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G.R. No.

L-961 September 21, 1949


BLANDINA GAMBOA HILADO, petitioner,
vs.
JOSE GUTIERREZ DAVID, VICENTE J. FRANCISCO, JACOB ASSAD and SELIM JACOB ASSAD, respondents.
Delgado, Dizon and Flores for petitioner.
Vicente J. Francisco for respondents.
TUASON, J.:
It appears that on April 23, 1945, Blandina Gamboa Hilado brought an action against Selim Jacob Assad to annul the sale of several houses and lot executed during the Japanese
occupation by Mrs. Hilado's now deceased husband.
On May 14, Attorneys Ohnick, Velilla and Balonkita filed an answer on behalf of the defendant; and on June 15, Attorneys Delgado, Dizon, Flores and Rodrigo registered their
appearance as counsel for the plaintiff. On October 5, these attorneys filed an amended complaint by including Jacob Assad as party defendant.
On January 28, 1946, Attorney Francisco entered his appearance as attorney of record for the defendant in substitution for Attorney Ohnick, Velilla and Balonkita who had
withdrawn from the case.
On May 29, Attorney Dizon, in the name of his firm, wrote Attorney Francisco urging him to discontinue representing the defendants on the ground that their client had consulted
with him about her case, on which occasion, it was alleged, "she turned over the papers" to Attorney Francisco, and the latter sent her a written opinion. Not receiving any answer
to this suggestion, Attorney Delgado, Dizon, Flores and Rodrigo on June 3, 1946, filed a formal motion with the court, wherein the case was and is pending, to disqualify Attorney
Francisco.
Attorney Francisco's letter to plaintiff, mentioned above and identified as Exhibit A, is in full as follows:
VICENTE J. FRANCISCO
Attorney-at-Law
1462 Estrada, Manila

July 13, 1945.

Mrs. Blandina Gamboa Hilado


Manila, Philippines
My dear Mrs. Hilado:
From the papers you submitted to me in connection with civil case No. 70075 of the Court of First Instance of Manila, entitled "Blandina Gamboa Hilado vs. S. J. Assad,"
I find that the basic facts which brought about the controversy between you and the defendant therein are as follows:
(a) That you were the equitable owner of the property described in the complaint, as the same was purchased and/or built with funds exclusively belonging to you, that is
to say, the houses and lot pertained to your paraphernal estate;
(b) That on May 3, 1943, the legal title to the property was with your husband, Mr. Serafin P. Hilado; and
(c) That the property was sold by Mr. Hilado without your knowledge on the aforesaid date of May 3, 1943.
Upon the foregoing facts, I am of the opinion that your action against Mr. Assad will not ordinarily prosper. Mr. Assad had the right to presume that your husband had the
legal right to dispose of the property as the transfer certificate of title was in his name. Moreover, the price of P110,000 in Japanese military notes, as of May 3, 1943,
does not quite strike me as so grossly inadequate as to warrant the annulment of the sale. I believe, lastly, that the transaction cannot be avoided merely because it was
made during the Japanese occupation, nor on the simple allegation that the real purchaser was not a citizen of the Philippines. On his last point, furthermore, I expect that
you will have great difficulty in proving that the real purchaser was other than Mr. Assad, considering that death has already sealed your husband's lips and he cannot now
testify as to the circumstances of the sale.
For the foregoing reasons, I regret to advise you that I cannot appear in the proceedings in your behalf. The records of the case you loaned to me are herewith returned.

