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FIRST DIVISION

[A.M. No. RTJ-05-1900.  January 28, 2005]

SHIRLEY LORIA TOLEDO and ROSIE LORIA DAJAC, complainants, vs. JUDGE ALFREDO E. KALLOS, respondent.

R E S O L U T I O N

DAVIDE, JR., C.J.:

For our resolution is the verified complaint, written in the vernacular and dated 21 August 2002, of siblings Shirley Loria Toledo and Rosie Loria Dajac against respondent Judge Alfredo E. Kallos, Presiding Judge of the Regional Trial Court (RTC) of Legazpi City, Branch 10, for violation of the Code of Judicial Conduct, the Code of Professional Responsibility, and Article 1491 (5) of the Civil Code.

Prior to his appointment as a judge in March 1995,[1] Judge Kallos was complainants’ counsel of record in Civil Case No. 4879 filed with the RTC of Legazpi City, Branch 4, involving the recovery of hereditary shares with damages.  On 25 March 1979, a judgment was rendered ordering the defendants to, among other things, turn over to herein complainants, the plaintiffs therein, the possession and ownership of the total area of 4,514 square meters of “lot 2082 Albay Cadastre.”  On appeal, the decision was affirmed by the Court of Appeals and became final and executory on 16 December 1985.[2]

Several years thereafter, or in February 2002, the respondent filed in the same action, Civil Case No. 4879, before the RTC of Legazpi, Branch 4, an Omnibus Motion[3] praying, inter alia, for the issuance an order constituting in his favor an attorney’s lien to the extent of one-third over the lot awarded in favor of the complainants representing his attorney’s fee. He based his motion on a written contingency agreement on attorney’s fees for professional services rendered whereby he is entitled to one-third share of what would be awarded to the complainants. He claimed that this agreement had already been implemented when “one of the three (3) lots levied upon by the sheriff to answer for the award of damages was given to (him) as his one-third share while the other two lots went to the plaintiffs as their two-third share … [as] evidenced by the Definite Deed of Sale and Transfer Certificate of Titles Nos. T-77728, T-77458 and T-77459.”  However, he misplaced a copy of said written agreement.

In the meantime, or on 5 September 2002, the complainants filed before this Court, through the Office of the Court Administrator, the subject verified complaint.  Here, complainants pray for three things. First, they pray for an order directing the respondent to stop demanding his “1/3 share attorney’s fees.”  They assert that the respondent has no basis for his claim because he failed to show in court proof of the alleged written contingency fee agreement. They also belie respondent’s insistence in his Omnibus Motion that the said agreement had already been implemented when, on execution, one of three lots levied upon by the sheriff was given to him as his 1/3 share. They emphasize that all the lots levied by the sheriff were given to them.  However, the respondent “forced” them to sign a Deed of Absolute Sale on 16 January 1990 involving a parcel of land valued in the document at P10,000, but actually worth more than P500,000, in payment of his attorney’s fees.  While they did not want to sign the document because respondent appeared in their case only during execution, they were constrained to do so for fear that something adverse might happen to their case, as the respondent so warned them.  The latter told them that they would not have won the case were it not for his services.

The complainants thus seek, as their second prayer, the recovery of the property involved in said Deed of Absolute Sale.  They argue that pursuant to Article 1491(5) of the Civil Code, lawyers are prohibited from buying their client’s properties when the same are still the object of litigation.  To prove that the respondent was still their counsel when the sale took place, the complainants attached to their complaint the Motion to Terminate Services dated 23 June 1994, which was based on respondent’s being remiss in his duties and responsibilities as their lawyer, and the Order of the court dated 29 June 1994, approving the termination.

Third, the complainants pray for the removal of the respondent from his position as RTC judge for his alleged abusive conduct unbecoming a judge.

In his Comment dated 25 November 2002, the respondent denies the allegations against him and asserts that he is only claiming what is due him.  He vehemently denies that he appeared in the case only during the execution stage, pointing to the Minutes of Hearing and the Order, both dated 05 October 1973, which show that he entered his appearance as counsel for the complainants as early as 5 October 1973, or two months after the complaint was filed. He continuously handled the case from then on, as shown by copies of the minutes of the hearings and orders issued by the RTC, until a favorable judgment was rendered on 25 March 1979 and the subject properties were levied upon on execution to satisfy the judgment. He insists that he was never remiss in the performance of his duties and responsibilities as complainants’ counsel.

The respondent further alleges that the existence of the agreement on attorney’s fees was admitted by complainant Shirley Loria Toledo as evidenced by the order issued by the court on 01 March 2002, which states that Ms. Toledo came to the court informally informing it that she had a copy of the contract on attorney’s fees.[4]

As regards the Deed of Absolute Sale, respondent admits that he was still complainants’ lawyer when the lot was transferred in his name. The lot was given to him by the complainants and their mother, pursuant to their written contingency agreement, as his 1/3 share in the three parcels of land levied upon by the sheriff to settle the accrued rentals awarded in the second paragraph of the dispositive portion of the decision.  He did not pay for it. The figure appearing on the document was written only to facilitate the transaction.  He never compelled the complainants and their mother to sell to him the parcel of land. Neither did he tell them that nothing would happen to their case without him.

