G.R. No.

L-23467 March 27, 1968

AMALGAMATED LABORERS' ASSOCIATION and/or FELISBERTO M. JAVIER for himself and as General
President,
ATTY. JOSEUR. CARBONELL, ET AL., petitioners,
vs.
HON. COURT OF INDUSTRIAL RELATIONS AND ATTY. LEONARDO C. FERNANDEZ, respondents.

SANCHEZ, J.:

Controversy over attorneys' fees for legal services rendered in CIR Case No. 70-ULP-Cebu.

The background facts are as follows:

On May 30, 1956, Florentino Arceo and 47 others together with their union, Amalgamated Laborers'
Association, and/or Felisberto Javier, general president of said union, lodged a complaint 1 in the Court of Industrial
Relations (CIR), for unfair labor practices specified in Sec. 4(a) 1, 2, 3 and 4 of the Industrial Peace Act. Made
respondents were their former employer, Binalbagan Sugar Central Company, Inc. (Biscom), Rafael Jalandoni, its
president and general manager; Gonzalo Guillen, its chief engineer and general factory superintendent; and
Fraternal Labor Organization and/or Roberto Poli, its president.

Failing in their attempts to dismiss the complaint (motions to dismiss dated June 30, 1956 and July 6,
1956), 2 respondents Biscom, Jalandoni, and Guillen, on July 9, 1957, answered and counterclaimed. Respondents
Fraternal Labor Union and Poli also filed their answer dated July 12, 1957.

With the issues joined, the case on the merits was heard before a trial commissioner.

At the hearings, only ten of the forty-eight complainant laborers appeared and testified. Two of these ten were
permanent (regular) employees of respondent company; the remaining eight were seasonal workers. The regular
employees were Arsenio Reyes and Fidel Magtubo. Seasonal workers were Catalino Bangoy, Juan Fernandez,
Jose Garlitos, Dionisio Pido, Santiago Talagtag, Dominador Tangente, Felimon Villaluna and Brigido Casas.

On November 13, 1962, CIR, thru Associate Judge Arsenio I. Martinez, rendered judgment, which
provides, inter alia, that the two regular employees (Reyes and Magtubo) be reinstated "to their former positions,
without loss of seniority and other benefits which should have accrued to them had they not been illegally
dismissed, with full back wages from the time of their said dismissals up to the time of their actual reinstatements,
minus what they have earned elsewhere in the meantime" and that the eight seasonal workers "be readmitted to
their positions as seasonal workers of respondent company (Biscom), with back wages as seasonal workers from
the time they were not rehired at the start of the 1955-1956 milling season on October 1, 1955 up to the time they
are actually reinstated, less the amount earned elsewhere during the period of their lay-off."

Respondents Biscom, Jalandoni and Guillen appealed direct to this Court. 3 On March 28, 1963, this Court
dismissed the appeal, without costs. Ground: Petitioners therein did not seek reconsideration of CIR's decision of
November 13, 1962. The judgment became final.

Upon the ten complainants' motion to name an official computer to determine the actual money due them,
CIR, on June 4, 1963, directed the Chief Examiner of its Examining Division to go to the premises of Biscom and
compute the back wages due the ten complainants.

On August 9, 1963, the Chief Examiner reported that the total net back wages due the ten complainants were
P79,755.22. Biscom and the complainants moved for reconsideration: Biscom on August 17, 1963; complainants on
September 24, 1963.

In the interim, Atty. Leonardo C. Fernandez (a respondent herein) filed on July 15, 1963 in the same case —
CIR Case No. 70-ULP-Cebu — a "Notice of Attorney's Lien." He alleged therein that he had been the attorney of
record for the laborers in CIR Case No. 70-ULP-Cebu "since the inception of the preliminary hearings of said case
up to the Supreme Court on appeal, as chief counsel thereof"; that he "had actually rendered legal services to the
laborers who are subject of this present litigation [CIR Case No. 70-ULP-Cebu] since the year 1956, more or less";
that the laborers "have voluntarily agreed to give [him], representing his attorney's fees on contingent basis such
amounts equivalent to 25% thereof which agreement is evidenced by a Note"; and that the 25% attorney's fee so
contracted is "reasonable and proper taking into consideration the length of services he rendered and the nature of
the work actually performed by him."

On September 25, 1963, Atty. Fernandez filed an "Amended Notice of Attorney's Lien," which in part reads:

3. That the laborers, subject of this present litigation, sometime on February 3, 1956, had initially voluntarily
agreed to give Undersigned Counsel herein, representing his Attorney's fees on contingent basis, such
amounts as equivalent to Thirty Per Cent (30%) of whatever money claims that may be adjudicated by this
Honorable Court, copy of said Agreement, in the local Visayan dialect and a translation of the same in the
English language are hereto attached as annexes "A" "A-1" hereof;

4. That subsequently thereafter, when the above-entitled Case was already decided in their favor, Arsenio
Reyes, in behalf of his co-laborers who are also Complainants in this Case begged from the Undersigned
Counsel herein that he reduce his attorney's fees to Twenty-Five Per Cent (25%) only for the reason that
they have to share and satisfy also Atty. Jose Ur. Carbonell in the equivalent amount of Five Per Cent (5%)
although the latter's actual services rendered was so insignificant thereof;

5. That because of the pleadings of said Arsenio Reyes, who is the President of said Union, the
Undersigned Counsel herein finally agreed and consented that his attorney's fees be reduced to only
Twenty-Five Per Cent (25%) instead of Thirty Per Cent (30%) as originally agreed upon in 1956.

On October 7, 1963, Atty. Jose Ur. Carbonell (a petitioner herein) filed in court a document labelled
"Discharge" informing CIR of the discharge, release and dismissal — thru a union board resolution (attached thereto
as Annex A thereof) — of Atty. Leonardo C. Fernandez as one of the lawyers of the complainants in CIR Case No.
70-ULP-Cebu, effective February 28, 1963.

On October 14, 1963, Atty. Fernandez replied. He averred that the grounds for his discharge specified in the
board resolution were "malicious and motivated by greed and ungratefulness" and that the unjustifiable discharge
did not affect the already stipulated contract for attorneys' fees.

On March 19, 1964, CIR Judge Arsenio I. Martinez resolved Biscom's and complainants' motions for
resonsideration objecting to the Chief Examiner's Report and also respondent Fernandez' Amended Notice of
Attorney's Lien. Judge Martinez' order reads in part:

(b) Respondent company is further directed to deposit the amount representing 25% of P79,755.22
with the Cashier of this Court, as attorney's fees;

xxx xxx xxx

(d) The amount representing attorney's fees to be deposited by the respondent company is hereby
awarded and granted to Atty. Leonardo C. Fernandez, and he may collect the same from the Cashier of the
Court upon the finality of this order, subject to existing auditing procedures; ....

Biscom complied with the order of deposit. 4

On April 10, 1964, Atty. Carbonell moved to reconsider the March 19, 1964 order with respect to the award of
attorneys' fees. Amongst his grounds are that CIR has no jurisdiction to determine the matter in question, and that
the award of 25% as attorneys' fees to Atty. Fernandez is excessive, unfair and illegal. This motion was denied on
April 28, 1964 by CIR en banc.

On June 9, 1964, a motion for reconsideration of the April 28, 1964 resolution was filed by Atty. Carbonell.
This was amplified by a similar motion filed on June 11, 1964.

On June 25, 1964, two things happened: First. CIR en banc denied the motion of June 11, 1964. Second. On
Atty. Fernandez' motion, Judge Martinez authorized the Cashier of the court to disburse to Fernandez the amount of
P19,938.81 representing attorneys' fees and deducting therefrom all legal fees incident to such deposit.
 Petitioners herein, Atty. Carbonell, Amalgamated Laborers' Association, and the ten employees, appealed
from the June 25, 1964 resolution of CIR, direct to this Court.

1. Petitioners press upon this Court the view that CIR is bereft of authority to adjudicate contractual disputes
over attorneys' fees. Their reasons: (1) a dispute arising from contracts for attorneys' fees is not a labor dispute and
is not one among the cases ruled to be within CIR's authority; and (2) to consider such a dispute to be a mere
incident to a case over which CIR may validly assume jurisdiction is to disregard the special and limited nature of
said court's jurisdiction.

These arguments are devoid of merit.

The present controversy over attorneys' fees is but an epilogue or a tail-end feature of the main case, CIR
No. 70-ULP-Cebu, which undoubtedly is within CIR's jurisdiction. And, it has been held that "once the Court of
Industrial Relations has acquired jurisdiction over a case under the law of its creation, it retains that jurisdiction until
the case is completely decided, including all the incidents related thereto." 5 Expressive of the rule on this point is
this —

4. It is well settled that:

A grant of jurisdiction implies the necessary and usual incidental powers essential to
effectuate it, and every regularly constituted court has power to do all things reasonably necessary
for the administration of justice within the scope of its jurisdiction, and for the enforcement of its
judgments and mandates, even though the court may thus be called upon to decide matters which
would not be within its cognizance as original causes of action.

