Canon 20 Ethics

8/13/2019 Canon 20 Ethics

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CANON 20 DUTY TO CHARGE ONLY FAIR AND REASONABLE FEES

1. LEVISTE VS CA

FACTS:

Petitioner lawyer entered into a written agreement with the private respondent Rosa del

Rosario to appear as her counsel in a petition for probate of the holographic will of the

late Maxima C. Reselva. Under the will, a piece of real property at Sales Street, uiapo,

Manila, was be!ueathed to "el Rosario.It was agreed that petitioner's contingent fee

would be thirty-five per cent (35%) of the property that Rosa may receive upon the

probate of the will

#eviste performed the following services as "el Rosario$s counsel% &horoughly

researched and studied the law on probate and succession' #oo(ed for and interviewedwitnesses, and too( their affidavits' )iled the petition for probate is Special Proceeding

*o. +-+' Made the proper publications' Presented at the trial witnesses

/n 0ugust 1, 234+, #eviste received a letter from Ms. "el Rosario, informing him that

she was terminating his services as her counsel due to 5conflicting interest.5 &his

consisted, according to the letter, in petitioner$s moral obligation to protect the interest of

his brother6in6law, 7audencio M. #lanes, whom "el Rosario and the other parties in the

probate proceeding intended to e8ect as lessee of the property which was be!ueathed to

"el Rosario under the will

/n September 1, 234+, petitioner filed a 5Motion to 9ntervene to Protect :is Rights to

)ees for Professional Services which was denied by &C because he 5not filed a claim for

attorney$s fees nor recorded his attorney$s lien.5

0lthough the order denying his motion to intervene had become final, petitioner

continued to receive copies of the court$s orders, as well as the pleadings of the other

parties in the case. :e also continued to file pleadings. &he case was submitted for

decision without the respondents$ evidence.

/n *ovember -, 2344, "el Rosario and special administratrix6legatee, filed a 5Motion

&o ;ithdraw Petition for Probate5 alleging that "el Rosario waived her rights to the

devise in her favor and agreed that the "e 7u


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&he petitioner filed an appeal bond, notice of appeal, and record on appeal. &he private

respondents filed a motion to dismiss the appeal on the ground that petitioner was not a

party in interest.

&he petitioner opposed the motion to dismiss his appeal, claiming that he has a direct

and material interest in the decision sought to be reviewed. :e also as(ed that he be

substituted as party6petitioner, in lieu of his former client, Ms. "el Rosario. /n March , 234, the trial 8udge dismissed the appeal and denied petitioner$s motion

for substitution%

&he petitioner filed in the Court of 0ppeals but to no avail as it was insufficient in form

and substance as he was not a proper party to appeal

Petitioner went to SC

ISSUE:

;/* an attorney who was engaged on a contingent fee basis may, in order to collect his

fees, prosecute an appeal despite his client$s refusal to appeal the decision of the trial

court.

HELD

petitioner argues that by virtue of his contract of services with "el Rosario, he is a

creditor of the latter, and that under 0rticle 21+ of the Civil Code he has a right to

accept for his client "el Rosario to the extent of -+> thereof the devise in her favor?which she in effect repudiated@ to protect his contingent attorney$s fees.

&he argument is devoid of merit. 0rticle 21+ of the Civil Code does not apply to this

case. &hat legal provision protects the creditor of a repudiating heir. Petitioner is not a

creditor of Rosa del Rosario. The payme! "# h$% #ee% $% &"!$'e! a( (epe(e!)p" !he %)&&e%%#)* p+",a!e "# !he h"*"'+aph$& -$**. S$&e !he pe!$!$" #"+ p+",a!e

-a% ($%m$%%e( ,y !he *"-e+ &")+! !he &"!$'e&y ($( "! "&&)+. A!!"+ey Le/$%!e $%

"! e!$!*e( !" h$% #ee.

)urthermore, 0rticle 21+ presupposes that the obligor is an heir. Rosa del Rosario is

not a legal heir of the late Maxima C. Reselva. Upon the dismissal of her petition forprobate of the decedent$s will, she lost her right to inherit any part of the latter$s estate.

&here is nothing for the petitioner to accept in her name.

