Lawyer’s duty to encourage settlement, C3S8 CPRA

Section 8, Canon III

SECTION 8. Lawyer’s duty to encourage settlement. – A lawyer shall encourage the client to avoid, end or settle a controversy, whether pending or not, in order to reach a settlement or a compromise if the matter can be compromised under the law and will admit of a fair settlement.
To this end, the lawyer shall actively assist the parties and the court, tribunal, or other government agency to effect mediation and/or dispute resolution. (2023 Code of Professional Responsibility and Accountability or CPRA)

1. Lawyer’s duty to encourage settlement

a. Encourage settlement

“Discourage litigation. Persuade your neighbor to compromise whenever you can. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough.” – Abraham Lincoln

Under this section, lawyers are required to “encourage the client to avoid, end or settle a controversy, whether pending or not, in order to reach a settlement or a compromise if the matter can be compromised under the law and will admit of a fair settlement.”

Masayon v. Renta, En Banc, A.C. No. 13471, January 17, 2023, Per Kho, Jr., J.:

• [Respondent-lawyer’s] act of requiring a reward in exchange for his clients’ agreement to the settlement, respondent not only engaged in dishonest conduct, but also, ironically, discouraged any potential settlement for complainants became wary of respondent and did not continue any communication regarding settling the dispute.57 He likewise undermined and discredited the legal profession by making it appear to Ms. Sia and consequently, to Clifford and the first family, that his clients’ willingness to settle is predicated on a reward given to him, their lawyer, or that a lawyer could somehow get their clients’ signatures so long as they get a reward. Finally, by implicitly characterizing his clients as credulous and amenable to signing anything he tells them to, he also failed to be mindful of the trust they reposed in him.

• It must be emphasized that Rule 1.01 [of the old CPR] does not require that the act complained of be punishable by law. It is enough that the act shows a lack of integrity, honesty, or probity.58 In this case, it cannot be overemphasized that respondent’s solicitation bordered on the duplicitous and dishonest. Worse, the dishonesty is foisted on his own clients, who, understandably, expect respondent to put their interests and not his foremost in his mind when dealing with complainants.

Relatedly, Rule 1.04 [of the old CPR] is a clarion call for all lawyers to encourage their clients to settle cases fairly and avoid disputes whenever possible. It may seem quite ironic in this case that respondent’s initial approach to Ms. Sia and Clifford was premised on a possible settlement. However, by placing his “reward” as a condition, respondent, in effect, prevented any settlement as complainants became expectedly wary of dealing with him. Rather than retracting his condition and sincerely negotiating an end to the dispute, respondent, when refused by Ms. Sia and Clifford, merely lowered his price.59 It is clear to the Court, then, that respondent was not willing to discuss settlement unless and until his reward was given to him. The Court is mindful of the fact that in negotiating disputes between parties, lawyers are authorized to communicate their clients’ conditions or demands, which may come in the form of settlement amounts, to the other party. That may be so, but here, it is clear by respondent’s language that the “reward” he asked for was not for his clients but for him personally, for his “pen” to have its “ink” and for him to start drafting the settlement that his clients will sign.

Sevilla v. Millo, A.C. No. 10697, March 25, 2019, Per Perlas-Bernabe, J.:

• [Respondent-lawyer] indeed fell short of what is expected of him, despite his avowed duties as officer of the court. Records reveal that respondent did not endeavor to initiate the settlement of the publication fee being charged by complainant. Disagreeing with the statement of account, respondent chose not to pay and immediately referred the matter to the Executive Judge, instead of negotiating and discussing the matter with complainant. Remarkably, respondent’s obstinate refusal to settle culminated in forbidding his clients, Sps. Manalo, to pay the reduced publication fee, which the latter secured for themselves. He even shouted at and ignored complainant when the latter called him up in an effort to finally settle. Ultimately, respondent’s acts, which are violative of Rule 1.04, Canon 1 of the [old CPR], prejudiced his clients as they resulted in the non-completion of the foreclosure proceedings, since complainant did not issue the affidavit of publication nor provide copies of the issues where the notice of auction sale was actually printed.

Baltazar v. Bañez, A.C. No. 9091, December 11, 2013, Per Sereno, CJ.:

• Complainants are the owners of three parcels of land located in Dinalupihan, Bataan. On 4 September 2002, they entered into an agreement, they stood to be paid ₱35,000.000 for all the lots that would be sold in the subdivision. For that purpose, they executed a Pecial Power of Attorney authorizing Fevidal to enter into all agreements concerning the parcels of land and to sign those agreements on their behalf.

