Canon 16 lawyer a trustee of clients money and properties

CANON 16 - A LAWYER SHALL HOLD IN TRUST ALL MONEYS AND PROPERTIES OF HIS CLIENT THAT MAY COME INTO HIS PROFESSION.
Rule 16.01 duty to account clients money and property A lawyer shall account for all money or property collected or received for or from the client. Rules of Court, Rule 138, Section 25 Unlawful retention of client's funds; contempt.When an attorney unjustly retains in his hands money of his client after it has been demanded he may be punished for contempt as an officer of the Court who has misbehaved in his official transactions; but proceedings under this section shall not be a bar to a criminal prosecution. Freeman v. Reyes, AC No. 6246, November 15, 2011 An administrative complaint, filed by complainant Marites E. Freeman, seeking the disbarment of respondent Atty. Zenaida P. Reyes, for gross dishonesty in obtaining money from her, without rendering proper legal services, and appropriating the proceeds of the insurance policies of her deceased husband. Complainant engaged the services of respondent who, in turn, assured her that she would help her secure the visas and obtain the death benefits and other insurance claims due her. Respondent told complainant that she had to personally go to London to facilitate the processing of the claims, and demanded that the latter bear all expenses for the trip. She gave respondent the amount of P50,000.00. After various amounts had been given to the respondent in orer to expedite the release of her visa, complainant said that despite repeated follow-ups with respondent, nothing came out. Instead, she received a picture of her husband's burial, sent by one Stanley Grist, a friend of the deceased. She later learned that respondent left for London alone, without informing her about it. Respondent explained that she needed to go to London to follow-up the insurance claims, and warned her not to communicate with Grist who allegedly pocketed the proceeds of her husband's insurance policy.

Complainant discovered that in an undated letter, addressed to one Lynn O. Wilson of Scottish Equitable PLC, respondent made representations that her husband left no will and that she had no verified information as to the total value of her husband's estate and the existence of any property in London that would be subjected to Grant of Representation. Said letter requested that complainant be advised on the value for probate in the amount of 5231.35 and the procedure for its entitlement. Respondent added therein that As to the matter of the installments due, as guaranteed by Mr. Freeman's policy, Mrs. Freeman requests that the remittance be sent directly to Account No. 0148-27377-7 Far East Bank, Diliman Branch, with business address at Malakas St. Barangay Central District, Quezon City, Philippines under the account name: Reyes/Mendiola, which serves as her temporary account until further notice. Complainant declared that in November 1999, she made a demand upon the respondent to return her passport and the total amount of P200,000.00 which she gave for the processing of the visa applications. Not heeding her demand, respondent asked her to attend a meeting with the Consul of the British Embassy, purportedly to discuss about the visa applications, but she purposely did not show up as she got disgusted with the turn of events. With regard to the alleged falsified documents, respondent denied knowledge about the existence of the same, and declared that the SPA, dated April 6, 1999, which was notarized on April 30, 1999 [second SPA], was her basis for communications with the insurance companies in London. She stated that in her absence, complainant, through wily representations, was able to obtain the case folder from Leah Buama, her office secretary, and never returned the same, despite repeated demands. She said that she was unaware of the loss of the case folder as she then had no immediate need of it. She maintained that through complainant's own criminal acts and machinations, her law office was prevented from effectively pursuing her claims. Between January to February 2000, she sent complainant a billing statement which indicated the expenses incurred by the law firm, as of July 1999; however, instead of settling the amount, the latter filed a malicious suit against her to evade payment of her obligations. Investigating Commissioner Milagros V. San Juan of the Integrated Bar of the Philippines (IBP) Commission on Bar Discipline found respondent to have betrayed the trust of complainant as her client, for being dishonest in her dealings and

appropriating for herself the insurance proceeds intended for complainant. The Investigating Commissioner pointed out that despite receipt of the approximate amount of P200,000.00, respondent failed to secure the visas for complainant and her son, and that through deceitful means, she was able to appropriate for herself the proceeds of the insurance policies of complainant's husband. Accordingly, the Investigating Commissioner recommended that respondent be suspended from the practice of law for the maximum period allowed under the law, and that she be ordered to turn over to complainant the amounts she received from the London insurance companies. The Court agrees with the observation of the Investigating Commissioner that complainant had sufficiently substantiated the charge of gross dishonesty against respondent, for having appropriated the insurance proceeds of the complainant's deceased husband, and the recommendation of the IBP Board of Governors that respondent should be disbarred. When a lawyer receives money from the client for a particular purpose, the lawyer is bound to render an accounting to the client showing that the money was spent for a particular purpose. And if he does not use the money for the intended purpose, the lawyer must immediately return the money to his client.1[39] In the present case, the cash/check voucher and the temporary receipts issued by respondent, with the letterhead of her law firm, Z.P. Reyes Law Office, indubitably showed that she received the total amount of P167,000.00 from the complainant, in connection with the handling of the latter's case. Respondent admitted having received money from the complainant, but claimed that the total amount of P120,000.00 she received was in accordance with their agreement. Nowhere was it shown that respondent rendered an accounting or, at least, apprised the complainant of the actual expenses incurred. The Canon of Professional Ethics provides that the lawyer should refrain from any action whereby for his personal benefit or gain, he abuses or takes advantage of the confidence reposed in him by his client. Money of the client or collected for the client, or other trust property coming into the possession of the lawyer, should be reported and accounted for promptly and should not, under any circumstances, be commingled with his own or be used by him. Consequently, a lawyer's failure to return upon demand the funds or property held by him on behalf of his client gives rise to the presumption that he has appropriated the same
1

for his own use to the prejudice of, and in violation of the trust reposed in him by, his client. It is a gross violation of general morality as well as of professional ethics; it impairs the public confidence in the legal profession and deserves punishment. Lawyers who misappropriate the funds entrusted to them are in gross violation of professional ethics and are guilty of betrayal of public confidence in the legal profession. Those who are guilty of such infraction may be disbarred or suspended indefinitely from the practice of law. Indeed, lawyering is not a business. It is a profession in which duty to public service, not money, is the primary consideration. WHEREFORE, respondent Atty. Zenaida P. Reyes is found guilty of gross misconduct and DISBARRED from the practice of law. Let her name be stricken off the Roll of Attorneys. This Decision is immediately executory. Rule 16.02 duty to segregate clients funds from his own and those of others A lawyer shall keep the funds of each client separate and apart from his own and those of others kept by him. Rule 16.03 lawyers lien A lawyer shall deliver the funds and property of his client when due or upon demand. However, he shall have a lien over the funds and may apply so much thereof as may be necessary to satisfy his lawful fees and disbursements, giving notice promptly thereafter to his client. He shall also have a lien to the same extent on all judgments and executions he has secured for his client as provided for in the Rules of Court. Rules of Court, Rule 138, Section 37 Attorneys' liens.An attorney shall have a lien upon the funds, documents and papers of his client, which have lawfully come into his possession and may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment,