Yours very truly,


(Sgd.) VICENTE J. FRANCISCO

VJF/Rag.
In his answer to plaintiff's attorneys' complaint, Attorney Francisco alleged that about May, 1945, a real estate broker came to his office in connection with the legal separation of a
woman who had been deserted by her husband, and also told him (Francisco) that there was a pending suit brought by Mrs. Hilado against a certain Syrian to annul the sale of a
real estate which the deceased Serafin Hilado had made to the Syrian during the Japanese occupation; that this woman asked him if he was willing to accept the case if the Syrian
should give it to him; that he told the woman that the sales of real property during the Japanese regime were valid even though it was paid for in Japanese military notes; that this
being his opinion, he told his visitor he would have no objection to defending the Syrian;
That one month afterwards, Mrs. Hilado came to see him about a suit she had instituted against a certain Syrian to annul the conveyance of a real estate which her husband had
made; that according to her the case was in the hands of Attorneys Delgado and Dizon, but she wanted to take it away from them; that as he had known the plaintiff's deceased
husband he did not hesitate to tell her frankly that hers was a lost case for the same reason he had told the broker; that Mrs. Hilado retorted that the basis of her action was not that
the money paid her husband was Japanese military notes, but that the premises were her private and exclusive property; that she requested him to read the complaint to be
convinced that this was the theory of her suit; that he then asked Mrs. Hilado if there was a Torrens title to the property and she answered yes, in the name of her husband; that he
told Mrs. Hilado that if the property was registered in her husband's favor, her case would not prosper either;
That some days afterward, upon arrival at his law office on Estrada street, he was informed by Attorney Federico Agrava, his assistant, that Mrs. Hilado had dropped in looking for
him and that when he, Agrava, learned that Mrs. Hilado's visit concerned legal matters he attended to her and requested her to leave the "expediente" which she was carrying, and
she did; that he told Attorney Agrava that the firm should not handle Mrs. Hilado's case and he should return the papers, calling Agrava's attention to what he (Francisco) already
had said to Mrs. Hilado;
That several days later, the stenographer in his law office, Teofilo Ragodon, showed him a letter which had been dictated in English by Mr. Agrava, returning the "expedients" to
Mrs. Hilado; that Ragodon told him (Attorney Francisco) upon Attorney Agrava's request that Agrava thought it more proper to explain to Mrs. Hilado the reasons why her case
was rejected; that he forthwith signed the letter without reading it and without keeping it for a minute in his possession; that he never saw Mrs. Hilado since their last meeting until
she talked to him at the Manila Hotel about a proposed extrajudicial settlement of the case;
That in January, 1946, Assad was in his office to request him to handle his case stating that his American lawyer had gone to the States and left the case in the hands of other
attorneys; that he accepted the retainer and on January 28, 1946, entered his appearance.
Attorney Francisco filed an affidavit of stenographer Ragodon in corroboration of his answer.
The judge trying the case, Honorable Jose Gutierrez David, later promoted to the Court of Appeals, dismissed the complaint. His Honor believed that no information other than
that already alleged in plaintiff's complaint in the main cause was conveyed to Attorney Francisco, and concluded that the intercourse between the plaintiff and the respondent did
not attain the point of creating the relation of attorney and client.
Stripped of disputed details and collateral matters, this much is undoubted: That Attorney Francisco's law firm mailed to the plaintiff a written opinion over his signature on the
merits of her case; that this opinion was reached on the basis of papers she had submitted at his office; that Mrs. Hilado's purpose in submitting those papers was to secure Attorney
Francisco's professional services. Granting the facts to be no more than these, we agree with petitioner's counsel that the relation of attorney and client between Attorney Francisco
and Mrs. Hilado ensued. The following rules accord with the ethics of the legal profession and meet with our approval:
In order to constitute the relation (of attorney and client) a professional one and not merely one of principal and agent, the attorneys must be employed either to give
advice upon a legal point, to prosecute or defend an action in court of justice, or to prepare and draft, in legal form such papers as deeds, bills, contracts and the like.
(Atkinson vs. Howlett, 11 Ky. Law Rep. (abstract), 364; cited in Vol. 88, A. L. R., p. 6.)
To constitute professional employment it is not essential that the client should have employed the attorney professionally on any previous occasion. . . . It is not necessary
that any retainer should have been paid, promised, or charged for; neither is it material that the attorney consulted did not afterward undertake the case about which the
consultation was had. If a person, in respect to his business affairs or troubles of any kind, consults with his attorney in his professional capacity with the view to
obtaining professional advice or assistance, and the attorney voluntarily permits or acquiesces in such consultation, then the professional employment must be regarded as
established. . . . (5 Jones Commentaries on Evidence, pp. 4118-4119.)
An attorney is employed-that is, he is engaged in his professional capacity as a lawyer or counselor-when he is listening to his client's preliminary statement of his case, or
when he is giving advice thereon, just as truly as when he is drawing his client's pleadings, or advocating his client's cause in open court. (Denver Tramway Co. vs.
Owens, 20 Colo., 107; 36 P., 848.)
Formality is not an essential element of the employment of an attorney. The contract may be express or implied and it is sufficient that the advice and assistance of the
attorney is sought and received, in matters pertinent to his profession. An acceptance of the relation is implied on the part of the attorney from his acting in behalf of his
client in pursuance of a request by the latter. (7 C. J. S., 848-849; see Hirach Bros. and Co. vs. R. E. Kennington Co., 88 A. L. R., 1.)
Section 26 (e), Rule 123 of the Rules of Court provides that "an attorney cannot, without the consent of his client, be examined as to any communication made by the client to him,
or his advice given thereon in the course of professional employment;" and section 19 (e) of Rule 127 imposes upon an attorney the duty "to maintain inviolate the confidence, and
at every peril to himself, to preserve the secrets of his client." There is no law or provision in the Rules of Court prohibiting attorneys in express terms from acting on behalf of
both parties to a controversy whose interests are opposed to each other, but such prohibition is necessarily implied in the injunctions above quoted. (In re De la Rosa, 27 Phil.,
258.) In fact the prohibition derives validity from sources higher than written laws and rules. As has been aptly said in In re Merron, 22 N. M., 252, L.R.A., 1917B, 378,
"information so received is sacred to the employment to which it pertains," and "to permit it to be used in the interest of another, or, worse still, in the interest of the adverse party,
is to strike at the element of confidence which lies at the basis of, and affords the essential security in, the relation of attorney and client."
That only copies of pleadings already filed in court were furnished to Attorney Agrava and that, this being so, no secret communication was transmitted to him by the plaintiff,
would not vary the situation even if we should discard Mrs. Hilado's statement that other papers, personal and private in character, were turned in by her. Precedents are at hand to
support the doctrine that the mere relation of attorney and client ought to preclude the attorney from accepting the opposite party's retainer in the same litigation regardless of what
information was received by him from his first client.
The principle which forbids an attorney who has been engaged to represent a client from thereafter appearing on behalf of the client's opponent applies equally even
though during the continuance of the employment nothing of a confidential nature was revealed to the attorney by the client. (Christian vs. Waialua Agricultural Co., 30
Hawaii, 553, Footnote 7, C. J. S., 828.)
Where it appeared that an attorney, representing one party in litigation, had formerly represented the adverse party with respect to the same matter involved in the
litigation, the court need not inquire as to how much knowledge the attorney acquired from his former during that relationship, before refusing to permit the attorney to
represent the adverse party. (Brown vs. Miller, 52 App. D. C. 330; 286, F. 994.)
In order that a court may prevent an attorney from appearing against a former client, it is unnecessary that the ascertain in detail the extent to which the former client's
affairs might have a bearing on the matters involved in the subsequent litigation on the attorney's knowledge thereof. (Boyd vs. Second Judicial Dist. Court, 274 P., 7; 51
Nev., 264.)
This rule has been so strictly that it has been held an attorney, on terminating his employment, cannot thereafter act as counsel against his client in the same general
matter, even though, while acting for his former client, he acquired no knowledge which could operate to his client's disadvantage in the subsequent adverse employment.
(Pierce vs. Palmer [1910], 31 R. I., 432; 77 Atl., 201, Ann. Cas., 1912S, 181.)
Communications between attorney and client are, in a great number of litigations, a complicated affair, consisting of entangled relevant and irrelevant, secret and well known facts.
In the complexity of what is said in the course of the dealings between an attorney and a client, inquiry of the nature suggested would lead to the revelation, in advance of the trial,
of other matters that might only further prejudice the complainant's cause. And the theory would be productive of other un salutary results. To make the passing of confidential
communication a condition precedent; i.e., to make the employment conditioned on the scope and character of the knowledge acquired by an attorney in determining his right to
change sides, would not enhance the freedom of litigants, which is to be sedulously fostered, to consult with lawyers upon what they believe are their rights in litigation. The
condition would of necessity call for an investigation of what information the attorney has received and in what way it is or it is not in conflict with his new position. Litigants
would in consequence be wary in going to an attorney, lest by an unfortunate turn of the proceedings, if an investigation be held, the court should accept the attorney's inaccurate
version of the facts that came to him. "Now the abstinence from seeking legal advice in a good cause is by hypothesis an evil which is fatal to the administration of justice." (John
H. Wigmore's Evidence, 1923, Section 2285, 2290, 2291.)
Hence the necessity of setting down the existence of the bare relationship of attorney and client as the yardstick for testing incompatibility of interests. This stern rule is designed
not alone to prevent the dishonest practitioner from fraudulent conduct, but as well to protect the honest lawyer from unfounded suspicion of unprofessional practice. (Strong vs.
Int. Bldg., etc.; Ass'n, 183 Ill., 97; 47 L.R.A., 792.) It is founded on principles of public policy, on good taste. As has been said in another case, the question is not necessarily one
of the rights of the parties, but as to whether the attorney has adhered to proper professional standard. With these thoughts in mind, it behooves attorneys, like Caesar's wife, not
only to keep inviolate the client's confidence, but also to avoid the appearance of treachery and double-dealing. Only thus can litigants be encouraged to entrust their secrets to their
attorneys which is of paramount importance in the administration of justice.
So without impugning respondent's good faith, we nevertheless can not sanction his taking up the cause of the adversary of the party who had sought and obtained legal advice
from his firm; this, not necessarily to prevent any injustice to the plaintiff but to keep above reproach the honor and integrity of the courts and of the bar. Without condemning the
respondents conduct as dishonest, corrupt, or fraudulent, we do believe that upon the admitted facts it is highly in expedient. It had the tendency to bring the profession, of which
he is a distinguished member, "into public disrepute and suspicion and undermine the integrity of justice."
There is in legal practice what called "retaining fee," the purpose of which stems from the realization that the attorney is disabled from acting as counsel for the other side after he
has given professional advice to the opposite party, even if he should decline to perform the contemplated services on behalf of the latter. It is to prevent undue hardship on the
attorney resulting from the rigid observance of the rule that a separate and independent fee for consultation and advice was conceived and authorized. "A retaining fee is a
preliminary fee given to an attorney or counsel to insure and secure his future services, and induce him to act for the client. It is intended to remunerate counsel for being deprived,
by being retained by one party, of the opportunity of rendering services to the other and of receiving pay from him, and the payment of such fee, in the absence of an express
understanding to the contrary, is neither made nor received in payment of the services contemplated; its payment has no relation to the obligation of the client to pay his attorney
for the services which he has retained him to perform." (7 C.J.S., 1019.)
The defense that Attorney Agrava wrote the letter Exhibit A and that Attorney Francisco did not take the trouble of reading it, would not take the case out of the interdiction. If this
letter was written under the circumstances explained by Attorney Francisco and he was unaware of its contents, the fact remains that his firm did give Mrs. Hilado a formal
professional advice from which, as heretofore demonstrated, emerged the relation of attorney and client. This letter binds and estop him in the same manner and to the same degree
as if he personally had written it. An information obtained from a client by a member or assistant of a law firm is information imparted to the firm. (6 C. J., 628; 7 C. J. S., 986.)
This is not a mere fiction or an arbitrary rule; for such member or assistant, as in our case, not only acts in the name and interest of the firm, but his information, by the nature of
his connection with the firm is available to his associates or employers. The rule is all the more to be adhered to where, as in the present instance, the opinion was actually signed
by the head of the firm and carries his initials intended to convey the impression that it was dictated by him personally. No progress could be hoped for in "the public policy that
the client in consulting his legal adviser ought to be free from apprehension of disclosure of his confidence," if the prohibition were not extended to the attorney's partners,
employers or assistants.
The fact that petitioner did not object until after four months had passed from the date Attorney Francisco first appeared for the defendants does not operate as a waiver of her right
to ask for his disqualification. In one case, objection to the appearance of an attorney was allowed even on appeal as a ground for reversal of the judgment. In that case, in which
throughout the conduct of the cause in the court below the attorney had been suffered so to act without objection, the court said: "We are all of the one mind, that the right of the
appellee to make his objection has not lapsed by reason of failure to make it sooner; that professional confidence once reposed can never be divested by expiration of professional
employment." (Nickels vs. Griffin, 1 Wash. Terr., 374, 321 A. L. R. 1316.)
The complaint that petitioner's remedy is by appeal and not by certiorari deserves scant attention. The courts have summary jurisdiction to protect the rights of the parties and the
public from any conduct of attorneys prejudicial to the administration of the justice. The summary jurisdiction of the courts over attorneys is not confined to requiring them to pay
over money collected by them but embraces authority to compel them to do whatever specific acts may be incumbent upon them in their capacity of attorneys to perform. The
