FACTS:

The case involves a complaint for damages and attorney's fees filed by Raul H. Sesbreño against the Province of Cebu, its provincial officials, and his former clients (the camineros). On January 26, 1970, the camineros hired Sesbreño to prosecute Civil Cases Nos. R-10933 and R-11214. They entered into an agreement where Sesbreño would receive 30% of any back salaries, damages, etc. that they may recover. During the pendency of the cases, Sesbreño registered his charging/retaining lien. The camineros eventually obtained a favorable judgment, but before the case could be executed, the province directly paid the camineros the full amount of their claims. Sesbreño then filed a complaint, alleging breach of contract and violation of the compromise agreement. He argued that he had legal standing as a quasi-party by virtue of his registered charging lien.

The Regional Trial Court (RTC) eventually rendered a decision in favor of Sesbreño. The Court of Appeals (CA) reversed the decision of the RTC, holding that Sesbreño did not have a cause of action against the Province of Cebu. Sesbreño filed a motion for reconsideration, which was denied by the CA. Thus, this review before the Supreme Court. The Supreme Court ruled that the delay and formal defects should not automatically result in the affirmance of the trial court's decision, citing a provision in the 1973 Constitution that is no longer present in the current Constitution. The Court stated that under the 1987 Constitution, the court is mandated to decide or resolve cases within specified periods, and even if there is a delay in rendering a decision, it does not automatically affirm the lower court's decision.

ISSUES:

1. Whether the appealed case should be dismissed for being pending beyond the time fixed by the Constitution.

2. Whether the appealed case should be dismissed due to the formal defects in the appellant's brief.

3. Whether the respondents are liable for damages for breach of contract.

4. Whether the petitioner was prejudiced by the direct payment made by the respondents to the camineros.

5. Whether the respondents should be held liable for the petitioner's attorney's fees based on his charging lien.

6. Whether the petitioner's withdrawal of his complaint against his clients constitutes a waiver of his right to the attorney's lien.

7. Whether the petitioner waived his right to claim against the respondents by accepting payment and absolving those primarily liable to him.

8. Whether there is any liability imputable to the province of Cebu or the respondent public officials.

RULING:

1. The cited cases of Malacora v. Court of Appeals and Flora v. Pajarillaga cannot be applied to the present case as they were decided under the 1973 Constitution, which had a provision that deemed the appealed decision affirmed if no decision or resolution was rendered within a specified period. Under the 1987 Constitution, there is no automatic affirmance of the appealed decision even if there is a delay in rendering a decision or resolution. The appellate court cannot be faulted for not affirming the trial court's decision.

2. The formal defects in the respondent's appellant's brief are insufficient to warrant the dismissal of the appeal. Even with the deficiencies, the brief sufficiently apprised the appellate court of the essential facts and issues of the case. The Court sustains the decision of the Court of Appeals to rule on the merits instead of dismissing the appeal based on technicality.

3. The compromise agreement entered into by the respondents and the camineros, which became the basis of the judgment, had already been validly executed and satisfied. The Court cannot delve into the substance of the compromise agreement, especially since it had already been fully satisfied. The petitioner's claim for attorney's fees was based on an agreement for attorney's fees voluntarily executed by the camineros, and as long as the petitioner was given the agreed percentage of the amount received by the camineros, the agreement is considered complied with.

4. The petitioner's claims that he was prejudiced by the direct payment made by the respondents to the camineros and that it rendered inutile his registered charging lien are unfounded. The law provides for a lien in favor of lawyers for the payment of their fees and disbursements, but it does not prohibit direct payment to clients. As long as the lawyer is given the agreed percentage of the amount received by the camineros, his right to payment is protected.

5. The Court ruled that the respondents are not liable for the petitioner's attorney's fees based on his charging lien. Although the respondents impaired the petitioner's charging lien by satisfying the judgment without regard for the lawyer's right to fees, the petitioner's withdrawal of his complaint against his clients indicates that they have already paid their obligations. This is further supported by the certification of the clerk of court that the clients had deposited their passbooks to ensure payment of the agreed fees. Therefore, the petitioner's claim against the respondents has no legal basis.

6. The Court held that the petitioner's withdrawal of his complaint against his clients and agreement to settle their dispute constitutes a waiver of his right to the attorney's lien. The petitioner's act of accepting payment and absolving his former clients from liability can be considered as a waiver of his right to claim against the respondents. Thus, even if there was a breach of contract, the petitioner has waived his right to seek damages from the respondents.

7. The petition is denied. The Court of Appeals decision affirming the absolution of the respondents from liability is affirmed.

PRINCIPLES:

• Under the 1973 Constitution, an appealed case pending beyond the specified time can be deemed affirmed, but under the 1987 Constitution, there is no automatic affirmance of the appealed decision even if there is a delay in rendering a decision or resolution.

• Formal defects in the appellant's brief are insufficient to warrant the dismissal of the appeal, as long as the brief sufficiently apprises the appellate court of the essential facts and issues of the case.

• The Court cannot delve into the substance of a compromise agreement that had already been fully satisfied.

• The lawyer's right to payment is protected by a lien on the funds, documents, and papers of the client, as well as on judgments and executions issued pursuant to such judgments. However, direct payment to the client does not render the lawyer's right to payment inutile, as long as the agreed percentage is given.

• Diligence and promptness are required in the disposition of cases, but appeals cannot be dismissed solely for being pending for a long period, especially if the appeal is highly meritorious.

• An attorney has a charging lien upon the funds, documents, and papers of his client that have lawfully come into his possession. The attorney may retain these until his lawful fees and disbursements have been paid (Section 37, Rule 138, Rules of Court).

• A charging lien allows the attorney to secure the fees and costs due to him out of the judgment or recovery in a particular suit. It is based on the principle that the plaintiff should not be allowed to appropriate the whole judgment without paying for the attorney's services (Calalang v. Judge de Borja).

• Satisfaction of a judgment does not automatically extinguish the attorney's lien. However, the lien may be extinguished if there has been a waiver, either through the attorney's conduct or passive omission (Bacolod Murcia Milling Co., Inc. v. Henares).

• Lawyers are not mere moneymakers but are bound by public interest and subject to state regulation. Lawyering is a calling that involves the provision of services rather than a profit-driven enterprise.

• Accepting payment and absolving those primarily liable can be considered as a waiver of the right to claim against other parties.

• The absence of bad faith and the wilful fulfillment of obligations by the other party may negate any claim of liability.

• The court will not ascribe bad faith to respondents who directly paid their obligations and did not induce the other party to violate their contract.

• Human nature dictates that a party would not accede to the withdrawal of a case without receiving agreed attorney's fees.