&his Court had ruled in the case of Recto vs. :arden, 211 Phil. 2A=, that 5the contract

(for contingent attorney's fees) neither gives nor purports to give to the appellee

(lawyer) any right whatsoever personal or real in and to her (!rs" #arden's) aforesaid

share in the con$ugal partnership" he amount thereof is simply a basisfor the

computation of said fees"&


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petition for certiorari is denied for lac( of merit.

2. LICUDAN VS CA

ISSUE:

;hether or not the award of attorney$s fees in this case is reasonable, being in the natureof contingent fees, is the principal issue.

FACTS:

&his petition for review on certiorari assails%

2@&he "ecision of the public respondent dated September 2, 233 which dismissed the

petitioners$ appeal thereby upholding the reasonableness of the respondent lawyer$s lien as

attorney$s fees over the properties of his clients' and

@&he Resolution of the public respondent dated Banuary -1, 2331 which denied the petitioners$motion for reconsideration.

&he grounds relied upon by the petitioners are as follows%

5&he respondent Court, in upholding the entitlement of private respondent6attorney on

the attorney$s fees he claimed, decided the !uestion in a manner not in accord with law

or with the applicable decisions of this :onorable &ribunal.

5&he respondent Court, in refusing to review and determine the propriety,reasonableness and validity of the attorney$s fees claimed by the private respondent6

attorney, departed from the usual course of 8udicial proceedings. #ib#ex

5&he respondent Court, in failing to declare the attorneys fees claimed by the privaterespondent6attorney as unconscionable, excessive, unreasonable, immoral andunethical, decided the !uestion in a way not in accord with law and with applicable

decisions of this :onorable &ribunal.5 ?Petition, pp. 262-' Rollo, pp. 2462=@

&he following are the antecedent facts pertinent to the case at bar%

&he respondent lawyer was retained as counsel by his brother6in6law and sister, the now

deceased petitioners$ parents, spouses 0urelio and )elicidad #icudan. :is services as counsel

pertained to two related civil cases doc(eted as Civil Case *o. 62+A for partition and CivilCase *o. 64++ for a sum of money in connection with the redemption of the property

sub8ect matter of the two cases covered by &ransfer Certificate of &itle *o. 2 of the Register

of "eeds of ue


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b@&he undersigned counsel shall have a usufructuary right for a period of ten ?21@

years of plaintiffs$ share of the lot in !uestion.

c@0nd that all damages accruing to plaintiffs to be paid by the defendant is for the

undersigned counsel.5 ?0nnex 5:5 of the Petition, Rollo, p. +A@

/n September 23, 23=3, the trial court handling Civil Case *o. 62+A ordered the annotation

at the bac( of &C& *o. 2 of the Register of "eeds of ue


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/n September -1, 23+, the trial court denied the motion on the ground that the respondentlawyer cannot collect attorney$s fees for other cases in the action for partition.

/n /ctober A, 23+, the respondent lawyer filed a second motion for reconsideration of the

/rder dated September 4, 23+ explaining that what he sought to be included in the /rder

dated September 23, 23=3 is the additional attorney$s fees for handling the redemption casewhich was but a mere offshoot of the partition case and further manifesting that the additional

-2 s!uare meters as compensation for the redemption case must be merged with the 31.+ s!uare

meters for the partition case to enable the said respondent lawyer to comply with the /rder

dated September 4, 23+ which directed him to submit a subdivision plan as re!uired.

/n /ctober 2, 23+, the trial court issued the second /rder being assailed in this petition. &he

said /rder reads%

50cting on the $Second Motion for Reconsideration$ filed by 0tty. &eodoro "omalanta

and finding the same to be 8ustified, let an attorney$s lien be annotated in the title of

the property for -2 s!uare meters as attorney$s fees of said 0tty. &eodoro "omalanta inaddition to the original 31.+ s!uare meters.5 ?C0 "ecision, p. ' Rollo, p. -=@

/n 0ugust , 234, more than ten ?21@ months after the /rders of September 4, 23+ and/ctober 2, 23+ had become final and executory, the petitioners as substituted heirs of the

respondent lawyers$ deceased clients filed a motion to set aside orders on the ground that the

award of professional fees covering 22.+ s!uare meters of the =2.+ s!uare meter lot is

unconscionable and excessive.

0fter the respondent lawyer filed his /pposition to the above petitioners$ motion, the lower

court, on 0ugust 3, 234, finding that the petitioners as substituted plaintiffs are not in full

agreement with the respondent lawyer$s claim for attorney$s fees, set aside its /rders datedSeptember 4, 23+ and /ctober 2, 23+.

