9/15/21, 6:00 PM SUPREME COURT REPORTS ANNOTATED VOLUME 712

 
 
 
 
 
 
 
 

 
A.C. No. 9091. December 11, 2013.*
 
CONCHITA A. BALTAZAR, ROLANDO SAN PEDRO,
ALICIA EULALIO-RAMOS, SOLEDAD A. FAJARDO AND
ENCARNACION A. FERNANDEZ, complainants, vs.
ATTY. JUAN B. BAÑEZ, JR., respondent.

Attorneys; Legal Ethics; Lawyers have a sworn duty and

responsibility to protect the interest of any prospective client and
pursue the ends of justice.—Respondent cannot be faulted for
advising complainants to file an action against Fevidal to recover
their properties, instead of agreeing to a settlement of
P10,000,000 — a measly

_______________

* FIRST DIVISION.

 
 
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amount compared to that in the original agreement, under which

Fevidal undertook to pay complainants the amount of
P35,000,000. Lawyers have a sworn duty and responsibility to
protect the interest of any prospective client and pursue the ends
of justice. Any lawyer worth his salt would advise complainants
against the abuses of Fevidal under the circumstances, and we
cannot countenance an administrative complaint against a lawyer
only because he performed a duty imposed on him by his oath.

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Same; Same; Attorney’s Fees; Section 26, Rule 138 of the Rules
of Court allows an attorney to intervene in a case to protect his
rights concerning the payment of his compensation.—Section 26,
Rule 138 of the Rules of Court allows an attorney to intervene in a
case to protect his rights concerning the payment of his
compensation. According to the discretion of the court, the
attorney shall have a lien upon all judgments for the payment of
money rendered in a case in which his services have been retained
by the client. We recently upheld the right of counsel to intervene
in proceedings for the recording of their charging lien. In Malvar
v. KFPI, 705 SCRA 242 (2013),  we granted counsel’s motion to
intervene in the case after petitioner therein terminated his
services without justifiable cause. Furthermore, after finding that
petitioner and respondent had colluded in order to deprive counsel
of his fees, we ordered the parties to jointly and severally pay
counsel the stipulated contingent fees.
Same; Same; Same; The compensation of lawyers for
professional services rendered is subject to the supervision of the
court, not only to guarantee that the fees they charge remain
reasonable and commensurate with the services they have actually
rendered, but to maintain the dignity and integrity of the legal
profession as well; That he had pursued its payment in the
appropriate venue does not make him liable for disciplinary
action.—The determination of whether respondent is entitled to
the charging lien is based on the discretion of the court before
which the lien is presented. The compensation of lawyers for
professional services rendered is subject to the supervision of the
court, not only to guarantee that the fees they charge remain
reasonable and commensurate with the services they have
actually rendered, but to maintain the dignity and integrity of the
legal profession as well. In any case, an attorney is entitled to be
paid reasonable compensation for his services.  That he had
pursued

 
 
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its payment in the appropriate venue does not make him liable for
disciplinary action.
Same; Same; Same; Champertous Contracts; Words and
Phrases; A champertous contract is an agreement whereby an
attorney undertakes to pay the expenses of the proceedings to
enforce the client’s rights in exchange for some bargain to have a
part of the thing in dispute. Such contracts are contrary to public
policy and are thus void or inexistent.—Notwithstanding the

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foregoing, respondent is not without fault. Indeed, we find that

the contract for legal services he has executed with complainants
is in the nature of a champertous contract — an agreement
whereby an attorney undertakes to pay the expenses of the
proceedings to enforce the client’s rights in exchange for some
bargain to have a part of the thing in dispute. Such contracts are
contrary to public policy and are thus void or inexistent. They are
also contrary to Canon 16.04 of the Code of Professional
Responsibility, which states that lawyers shall not lend money to
a client, except when in the interest of justice, they have to
advance necessary expenses in a legal matter they are handling
for the client.
Same; Same; Same; Same; While lawyers may advance the
necessary expenses in a legal matter they are handling in order to
safeguard their client’s rights, it is imperative that the advances be
subject to reimbursement.—While lawyers may advance the
necessary expenses in a legal matter they are handling in order to
safeguard their client’s rights, it is imperative that the advances
be subject to reimbursement. The purpose is to avoid a situation
in which a lawyer acquires a personal stake in the client’s cause.
Regrettably, nowhere in the contract for legal services is it stated
that the expenses of litigation advanced by respondent shall be
subject to reimbursement by complainants.

ADMINISTRATIVE CASE in the Supreme Court. Violation

of Canon 16.04 of the Code of Professional
Responsibility.
The facts are stated in the resolution of the Court.