or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements. Traders Royal Bank v. NLRC, G.R. No. 120592, March 14, 1997 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 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. (Case before NLRC) 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. The latter duly paid its concerned employees their respective entitlement in said sum through their payroll. After private respondent received the above decision of the Supreme Court, 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. 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. 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. 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. There are two commonly accepted concepts of attorney's fees, the so-called ordinary and extraordinary. In its ordinary concept (as in this case), 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 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. The remedy for recovering attorney's fees as an incident of the main action may be availed of only when something is due to the client. Attorney's fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue over attorney's fees only arises when something has been recovered from which the fee is to be paid. While a claim for attorney's fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer's claim for attorney's fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. 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. 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's commitment to render the services enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer agreement. 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.

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). 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. Petitioner is hereby ORDERED to pay the amount of TEN THOUSAND PESOS (P10,000.00) as attorney's fees JK Mercado v. De Vera, AC No. 3066, October 26, 1999 A complaint for disbarment against Atty. Eduardo C. de Vera was filed by J.K. Mercado and Sons Agricultural Enterprises, Inc., and the spouses Jesus Mercado and Rosario Mercado. The complaint was an offshoot of an action for dissolution and liquidation of conjugal partnership, accounting, support with support pendente lite, annulment of contract, reconveyance or recovery of possession of conjugal share, partition, damages and attorney's fees. Rosario Mercado was represented by respondent Atty. Eduardo C. de Vera. The case was decided in favor of Rosario Mercado who was awarded the sum of a little over P9 million. The total amount of P1,270,734.66 was garnished. Rosario Mercado terminated the services of respondent and tendered the amount of P350,000.00 by way of attorney's fees. She demanded an accounting and the turn-over of the money still in the custody of respondent but the latter refused, claiming that he was entitled to P2,254,217.00 attorney's fees. IBP Board of Governors: Suspension for one (1) year. Amount received by respondent by way of garnished funds P1 ,270, 734.56

Amount to be accounted for by respondent

P845,901.89

Less: (1) Respondent's attorney's fees

P350,000.00

(2) Amount voluntarily returned by respondent

114.042.28

464.042.28

Amount still possession

in

respondent's

P381,859.6 1

"Respondent is obliged to deliver to complainant the amount of P381,859.61 pursuant to Rule 16.03 of the Code of Professional Responsibility which provides that a lawyer shall deliver the funds and property of his client when due or upon demand." WHEREFORE, respondent Atty. Eduardo C, de Vera is hereby DIRECTED to return to Rosario Mercado the amount of P381,859.61, and his suspension from the practice of law shall be lifted once he would have shown to the satisfaction of the Court his compliance therewith. Miranda v. Carpio, AC No. 6281, Sept 26, 2011 Complainant Valentin C. Miranda is one of the owners of a parcel of land consisting of 1,890 square meters located at Barangay Lupang Uno, Las Pias, Metro Manila. In 1994, complainant initiated Land Registration Commission (LRC) Case No. M-226 for the registration of the aforesaid property. In complainant's Affidavit, complainant and respondent agreed that complainant was to pay respondent Twenty Thousand Pesos (PhP20,000.00) as acceptance fee and Two Thousand Pesos (PhP2,000.00) as appearance fee. Complainant paid respondent the amounts due him, as evidenced by receipts duly signed by the latter. During the last hearing of the case, respondent demanded the additional amount of Ten Thousand Pesos (PhP10,000.00) for the preparation of a memorandum,

Less: Disbursements/Deductions as discussed above

424.832.67

which he said would further strengthen complainant's position in the case, plus twenty percent (20%) of the total area of the subject property as additional fees for his services. Case won. Complainant went to the RD to get the owner's duplicate of the Original Certificate of Title (OCT) bearing No. 094. He was surprised to discover that the same had already been claimed by and released to respondent. Respondent insisted that complainant first pay him the PhP10,000.00 and the 20% share in the property equivalent to 378 square meters, in exchange for which, respondent would deliver the owner's duplicate of the OCT. Once again, complainant refused the demand, for not having been agreed upon. In defense of his actions, respondent relied on his alleged retaining lien over the owner's duplicate of OCT No. 0-94. Respondent admitted that he did not turn over to complainant the owner's duplicate of OCT No. 0-94 because of complainant's refusal, notwithstanding repeated demands, to complete payment of his agreed professional fee consisting of 20% of the total area of the property covered by the title, i.e., 378 square meters out of 1,890 square meters, or its equivalent market value at the rate of PhP7,000.00 per square meter, thus, yielding a sum of PhP2,646,000.00 for the entire 378-square-meter portion and that he was ready and willing to turn over the owner's duplicate of OCT No. 0-94, should complainant pay him completely the aforesaid professional fee. The Integrated Bar of the Philippines-Commission on Bar Discipline (IBP-CBD) recommended that respondent be suspended from the practice of law for a period of six (6) months for unjustly withholding from complainant the owner's duplicate of OCT No. 0-94 in the exercise of his so-called attorney's lien. The Court sustains the resolution of the IBP Board of Governors, which affirmed with modification the findings and recommendations of the IBP-CBD. Respondent's claim for his unpaid professional fees that would legally give him the right to retain the property of his client until he receives what is allegedly due him has been paid has no basis and, thus, is invalid. An attorney's retaining lien is fully recognized if the presence of the following elements concur: (1) lawyer-client relationship; (2) lawful possession of the client's funds, documents and papers; and (3) unsatisfied claim for attorney's fees. Further, the attorney's retaining lien is a general lien for the