/n September 24, 234, the respondent lawyer filed a motion for reconsideration stressing thefact that the payment of the professional services was pursuant to a contract which could no

longer be disturbed or set aside because it has already been implemented and had since thenbecome final. &his motion was denied on /ctober -, 234.

/n *ovember 2+, 234, the respondent lawyer filed a motion to set aside the orders dated

0ugust 3, 234 and /ctober -, 234 reiterating his position that the /rders of September 4,

23+ and /ctober 2, 23+ have become final and are already implemented. &he respondent

lawyer further as(ed for the modification of the /ctober 2, 23+ /rder to reflect 41.- s!uare

meters instead of -2 s!uare meters only since the stipulation in the 0dditional Contract for

Professional Services entitled him to 41.- s!uare meters.cdll

0fter the petitioners$ /pposition to the said motion was filed, the trial court, on )ebruary 4,

23=, rendered an /rder with the following dispositive portion%

5;:DRD)/RD, this Court has no alternative but to set aside its orders of 3 0ugust234 and - /ctober 234 and declare its /rders of 23 September 23=3 and 2 /ctober

23+ irrevocably final and executory.5 ?C0 "ecision, p. +' Rollo, p. -A@

/n 0ppeal, the Court of 0ppeals ruled in favor of the respondent lawyer by dismissing the

appeal and the prayed for writ of preliminary in8unction. &heir subse!uent motion for


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reconsideration having been denied, the petitioners filed the instant petition.

&he petitioners fault the respondent Court for its failure to exercise its inherent power to review

and determine the propriety of the stipulated attorney$s fees in favor of the respondent lawyer

and accuse the respondent lawyer of having committed an unfair advantage or legal fraud by

virtue of the Contract for Professional Services devised by him after the trial court awarded himattorney$s fees for P2,111.11 only instead of respecting the trust and confidence of the highest

level reposed on him considering the close blood and affinal relationship between him and his

clients.

&he petitioners contend that under the award for professional services, they may have won the

case but would lose the entire property won in litigation to their uncle6lawyer. &hey would be

totally deprived of their house and lot and the recovered damages considering that of the =2.+

s!uare meters of the sub8ect lot, the respondent lawyer is claiming 22.+ s!uare meters and the

remaining portion of 2+1 s!uare meters would also go to attorney$s fees since the said portion

pertains to the lawyer$s son by way of usufruct for ten ?21@ years.

&he aforesaid submissions by the petitioners merit our consideration.

9t is a well6entrenched rule that attorney$s fees may be claimed in the very action in which the

services in !uestion have been rendered or as an incident of the main action. &he fees may be

properly ad8udged after such litigation is terminated and the sub8ect of recovery is at the

disposition of the court. ?see amacho v" ourt of ppeals, 2=3 SCR0 41A G233H' *uirante v"Intermediate ppellate ourt, 243 SCR0 =43 G233H@.

9t is an e!ually deeply6rooted rule that contingent fees are notper seprohibited by law. &hey

are sanctioned by Canon 2- of the Canons of Professional Dthics and Canon 1, Rule 1.12 of

the recently promulgated Code of Professional Responsibility. :owever, as we have held in the

case of anhueco v.+e +umo?2= SCR0 =41 G233H@%

5. . . ;hen it is shown that a contract for a contingent fee was obtained by undueinfluence exercised by the attorney upon his client or by any fraud or imposition, or

that the compensation is clearly excessive, the Court must and will protect the

aggrieved party. ?Ulanday v. Manila Railroad Co., A+ Phil. +A1 G23-H' 7rey v. 9nsular

#umber Co., 3= Phil. -- G23++H@.