While a court may be expressly granted the incidental powers necessary to effectuate its
jurisdiction, a grant of jurisdiction, in the absence of prohibitive legislation, implies the necessary
and usual incidental powers essential to effectuate it (In re Stinger's Estate, 201 P. 693), and,
subject to existing laws and constitutional provisions, every regularly constituted court has power to
do all things that are reasonably necessary for the administration of justice within the scope of its
jurisdiction, and for the enforcement of its judgments and mandates. So demands, matters, or
questions ancillary or incidental to, or growing out of, the main action, and coming within the above
principles, may be taken cognizance of by the court and determined, since such jurisdiction is in aid
of its authority over the principal matter, even though the Court may thus be, called on to consider
and decide matters, which as original causes of action, would not be within its
cognizance (Bartholomew vs. Shipe, 251 S.W. 1031), (21 C.J.S. pp. 136-138.)

Thus, in Gomez vs. North Camarines Lumber Co., L-11945, August 18, 1958, and Serrano vs.
Serrano, L-19562, May 23, 1964, we held that the court having jurisdiction over the main cause of action,
may grant the relief incidental thereto, even if they would otherwise, be outside its competence. 6

To direct that the present dispute be lodged in another court as petitioners advocate would only result in
multiplicity of suits, 7 a situation abhorred by the rules. Thus it is, that usually the application to fix the attorneys' fees
is made before the court which renders the judgment. 8 And, it has been observed that "[a]n approved procedure,
where a charging lien has attached to a judgment or where money has been paid into court, is for the attorney to file
an intervening petition and have the amount and extent of his lien judicially determined." 9 Appropriately to be
recalled at this point, is the recent ruling in Martinez vs. Union de Maquinistas, 1967A Phild. 142, 144, January 30,
1967, where, speaking thru Mr. Justice Arsenio P. Dizon, explicit pronouncement was made by this Court that: "We
are of the opinion that since the Court of Industrial Relations obviously had jurisdiction over the main cases, ... it
likewise had full jurisdiction to consider and decide all matters collateral thereto, such as claims for attorney's
fees made by the members of the bar who appeared therein." 10

2. The parties herein join hands in one point - the ten (10) successful complainants in C.I.R Case No. 70-
ULP-Cebu should pay as attorneys' fees 30% of the amount adjudicated by the court in the latter's favor
(P79,755.22).

They are at odds, however, on how to split the fees.

Respondent Atty. Fernandez claims twenty-five per cent (25%) of the 30% attorneys' fees. He explains that
upon the plea of Arsenio Reyes, union president and one of the 10 successful complainants, he had to reduce his
fees to 25% since "they have to share and satisfy also Atty. Jose Ur. Carbonell in the equivalent amount of Five Per
Cent (5%)." Atty. Fernandez exhibited a contract purportedly dated February 3, 1956 — before the 48 employees
have even filed their complaint in CIR. The stipulated fee is 30% of whatever amount the ten might recover. Strange
enough, this contract was signed only by 8 of the 10 winning claimants. What happened to the others? Why did not
the union intervene in the signing of this contract? Petitioners dispute said contract. They say that Atty. Fernandez
required the ten to sign the contract only after the receipt of the decision.

Petitioners, on the other hand, contend that the verbal agreement entered into by the union and its officers
thru its President Javier and said two lawyers, Atty. Carbonell and Atty. Fernandez, is that the 30% attorneys' fees,
shall be divided equally ("share and share alike") amongst Atty. Carbonell, Atty. Fernandez and Felisberto Javier,
the union president.

After hearing, CIR Associate Judge Arsenio I. Martinez awarded 25% attorneys' fees to respondent Atty.
Fernandez. CIR noted that "the active conduct and prosecution of the above-entitled case was done by Atty.
Fernandez up to the appeal in the Supreme Court," and that petitioner Atty. Carbonell manifested that "Atty.
Leonardo C. Fernandez was the counsel mainly responsible for the conduct of the case." It noted, too, that
petitioner Atty. Carbonell did not file any notice of Attorney's Lien.

3. We strike down the alleged oral agreement that the union president should share in the attorneys' fees.
Canon 34 of Legal Ethics condemns this arrangement in terms clear and explicit. It says: "No division of fees for
legal services is proper, except with another lawyer, based upon a division of service or responsibility." The union
president is not the attorney for the laborers. He may seek compensation only as such president. An agreement
whereby a union president is allowed to share in attorneys' fees is immoral. Such a contract we emphatically reject.
It cannot be justified.

4. A contingent fee contract specifying the percentage of recovery an attorney is to receive in a suit "should
be reasonable under all the circumstances of the case, including the risk and uncertainty of the compensation, but
should always be subject to the supervision of a court, as to its reasonableness." 11

Lately, we said: 12

The principle that courts should reduce stipulated attorney's fees whenever it is found under the
circumstances of the case that the same is unreasonable, is now deeply rooted in this jurisdiction....

xxx xxx xxx

Since then this Court has invariably fixed counsel fees on a quantum meruit basis whenever the fees
stipulated appear excessive, unconscionable, or unreasonable, because a lawyer is primarily a court officer
charged with the duty of assisting the court in administering impartial justice between the parties, and
hence, the fees should be subject to judicial control. Nor should it be ignored that sound public policy
demands that courts disregard stipulations for counsel fees, whenever they appear to be a source of
speculative profit at the expense of the debtor or mortgagor. See, Gorospe, et al. v. Gochangco, L-12735,
October 30, 1959. And it is not material that the present action is between the debtor and the creditor, and
not between attorney and client. As courts have power to fix the fee as between attorney and client, it must
necessarily have the right to say whether a stipulation like this, inserted in a mortgage contract, is
valid. Bachrach v. Golingco, 39 Phil. 138.

In the instant case, the stipulated 30% attorneys' fee is excessive and unconscionable. With the exception of
Arsenio Reyes who receives a monthly salary of P175, the other successful complainants were mere wage earners
paid a daily rate of P4.20 to P5.00. 13 Considering the long period of time that they were illegally and arbitrarily
deprived of their just pay, these laborers looked up to the favorable money judgment as a serum to their pitiful
economic malaise. A thirty per cent (30%) slice therefrom immensely dilutes the palliative ingredient of this judicial
antidote.

The ten complainants involved herein are mere laborers. It is not far-fetched to assume that they have not
reached an educational attainment comparable to that of petitioner Carbonell or respondent Fernandez who, on the
other hand, are lawyers. Because of the inequality of the situation between laborers and lawyers, courts should go
slow in awarding huge sums by way of attorneys' fees based solely on contracts. 14 For, as in the present case, the
real objective of the CIR judgment in CIR Case No. 70-ULP-Cebu is to benefit the complaint laborers who were
unjustifiedly dismissed from the service. While it is true that laborers should not be allowed to develop that atavistic
proclivity to bite the hands that fed them, still lawyers should not be permitted to get a lion's share of the benefits
due by reason of a worker's labor. What is to be paid to the laborers is not windfall but a product of the sweat of
their brow. Contracts for legal services between laborer and attorney should then be zealously scrutinized to the
end that a fair share of the benefits be not denied the former.

5. An examination of the record of the case will readily show that an award of twenty-five per cent (25%)
attorneys' fees reasonably compensates the whole of the legal services rendered in CIR Case No. 70-ULP-Cebu.
This fee must be shared by petitioner Atty. Carbonell and respondent Atty. Fernandez. For, after all, they are the
counsel of record of the complainants. Respondent Atty. Fernandez cannot deny this fact. The pleadings filed even
at the early stages of the proceedings reveal the existence of an association between said attorneys. The pleadings
were filed under the name of "Fernandez & Carbonell." This imports a common effort of the two. It cannot be denied
though that most of those pleadings up to judgment were signed for Fernandez & Carbonell by respondent
Fernandez.

We note that a break-up in the professional tie-up between Attorneys Fernandez and Carbonell began when
petitioner Atty. Carbonell, on November 26, 1962, complained to CIR that respondent Atty. Fernandez "failed to
communicate with him nor to inform him about the incidents of this case." He there requested that he be furnished
"separately copies of the decision of the court and other pleadings and subsequent orders as well as motions in
connection with the case."

Subsequent pleadings filed in the case unmistakably show the widening rift in their professional relationship.
Thus, on May 23, 1963, a "Motion to Name and Authorize Official Computer" was filed with CIR. On the same day,
a "Motion to Issue Writ of Execution" was also registered in the same court. Although filed under the name of
"Carbonell & Fernandez," these pleadings were signed solely by petitioner Atty. Carbonell.

On September 16, 1963, an "Opposition to respondent Biscom's Motion for Reconsideration" was filed by
petitioner Atty. Carbonell. On September 24, 1963, he filed a "Motion for Clarification" of the November 13, 1962
judgment of CIR regarding the basic pay of Arsenio Reyes and Fidel Magtubo. On September 24, 1963, he also
filed a "Motion to Reconsider Report of Chief Examiner." These, and other pleadings that were filed later were
signed solely by petitioner Atty. Carbonell, not in the name of "Carbonell & Fernandez." While it was correctly
observed by CIR that a good portion of the court battle was fought by respondent Atty. Fernandez, yet CIR cannot
close its eyes to the legal services also rendered by Atty. Carbonell. For, important and numerous, too, were his
services. And, they are not negligible. The conclusion is inevitable that petitioner Atty. Carbonell must have a share
in the twenty-five per cent (25%) attorneys' fees awarded herein. As to how much, this is a function pertaining to
CIR.

