Gabucan vs. Narido, Jr.

A lawyer who leases property that is the subject of litigation he is handling by virtue of his profession violates Article 1646 in relation to Article 1491 of the Civil Code, and a lawyer who fails to file required pleadings before an appellate court and fails to keep his client informed of the case status violates Rules 18.03 and 18.04 of the Code of Professional Responsibility; each violation warrants six months' suspension, to be served consecutively for a total of one year.

Jose Antonio G. Gabucan owned a parcel of land covered by Transfer Certificate of Title No. 3934 located in Catarman, Camiguin. He engaged the legal services of Atty. Florencio A. Narido, Jr. on a semi-contingent basis to file an unlawful detainer case against one Rogelio Ebalang before the 2nd Municipal Circuit Trial Court of Catarman, Sagay. The engagement agreement, dated December 7, 2004, provided for a 35% contingent fee based on the property or its value and any damages awarded, plus appearance fees and incidental expenses. The property subject of the ejectment suit was covered by Original Certificate of Title No. 386.

Jose Antonio G. Gabucan owned a parcel of land covered by Transfer Certificate of Title No. 3934 in Catarman, Camiguin. On December 7, 2004, he engaged the services of Atty. Florencio A. Narido, Jr. on a semi-contingent basis to file an unlawful detainer case against Rogelio Ebalang before the 2nd Municipal Circuit Trial Court of Catarman, Sagay. Their written agreement waived the acceptance fee, set the professional fee at 35% of the property or its value and any damages awarded, and fixed the appearance fee at ₱2,500.00 per hearing. Three days later, on December 10, 2004, the parties entered into a Contract of Lease over the property covered by Original Certificate of Title No. 386 — the very property that would be the subject of the unlawful detainer case. Atty. Narido, Jr. took possession of the litigated property and introduced improvements by building a shanty of mixed materials.

On March 18, 2005, Atty. Narido, Jr. filed the unlawful detainer case against Ebalang. The MCTC rendered a decision on April 5, 2005 in favor of Gabucan, ordering Ebalang's ejectment. On appeal, the Regional Trial Court of Mambajao, Camiguin, Branch 28, in its Decision dated February 15, 2006, dismissed the appeal and remanded the case to the MCTC for execution. Ebalang, however, filed a Petition for Review before the Court of Appeals. Pending review by the CA, Atty. Narido, Jr. failed to communicate to Gabucan or apprise him of the case status, and likewise failed to file the comment or memorandum required by the CA. In its Decision dated February 28, 2008, the CA granted the petition and remanded the case to the MCTC for further proceedings. Because of Atty. Narido, Jr.'s inaction, Gabucan hired another lawyer to continue prosecuting the remanded case. Atty. Narido, Jr. did not object to the termination of his services.

On April 2, 2011, the parties amicably settled Atty. Narido, Jr.'s attorney's fees, fixing the 35% contingent fee at ₱70,000.00, payable in two installments of ₱35,000.00 each. Atty. Narido, Jr. agreed to voluntarily relinquish all interest over Lot 3934 and all improvements he introduced, and further agreed that demolition costs would be on his account. He prepared an Acknowledgment with Quitclaim to evidence the settlement. Eventually, the MCTC rendered a decision in favor of Gabucan in the remanded case, and the latter immediately executed the judgment, took possession of the property, and leased it to one Bernard Guani, who began introducing improvements.

On November 4, 2011, Gabucan, through his representative Evangelista Z. Almonia, sought to pay the remaining ₱35,000.00 to Atty. Narido, Jr. The latter refused to accept payment unless an additional ₱10,000.00 was paid as compensation for his demolished materials. Two days later, on November 6, 2011, Atty. Narido, Jr. re-entered the property by coercion and intimidation and had his men build a structure to obstruct the dump trucks of Guani. On November 8, 2011, Gabucan filed a complaint with the IBP Commission on Bar Discipline. In his Answer, Atty. Narido, Jr. admitted the semi-contingency engagement but claimed he had constantly updated Gabucan through Almonia due to the complainant's frequent absence from the country. He admitted not filing a comment or memorandum before the CA, stating he was confident the CA would affirm the lower courts' rulings. He also claimed the lease was merely a strategy to prevent Guani from taking possession of the property.