courts from the general principles of equity and policy, will always look into the dealings between attorneys and clients and guard the latter from any undue consequences resulting
from a situation in which they may stand unequal. The courts acts on the same principles whether the undertaking is to appear, or, for that matter, not to appear, to answer
declaration, etc. (6 C.J., 718 C.J.S., 1005.) This summary remedy against attorneys flows from the facts that they are officers of the court where they practice, forming a part of the
machinery of the law for the administration of justice and as such subject to the disciplinary authority of the courts and to its orders and directions with respect to their relations to
the court as well as to their clients. (Charest vs. Bishop, 137 Minn., 102; 162, N.W., 1062, Note 26, 7 C. J. S., 1007.) Attorney stand on the same footing as sheriffs and other court
officers in respect of matters just mentioned.
We conclude therefore that the motion for disqualification should be allowed. It is so ordered, without costs.
A.M. No. RTJ-05-1900. January 28, 2005]
SHIRLEY LORIA TOLEDO and ROSIE LORIA DAJAC, complainants, vs. JUDGE ALFREDO E. KALLOS, respondent.
RESOLUTION
DAVIDE, JR., C.J.:
For our resolution is the verified complaint, written in the vernacular and dated 21 August 2002, of siblings Shirley Loria Toledo and Rosie Loria Dajac against respondent
Judge Alfredo E. Kallos, Presiding Judge of the Regional Trial Court (RTC) of Legazpi City, Branch 10, for violation of the Code of Judicial Conduct, the Code of Professional
Responsibility, and Article 1491 (5) of the Civil Code.
Prior to his appointment as a judge in March 1995,[1] Judge Kallos was complainants counsel of record in Civil Case No. 4879 filed with the RTC of Legazpi City, Branch 4,
involving the recovery of hereditary shares with damages. On 25 March 1979, a judgment was rendered ordering the defendants to, among other things, turn over to herein
complainants, the plaintiffs therein, the possession and ownership of the total area of 4,514 square meters of lot 2082 Albay Cadastre. On appeal, the decision was affirmed by the
Court of Appeals and became final and executory on 16 December 1985. [2]
Several years thereafter, or in February 2002, the respondent filed in the same action, Civil Case No. 4879, before the RTC of Legazpi, Branch 4, an Omnibus
Motion[3] praying, inter alia, for the issuance an order constituting in his favor an attorneys lien to the extent of one-third over the lot awarded in favor of the complainants
representing his attorneys fee. He based his motion on a written contingency agreement on attorneys fees for professional services rendered whereby he is entitled to one-third
share of what would be awarded to the complainants. He claimed that this agreement had already been implemented when one of the three (3) lots levied upon by the sheriff to
answer for the award of damages was given to (him) as his one-third share while the other two lots went to the plaintiffs as their two-third share [as] evidenced by the Definite
Deed of Sale and Transfer Certificate of Titles Nos. T-77728, T-77458 and T-77459. However, he misplaced a copy of said written agreement.
In the meantime, or on 5 September 2002, the complainants filed before this Court, through the Office of the Court Administrator, the subject verified complaint. Here,
complainants pray for three things. First, they pray for an order directing the respondent to stop demanding his 1/3 share attorneys fees. They assert that the respondent has no basis
for his claim because he failed to show in court proof of the alleged written contingency fee agreement. They also belie respondents insistence in his Omnibus Motion that the said
agreement had already been implemented when, on execution, one of three lots levied upon by the sheriff was given to him as his 1/3 share. They emphasize that all the lots levied
by the sheriff were given to them. However, the respondent forced them to sign a Deed of Absolute Sale on 16 January 1990 involving a parcel of land valued in the document
at P10,000, but actually worth more than P500,000, in payment of his attorneys fees. While they did not want to sign the document because respondent appeared in their case only
during execution, they were constrained to do so for fear that something adverse might happen to their case, as the respondent so warned them. The latter told them that they would
not have won the case were it not for his services.
The complainants thus seek, as their second prayer, the recovery of the property involved in said Deed of Absolute Sale. They argue that pursuant to Article 1491(5) of the
Civil Code, lawyers are prohibited from buying their clients properties when the same are still the object of litigation. To prove that the respondent was still their counsel when the
sale took place, the complainants attached to their complaint the Motion to Terminate Services dated 23 June 1994, which was based on respondents being remiss in his duties and
responsibilities as their lawyer, and the Order of the court dated 29 June 1994, approving the termination.
Third, the complainants pray for the removal of the respondent from his position as RTC judge for his alleged abusive conduct unbecoming a judge.
In his Comment dated 25 November 2002, the respondent denies the allegations against him and asserts that he is only claiming what is due him. He vehemently denies that
he appeared in the case only during the execution stage, pointing to the Minutes of Hearing and the Order, both dated 05 October 1973, which show that he entered his appearance
as counsel for the complainants as early as 5 October 1973, or two months after the complaint was filed. He continuously handled the case from then on, as shown by copies of the
minutes of the hearings and orders issued by the RTC, until a favorable judgment was rendered on 25 March 1979 and the subject properties were levied upon on execution to
satisfy the judgment. He insists that he was never remiss in the performance of his duties and responsibilities as complainants counsel.
The respondent further alleges that the existence of the agreement on attorneys fees was admitted by complainant Shirley Loria Toledo as evidenced by the order issued by
the court on 01 March 2002, which states that Ms. Toledo came to the court informally informing it that she had a copy of the contract on attorneys fees.[4]
As regards the Deed of Absolute Sale, respondent admits that he was still complainants lawyer when the lot was transferred in his name. The lot was given to him by the
complainants and their mother, pursuant to their written contingency agreement, as his 1/3 share in the three parcels of land levied upon by the sheriff to settle the accrued rentals
awarded in the second paragraph of the dispositive portion of the decision. He did not pay for it. The figure appearing on the document was written only to facilitate the
transaction. He never compelled the complainants and their mother to sell to him the parcel of land. Neither did he tell them that nothing would happen to their case without him.
Finally, the respondent asserts that his claim for attorneys fees is still being litigated in Civil Case No. 4879. Thus, the instant complaint is premature.
In their Rejoinder dated 7 January 2003, the complainants insist that there is no basis for respondents claim for attorneys fees for the following reasons: (1) the respondent
failed to present the agreement on attorneys fees; (2) attorneys fees were not awarded by the RTC or the Court of Appeals; and (3) Civil Case No. 4879 is in its execution stage.
After evaluating the pleadings submitted by the parties, the Court Administrator found [5] that respondent was, indeed, complainants counsel in Civil Case No. 4879, and he
should therefore be compensated for his services. The act of demanding payment for his attorneys fees is not a ground for administrative liability. However, he can be allowed only
fair and reasonable attorneys fees under Canon 20 of the Code of Professional Responsibility. As to this, the Court Administrator stated:
On the question of whether respondent violated Article 1491(5) of the Civil Code, the Court Administrator found that this may be fairly resolved in an investigation, there
being a factual dispute, and recommended that the complaint be referred to an Associate Justice of the Court of Appeals pursuant to Section 3, Rule 140 of the Rules of Court. On
the basis of this recommendation, we referred the matter to Associate Justice Jose Mendoza of the Court of Appeals for investigation, report, and recommendation.
In his Report,[6] Justice Mendoza found that the respondent indeed represented the complainants in Civil Case No. 4879. Like the Court Administrator, he expresses the view
that the act of demanding attorneys fees for services rendered is not a ground for administrative sanction. He finds that when the respondent made the demand, he did so as a
lawyer who obtained a favorable judgment for his client, and not as a judge. As a lawyer, it is but just that he be fairly compensated for his services. And his filing of a claim for
attorneys fees in Civil Case No. 4879 was an appropriate legal remedy. Considering the pendency of such claim, Justice Mendoza recommends the suspension of the determination
of the instant administrative complaint until the rendition of a final judicial ruling on the matter of respondents attorneys fees; thus:
As the said issue is still being litigated in the Regional Trial Court in Civil Case No. 4879, it is the view of the undersigned that the complaint is still premature .
In other words, the complaint is not yet ripe for administrative evaluation. The hearing on the matter being conducted by the court below should be allowed to run its course as that
court is the appropriate forum for a ruling on the dispute.
To make a determination at this time on whether the respondent violated Article 1491 (A) would be to preempt the lower court in its resolution of the issue. Any recommendation
by the undersigned in this administrative case and subsequent resolution by the Honorable Supreme Court on the matter would certainly affect or influence the thinking of the trial
court before which the matter is pending. In such a case, it will be unfair to either party. At any rate, the party who would feel aggrieved might still elevate the decision to the
higher courts.
This recommendation is not without precedent. In the case of Spouses De Leon v. Hon. Bonifacio, Adm. Case No. 4467, October 10, 1997, the then Deputy Court Administrator,
Hon. Reynaldo Suarez, recommended the dismissal of the case for being judicial in nature or, at least, premature.
In this case, the respondent is not being charged for his acts or decisions as a judge. Rather, he has been charged for dealing with the property of his client which is prohibited by
law. Nevertheless, the principle is the same, in that, the matter is still judicial in nature.
We agree with Justice Mendoza.
It is fundamental that a claim for attorneys fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.[7] The
respondent chose to file his claim for attorneys fees in the same case in which he served as counsel for the complainants. As mentioned, this is a proper remedy under our
jurisdiction and is preferred to an independent action as it avoids multiplicity of suits. Besides, the right to recover attorneys fees is but an incident of the case in which the services
of counsel have been rendered. Moreover, the court trying the case is to a certain degree already familiar with the nature and extent of the lawyers services [8] and is in a better
position to decide the question of fees.
Undisputably, respondents claim for attorneys fees is under litigation. We find in the records an Order dated 7 January 2004 issued in Civil Case No. 4879 which granted
respondents prayer for 1/3 share of attorneys fees in the proceeds of litigation as claimed in his Omnibus Motion dated 14 February 2002. This Order is the subject of a motion for
reconsideration by the complainants, as stated in respondents Manifestation dated 24 January 2004 [9] filed in the investigation proceedings conducted by Justice Mendoza. Also
part of the records is respondents Affidavit dated 1 December 2003, filed in the same investigation proceedings, alluding to the complainants filing of a Petition for Certiorari and
Mandamus in the Court of Appeals, docketed as CA-G.R. SP No. 80090, seeking to reverse the Order of the trial court denying complainants Motion to Dismiss respondents
Omnibus Motion.
We, therefore, find no cogent reason for us to resolve complainants first two issues raised in the verified complaint, for they are inextricably inherent in the claim of the
respondent in his Omnibus Motion, which is pending judicial determination. Since respondents claim for attorneys fees in the main case has not yet become final, the objection of
prematurity obtains, as a contrary holding may be preemptive of a final judicial determination of factual and evidentiary matters inherent in the claim.[10] Clearly, the reliefs asked
by the complainants are judicial in nature.[11] And, if only for an orderly administration of justice, the proceedings in Civil Case No. 4879 should be allowed to continue and take
its course, and the claim of the respondent judicially settled first.
But while we give deference to the wisdom of the trial court to initially decide respondents claim for attorneys fees, we deem it appropriate to reiterate certain principles
governing the payment of attorneys fees and impart our observations on the instant claim. Foremost of these principles is that the act of demanding attorneys fees for services
rendered is not a ground for an administrative sanction. On the contrary, Canon 20 of the Code of Professional Responsibility allows lawyers to charge fair and reasonable fees. As
long as a lawyer honestly and in good faith serves and represents the interest of the client, he should have a reasonable compensation for his service. [12]
Lawyers are thus as much entitled to judicial protection against injustice on the part of their clients as the clients are against abuses on the part of counsel. The duty of the
court is not only to see that lawyers act in a proper and lawful manner, but also to see that lawyers are paid their just and lawful fees.[13] Thus, in J.K. Mercado and Sons
Agricultural Enterprises, Inc. v. De Vera,[14] citing Albano v. Coloma,[15] we stressed:
While, indeed, the practice of law is not a business venture, a lawyer, nevertheless, is entitled to be duly compensated for professional services rendered. So, also, he must be
protected against clients who wrongly refuse to give him his just due. In Albano vs. Coloma, this Court has said:
Counsel, any counsel, who is worthy of his hire, is entitled to be fully recompensed for his services. With his capital consisting solely of his brains and with his skill, acquired at
tremendous cost not only in money but in the expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of a client to
escape payment of his fees. It is indeed ironic if after putting forth the best that is in him to secure justice for the party he represents, he himself would not get his due. Such an
eventuality this Court is determined to avoid. It views with disapproval any and every effort of those benefited by counsels services to deprive him of his hard-earned honorarium.
Such an attitude deserves condemnation.
It should be stressed in this connection that the absence of a written contract will not preclude the finding that there was a professional relationship that justifies the collection
of attorneys fees for professional services rendered. Documentary formalism is not an essential element in the employment of an attorney; the contract may be express or implied.
To establish the relation, it is sufficient that the advice and assistance of an attorney is sought and received in any matter pertinent to his profession. [16] Hence, with or without a
contingency agreement between the complainants and the respondent, the trial court must determine the propriety of respondents claim for attorneys fees and the reasonable
amount thereof.
The third issue raised in the verified complaint deserves a short shrift. No evidence was presented to prove respondents alleged abusive conduct unbecoming a judge. The
complainants do not dispute the fact that the respondent was not yet a judge when the assailed action or conduct was allegedly committed by him. As such, and to that extent, there
is no reason to bind him by the strict standards of the Code of Judicial Conduct for acts committed as counsel to a case prior to his appointment as a judge.
WHEREFORE, the instant administrative complaint is DISMISSED for being premature and for lack of merit.
SO ORDERED.
Quisumbing, Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

