Lecture Notes Part 2 (LEGAL ETHICS)

Note 21. Contingent fees are not per se prohibited by law, as they are sanctioned by
Canon 13 of the Canons of Professional Ethics and Canon 20, Rule 20.01 of the Code of
Professional Responsibility.

However, when it is shown that a contract for a contingent fee was obtained by undue
influence exercised by the attorney upon his client or by fraud of imposition, or that the
compensation is clearly excessive, the Court must and will protect the aggrieved party (Ulanday
vs. Manila Railroad Co., 45 Phil. 540). Moreover, contingent fees are subject to the supervision
of the Supreme Court with regard to its reasonableness as provided under Sec. 13 Canons of
Professional Ethics (Tahueco vs. De Dumo, 172 SCRA 760).

Note 22 – Initial fees and fees paid during the progress of litigation are not part of
contingent fees (Law Firm of Raymundo Armovil vs. CA, 202 SCRA 16).
Note 23- CHAMPERTOUS CONTRACT- an agreement whereby an attorney agrees to pay
off proceedings to enforce the client’s rights. It is against public police especially where the
attorney has agreed to carry on the action at his ow expense in consideration of some bargain
to have part of the thing in dispute. The execution of such kind of contract violates the fiduciary
relationship between the lawyer and his client, for which the former must incur administrative
sanctions. It is violative of Canon 42 of the Canons of Professional Ethics which provides that a
lawyer may not properly agree with a client to pay or bear the expenses of litigation. (Bautista
vs. Gonzales, 182 SCRA 151).

An agreement whereby an attorney agrees to pay expenses of proceedings to enforce

the client’s rights is CHAMPERTOUS (JBP Holding Corp. vs. US 166 F. Supp. 324 (1958). Such
agreements are against public policy especially where, as in this case, the attorney has agreed
to carry on the action at his own expense in consideration of some bargain to have part of the
thing in dispute (supra).

Note 24 – A claim for attorney’s fees may be asserted either in the very action in which
the services of a lawyer had been rendered or in a separate action.
However, 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 ( Rosario Jr. vs De Guzman, GR No. 191247, July 10, 2013)

** 2 concepts of ATTORNEY’S :
a) ORDINARY – reasonable compensation paid to a lawyer by his client for legal
services rendered.
b) EXTRAORDINARY – it is awarded by the court to the successful litigant to be paid by
the losing party as an indemnity for damages.
 Differences:
In ordinary attorney’s fees, the fees are paid by the client to the counsel as
compensation for the latter’s services. The losing party against whom damages by
way of attorney’s fees may be assessed is not bound by, nor is his liability depended
upon, the fee arrangement of the prevailing party with his lawyer.
In extraordinary attorney’s fees, it refers to the award that the court may grant to a
successful party by way of attorney’s fee as an indemnity for damages sustained by
him in prosecuting or defending, through counsel, his cause in court. It may be
decreed in favor of the party, not his lawyer, in any of the instances authorized by
law. It is an item of damages belonging to the party litigant and not to his lawyer
(Ibid)

Note 23 – Quantum Meruit – (“as much as one deserves) – used as basis for determining
an atotrney’s professional fees in the absence of express agreement. The recovery of
attorney’s fees on the basis of quantum meruit is a device that prevents an unscrupulous client
from running away with the fruits of the legal services of counsel without paying for it and also
avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is
entitled to reasonable compensation for the effort in pursuing the client’s cause , taking into
account certain factors in fixing the amount of legal fees

Note 23.1. The principle of QUANTUM MERUIT is applied if a lawyer is employed

without a price agreed upon for his services (Lorenzo vs. CA)

Note 24 – Guidelines in determining the proper amount of attorney’s fees

Rule 20.01 (CPR) – A lawyer shall eb guided by the following
Factors in determining his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficulty of the questions involved;
c) The importance of the subject matter;
d) The skill demanded
e) The probability of losing other employment as a result or acceptance of the
proferred case;
f) The customary charges for similar services and the schedule of fees of the
IBP Chapter to which the lawyer belongs
g) The amount involved in the controversy and the benefits resulting to the
client from the service;
h) The contingency or certainty of the compensation;
i) The character of the employment, whether occasional or established and
j) The professional standing of the lawyer.