• Failure to Inform Client: Complainant charged Atty. Narido, Jr. with violating Rule 1.01, Canon 1, Rule 18.04, Canon 18, and Rule 20.04, Canon 20 of the CPR, alleging that the respondent failed to communicate or apprise him of the status of the case pending before the CA and failed to file the required comment or memorandum.
• Unlawful Lease of Litigated Property: Complainant alleged that Atty. Narido, Jr. entered into a lease contract over the very property subject of the unlawful detainer case, took possession thereof, and introduced improvements, in violation of the prohibition against lawyers acquiring interests in litigated property.
• Coercion and Intimidation: Complainant alleged that on November 6, 2011, Atty. Narido, Jr. re-entered the property by coercion and intimidation and had his men build a structure to obstruct Guani's dump trucks.

• Diligence in Representation: Atty. Narido, Jr. claimed he never abandoned the case until a favorable MCTC decision was issued, and continued representing the complainant before the RTC and CA despite the absence of a separate professional fee agreement for the appeals. He asserted he was not remiss in informing the client, having given constant updates to Almonia due to the complainant's constant absence from the country.
• Justification for Not Filing CA Comment: Atty. Narido, Jr. stated he was confident the CA would uphold the rulings of the MCTC and RTC, which is why he did not see the need to file a comment or memorandum.
• Lease as Strategy: Atty. Narido, Jr. claimed the lease was merely a strategy to prevent Guani from taking possession of the property, as a certain Mrs. Banaag had allegedly sold the property to Guani before the unlawful detainer case was filed.
• Demand for Additional Payment: Atty. Narido, Jr. demanded an additional ₱10,000.00 as compensation for valuable materials of his house that were buried when the complainant unceremoniously demolished his improvements and Guani's dump trucks filled the area, preventing him from salvaging any materials.

• Neglect of Legal Matter: Whether Atty. Narido, Jr. violated Rule 18.03 and Rule 18.04 of the CPR by failing to file a comment or memorandum before the CA and by failing to keep the complainant informed of the case status.
• Validity of Contingency Fee Arrangement: Whether the contingency fee arrangement, particularly the claim that a separate 35% contingent fee was required for each level of appeal, was reasonable and valid.
• Prohibition on Leasing Litigated Property: Whether Atty. Narido, Jr. violated Article 1646 in relation to Article 1491 of the Civil Code by entering into a lease contract over the property subject of the litigation he was handling.
• Propriety of Re-entry and Demand for Compensation: Whether Atty. Narido, Jr. could be faulted for demanding ₱10,000.00 for his buried materials and for re-entering the leased premises to prevent further burial of his materials.

• Neglect of Legal Matter: Yes. Atty. Narido, Jr. violated Rules 18.03 and 18.04 of the CPR by failing to file the required comment or memorandum before the CA and by failing to inform the complainant of the case status, constituting inexcusable negligence warranting six months' suspension.
• Validity of Contingency Fee Arrangement: No. The claim that a separate 35% contingency fee was required for each appellate level was unreasonable, unjustified, and unconscionable, violating Section 24, Rule 138 of the Rules of Court.
• Prohibition on Leasing Litigated Property: Yes. Atty. Narido, Jr. violated Article 1646 in relation to Article 1491 of the Civil Code by leasing the very property subject of the unlawful detainer case he was prosecuting, warranting six months' suspension.
• Propriety of Re-entry and Demand for Compensation: No. Atty. Narido, Jr. could not be faulted for demanding ₱10,000.00 for his buried materials and for re-entering the premises, as the complainant had violated their agreement by demolishing the improvements without notice and without full payment of professional fees.

• Neglect of Legal Matter: Rule 18.04 of the CPR mandates that a lawyer shall keep the client informed of the status of his case and respond within a reasonable time to the client's request for information. A lawyer's duty to keep his client updated is crucial in maintaining the client's confidence. Atty. Narido, Jr. claimed he updated the complainant through Almonia but presented no documentary evidence to that effect. Given the complainant's frequent absence from the country, it would have been prudent to formally inform him in writing. More gravely, Atty. Narido, Jr. admitted he did not file a comment or memorandum before the CA because he was confident the CA would affirm the lower courts — an attitude the Court characterized as arrogant and presumptuous. He had no way of knowing the CA would rule in his client's favor; in fact, the CA reversed the lower courts' rulings. His failure constituted inexcusable negligence. Under Canon 18 and Rule 18.03, a lawyer shall not neglect a legal matter entrusted to him. An attorney who undertakes an action impliedly stipulates to carry it to its termination until the case becomes final and executory. Following the precedent in Mendoza vda. de Robosa vs. Atty. Mendoza and The Heirs of Tiburcio F. Ballesteros, Sr. vs. Atty. Apiag, where lawyers were suspended for six months for similar violations, a six-month suspension was found justified.