G.R. No. 90983 September 27, 1991


LAW FIRM OF RAYMUNDO A. ARMOVIT, petitioner
vs.
COURT OF APPEALS, JUDGE GENARO C. GINES, Presiding Judge of Branch XXVI, Regional Trial Court, First Judicial Region, San Fernando, La Union, and
BENGSON COMMERCIAL BUILDING, INC., respondents.
Raymundo A. Armovit and Rafael R. Armovit for petitioner.
Pacifico C. Yadao for private respondent.

SARMIENTO, J.:
Before the Court is Atty. Raymundo Armovit's claim for attorney's fees against the private respondent.
It appears that Atty. Armovit was engaged as counsel for the private respondent in a complaint to have an extrajudicial foreclosure of certain properties by the Government Service
Insurance System declared null and void; that the parties allegedly agreed that the private respondent shall pay P15,000.00 as initial compensation and twenty percent in contingent
fees; that after trial, the defunct Court of First Instance rendered judgment annulling foreclosure and ordering the Government Service Insurance System to restructure the private
respondent's loan; that thereafter, the System appealed; the on appeal, the Court of Appeals affirmed the decision of lower court; and that the Appellate Court's judgment has since
attained finality.
It also appears that when Atty. Armovit sought execution with the court a quo, he was informed by Romualdo Bengson president of the respondent corporation, that the firm has
retained the services of Atty. Pacifico Yadao. He was also informed that the company would pay him the agreed compensation and that Atty. Yadao's fees were covered by a
separate agreement. The private respondent, however, later ignored his billings and over the phone, directed him allegedly not to take part in the execution proceedings. Forthwith,
he sought the entry of an attorney's lien in the records of the case. The lower court allegedly refused to make the entry and on the contrary issued an order ordering the Philippine
National Bank to "release to the custody of Mr. Romualdo F. Bengzon and/or Atty Pacifico Yadao" 1 the sum of P2,760,000.00 (ordered by the Court of Appeals as rentals payable
by the Government Service Insurance System).
Atty. Armovit then moved, apparently for the hearing of hi motion to recognize attorney's lien, and thereafter, the trial court. issued an order in the tenor as follows:
When this case was called for hearing on the petition to record attorney's charging lien, Attys. Armovit and Aglipay appeared for the petitioners.
Atty. Armovit informed the Court that they are withdrawing the petition considering that they are in the process of amicably settling their differences with the plaintiff,
which manifestation was confirmed by Atty. Yadao as well as the plaintiffs, Romualdo Bengson and Brenda Bengson, who are present today.
In view of this development, the petition to record attorney charging lien, the same being in order and not contrary to law, moral and public policy, as prayed for by Attys.
Armovit and Aglipay, it hereby withdrawn. The parties, therefore are hereby directed to co ply faithfully with their respective obligations.
SO ORDERED.2
However, upon the turnover of the money to the private respondent, Mrs. Brenda Bengson (wife of Romualdo Bengzon delivered to Atty. Armovit the sum of P300,000.00 only.
Armovit protested and demanded the amount of P552,000.0 twenty percent of P2,760,000.00), for which Mrs. Bengzon made assurances that he will be paid the balance.
On November 4, 1988, however, Atty. Armovit received a order emanating from the trial court in the tenor as follows:
During the hearing on the petition to record attorney's charge lien on October 11, 1988, Attys. Armovit and Aglipay withdrew their petition to record attorney's charging
lien, which was duly approve petition to recordby the Court, after which the Court directed the parties to comp faithfully with their respective obligations.
In compliance with the Order of this Court, the plaintiff submitted a pleading denominated as compliance alleging that petition (Atty. Armovit) has already received from
the plaintiff the sum P300,000.00, Philippine Currency, as and by way of attorney's fees With the receipt by the petitioner from the plaintiff of this amount, the latter has
faithfully complied with its obligation.
WHEREFORE, the Order of this Court dated October 11, 1988 approving the withdrawal of the petition to record attorney's charging lien, on motion of the petitioner, is
now final.
SO ORDERED.3
Reconsideration having been denied, Atty. Armovit went the Court of Appeals on a petition for certiorari and prohibition.
On August 25, 1989, the Court of Appeals4 rendered judgment dismissing the petition. Reconsideration having been likewise denied by the Appellate Court, Atty. Armovit
instituted the instant appeal.
Shortly thereafter, we required the private respondent comment.
The private respondent did not materially traverse Atty. Armorvit's chronicle of events but added: that the private respondent hired the petitioner after the Government Service
Insurance System had answered and that it was Atty. Benjam Bernardino who prepared the complaint; that for his appearances, Atty. Armovit was paid a total of P108,000.00, not
to mention "beach resort accommodations";5 that Atty. Armovit did not inform the private respondent that the court had rendered judgment which they would have appealed; that
they lost an appeal on account of Atty. Armovit's indiscretion; that the forthwith engaged the services of another lawyer, Atty. Yadao; and that it was the latter who prepared the
brief in the Court Appeals (on GSIS's appeal).
The private respondent also alleged that it opposed Atty. Armovit's effort to record his attorney's lien on grounds of allege nullity of the retainer agreement, Atty. Armovit's
negligence and because of excessive fees demanded.
The private respondent also insisted that the retainer agreement was signed by only one of seven directors, and it could no bind the corporation. Atty. Armovit, in any event, had
also been allegedly more than sufficiently compensated.
The private respondent alleged that Atty. Armovit had bee paid P300,000.00 — an amount approved by the court, and an amount he accepted and for which he is allegedly
estoppel from claiming a higher amount. The order of the court has the effect of res judicata, the private respondent claimed, as well as a compromise agreement which is
immediately executory.
The disposition of the Court of Appeals was that since the receipt evidencing payment to Atty. Armovit of the sum P300,000.00 "was without any qualification as 'advance' 'partial'
or 'incomplete',"6 the intention of the parties was that was full payment. The Appellate Court also noted Atty. Armorvit's withdrawal of his motion to record attorney's lien and
figured that Atty. Armovit was satisfied with the payment P300,000,00.
The only issue is whether or not Atty. Armovit is entitled to the sum of P252,000.00 more, in addition to the sum P300,000.00 already paid him by the private respondent.There is
no question that the parties had agreed on a compensation as follows:
a) P15,000.00 by way of acceptance and study fee, payable within five (5) days from date;
b) 20% contingent fee computed on the value to be recovered b favorable judgment in the cases; and
c) the execution and signing of a final retainer agreement complete with all necessary details. 7
(While the parties' agreement speaks of "a final retain agreement" 8 to be executed later, it does not appear that the parties did enter into a "final" agreement thereafter.)
The private respondent's version however is that while it may be true that the agreed compensation was twenty percent of all recoveries, the parties later agreed on a compromise
sum approved allegedly by the trial court, per its Order of October 11, 1988.
The Court is inclined to believe that Atty. Armovit never agreed on the compromise sum of P300,000.00. It is true that he did agree to withdraw his motion to annotate attorney's
lien, but because the parties were "in the process of amicably settling their differences"9 and not because Atty. Armovit had agreed to accept a lower amount as full payment. There
is nothing, on top of that, Atty. Armovit's manifestation that would suggest that he was accepting the sum of P300,00.00 as agreed final payment, other than the fact that an
agreement was supposedly certain. We quote:
ATTY. ARMOVIT:
Your Honor, we would like to manifest in Court that we served notice to the counsel of the plaintiff, Bengson Commercial Building, a copy of the petition to record
attorney's charging lien, and together with the president of the corporation, Mr. Romualdo Bengson, and his wife, Mrs. Brenda Bengson, we have discussed the problem
and we all agreed upon is an earnest one at this time, this representation is withdrawing his petition to record charging lien.
ATTY. YADAO:
No objection, Your Honor, because we have to agree with Atty. Armovit. I am in full accord with this. 10
There is nothing there that would indicate Atty. Armovit's willingness to accept, in fact, a lower figure in consideration of his withdrawal of his request to enter attorney's lien.
What the Court takes his statement to mean is that he was withdrawing his request on the certainty that the private respondent would pay him the money, presumably, under more
becoming circumstances.
The Court does not therefore see how the private respondent can hold Atty. Armovit to have been in estoppel.
The fact that Atty. Armovit did not, after all, accept the sum of P300,000.00 as final compensation is indeed indicated by the behavior of the private respondent, through Mrs.
Romualdo Bengson, when she assured Atty. Armovit that the balance was forthcoming. 11 According to Mrs. Bengson, she wished the rest of the Bengsons to witness the final
payment and when the occasion was present, wished for a postponement on account of "All Saints Day." 12
The parties never therefore amended their original agreement, and what appears to the Court is a clear effort on the part of a client, with the apparent approval of the trial court, to
renege on a valid agreement with its lawyer.
The Court believes that the trial court, in accepting the private respondent's "compliance" as a final payment of Atty. Armovit's fees, was guilty of a grave abuse of discretion. The
private respondent had nothing with which to comply, and the parties, as manifested by Atty. Armovit, were "in the process [merely] of amicably settling their differences."13
It is apparent furthermore that the trial judge himself was out to deny Atty. Armovit the agreed compensation. In his order of October 4, 1988, he commanded:
The PNB is hereby ordered and directed to release to the custody of Mr. Romualdo F. Bengson and /or Atty. Pacifico Yadao, counsel for the plaintiff, the sum of Two
Million Seven Hundred Sixty Thousand Pesos (P2,760,000.00), Philippine Currency for the satisfaction of the rentals of the Bengson Building against the GSIS. 14
in spite of the fact that Atty. Armovit had remained the private respondent's counsel of record. It is fundamental that unless a lawyer has been validly discharged, his authority to
act for his client continues and should be recognized by the court. 15
The fact that the receipt evidencing payment by the private respondent of the amount of P300,000.00 "was without any qualification as 'advance' or 'partial' or 'incomplete'," 16 as
the Court of Appeals noted and the Court of Appeals took to mean "full payment", will not weaken Atty. Armovit's demand for the balance. There is nothing in the receipt that will
suggest that will suggest that it was full payment either, and the fact that Atty. Armovit accepted it does not mean that he was satisfied that it was final payment. The fact of the
matter is that the private respondent had assured him that the balance was forthcoming.
The private respondent can not justifiably downplay Atty. Armovit as negligent (for failing to appeal) or his demand for fees excessive (that he had been paid enough). Atty.
Armovit, after all, succeeded in obtaining a favorable decision for his client, an although his prayer for various damages were denied, he secceeded in obtaining a substantial award
(P1,900,00.00 in unpaid rentals) for his client. On appeal, the Court of Appeals sustained his theory. It should be noted that the private respondent had in fact stood to lose
substantial properties on foreclosure — Atty. Armovit not only restored to the private respondent its foreclosured properties, he succeeded in having the private respondent's loans
restructed and the Government Service Insurance System pay rentals. No client can ask a better result from a lawyer.
Obviously, the private respondent's effort to downgrade Atty. Armovit's performance is a wild, if not cheap, shot of a client out to evade its obligations to its lawyer. The fact that
Atty. Armovit may have been paid substantially (in initial fees) while the case was dragging is no justification for denying him the full amount under their agreement. It has been
held that initial fees and fees paid in the progress of litigation are independent of the contingent fees.17
That the retainer agreement was never approved by the board of the corporation is also a poor excuse because the fact of the matter is that the private respondent did deliver to
Atty. Armovit the sum of P300,000.00 in partial payment, and the private respondent can not now deny him the balance bay alleging lack of authority of the Bengson spouses.
Contingent fees are valid in this jurisdiction.18 It is true that attorney's fees must at all times be reasonable;19however, we do not find Atty. Armovit's claim for "twenty percent of
all recoveries" to be unreasonable. In the case of Aro v. Nañawa,20 decided in 1969, this Court awarded the agreed fees amid the efforts of the client to deny him fees by
terminating his services. In parallel vein, we are upholding Atty. Armovit's claim for P252,000.00 more — pursuant to the contingent fee agreement — amid the private
respondent's own endeavours to evade its obligations.
Several times, we have come down hard on erring practitioners. We will not however be slow either, in coming to the rescue of aggrieved brother-lawyers in protecting the
integrity of the bar from unscrupulous litigants.
WHEREFORE, premises considered, the petition is GRANTED. The private respondent is ORDERED to pay the petitioner the sum of P252,000.00. Costs against the private
respondent.
IT IS SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Regalado, JJ., concur.

G.R. No. 91958 January 24, 1991


WILFREDO D. LICUDAN and CRISTINA LICUDAN-CAMPOS, petitioners,
vs.
THE HONORABLE COURT OF APPEALS and ATTY. TEODORO O. DOMALANTA, respondents.
Arnold V. Guerrero & Associates for petitioners.
Teodoro O. Domalanta for and on his behalf as private respondent.

GUTIERREZ, JR., J.:


The practice of law is a profession rather than trade. Courts must guard against the charging of unconscionable and excessive fees by lawyers for their services when engaged as
counsel. Whether or not the award of attorney's fees in this case is reasonable, being in the nature of contingent fees, is the principal issue.
This petition for review on certiorari assails:
1) The Decision of the public respondent dated September 12, 1989 which dismissed the petitioners' appeal thereby upholding the reasonableness of the respondent lawyer's lien as
attorney's fees over the properties of his clients; and
2) The Resolution of the public respondent dated January 30, 1990 which denied the petitioners' motion for reconsideration.
The grounds relied upon by the petitioners are as follows:
The respondent Court, in upholding the entitlement of private respondent-attorney on the attorney's fees he claimed, decided the question in a manner not in accord with
law or with the applicable decisions of this Honorable Tribunal.
The respondent Court, in refusing to review and determine the propriety, reasonableness and validity of the attorney's fees claimed by the private respondent-attorney,
departed from the usual course of judicial proceedings.
The respondent Court, in failing to declare the attorney's fees claimed by the private respondent-attorney as unconscionable, excessive, unreasonable, immoral and
unethical, decided the question in a way not in accord with law and with applicable decisions of this Honorable Tribunal. (Petition, pp. 12-13; Rollo, pp. 16-17)
The following are the antecedent facts pertinent to the case at bar:
The respondent lawyer was retained as counsel by his brother-in-law and sister, the now deceased petitioners' parents, spouses Aurelio and Felicidad Licudan. His services as
counsel pertained to two related civil cases docketed as Civil Case No. Q-12254 for partition and Civil Case No. Q-28655 for a sum of money in connection with the redemption of
the property subject matter of the two cases covered by Transfer Certificate of Title No. 818 of the Register of Deeds of Quezon City. In both cases, the respondent lawyer
obtained a judgment in favor of his clients.
On August 13,1979, the respondent lawyer filed a Petition for Attorney's Lien with Notification to his Clients which substantially alleged that his clients executed two written
contracts for professional services in his favor which provided that:
a) The undersigned counsel is entitled to own 97.5 square meters of the plaintiff's share of the lot in question.
b) The undersigned counsel shall have a usufructuary right for a period of ten (10) years of plaintiffs' share of the lot in question.
c) And that all damages accruing to plaintiffs to be paid by the defendant is for the undersigned counsel.(Annex "H" of the Petition, Rollo, p. 54)
On September 19, 1979, the trial court handling Civil Case No. Q-12254 ordered the annotation at the back of TCT No. 818 of the Register of Deeds of Quezon City of the
respondent lawyer's Contract for Professional Services dated August 30, 1979 signed by petitioner Wilfredo Licudan and Aurelio Licudan on his own behalf and on behalf of his
daughter, petitioner Cristina Licudan-Campos. The said trial court's Order, being one of two Orders being essentially challenged in this petition, is reproduced below:
Before the court for consideration is a Petition for Attorney's Lien filed by Atty. Teodoro D. Domalanta, counsel for the plaintiff, praying that his attorney's fees be
annotated as a lien at the back of Transfer Certificate of Title No. 818 of the Register of Deeds of Quezon City, subject matter of this case.
For the protection of the plaintiffs, the court required the plaintiff Aurelio Licudan as well as his son to appear this morning. Plaintiff Aurelio Licudan together with his
son Wilfredo Licudan, who appears to be intelligent and in fact he speaks (the) English language well, appeared. Both Aurelio and Wilfredo Licudan manifested that they
have freely and voluntarily signed the Contract for Professional Services, dated August 30, 1979 and notarized before Notary Public Amado Garrovillas as Doc. No. 32,
Page 8, Book No. XIX, Series of 1979.
Considering the manifestation of plaintiff, Aurelio Licudan and Alfredo (sic) Licudan that they have entered freely and voluntarily in the said contract of professional
services, let the same be annotated at the back of TCT 818 of the Register of Deeds of Quezon City, upon payment of the required legal fees. (CA Decision, pp. 7-
8; Rollo, pp. 36-37)
The Contract for Professional Services dated August 30, 1979 differs from the earlier contractual provisions in that it entitled the respondent lawyer to one-third (1/3) of the subject
property or 90.5 square meters and provided for usufructuary rights over the entire lot in question in favor of the respondent lawyer's son, Teodoro M. Domalanta, Jr. for an agreed
consideration. (Annex "J" of the Petition; Rollo, p. 59)
On July 25, 1985, the respondent lawyer filed a motion ex parte to amend the Order dated September 19, 1979 so as to conform with an additional professional fee covering 31
square meters more of the lot for services rendered in Civil Case No. Q-28655 as evidenced by a Deed of Absolute Sale dated May 1, 1983 executed by Aurelio Licudan in favor
of the respondent lawyer.
On September 6, 1985, the trial court ordered the respondent lawyer to submit a subdivision plan in conformity with his attorney's fees contract under which one-third (1/3) of the
property or 90.5 square meters was alloted to him.
On September 23, 1985, the respondent lawyer filed a motion for reconsideration praying for the amendment of the Order dated September 19, 1979 to conform with the Deed of
Absolute Sale dated May 1, 1983 which was executed after the annotation of the original attorney's lien of 90.5 square meters.
On September 30, 1985, the trial court denied the motion on the ground that the respondent lawyer cannot collect attorney's fees for other cases in the action for partition.
On October 4, 1985, the respondent lawyer filed a second motion for reconsideration of the Order dated September 6, 1985 explaining that what he sought to be included in the
Order dated September 19, 1979 is the additional attorney's fees for handling the redemption case which was but a mere offshoot of the partition case and further manifesting that
the additional 31 square meters as compensation for the redemption case must be merged with the 90.5 square meters for the partition case to enable the said respondent lawyer to
comply with the Order dated September 6,1985 which directed him to submit a subdivision plan as required.
On October 21, 1985, the trial court issued the second Order being assailed in this petition. The said Order reads:
Acting on the "Second Motion for Reconsideration" filed by Atty. Teodoro Domalanta and finding the same to be justified, let an attorney's lien be annotated in the title of
the property for 31 square meters as attorney's fees of said Atty. Teodoro Domalanta in addition to the original 90.5 square meters. (CA Decision, p. 8; Rollo, p. 37)
On August 22, 1986, more than ten (10) months after the Orders of September 6, 1985 and October 21, 1985 had become final and executory, the petitioners as substituted heirs of
the respondent lawyers' deceased clients filed a motion to set aside orders on the ground that the award of professional fees covering 121.5 square meters of the 271.5 square meter
lot is unconscionable and excessive.
After the respondent lawyer filed his Opposition to the above petitioners' motion, the lower court, on August 29, 1986, finding that the petitioners as substituted plaintiffs are not in
full agreement with the respondent lawyer's claim for attorney's fees, set aside its Orders dated September 6, 1985 and October 21, 1985.
On September 16, 1986, the respondent lawyer filed a motion for reconsideration stressing the fact that the payment of the professional services was pursuant to a contract which
could no longer be disturbed or set aside because it has already been implemented and had since then become final. This motion was denied on October 3, 1986.
On November 15, 1986, the respondent lawyer filed a motion to set aside the orders dated August 29, 1986 and October 3, 1986 reiterating his position that the Orders of
September 6, 1985 and October 21, 1985 have become final and are already implemented. The respondent lawyer further asked for the modification of the October 21, 1985 Order
to reflect 60.32 square meters instead of 31 square meters only since the stipulation in the Additional Contract for Professional Services entitled him to 60.32 square meters.
After the petitioners' Opposition to the said motion was filed, the trial court, on February 26, 1987, rendered an Order with the following dispositive portion:
WHEREFORE, this Court has no alternative but to set aside its orders of 29 August 1986 and 3 October 1986 and declare its Orders of 19 September 1979 and 21
October 1985 irrevocably final and executory. (CA Decision, p. 5; Rollo, p. 34)
On Appeal, the Court of Appeals ruled in favor of the respondent lawyer by dismissing the appeal and the prayed for writ of preliminary injunction. Their subsequent motion for
reconsideration having been denied', the petitioners filed the instant petition.
The petitioners fault the respondent Court for its failure to exercise its inherent power to review and determine the propriety of the stipulated attorney's fees in favor of the
respondent lawyer and accuse the respondent lawyer of having committed an unfair advantage or legal fraud by virtue of the Contract for Professional Services devised by him
after the trial court awarded him attorney's fees for P1,000.00 only instead of respecting the trust and confidence of the highest level reposed on him considering the close blood
and affinal relationship between him and his clients.
The petitioners contend that under the award for professional services, they may have won the case but would lose the entire property won in litigation to their uncle-lawyer. They
would be totally deprived of their house and lot and the recovered damages considering that of the 271.5 square meters of the subject lot, the respondent lawyer is claiming 121.5
square meters and the remaining portion of 150 square meters would also go to attorney's fees since the said portion pertains to the lawyer's son by way of usufruct for ten (10)
years.
The aforesaid submissions by the petitioners merit our consideration.
It is a well-entrenched rule that attorney's fees may be claimed in the very action in which the services in question have been rendered or as an incident of the main action. The fees
may be properly adjudged after such litigation is terminated and the subject of recovery is at the disposition of the court. (see Camacho v. Court of Appeals, 179 SCRA 604 [1989];
Quirante v. Intermediate Appellate Court, 169 SCRA 769 [1989]).
It is an equally deeply-rooted rule that contingent fees are not per se prohibited by law. They are sanctioned by Canon 13 of the Canons of Professional Ethics and Canon 20, Rule
20.01 of the recently promulgated Code of Professional Responsibility. However, as we have held in the case of Tanhueco v. De Dumo (172 SCRA 760 [1989]):
. . . When it is shown that a contract for a contingent fee was obtained by undue influence exercised by the attorney upon his client or by any fraud or imposition, or that
the compensation is clearly excessive, the Court must and will protect the aggrieved party. (Ulanday v. Manila Railroad Co., 45 Phil. 540 [1923]; Grey v. Insular Lumber
Co., 97 Phil. 833 [1955]).
In the case at bar, the respondent lawyer caused the annotation of his attorney's fees lien in the main action for partition docketed as Civil Case No. Q-12254 on the basis of a
Contract for Professional Services dated August 30, 1979. We find reversible error in the Court of Appeals' holding that:
When the reasonableness of the appellee's lien as attorney's fees over the properties of his clients awarded to him by the trial court had not been questioned by the client,
and the said orders had already become final and executory, the same could no longer be disturbed, not even by the court which rendered them (Tañada v. Court of
Appeals, 139 SCRA 419). (CA Decision p. 7; Rollo, p. 36)
On the contrary, we rule that the questioned Orders dated September 19, 1979 and October 21, 1985 cannot become final as they pertain to a contract for a contingent fee which is
always subject to the supervision of the Court with regard to its reasonableness as unequivocally provided in Section 13 of the Canons of Professional Ethics which reads:
13. Contingent Fees.—
A contract for a contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the case including the risk and uncertainty of the
compensation, but should always be subject to the supervision of a court, as to its reasonableness. (Emphasis supplied).
There is no dispute in the instant case that the attorney's fees claimed by the respondent lawyer are in the nature of a contingent fee. There is nothing irregular about the execution
of a written contract for professional services even after the termination of a case as long as it is based on a previous agreement on contingent fees by the parties concerned and as
long as the said contract does not contain stipulations which are contrary to law, good morals, good customs, public policy or public order.
Although the Contract for Professional Services dated August 30, 1979 was apparently voluntarily signed by the late Aurelio Licudan for himself and on behalf of his daughter,
petitioner Cristina Licudan-Campos and by the petitioner Wilfredo Licudan who both manifested in open court that they gave their free and willing consent to the said contract we
cannot allow the said contract to stand as the law between the parties involved considering that the rule that in the presence of a contract for professional services duly executed by
the parties thereto, the same becomes the law between the said parties is not absolute but admits an exception—that the stipulations therein are not contrary to law, good morals,
good customs, public policy or public order (see Philippine American Life Insurance Company v. Pineda, 175 SCRA 416 [1989]; Syjuco v. Court of Appeals, 172 SCRA 111
[1989]).
Under Canon 20 of the Code of Professional Responsibility, a lawyer shall charge only fair and reasonable fees.1âwphi1 In determining whether or not the lawyer fees are fair and
reasonable, Rule 20-01 of the same Code enumerates the factors to be considered in resolving the said issue. They are as follows:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficulty of the questions involved;
c) The importance of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result of acceptance of the proferred case;
f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;
g) The amount involved in the controversy and the benefits resulting to the client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or established; and
j) The professional standing of the lawyer.
A similar provision is contained under Section 24, Rule 138 of the Revised Rules of Court which partly states that:
Sec. 24. Compensation of attorneys; agreement as to fees. — An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for
his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. . . . A
written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.
All that the respondent lawyer handled for his deceased sister and brother-in-law was a simple case of partition which necessitated no special skill nor any unusual effort in its
preparation. The subsequent case for redemption was admittedly but an offshot of the partition case. Considering the close blood and affinal relationship between the respondent
lawyer and his clients, there is no doubt that Atty. Domalanta took advantage of the situation to promote his own personal interests instead of protecting the legal interests of his
clients. A careful perusal of the provisions of the contract for professional services in question readily shows that what the petitioners won was a pyrrhic victory on account of the
fact that despite the successful turnout of the partition case, they are now practically left with nothing of the whole subject lot won in the litigation. This is because aside from the
121.5 square meters awarded to Atty. Domalanta as attorney's fees, the said contract for professional services provides that the remaining portion shall pertain to the respondent
lawyer's son by way of usufruct for ten (10) years. There should never be an instance where a lawyer gets as attorney's fees the entire property involved in the litigation. It is
unconscionable for the victor in litigation to lose everything he won to the fees of his own lawyer.
The respondent lawyer's argument that it is not he but his son Teodoro M. Domalanta, Jr. who is claiming the usufructuary right over the remaining portion of the subject lot is
inaccurate. The records show that the matter of usufruct is tied up with this case since the basis for the said usufructuary right is the contract for professional services the
reasonableness of which is being questioned in this petition. We find the ten-year usufruct over the subject lot part and parcel of the attorney's fees being claimed by the respondent
lawyer.
In resolving the issue of reasonableness of the attorney's fees, we uphold the time-honoured legal maxim that a lawyer shall at all times uphold the integrity and dignity of the legal
profession so that his basic ideal becomes one of rendering service and securing justice, not money-making. For the worst scenario that can ever happen to a client is to lose the
litigated property to his lawyer in whom an trust and confidence were bestowed at the very inception of the legal controversy. We find the Contract for Professional Services dated
August 30, 1979, unconscionable and unreasonable. The amount of P20,000.00 as attorney's fees, in lieu of the 121.5 square meters awarded to the respondent lawyer and the ten-
year usufructuary right over the remaining portion of 150 square meters by the respondent lawyer's son, is, in the opinion of this Court, commensurate to the services rendered by
Atty. Domalanta.
WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The Court of Appeals' decision of September 12, 1989 is hereby REVERSED and SET
ASIDE. Atty. Domalanta is awarded reasonable attorney's fees in the amount of P20,000.00.
SO ORDERED.

G.R. No. 97006 February 9, 1993


ERNESTO F. ROLDAN and MARIETTA A. ROLDAN, petitioners,
vs.
THE COURT OF APPEALS and COMMERCIAL CREDIT CORPORATION OF DAVAO, respondents.
Rodolfo B. Ta-asan for petitioners.
Honesto A. Cabarroguis for private respondent.