balance of the account between the attorney and his client, and applies to the documents and funds of the client which may come into the attorney's possession in the course of his employment. As correctly found by the IBP-CBD, there was no proof of any agreement between the complainant and the respondent that the latter is entitled to an additional professional fee consisting of 20% of the total area covered by OCT No. 0-94. The agreement between the parties only shows that respondent will be paid the acceptance fee and the appearance fees, which the respondent has duly received. Clearly, there is no unsatisfied claim for attorney's fees that would entitle respondent to retain his client's property. Hence, respondent could not validly withhold the title of his client absence a clear and justifiable claim. Quantum Meruit - In the present case, the parties had already entered into an agreement as to the attorney's fees of the respondent, and thus, the principle of quantum meruit does not fully find application because the respondent is already compensated by such agreement. The Court notes that respondent did not inform complainant that he will be the one to secure the owner's duplicate of the OCT from the RD and failed to immediately inform complainant that the title was already in his possession. Respondent's inexcusable act of withholding the property belonging to his client and imposing unwarranted fees in exchange for the release of said title deserve the imposition of disciplinary sanction. WHEREFORE, Atty. Macario D. Carpio is SUSPENDED from the practice of law for a period of six (6) months, effective upon receipt of this Decision. He is ordered to RETURN to the complainant the owner's duplicate of OCT No. 0-94 immediately upon receipt of this decision. He is WARNED that a repetition of the same or similar act shall be dealt with more severely. Kaisahan at Kapatiran ng mga Manggagawa v. Manila Water, GR No. 174179, Nov 16 2011 The Union demanded from the Company the payment of the AA and the COLA during the renegotiation of the parties Collective Bargaining Agreement (CBA). The Company initially turned down this demand, however, it subsequently agreed to an

amendment of the CBA on the matter. The Company, however, did not subsequently include the COLA since the Commission on Audit disapproved its payment because the Company had no funds to cover this benefit. Labor Arbiter Aliman D. Mangandog (LA) ruled in favor of the petitioners and ordered the payment of their AA and COLA, six percent (6%) interest of the total amount awarded, and ten percent (10%) attorneys fees. The NLRC affirmed with modification the LAs decision. It set aside the award of the COLA benefits because the claim was not proven and established, but ordered the Company to pay the petitioners their accrued AA of about P107,300,000.00 in lump sum and to continue paying the AA starting August 1, 2002. It also upheld the award of 10% attorneys fees to the petitioners. In its Motion for Partial Reconsideration of the NLRCs decision, the Company pointed out that the award of ten percent (10%) attorneys fees to the petitioners is already provided for in their December 19, 2003 Memorandum of Agreement (MOA) which mandated that attorneys fees shall be deducted from the AA and CBA receivables. In their Opposition, the petitioners argued that the MOA only covered the payment of their share in the contracted attorneys fees, but did not include the attorneys fees awarded by the NLRC. The CA modified the assailed NLRC rulings by deleting [t]he order for respondent MWCI to pay attorneys fees equivalent to 10% of the total judgment awards. The CA recognized the binding effect of the MOA between the Company and the Union; it stressed that any further award of attorneys fees is unfounded considering that it did not find anything in the Agreement that is contrary to law, morals, good customs, public policy or public order. We explained in PCL Shipping Philippines, Inc. v. National Labor Relations Commission that there are two commonly accepted concepts of attorneys fees the ordinary and extraordinary. In its ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal services the former renders; compensation is paid for the cost and/or results of legal services per agreement or as may be assessed. In its extraordinary concept, attorneys fees are deemed indemnity for damages ordered by the court to

be paid by the losing party to the winning party. The instances when these may be awarded are enumerated in Article 2208 of the Civil Code, specifically in its paragraph 7 on actions for recovery of wages, and is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of compensation. In the present case, we find it undisputed that the union members are entitled to their AA benefits and that these benefits were not paid by the Company. That the Company had no funds is not a defense as this was not an insuperable cause that was cited and properly invoked. As a consequence, the union members represented by the Union were compelled to litigate and incur legal expenses. On these bases, we find no difficulty in upholding the NLRCs award of ten percent (10%) attorneys fees. In the present case, the ten percent (10%) attorneys fees awarded by the NLRC on the basis of Article 111 of the Labor Code accrue to the Unions members as indemnity for damages and not to the Unions counsel as compensation for his legal services, unless, they agreed that the award shall be given to their counsel as additional or part of his compensation; in this case the Union bound itself to pay 10% attorneys fees to its counsel under the MOA and also gave up the attorneys fees awarded to the Unions members in favor of their counsel. This is supported by Borelas affidavit which stated that [t]he 10% attorneys fees paid by the members/employees is separate and distinct from the obligation of the company to pay the 10% awarded attorneys fees which we also gave to our counsel as part of our contingent fee agreement.2[43] The limit to this agreement is that the indemnity for damages imposed by the NLRC on the losing party (i.e., the Company) cannot exceed ten percent (10%). Properly viewed from this perspective, the award cannot be taken to mean an additional grant of attorneys fees, in violation of the ten percent (10%) limit under Article 111 of the Labor Code since it rests on an entirely different legal obligation than the one contracted under the MOA. Simply stated, the attorneys fees contracted under the MOA do not refer to the amount of attorneys fees awarded by the NLRC; the MOA provision on attorneys fees does not have any
2

bearing at all to the attorneys fees awarded by the NLRC under Article 111 of the Labor Code. Based on these considerations, it is clear that the CA erred in ruling that the LAs award of attorneys fees violated the maximum limit of ten percent (10%) fixed by Article 111 of the Labor Code. Under this interpretation, the Companys argument that the attorneys fees are unconscionable as they represent 20% of the amount due or about P21.4 million is more apparent than real. Since the attorneys fees awarded by the LA pertained to the Unions members as indemnity for damages, it was totally within their right to waive the amount and give it to their counsel as part of their contingent fee agreement. Beyond the limit fixed by Article 111 of the Labor Code, such as between the lawyer and the client, the attorneys fees may exceed ten percent (10%) on the basis of quantum meruit, as in the present case.3[44] WHEREFORE, premises considered, the petition is hereby GRANTED. The assailed decision dated March 6, 2006 and the resolution dated August 15, 2006 of the Court of Appeals in CAG.R. SP No. 83654 are REVERSED and SET ASIDE. The Labor Arbiters award of attorneys fees equivalent to ten percent (10%) of the total judgment award is hereby REINSTATED. Rule 16.04 creditor-debtor relationship between lawyer and client A lawyer shall not borrow money from his client unless the client's interest are fully protected by the nature of the case or by independent advice. Neither shall a lawyer lend money to a client except, when in the interest of justice, he has to advance necessary expenses in a legal matter he is handling for the client. Canon 20 lawyers fees

