Waived

This case is about attorney’s fees and attorney’s lien. While it mainly concerns lawyers, it is also helpful to others who may be possible clients of lawyers. Under the Rules of Court (Section 37, Rule 138) lawyers have a lien upon all judgments for the payment of money, and executions issued in pursuance of such judgments which he has secured in a litigation of his client. The lien attaches from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such judgment, or issuing such execution, and shall have notified his client and the adverse party of such lien. This is illustrated in this case of Atty. Ray.

Atty. Ray was hired by a group of dismissed permanent laborers holding positions in the national plantilla but with particular assignments at the First Engineering District of Cebu to file a case in court for their reinstatement to their original positions with back salaries together with all privileges and salary adjustments or increases.

For his services, the laborers executed an Agreement for Attorney’s Fees where they agreed to pay Atty. Ray 30% of whatever back salaries, damages etc. that they might recover in the cases that they are filing or have filed. Based on this agreement Atty. Ray registered his charging/retaining lien during the pendency of the cases he filed.

After the laborers won the case in the lower court, Atty. Ray willingly rendered further legal assistance on appeal by the losing party. Subsequently when a new Governor assumed office, a compromise agreement was entered into between the province and the laborers wherein the laborers waived their right to reinstatement embodied in the decision of the lower court and the province agreed to immediately pay them their back salaries and other claims. This compromise agreement was approved by the court and thus became the final and executory decision of the cases.

When the laborers through their new counsel moved for the execution of the compromise judgment, the court ordered the issuance of a writ directing payment of only 45% of the amount due them and did not release the remaining 55% thus holding in abeyance the lawyer’s fees pending determination of its final amount. However instead of complying with the court order, the province paid the full amount of their adjudicated claims.

Thus Atty. Ray fled a complaint for damages due to breach of contract and for attys. fees against the governor, treasurer, auditor and engineer as well as against the laborers, his former clients. He alleged that by directly paying the laborers the amounts due them, the provincial officials induced them to violate their written contract for attorney’s fees. He also claimed that they violated the compromise agreement by computing the laborers’ money claims based on the provincial rather than the national wage rate that consequently yielded a lower amount.

Subsequently however he entered into an agreement with the laborers and settled the difference with them and therefore moved to dismiss the case against them. But the case proceeded against the provincial officials that ended with a decision in favor of Atty. Ray. The province was thus ordered to pay Atty. Ray actual damages representing the difference between the national and provincial wage rate paid to the laborers, moral damages of P20,000 and P5,000 litigation expenses. Was the lower court correct?

No. In the agreement for attorney’s fees, the laborers agreed to the payment of whatever back salaries, damages etc. they might recover. No fixed amount was specified nor a specific rate agreed upon on how the money claims are to be computed. The use of the word “whatever” shows that the basis of the computation would be the amount that the court would award in favor of the laborers.

Atty. Ray may have rightly commenced the action against both his clients (the laborers) and the provincial officials. The provincial officials may have impaired his charging lien by directly paying the laborers without regard for his right to the attorney’s fees. However at his instance the complaint against his clients was withdrawn because he had settled his differences with them thus indicating that his former clients already paid their obligations. Having been paid by his clients in accordance with their agreement his claim against the provincial officials has no leg to stand on.

The satisfaction of a judgment extinguishes the attorney’s lien if there has been a waiver, as shown either by the attorney’s conduct or by his passive omission. In this case, Atty. Ray’s act of withdrawing the case against the laborers (his former clients) and agreeing to settle their dispute may be considered a waiver of his lien. A lawyer cannot collect from his client then collect anew from the judgment debtor except, perhaps, on a claim for a bigger amount which as shown above is baseless.

Atty. Ray’s right to damages for breach of contract cannot likewise be sustained because there was no breach at all considering that his claim for higher attorney’s fees is baseless and that he had already settled his case against his former clients. Besides, even if there was a breach he had waived his right to claim against the provincial officials by accepting payment and/or absolving from liability his clients who were primarily liable to him. Thus no liability can be imputed to the province and to public either in their personal or official capacities (Sesbreno vs. Court of Appeals et. al. G.R. 161390, April 16, 2008).

Note: Books containing compilation of my articles on Labor Law and Criminal Law (Vols. I and II) are now available. Call tel. 7249445.

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