• Validity of Contingency Fee Arrangement: A contingency fee agreement is generally valid and binding, but the fee must be reasonable under the circumstances, including the risk and uncertainty of compensation, and subject to the court's supervision as to reasonableness, per Canon 13 of the Canons of Professional Ethics. Atty. Narido, Jr. claimed the 35% contingency fee applied only at the MCTC level, requiring separate 35% fees for the RTC and CA appeals. The Court found this clearly unreasonable, unjustified, and unconscionable, especially for a mere ejectment case, and violative of Section 24, Rule 138 of the Rules of Court, which provides that a written contract for services shall control the amount to be paid unless found by the court to be unconscionable or unreasonable. The practice of law is not a business; public service, not profit, should be the primary consideration. An attorney who undertakes an action impliedly stipulates to carry it to its termination and cannot abandon the client without reasonable cause.

• Prohibition on Leasing Litigated Property: The lawyer-client relationship demands a highly fiduciary relationship requiring utmost fidelity, candor, fairness, and good faith. Article 1646, in relation to Article 1491(5) of the Civil Code, explicitly prohibits lawyers from leasing property and rights which may be the object of any litigation in which they may take part by virtue of their profession. The prohibition rests on considerations of public policy and is intended to curtail any undue influence of the lawyer upon his client. Atty. Narido, Jr. acquired an interest over the complainant's property subject of litigation even before the filing of the unlawful detainer complaint, in the guise of a lease contract. His excuse that the lease was merely a strategy to prevent Guani from taking possession was found flawed: he asserted the lease would expire only on December 14, 2014, which was inconsistent with a mere strategy; Guani would not have agreed to merely lease property he had already bought; and the police blotter itself indicated the lot was owned by Gabucan and rented by Guani. The fabrication of facts demonstrated unethical conduct and unfitness for Bar membership, violating Rule 10.01 of the CPR and the Lawyer's Oath. Following Heirs of Juan De Dios E. Carlos vs. Atty. Linsangan, where a lawyer was suspended for six months for apportioning litigated property to himself, a six-month suspension was deemed proper even though the present case involved a lease rather than a purchase.

• Propriety of Re-entry and Demand for Compensation: The Acknowledgment with Quitclaim executed by Atty. Narido, Jr. established that the complainant was obligated to pay the remaining ₱35,000.00 not later than June 2011, and that the cost of demolition would be for Atty. Narido, Jr.'s account so he could salvage his materials. However, the complainant offered to pay only on November 4, 2011 — well beyond the agreed deadline — and immediately demolished the improvements without notice, scattering the materials across the premises. Guani's dump trucks and boulders then buried the materials, preventing any salvage. At the time of demolition, Atty. Narido, Jr. had not been fully paid his professional fees. The complainant could not simply demolish the improvements without notice and without full payment. Atty. Narido, Jr. was only acting within his rights and protecting his interest when he returned to salvage his materials and prevent further burial. The Court therefore declined to subscribe to the IBP's recommended two-year suspension insofar as it penalized this conduct.

• Fiduciary Duty of Lawyers to Clients — The lawyer-client relationship demands a highly fiduciary relationship requiring a high standard of conduct and utmost fidelity, candor, fairness, and good faith. Once a lawyer agrees to take up a client's cause, he owes fidelity to that cause and impliedly stipulates to carry it to its termination until the case becomes final and executory. He cannot abandon the client without reasonable cause and proper notice to the court. The Court applied this doctrine to find that Atty. Narido, Jr.'s failure to file the CA comment and his neglect of the case constituted inexcusable negligence.

• Prohibition on Lawyers Acquiring or Leasing Litigated Property (Article 1491(5) and Article 1646, Civil Code) — Lawyers are prohibited from acquiring by purchase or assignment, and from leasing, property and rights which may be the object of any litigation in which they may take part by virtue of their profession. The prohibition rests on considerations of public policy and is intended to curtail any undue influence of the lawyer upon his client. The Court applied this to find that Atty. Narido, Jr.'s lease contract over the property subject of the unlawful detainer case he was handling violated the Civil Code, notwithstanding his claim that the lease was merely a strategy.

• Reasonableness of Contingency Fee Agreements — A contract for a contingent fee, when sanctioned by law, should be reasonable under all the circumstances, including the risk and uncertainty of compensation, and is always subject to the supervision of the court as to its reasonableness. Under Section 24, Rule 138 of the Rules of Court, a written contract for services shall control the amount to be paid unless found by the court to be unconscionable or unreasonable. The Court found that demanding a separate 35% contingency fee for each level of appeal in a mere ejectment case was unconscionable.