 
 
122

RESOLUTION
 
SERENO,  CJ.:
 
Complainants are the owners of three parcels of land
located in Dinalupihan, Bataan.1 On 4 September 2002,
they entered into an agreement with Gerry R. Fevidal
(Fevidal), a subdivision developer. In that agreement, they
stood to be paid P35,000,000 for all the lots that would be
sold in the subdivision.2 For that purpose, they executed a
Special Power of Attorney authorizing Fevidal to enter into
all agreements concerning the parcels of land and to sign
those agreements on their behalf.3

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Fevidal did not update complainants about the status of

the subdivision project and failed to account for the titles to
the subdivided land.4 Complainants also found that he had
sold a number of parcels to third parties, but that he did
not turn the proceeds over to them. Neither were
complainants invited to the ceremonial opening of the
subdivision project.5 Thus, on 23 August 2005, they
revoked the Special Power of Attorney they had previously
executed in his favor.6
Complainants subsequently agreed to settle with
Fevidal for the amount of P10,000,000, but the latter again
failed to pay them.7 Complainants engaged the professional
services of respondent for the purpose of assisting them in
the preparation of a settlement agreement.8 Instead of
drafting a written settlement, respondent encouraged them
to institute actions against Fevidal in order to recover their
properties.

_______________

1 Rollo (Vol. I), pp. 3-4.

2 Id., at pp. 5-6.
3 Id., at pp. 6-7.
4 Rollo, (Vol. II), p. 127.
5 Id.
6 Id., at p. 126.
7 Id., at p. 263.
8 Rollo (Vol. I), p. 7.

 
 
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Complainants then signed a contract of legal services,9

in which it was agreed that they would not pay acceptance
and appearance fees to respondent, but that the docket fees
would instead be shared by the parties. Under the contract,
complainants would pay respondent 50% of whatever
would be recovered of the properties.
In preparation for the filing of an action against Fevidal,
respondent prepared and notarized an Affidavit of Adverse
Claim, seeking to annotate the claim of complainants to at
least 195 titles in the possession of Fevidal.10 A certain
Luzviminda Andrade (Andrade) was tasked to submit the
Affidavit of Adverse Claim to the Register of Deeds of
Bataan.11 The costs for the annotation of the adverse claim
were paid by respondent. Unknown to him, the adverse

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claim was held in abeyance, because Fevidal got wind of it

and convinced complainants to agree to another
settlement.12
Meanwhile, on behalf of complainants, and after sending
Fevidal a demand letter dated 10 July 2006, respondent
filed a complaint for annulment, cancellation and
revalidation of titles, and damages against Fevidal before
the Regional Trial Court (RTC) of Bataan on 13 October
2006.13
Complainants found it hard to wait for the outcome of
the action. Thus, they terminated the services of
respondent on 8 June 2007, withdrew their complaint
against Fevidal on 9 June 2007, and finalized their
amicable settlement with him on 5 July 2007.14
Respondent filed a Manifestation and Opposition15
dated 20 July 2007 before the RTC, alleging that the
termination of his

_______________

9 Id., at p. 25.
10 Rollo (Vol. II), pp. 102-105.
11 Id., at pp. 7-8.
12 Id., at p. 264.
13 Id., at pp. 8-9.
14 Rollo (Vol. I), pp. 11-13.
15 Rollo (Vol. II), pp. 187-191.

 
 

124

services and withdrawal of the complaint had been done

with the intent of defrauding counsel. On the same date, he
filed a Motion for Recording of Attorney’s Charging Lien in
the Records of the Above-Captioned Cases.16 When the
RTC granted the withdrawal of the complaint,17 he filed a
Manifestation and Motion for Reconsideration.18
After an exchange of pleadings between respondent and
Fevidal, with the latter denying the former’s allegation of
collusion,19 complainants sought the
suspension/disbarment of respondent through a
Complaint 20 filed before the Integrated Bar of the
Philippines (IBP) on 14 November 2007. Complainants
alleged that they were uneducated and underprivileged,
and could not taste the fruits of their properties because
the disposition thereof was “now clothed with legal

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problems” brought about by respondent.21 In their

complaint, they alleged that respondent had violated
Canons 1.01,22 1.03,23 1.04,24 12.02,25 15.05,26 18.04,27 and
20.0428 of the Code of Professional Responsibility.