6. We note that CIR's cashier was authorized on June 25, 1964 to disburse to Atty. Leonardo C. Fernandez
the sum of P19,938.81 which is 25% of the amount recovered. In the event payment actually was made, he should
be required to return whatever is in excess of the amount to which he is entitled in line with the opinion expressed
herein. 15

IN VIEW OF THE FOREGOING, the award of twenty five per cent (25%) attorneys' fees solely to respondent
Atty. Fernandez contained in CIR's order of March 19, 1964 and affirmed by said court's en banc resolutions of April
28, 1964 and June 25, 1964, is hereby set aside; and the case is hereby remanded to the Court of Industrial
Relations with instructions to conduct a hearing on, and determine, the respective shares of Attorney Leonardo C.
Fernandez and Attorney Jose Ur. Carbonell in the amount of P19,938.81 herein awarded as attorneys' fees or both.
No costs. So ordered.
G.R. No. L-24864 April 30, l985

FORTUNATO HALILI, doing business under the name and style HALILI TRANSIT (substituted by EMILIA DE
VERA DE HALILI), petitioner
vs.
COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS and CONDUCTORS UNION
(PTGWO), respondents.

G.R. No. L-27773 April 30, l985

EMILIA DE VERA VDA. DE HALILI, petitioner,

vs.
COURT OF INDUSTRIAL RELATIONS and HALILI BUS DRIVERS AND CONDUCTORS UNION
(PTGWO), respondents.

G.R. No. L-38655 April 30, l985

FELICIDAD M. TOLENTINO, et al., petitioners,

vs.
COURT OF INDUSTRIAL RELATIONS, et al., respondents.

G.R. No. L-30110 April 30, l985

EMILIA DE VERA VDA. DE HALILI petitioner,

vs.
HALILI BUS DRIVERS AND CONDUCTORS UNION-PTGWO and COURT OF INDUSTRIAL
RELATIONS, respondents.

RESOLUTION

MAKASIAR, J.:

Before Us for resolution is the urgent motion to cite Atty. Benjamin C. Pineda, Ricardo Capuno and Manila Bank
(Cubao Branch) in contempt for the alleged continued failure of aforenamed parties to comply with the temporary
mandatory restraining order issued by this Court on September 1, 1983 and with the resolution dated September
13, 1983 which again directed Atty. Pineda and union administrator Capuno to comply with the aforesaid mandatory
restraining order and which ordered the Manila Bank to transfer the funds allocated for the workers to the NLRC (p.
376, L-24864, rec.; p. 301, L027773 rec.).

The issuance of the temporary mandatory restraining order stemmed from the questioned orders of September 23,
1982 and February 9, 1983 issued by Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC
which orders respectively allowed the sale of the property awarded to satisfy or answer for the claims of the union
members in these four cases and authorized the distribution of the proceeds of the purchase.

For a better appreciation of the aforesaid motion for contempt, We must recall certain prefatory facts which the
Solicitor General has so aptly summed up. Thus:

The above-entitled cases involve disputes regarding claims for overtime of more than five hundred
bus drivers and conductors of Halili Transit. Litigation initially commenced with the filing of a
complaint for overtime with the defunct Court of Industrial Relations on August 20, 1958 docketed
as CIR Case No. 1099-V. The disputes were eventually settled when the contending parties
reached an Agreement on December 23, 1974, the pertinent portions of which are as follows:

WHEREAS, in the face of this strong urging on the part of the Supreme Court Justices upon the
parties to put an immediate end to this case by amicable settlement, the parties repeatedly came to
conference, conscientiously explored all avenues of settlement, and finally arrived at the tentative
agreement (tentative because of the condition that the same be sanctioned by the court in the
estate case) whereby the Administratrix would transfer to the employees title to that tract of land,
covered by TCT No. 36389, containing an area of approximately 33,952 square meters, situated in
the Barrio of San Bartolome, Municipality of Caloocan, Province of Rizal, and pay in addition the
cash amount of P25,000.00 in full and final satisfaction of all the claims and causes of action of all
of the employees against the estate of Fortunato F. Halili subject of CIR Case No. 1099-V.

xxx xxx xxx

NOW, THEREFORE, for and in consideration of the foregoing and of the covenants, stipulations
and undertakings hereinafter contained, the parties have agreed as follows:

l. The UNION, its officers and members-claimants relative to CIR Case No. 1099-V, shall withdraw
and dismiss with prejudice Case No. 1099-V filed by the UNION in behalf of its members-claimants
before the Court of Industrial Relations and all its incidents thereto.

2. The ESTATE shall deliver or cause to be delivered, to the UNION the following:

(a) Deed of Transfer of a parcel of land situated in Barrio San Bartolome, Caloocan City, containing
an area of THIRTY-THREE THOUSAND NINE HUNDRED FIFTY-TWO (33,952) Square Meters,
more or less, and covered by Transfer Certificate of Title No. 35389 of the Registry of Deeds of
Rizal, to be made, upon authority and approval granted by the Court of First of Rizal, Branch IV, at
Quezon City, in Proc. No. Q-10852 in the name of the Halili Bus Drivers & Conductors Union
(PTGWO), free from any and all liens encumbrances, and any and all claims whatsoever.

(b) Negotiable Check for TWENTY-FIVE THOUSAND (P25,000.00) PESOS in the name of
Domingo D. Cabading, President of the UNION.

3. The transfer of the above-described parcel of land and receipt of the amount of P25,000.00
constitute the full and final satisfaction of the claims and award in said CIR Case No. 1099-V, as
well as any and all attorney's liens in said case, for and in consideration of which the UNION
members-claimants in CIR Case No. 1099-V by these present now and forever release and
quitclaim Halili Enterprises, Halili Transit, Fortunato F. Halili his estate, heirs and successors by
reason of CIR Case No. 1099-V, it being their intention that they be absolutely, completely and
finally absolved and released from any and all liability in said case, including attorneys' liens the
transfer of the property and payment of the amount hereinabove stated constituting for all intents
and purposes a full, final and complete settlement and satisfaction of the award in CIR Case No.
1099-V and all incidents thereto.

4. The UNION and its undersigned officers hereby warrant that the UNION is a duly registered labor
organization and that in a special meeting called for the purpose they were duly authorized on
December 22, 1974, by all the members- claimants in CIR Case No. 1099-V to sign this
Memorandum of Agreement with Release and Quitclaim which was unanimously approved and
ratified by said members-claimants as evidenced by a Resolution dated December 22, 1974, a
copy of which is attached hereto and made a part hereof as Annex "B", and hereby jointly and
severally hold the estate and heirs of Fortunato F. Halili free and harness from, and undertake to
indemnify them for, any and all liability for any claims by members of the UNION, their heirs,
assigns and agents relating to CIR Case No. 1099-V or attorneys' liens in connection therewith (69
SCRA 509-510).

On January 6, 1975, pursuant to the Agreement, the administratrix of the estate of Fortunato F,
Halili executed a Deed of Conveyance of Real Property, transferring the aforementioned parcel of
land to the Halili Bus and Conductors Union (PTGWO) in trust for the members of the union
claimants. The parcel of land was eventually registered in the name of the Union on February 14,
1975. Hence, on February 10, 1976, the contending parties moved for the dismissal of G.R. No. L-
30110 and G.R. No. L-38655, which this Honorable Court granted on February 27, 1976 (69 SCRA
505). The two other cases, G.R. No. L-24864 and G.R. No. L- 27773, were previously disposed of
on February 26, 1968 and December 28, 1970, respectively (22 SCRA 785. and 36 SCRA 522).

On August 9, 1982, the Union, through Atty. Benjamin C. Pineda, filed an urgent motion with the
Ministry of Labor and Employment (MOLE) requesting for authority to sell and dispose of the
property. The motion was granted in an order dated September 23, 1982. A prospective buyer, the
Manila Memorial Park Cemetery, inc. expressed its misgivings on the authority of the Union to sell
 the property in view of sec. 66 of PD 1529 which requires no less than an order from a court of
competent jurisdiction as authority to sell property in trust. So, Atty. Pineda filed a motion with the
Supreme Court on December 1, 1982 requesting for authority to sell the property, This Honorable
Court, however, merely noted the motion in a resolution dated December 8, 1982.

Nevertheless, Atty. Pineda, without authority from the Supreme Court but relying on the earlier
authority given him by the Ministry of Labor, filed another urgent motion with the latter, praying that
the Union be authorized to sell the lot to the Manila Memorial Park Cemetery, Inc. and to make
arrangements with it such that payment will be advanced for the real estate taxes inclusive of
penalties, attorney's lien which is equivalent to a thirty-five percent (35%) of the total purchase
price, and home developer's fee of P69,000.00. Apparently, the prospective purchaser had decided
to withdraw its objection regarding the Union's authority to sell. In an Order dated February 9, 1983,
Labor Arbiter Raymundo R. Valenzuela granted the motion. So, the sale was finally consummated
on June 7, 1983, resulting in the execution of an escrow agreement on June 8, 1983 wherein the
purchase price was deposited under escrow with the Manila Bank-Cubao Branch. The Bank then
released the amounts due the claimants in accordance with the escrow agreement" (pp. 352- 356,
L-24864 rec.).