NOCON, J.:
While in bed the sick man's lying,
While in Court your client's cause you're trying,
That's the time to get your fee.
For, when the sick man has recovered.
And the lawsuit's won or smothered
He will never think of thee.1
Petitioners spouses Ernesto and Marietta Roldan claim that the attorney's fees claimed by the private respondent, Commercial Credit Corporation of Davao City, being gargantuan,
exhorbitant and unconscionable, should be proportionately reduced on the basis of quantum meruit. Private respondent Commercial Credit Corporation of Davao demurs and states
that the amount is reasonable or conscionable considering the difficulty it has encountered in collecting from the petitioners.
Culled from private respondent's statement of facts are the following antecedents of this case. On June 7, 1971, petitioners purchased fifteen (15) trucks on installment basis for
P1,250,000.00 from private respondent. Since they could not fully pay their obligation, private respondent sued them on November 21, 1981. On July 28, 1987, the trial court
rendered its decision, which in its dispositive portion reads as follows:
IN VIEW WHEREOF, judgment is hereby rendered ordering the defendants to pay in solidum the plaintiff the following sums:
1. Five Hundred Seventy Nine Thousand Five Hundred Sixty Seven Pesos and Thirteen Centavos representing the principal balance with interest at 12% to be
computed from November 24, 1981 until fully paid;
2. Twenty Thousand Two Hundred Eighty Five and Forty Three Centavos representing the past due charges as of November 23, 1981 with interest of 12% per
annum to be computed from November 24, 1981 until fully paid;
3. One Hundred Ninety Three Thousand One Hundred Sixty Nine Pesos and Seventy Two Centavos representing liquidated damages as of November 23, 1981
with interest of 12% per annum to be computed from November 24, 1981 until fully paid;
4. Attorney's fees equivalent to 25% of the total amount due in favor of the plaintiff;
5. Two Hundred Fifty Pesos and Seventy Five Centavos representing the value of the check which was drawn by the defendant, accepted by the plaintiff and
dishonored by the drawee bank.
6. Costs of suit.
SO ORDERED.2
Seeking appellate review, the matter was elevated to the Court of Appeals which dismissed petitioners' appeal for lack of merit 3 and so with their Motion for Reconsideration. 4
Hence, this petition.
Petitioners do not dispute the facts but only that portion of the findings of fact of the trial court, as affirmed by the appellate court on the alleged exhorbitant attorney's fees,
excessive liquidated damages and usurious interest on the loan.
Settled is the rule, that in petitions for review under Rule 45 of the Rules of Court, only questions of law may be raised since factual findings of the Court of Appeals are deemed
conclusive on the Supreme Court subject to certain exceptions. 5
Thus, the issues raised by petitioners on (1) the alleged lack of basis for liquidated damages imposed as a penalty for litigation as determined by the trial court and (2) the alleged
usurious interests rate they were charged on the contract of loan as evidenced by the promissory note has been disposed of by the trial court and the Court of Appeals. Thus, the
findings of fact are binding on Us.
The matter, however, of the attorney's fees — gargantuan, exhorbitant and unconscionable as alleged by petitioners — is what this Court will rule upon.
This is not the first time that the amount of attorney's fees has been questioned. In Radiowealth Finance Co., Inc. vs. International Corporate Bank,6 petitioner Radiowealth
questioned the reasonableness of the amount of attorney's fees therein and asked whether this Court has the power to modify the attorney's fees previously agreed upon by the
parties under a valid contractual stipulation.
The Court ruled there as follows:
As a basic premise, the contention of petitioners that this Court may alter, modify or change even an admittedly valid stipulation between the parties regarding
attorney's fees is conceded. The high standards of the legal profession as prescribed by law and the Canons of Professional Ethics regulate if not limit the
lawyer's freedom in fixing his professional fees. The moment he takes his oath, ready to undertake his duties first, as a practitioner in the exercise of his
profession, and second, as an officer of the court in the administration of justice, the lawyer submits himself to the authority of the court. It becomes axiomatic
therefore, that power to determine the reasonableness or the unconscionable character of attorney's fees stipulated by the parties is a matter falling within the
regulatory prerogative of the courts (Panay Electric Co., Inc. vs. Court of Appeals, 119 SCRA 456 [1982]; De Santos vs. City of Manila, 45 SCRA 409 [1972];
Rolando vs. Luz, 34 SCRA 337 [1970]; Cruz vs. Court of Industrial Relations, 8 SCRA 826 [1963]). And this Court has consistently ruled that even with the
presence of an agreement between the parties, the court may nevertheless reduce attorney's fees though fixed in the contract when the amount thereof appears to
be unconscionable or unreasonable (Borcena vs. Intermediate Appellate Court, 147 SCRA 111 [1987]; Mutual Paper Inc. vs. Eastern Scott Paper Co., 110
SCRA 481 [1981]; Gorospe vs. Gochango, 106 Phil. 425 [1959]; Turner vs. Casabar, 65 Phil. 490 [1938]; F.M. Yap Tico & Co. vs. Alejano, 53 Phil. 986
[1929]). For the law recognizes the validity of stipulations included in documents such as negotiable instruments and mortgages with respect to attorney's fees in
the form of penalty provided that they are not unreasonable or unconscionable (Philippine Engineering Co. vs. Green, 48 Phil. 466).7 (Emphasis supplied)
Before We proceed any further, it is worthwhile recalling what Polytrade vs. Blanco8 has to say on the matter of attorney's fees, to wit:
To be borne in mind is that the attorneys' fees here provided is not, strictly speaking, the attorneys' fees recoverable as between attorney and client spoken of and
regulated by the Rules of Court. Rather, the attorneys' fees here are in the nature of liquidated damages and the stipulation therefor is aptly called a penal clause.
It has been said that so long as such stipulation does not contravene law, morals, or public order, it is strictly binding upon defendant. The attorney's fees so
provided are awarded in favor of the litigant, not his counsel. It is the litigant, not counsel, who is the judgment creditor entitled to enforce the judgment by
execution.9 (Emphasis supplied).
Private respondent's counsel must have forgotten this as evident from the following exchange of letters between the parties, as follows:
1. Letter of Atty. Ta-asan to Atty. Cabarroguis dated November 16, 1990: 10
ATTY. HONESTO A. CABARROGUIS
Hacalex Bldg., Brokenshire
Complex, A. Pichon St.,
Davao City, Philippines
Dear Atty. Cabarroguis,
Greetings:
This is with reference to CA-G.R. CV No. 15939 entitled Commercial Credit Corporation of Davao vs.Ernesto F. Roldan and Marietta A. Roldan. My client, Mr.
& Mrs. Roldan, have sought my intercession instructing me to present to you a proposal to amicably settle the above entitled case.
My client wishes to make the following proposal:
xxx xxx xxx
2. To pay P50,000.00 pesos cash downpayment and balance with real properties located in M'lang, Cotabato, Philippines to be paid to the plaintiff's counsel for
his attorney's fees and other legal fees.
xxx xxx xxx
It is my client's fervent wish and desire that your client will favorably consider our proposal to satisfy their respective claims and interests.
xxx xxx xxx
11
2. Reply of Atty. Cabarroguis of even date:
Atty. R. Taa-san
Brgly Bldg. Davao City
Re: Your letter (Roldan Case) can we meet over coffee tomorrow at JALTAN Coffee Shop along A. Pichon St? Please confirm.
Regards.
H Cabarroguis
11-16-90
3. Letter of Atty. Ta-asan to petitioner Marietta A. Roldan dated November 17, 1990: 12
MRS. MARIETTA A. ROLDAN
MacArthur Highway, Matina,
Davao City, Philippines
Dear Mrs. Roldan,
I wish to inform you of the outcome of my conference with
Atty. Honesto A. Cabarroguis, legal counsel of the Commercial Credit Corporation (CCC), last Saturday November 17, 1990. During the conference, we made
known to Atty. Cabarroguis your previous proposal which I laid down in writing. However, Atty. Cabarroguis suggested some modifications. He has made the
following proposal:
xxx xxx xxx
2. The attorney's fees of Atty. Cabarroquis has not been altered. He is to be paid the full amount of P577,320.20 with P100,000.00 as initial downpayment. The
remaining balance can be paid in installments. You can make a proposal as to when you can fully satisfy his fees provided that you put up either a surety bond or
real property located in Davao City commensurate to the amount of your obligation;
xxx xxx xxx
13
4. Letter of Atty. Cabarroquis to Atty. Ta-asan dated November 29, 1990:
Atty. Rodolfo Ta-asan, Jr.
Davao City.
Re: CCC of Davao vs. Ernesto
Roldan et. als.
Dear Atty. Ta-asan,
Further to our conference yesterday afternoon and previous ones in connection with captioned case, I just came back from the office of the Register of Deeds of
Davao City where I checked the partial list of 334-titles in the name of Marietta A. Roldan which was furnished me by said office and which I showed you
yesterday.
xxx xxx xxx
May I suggest that the amount of One Hundred Thousand (P100,000.00) which is ready and available be paid to me immediately by your clients, in partial
payment of my fees from them and from my client. In turn, I could do a lot to help them get the waivers they are requesting from my clients through me.
However, with all of these lots available in Davao City to be levied upon on execution or to be the subject-matter of your proposed settlement, we shall in the
meantime disregard their offer of lots in M'lang to settle an otherwise favorable judgment already by the Court of Appeals.
xxx xxx xxx
Private respondent's counsel glaring cupidity is beyond Us. It could be that private respondent might have contracted with its counsel that the latter would get the 25% attorney's
fees stipulated in the promissory note as his attorney's fees. 14 The record however, does not show such an agreement. But even if this were so, it is no excuse for Atty.
Cabarroguis, private respondent's counsel, to act in such a manner as to evoke disgust from non-members of the Bar.
A lawyer is to uphold the integrity and dignity of the legal profession 15 and one who acts like a middleman always out on grabs for what he can get certainly lessens the dignity of
the legal profession.
The trial court found:
4. That one of the terms of Promissory Note is that in case of litigation, ". . . the makers and indorsers shall in addition pay 25% of the amount due as attorney's
fees and 33 1/3 more of the principal due and unpaid as liquidated damages . . ." (Exh. "F-2").
Twenty-five (25%) percent of the balance of the Promissory Note due which the trial court pegged at P579,576.13 is P579,576.13 x 0.25 = P144,894.03, which amount would be
due the private respondent — NOT its counsel — as attorney's fees. It is clear that the liquidated damages and other charges are not to be included for computation of the attorney's
fees. The reason why respondent's counsel came up with his attorney's fees of P577,320.20 is that he erroneously added the liquidated damages and other charges and interests due
to the balance of the promissory note to get the total due to which he applied the 25% stipulated fee.
WHEREFORE, in view of the foregoing, this Petition is partially granted. The private respondent is hereby AWARDED attorney's fees in the amount of ONE HUNDRED
FORTY FOUR THOUSAND, EIGHT HUNDRED NINETY FOUR PESOS AND THREE CENTAVOS (P144,894.03). The other awards of the trial court, as affirmed by the
respondent Court of Appeals, are hereby RETAINED.
SO ORDERED.