_______________

16 Id., at pp. 197-203.

17 Id., at p. 209.
18 Id., at pp. 212-222.
19 Id., at pp. 237-238.
20 Rollo (Vol. I), pp. 1-18.
21 Id., at p. 2.
22 A lawyer shall not engage in unlawful, dishonest, immoral or
deceitful conduct.
23 A lawyer shall not, for any corrupt motive or interest, encourage any
suit or proceeding or delay any man’s cause.
24 A lawyer shall encourage his clients to avoid, end or settle a
controversy if it will admit of a fair settlement.
25 A lawyer shall not unduly delay a case, impede the execution of a
judgment or misuse Court processes.
26 A lawyer when advising his client, shall give a candid and honest
opinion on the merits and probable results of the client’s case, neither
overstating nor understating the prospects of the case.

 
 
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On 14 August 2008, the IBP Commission on Bar

Discipline adopted and approved the Report and
Recommendation29 of the investigating commissioner. It
suspended respondent from the practice of law for a period
of one year for entering into a champertous agreement.30
On 26 June 2011, it denied his motion for reconsideration.
On 26 November 2012, this Court noted the
Indorsement of the IBP Commission on Bar Discipline, as
well as respondent’s second motion for reconsideration.
We find that respondent did not violate any of the
canons cited by complainants. In fact, we have reason to
believe that complainants only filed the instant complaint
against him at the prodding of Fevidal.
Respondent cannot be faulted for advising complainants
to file an action against Fevidal to recover their properties,
instead of agreeing to a settlement of P10,000,000 — a
measly amount compared to that in the original agreement,
under which Fevidal undertook to pay complainants the

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amount of P35,000,000. Lawyers have a sworn duty and

responsibility to protect the interest of any prospective
client and pursue the ends of justice.31 Any lawyer worth
his salt would advise complainants against the abuses of
Fevidal under the circumstances, and we cannot
countenance an administrative complaint against a lawyer
only because he performed a duty imposed on him by his
oath.

_______________

27 A lawyer shall keep the client informed of the status of his case and
shall respond within a reasonable time to client’s request for information.
28 A lawyer shall avoid controversies with clients concerning his
compensation and shall resort to judicial action only to prevent
imposition, injustice or fraud.
29 Rollo (Vol. IV), pp. 2-12.
30 Id., at p. 1.
31 Manzano v. Soriano, A.C. No. 8051, 7 April 2009, 584 SCRA 1.

 
 

126

The claim of complainants that they were not informed

of the status of the case is more appropriately laid at their
door rather than at that of respondent. He was never
informed that they had held in abeyance the filing of the
adverse claim. Neither was he informed of the brewing
amicable settlement between complainants and Fevidal.
We also find it very hard to believe that while
complainants received various amounts as loans from
respondent from August 2006 to June 2007,32 they could
not spare even a few minutes to ask about the status of the
case. We shall discuss this more below.
As regards the claim that respondent refused to “patch
up” with Fevidal despite the pleas of complainants, we note
the latter’s  Sinumpaang Salaysay  dated 24 September
2007, in which they admitted that they could not convince
Fevidal to meet with respondent to agree to a settlement.33
Finally, complainants apparently refer to the motion of
respondent for the recording of his attorney’s charging lien
as the “legal problem” preventing them from enjoying the
fruits of their property.
Section 26, Rule 138 of the Rules of Court allows an
attorney to intervene in a case to protect his rights
concerning the payment of his compensation. According to
the discretion of the court, the attorney shall have a lien
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upon all judgments for the payment of money rendered in a

case in which his services have been retained by the client.
We recently upheld the right of counsel to intervene in
proceedings for the recording of their charging lien. In
Malvar v. KFPI,34 we granted counsel’s motion to intervene
in the case after petitioner therein terminated his services
without justifiable cause. Furthermore, after finding that
petitioner and respondent had colluded in order to deprive
counsel of his

_______________

32 Rollo (Vol. II), pp. 90-101.

33 Id., at p. 264.
34 G.R. No. 183952, 9 September 2013, 705 SCRA 242.

 
 
127

fees, we ordered the parties to jointly and severally pay

counsel the stipulated contingent fees.
Thus, the determination of whether respondent is
entitled to the charging lien is based on the discretion of
the court before which the lien is presented. The
compensation of lawyers for professional services rendered
is subject to the supervision of the court, not only to
guarantee that the fees they charge remain reasonable and
commensurate with the services they have actually
rendered, but to maintain the dignity and integrity of the
legal profession as well.35 In any case, an attorney is
entitled to be paid reasonable compensation for his
services.36 That he had pursued its payment in the
appropriate venue does not make him liable for disciplinary
action.
Notwithstanding the foregoing, respondent is not
without fault. Indeed, we find that the contract for legal
services he has executed with complainants is in the nature
of a champertous contract — an agreement whereby an
attorney undertakes to pay the expenses of the proceedings
to enforce the client’s rights in exchange for some bargain to
have a part of the thing in dispute.37 Such contracts are
contrary to public policy38 and are thus void or inexistent.39
They are also contrary to Canon 16.04 of the Code of
Professional Responsibility, which states that lawyers shall
not lend money to a client, except when in the interest of
justice, they have to advance necessary expenses in a legal
matter they are handling for the client.
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A reading of the contract for legal services40 shows that