9n the case at bar, the respondent lawyer caused the annotation of his attorney$s fees lien in themain action for partition doc(eted as Civil Case *o. 62+A on the basis of a Contract for

Professional Services dated 0ugust -1, 23=3. ;e find reversible error in the Court of 0ppeals$

holding that%

5;hen the reasonableness of the appellee$s lien as attorney$s fees over the properties

of his clients awarded to him by the trial court had not been !uestioned by the client,

and the said orders had already become final and executory, the same could no longerbe disturbed, not even by the court which rendered them ?&aIada v. Court of 0ppeals,

2-3 SCR0 [email protected] ?C0 "ecision p. =' Rollo, p. -4@

/n the contrary, we rule that the !uestioned /rders dated September 23, 23=3 and /ctober 2,

23+ cannot become final as they pertain to a contract for a contingent fee which is always

sub8ect to the supervision of the Court with regard to its reasonableness as une!uivocally


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provided in Section 2- of the Canons of Professional Dthics which reads%

52-.Contingent )ees. J

0 contract for a contingent fee, where sanctioned by law, should be reasonable under

all the circumstances of the case including the ris( and uncertainty of thecompensation, but should alwaysbe sub8ect to the supervision of a court, as to its

reasonableness.5 ?Dmphasis supplied@.

&here is no dispute in the instant case that the attorney$s fees claimed by the respondent lawyer

are in the nature of a contingent fee. &here is nothing irregular about the execution of a written

contract for professional services even after the termination of a case as long as it is based on a

previous agreement on contingent fees by the parties concerned and as long as the said contract

does not contain stipulations which are contrary to law, good morals, good customs, public

policy or public order.##phil

0lthough the Contract for Professional Services dated 0ugust -1, 23=3 was apparently

voluntarily signed by the late 0urelio #icudan for himself and on behalf of his daughter,

petitioner Cristina #icudan6Campos and by the petitioner ;ilfredo #icudan who both

manifested in open court that they gave their free and willing consent to the said contract, wecannot 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 6 that the stipulations therein are not contrary to law, good morals, good customs,

public policy or public order ?see,hilippine merican ife Insurance ompany v" ,ineda, 2=+

SCR0 A24 G233H' .y$uco v" ourt of ppeals, 2= SCR0 222 G233H@.

Under Canon 1 of the Code of Professional Responsibility, a lawyer shall charge only fair and

reasonable fees. 9n determining whether or not the lawyer$s fees are fair and reasonable, Rule

1612 of the same Code enumerates the factors to be considered in resolving the said issue.

&hey are as follows%

a@&he time spent and the extent of the services rendered or re!uired'

b@&he novelty and difficulty of the !uestions involved'

c@&he importance of the sub8ect matter'

d@&he s(ill demanded'

e@&he probability of losing other employment as a result of acceptance of the proferred

case'

f@&he customary charges for similar services and the schedule of fees of the 9P

Chapter to which he belongs'g@&he amount involved in the controversy and the benefits resulting to the client from

the service'

h@&he contingency or certainty of compensation'

i@&he character of the employment, whether occasional or established' and

8@&he professional standing of the lawyer.5

0 similar provision is contained under Section A, Rule 2- of the Revised Rules of Court


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which partly states that%

5SDC. A.ompensation of attorneys' agreement as to fees. J 0n 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 sub8ect matter of the controversy,the extent of the services rendered, and the professional standing of the attorney . . . 0

written contract for services shall control the amount to be paid therefor unless found

by the court to be unconscionable or unreasonable.5

0ll that the respondent lawyer handled for his deceased sister and brother6in6law was a simple

case of partition which necessitated no special s(ill nor any unusual effort in its preparation.&he subse!uent case for redemption was admittedly but an offshot of the partition case.

Considering the close blood and affinal relationship between the respondent lawyer and his

clients, there is no doubt that 0tty. "omalanta too( advantage of the situation to promote his

own personal interests instead of protecting the legal interests of his clients. 0 careful perusal

of the provisions of the contract for professional services in !uestion readily shows that what

the petitioners won was a pyrrhic victory on account of the fact that despite the successfulturnout of the partition case, they are now practically left with nothing of the whole sub8ect lot

won in the litigation. &his is because aside from the 22.+ s!uare meters awarded to 0tty."omalanta as attorney$s fees, the said contract for professional services provides that the

remaining portion shall pertain to the respondent lawyer$s son by way of usufruct for ten ?21@

years. &here should never be an instance where a lawyer gets as attorney$s fees the entire

property involved in the litigation. 9t is unconscionable for the victor in litigation to loseeverything he won to the fees of his own lawyer.llcd

&he respondent lawyer$s argument that it is not he but his son &eodoro M. "omalanta, Br. who

is claiming the usufructuary right over the remaining portion of the sub8ect lot is inaccurate.