G.R. No. 160334 September 11, 2006


GUENTER BACH, petitioner,
vs.
ONGKIKO KALAW MANHIT & ACORDA LAW OFFICES, respondent.
DECISION
CHICO-NAZARIO, J.:
This Petition for Review on Certiorari seeks to reverse the Decision1 dated 8 October 2003 of the Court of Appeals in CA-G.R. CV No. 74445, entitled, "Ongkiko Kalaw Manhit
& Accorda Law Offices v. Guenter Bach."
The facts as culled from the records of the case are as follows:
On 7 November 1994, petitioner Guenter Bach engaged the services of respondent law firm Ongkiko Kalaw Manhit & Accorda Law Offices to represent him in a Petition for
Declaration of Nullity of Marriage filed before the Regional Trial Court (RTC) of Makati City, Branch 143, docketed as Civil Case No. 95-224. The parties signed a "Fee
Agreement," for the legal services to be rendered by respondent. The provision for payment of the legal services reads:
(a) seven and one-half (7 ½ % ) of all cash recoveries, including damages, interests, attorney's fees and costs; as well as
(b) five percent (5 %) of the market value of all properties awarded to [the petitioner] by the court or obtained through the compromise agreement, valued at the time of
recovery.2
However, on 5 December 1995, respondent withdrew its appearance as counsel of petitioner, due to policy differences. On 18 December 1995, respondent sent the termination
billing3 for the services they rendered and billed petitioner the total amount of P1,000,000.00 plus 2% interest for every month of delay in payment, based on the provision for
termination of services stated in their Fee Agreement, thus:
(C) Interest for late payment
All fees mentioned herein are payable within seven (7) days from receipt of our statement of account. It is understood that all late payments shall be subject to interest
payment at the rate of 2 % per month of delay, a fraction of a month being considered as one month, counted from the date the fees shall fall due, without need of prior
demand.
xxxx
(F) Termination Clause
It is understood that you may terminate our services at any time. In such an event, we shall be entitled to collect fees for legal services already performed and results
obtained based on quantum meruit."4
On 7 March 1996, respondent filed with the RTC a Notice 5 of Charging Lien over the properties of the spouses Bach.
On 5 February 1997, the RTC issued an Order6 directing the annotation of the charging lien in the amount of P1,000,000.00 on all the titles of the spouses Bach's personal and real
properties enumerated in the notice of charging lien.
On 11 February 1999, respondent received a copy of the Order 7 dated 8 June 1998, granting petitioner's Motion to Withdraw his petition in Civil Case No. 95-224.
Despite respondent's demands for his legal fees, petitioner failed and refused to pay. Thus, respondent filed a Complaint 8 for a sum of money also before the RTC of Makati,
Branch 148, docketed as Civil Case No. 99-514. Respondent prayed for the payment of the following: P1,000,000.00 as the latter's lawful fees for services rendered in Civil Case
No. 95-224, plus 2% interest from date of final demand until paid; P250,000.00 as exemplary damages; P200,000.00 representing billable time spent in prosecuting the case, plus
another P150,000.00 for any appeal taken; and P50,000.00 as litigation expenses and the cost of suit.
Within the period for filing an Answer, petitioner filed a Motion 9 to dismiss on the ground that respondent's claim had already been paid, waived, abandoned or otherwise
extinguished. Petitioner contended that prior to respondent's withdrawal as counsel in Civil Case No. 95-224, petitioner had already paid respondent's services in the total amount
of P200,000.00. On 9 August 1999, the Motion to Dismiss was denied10 by the RTC for lack of merit. Petitioner failed to file his Answer; thus, he was declared in default and
respondent was allowed to present its evidence ex parte.11
On 24 January 2002, the RTC rendered its judgment in favor of the respondent, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant and the latter is hereby ordered to pay the following:
1. The amount of P750,000.00 as plaintiff's lawful fees for services rendered under Civil Case No. 95-224, plus interest at the rate of 2% per month from the date of
demand until paid;
2. P700,000.00 representing billable time which was spent in prosecuting this case;
3. P50,000.00 as and litigation expenses, and
4. Costs of suit.12
Not satisfied, petitioner appealed to the Court of Appeals, which modified the RTC Decision, thus:
WHEREFORE, Based on the foregoing premises, the instant appeal is PARTLY GRANTED and the appealed January 24, 2002 Decision of the Regional Trial Court of
Makati City-Branch 148 in Civil Case No. 99-514 is hereby MODIFIED. Accordingly, the award of P700,000.00 representing billable time allegedly spent in the
prosecution of the case a quo is hereby DELETED. All other aspects of the appealed DECISION are UPHELD. 13
Hence, this Petition filed by petitioner Guenter Bach raising the following issues to wit:
WHETHER OR NOT UNDER THE CONCEPT OF QUANTUM MERUIT, THE AMOUNT OF P750,000.00 AS FEES FOR SERVICES RENDERED WITH
INTEREST PEGGED AT 2% A MONTH FROM DATE OF DEMAND UNTIL FULLY PAID IS REASONABLE
WHETHER OR NOT THERE IS LEGAL BASIS TO AWARD P50,000.00 AS AND FOR LITIGATION EXPENSES AND COSTS OF SUIT. 14
On the first issue, petitioner contends that the P750,000.00 awarded to the respondent by way of quantum meruit, with interest of 2% a month from date of demand until fully paid,
is excessive, unreasonable and confiscatory. Thus, petitioner prays for reduction of the same.
Both the Court of Appeals and the trial court approved the attorney's fees in the total amounts of P750,000.00 plus 2 % interest for the services rendered by respondent in Civil
Case No. 95-224. In this regard, the rule is that the issue of the reasonableness of attorney's fees based on quantum meruit is a question of fact, and well-settled is the rule that
conclusions and findings of fact by the lower courts are entitled to great weight on appeal and will not be disturbed except for strong and cogent reasons. The findings of the Court
of Appeals by itself, which are supported by substantial evidence, are almost beyond the power of review by the Supreme Court.15 Thus, in the exercise of the Supreme Court's
power of review the findings of facts of the Court of Appeals are conclusive and binding on the Supreme Court. There are, however, recognized exceptions to this rule, namely: (1)
when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave
abuse of discretion; (4) when the judgment is based on misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making the findings the Court of
Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellee and the appellant; (7) when the findings are contrary to the trial court;
(8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main
and reply briefs are not disputed by the respondent; (10) when the findings of facts are premised on the supposed absence of evidence and contradicted by the evidence on record;
and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which if properly considered, would justify a different
conclusion.16 Exceptions (4) and (11) are present in the case at bar, and so this Court shall make its own determination of the facts relevant for the resolution of the case.
Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by respondent to petitioner. However,
so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's
fees in favor of respondent.
There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered
to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing
party.17
The issue in this case concerns attorney's fees in the ordinary concept. Generally, the amount of attorney's fees due is that stipulated in the retainer agreement which is conclusive
as to the amount of the lawyer's compensation. In the absence thereof, the amount of attorney's fees is fixed on the basis of quantum meruit, i.e., the reasonable worth of the
attorney's services. Courts may ascertain also if the attorney's fees are found to be excessive, what is reasonable under the circumstances. 18 In no case, however, must a lawyer be
allowed to recover more than what is reasonable, pursuant to Section 24, Rule 138 of the Rules of Court, which provides:
SEC. 24. Compensation of attorney's fees; agreement as to fees.- An attorney shall be entitled to have and recover from his client no more than a reasonable compensation
for his services, with a view to the importance of the subject - matter of the controversy, the extent of the services rendered, and the professional standing of the attorney.
No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its
own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or
unreasonable. (Underscoring supplied.)
We have identified the circumstances to be considered in determining the reasonableness of a claim for attorney's fees as follows: (1) the amount and character of the service
rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility imposed; (5)
the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the performance of the
services; (7) the professional character and social standing of the attorney; (8) the results secured; and (9) whether the fee is absolute or contingent, it being recognized that an
attorney may properly charge a much larger fee when it is contingent than when it is not. 19
Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the following factors which should guide a lawyer in determining his fees:
(a) the time spent and extent of services rendered or required;
(b) the novelty and difficulty of the questions involved;
(c) the importance of the subject matter;
(d) the skill demanded;
(e) the probability of losing other employment as a result of the acceptance of the proffered case;
(f) the customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;
(g) the amount involved in the controversy and the benefits resulting to the client from the service;
(h) the contingency or certainty of compensation;
(i) the character of the employment, whether occasional or established; and
(j) the professional standing of the lawyer.
In determining a reasonable fee to be paid to respondent as compensation for their services on quantum meruit, based on the factors abovequoted, it is proper to consider
all the facts and circumstances obtaining in this case.
It is undisputed that respondent firm had rendered services as counsel for the petitioners in Civil Case No. 95-244. The services rendered consist of the following:
1. Respondent was able to annotate a notice20 of lis pendens on the property of Spouses Bach in Caloocan City covered by TCT No. C-12112, thereby preventing easy
disposition of the property by Luzviminda Bach;
2. Respondent was likewise able to annotate a notice21 of lis pendens on the property of Spouses Bach in Pasig City covered by TCT No. 48223, thereby preventing
disposition of the property by Luzviminda Bach;
3. Further, respondent annotated a notice22 of lis pendens on the property of Spouses Bach in Dasmarinas, Cavite covered by TCT No. T-339282, thereby preventing
disposition of the property by Luzviminda Bach;
4. Additionally, respondent annotated a notice23 of lis pendens on the property of Spouses Bach in Tanza, Cavite, covered by TCT No. T-255263, thereby preventing
disposition of the property by Luzviminda Bach;
5. Respondent also worked on the annotation of the notice 24 of lis pendens on the property of Spouses Bach in Makati, covered by TCT No. S-62541, thereby preventing
disposition of the property by Luzviminda Bach;
6. Respondent worked on the annotation of a notice of lis pendens on the property of Spouses Bach in Dasmariñas, Cavite, covered by TCT No. T-380848, thereby
preventing disposition of the property by Luzviminda Bach;
7. Respondent annotated a notice25 of lis pendens on the property of Spouses Bach situated in Tagaytay City, covered by TCT No. P-705, thereby preventing disposition
of the property by Luzviminda Bach;
8. Respondent filed the Petition26 for Declaration of Nullity of Marriage and Dissolution of the Conjugal Partnership of Gains of petitioner with his wife;
9. Respondent prepared an affidavit27 in favor of petitioner attesting to the fact of petitioner's marriage and their properties acquired during his marriage with Luzviminda
Bach:
10. Respondent prepared an ex parte motion28 to declare petitioner's wife to have waived her right to file answer for failure to file the same within the period granted by
law and to direct the public prosecutor to determine whether or not a collusion exist;
11. Respondent prepared a Petition29 for appointment of a receiver and to compel petitioner's wife to render an accounting;
12. Other services included the filling of several oppositions 30 to certain motions filed by petitioner's wife;
13. Respondent filed a motion31 to set the case for preliminary investigation;
14. Respondent filed an ex parte motion32 to declare petitioner's wife in default;
15. Respondent submitted a supplemental comment33 on the motion for leave to withdraw funds from Certificate of Participation filed by petitioner's wife;
16. Respondent filed a manifestation and motion34 praying the court to direct petitioner's wife to designate her lead counsel in the case;
17. Respondent prepared a Reply35 to comments on opposition of petitioner;
18. Respondent was able to secure an Order36 from the said court freezing the United Coconut Planters Bank (UCPB) account in the name of petitioner's wife, Luzviminda
Bach, containing about P6,500,000.00, representing the balance of the proceeds from the sale of their conjugal property in Pasig City;
19. Respondent represented petitioner in numerous hearings in Civil Case No. 95-224, evidenced by the signatures of the lawyers of respondent Law Firm in the minutes
dated 25 April 1995, 27 April, 1995, 14 June 1995, 27 June 1995, 1 August 1995, 11 August 1995, 22 September 1995,10 October 1995, 17 October 1995, 1 December
1995, 7 December 1995, 29 March 1996 and 16 January 1997; 37
20. Conducted several preliminary and post litigation conferences in the proceedings for preliminary injunction leading to the freezing of the bank account of the parties;
and
21. Prepared and sent out numerous letters to third parties and entities to protect the interest of petitioner and notices to petitioner updating him of the status of the case
and the courses of action taken by respondent Law Firm. 38
In sum, the services rendered by the respondent as enumerated above and as admitted 39 by Atty. Mario Ongkiko during the ex parte hearing, consist of annotating notice of lis
pendens on the conjugal properties of petitioner and his wife; filing the Petition for Declaration of Nullity of Marriage; preparing and filing various pleadings and documents
relevant to the case; obtaining a freeze order of petitioner's funds in the UCPB; attending hearings in Civil Case No. 05-224, and sending notices to petitioner updating the latter of
the status of the case. Nothing in Civil Case No. 95-224 so far appears complicated and no extra ordinary skill was needed for lawyers of respondent Law Firm to accomplish what
they had done in the case before they withdrew their appearance. We do not find herein a situation so intricate that demands more than a careful scrutiny of the legal matters
involved. These are simply the normal duties of a lawyer that he is bound by law to render to his clients with utmost fidelity for which his client must not be burdened to pay an
extra price. It bears stressing that at the time respondent firm withdrew their appearance due to policy differences with petitioner, the case was still in its initial stage.
Guided by the above yardstick and so much of the pertinent data as are extant in the records of this case and in the exercise of our sound discretion, we hold that the amount
of P500,000.00 is a reasonable and fair compensation for the legal services rendered by respondent to the petitioner.
The imposition of legal interest on the amount payable to private respondent as attorney's fees is unwarranted. Even as we agree that parties can freely stipulate on the terms of
payment, still the imposition of interest in the payment of attorney's fees is not justified. In the case of Cortes v. Court of Appeals,40 we ruled that Article 220941 of the Civil Code
does not even justify the imposition of legal interest on the payment of attorney's fees as it is a provision of law governing ordinary obligations and contracts. It deleted the 6%
interest imposed by the appellate court on the payment of attorney's fees. It ratiocinated by citing Mambulao Lumber Co. v. Philippine National Bank,42 thus:
Contracts for attorney's services in this jurisdiction stands upon an entirely different footing from contracts for the payment of compensation for any other
services. x x x [A]n attorney is not entitled in the absence of express contract to recover more than a reasonable compensation for his services; and even when an express
contract is made, the court can ignore it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the court to be unreasonable.
This is a very different rule from that announced in section 1091 of the Civil Code with reference to the obligation of contracts in general, where it is said that such
obligation has the force of law between the contracting parties. Had the plaintiff herein made an express contract to pay his attorney an uncontingent fee of P2,115.25 for
the services to be rendered in reducing the note here in suit to judgment, it would not have been enforced against him had he seen fit to oppose it, as such a fee is
obviously far greater than is necessary to remunerate the attorney for the work involved and is therefore unreasonable. In order to enable the court to ignore an express
contract for attorney's fees, it is necessary to show, as in other contracts, that it is contrary to morality or public policy (Art.1255, Civil Code). It is enough that it is
unreasonable or unconscionable. (Emphases supplied.)
We have held that lawyering is not a moneymaking venture and lawyers are not merchants. 43 Law advocacy, it has been stressed, is not capital that yields profits. The returns it
births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from governmental interference, is
impressed with a public interest, for which it is subject to State regulation.44
A lawyer is not merely the defender of his client's cause and a trustee of his client's cause of action and assets; he is also, and first and foremost, an officer of the court and
participates in the fundamental function of administering justice in society. 45 It follows that a lawyer's compensation for professional services rendered are subject to the
supervision of the court, not just to guarantee that the fees he charges and receives remain reasonable and commensurate with the services rendered, but also to maintain the dignity
and integrity of the legal profession to which he belongs. Upon taking his attorney's oath as an officer of the court, a lawyer submits himself to the authority of the courts to
regulate his right to charge professional fees.46
Though we reduced the award of attorney's fees and disallowed the imposition of interest thereon, the fact that an attorney plays a vital role in the administration of justice
underscores the need to secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to
judicial protection against injustice, imposition of fraud on the part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a
lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his capital consisting only of his brains and with his skill acquired at
tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to
escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client, he himself would not get his due.47
Thus, the Court of Appeals did not err in awarding expenses of litigation. Article 2208, paragraphs 2, 5 and 11, of the Civil Code, authorize the recovery of such fees "(2) When the
defendant's act or omission has compelled the plaintiff to litigate x x x or to incur expenses to protect his interest; x x x (5) Where the defendant acted in gross and evident bad faith
in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; x x x and (11) In any other case where the court deems it just and equitable that attorney's fees and
expenses of litigation should be recovered." Considering the fact that respondent was drawn into this litigation by petitioner to protect and defend their interest and taking into
account the services already rendered by respondent to petitioner, the sum of P30,000.00 as expenses of litigation and cost of suit would be reasonable under the premises.
WHEREFORE, the Decision appealed from is AFFIRMED WITH MODIFICATIONS to the effect that the attorney's fees awarded to respondent
is REDUCED to P500,000.00, the legal interest of 2% on the amount due to respondent is DELETED, and the award of litigation expenses is REDUCED to P30,000.00.
SO ORDERED.