The dispositive portion in L-24864 is re-stated hereunder:

WHEREFORE, the appealed order and resolution en banc are hereby affirmed and the Court of
Industrial Relations is hereby enjoined to make a judicial determination of the union membership of
the claimants, while the Examining Division of said court shall proceed with its computation of the
compensable hours of work rendered by, and the corresponding compensation payable to, the
drivers and conductors admitted by both parties to be union members since October 1, 1956 and
those contended by the union to be such members but disputed by the employer. No costs. So
ordered (p. 186, L-24864 rec.).

When Atty. Jose C. Espinas (herein movant and alleged original counsel for the Union) learned of the sale and
apportionment of the proceeds from past Union president Amado Lopez, he requested Labor Arbiter Raymundo
Valenzuela to allow him to look into the records of Case No. 1099-V. The latter, however, told him that the records
of the aforecited case were missing. Thereupon, Atty. Espinas requested Director Pascual Reyes of the NLRC to
locate the records (p. 356, L24864 rec.).

Hence, Atty. Espinas filed the urgent motion with prayer for a temporary mandatory restraining order on August 26,
1983 and the supplement thereto on August 29, 1983 (pp. 215, 227, L-24864 rec.).

On August 30, 1983, the records of Case No. 1099-V were finally found and Atty. Espinas was dully informed of the
development,

The above two motions question the legality of the orders dated September 23, 1982 and February 9, 1983 issued
by Labor Arbiter Raymundo Valenzuela in Case No. 1099-V before the NLRC which authorized the sale of the
awarded property and the distribution of the proceeds from such purchase.

Movants Union and counsel Espinas upon filing of the motions urgently pray of thisourt to:

1. Require Atty. Benjamin C. Pineda to deposit with the NLRC the amount of P712,992.00 paid to him or deposited
to his account at Manila Bank, Cubao Branch,allegedly representing 35% attorney's fees on the sale of 33,952
square meters of the lot registered in the name of the Union;

2. Require the Halili Drivers and Conductors Union through Domingo Cabading or any of his representatives to
deposit with the NIRC the 6% alleged union expenses paid to them or similarly deposited to their account;

3. Implead with leave of court this Manila Bank Cubao Branch to require the said bank to prevent further
withdrawals of amount deposited in the name of Atty. Pineda and/or the Halili Drivers and Conductors Union or any
of its officers and to turn over any remaining deposits to the NLRC for proper disposition;

4. Should Atty. Pineda and the Union officers have already withdrawn the deposits or parts thereof, require them to
post a bond in the equivalent amounts of 35% (attorney's fee), 6% (union expenses), and 5% (broker's fee)
respectively of the total proceeds of the sale of the property, solidarity (p. 219, L-24864 rec.; p. 160, L-27773 rec.).
Likewise, and after due consideration of the merits, movants prayed that—

1. the order of Arbiter Valenzuela dated February 9, 983 be nullified insofar as it allows Atty. Pineda 35% attorney's
fees;

2. the NLRC be directed to locate the records of Case No. 1099-V or reconstitute the same and thereafter to
equitably dispose 20% as fees to all lawyers who participated in the proceedings and any excess amounts to be
again distributed to the workers; and

3. these cases be remanded to the NLRC with instructions as above-stated and that the proper penalty be imposed
on those involved and who have acted fraudulently and illegally (p. 220, L-24864 rec.; p. 165, L-27773 rec.).

The succeeding pleadings and developments which are common to all these cases are now presented
chronologically.

On August 29, 1983, Atty. Espinas, for himself and members of the respondent Union, filed a supplement to urgent
motion stating that the prayers in the urgent motion of August 26, 1983 are reiterated and praying for the
nullification of Arbiter Valenzuela's order not only on the award of attorney's fees but also on the allowance of
payment of "union obligations" not previously authorized nor approved by the NLRC (p. 227, L-24864, rec.; p. 176,
L-27773 rec.).

In its resolution dated September 1, 1983, this Court impleaded the Manila Bank, Cubao Branch as party
respondent and directed the issuance of a temporary mandatory restraining order (p. 234, L-24864 rec. & p. 187, L-
27773 rec.). This Court correspondingly issued a temporary mandatory restraining order on the same date which
enjoined Atty. Benjamin C. Pineda or his agents or any person acting in his stead to deposit with the NLRC the
amount of P712,992.00 paid to him or deposited in his account at Manila Bank, Cubao Branch allegedly
representing 35% attorney's fees on the sale of 33,952 square meters of the lot registered in the name of Halili
Drivers and Conductors Union; directed the Union thru Domingo Cabading or his agents to deposit with the NLRC
6% alleged union expenses paid to the Union or similarly deposited to its account; and ordered the NLRC and
Manila Bank, Cubao Branch, or their agents or persons in their stead not to allow withdrawals of amounts deposited
in the name of Atty. Benjamin C. Pineda and/or the Union or any of its officers (P. 235, L-24864; p. 188, L-27773
rec.).

On September 6, 1983, respondent Union, thru Atty. Pineda, filed its comment, in compliance with the resolution of
September 1, 1983, on the urgent motion and the supplement thereto both filed by counsel Espinas, alleging therein
that the subject matter sought to be enjoined or mandated by the restraining order ceased to exist rendering the
same moot and academic, and thus praying for the dismissal of the said motion and the supplement thereto (p. 237,
L-24864 rec.; p. 191, L-27773 rec.).

On September 7, 1983, Atty. Pedro Lopez, an original associate of Atty. Espinas, filed his motion for leave to
intervene, with the submission that the lawyers involved should only divide 20% fees as per the workers' contract
and the rest refunded by Atty. Pineda and the alleged "union officers" for redistribution to the members (p. 265, L-
24864, rec.; p. 219. L-27773 rec.).

Atty. Espinas, in behalf of the workers, filed a manifestation and motion to require Atty, Pineda and the union to
comply with the temporary mandatory restraining order on September 9, 1983, with prayer that the Manila Bank be
ordered to transfer the funds allocated for the workers to the NLRC, which should be instructed to pay the workers
upon proper Identification (without prejudice to additional shares) or to mail such amounts by money order or
manager's check to the workers' addresses as furnished to the NLRC (p. 274, L-24864, rec.; p. 231, L-27773 rec.).

On September 12, 1983, petitioner filed a manifestation in compliance with the resolution of September 2, 1983
stating, among other things, that its liability had been completely extinguished with the approval of the
Memorandum of Agreement with Release and Quitclaim in L-38655 and L-30110; that said agreement operated as
an absolute and complete release of petitioner from any liability to the Union; and that petitioner had not been given
any notice of any proceedings respecting cases subsequent to the promulgation of the decisions aforestated (p.
281, L-24864, rec.; p. 237, L-27773 rec.).

Counsel Espinas (for the workers involved) filed his reply to comments of respondent Union on September 14, 1983
praying for this Court to:
1. nullify the order of February 9, 1983 issued by Arbiter Raymundo Valenzuela in CIR Case No. 1099-V and others
connected therewith regarding the distribution of proceeds of the sale of the land belonging to the members-
claimants for lack of due process and for being contrary to law;

2. nullify the 35% attorney's fees of Atty. Benjamin Pineda as illegal and unconscionable and in disregard of other
lawyers in the case;

3. require reimbursement to the members-from the Union P101,856.00 allocated without their consent as Union
expenses; P101,856 unreceipted brokers' fees less P4,020.40 expenses for the transfer of title; to refund the 1 % of
the net proceeds, P9,596.18, for named claimants; and to secure a refund of P308,000.00 from the P712,992.00
fees of Atty. Pineda (the excess of 20% fees for all lawyers);

4. subject the balance of P404,992.00 of the remainder of Atty. Pineda's 35% fees for distribution among the three
lawyers as may be determined by the NLRC; and

5. should this Court so decides, fix the fees (p. 285, L- 24864 rec.; p. 240, L-27773 rec.).

On September 13, 1983, the Solicitor General filed his comment on the urgent motion and the supplement thereto
dated August 25, 1983 and August 29, 1983, respectively with the recommendations that (1) the orders of Arbiter
Valenzuela dated September 23, 1982 and February 9, 1983 be nullified for having been issued without due
process; (2) the case must be remanded to the NLRC for further proceedings; and (3) the temporary restraining
order issued by this Court on September 1, 1983 be maintained, pending final resolution by the NLRC (p. 351, L-
24864 rec.).

The Solicitor General, on October 6, 1983, filed his manifestation and motion in lieu of comment on the motion of
Atty. Pedro Lopez for leave to intervene in L-24864 and L-27773 (p. 360, L-24864 rec.; p. 289, L-27773 rec.).

On October 6, 1983, counsel Espinas filed his comment on the intervention of Atty. Pedro Lopez wherein he offers
no objection to the latter's intervention and states that said counsel is also entitled to attorney's fees in accordance
with his participation (p. 364, L-24864 rec.; p. 292, L-27773 rec.).

