. It was thus a spontaneous and natural reaction for her to confront respondent with his absence. Her belligerence arose from her overzealousness, nothing more. Complainant's words and actions may have hurt respondent's feelings considering the work he had put into the case. But her words were uttered in a burst of passion. And even at that moment, complainant did not expressly terminate respondent's services. She made this clear when she refused to sign his "Motion to Withdraw as Counsel." Assuming, nevertheless, that respondent was justified in terminating his services, he, however, cannot just do so and leave complainant in the cold unprotected. The lawyer has no right to presume that his petition for withdrawal will be granted by the court. 21 Until his withdrawal shall have been approved, the lawyer remains counsel of record who is expected by his client as well as by the court to do what the interests of his client require. 22 He must still appear on the date of hearing 23 for the attorney-client relation does not terminate formally until there is a withdrawal of record. 24 Respondent expressly bound himself under the contract to bring the criminal case to its termination. He was in fact paid in full for his services. Respondent failed to comply with his undertaking, hence, it is but fair that he return to complainant half of the amount paid him. The peculiar circumstances of the case have rendered it impossible for respondent and complainant to continue their relation under the contract. IN VIEW WHEREOF, respondent is admonished to exercise more prudence and judiciousness in dealing with his clients. He is also ordered to return to complainant within fifteen (15) days from notice the amount of ten thousand pesos (P10,000.00) representing a portion of his legal fees received from the latter with a warning that failure on his part to do so will result in the imposition of stiffer disciplinary action. SO ORDERED.

ORCINO vs. ATTY. GASPARFACTS: COMPLAINT: abandoning his duties and for failing to return the legal fees, fully paid for his services. PENALTY: ordered to return to complainant within fifteen(15) days from notice the amount of ten thousand pesos (P10,000.00) represent in a portion of his legal fees received from the latter with a warning that failure on his part to do so will result in the imposition of stiffer disciplinary action Complainant engaged the service of Atty. Gaspar to handle the case she was planning to institute against the suspect of killing her husband. They entered into a contract, stipulating that said lawyer shall handle the case, also included payments and how payment be made. In accordance with the contract, complainant made several payments. Respondent as a private prosecutor, he religiously attended the hearing, however in one time he that was absent, the accused were all granted bail. The complainant became belligerent and started accusing him of jeopardizing the case by his absence, she get the record from respondent and said that she could refer them to another lawyer. Respondent in dying, said that he did not receive anotice.Respondent filed its withdrawal as counsel forcomplainant on the criminal case, but then, his withdrawal was bearing no conformity from the complainant, so the court advice him or else he would remain the complainants counsel. Respondent did not secure the conformity of the complainant as it refused of doing so. Criminal case continued its hearing but counsel did not appear nor contact the complainant. In result, the latter forced to engage the service of another lawyer. ISSUE: RULING: Section 26 of Rule 138 of the Revised Rules of Court provides: Sec. 26. Change of attorneys 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. A lawyer may retire at any time from any action special proceeding with the written consent of his client filed in court and copy thereof served upon the adverse party. Should the client refuse to give his consent, the lawyer must file an application with the court. The court, on notice to the client and adverse party, shall determine whether he ought to be allowed to retire. The application for withdrawal must be based on a good cause. 18In the instant case, complainant did not give her written consent to respondent's withdrawal. The court thus ordered respondent to secure this consent. Respondent allegedly informed the court that complainant had become hostile and refused to sign his motion. 19 He, however, did not file an application with the court for it to determine whether he should be allowed to withdraw. Rule 22.01 of Canon 22 of the Code of Professional Responsibility provides: CESONLY FOR GOOD CAUSE AND UPON NOTICE APPROPRIATE IN THECIRCUMSTANCES. following cases: a) when a client insists upon an unjust or immoral conduct of his case;b) when the client

insists that the lawyer pursue conduct violative of the Code of Professional Responsibility; ) when the client has two or more retained lawyers and the lawyers could not get along to the detriment of the case; d) when the mental or physical condition of the lawyer makes him incapable of handling the case effectively; e) when the client deliberately fails to pay the attorney's fees agreed upon; f) when the lawyer is elected or appointed to public office; g) other similar cases. The instant case does not fall under any of the grounds mentioned. Neither can this be considered analogous to the grounds enumerated. As found by the Commission on Bar Discipline, this case arose from a simple misunderstanding between complainant and respondent. Complainant was upset by respondent's absence at the hearing where bail was granted to the suspected killers of her husband. She vehemently opposed the grant of bail. It was thus a spontaneous and natural reaction for her to confront respondent with his absence. Her belligerence arose from her overzealousness, nothing more. Complainant's words and actions may have hurt respondent's feelings considering the work he had put into the case.But her words were uttered in a burst of passion. And even at that moment, complainant did not expressly terminate respondent's services. She made this clear when she refused to sign his "Motion to Withdraw as Counsel."

