FreeTDS: How to set charset of parameters running

I have a C program connecting to a MSSQL database through FreeTDS.

I'm trying to execute a stored procedure with a varchar parameter set to something like "Saída Liberada", but it's being stored with strange characters in MS SQL, as the screenshot above:

Here is my freetds.conf:

#   $Id: freetds.conf,v 1.12 2007/12/25 06:02:36 jklowden Exp $
#
# This file is installed by FreeTDS if no file by the same
# name is found in the installation directory.
#
# For information about the layout of this file and its settings,
# see the freetds.conf manpage "man freetds.conf".

# Global settings are overridden by those in a database
# server specific section
[global]
        # TDS protocol version
        tds version = 8.0

        # Whether to write a TDSDUMP file for diagnostic purposes
        # (setting this to /tmp is insecure on a multi-user system)
        dump file = /tmp/freetds.log
;       debug flags = 0xffff

        # Command and connection timeouts
;       timeout = 10
;       connect timeout = 10

        # If you get out-of-memory errors, it may mean that your client
        # is trying to allocate a huge buffer for a TEXT field.
        # Try setting 'text size' to a more reasonable limit
        text size = 64512

        client charset = UTF-8

Here is parts of the tds dump file:

log.c:196:Starting log file for FreeTDS 0.91
        on 2016-05-17 19:19:41 with debug flags 0x4fff.
iconv.c:330:tds_iconv_open(0xaed19130, ISO-8859-1)
iconv.c:353:Using trivial iconv
iconv.c:187:local name for ISO-8859-1 is ISO-8859-1
iconv.c:187:local name for UTF-8 is UTF-8
iconv.c:187:local name for UCS-2LE is UCS-2LE
iconv.c:187:local name for UCS-2BE is UCS-2BE
iconv.c:349:setting up conversions for client charset "ISO-8859-1"
iconv.c:351:preparing iconv for "ISO-8859-1" <-> "UCS-2LE" conversion
iconv.c:391:preparing iconv for "ISO-8859-1" <-> "ISO-8859-1" conversion
iconv.c:394:tds_iconv_open: done

...

net.c:741:Sending packet
0000 01 01 00 84 00 00 00 00-20 45 58 45 43 20 55 50 |........  EXEC UP|
0010 5f 49 4e 53 45 52 54 4d-4f 56 49 4d 45 4e 54 4f |_INSERTM OVIMENTO|
0020 20 27 32 30 31 36 2d 30-35 2d 31 37 20 31 39 3a | '2016-0 5-17 19:|
0030 31 39 3a 33 31 2e 30 30-30 27 2c 27 30 30 30 30 |19:31.00 0','0000|
0040 30 30 30 30 30 30 36 34-38 33 30 35 37 30 33 30 |00000064 83057030|
0050 27 2c 27 53 27 2c 30 2c-32 2c 27 50 43 56 43 30 |','S',0, 2,'PCVC0|
0060 34 20 3d 20 53 61 c3 ad-64 61 20 4c 69 62 65 72 |4 = Sa.. da Liber|
0070 61 64 61 27 2c 34 2c 27-50 43 56 43 4d 41 4e 41 |ada',4,' PCVCMANA|
0080 47 45 52 27            -                        |GER'|

According to the freetds log, it's sending the character 'í' (i acute) as c3 ad, which means it's sending it as UTF-8 (LATIN SMALL LETTER I WITH ACUTE).

How can I setup the client or the server, so the string can be properly stored?

Update 1:

# tsql -C
Compile-time settings (established with the "configure" script)
                            Version: freetds v0.91
             freetds.conf directory: /etc
     MS db-lib source compatibility: no
        Sybase binary compatibility: yes
                      Thread safety: yes
                      iconv library: no
                        TDS version: 4.2
                              iODBC: no
                           unixodbc: yes
              SSPI "trusted" logins: no
                           Kerberos: no
#

Update 2

Code to connect:

ret = SQLDriverConnect(db_msserver_dbc_handle,
    NULL,  "Driver={FreeTDS};Server=FooBar;Port=1433;Database=Foo;UID=sa;PWD=pwd@123;APP=XPTO;TDS_Version=8.0;",
    SQL_NTS, outstr, sizeof(outstr), &outstrlen,
    SQL_DRIVER_COMPLETE);

After a lot of attempts, I couldn't figure out why freetds.conf settings (client charset and tds version) are not being respected. At least, when I append TDS_Version=8.0;ClientCharset=UTF-8 into the connection string, it works!

"Driver={FreeTDS};Server=%s;Port=%s;Database=%s;UID=%s;PWD=%s;APP=%s;TDS_Version=8.0;ClientCharset=UTF-8"

Also, the header of freetds log file is changed, mentioning UTF-8 conversion:

log.c:196:Starting log file for FreeTDS 0.91
        on 2016-05-18 15:58:49 with debug flags 0x4fff.
iconv.c:330:tds_iconv_open(0xaeb19118, UTF-8)
iconv.c:353:Using trivial iconv
iconv.c:187:local name for ISO-8859-1 is ISO-8859-1
iconv.c:187:local name for UTF-8 is UTF-8
iconv.c:187:local name for UCS-2LE is UCS-2LE
iconv.c:187:local name for UCS-2BE is UCS-2BE
iconv.c:349:setting up conversions for client charset "UTF-8"
iconv.c:351:preparing iconv for "UTF-8" <-> "UCS-2LE" conversion
iconv.c:391:preparing iconv for "ISO-8859-1" <-> "UCS-2LE" conversion
iconv.c:394:tds_iconv_open: done