Atty. Pineda filed his comment and manifestation on October 7, 1983, in compliance with the resolution of
September 13, 1983, alleging therein that as per Retainer's Contract dated January 1, 1967, he handled Case No.
1099-V before the Court of Industrial Relations alone. On the mandatory restraining order, Atty. Pineda claims that
as of October 4, 1983, he had a balance of P2,022.70 in his account with the Manila Bank (p. 370, L-24864 rec.; p.
295, L-27773 rec.).

In its resolution dated October 18, 1983, this Court (1) set, aside as null and void the orders of September 23, 1982
and February 9, 1983 of Arbiter Raymundo R. Valenzuela; (2) allowed the intervention of Atty. Pedro Lopez; (3)
directed the Manila Bank (Cubao Branch), Atty. Benjamin Pineda, and the Halili Drivers and Conductors Union
through Domingo Cabading or any of his representatives, to comply with the temporary mandatory restraining order
issued on September 1, 1983 and the resolution dated September 13, 1983, within ten [10] days from receipt
thereof; and (4) remanded these cases to the NLRC for further proceedings (p. 374, L-24864 rec.; p. 299, L-27773
rec.).

The day before or on October 17, 1983, Sergio de Pedro, as representative of the workers and assisted by Atty.
Espinas, thus fided the urgent motion to cite Atty. Pineda, Ricardo Capuilo and Manila Bank (Cubao Branch) in
contempt, alleging therein that after two letters dated October 6 and October l4, l983 to the NLRC which inquired as
to whether or not compliant, with the restraining order had been made, the Commission certified that as of October
14, 1983, no deposits had been effected by the parties so (directed (p. 376, L-24864 rec.; p. 301, L-27773 rec.).

In its manifestation and motion filed on November 2, 1983, respondent Manila Banking Corporation (Rustan-Cubao
Branch), in compliance with this Court's resolution of September 13, 1983, stated that it transmitted or paid to the
NLRC the amount of P417,380.64 under Cashier's Check No. 34084190 for the account of the Union and
P2,022.70 under Cashier's Check No. 34084191 for the account of Atty. Pineda and thus prayed therein that the
aforesaid transmittals be deemed as sufficient compliance with the aforecited resolution and that the urgent motion
to cite respondents in contempt dated October 17, 1983 be considered moot and academic (p. 390, L-24864 rec.).

On November 8, 1983, respondent Atty. Pineda filed his manifestation and motion in lieu of comment in compliance
with this Court's resolution of October 20, 1983, stating that he and respondent Union thereby adopt the aforecited
manifestation and motion of respondent Manila Banking Corporation and thus prayed that since they have complied
with this Court's resolution of September 13, 1983, the urgent motion to cite them for contempt be considered moot
and academic (p. 394, L-24864 rec.; p. 310, L-27773 rec.).

On November 10, 1983, respondent Manila Banking Corporation filed another manifestation and motion in lieu of
commence, by way of compliance with the Court's resolution of October 20, 1983 with prayer that its previous
manifestation and motion dated October 28, 1983 and filed on November 2, 1983 be considered as sufficient
compliance with the resolution of September 13, 1983 which would render the urgent motion to cite respondents in
contempt moot and academic (p. 396, L-24864 rec. p. 312, L-27773 rec.).

On the foregoing manifestations and motions, representative Sergio de Pedro, with the assistance of Atty. Espinas,
filed a comment on November 16,1983 wherein he alleged that out of the P2,037,120.00 purchase price, only
Pl,940,127.29 was deposited with the Manila Bank; that Atty. Pineda has yet to return the balance of P710,969,30;
and that the Union has still to account for P111,452.18 (p. 399, L- 24864 rec.; p. 315, L-27773 rec.).

December 14, 1983, respondent Union filed its reply to Mr. de Pedro's above unsigned comment therein stating
among other things that the alleged missing amount of P96.992.71 was used for the payment of outstanding real
estate taxes on real property of said Union covered by TCT No. 205755 and that the amount of P2,022.70 only was
remitted by Manila Bank to the NLRC for the account of Atty. Pineda (p. 323, L-27773 rec.)

On December 20, 1983, Mr. de Pedro and Atty. Espinas, for the workers involved, filed their rejoinder to the
comment of Atty. Pineda and Mr. Capuno reiterating therein their plea to declare Atty. Pineda and Mr. Capuno in
contempt of court and to mete out the proper penalty (p. 328, L-27773 rec.).

The Manila Banking Corporation filed its compliance with the Court resolution of November 22, 1983 on February 3,
1984, praying that its report to the NLRC on the amount of withdrawals be considered as sufficient compliance with
the said resolution (p. 343, L-27773 rec.).

Atty. Espinas filed his comment and motion on March 15, 1984, stating among other things that as per report of the
Manila Bank to the NLRC, Atty. Pineda has not yet complied with the said order. He thus moved that Atty. Pineda
be required to post a bond on the undeposited balance in the amounts of P710,969.30 and that Mr. Capuno be also
required to post a bond before the NLRC on the undeposited balance of P52,236.04 during the pendency of the
motion for contempt (p. 373, L-27773 rec.).

On April 4, 1984, Mr. Sergio de Pedro filed his reply to the aforesaid comment of the Union administrator and Atty.
Pineda stating therein that there are still questions to be resolved on the merits before the NLRC and hence, prays
that Arbiter Antonio Tirona be required to continue hearing the merits of the case pending in the said Commission
(p. 377, L-27773 rec.).

Before We resolve the motion for contempt, certain crucial facts which have surfaced and which precipitated Our
issuance of the resolution of October 18, 1983 declaring the two questioned orders of Arbiter Valenzuela as null and
void, must be retraced.

Then Union President Amado Lopez, in a letter dated August 21, 1958, informed J.C. Espinas and Associates that
the general membership of the said Union had authorized a 20% contingent fee for the law firm based on whatever
amount would be awarded the Union (p. 267, L-24864 rec.).

Atty. Jose C. Espinas, the original counsel, established the award of 897 workers' claim in the main cases before
the defunct CIR and the Supreme Court. In L-24864, the Notice of Judgment of this Court dated February 26, 1968
was served on Messrs. J.C. Espinas & Associates (p. 188, L-24864 rec.). In L-27773, the Notice of Judgment dated
December 29, 1970 was sent to Atty. B.C. Pineda & Associates under same address-716 Puyat Bldg., Suit 404 at
Escolta, Manila (p. 147, L-27773 rec.) Note that this is the same address of Atty. J.C. Espinas & Associates.

When Atty. 'Pineda appeared for the Union in these cases, still an associate of the law firm, his appearance carried
the firm name B.C. Pineda and Associates," giving the impression that he was the principal lawyer in these cases.

Atty. Pineda joined the law firm of Atty. Espinas in 1965 when these cases were pending resolution. He always held
office in the firm's place at Puyat Building, Escolta until 1974, except in 1966 to 1967 when he transferred to the
Lakas ng Manggagawa Offices. During this one-year stint at the latter office, Atty. Pineda continued handling the
case with the arrangement that he would report the developments to the Espinas firm. When he rejoined the law
firm in 1968, he continued working on these cases and using the Puyat Building office as his address in the
pleadings.

When Atty. Pineda rejoined the Espinas firm in 1968, he did not reveal to his partners (he was made the most
senior partner) that he had a retainer's contract entered into on January 1, 1967 which allegedly took effect in 1966.
He stayed with the law firm until 1974 and still did not divulge the 1967 retainer's contract. Only the officers of the
Union knew of the contract.

The alleged retainer's contract between Atty. Pineda and the Union appears anomalous and even illegal as well as
unethical considering that-

1. The contract was executed only between Atty. Pineda and the officers of the Union chosen by about 125
members only. It was not a contract with the general membership, Only 14% of the total membership of 897 was
represented. This violates Article 242 (d) of the Labor Code which provides:

The members shall determine by secret ballot, after due deliberation, any question of major policy
affecting the entire membership of the organization, unless the nature of the organization or force
majeure renders such secret ballot impractical, in which case the board of directors of the
organization may make the decision in behalf of the general membership (emphasis supplied).

2. The contingent fee of 30% for those who were still working with Halili Transit and the 45% fee for those who were
no longer working worked to the prejudice of the latter group who should and were entitled to more benefits. Thus,
too, when the alleged retainer's contract was executed in 1967, the Halili Transit had already stopped operations in
Metro Manila. By then, Atty. Pineda knew that all the workers would be out of work which would mean that the 45%
contingent fee would apply to all.

3. The contract which retroactively took effect on January 1, 1966, was executed when Atty. Espinas was still
handling the appeal of Halili Transit in the main case before the Supreme Court. Atty. Pineda would have but did not
substitute himself in place of Atty. Espinas or the law firm on the basis of such contract.

4. When Atty. Pineda filed his motion for approval of his attorney's lien with Arbiter Valenzuela on February 8, 1983,
he did not attach the retainer's contract.

5. The retainer's contract was not even notarized (p. 248, L-24864 rec.).

The Manila Memorial Park Cemetery, Inc., as the prospective buyer, initially expresses its misgivings over the
authority of the Union to sell subject property conformably with Section 66 of P.D. No. 1529, which requires an order
from a court of competent jurisdiction authorizing the sale of a property in trust. The pertinent portion of Section 66
provides:

No instruments which transfers or mortgages or in any way deals with registered land in trust shall
be registered, unless the enabling power thereto is expressly conferred in the trust instrument, or
unless a final judgment or order of a court of competent jurisdiction has construed the instrument in
favor of the power, in which case a certified copy of such judgment or order may be registered.