&he records show that the matter of usufruct is tied up with this case since the basis for the saidusufructuary right is the contract for professional services the reasonableness of which is being

!uestioned in this petition. ;e find the ten6year usufruct over the sub8ect lot part and parcel of

the attorney$s fees being claimed by the respondent lawyer.

9n resolving the issue of reasonableness of the attorney$s fees, we uphold the time6honoured

legal maxim that a lawyer shall at all times uphold the integrity and dignity of the legal

profession so that his basic ideal becomes one of rendering service and securing 8ustice, not

money6ma(ing. )or the worst scenario that can ever happen to a client is to lose the litigated

property to his lawyer in whom all trust and confidence were bestowed at the very inception of

the legal controversy. ;e find the Contract for Professional Services dated 0ugust -1, 23=3,

unconscionable and unreasonable. &he amount of P1,111.11 as attorney$s fees, in lieu of the

22.+ s!uare meters awarded to the respondent lawyer and the ten6year usufructuary right overthe remaining portion of 2+1 s!uare meters by the respondent lawyer$s son, is, in the opinion of

this Court, commensurate to the services rendered by 0tty. "omalanta.

;:DRD)/RD, 9* K9D; /) &:D )/RD7/9*7, the instant petition is 7R0*&D". &he

Court of 0ppeals$ decision of September 2, 233 is hereby RDKDRSD" and SD& 0S9"D.

0tty. "omalanta is awarded reasonable attorney$s fees in the amount of P1,111.11.

S/ /R"DRD".

/ernan .0. /eliciano and1idin 00., concur.


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. RETUYA VS GORDUI

FACTS:

disbarment case lin(ed to 0dministrative Case ?0na ). Retuya KS Municipal

Budge Paulo 0. D!uipilag of Maasin, #eyte@

0na ). Retuya, a widow with four minor children, filed a claim for wor(men$s

compensationagainst Dastern Shipping #ines, 9nc., the employer of her husband who

died in 234. She was awarded P,=3.21 including,322 as attorney's fees of tty"

Iego 4ordui

&he employer appealed and proposed to compromise the claim by paying PA,-34.1+.

0na accepted the proposal.

7ordui


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&his is a complaint for suspension of respondent 0tty. Patricio 0. *gaseo for violation

of the Code of Professional Responsibility and 0rticle 2A32 of the Civil Code

*gaseo demanded from complainant )ederico *. Ramos, the delivery of 2,111 s!uare

meters of land, a litigated property, as payment for his appearance fees.

Sometime in 233, complainant )ederico Ramos went to respondent 0tty. Patricio

*gaseo$s Ma(ati office to engage his services as counsel in a case 1involving a piece ofland in San Carlos, Pangasinan. Re%p"(e! a'+ee( !" ha(*e !he &a%e #"+ a

a&&ep!a&e #ee "# 420000.00 appea+a&e #ee "# 41000.00 pe+ hea+$' a( !he &"%!

"# mea*% !+a%p"+!a!$" a( "!he+ $&$(e!a* e5pe%e%. Complainant alleges that he

did not promise to pay the respondent 2,111 s!. m. of land as appearance fees. 2

&o follow up on the status of the case, complainant went to the respondent$s office.

*gaseo informed him that the decision was adverse to them because a congressman

exerted pressure upon the trial 8udge. Respondent however assured him that they could

still appeal the adverse 8udgment anda%6e( #"+ !he a(($!$"a* am")! "# 4780.00

a( a"!he+ 42000.00 " Sep!em,e+ 29 2000 a% a**"-a&e #"+ +e%ea+&h ma(e.

0lthough an appeal was filed, complainant however charges the respondent of purposely

failing to submit a copy of the summons and copy of the assailed decision.

Subse!uently, complainant learned that the respondent filed the notice of appeal - days

after the lapse of the reglementary period.

/n Banuary 3, 11-, complainant received a demand-letterfrom the respondent as6ing

for the delivery of the 7222 s8" m" piece of land which he allegedly promised as

payment for respondent's appearance fee" In the same letter respondent also threatened

to file a casein court if the complainant would not confer with him and settle the matter

within 32 days"

Respondent$s side of the story% a former client, )ederico Ramos and his brother,

"ionisio, went to his office to engage his professional services in connection with a 6

hectare parcel of land situated in San Carlos, Pangasinan which the complainant$s family

lost = years earlier through an execution sale in favor of one 0lfredo &. Castro.