(a) the time spent and the extent of the service rendered or required; (b) the novelty and difficulty of the questions involved; (c) The importance of the subject matter; (d) The skill demanded; (e) The probability of losing other employment as a result of acceptance of the proffered case; (f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs; (g) The amount involved in the controversy and the benefits resulting to the client from the service; (h) The contingency or certainty of compensation; (i) The character of the employment, whether occasional or established; and (j) The professional standing of the lawyer. Rules of Court, Rule 138, Section 24 Compensation of attorneys; agreement as to fees.An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. Civil Code, Articles 1491 and 1492 Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial auction, either in person or through the mediation of another:

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

Rule 20.01 factors in determining lawyers fees A lawyer shall be guided by the following factors in determining his fees:
3

(1) The guardian, the property of the person or persons who may be under his guardianship; (2) Agents, the property whose administration or sale may have been entrusted to them, unless the consent of the principal has been given; (3) Executors and administrators, the property of the estate under administration; (4) Public officers and employees, the property of the State or of any subdivision thereof, or of any governmentowned or controlled corporation, or institution, the administration of which has been intrusted to them; this provision shall apply to judges and government experts who, in any manner whatsoever, take part in the sale; (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory they exercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with respect to the property and rights which may be the object of any litigation in which they may take part by virtue of their profession. (6) Any others specially disqualified by law. (1459a) Art. 1492. The prohibitions in the two preceding articles are applicable to sales in legal redemption, compromises and renunciations. (n) Research and Services Realty v. CA, GR 124074, January 27, 1997 questions the propriety of the award for, and the reasonableness of the amount of, attorney's fees granted in favor of the private respondent by the Regional Trial Court (RTC) of Makati City The instant case in which defendant is praying to be awarded attorney's fees, is an action for rescission of the Joint Venture Agreement between plaintiffs, Patricio Sarile, et al., as owners of

a parcel of land and defendant Research & Service Realty, Inc., as developer of the land. Petitioner entered into a Joint Venture Agreement with Jose, Fidel, and Antonia Carreon. Under the said agreement, the petitioner undertook to develop, subdivide, administer, and promote the sale of the parcels of land owned by the Carreons. The Carreons and a certain Patricio C. Sarile instituted before the RTC of Makati City an action against the petitioner for rescission of the Joint Venture Agreement (Civil Case No. 612). Petitioner engaged the services of private respondent Atty. Manuel S. Fonacier, Jr., who then entered his appearance in Civil Case No. 612. The petitioner, without the knowledge of the private respondent, entered into a Memorandum of Agreement (MOA)i[5] with another land developer, Filstream International, Inc. (hereinafter Filstream). Under this MOA, the former assigned its rights and obligations under the Joint Venture Agreement in favor of the latter for a consideration of P28 million, payable within twenty-four months. On 31 March 1993, the petitioner terminated the legal services of the private respondent. At the time the petitioner had already received P7 million from Filstream. Upon knowing the existence of the MOA, the private respondent filed in Civil Case No. 612 an Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien praying, among other things, that the petitioner be ordered to pay him the sum of P700,000.00 as his contingent fee in the case. After hearing the motion, the trial court issued an order dated 11 October 1993 directing the petitioner to pay the private respondent the sum of P600,000.00 as attorney's fees on the basis of quantum meruit (the reasonable value of services; damages awarded in an amount considered reasonable to compensate a person who has rendered services in a quasicontractual relationship). RTC reason: The said counsel for defendant Research prepared for the latter various pleadings and represented it in Court The Court of Appeals affirmed the challenged order of the trial court. Ratiocinated as follows: In an American jurisprudence on this point cited in local annotation on the Canon of Professional Ethics, it was held that "if a lawyer renders valuable services to one who receives the benefits thereof, a promise to pay a reasonable value is presumed, unless such services were intended to be gratuitous" (Young vs. Buere, 78 Cal. Am. 127) In

effect, to compensate a lawyer, we are faced with the pivotal question: "was the legal services intended to be free or not?" If it is not free, then, appellant must simply pay. The 10% contingent fee of the amount collected and/or to be collected in Civil Case No. 612 of the lower court, is, to Our mind fair and reasonable. The petitioner maintains that under the contract, attorney's fees on contingent basis could only be awarded in collection cases, and Civil Case No. 612 is not a collection case. Hence, the Court of Appeals erred in affirming the award on that basis, while the trial court was correct in applying the principle of quantum meruit. We uphold the petitioner, but not necessarily on the strength of it arguments. An analysis of the contract clearly shows that it was a general retainer, since its primary purpose was to secure beforehand the services of the private respondent for any legal problem which might afterward arise. ii[19] The fixed retaining fee was P800.00 a month. A retaining fee is a preliminary fee paid to ensure and secure a lawyer's future services, to remunerate him for being deprived, by being retained by one party, of the opportunity of rendering services to the other party and of receiving pay from him. In the absence of an agreement to the contrary, the retaining fee is neither made nor received in consideration of the services contemplated; it is apart from what the client has agreed to pay for the services which he has retained him to perform. While the contract did not mention non-collection cases, it is, nevertheless, clear therefrom that such cases were not excluded from the retainership, as borne out by the provision requiring the private respondent to "make appearances in Court for cases involving the corporation or any allied cases pertaining to the latter." As to such cases, there was no specific stipulation of additional attorney's fees. We cannot sustain the private respondent's theory that he could collect attorney's fees on contingent basis because in the other "non-collection" cases he handled for the petitioner' he was paid on contingent basis at the rate of 10% of what was awarded to the petitioner. In the first place, Civil Case No. 612 is still unresolved, and no judgment has yet been rendered in favor of the petitioner. The amount in the memorandum of agreement could not be made the basis of a "contingent fee". The amount of P28 million, which Filstream agreed to pay the petitioner, was not a judgment or award in favor of the petitioner in Civil Case No.