The decision of aforenamed purchaser to stop questioning the Union's authority to sell and the expeditious manner
by which Arbiter Valenzuela granted Atty. Pineda's motion for such authority to sell the property make the entire
transaction dubious and irregular.

Thus, without notice to the other lawyers and parties, Atty. Pineda commenced the proceeds before the NLRC with
the filing of a motion and manifestation on August 9, 1982 with Arbiter Valenzuela of the NLRC Office of the Labor
Ministry wherein he asked for authority to sell the property. On September 23, 1983 or just over a month, Arbiter
Valenzuela approved the motion per order of the same date. Notably, only Atty. Pineda and the lawyers of the
purchaser were informed of such order.

On February 4, 1983, again without notice to Atty. Espinas and Atty. Lopez, Atty. Pineda filed a motion with Arbiter
Valenzuela wherein he asked for authority to distribute the proceeds of the sale of the property. This distribution
would include his attorney's fee which was allegedly the subject of a retainer contract entered into between him and
the alleged Union officers, On February 9, 1983, or barely five days from the day the motion was filed, Arbiter
Valenzuela, without informing the other lawyers and relying exclusively on the unverified motion of Atty. Pineda (the
records of the case were not on hand), approved the said motion which authorized the appointment.

This Court, as earlier stated, nullified said orders dated September 23, 1982 and February 9, 1983 of Labor Arbiter
Valenzuela as violative of the due process clause. It is a settled rule that in administrative proceedings, or cases
coming before administrative tribunals exercising quasi-judicial powers, due process requires not only notice and
hearing, but also the consideration by the administrative tribunal of the evidence presented; the existence of
evidence to support the decision; its substantiality a decision based thereon or at least contained in the record and
disclosed to the parties; such decision by the administrative tribunal resting on its own independent consideration of
the law and facts of the controversy; and such decision acquainting the parties with the various issued involved and
the reasons therefore (Ang Tibay vs. Court, 69 Phil. 635, cited on p. 84, Philippine Constitutional Law, Fernando,
1984 ed.)

Significantly Atty. Pineda's act of filing a motion with this Court on December 1, 1982 praying for authority to sell
was by itself an admission on his part that he did not possess the authority to sell the property and that this Court
was the proper body which had the power to grant such authority. He could not and did not even wait for such valid
authority but instead previously obtained the same from the labor arbiter whom he knew was not empowered to so
authorize. Under Article 224 (a) of the Labor Code, only final decisions or awards of the NLRC, the Labor Arbiter, or
compulsory or voluntary arbitrators may be implemented or may be the subject of implementing orders by
aforenamed body or officers.

When Atty. Espinas discovered the sale of the property, he went to Arbiter Valenzuela to look into the transaction
who told him that the records of CIR Case No. 1099-V were missing. It took director Pascual Reyes of the NLRC to
locate the records.

The 45% attorney's lien on the award of those union members who were no longer working and the 30% lien on the
benefits of those who were still working as provided for in the alleged retainer's contract are very exorbitant and
unconscionable in view of Section 11, Rule VIII of Book III which explicitly provides:

Sec. 11. Attorney's fees—Attorney's fees on any judicial or administrative proceedings for the
recovery of wages shall not exceed 10% of the amount awarded. The fees may be deducted from
the total amount due the winning party.

The amount of P101,856.00 which Atty. Pineda donated to the Union and which actually corresponds to 5% of the
total 35% attorney's fees taken from the proceeds (p. 263, L-24864, rec.) appears improper since it amounts to a
rebate or commission. This amount was subsequently treated as union miscellaneous operating expenses without
the consent of the general membership.

Thus, in the case of Amalgamated Laborers' Association vs. Court of Industrial Relations (L-23467, 22 SCRA 1267
[March 27, 1968]), We declared:

We strike down the alleged oral agreement that the union president should share in the attorney's
fees. Canon 34 of Legal Ethics condemns this arrangement in terms clear and explicit. It says: 'No
division of fees for legal services is proper, except with another lawyer, based upon a division of
service or responsibility.' The union president is not the attorney for the laborers. He may seek
compensation only as such president. An agreement whereby a union president is allowed to share
in attorney's fees is immoral. Such a contract we emphatically reject. It cannot be justified.

A contingent fee contract specifying the percentage of recovery an attorney is to receive in a suit
'should be reasonable under all the circumstances of the case, including the risk and uncertainty of
the compensation, but should always be subject to the supervision of a court, as to its
reasonableness. (emphasis supplied).

A deeper scrutiny of the pleadings in L-24864 notably indicates a fraudulent or deceitful pattern in the actuations of
Atty. Pineda. Thus, in his motion for execution of judgment filed on September 18, 1965 in this case, he signed for
and in behalf of "J.C. Espinas & Associates" (p. 323, rec.). In his manifestation dated December 10, 1968, he
signed as "B.C. Pineda," lone counsel for petitioner (p. 327, rec.); and yet, he carried the address of Espinas &
Associates at 716 G. Puyat Building, Escolta.
However, in the October 29, 1968 resolution of this Court, a copy thereof was served on "Messrs. J.C. Espinas, B.C
Pineda, J.J. dela Rosa & Associates" at Puyat Building, Escolta (p. 324, rec.). In the notice of judgment dated
December 29, 1970, this Court addressed the said pleading to "Attys. B.C. Pineda & Associates with the same
Puyat Building address (p. 325, rec.). Notably also, then Union President Amado Lopez addressed his letter dated
August 21, 1958 to J.C. Espinas & Associates" wherein he informed the latter that the general membership of the
Union had authorized them a 20%, contingent fee on whatever award would be given the workers (p. 267, rec.).

The Manila Banking Corporation (Cubao Branch) has manifested that it turned over to the NLRC the amount of
P417,380.64 for the Union's account, which appears to be the balance of P950,021.76 corresponding to the net
proceeds for distribution to the workers after deducting P525,480.40, the total payments to claimants. The amount
of P417,380.64 appears lacking, since accurately computed, the balance should be P424,541,36.

However, the Union has yet to account for P101,856.00, the 5% donation or share from Atty. Pineda's attorney's fee
of 35%.

For the account of Atty. Pineda, the Manila Banking Corporation has remitted to the NLRC the amount of P2,022.70
only. This means that Atty. Pineda is still accountable for the amount of P710,969.30. He is directed to return the
amount of P712,992.00 representing the 35% attorney's fees he unlawfully received.

In view of Our resolution of October 18, 1983, which set aside as null and void the questioned orders dated
September 23, 1982 and February 9, 1983 issued by Arbiter Raymundo Valenzuela, the sale of the Union property
and the distribution of the proceeds therefrom had been effected without authority and, therefore, illegal
Consequently. Atty. Pineda and Arbiter Valenzuela become liable for their unauthorized acts,

Atty. Pineda should be cited for indirect contempt under paragraphs (b), (c) and (d) of Section 3, Rule 71 of the
Revised Rules of Court, The said paragraphs read thus:

Sec. 3. indirect contempts to be punished after charge and hearing.—

xxx xxx xxx

(b) Disobedience of or resistance to a lawful writ, process, order, judgment, or company court, or
injunction granted by a court or judge, including the act of a person who, after being dispossessed
or ejected from any real property by the judgment or process of any court of competent jurisdiction,
enters or attempts or induces another to enter into or upon such real property, for the purpose of
executing acts of ownership or possession, or in any manner disturbs the possession given to the
person adjudged to be entitled thereto;

(c) Any abuse of or any interference with the process or proceedings of a court not constituting
direct contempt under section 1 of this rule;

(d) Any improper conduct tending, directly or indirectly to impede, obstruct, or degrade the
administration of justice.

Contempt of court is a defiance of the authority, justice or dignity of the court; such conduct as tends to bring the
authority and administration of the law into disrespect or to interfere with or prejudice parties litigant or their
witnesses during litigation (12 Am. jur. 389, cited in 14 SCRA 813).

Contempt of court is defined as a disobedience to the court by acting in opposition to its authority, justice and
dignity. It signifies not only a willful disregard or disobedience of the court's orders, but such conduct as tends to
bring the authority of 'the court and the administration of law into disrepute or in some manner to impede the due
administration of justice (17 C.J.S. 4).