Finally, the respondent asserts that his claim for attorney’s fees is still being litigated in Civil Case No. 4879.  Thus, the instant complaint is premature.

In their Rejoinder dated 7 January 2003, the complainants insist that there is no basis for respondent’s claim for attorney’s fees for the following reasons: (1) the respondent failed to present the agreement on attorney’s fees; (2) attorney’s fees were not awarded by the RTC or the Court of Appeals; and (3) Civil Case No. 4879 is in its execution stage.

After evaluating the pleadings submitted by the parties, the Court Administrator found[5] that respondent was, indeed, complainants’ counsel in Civil Case No. 4879, and he should therefore be compensated for his services.  The act of demanding payment for his attorney’s fees is not a ground for administrative liability.  However, he can be allowed only fair and reasonable attorney’s fees under Canon 20 of the Code of Professional Responsibility.  As to this, the Court Administrator stated:

On the question of whether respondent violated Article 1491(5) of the Civil Code, the Court Administrator found that this may be fairly resolved in an investigation, there being a factual dispute, and recommended that the complaint be referred to an Associate Justice of the Court of Appeals pursuant to Section 3, Rule 140 of the Rules of Court.  On the basis of this recommendation, we referred the matter to Associate Justice Jose Mendoza of the Court of Appeals for investigation, report, and recommendation.

In his Report,[6] Justice Mendoza found that the respondent indeed represented the complainants in Civil Case No. 4879. Like the Court Administrator, he expresses the view that the act of demanding attorney’s fees for services rendered is not a ground for administrative sanction.  He finds that when the respondent made the demand, he did so as a lawyer who obtained a favorable judgment for his client, and not as a judge.  As a lawyer, it is but just that he be fairly compensated for his services. And his filing of a claim for attorney’s fees in Civil Case No. 4879 was an appropriate legal remedy.  Considering the pendency of such claim, Justice Mendoza recommends the suspension of the determination of the instant administrative complaint until the rendition of a final judicial ruling on the matter of respondent’s attorney’s fees; thus:

As the said issue is still being litigated in the Regional Trial Court in Civil Case No. 4879, it is the view of the undersigned that the complaint is still premature ….

In other words, the complaint is not yet ripe for administrative evaluation. The hearing on the matter being conducted by the court below should be allowed to run its course as that court is the appropriate forum for a ruling on the dispute….

…To make a determination at this time on whether the respondent violated Article 1491 (A) would be to preempt the lower court in its resolution of the issue.  Any recommendation by the undersigned in this administrative case and subsequent resolution by the Honorable Supreme Court on the matter would certainly affect or influence the thinking of the trial court before which the matter is pending. In such a case, it will be unfair to either party. At any rate, the party who would feel aggrieved might still elevate the decision to the higher courts.

This recommendation is not without precedent. In the case of Spouses De Leon v. Hon. Bonifacio, Adm. Case No. 4467, October 10, 1997, the then Deputy Court Administrator, Hon. Reynaldo Suarez, recommended the dismissal of the case for being judicial in nature or, at least, premature….

In this case, the respondent is not being charged for his acts or decisions as a judge. Rather, he has been charged for dealing with the property of his client which is prohibited by law.  Nevertheless, the principle is the same, in that, the matter is still judicial in nature.

We agree with Justice Mendoza.

It is fundamental that 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.[7] The respondent chose to file his claim for attorney’s fees in the same case in which he served as counsel for the complainants.  As mentioned, this is a proper remedy under our jurisdiction and is preferred to an independent action as it avoids multiplicity of suits. Besides, the right to recover attorney’s fees is but an incident of the case in which the services of counsel have been rendered.  Moreover, the court trying the case is to a certain degree already familiar with the nature and extent of the lawyer’s services[8] and is in a better position to decide the question of fees.

Undisputably, respondent’s claim for attorney’s fees is under litigation.  We find in the records an Order dated 7 January 2004 issued in Civil Case No. 4879 which granted respondent’s prayer for “1/3 share of attorney’s fees in the proceeds of litigation” as claimed in his Omnibus Motion dated 14 February 2002. This Order is the subject of a motion for reconsideration by the complainants, as stated in respondent’s Manifestation dated 24 January 2004[9] filed in the investigation proceedings conducted by Justice Mendoza.  Also part of the records is respondent’s Affidavit dated 1 December 2003, filed in the same investigation proceedings, alluding to the complainants’ filing of a Petition for Certiorari and Mandamus in the Court of Appeals, docketed as CA-G.R. SP No. 80090, seeking to reverse the Order of the trial court denying complainants’ Motion to Dismiss respondent’s Omnibus Motion.