Complainant, who was deaf and could only spea( conversational &agalog haltingly, was

assisted by his brother "ionisio. &hey came all the way from Pangasinan because no

lawyer in San Carlos City was willing to handle the case. Complainant, through

"ionisio, avers that he has consulted local lawyers but did not engage their services

because they were demanding exorbitant fees. /ne local lawyer was willing to handle

the case for at least one6half of the land involved as his attorney$s fee, plus cashexpenses, while the other as(ed for 2FA of the land in addition to a large sum of money.

Respondent agreed to handle the case for an acceptance fee of ,92222"22 plus an

appearance fee of ,3222"22 per hearing. Complainant told him that he would consult

his siblings on the matter.

Six months later, i.e., in 0pril 233, complainant, assisted by one Bose Castillo, went to

respondent$s office to discuss the legal fees. Complainant, through Castillo, told

respondent that he was willing to pay an acceptance fee of PA1,111.11, P1,111.11 of
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which shall be paid upon engagement and the remaining P1,111.11 to be paid aftertheir treasure hunt operations in *ueva Kiscaya were terminated. )urther, complainant

offered, in lieu of P-,111.11 per appearance, 2,111 s!. m. of land from the land sub8ect

matter of the case, if they win, or from another piece of property, if they lose. 9n

addition, complainant also offered to defray the expenses for transportation, meals and

other incidental expenses. Respondent accepted the complainant$s offer.

Respondent claims that after the trial court dismissed Civil Case *o. SCC 2, he filed

a timely notice of appeal and thereafter moved to be discharged as counsel because he

had colon cancer.

Complainant, now assisted by one Bohnny Ramos, implored respondent to continue

handling the case, with an offer to double the 2,111 s!. m. piece of land earlier promised

and the remaining balance of P1,111.11 acceptance fee. Bohnny Ramos made a written

commitment and gave respondent$s secretary P,111.11 of the P-,+1.11 expenses for

the preparation of the appellant$s brief. a&0"CD

/n Buly 2, 112, the Court of 0ppeals rendered a favorable decision ordering the return

of the disputed 6hectare land to the complainant and his siblings. &he said decision

became final and executory on Banuary 2, 11. Since then complainant allegedlyfailed to contact respondent, which compelled him to send a demand letter on Banuary

3, 11-.

/n )ebruary 2A, 11-, complainant filed a complaint before the 9P charging his former

counsel, respondent 0tty. *gaseo, of violation of the Code of Professional

Responsibility for demanding the delivery of 2,111 s!. m. parcel of land which was the

sub8ect of litigation.

9P Commissioner found the respondent guilty of grave misconduct and conduct

unbecoming of a lawyer in violation of the Code of Professional Responsibility andrecommended that he be suspended from the practice of law for 2 year.

respondent filed a petition for review assailing 9P Resolution *o. EK9611-6A= for

having been issued without or in excess of 8urisdiction. 9

Respondent argues that he did not violate 0rticle 2A32 of the Civil Code because when

he demanded the delivery of the 2,111 s!. m. of land which was offered and promised to

him in lieu of the appearance fees, the case has been terminated, when the appellate

court ordered the return of the 6hectare parcel of land to the family of the complainant.

Respondent further contends that he can collect the unpaid appearance fee even without

a written contract on the basis of the principle of 8uantum meruit. :e claims that his

acceptance and appearance fees are reasonable because a Ma(ati based legal

practitioner, would not handle a case for an acceptance fee of only P1,111.11 and

P2,111.11 per court appearance.

Under 0rticle 2A32?+@ of the Civil Code, lawyers are prohibited from ac!uiring either by

purchase or assignment the property or rights involved which are the ob8ect of the

litigation in which they intervene by virtue of their profession. =&he prohibition on
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purchase is all embracing to include not only sales to private individuals but also publicor 8udicial sales. &he rationale advanced for the prohibition is that public policy

disallows the transactions in view of the fiduciary relationship involved, i.e., the relation

of trust and confidence and the peculiar control exercised by these persons. 9t is

founded on public policy because, by virtue of his office, an attorney may easily ta(e

advantage of the credulity and ignorance of his client and unduly enrich himself at the

expense of his client. 3 :owever, the said prohibition applies only if the sale orassignment of the property ta(es place during the pendency of the litigation involving

the client$s property. Conse!uently, where the property is ac!uired after the termination

of the case, no violation of paragraph +, 0rticle 2A32 of the Civil Code attaches.