Note 25 _ A stipulation regarding the payment of attorney’s fees is neither illegal

nor immoral and is enforceable as the law between the parties as long as such
stipulation does not contravene law, good morals, good customs, public order or public
policy (Reparations Commission vs. Visayan Packing Corp. 191 SCRA 531).
 Note 26 – An executor or administrator may not recover attorney’s fees for the
services to the estate because it is the heirs who are his clients (Lacson vs. Reyes, 182
SCRA 729).

Note 27- An award of attorney’s fees under Art. 2208 of the Civil Code is more of
the exception than the general rule, and counsel’s fees are not to be awarded every
time. The power of the court to award attorney’s fees under Art. 2208 of the Civil Code
demands factual, legal and equitable justification, without which the award is a
conclusion without a premise, its basis being improperly left to speculation and
conjecture (Central Azucarera de Bais vs. CA, 188 SCRA 328).

Note 28 – Who may not charge attorney’s fees –

1) Government lawyers
2) Executor or administrator of an estate
3) Counsel de oficio except that he may entitled to a token compensation.

Note 29 – A lawyer may enforce his claim for attorney’s fees through:
1) Filing a petition as an incident of the main action which may be
adjudicated by the court is there is something due to the client in the
action or
2) Filing an independent action

Note 30 – When a lawyer exercises his RETAINING LIEN, it does not mean that it
is attached the funds which came to his possession in some other capacity; or
that it extends to the funds of client’s principal or that it extends to the subject
matter of the action .
A retaining lien ends when the possession of documents lawfully ends.
The requisites of a charging lien are:
1) It should be filed while the court still has the records of the case and
before full satisfaction of the judgment and
2) Copies of the statement must be served on the client who has the
right to dispute it, or on the adverse party in order to bind him. It
shall take effect from the time the lawyer caused a notice of his lien
to be entered in. the records of the case.
CHARGING LIEN- to eb enforceable as security for the payment of
attorney’s fees, requires as a condition sine qua non judgment secured in
the main action by the attorney in favor of his client. It is not of the
nature which attaches to the property in litigation, but is at most a
personal claim enforceable by a writ of execution. It presupposes that
the attorney has secured a favorable money judgment for his client, and
it is limited only to money judgments, not to judgments for annulment of
contract or delivery of real property (Metrobank vs CA, 181 SCRA 367).
 Effects of Charging lien –
1) It gives the lawyer the right to collect out of the judgment on
executions in pursuance thereof
2) It allows a client or assignee who receives the proceeds of the
judgment to hold it in trust for the lawyer
3) It does not free the judgment debtor who fully satisfies the judgment
debt in disregard of the lien from the liability for the full value
thereof, enforceable by execution
4) It still enjoys preference of credit over a creditor who subsequently
recorded his credit and
5) It gives the lawyer a standing in the action to protest its
discontinuance by the client unless suitable measures for the
protection of his fees are provided.

Note 31 – The basic requirement for the validity of an award of attorney’s fees in
a decision is that it must be stated in the dispositive portion of the decision
giving a reason for the said award. It is also necessary for the court to make
findings of facts and law that would bring the case within the exception to justify
the grant of such award. The exercise of judicial discretion in the award of
attorney’s fees under Art. 2208 (11) of the Civil Code demands a factual, legal or
equitable justification (Mirasol vs. Hon. Dela Cruz, GR l-32552, July 31, 1978)

Note – If the services of a lawyer was terminated before his client had
compromised the case, he is no longer entitled to contingent attorney’s fees
because he did not participate in the negotiations for the settlement of the case.

A lawyer may not get the entire property in the litigation after the termination
for the case. A lawyer is merely the trustee of his client and the defendant of his
client’s cause. It would be unfair if a winning client loses everything to his lawyer
alone.