[A.C. No. 4215. May 21, 2001]

FELICISIMO M. MONTANO, complainant, vs. INTEGRATED BAR of the PHILIPPINES AND Atty. JUAN S. DEALCA, respondents. RESOLUTION
KAPUNAN, J.:

In a verified complaint filed before this Court on March 9, 1994, complainant Felicisimo M. Montano charged Atty. Juan Dealca with misconduct and prays that he be sternly dealt wit administratively. The complaint[1] is summarized as follows: 1. On November 14, 1992, the complainant hired the services of Atty. Juan S. Dealca as his counsel in collaboration with Atty. Ronando L. Gerona in a case pending before the Court of Appeals docketed as CA-G.R. CV No. 37467 wherein the complainant was the plaintiff-appellant. 2. The parties agreed upon attorneys fees in the amount of P15,000.00, fifty percent (50%) of which was payable upon acceptance of the case and the remaining balance upon the termination of the case. Accordingly, complainant paid respondent the amount of P7,500.00 representing 50% of the attorneys fee.

3. Thereafter, even before the respondent counsel had prepared the appellants brief and contrary to their agreement that the remaining balance be payable after the termination of the case, Atty. Dealca demanded an additional payment from complainant. Complainant obliged by paying the amount of P4,000.00. 4. Prior to the filing of the appellants brief, respondent counsel again demand payment of the remaining balance of 3,500.00. When complainant was unable to do so, respondent lawyer withdrew his appearance as complainants counsel without his prior knowledge and/or conformity. Returning the case folder to the complainant, respondent counsel attached a Note dated February 28, 1993,[2] stating: 28 February 1994 Pepe and Del Montano, For breaking your promise, since you do not want to fulfill your end of the bargain, heres your reward: Henceforth, you lawyer for yourselves. Here are your papers. Johnny Complainant claimed that such conduct by respondent counsel exceeded the ethical standards of the law profession and prays that the latter be sternly dealt with administratively. Complainant later on filed motions praying for the imposition of the maximum penalty of disbarment. After respondent counsel filed his comment on the complaint, the Court in the Resolution of August 1, 1994, referred the case to the Integrated Bar of the Philippines (IBP) for investigation, report and recommendation. The Investigating Commissioner found respondent counsel guilty of unprofessional conduct and recommended that he be severely reprimanded. However, in a Resolution[3] by the IBP Board of Governors on July 26, 1997, it was resolved that the penalty recommended by the Investigating Commissioner meted to respondent by amended to three (3) months suspension from the practice of law for having been found guilty of misconduct, which eroded the public confidence regarding his duty as a lawyer. Respondent counsel sought reconsideration of the aforementioned resolution of the IBP, alleging that the latter misapprehended the facts and that, in any case, he did not deserve the penalty imposed. The true facts, according to him, are the following:
1. Complainant is being represented by Atty. Ronando L. Gerona in his case on appeal;

2. Due to the ailment of Atty. Geronas daughter, he could not prepare and submit complainants appellants brief on time; 3. Complainant went to the respondent to do just that, i.e., prepare and submit his appellants brief on time at the agreed fee of P15,000.00, 50% down and 50% upon its completion; 4. Working overtime, respondent was able to finish the appellants brief ahead of its deadline, so he advised the complainant about its completion with the request that the remaining balance of P7,500.00 be paid. Complainant paid P4,000.00 only, promising to pay the P3,500.00 tomorrow or on later particular date. Please take note that, at this juncture, there was already a breach of the agreement on complainants part. 5. When that tomorrow or on a later particular date came, respondent, thru a messenger, requested the complainant to pay the P3,500.00 as promised but word was sent that he will again pay tomorrow or on later date. This promise-non-payment cycle went on repeatedly until the last day of the filing of the brief. Please take note again that it was not the respondent but the complainant who sets the date when he will pay, yet fails to pay as promised; 6. Even without being paid completely, respondent, of his own free will and accord, filed complainants brief on time; 7. After the brief was filed, respondent tried to collect from the complainant the remaining balance of P3,500.00, but the latter made himself scarce. As the records would show, such P3,500.00 remains unpaid until now; 8. Sensing that something was amiss, respondent sent the February 28, 1993 note and case folder to the complainant, hoping that the latter would see personally the former about it to settle the matter between them; 9. However, instead of seeing the respondent, complainant filed this case; 10. Respondent was constrained to file his withdrawal with the Court of Appeals because of this case to avoid further misunderstanding since he was the one who signed the appellants brief although Atty. Gerona was his counsel of record. Such withdrawal was accordingly granted by the appellate court;

