Facts: In August 1990, Ala Mambuay, Norma Maba, and Acur Macarampat separately filed civil suits for damages against the NPC before the Regional Trial Court of Lanao del Sur in Marawi City . In the said complaint, plaintiffs were represented by Atty. Linang Mandangan, the petitioner, whose services were engaged at an agreed attorney's fees of P30,000.00 for each case and P600.00 for every appearance. Petitioner was the one who signed the complaints on behalf of himself and Atty. Mandangan.

During the course of the proceedings, the three complaints were consolidated because the plaintiffs' causes of action are similar. They all arose from NPC's refusal to pay the amounts demanded by the plaintiffs for the cost of the improvements on their respective lands which were destroyed when the NPC constructed the Marawi-Malabang Transmission Line.

On the day of the initial hearing on the merits, NPC and its counsel failed to appear. Consequently, respondent was declared in default. Despite the plea of NPC for the lifting of the default order, the RTC ruled in favor of the plaintiffs.
NPC appealed to the CA. During the pendency of the appeal, Atty. Gubat filed an Entry and Notice of Charging Lien to impose his attorney's lien of P30,000.00 and appearance fees of P2,000.00 on each of the three civil cases he handled, totalling P96,000.00. NPC moved to dismiss its appeal alleging that the parties had arrived at a settlement. Attached to the motion were acknowledgment receipts signed by plaintiffs Acur Macarampat , Ala Mambuay, and Norma Maba, who received P90,060.00, P90,000.00, and P90,050.00 respectively, in full satisfaction of their claims against the NPC. The motion stated that copies were furnished to Atty. Mandangan and the petitioner, although it was only Atty. Mandangan's signature which appeared therein.

The Court of Appeals rendered a decision stating that the Order of Default, the Order denying the Motion for Reconsideration to Lift Order of Default and the Decision dated April 24, 1991, are all annulled and set aside and the records of civil cases be remanded to the court of origin for new trial.

After the cases were remanded to the RTC, petitioner filed a Motion for Partial Summary Judgment on his attorney's fees. He claimed that the plaintiffs and the NPC deliberately did not inform him about the execution of the compromise agreement, and that said parties connived with each other in entering into the compromise agreement in order to unjustly deprive him of his attorney's fees. Petitioner thus prayed that a partial summary judgment be rendered on his attorney's fess and that NPC be ordered to pay him directly his lawful attorney's fees of P32,000.00 in each of the above cases, for a total of P96,000.00.

NPC opposed the motion for partial summary of judgment. It alleged that a client may compromise a suit without the intervention of the lawyer and that petitioner's claim for attorney's fees should be made against the plaintiffs. NPC likewise claimed that it settled the case in good faith and that plaintiffs were paid in full satisfaction of their claims which included attorney's fees. The trial court issued an Order granting petitioner's motion for summary judgment. It found that the parties to the compromise agreement connived to petitioner's prejudice which amounts to a violation of the provisions of the Civil Code on Human Relations.

NPC maintained that it acted in good faith in the execution of the compromise settlement. It likewise averred that the lower court's award of attorney's fees amounting to P96,000.00 was clearly based on the award of attorney's fees in the April 24, 1991 Decision of the trial court which had already been reversed and set aside by the CA in CA-G.R. CV No. 33000. Moreover, NPC contended that petitioner cannot enforce his charging lien because it presupposes that he has secured a favorable money judgment for his clients.

On the other hand, petitioner claimed that he was not informed of the compromise agreement or furnished a copy of NPC's Motion to Dismiss Appeal. He alleged that the same was received only by Atty. Mandangan who neither signed any of the pleadings nor appeared in any of the hearings before the RTC. Petitioner clarified that his motion for a partial summary judgment was neither a request for the revival of the vacated April 24, 1991 Decision nor an enforcement of the lien, but a grant of his contingent fees by the trial court as indemnity for damages resulting from the fraudulent act of NPC and of his clients who conspired to deprive him of the fees due him. He asserted that NPC cannot claim good faith because it knew of the existence of his charging lien when it entered into a compromise with the plaintiffs.

Petitioner insists on the propriety of the trial court's order of summary judgment on his attorney's fees. At the same time, he imputes grave abuse of discretion amounting to lack or excess of jurisdiction on the CA for entertaining respondent's Petition for Certiorari. He maintains that the petition should have been dismissed outright for being the wrong mode of appeal.

ISSUE: Is petitioner's contention correct?

HELD: The petition lacks merit. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. It is a consensual contract, binding upon the signatories/privies, and it has the effect of res judicata. This cannot however affect third persons who are not parties to the agreement.

Contrary to petitioner's contention, a client has an undoubted right to settle a suit without the intervention of his lawyer, for he is generally conceded to have the exclusive control over the subject-matter of the litigation and may, at any time before judgment, if acting in good faith, compromise, settle, and adjust his cause of action out of court without his attorney's intervention, knowledge, or consent, even though he has agreed with his attorney not to do so. Hence, a claim for attorney's fees does not void the compromise agreement and is no obstacle to a court approval.
However, counsel is not without remedy. As the validity of a compromise agreement cannot be prejudiced, so should not be the payment of a lawyer's adequate and reasonable compensation for his services should the suit end by reason of the settlement. The terms of the compromise subscribed to by the client should not be such that will amount to an entire deprivation of his lawyer's fees, especially when the contract is on a contingent fee basis. In this sense, the compromise settlement cannot bind the lawyer as a third party. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel. The duty of the court is not only to ensure that a lawyer acts in a proper and lawful manner, but also to see to it that a lawyer is paid his just fees.

Even if the compensation of a counsel is dependent only upon winning a case he himself secured for his client, the subsequent withdrawal of the case on the client's own volition should never completely deprive counsel of any legitimate compensation for his professional services. In all cases, a client is bound to pay his lawyer for his services. The determination of bad faith only becomes significant and relevant if the adverse party will likewise be held liable in shouldering the attorney's fees.

Petitioner's compensation is a personal obligation of his clients who have benefited from his legal services prior to their execution of the compromise agreement. This is strictly a contract between them. NPC would only be made liable if it was shown that it has connived with the petitioner's clients or acted in bad faith in the execution of the compromise agreement for the purpose of depriving petitioner of his lawful claims for attorney's fees. In each case, NPC should be held solidarily liable for the payment of the counsel's compensation. However, as we have already discussed, petitioner's resort to summary judgment is not proper. Besides, it is interesting to note that petitioner is the only one claiming for his attorney's fees notwithstanding that plaintiffs' counsels of record were petitioner herein and Atty. Mandangan. Nevertheless, this is not at issue here. As we have previously discussed, this is for the trial court to resolve. (Atty. Mangontawar M. Gubat vs. National Power Corporation, G.R. No. 167415, Feb. 26, 2010)

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