We, therefore, find no cogent reason for us to resolve complainants’ first two issues raised in the verified complaint, for they are inextricably inherent in the claim of the respondent in his Omnibus Motion, which is pending judicial determination.  Since respondent’s claim for attorney’s fees in the main case has not yet become final, the objection of prematurity obtains, as a contrary holding may be preemptive of a final judicial determination of factual and evidentiary matters inherent in the claim.[10] Clearly, the reliefs asked by the complainants are judicial in nature.[11] And, if only for an orderly administration of justice, the proceedings in Civil Case No. 4879 should be allowed to continue and take its course, and the claim of the respondent judicially settled first.

But while we give deference to the wisdom of the trial court to initially decide respondent’s claim for attorney’s fees, we deem it appropriate to reiterate certain principles governing the payment of attorney’s fees and impart our observations on the instant claim. Foremost of these principles is that the act of demanding attorney’s fees for services rendered is not a ground for an administrative sanction. On the contrary, Canon 20 of the Code of Professional Responsibility allows lawyers to charge fair and reasonable fees.  As long as a lawyer honestly and in good faith serves and represents the interest of the client, he should have a reasonable compensation for his service.[12]

Lawyers are thus as much entitled to judicial protection against injustice on the part of their clients as the clients are against abuses on the part of counsel.  The duty of the court is not only to see that lawyers act in a proper and lawful manner, but also to see that lawyers are paid their just and lawful fees.[13] Thus, in J.K. Mercado and Sons Agricultural Enterprises, Inc. v. De Vera,[14] citing Albano v. Coloma,[15] we stressed:

While, indeed, the practice of law is not a business venture, a lawyer, nevertheless, is entitled to be duly compensated for professional services rendered.  So, also, he must be protected against clients who wrongly refuse to give him his just due.  In Albano vs. Coloma, this Court has said:

“Counsel, any counsel, who is worthy of his hire, is entitled to be fully recompensed for his services.  With his capital consisting solely of his brains and with his skill, acquired at tremendous cost not only in money but in the expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of a client to escape payment of his fees.  It is indeed ironic if after putting forth the best that is in him to secure justice for the party he represents, he himself would not get his due.  Such an eventuality this Court is determined to avoid. It views with disapproval any and every effort of those benefited by counsel’s services to deprive him of his hard-earned honorarium.  Such an attitude deserves condemnation.”

It should be stressed in this connection that the absence of a written contract will not preclude the finding that there was a professional relationship that justifies the collection of attorney’s fees for professional services rendered.  Documentary formalism is not an essential element in the employment of an attorney; the contract may be express or implied.  To establish the relation, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his profession.[16] Hence, with or without a contingency agreement between the complainants and the respondent, the trial court must determine the propriety of respondent’s claim for attorney’s fees and the reasonable amount thereof.

The third issue raised in the verified complaint deserves a short shrift.  No evidence was presented to prove respondent’s alleged abusive conduct unbecoming a judge.  The complainants do not dispute the fact that the respondent was not yet a judge when the assailed action or conduct was allegedly committed by him.  As such, and to that extent, there is no reason to bind him by the strict standards of the Code of Judicial Conduct for acts committed as counsel to a case prior to his appointment as a judge.

WHEREFORE, the instant administrative complaint is DISMISSED for being premature and for lack of merit.

SO ORDERED.

Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.



[1] Rollo, 278.

[2] Rollo, 24.

[3] Id., 9-11.

[4] See Rollo, 59.

[5] Rollo, 108-112.

[6] Rollo, 340-346.

[7] Traders Royal Bank Employees Union-Independent v. NLRC, G.R. No. 120592, 14 March 1997, 269 SCRA, 733, 741, citing Tolentino v. Escalona, et al., No. L-26556, 24 January 1969, 26 SCRA 613.

[8] Quirante v. IAC, G.R. No. 73886, 31 January 1989, 169 SCRA 769, 774, citing Tolentino v. Escalona, et al., supra, and Palanca v. Pecson, et al., Nos. L-6334 and L-6346, 94 Phil. 419 (1954).

[9] Rollo, 275-276.

[10] Quirante v. IAC, supra note 8.

[11] See Spouses De Leon v. Hon. Bonifacio, Adm. Case No. 4467, 10 October 1997, 280 SCRA 434, 441-443.

[12] De Guzman v. Visayan Rapid Transit Co., Inc., No. 46396, 68 Phil. 643, 648 (1939).

[13] Fernandez v. Bello, No. L-14277, 107 Phil. 1140, 1145 (1960).

[14] Adm. Case Nos. 3066, 4438, 26 October 1999, 317 SCRA 339, 346.

[15] Adm. Case No. 528, 128 Phil. 433 (1967).

[16] Dee v. Court of Appeals, G.R. No. 77439, 24 August 1989, 176 SCRA 651, 658, citing 7 C.J.S., 848-849, and Hirach Bros. & Co. v. R.E. Kennington Co., 88 A.L.R., 1, as cited in Hilado v. Gutierrez David, et al., No. L-961, 84 Phil. 569, 576 (1949).