612. Indisputably then, the private respondent's attorney's fee on "contingent basis" in Civil Case No. 612 is unwarranted. If at all, he could only be entitled to attorney's fees on quantum meruit basis as of the expiration of his retainer contract on 31 March 1993. Quantum meruit simply means "as much as he deserves." The trial court is further DIRECTED to set for further hearing the private respondent's Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien and thereafter to fix the private respondent's attorney's fees in Civil Case No. 612 as of 31 March 1993 when his contract with the petitioner was effectively terminated, taking into account Section 24, Rule 138 of the Rules of Court; Rule 20.1, Canon 20 of the Code of Professional Responsibility; and the jurisprudentially established guiding principles in determining attorney's fees on quantum meruit basis. Bach v. Ongkiko Kalaw, GR 160334, Sept 11, 2006 Guenter Bach engaged the services of respondent law firm Ongkiko Kalaw Manhit & Accorda Law Offices to represent him in a Petition for Declaration of Nullity of Marriage filed before the Regional Trial Court (RTC) of Makati City. Respondent withdrew its appearance as counsel of petitioner, due to policy differences. On 18 December 1995, respondent sent the termination billing[3] for the services they rendered and billed petitioner the total amount of P1,000,000.00 plus 2% interest for every month of delay in payment, based on the provision for termination of services stated in their Fee Agreement. Despite respondents demands for his legal fees, petitioner failed and refused to pay. Petitioner contended that prior to respondents withdrawal as counsel in Civil Case No. 95224, petitioner had already paid respondents services in the total amount of P200,000.00. Both the Court of Appeals and the trial court approved the attorneys fees in the total amounts of P750,000.00 plus 2 % interest for the services rendered by respondent in Civil Case No. 95-224. In this regard, the rule is that the issue of the reasonableness of attorneys fees based on quantum meruit is a question of fact, and well-settled is the rule that conclusions and findings of fact by the lower courts are entitled to great weight on appeal and will not be disturbed except for strong and cogent

reasons. The findings of the Court of Appeals by itself, which are supported by substantial evidence, are almost beyond the power of review by the Supreme Court. 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 attorneys fees in favor of respondent. There are two concepts of attorneys fees. In the ordinary sense, attorneys fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered to the latter. On the other hand, in its extraordinary concept, attorneys fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party. The issue in this case concerns attorneys fees in the ordinary concept. Generally, the amount of attorneys fees due is that stipulated in the retainer agreement which is conclusive as to the amount of the lawyers compensation. In the absence thereof, the amount of attorneys fees is fixed on the basis of quantum meruit, i.e., the reasonable worth of the attorneys services. Courts may ascertain also if the attorneys fees are found to be excessive, what is reasonable under the circumstances. In no case, however, must a lawyer be allowed to recover more than what is reasonable. We have identified the circumstances to be considered in determining the reasonableness of a claim for attorneys fees as follows: (1) the amount and character of the service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the performance of the services; (7) the professional character and social standing of the attorney; (8) the results secured; and (9) whether the fee is absolute or contingent, it being recognized that an attorney may properly charge a much larger fee when it is contingent than when it is not. In sum, the services rendered by the respondent as enumerated above and as admitted by Atty. Mario Ongkiko during the ex parte hearing, consist of annotating notice of lis pendens on the conjugal properties of petitioner and his wife; filing the Petition for Declaration of Nullity of Marriage; preparing and filing various pleadings and documents relevant to the case; obtaining a freeze order of petitioners funds in the UCPB;

attending hearings in Civil Case No. 05-224, and sending notices to petitioner updating the latter of the status of the case. Nothing in Civil Case No. 95-224 so far appears complicated and no extra ordinary skill was needed for lawyers of respondent Law Firm to accomplish what they had done in the case before they withdrew their appearance. We do not find herein a situation so intricate that demands more than a careful scrutiny of the legal matters involved. These are simply the normal duties of a lawyer that he is bound by law to render to his clients with utmost fidelity for which his client must not be burdened to pay an extra price. It bears stressing that at the time respondent firm withdrew their appearance due to policy differences with petitioner, the case was still in its initial stage. Guided by the above yardstick and so much of the pertinent data as are extant in the records of this case and in the exercise of our sound discretion, we hold that the amount of P500,000.00 is a reasonable and fair compensation for the legal services rendered by respondent to the petitioner. The imposition of legal interest on the amount payable to private respondent as attorneys fees is unwarranted. Even as we agree that parties can freely stipulate on the terms of payment, still the imposition of interest in the payment of attorneys fees is not justified. WHEREFORE, the Decision appealed from is AFFIRMED WITH MODIFICATIONS to the effect that the attorneys fees awarded to respondent is REDUCED to P500,000.00, the legal interest of 2% on the amount due to respondent is DELETED, and the award of litigation expenses is REDUCED to P30,000.00. Bautista v. Gonzales, AM 1625, Feb 12, 1990 In a verified complaint filed by Angel L. Bautista on May 19, 1976, respondent Ramon A. Gonzales was charged with malpractice, deceit, gross misconduct and violation of lawyer's oath. Complainant submitted an amended complaint for disbarment, alleging that respondent committed the following acts: 1. Accepting a case wherein he agreed with his clients, namely, Alfaro Fortunado, Nestor Fortunado and Editha Fortunado [hereinafter referred to as the Fortunados] to pay all expenses,

10

including court fees, for a contingent fee of fifty percent (50%) of the value of the property in litigation; 2. Acting as counsel for the Fortunados in Civil Case No. Q-15143, wherein Eusebio Lopez, Jr. is one of the defendants and, without said case being terminated, acting as counsel for Eusebio Lopez, Jr. in Civil Case No. Q-15490; 3. Transferring to himself one-half of the properties of the Fortunados, which properties are the subject of the litigation in Civil Case No. Q-15143, while the case was still pending; 4. Inducing complainant, who was his former client, to enter into a contract with him on August 30, 1971 for the development into a residential subdivision of the land involved in Civil Case No. Q15143, covered by TCT No. T-1929, claiming that he acquired fifty percent (50%) interest thereof as attorney's fees from the Fortunados, while knowing fully well that the said property was already sold at a public auction on June 30, 1971, by the Provincial Sheriff of Lanao del Norte and registered with the Register of Deeds of Iligan City; After a careful review of the record of the case and the report and recommendation of the Solicitor General, the Court finds that respondent committed acts of misconduct which warrant the exercise by this Court of its disciplinary power. The record shows that respondent prepared a document entitled "Transfer of Rights" which was signed by the Fortunados on August 31, 1971. The document assigned to respondent onehalf (1/2) of the properties of the Fortunados covered by TCT No. T-1929, with an area of 239.650 sq. mm., and TCT No. T-3041, with an area of 72.907 sq. m., for and in consideration of his legal services to the latter. At the time the document was executed, respondent knew that the abovementioned properties were the subject of a civil case [Civil Case No. Q-15143] pending before the Court of First Instance of Quezon City since he was acting as counsel for the Fortunados in said case [See Annex "B" of Original Complaint, p. 12; Rollo, p. 16]. In executing the document transferring one-half (1/2) of the subject properties to himself, respondent violated the law expressly prohibiting a lawyer from acquiring his client's property or interest involved in any litigation in which he may take part by virtue of his profession [Article 1491, New Civil Code]. This Court has held that the purchase by a lawyer of his client's property or interest in litigation is a breach