This Court has thus repeatedly declared that the power to punish for contempt is inherent in all courts and is
essential to the preservation of order in judicial proceedings and to the enforcement of judgments, orders, and
mandates of the court, and consequently, to the due administration of justice (Slade Perkins vs. Director of Prisons,
58 Phil. 271; In re Kelly, 35 Phil. 944; Commissioner of Immigration vs. Cloribel, 20 SCRA 1241; Montalban vs.
Canonoy, 38 SCRA 1).
In the matter of exercising the power to punish contempts, this Court enunciated in the Slade Perkins case that "the
exercise of the power to punish contempts has a twofold aspect, namely (1) the proper punishment of the guilty
party for his disrespect to the court or its order; and (2) to compel his performance of some act or duty required of
him by the court which he refuses to perform. Due to this twofold aspect of the exercise of the power to punish
them, contempts are classified as civil or criminal. A civil contempt is the failure to do something ordered to be done
by a court or a judge for the benefit of the opposing party therein; and a criminal contempt, is conduct directed
against the authority and dignity of a court or of a judge, as in unlawfully assailing or discrediting the authority or
dignity of the court or judge, or in doing a duly forbidden act. Where the punishment imposed, whether against a
party to a suit or a stranger, is wholly or primarily to protect or vindicate the dignity and power of the court, either by
fine payable to the government or by imprisonment, or both, it is deemed a judgment in a criminal case. Where the
punishment is by fine directed to be paid to a party in the nature of damages for the wrong inflicted, or by
imprisonment as a coercive measure to enforce the performance of some act for the benefit of the party or in aid of
the final judgment or decree rendered in his behalf, the contempt judgment will, if made before final decree, be
treated as in the nature of an interlocutory order, or, if made after final decree, as remedial in nature, and may be
reviewed only on appeal from the final decree, or in such other mode as is appropriate to the review of judgments in
civil cases. ... The question of whether the contempt committed is civil or criminal, does not affect the jurisdiction or
the power of a court to punish the same. ... (58 Phil. 271, 272).

For civil contempt, Section 7, Rule 71 of the Revised Rules of Court explicitly provides:

Sec. 7, Rule 71. Imprisonment until order obeyed. When the contempt consists in the omission to
do an act which is yet in the power of the accused to perform, he may be imprisoned by order of a
superior court until he performs it.

Thus, in the case of Harden vs. Director of Prisons (L-2349, 81 Phil. 741 [Oct. 22, 1948]), where petitioner was
confined in prison for contempt of court, this Court, in denying the petition and resolving the question of petitioner's
indefinite confinement, had the occasion to apply and clarify the aforequoted provision in the following tenor:

The penalty complained of is neither cruel unjust nor excessive. In Ex-parte Kemmler 136 U.S. 436,
the United States Supreme Court said that 'punishments are cruel when they involve torture or a
lingering death, but the punishment of death is not cruel, within the meaning of that word as used in
the constitution. It implies there something inhuman and barbarous, something more than the
extinguishment of life.

The punishment meted out to the petitioner is not excessive. It is suitable and adapted to its
objective; and it accords with section 7, Rule 64 of the Rules of Court which provides that "when the
contempt consists in the omission to do an act which is yet in the power of the accused to perform,
he may be imprisoned by order of a superior court until he performs it."

If the term of imprisonment in this case is indefinite and might last through the natural life of the
petitioner, yet by the terms of the sentence the way is left open for him to avoid serving any part of
it by complying with the orders of the court, and in this manner put an end to his incarceration. In
these circumstances, the judgment cannot be said to be excessive or unjust. (Davis vs. Murphy
[1947], 188 P., 229- 231.) As stated in a more recent case (De Wees [1948], 210 S.W., 2d, 145-
147), 'to order that one be imprisoned for an indefinite period in a civil contempt is purely a remedial
measure. Its purpose is to coerce the contemner to do an act within his or her power to perform. He
must have the means by which he may purge himself of the contempt . The latter decision cites
Staley vs. South Jersey Realty Co., 83 N.J. Eq., 300, 90 A., 1042, 1043, in which the theory is
expressed in this language:

In a "civil contempt" the proceeding is remedial, it is a step in the case the object of
which is to coerce one party for the benefit of the other party to do or to refrain from
doing some act specified in the order of the court. Hence, if imprisonment be
ordered, it is remedial in purpose and coercive in character, and to that end must
relate to something to be done by the defendant by the doing of which he may
discharge himself. As quaintly expressed, the imprisoned man carries the keys to
his prison in his own pocket (pp. 747-748).

Likewise. American courts had long enunciated these rulings:

 The commitment of one found in contempt of a court order only until the contemnor shall have
purged himself of such contempt by complying with the order is a decisive characteristic of civil
contempt. Maggio v. Zeitz, 333 US 56, 92 L. ed. 476, 68 S Ct 401.

Civil or quasi-criminal contempt is contemplated by a statute providing that if any person refused to
obey or perform any rule, order, or judgment of court, such court shall have power to fine and
imprison such person until the rule, order, or judgment shall be complied with. Evans v. Evans, 193
Miss 468, 9 So 2d. 641. (17 Am. Jur. 2d.)

The reason for the inherent power of courts to punish for contempt is that respect of the courts guarantees the
stability of the judicial institution. Without such guarantee said institution would be resting on a very shaky
foundation (Salcedo vs. Hernandez, 61 Phil. 724; Cornejo vs. Tan, 85 Phil. 722),

Likewise, Atty. Pineda should be subject to disbarment proceedings under Section 27 of Rule 138 of the Revised
Rules of Court which provides:

Sec. 27. Attorneys removed or suspended by Supreme Court on what grounds.—A member of the
bar may be removed or suspended from his office as attorney by the Supreme Court for any deceit,
malpractice, or other gross misconduct in such office, grossly immoral conduct, or by reason of his
conviction of a crime involving moral turpitude, or for any violation of the oath which he is required
to take before admission to practice, or for a willful disobedience of any lawful order of a superior
court, or for corrupt or willfully appearing as an attorney for a party to a case without authority so to
do. The practice of soliciting cases at law for the purpose of gain, either personally or through paid
agents or brokers, constitutes malpractice.

The Court may suspend or disbar a lawyer for any conduct on his part showing his unfitness for the confidence and
trust which characterize the attorney and client relations, and the practice of law before the courts, or showing such
a lack of personal honesty or of good moral character as to render him unworthy of public confidence (7 C.J.S.
733).

It is a well-settled rule that the statutory grounds for disbarment or suspension are not to be taken as a limitation on
the general power of the courts in this respect. The inherent powers of the court over its officers cannot be restricted
(In re Pelaez, 44 Phil. 567).

Finally, Atty. Pineda could be prosecuted for betrayal of trust by an attorney under Article 209 of the Revised Penal
Code. Said article provides:

Art. 209. Betrayal of must by an attorney or solicitor. Revelation of secrets.—In addition of the
proper administrative action , the penalty of prision correccional in its minimum period, or a fine
ranging from 200 to 1,000 pesos, or both shall be imposed upon any attorney-at-law or solicitor
(procurador judicial) who, by any malicious breach of professional duty or inexcusable negligence
or ignorance, shall prejudice his client, or reveal any of the secrets of the latter learned by him in his
professional capacity (emphasis supplied).

The aforequoted criminal sanction for unprofessional conduct of an attorney is without prejudice to proper
administrative action, such as disbarment or suspension of attorneys (p. 503, Criminal Law Annotated, Padilla, 1972
Ed.).

Labor Arbiter Raymundo Valenzuela should be made to answer for having acted without or beyond his authority in
proper administrative charges. He could also be prosecuted before the Tanodbayan under the provisions of the
Anti-Graft Law. Independently of his liabilities as a government officer, he could be the subject of disbarment
proceedings under Section 27, Rule 138 of the Revised Rules of Court.

Atty. Benjamin Pineda could also be held liable under Section 4(b) of R.A. No. 3019 (Anti-Graft and Corrupt
Practices Act) which makes it unlawful for any person knowingly to induce or cause any public official to commit any
of the offenses defined in Section 3 of said act. Section 3 enumerates the corrupt practices which public officers
may be prosecuted for. Atty. Pineda knowingly induced or caused Labor Arbiter Valenzuela to issue the questioned
orders without or beyond the latter's authority and to which orders the former was not entitled, considering that he
was not the sole and proper representative.
The Manila Banking Corporation (Cubao Branch) per manifestation and motion dated October 28, 1983 and
reiterated on November 10, 1983, had transmitted to the NLRC the remaining balance of P417,380.64 and
P2,022.70 for the account of the Union and Atty. Pineda, respectively. This turnover of the aforecited amounts is a
sufficient compliance with Our restraining order and resolution of September 13, 1983 and hence, the Manila
Banking Corporation can no longer be liable for contempt of court.

Very recently, on August 23, 1984, respondent Union, thru Acting Administrator Ricardo Capuno, filed its motion to
drop Halili Bus Drivers and Conductors Union from the contempt charge in view of these reasons:

1. The Manila Bank has already turned over to the NLRC the amount of P59,716.14 which represents the remaining
balance of 5% earmarked for Union expenses incurred in the case aside from the amounts deposited in escrow for
the workers. The amount of P42,140.00 was spent legitimately by the Union for administration purposes relative to
the subject property. The Union asserts that it is ready and willing to account for all expenses and withdrawals from
the bank before the NLRC.

2. The alleged 5% donation of Atty. Pineda to the Union taken from the 35% attorneys' fees was given to and
received by then President Domingo Cabading alone, who thereafter left for the United States.

3. The 1% allocated for unknown claimants or those not previously listed in the amount of P9,596.18 can easily be
accounted for by the Union before the NLRC.