respondent agreed to pay for at least half of the expense for
the
 

_______________

35 Municipality of Tiwi v. Betito, G.R. No. 171873, 9 July 2010, 624

SCRA 623.
36 Rules of Court, Rule 138, Sec. 24.
37 Bautista v. Gonzales, 261 Phil. 266, 281; 182 SCRA 151, 164 (1990).
38 Id.
39 Civil Code, Art. 1409(1).
40 KAMI, na nakalagda sa ilalim nito ay hinihirang ang tanggapan ng
BAÑEZ, BAÑEZ & ASSOCIATES upang siyang humawak

 
 
128

docket fees. He also paid for the whole amount needed for
the recording of complainants’ adverse claim.
While lawyers may advance the necessary expenses in a
legal matter they are handling in order to safeguard their
client’s rights, it is imperative that the advances be subject
to reimbursement.41 The purpose is to avoid a situation in
which a lawyer acquires a personal stake in the client’s
cause. Regrettably, nowhere in the contract for legal
services is it stated that the expenses of litigation advanced
by respondent shall be subject to reimbursement by
complainants.
In addition, respondent gave various amounts as cash
advances (bali), gasoline and transportation allowance to
them for the duration of their attorney-client relationship.
In fact, he admits that the cash advances were in the
nature of personal loans that he extended to
complainants.42

_______________

sa lahat ng kaso na aming isasampa laban kay Gerry R. Fevidal at iba

pang kasama nito, hinggil sa mga parsela ng lupa na matatagpuan sa Bo.
Pinulot, Hermosa, Bataan, na paw[a]ng pag-aari ni Dominador Alejo,
ayon sa mga sumusunod na alituntunin:
1.     Na kami ay hindi magbabayad ng acceptance fee;
2.  Na kami ay hindi magbabayad ng appearance fee tuwing may
hearing;

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3. Na paghahatian namin ng aming abogado ang magagastos bilang

docket fee o bayad sa husgado sa pagsasampa ng kaso;
4.   Na aming babayaran ang aming nasabing abogado ng katumbas
ng 50% ng anumang marerecover o mababawi namin sa mga ari-
ariang nakasaad sa Extrajudicial Settlement of Estate na
isinagawa noong Abril 12, 1986, gaya Ng mga sumusunod:  [1]
TCT No. T-18653 [79,885 sq.m.]; [2] TCT No. T-21447 [80,555
sq.m.] at [3] 38847 [35,380 sq.m.], at ito ay matapos bawasin ang
10% ng anumang marerecover bilang parte ni Luzviminda
Andrade;
5.   Ang anumang bayarin sa buwis para sa nasabing mga parsela ng
lupa ay aming sasagutin.
41 Supra note 38.
42 Rollo (Vol. IV), p. 33.

 
 
129

Clearly, respondent lost sight of his responsibility as a

lawyer in balancing the client’s interests with the ethical
standards of his profession. Considering the surrounding
circumstances in this case, an admonition shall suffice to
remind him that however dire the needs of the clients, a
lawyer must always avoid any appearance of impropriety to
preserve the integrity of the profession.
WHEREFORE, Attorney Juan B. Bañez, Jr. is hereby
ADMONISHED for advancing the litigation expenses in
a
legal matter he handled for a client without providing for
terms of reimbursement and lending money to his client, in
violation of Canon 16.04 of the Code of Professional
Responsibility. He is sternly warned that a repetition of the
same or a similar act would be dealt with more severely.
Let a copy of this Resolution be attached to the personal
record of Attorney Bañez, Jr.
SO ORDERED.

Leonardo-De Castro, Bersamin, Villarama, Jr. and

Reyes, JJ., concur.

Attorney Juan B. Bañez, Jr. admonished.

Notes.—The award of attorney’s fees is the exception

rather than the rule and the court must state explicitly the
legal reason for such award. (Development Bank of the
Philippines vs. Traverse Development Corporation, 658
SCRA 614 [2011])

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The award of attorney’s fees must rest on a factual basis

and legal justification stated in the body of the decision
under review. (Dela Cruz vs. Planters Products, Inc., 691
SCRA 28 [2013])
 
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