Case Summary (A.C. No. 9119)
Allegations and Background
Complainant alleged that he engaged Atty. Cortes under a handshake agreement that stipulated a 12% contingency fee for his legal services. Atty. Cortes successfully pursued illegal dismissal claims that resulted in a favorable ruling where PEC was ordered to pay complainant a total of One Million One Hundred Thousand Pesos (P1,100,000). The amounts were to be payable through three checks issued to complainant.
Transaction Problems
Upon the issuance of the checks, Atty. Cortes accompanied the complainant to a bank to open an account for depositing the checks. After depositing, when complainant attempted to withdraw from the initial check, Atty. Cortes intervened, claiming entitlement to 50% of the awarded claims and causing a disturbance at the bank. Complainant was pressured into endorsing subsequent checks to Atty. Cortes against his will, resulting in a conflict over attorney’s fees.
Response of Atty. Cortes
Atty. Cortes responded by denying the existence of a 12% agreement, asserting instead a 50% fee arrangement. He claimed that the fees were based on a pre-execution agreement reached at the office of the Labor Arbiter and justified his actions by describing them as necessary due to the complainant's alleged deception.
Procedural History and Disciplinary Action
The Integrated Bar of the Philippines (IBP) investigated the case, ultimately recommending a six-month suspension for Atty. Cortes due to the absence of a written agreement concerning the contingency fee and his excessive claims, which violated the Labor Code's stipulation limiting attorney’s fees in labor cases to a maximum of 10%. The IBP’s resolution was adopted, and a motion for reconsideration by Atty. Cortes was denied.
Legal Principles on Contingency Fees
The decision reaffirmed that while contingent fee agreements are valid, they must be supported by an express contract. Case law indicates that if there is no explicit agreement, lawyers may only recover fees based on the concept of quantum meruit. The maximum fee for labor cases is set at 10%, but this cap applies to extraordinary attorney's fees awarded by the court, not necessarily to the attorney-client agreement for services rendered.
Evaluation of Atty. Cortes's Fees
In evaluating Atty. Cortes's claims for a 50% fee, the court found them grossly excessive and unconscionable. Despite his assertion of the fees being reasonable due to the case's complexity and the re
...continue readingCase Syllabus (A.C. No. 9119)
Background of the Case
- The case originated from a Complaint-Affidavit filed by Eugenio E. Cortez against Atty. Hernando P. Cortes for grave misconduct and violations of the Lawyer's Oath and the Code of Professional Responsibility.
- Cortez engaged Atty. Cortes for legal representation in an illegal dismissal case against Philippine Explosives Corporation (PEC).
- The parties allegedly had a handshake agreement stipulating a 12% contingency fee for attorney's fees.
Progress of the Case
- Atty. Cortes successfully prosecuted Cortez's claims, resulting in a favorable decision, which was affirmed by the Court of Appeals, ordering PEC to pay Cortez a total of P1,100,000 in staggered payments.
- PEC issued three checks totaling P1,100,000, payable to Cortez, with specific amounts and dates for each check.
Account Opening Incident
- After the maturity of the first check, Cortez accompanied Atty. Cortes and his wife to open a bank account to deposit the check.
- Atty. Cortes asked Cortez to wait outside while he facilitated the account opening.
- Once inside, Cortez was asked to sign a joint savings account with Atty. Cortes.
Dispute Over Attorney's Fees
- On April 7, 2005, when Cortez attempted to withdraw funds from the account, Atty. Cortes intervened, claiming that 50% of the total awarded claims constituted his attorney's fees.
- Cortez offered P200,000 and later the second check for P275,000, but Atty. Cortes insisted on 50% of the total award.
- Under duress,