of professional ethics and constitutes malpractice [Hernandez v. Villanueva, 40 Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248 (1940)]. A lawyer is disqualified from acquiring by purchase the property and rights in litigation because of his fiduciary relationship with such property and rights, as well as with the client. And it cannot be claimed that the new Code of Professional Responsibility has failed to emphasize the nature and consequences of such relationship. Canon 17 states that "a lawyer owes fidelity to the cause of his client and he shall be mindful of the trust and confidence reposed in him." On the other hand, Canon 16 provides that "a lawyer shall hold in trust all moneys and properties of his client that may come into his possession." Hence, notwithstanding the absence of a specific provision on the matter in the new Code, the Court, considering the abovequoted provisions of the new Code in relation to Art. 1491 of the Civil Code, as well as the prevailing jurisprudence, holds that the purchase by a lawyer of his client's property in litigation constitutes a breach of professional ethics for which a disciplinary action may be brought against him. WHEREFORE, finding that respondent Attorney Ramon A. Gonzales committed serious misconduct, the Court Resolved to SUSPEND respondent from the practice of law for SIX (6) months effective from the date of his receipt of this Resolution. Let copies of this Resolution be circulated to all courts of the country for their information and guidance, and spread in the personal record of Atty. Gonzales. Canlas v. CA, GR L-77691, August 8, 1988 The case dramatizes the unpleasant spectacle of a lawyer tangling with his own client, more often than not, in the matter of fees. The private respondent was the owner of eight parcels of land in Quezon City that he acquired through various loans from L&R Corporation. Having failed to make the necessary payments, the aforementioned parcels of land were subsequently sold at public auction, and in which L&R Corporation itself was the highest bidder. In a subsequent proceeding to enjoin consolidation of the titles in the name of L&R Corporation, the petitioner (Paterno Canlas) represented the private respondent (Francisco Herrera).

11

Two years later, and with no imminent end to the litigation in sight, the parties entered into a compromise agreement whereby L & R Corporation accorded the private respondent another year to redeem the foreclosed properties subject to payment of P600,000.00, with interest thereon at one per cent per month. They likewise stipulated that the petitioner shall be entitled to attorney's fees of P100,000.00. On November 19, 1982, the court 3 approved the compromise. The petitioner, however, continued to renege on his obligations to L&R Corporation. The petitioner contends that the private respondent "earnestly implored" him to redeem the said properties; the private respondent maintains that it was the petitioner himself who 'offered to advance the money," provided that he, the private respondent, executed a "transfer of mortgage" 8 over the properties in his favor. Who implored whom is a bone of contention, but as we shall see shortly, we are inclined to agree with the private respondent's version, considering primarily the petitioner's moral ascendancy over his client and the private respondent's increasing desperation. The records further show that the parties, pursuant to their agreement, executed a "Deed of Sale and Transfer of Rights of Redemption and/or to Redeem," a document that enabled the petitioner, first, to redeem the parcels in question, and secondly, to register the same in his name. Trial Court: the petitioner cannot be said to have violated the ban against sales of properties in custodia legis to lawyers by their clients pendente lite, since the sale in question took place after judgment in the injunction case abovesaid had attained finality. The complaint was consequently dismissed, a dismissal that eventually attained a character of finality. The Appelate Court denied reconsideration. Right to Redemption (it was the petitioner who succeeded in having the private respondent sign the "Deed of Sale and Transfer of Rights of Equity of Redemption and/or to Redeem," a pre-prepared document apparently, that allowed him (the petitioner) to exercise the right of redemption over the properties and to all intents and purposes, acquire ownership thereof)? We do not find the petitioner's claim of attorney's fees in the sum of P100,000.00 reasonable. We do not believe that it satisfies the standards set forth by the Rules. The extent of the services he had rendered in Civil Case No. 30679, and as far as

the records will yield, is not impressive to justify payment of such a gargantuan amount. The case itself moreover did not involve complex questions of fact or law that would have required substantial effort as to research or leg work for the petitioner to warrant his demands. It is futile to invoke the rule granting attorneys a lien upon the things won in litigation similar to that vested upon redemptioners. To begin with, the rule refers to realty sold as a result of execution in satisfaction of judgment. In this case, however, redemption was decreed by agreement (on compromise) between the mortgagor and mortgagee. It did not give the petitioner any right to the properties themselves, much less the right of redemption, although provisions for his compensation were purportedly provided. It did not make him a redemptioner for the plain reason that he was not named one in the amicable settlement. To this extent, we reverse Judge Pedro Santiago's ruling in Civil Case No. 40066, recognizing Atty. Canlas' "legal right, independent of the questioned deed of sale and transfer which was executed subsequently on May 3, 1983, to redeem the subject realty from the L & R Corporation pursuant to Sec. 29 (b), Rule 39 of the Rules of Court." Whatever right he had, it was, arguably with respect alone to his renumeration. It did not extend to the lands. and assuming that such a right exists, it must be in proportion to the "just fees and disbursements" due him. It is still subject to the tempering hand of this Court. The Court notes a hidden agenda in the petitioner's haste to execute the compromise agreement and subsequently, to force the transfer of the properties to himself. As we have observed, in spite of the issuance of the writ of execution, it does not appear that the petitioner took pains to implement it. We find this perplexing given his passionate and persistent pleas that he was entitled to the proceeds. There can indeed be no plausible explanation other than to enable him to keep an "ace" against the private respondent that led finally, to the conveyance of the properties in his favor. To be sure, he would have us beheve that by redeeming the same from the mortgagee and by in fact parting with his own money he had actually done the private respondent a favor, but this is to assume that he did not get anything out of the transaction. Indeed, he himself admits that "[t]itles to the properties have been issued to the new owners long before the filing of private respondents [sic] petition for annulment." To say that he did not profit therefrom is to take

