URBAN BANK vs. PENA G.R. No.

145817, 145822 & 162562 October 19, 2011

FACTS:
In 1994, Isabel Sugar Complany, Inc (ISCI) sold a parcel of land to Urban Bank Inc (UBI). The land
was sold for P240 million. As the land was occupied by unauthorized sub-tenants, ISCI's lawyer, Atty.
Magdaleno Pena had to negotiate with them for them to relocate. But the said occupants, knowing that
the land was already transferred to UBI, refused to recognize Pena. ISCI then communicated with UBI s
that the latter may authorize Pena to negotiate with the tenants. Pena had barricaded himself inside the
property to keep the tenants out who were forcing their way in especially so that the local cops are now
sympathetic to them. Pena then had a phone conversation with Teodoro Borlongan, president of UBI,
where Pena explained to him the situation. In said conversation, Pena asked authorization from Borlongan
to negotiate with the tenants. Pena also asked that he be paid 10% of the purchased price of P24 million
for his efforts. Borlogan agreed over the phone on the condition that Pena should be able to settle with
the tenants otherwise he forfeits said 10% fee. Pena also asked that said authorization be put into writing.
The authorization was put into writing but no mention was made as regards the 10 % fee. Pena
was able to settle and relocate the tenants. After everything was settled and the property is now formally
under the possession of UBI, Pena began sending demands to UBI for the latter to pay him the P24 million
fee agreed upon, plus his expenses for the relocation of the tenants and the hiring of security guards or
an additional P3 million. But UBI refused to make payment hence Pena filed a complaint for recovery
against UBI.
The trial court ruled in favor of Pena as it found there indeed was a contract of agency created
between them, and that Pena is entitled to the 10% fee plus expenses he incurred including litigation
expenses. In sum, the trial court awarded him P28 million.
The Court of Appeals, however, reserved the order of the trial court. It ruled that no agency was
formed but his legal services, Pena is entitled to payment but applying the principle of unjust enrichment
and quantum meruit, Pena should only be pad P3 million.
ISSUE:
Whether or not Aty. Magdaleno Pena is entitled to receive the P28 million
HELD:
No. The Supreme Court ruled that said amount is unconscionable. Pena is entitled to payment for
compensation for services rendered as an agent of Urban Bank, but on the basis of the principle of unjust
enrichment and quantum meruit. In the first place, other than the self-serving testimony of Pena, there
was no other evidence presented to support his claim that Borlongan agreed to pay him that 10% over the
phone. The written authorization later issued merely confirms the power granted him to negotiate with
the tenants. The written authorization proved the existence of agency but not the existence of any
agreement as t how much Pena should be paid.
Absent any such agreement, the principle of quantum meruit should be applied. In this case, Pena
is entitled to receive what he merits for his services, or as much as he has earned. In dealing with the
tenants, Pena didn't have to perform any extraordinary acts or legal maneuvering. Hence, he is entitled t
received P1.5 million for his legal services. He is also entitled to reimbursement for his expenses in securing
the property, to wit, P1.5 million for the security guards he had to hire and another P1.5 million for settling
and relocating the 23 tenants. Total of 4.5 million.
 The Supreme Court emphasized that lawyering is not a business; it is a profession which duty to
public service, not money, is the primary consideration.