Regino Aro vs Arsenio Nañawa

27 SCRA 1090 – Legal Ethics – Attorney’s Fees; Right Thereto – Contingent Fees

In 1964, Luis and Pablo Magtibay engaged the services of Atty. Regino Aro in a partition case.
The Magtibays have no money to pay Atty. Aro and so a contingent fee agreement was reduced
in writing. Atty. Aro did his part in prosecuting the case. Later, Atty. Aro was able to negotiate a
proposed amicable settlement whereby the opposing party agreed to pay P3,000.00 to the
Magtibays. Atty. Aro then advised his clients to meet with the other party but unfortunately, the
Magtibays were not able to do so.

Later in October 1964, Atty. Aro received an order from the trial judge (Judge Arsenio Nañawa)
which stated that the case has been dismissed because the Magtibays had already entered into an
amicable settlement (extrajudicial settlement) with the other party. Atty. Aro opposed the
dismissal on the ground that such extrajudicial settlement without his assistance was fraudulent
because it deprived him of the contingent fees.

The Magtibay’s contended that it is their right to settle the case amicably even without the
assistance of Atty. Aro and that it is also their right to withdraw the services of Atty. Aro even
before the case is settled. The judge agreed with the Magtibays.

ISSUE: Whether or not Atty. Aro is entitled to attorney’s fees.

HELD: Yes. It is true that a client can withdraw the services of his counsel at any time provided
the same is grounded on valid reasons. It is also true that a client can enter into an amicable
settlement with the opposing party even without the assistance of counsel. However, if such is an
attempt to defraud or if it is a collusive agreement to deprive the lawyer of his attorney’s fees,
then the courts can intervene to protect the lawyers, who are officers of the court.

In this case, it is undisputed that there is already a written agreement as to Atty. Aro’s fees (the
contingent fee agreement). Fraud is apparent in this case because it appears that the amicable
settlement initially secured by Atty. Aro for the Magtibays is better than that secured by the
Magtibays without the assistance of Aro. Besides, there was no justifiable reason as to why the
Magtibays dismissed the services of Aro. It was through Aro’s effort that the Magtibay’s right to
the disputed property was finally recognized by the other party (who was actually their aunt).