12

either this Court or the petitioner for naive, a proposition this Court is not prepared to accept under the circumstances. We are of the opinion that in ceding his right of redemption, the private respondent had intended merely to forestall the total loss of the parcels to the mortgagee upon the understanding that his counsel shall acquire the same and keep them therefore within reach, subject to redemption by his client under easier terms and conditions. Surely, the petitioner himself would maintain that he agreed to make the redemption"in order that [he] may already be paid the P100,000.00 attorney's fees awarded him in the Compromise Agreement," and if his sole concern was his fees, there was no point in keeping the properties in their entirety. Whether or not the conveyance in favor of the petitioner is subject to the ban on acquisition by attorneys of things in litigation. At any rate, the transfer, so we hold, is not subject to the injunction of Article 1491 of the Civil Code. But like all voidable contracts, it is open to annulment on the ground of mistake, fraud, or undue influence, which is in turn subject to the right of innocent purchasers for value. For this reason, we invalidate the transfer in question specifically for undue influence as earlier detailed. While the respondent Herrera has not specifically prayed for invalidation, this is the clear tenor of his petition for annulment in the Appellate Court. WHEREFORE, judgment is hereby rendered. 1. ORDERING the petitioner, Atty. Patemo Canlas, to pay to the private respondent, Francisco Herrera, the sum of P326,000.00, as and for damages; 2. ORDERING the petitioner to SHOW CAUSE why no disciplinary action may be imposed on him for violation of his oath, as a lawyer, within ten (10) days from notice, after which the same will be consolidated with AC No. 2625; Rilloraza v Eastern Telecom, GR 104600, July 2, 1999 The basic issue submitted for consideration of the Court is

whether or not petitioner is entitled to recover attorneys fees amounting to Twenty Six Million Three Hundred Fifty Thousand Seven Hundred Seventy Nine Pesos and Ninety One Centavos (P26,350,779.91) for handling the case for its client Eastern Telecommunications Philippines, Inc. filed with the Regional Trial Court, Makati, though its services were terminated in midstream and the client directly compromised the case with the adverse party. Eastern Telecommunications Philippines, Inc. (ETPI) represented by the law firm San Juan, Africa, Gonzales and San Agustin (SAGA), filed with the Regional Trial Court, Makati, a complaint for recovery of revenue shares against Philippine Long Distance Telephone Company (PLDT). Atty. Francisco D. Rilloraza, a partner of the firm appeared for ETPI. After ETPI rested its case, it paid SAGA the billed amount of One Hundred Thousand Pesos (P100,000.00). On September 18, 1987, the trial court issued a resolution granting ETPIs application for preliminary restrictive and mandatory injunctions. During this period, SAGA was dissolved and four of the junior partners formed the law firm Rilloraza, Africa, De Ocampo & Africa (RADA), which took over as counsel in the case for ETPI. The latter signed a retainer agreement with counsel dated October 1, 1987. On June 28, 1988, petitioner received a letter from ETPI signed by E. M. Villanueva, President and Chief Executive Officer. In substance, the letter stated that ETPI was terminating the retainer contract dated October 1, 1987, effective June 30, 1988. On June 29, 1988, petitioner filed with the Regional Trial Court a notice of attorneys lien, furnishing copies to the plaintiff ETPI, to the signatory of the termination letter and PLDT. On the same date, petitioner additionally sent a letter to ETPI attaching its partial billing statement. In its notice, RADA informed the court that there were negotiations toward a compromise between ETPI and PLDT. The trial court in its resolution dated September 14, 1990 denied the motion for enforcement of attorneys lien. We understand that Atty. Francisco Rilloraza handled the case from its inception until ETPI terminated the law firms services in 1988. Petitioners claim for attorneys fees hinges on two grounds: first, the fact that Atty. Rilloraza personally handled the case when he was working for SAGA; and second, the retainer agreement dated October 1, 1987. We agree that petitioners are entitled to attorneys fees. We,

13

however, are not convinced with the petitioners arguments that the services RADA rendered merit the amount they are claiming. Petitioner contends that Atty. Rilloraza initiated the filing of the complaint. When a client employs the services of a law firm, he does not employ the services of the lawyer who is assigned to personally handle the case. Rather, he employs the entire law firm. In the event that the counsel appearing for the client resigns, the firm is bound to provide a replacement. Thus, RADA could not claim to have initiated the filing of the complaint considering that ETPI hired SAGA. In fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be considered are generally (1) the importance of the subject matter in controversy, (2) the extent of services rendered, and (3) the professional standing of the lawyer. A determination of these factors would indispensably require nothing less than a full-blown trial where private respondents can adduce evidence to establish the right to lawful attorneys fees and for petitioner to oppose or refute the same. The trial court has the principal task of fixing the amount of attorneys fees. ACCORDINGLY, the Court GRANTS the petition, REVERSES the decision of the Court of Appeals in CA-G. R. SP No. 24463 and REMANDS the case to the court of origin for the determination of the amount of attorneys fees to which petitioner is entitled. Rule 20.02 division of fees between lawyers A lawyer shall, in case of referral, with the consent of the client, be entitled to a division of fees in proportion to the work performed and responsibility assumed. Rule 20.03 acceptance of fees other than from client A lawyer shall not, without the full knowledge and consent of the client, accept any fee, reward, costs, commission, interest, rebate or forwarding allowance or other compensation whatsoever related to his professional employment from anyone other than the client. Rule 20.04 remedy for collection A lawyer shall avoid controversies with clients concerning his compensation and shall resort to judicial action only to prevent imposition, injustice or fraud.

Canon 22 termination of attorney client relationship

CANON 22 - A LAWYER SHALL WITHDRAW HIS SERVICES ONLY FOR GOOD CAUSE AND UPON NOTICE APPROPRIATE IN THE CIRCUMSTANCES.
Rule 22.01 grounds for withdrawing services A lawyer may withdraw his services in any of the following case: (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. Rules of Court, Rule 3, Section 16 Death of party; duty of counsel.Whenever a party to a pending action dies, and the claim is not thereby extinguished, it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof, and to give the name and address of his legal representative or representatives. Failure of counsel to comply with this duty shall be a ground for disciplinary action. The heirs of the deceased may be allowed to be substituted for the deceased, without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. The court shall forthwith order said legal representative or

14

representatives to appear and be substituted within a period of thirty (30) days from notice. If no legal representative is named by the counsel for the deceased party or if the one so named shall fail to appear within the specified period, the court may order the opposing party, within a specified time, to procure the appointment of an executor or administrator for the estate of the deceased and the latter shall immediately appear for and on behalf of the deceased. The court charges in procuring such appointment, if defrayed by the opposing party, may be recovered as costs. (16a, 17a) Rules of Court, Rule 138, Section 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 client may at any time dismiss his attorney or substitute another in his place, but if the contract between client and attorney has been reduced to writing and the dismissal of the attorney was without justifiable cause, he shall be entitled to recover from the client the full compensation stipulated in the contract. For the payment of such compensation the attorney shall have a lien upon all judgments for the payment of money, and execution issued in pursuant of such judgments, rendered in the case wherein his services had been retained by the client. (As amended by Rep. Act No. 636.) Spouses Aquino v. CA, GR 109493, July 2, 1999 The petitioners argue that they were never notified by their counsel of record, Atty. Mala, of the notice to file an appellants brief. Atty. Mala was incapacitated to notify the petitioners of their obligation as he was in a coma when said notice was served upon him. They argue that when the Court of Appeals was notified of the death of Atty. Mala when it received the return of the assailed Resolution of July 25, 1991 bearing the notation RETURN TO SENDER, REASON: Deceased 8-1-81, it should have sent resolutions, notices and other processes to the petitioners themselves for the reason that when the case was brought to the Court of Appeals, they had no counsel of record and were filing and signing the pleadings themselves.