0tty. Patricio 0. *gaseo is found guilty of conduct unbecoming a member of the legal

profession in violation of Rule 1.1A of Canon 1 of the Code of Professional

Responsibility. A lawyer shall avoid controversies with clientsconcerning his compensation and shall resort to judicial action

only to prevent imposition, injustice or fraud.

8. DIRECTOR OF LANDS VS ABABA

FACTS:

SYNO4SIS

0fter winning a case for annulment of a contract of sale with right of repurchase and recovery

of the parcels of land sub8ect matter thereof, petitioner 0bar!ue< refused to comply with his

contractual obligation to his counsel to give the latter 2F of the property recovered asattorney$s fees, and instead offered to sell the whole parcels of land to the petitioner6spouses

#arra


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3AASIAR,0 p%

&his is an appeal from the order of the Court of )irst 9nstance of Cebu dated March 23, 2344

denying the petition for the cancellation of an adverse claim registered by the adverse claimant

on the transfer certificate of title of the petitioners.

&he adverse claimant, 0tty. 0lberto . )ernande< was retained as counsel by petitioner,

Maximo 0bar!ue


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prior to the partition conveying to her any or all rights in the estate of their parents. Petitionerdiscovered later that the claim of his sister over his share was based on an instrument he was

induced to sign prior to the partition, an instrument he believed all along to be a mere

ac(nowledgment of the receipt of P=11.11 which his sister gave to him as a consideration for

ta(ing care of their father during the latter$s illness and never an instrument ofpacto de retro"

:ence, he instituted an action to annul the alleged instrument ofpacto de retro.

&he Court of 0ppeals in a decision promulgated on 0ugust =, 234- reversed the decision of

the lower court and annulled the deed ofpacto de retro. 0ppellee 0gripina 0bar!ue< filed a

motion for reconsideration but the same was denied in a resolution dated Banuary =, 234A ?p.

+4, Record on 0ppeal' p. 2-, Rec.@ and the 8udgment became final and executory on Banuary

, 234A.cdrep

Subse!uently, &ransfer Certificate of &itle *o. -2A2 was issued on May 23, 234+ in the name

of Maximo 0bar!ue


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third of the lot described in &ransfer Certificate of &itle *o. -344 is the best proof of

the authority to maintain said adverse claim5 ?p. +=, R/0' p. 2- rec.@.

Petitioner6spouses decided to appeal the order of dismissal to this Court and correspondingly

filed the notice of appeal or 0pril 2, 2344 with the trial court. /n 0pril , 2344, petitioner6

spouses filed the appeal bond and subse!uently filed the record on appeal on 0pril 4, 2344. &herecords of the case were forwarded to this Court through the #and Registration Commission of

Manila and were received by this Court on May +, 2344. pr##

Counsel for the petitioner6spouses filed the printed record on appeal on Buly 2, 2344. Re!uired

to file the appellants$ brief, counsel filed one on 0ugust 3, 2344 while that of the appellee wasfiled on /ctober 2, 2344 after having been granted an extension to file his brief.

&he case was submitted for decision on "ecember 2, 2344. Counsel for the petitioners filed a

motion to expunge appellees$ brief on "ecember , 2344 for having been filed beyond the

reglementary period, but the same was denied by this Court in a resolution dated )ebruary 2-,

234=.

&he pivotal issue to be resolved in the instant case is the validity or nullity of the registration of

the adverse claim of 0tty. )ernande


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outcome of the matter in which he is employed5 ?"rin(er,suprap. 211 citing 0..0. /p. =3@.

0 contract for a contingent fee is not covered by 0rticle 2A32 because the transfer or

assignment of the property in litigation ta(es effect only after the finality of a favorable

8udgment. 9n the instant case, the attorney$s fees of 0tty. )ernande


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necesitan para e8ercer su ministerio, librando los de toda sospecha, !ue, aun!ue fuere

infundada, redundaria en descredito de la institucion.

5Por no dar lugar a recelos de ninguna clase, admite el Codigo ?en el apartado

penutimo del art. 2.A+3@ algunos casos en !ue, por excepcion, no se aplica el principioprohibitivo de !ue venimos hablando. &ales son los de !ue se trate de acciones

hereditarias entre coherederos, de cesion en pago de creditos, o de garantia de los

bienes !ue posean los funcionarios de 8usticia.