In the same motion, Mr. Capuno clarifies that with regard to attorneys' fees, Atty. Pineda made the Union officers
believe that he would be the one to pay the fees of Attys. Espinas and Lopez for which reason, the 35% increased
fees was approved by the Union's board in good faith. The Union likewise confirms that Atty. Pineda came into the
picture only when he was assigned by Atty. Espinas in, 1965 to execute the CIR decision which, thru Atty. Espinas
handling, was upheld by this Court in L-24864 in 1968. The Union officers were aware that Atty. Espinas was the
principal counsel even after Atty. Pineda's assignment. They also knew of the original contract for 20% attorney's
fees which was increased to 35% by Atty. Pineda upon the arrangement that with the increase, he would answer for
the payment of Attys. Espinas and Lopez' fees and for necessary representation expenses (p. 450, L-24864 rec.).

Acting on the aforesaid motion, this Court in its resolution of August 28, 1964, dropped the Union and its officers
from the within contempt charge (p. 455, L-24864 rec.).

WHEREFORE, ATTY. BENJAMIN PINEDA IS HEREBY FOUND GUILTY OF INDIRECT CONTEMPT OF COURT
FOR WHICH HE IS HEREBY SENTENCED TO IMPRISONMENT IN THE MANILA CITY JAIL UNTIL THE
ORDERS OF THIS COURT DATED SEPTEMBER 1 AND SEPTEMBER 13, 1983 ARE COMPLIED WITH.

ATTY. BENJAMIN PINEDA IS ALSO DIRECTED TO SHOW CAUSE WHY HE SHOULD NOT BE DISBARRED
UNDER RULE 138 OF THE REVISED RULES OF COURT.

LET COPIES OF THIS RESOLUTION AND THE RESOLUTION OF OCTOBER 18, 1983 BE FURNISHED THE
MINISTRY OF LABOR AND THE TANODBAYAN FOR APPROPRIATE ACTION.

SO ORDERED.
TAN TEK BENG, Complainant, v. TIMOTEO A. DAVID, Respondent.
[A.C. No. 1261. December 29, 1983.]

SYLLABUS

1. LEGAL ETHICS; MEMBER OF THE BAR; SOLICITING CASES AT LAW FOR THE PURPOSE OF GAIN;
CONSTITUTES MALPRACTICE. — Where in the agreement lawyer David not only agreed to give one-half of his
professional fees to an intermediary or commission agent but he also bound himself not to deal directly with the
clients, the Court held that the said agreement is void because it was tantamount to malpractice which is "the
practice of soliciting cases at law for the purpose of gain, either personally or through paid agents or brokers" (Sec.
27, Rule 138, Rules of Court). Malpractice ordinarily refers to any malfeasance or dereliction of duty committed by a
lawyer. Section 27 gives a special and technical meaning to the term "malpractice" (Act No. 2828, amending Sec.
21 of Act No. 190). That meaning is in consonance with the elementary notion that the practice of law is a
profession, not a business. "The lawyer may not seek or obtain employment by himself or through others for to do
so would be unprofessional" (2 R.C.L. 1097 cited in In re Tagorda, 33 Phil. 37, 42).

2. ID.; ID.; ID.; UNPROFESSIONAL CONDUCT; CAUSE FOR CENSURE. — The commercialization of law practice
is condemned in certain canons of professional ethics adopted by the American Bar Association. "Unprofessional
conduct in an attorney is that which violates the rules or ethical code of his profession or which is unbecoming a
member of that profession" (Note 14, 7 C.J.S. 743). We censure lawyer David for having entered and acted upon
such void and unethical agreement. We discountenance his conduct, not because of the complaint of Tan Tek Beng
(who did not know legal ethics) but because David should have known better.

DECISION

AQUINO, J.:

The issue in this case is whether disciplinary action should be taken against lawyer Timoteo A. David (admitted to
the bar in 1945) for not giving Tan Tek Beng, a nonlawyer (alleged missionary of the Seventh Day Adventists), one-
half of the attorney’s fees received by David from the clients supplied by Tan Tek Beng. Their agreement
reads:jgc:chanrobles.com.ph

"December 3, 1970

"Mr. Tan Tek Beng

"Manila

"Dear Mr. Tan:chanrob1es virtual 1aw library

In compliance with your request, I am now putting into writing our agreement which must be followed in connection
with the accounts that you will entrust to me for collection. Our terms and conditions shall be as
follows:jgc:chanrobles.com.ph

"1. On all commission or attorney’s fees that we shall receive from our clients by virtue of the collection that we shall
be able to effect on their accounts, we shall divide fifty-fifty. Likewise you are entitled to commission, 50/50 from
domestic, inheritance and commercial from our said clients or in any criminal cases where they are involved.

"2. I shall not deal directly with our clients without your consent.

"3. You shall take care of collecting our fees as well as advances for expenses for the cases referred to us by our
clients and careful in safeguarding our interest.

"4. It is understood that legal expenses that we shall recover from the debtors shall be turned over to our clients.
Other clients who directly or indirectly have been approached or related (sic) to you as a result of your labor are
your clients.

"I hereby pledge in the name of God, our Heavenly Father, that I will be sincere, honest and fair with you in
connection with our transactions with our clients. Likewise you must be sincere, honest and fair with me.

Very truly yours,

(Sgd.) Illegible

TIMOTEO A. DAVID

"P.S.

I will be responsible for all documents entrusted me by our clients.

(Sgd.) Initial

"CONFORME to the above and likewise will reciprocate my sincerity to Atty. David as stated in the last paragraph of
this letter.

(Sgd.) Tan Tek Beng

MR. TAN TEK BENG"

The foregoing was a reiteration of an agreement dated August 5, 1969. Note that in said agreement lawyer David
not only agreed to give one-half of his professional fees to an intermediary or commission agent but he also bound
himself not to deal directly with the clients.

The business relationship between David and Tan Tek Beng did not last. There were mutual accusations of
doublecross. For allegedly not living up to the agreement, Tan Tek Beng in 1973 denounced David to Presidential
Assistant Ronaldo B. Zamora, to the Office of Civil Relations at Camp Crame and to this Court. He did not file any
civil action to enforce the agreement.

In his 1974 comment, David clarified that the partnership was composed of himself as manager, Tan Tek Beng as
assistant manager and lawyer Pedro Jacinto as president and financier. When Jacinto became ill and the costs of
office maintenance mounted, David suggested that Tan Tek Beng should also invest some money or shoulder a
part of the business expenses but Tan Tek Beng refused.chanrobles.com : virtual law library

This case was referred to the Solicitor General for investigation, report and recommendation. Hearings were
scheduled from 1974 to 1981. It was proposed that respondent should submit a stipulation of facts but that did not
materialize because the scheduled hearings were not held due to the nonavailability of Tan Tek Beng and his
counsel.

On September 16, 1977 Tan Tek Beng died at the Philippine Union Colleges Compound, Baesa, Caloocan City but
it was only in the manifestation of his counsel dated August 10, 1981 that the Solicitor General’s Office was
informed of that fact. A report on this case dated March 21, 1983 was submitted by the Solicitor General to this
Court.

We hold that the said agreement is void because it was tantamount to malpractice which is "the practice of soliciting
cases at law for the purpose of gain, either personally or through paid agents or brokers" Sec. 27, Rule 138, Rules
of Court). Malpractice ordinarily refers to any malfeasance or dereliction of duty committed by a lawyer. Section 27
gives a special and technical meaning to the term "malpractice" (Act No. 2828, amending sec. 21 of Act No. 190).

That meaning is in consonance with the elementary notion that the practice of law is a profession, not a business.
"The lawyer may not seek or obtain employment by himself or through others for to do so would be unprofessional"
(2 R.C.L. 1097 cited in In re Tagorda, 53 Phil. 37, 42; Malcolm, J., Jayme v. Bualan, 58 Phil. 422; Arce v. Philippine
National Bank, 62 Phil. 569). The commercialization of law practice is condemned in certain canons of professional
ethics adopted by the American Bar Association:jgc:chanrobles.com.ph

"34. Division of Fees. — No division of fees for legal services is proper, except with another lawyer, based upon a
division of service or responsibility."cralaw virtua1aw library

"35. Intermediaries. — The professional services of a lawyer should not be controlled or exploited by any law
agency, personal or corporate, which intervenes between client and lawyer. A lawyer’s responsibilities and
qualifications are individual. He should avoid all relations which direct the performance of his duties by or in the
interest of such intermediary. A lawyer’s relation to his client should be personal, and the responsibility should be
direct to the client. . . ."cralaw virtua1aw library
"38. Compensation, Commissions and Rebates. — A lawyer should accept no compensation, commissions, rebates
or other advantages from others without the knowledge and consent of his client after full disclosure." (Appendix,
Malcolm, Legal Ethics).

We censure lawyer David for having entered and acted upon such void and unethical agreement. We
discountenance his conduct, not because of the complaint of Tan Tek Beng (who did not know legal ethics) but
because David should have known better.chanrobles law library

"Unprofessional conduct in an attorney is that which violates the rules or ethical code of his profession or which is
unbecoming a member of that profession" (Note 14, 7 C.J.S. 743).

WHEREFORE, respondent is reprimanded for being guilty of malpractice. A copy of this decision should be
attached to his record in the Bar Confidant’s office.

SO ORDERED.