• Duty to Keep Client Informed (Rule 18.04, CPR) — A lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the client's request for information. This duty is crucial in maintaining the client's confidence; the lawyer should not leave the client in the dark as to how he is defending the client's interest. The Court found that verbal updates through a representative, without documentary proof, were insufficient, especially when the client was frequently out of the country.

• "The practice of law is not a business. Public service, not profit, should be the primary consideration. Lawyering is not primarily meant to be a money-making venture, and law advocacy is not a capital that necessarily yields profits." — This passage articulates the fundamental principle that the legal profession is a public service, cited to reject the respondent's claim for separate contingency fees at each appellate level.

• "It is a fundamental rule in ethics that an attorney who undertakes an action impliedly stipulates to carry it to its termination, that is, until the case becomes final and executory. He cannot simply abandon his client and withdraw his service without reasonable cause and only upon proper notice with the court." — This states the doctrine of implied stipulation to carry a case to completion, foundational to the finding that Atty. Narido, Jr. could not limit his engagement to the MCTC level only.

• "The prohibition, which rests on considerations of public policy and interests is intended to curtail any undue influence of the lawyer upon his client on account of his fiduciary and confidential relationship with him." — This defines the rationale behind Article 1491(5) and Article 1646 of the Civil Code, explaining why lawyers are barred from acquiring or leasing litigated property they handle by virtue of their profession.

• Mendoza vda. de Robosa vs. Atty. Mendoza, 769 Phil. 359 (2015) — Followed. The respondent lawyers in that case violated Rules 18.03 and 18.04 of the CPR and were suspended for six months. The Court applied the same penalty period for Atty. Narido, Jr.'s analogous violations.

• The Heirs of Tiburcio F. Ballesteros, Sr. vs. Atty. Apiag, 508 Phil. 113 (2005) — Followed. Also involved a lawyer's violation of Rules 18.03 and 18.04, resulting in six months' suspension. Cited to support the penalty for neglect of a legal matter and failure to inform the client.

• Heirs of Juan De Dios E. Carlos vs. Atty. Linsangan, A.C. No. 11494, July 24, 2017 — Followed. The respondent lawyer apportioned litigated property to himself in violation of Article 1491(5) of the Civil Code and was suspended for six months. The Court applied the same penalty for Atty. Narido, Jr.'s lease of litigated property under Article 1646.

• Sps. Jacinto vs. Atty. Bangot Jr., 706 Phil. 302 (2016) — Cited for the definition of a contingency fee agreement as a contract in writing in which the fee, generally a fixed percentage of what may be recovered, depends upon the success of the case.

• De Juan vs. Atty. Baria III, 473 Phil. 161 (2004) — Cited for the doctrine that an attorney who undertakes an action impliedly stipulates to carry it to its termination until the case becomes final and executory.

• Rule 18.04, Canon 18, Code of Professional Responsibility — Provides that a lawyer shall keep the client informed of the status of his case and shall respond within a reasonable time to the client's request for information. Applied to find Atty. Narido, Jr. liable for failing to inform the complainant of the CA proceedings.

• Rule 18.03, Canon 18, Code of Professional Responsibility — Provides that a lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable. Applied to find Atty. Narido, Jr. liable for failing to file the required comment or memorandum before the CA.

• Rule 10.01, Code of Professional Responsibility — Provides that a lawyer shall not do any falsehood, nor consent to the doing of any in court, nor mislead or allow the court to be misled by any artifice. Applied to the respondent's fabrication of facts to justify the lease contract.

• Article 1646, Civil Code — Provides that persons disqualified to buy under Articles 1490 and 1491 are also disqualified to become lessees of the things mentioned therein. Applied to prohibit Atty. Narido, Jr. from leasing the litigated property.

• Article 1491(5), Civil Code — Disqualifies lawyers from acquiring by purchase or assignment property and rights which may be the object of any litigation in which they may take part by virtue of their profession. Read in relation to Article 1646 to extend the prohibition to leasing.

• Section 24, Rule 138, Rules of Court — Provides that a written contract for attorney's services shall control the amount to be paid unless found by the court to be unconscionable or unreasonable. Applied to find the demand for separate 35% contingency fees at each appellate level unconscionable.

• Canon 13, Canons of Professional Ethics — States that a contract for a contingent fee should be reasonable under all circumstances, including the risk and uncertainty of compensation, and subject to court supervision. Applied to evaluate the reasonableness of the contingency fee arrangement.

Bersamin (C.J.), Carpio, Peralta, Perlas-Bernabe, Leonen, Jardeleza, Caguioa, A. Reyes, Jr., Gesmundo, J. Reyes, Jr., Hernando, Lazaro-Javier, Inting, and Zalameda, JJ., concurred. No separate concurring opinions were written.