$0lgunos autores ?7oyena, Manresa, Kalverde@ creen !ue en laprohibicion del art. 2.A+3 esta comprendido el pacto de 8uota litis?o sea el

convenio por el cual se concede al 0bogado o Procurador, para el caso de

obtener sentencia favorable, una parte alicuota de la cosa o cantidad !ue se

litiga@, por!ue dicho pacto supone la venta o cesion de una parte de la cosa odrecho !ue es ob8ecto del litigio. Pero!ucius .caevolaoberva, con ra


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portion of the property in litigation.5#ex#ib

Contracts of this nature are permitted because they redound to the benefit of the poor client and

the lawyer 5especially in cases where the client has meritorious cause of action, but no means

with which to pay for legal services unless he can, with the sanction of law, ma(e a contract for

a contingent fee to be paid out of the proceeds of the litigation5 ?)rancisco, #egal Dthics, p. 3AG23A3H, citing #ipscomb vs. 0dams 32 S.;. 21A4, 21A G2314H@. /ftentimes, contingent fees

are the only means by which the poor and helpless can see( redress for in8uries sustained and

have their rights vindicated. &hus%

5&he reason for allowing compensation for professional services based on contingent

fees is that if a person could not secure counsel by a promise of large fees in case of

success, to be derived from the sub8ect matter of the suit, it would often place the poorin such a condition as to amount to a practical denial of 8ustice. 9t not infre!uently

happens that person are in8ured through the negligence or willful misconduct of others,

but by reason of poverty are unable to employ counsel to assert their rights. 9n suchevent their only means of redress lies in gratuitous service, which is rarely given, or in

their ability to find some one who will conduct the case for a contingent fee. &hat

relations of this (ind are often abused by speculative attorneys or that suits of thischaracter are turned into a sort of commercial traffic by the lawyer, does not destroy

the beneficial result to one who is so poor to employ counsel5 ?id., at p. 3-, citing

;arvelle, #egal Dthics, p. 3, emphasis supplied@.

Bustice 7eorge Malcolm, writing on contingent fees, also stated that%

5. . . the system of contingent compensation has the merit of affording to certain

classes of persons the opportunity to procure the prosecution of their claims which

otherwise would be beyond their means.In many cases in the =nited .tates and the

,hilippines the contingent fee is socially necessary5 ?Malcolm, #egal and BudicialDthics, p. ++ G23A3H, italics supplied@.

Stressing further the importance of contingent fees, Professor Max Radin of the University of

California, said that%

5&he contingent fee certainly increases the possibility that vexatious and unfoundedsuits will be brought. /n the other hand, it ma(es possible the enforcement of

legitimate claims which otherwise would be abandoned because of the poverty of the

claimants. /f these two possibilities, the social advantage seems clearly on the side of

the contingent fee. 9t may in fact be added by way of reply to the first ob8ection thatvexatious and unfounded suits have been brought by men who could and did pay

substantial attorney$s fees for that purpose5 ?Radin, Contingent )ees in California,

Cal. #. Rev. +=, +3 G23A1H, emphasis supplied@.

)inally, a contingent fee contract is always sub8ect to the supervision of the courts with respect

to the stipulated amount may be reduced or nullified. So that in the event that there is anyundue influence or fraud in the execution of the contract or that the fee is excessive, the client

is not without remedy because the court will amply protect him. 0s held in the case of 7rey vs.

9nsular #umber Co.,supra, citing the case of Ulanday vs. Manila Railroad Co.,supra%#ib#ex

5;here it is shown that the contract for a contingent fee was obtained by any undue


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influence of the attorney over the client, or by any fraud or imposition, or that the

compensation is so clearly excessive as to amount to extortion, the court will in a

proper case protect the aggrieved party.5

9n the present case, there is no iota of proof to show that 0tty. )ernande< had exerted any undue

influence or had perpetrated fraud on, or had in any manner ta(en advantage of his client,

Maximo 0bar!ue


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&he one6half ?2F@ interest of 0tty. )ernande< in the lots in !uestion should therefore berespected. 9ndeed, he has a better right than petitioner6spouses, Buan #arra

Canon 20 Ethics

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