The respondents, on the other hand, argue that Atty. Barican did not make a formal withdrawal as counsel of record of the petitioners. It is true that Atty. Mala assisted the petitioners in filing their notice of appeal but said notice was signed by Serafin Aquino himself. Moreover, Atty. Mala never entered his appearance as their counsel. In addition, the Motion for the Issuance of a Writ of Preliminary Injunction filed by the petitioners was signed by the petitioner spouses and only notarized by Atty. Mala. If it was intended that he should be their counsel of record, he should have signed the motion. In cases of substitution of attorneys the following requisites must be complied with: 1. Written application for substitution; 2. written consent of the client; and 3. a written consent of the attorney to be substituted. In case the consent of the attorney to be substituted cannot be obtained, there must at least be proof that notice of the motion for substitution has been served upon him in the manner prescribed by our rules. In the present case, petitioners admit that Atty. Barican represented them in the proceedings before the lower court but that Atty. Mala substituted Atty. Barican when the case was elevated to the Court of Appeals.[19] No proof was presented by the petitioners to show compliance with the above procedural requirements for the withdrawal of Atty. Barican and the substitution of Atty. Mala in his stead; no written application for substitution or written consent of the client was filed in court. The Certification made by Atty. Rosalino C. Barican to the effect that he was the former counsel of record of the petitioners but that he withdrew as their counsel is not controlling in the absence of compliance with the above procedural requirements. It is therefore irrelevant that Atty. Mala did not receive the copy of the resolution of the Court of Appeals dated July 25, 1991 which dismissed their appeal since he was not the counsel of record and had never entered his appearance as counsel of the petitioners. Accordingly, the resolution of the Court of Appeals in CA G.R. CV No. 21533 dated July 25, 1991, dismissing the petitioners appeal became final and executory because their lawyer of record, Atty. Barican, was duly served with a copy of that resolution. There was an effective service upon the petitioners for as far as the Court of Appeals was concerned, Atty. Barican continued to be their counsel of record. The failure of an appellant to file an appellants brief is ground for the dismissal of the appeal.[20] The dismissal becomes final and

15

executory after fifteen days from receipt of the judgment or order. In the present case, since it is not denied that Atty. Barican, the counsel of record, received the copy of the resolution of the Court of Appeals dismissing the petitioners appeal, the dismissal became final and executory after the lapse of fifteen days. IN VIEW OF THE FOREGOING, the instant Petition is hereby DENIED. Rule 22.02 turnover duties A lawyer who withdraws or is discharged shall, subject to a retainer lien, immediately turn over all papers and property to which the client is entitled, and shall cooperative with his successor in the orderly transfer of the matter, including all information necessary for the proper handling of the matter. Briones v. Zapanta, Adm. Case No. 6266 November 16, 2006 This is a disbarment complaint filed by Estela Anastacio-Briones against respondent Atty. Alfredo A. Zapanta for abandonment and neglect of duties. Estela Anastacio-Briones stated that she engaged the services of respondent to file three civil cases involving a parcel of land located in Antipolo City. Complainant showed respondent a copy of Discharge and Appearance of Counsels with Ex-parte Motion to Cancel the October 25, 2002 Hearing she intended to file that day. She claimed that even prior to the hearing, she informed respondent of her joint venture agreement with a real estate developer who offered the services of its own counsel. Complainant added that respondent requested her not to file it and he would submit a withdrawal of appearance instead. Complainant also informed respondent that she could not attend the hearing on January 6, 2003 because of other commitments. Respondent allegedly assured her that he would be present in the hearing. Both respondent and complainant failed to appear in the hearing. As a result, the trial court declared them to have waived their right to present further witnesses. Complainant learned that the cases were dismissed and that respondent did not attend the hearing and did not file a formal offer of evidence. Complainant prayed that respondent be disbarred for abandoning her case and withdrawing his

appearance as counsel without her knowledge. In his Comment dated June 10, 2004, respondent countered that he was discharged as complainants counsel after the October 25, 2002 hearing. Respondent added that he prepared a withdrawal of appearance on October 30, 2002 but complainant ignored his several requests to sign it in his office. Nevertheless, he claimed he filed a withdrawal of appearance on March 5, 2003 without complainants conformity. Commissioner Dennis A.B. Funa of the IBP Commission on Bar Discipline found respondent liable for negligence in the performance of his duties as counsel, and for violating the Code of Professional Responsibility. Commissioner Funa recommended respondents suspension for three months from the practice of law. The IBP Board of Governors adopted and approved the report and recommendation of Commissioner Funa. We sustain the findings of the IBP that respondent was remiss in performing his duties as counsel of complainant. Section 26, Rule 138 of the Rules of Court provides the proper procedure for a lawyers withdrawal as counsel in a case. Unless the procedure prescribed in the abovementioned section is complied with, the attorney of record is regarded as the counsel who should be served with copies of the judgments, orders and pleadings and who should be held responsible for the case. For its part, the court could recognize no other representation on behalf of the client except such counsel of record until a formal substitution of attorney is effected. Until a lawyers withdrawal shall have been approved, he remains counsel of record and is expected by his client as well as by the court to do what the interests of his client require. He must still appear on the date of hearing for the attorney-client relation does not terminate formally until there is a withdrawal of his appearance on record. His claim that he was already discharged as counsel as early as October 25, 2002 is negated by the record that he withdrew his appearance only on March 5, 2003. Until his dismissal or withdrawal was made of record, any judicial notice sent to him was binding upon his client even though as between them the professional relationship may have been terminated. Thus, unless properly relieved, respondent is responsible for the

16

conduct of the cases and his failure to attend the hearing and comply with the trial courts directive to file a formal offer of evidence constitute inexcusable negligence. WHEREFORE, respondent Atty. Alfredo A. Zapanta is hereby found GUILTY of negligence and is meted the penalty of SUSPENSION from the practice of law for THREE MONTHS effective upon finality of this Decision.

17

i ii