xxx xxx

xxx.[4]

Respondent counsel further averred that complainants refusal to pay the agreed lawyers fees, measly as it was, was deliberate and in bad faith; hence, his withdrawal as counsel was just, ethical and proper. Respondent counsel concluded that not only was the penalty of suspension harsh for his act of merely trying to collect payment for his services rendered, but it indirectly would punish his family since he was the sole breadwinner with children in school and his wife terminally ill with cancer. In its Resolution No. XIII-97-129 dated October 25, 1997, the IBP denied Atty. Dealcas motion for reconsideration, to wit: xxx RESOLVED TO DENY Atty. Dealcas Motion For Reconsideration of the Boards Decision in the above-entitled case there being no substantive reason to reverse the

finding therein. Moreover, the motion is improperly laid the remedy of the respondent is to file the appropriate pleading with the Supreme Court within fifteen (15) days from receipt of notice of said Decision pursuant to Sec. 12 [c] of Rule 139B.[5] On December 10, 1997, this Court noted the following pleadings filed in the present complaint,
(a) notice and a copy of Resolution No. XII-97-154 dated July 26, 1997 of the Integrated Bar of the Philippines amending the recommendation of the Investigating Commissioner of reprimand to three (3) months suspension of respondent from the practice of law for having been found guilty of misconduct which eroded the public confidence regarding his duty as a lawyer; (b) complainants motion for praying for the imposition of the maximum penalty of disbarment; (c) motion dated September 15, 1997 of respondent for reconsideration of the aforesaid resolution of July 26, 1997; (d) comment/opposition of respondent praying that the motion for the imposition of the maximum penalty be denied; (e) comment of complainant praying that the penalty of three (3) months suspension for the practice of law as recommended by the Integrated Bar of the Philippines pursuant to Resolution No. XII-97-154 be raised to a heavier penalty; (f) comment/manifestation/opposition of complainant praying that the respondent be disbarred; and (g) rejoinder of respondent praying that this case be dismissed for being baseless.[6]

and referred the same to the IBP for evaluation and report. In compliance therewith, on March 28, 1998, the IBP issued Resolution No. XIII98-42 referring the above-entitled case to Commissioner Vibar for evaluation, report and recommendation in view of the Motion for Reconsideration granted by the Supreme Court. The Investigating Commissioner, after referring the case, recommended that his original recommendation of the imposition of the penalty of reprimand be maintained, noting that respondent counsel had served the IBP well as President of the Sorsogon Chapter.[7] Accordingly, on February 23, 1999, the IBP Board of Governors, issued the following resolution:
RESOLUTION NO. XIII-99-48