• Fevidal did not update complainants about the status of the subdivision project and failed to account for the titles to the subdivided land.4 Complainants also found that he had sold a number of parcels to third parties, but that he did not turn the proceeds over to them. Neither were complainants invited to the ceremonial opening of the subdivision project.

• Thus, on 23 August 2005, they revoked the Special Power of Attorney they had previously executed in his favor.

• Complainants subsequently agreed to settle with Fevidal for the amount of ₱10,000,000, but the latter again failed to pay them.

• Complainants engaged the professional services of respondent for the purpose of assisting them in the preparation of a settlement agreement.8

• Instead of drafting a written settlement, respondent encouraged them to institute actions against Fevidal in order to recover their properties. Complainants then signed a contract of legal services, in which it was agreed that they would not pay acceptance and appearance fees to respondent, but that the docket fees would instead be shared by the parties. Under the contract, complainants would pay respondent 50% of whatever would be recovered of the properties. In preparation for the filing of an action against Fevidal, respondent prepared and notarized an Affidavit of Adverse Claim, seeking to annotate the claim of complainants to at least 195 titles in the possession of Fevidal.

• A certain Luzviminda Andrade (Andrade) was tasked to submit the Affidavit of Adverse Claim to the Register of Deeds of Bataan.

• The costs for the annotation of the adverse claim were paid by respondent. Unknown to him, the adverse claim was held in abeyance, because Fevidal got wind of it and convinced complainants to agree to another settlement.

• Meanwhile, on behalf of complainants, and after sending Fevidal a demand letter dated 10 July 2006, respondent filed a complaint for annulment, cancellation and revalidation of titles, and damages against Fevidal before the Regional Trial Court (RTC) of Bataan on 13 October 2006.

• Complainants found it hard to wait for the outcome of the action. Thus, they terminated the services of respondent on 8 June 2007, withdrew their complaint against Fevidal on 9 June 2007, and finalized their amicable settlement with him on 5 July 2007.

• Respondent filed a Manifestation and Opposition dated 20 July 2007 before the RTC, alleging that the termination of his services and withdrawal of the complaint had been done with the intent of defrauding counsel. On the same date, he filed a Motion for Recording of Attorney’s Charging Lien in the Records of the Above-Captioned Cases.

• When the RTC granted the withdrawal of the complaint, he filed a Manifestation and Motion for Reconsideration.

• After an exchange of pleadings between respondent and Fevidal, with the latter denying the former’s allegation of collusion, complainants sought the suspension/disbarment of respondent through a Complaint filed before the Integrated Bar of the Philippines (IBP) on 14 November 2007. Complainants alleged that they were uneducated and underprivileged, and could not taste the fruits of their properties because the disposition thereof was “now clothed with legal problems” brought about by respondent

• [Respondent-lawyer] cannot be faulted for advising complainants to file an action against Fevidal to recover their properties, instead of agreeing to a settlement of ₱10,000,000 – a measly amount compared to that in the original agreement, under which Fevidal undertook to pay complainants the amount of ₱35,000,000. Lawyers have a sworn duty and responsibility to protect the interest of any prospective client and pursue the ends of justice.

• Any lawyer worth his salt would advise complainants against the abuses of Fevidal under the circumstances, and we cannot countenance an administrative complaint against a lawyer only because he performed a duty imposed on him by his oath. The claim of complainants that they were not informed of the status of the case is more appropriately laid at their door rather than at that of respondent. He was never informed that they had held in abeyance the filing of the adverse claim. Neither was he informed of the brewing amicable settlement between complainants and Fevidal. We also find it very hard to believe that while complainants received various amounts as loans from respondent from August 2006 to June 2007, they could not spare even a few minutes to ask about the status of the case. We shall discuss this more below. As regards the claim that respondent refused to “patch up| with Fevidal despite the pleas of complainants, we note the latter’s Sinumpaang Salaysay dated 24 September 2007, in which they admitted that they could not convince Fevidal to meet with respondent to agree to a settlement.

1) Actively assist to effect mediation and/or dispute resolution

To this end, the lawyer shall actively assist the parties and the court, tribunal, or other government agency to effect mediation and/or dispute resolution. (2023 Code of Professional Responsibility and Accountability or CPRA)

Pineda v. Macapagal, A.C. No. 6026, November 29, 2005, Per Ynares-Santiago, J.:

• Indeed, it is the duty of a lawyer to encourage his clients to avoid, end or settle a controversy if it will admit of a fair settlement. However, the same must be done in a manner that will not cause prejudice to the other party. In this case, respondent’s failure to attend several hearings on the pretext that he was exploring the possibility of amicable settlement between the contending parties, resulted in the dismissal of complainant’s suit.


Canon III, 2023 Code of Professional Responsibility

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