xxx

RESOLVED to ADOPT and APPROVE, as it is hereby ADOPTED and APPROVED, the Report and Recommendation of the Investigating Commissioner in the above-entitled case, herein made part of this Resolution/Decision as Annex A; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules, the Motion for Reconsideration be granted and that the penalty of REPRIMAND earlier recommended by the Investigating Commissioner be imposed on Atty. Juan S. Dealca.[8] Complainant asked the IBP to reconsider the foregoing resolution but the motion was denied.[9] On April 10, 2000, complainant filed with this Court a petition for review on certiorari in connection with Administrative Case No. 4215 against the IBP and respondent counsel averring that the IBP Board of Governors committed grave abuse of discretion when it overturned its earlier resolution and granted respondent counsels motion for reconsideration on February 23, 1999. He claimed that the earlier resolution denying the motion for reconsideration issued on October 25, 1997 had already become final and executory; hence, any further action or motion subsequent to such final and executory judgment shall be null and void. When the Court issued the resolution of December 10, 1997 treating the several pleadings filed in the present complaint, it should be noted that the IBP resolution denying respondents motion for reconsideration (Resolution No. XIII-97-129) dated October 25, 1997, for some reason, had not yet reached this Court. As of that date, the only IBP resolution attached to the records of the case was Resolution No. XII-9754 amending the administrative sanction from reprimand to three months suspension. Hence, at the time the pleadings were referred back to the IBP in the same resolution, the Court was not aware that the IBP had already disposed of the motion for reconsideration filed by respondent counsel. Thus, when the IBP was informed of the said Court resolution, it construed the same as granting Atty. Dealcas motion for reconsideration and as an order for IBP to conduct a re-evaluation of the case. The IBP assumed that its resolution of October 25, 1997 was already considered by this Court when it referred the case back to the IBP. It failed to notice that its resolution denying the motion for reconsideration was not among those pleadings and resolution referred back to it. Hence, on the strength of this Courts resolution which it had inadvertently misconstrued, the IBP conducted a re-evaluation of the case and came up with the assailed resolution now sought to be reversed. The Court holds that the error is not attributable to the IBP. It is regrettable that the procedural infirmity alleged by complainant actually arose from a mere oversight which was attributable to neither party.

Going into the merits, we affirm the findings made by the IBP that complainant engaged the services of respondent lawyer only for the preparation and submission of the appellants brief and the attorneys fees was payable upon the completion and submission of the appellants brief and not upon the termination of the case. There is sufficient evidence which indicates complainants willingness to pay the attorneys fees. As agreed upon, complainant paid half of the fees in the amount of P7,500.00 upon acceptance of the case. And while the remaining balance was not yet due as it was agreed to be paid only upon the completion and submission of the brief, complainant nonetheless delivered to respondent lawyer P4,000.00 as the latter demanded. This, notwithstanding, Atty. Dealca withdrew his appearance simply because of complainants failure to pay the remaining balance of P3,500.00, which does not appear to be deliberate. The situation was aggravated by respondent counsels note to complainant withdrawing as counsel which was couched in impolite and insulting language.[10] Given the above circumstances, was Atty. Dealcas conduct just and proper? We find Atty. Dealcas conduct unbecoming of a member of the legal profession. Under Canon 22 of the Code of Professional Responsibility, lawyer shall withdraw his services only for good cause and upon notice appropriate in the circumstances. Although he may withdraw his services when the client deliberately fails to pay the fees for the services,[11] under the circumstances of the present case, Atty. Dealcas withdrawal was unjustified as complainant did not deliberately fail to pay him the attorneys fees. In fact, complainant exerted honest efforts to fulfill his obligation. Respondents contemptuous conduct does not speak well of a member of the bar considering that the amount owing to him was only P3,500.00. Rule 20.4 of Canon 20, mandates that a lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud. Sadly, for not so large a sum owed to him by complainant, respondent lawyer failed to act in accordance with the demands of the Code. The Court, however, does not agree with complainants contention that the maximum penalty of disbarment should be imposed on respondent lawyer. The power to disbar must be exercised with great caution. Only in a clear case of misconduct that seriously affects the standing and character of the lawyer as an officer of the Court and member of the bar will disbarment be imposed as a penalty. It should never be decreed where a lesser penalty, such as temporary suspension, would accomplish the end desired.[12] In the present case, reprimand is deemed sufficient. WHEREFORE, in view of the foregoing, respondent Atty. Juan S. Dealca is REPRIMANDED with a warning that repetition of the same act will be dealt with more severely.

SO ORDERED.
PONENTE: Kapunan FACTS: Atty. Dealca, counsel for Felicisimo Montano withdrew his services for his client upon the latter's failure to comply with their retainer agreement. HELD: We find Atty Dealcas conduct unbecoming of a member of the legal profession. Under Canon 22 of the Code of Professional Responsibility, a lawyer shall withdraw his services only for good cause and upon notice appropriate in the circumstances. Although he may withdraw his services when client deliberately fails to pay the fees for the services, under the circumstances of the present case, Atty. Dealcas withdrawal was unjustified as complainant did not deliberately fail to pay him the attys fees. Rule 20.4 of Canon 290, mandates that a lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud. Sadly, for not so large a sum owed to him by complainant (P 3,500.00), respondent lawyer failed to act in accordance with the demands of the Code. But, only in a clear case of misconduct that seriously affects the standing and character of the lawyeras an officer of the court and member of the bar will disbarment be imposed a s penalty.