EVANGELINA MASMUD (as substitute complainant for G.R. No. 183385


ALEXANDER J. MASMUD),
Petitioner,
Present:

YNARES-SANTIAGO, J.,
- versus -
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
NATIONAL LABOR RELATIONS COMMISSION (First
PERALTA, JJ.
Division) and ATTY. ROLANDO B. GO, JR.,
Respondents.
Promulgated:

February 13, 2009

x------------------------------------------------------------------------------------x

RESOLUTION

NACHURA, J.:
Before the Court is a petition for review on certiorari[1] assailing the Decision[2] dated October 31, 2007 and the Resolution dated June 6, 2008 of the Court of Appeals (CA) in
CA-G.R. SP No. 96279.

The facts of the case are as follows:

On July 9, 2003, Evangelina Masmuds (Evangelina) husband, the late Alexander J. Masmud (Alexander), filed a complaint [3] against First Victory Shipping Services and
Angelakos (Hellas) S.A. for non-payment of permanent disability benefits, medical expenses, sickness allowance, moral and exemplary damages, and attorneys fees. Alexander
engaged the services of Atty. Rolando B. Go, Jr. (Atty. Go) as his counsel.

In consideration of Atty. Gos legal services, Alexander agreed to pay attorneys fees on a contingent basis, as follows: twenty percent (20%) of total monetary claims as settled or
paid and an additional ten percent (10%) in case of appeal. It was likewise agreed that any award of attorneys fees shall pertain to respondents law firm as compensation.

On November 21, 2003, the Labor Arbiter (LA) rendered a Decision granting the monetary claims of Alexander. The dispositive portion of the decision, as quoted in the CA
Decision, reads:

WHEREFORE, foregoing considered, judgment is rendered finding the [First Victory Shipping Services and Angelakos (Hellas) S.A.] jointly and severally liable
to pay [Alexanders] total permanent disability benefits in the amount of US$60,000.00 and his sickness allowance of US$2,348.00, both in Philippine currency at
the prevailing rate of exchange at the time of payment; and to pay further the amount of P200,000.00 as moral damages, P100,000.00 as exemplary damages and
attorneys fees equivalent to ten percent (10%) of the total monetary award.
[Alexanders] claim for payment of medical expenses is dismissed for lack of basis.

SO ORDERED.[4]
Alexanders employer filed an appeal before the National Labor Relations Commission (NLRC). During the pendency of the proceedings before the NLRC, Alexander died. After
explaining the terms of the lawyers fees to Evangelina, Atty. Go caused her substitution as complainant. On April 30, 2004, the NLRC rendered a Decision dismissing the appeal
of Alexanders employer. The employer subsequently filed a motion for reconsideration. The NLRC denied the same in an Order dated October 26, 2004.

On appeal before the CA, the decision of the LA was affirmed with modification. The award of moral and exemplary damages was deleted. [5] Alexanders employers filed a petition
for certiorari[6] before this Court. On February 6, 2006, the Court issued a Resolution dismissing the case for lack of merit.

Eventually, the decision of the NLRC became final and executory. Atty. Go moved for the execution of the NLRC decision, which was later granted by the LA. The surety bond of
the employer was garnished. Upon motion of Atty. Go, the surety company delivered to the NLRC Cashier, through the NLRC Sheriff, the check amounting to P3,454,079.20.
Thereafter, Atty. Go moved for the release of the said amount to Evangelina.

On January 10, 2005, the LA directed the NLRC Cashier to release the amount of P3,454,079.20 to Evangelina. Out of the said amount, Evangelina paid Atty. Go the sum
of P680,000.00.

Dissatisfied, Atty. Go filed a motion to record and enforce the attorneys lien alleging that Evangelina reneged on their contingent fee agreement. Evangelina paid only the amount
of P680,000.00, equivalent to 20% of the award as attorneys fees, thus, leaving a balance of 10%, plus the award pertaining to the counsel as attorneys fees.

In response to the motion filed by Atty. Go, Evangelina filed a comment with motion to release the amount deposited with the NLRC Cashier. In her comment, Evangelina
manifested that Atty. Gos claim for attorneys fees of 40% of the total monetary award was null and void based on Article 111 of the Labor Code.

On February 14, 2005, the LA issued an Order [7] granting Atty. Gos motion, the fallo of which reads:

WHEREFORE, premises considered, and further considering the substitute complainants initial payment of 20% to movant-counsel of the monetary claims as
paid, let the balance or unpaid twenty (20%) per cent of attorneys fees due movant-counsel (or the amount of P839,587.39) be recorded as lien upon all the
monies that may still be paid to substitute complainant Evangelina Masmud.

Accordingly, the NLRC Cashier is directed to pay movant-counsel the amount of P677,589.96 which is currently deposited therein to partially satisfy the lien.
SO ORDERED.[8]

Evangelina questioned the February 14, 2005 Order of the LA before the NLRC. On January 31, 2006, the NLRC issued a Resolution [9] dismissing the appeal for lack of merit.

Evangelina then elevated the case to the CA via a petition for certiorari.[10] On October 31, 2007, the CA rendered a Decision[11] partially granting the petition. The dispositive
portion of the decision reads:

WHEREFORE, the petition is PARTIALLY GRANTED. The Resolutions dated January 31, 2006 and July 18, 2006 are hereby AFFIRMED with
MODIFICATION in that the Attorneys fees of respondent Atty. Rolando B. Go, Jr. is declared fully compensated by the amount of P1,347,950.11 that he has
already received.
SO ORDERED.[12]

Evangelina filed a motion for reconsideration. However, on June 6, 2008, the CA issued a Resolution [13] denying the motion for reconsideration for lack of merit.

Hence, the instant petition.

Evangelina presented this issue, viz.:

THE COURT OF APPEALS COMMITTED SERIOUS AND REVERSIBLE ERROR OF LAW IN ITS DECISION DATED 31 OCTOBER 2007 AND
RESOLUTION DATED 6 JUNE 2008 INSOFAR AS IT UPHOLDS RESPONDENT LAWYERS CLAIM OF FORTY PERCENT (40%) OF THE
MONETARY AWARD IN A LABOR CASE AS ATTORNEYS FEES.[14]

In effect, petitioner seeks affirmance of her conviction that the legal compensation of a lawyer in a labor proceeding should be based on Article 111 of the Labor Code.
There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered
to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing
party,[15] such that, in any of the cases provided by law where such award can be made, e.g., those authorized in Article 2208 of the Civil Code, the amount is payable not to the
lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. [16]

Here, we apply the ordinary concept of attorneys fees, or the compensation that Atty. Go is entitled to receive for representing Evangelina, in substitution of her husband, before
the labor tribunals and before the court.

Evangelina maintains that Article 111 of the Labor Code is the law that should govern Atty. Gos compensation as her counsel and assiduously opposes their agreed retainer
contract.

Article 111 of the said Code provides:

ART. 111. Attorney's fees. (a) In cases of unlawful withholding of wages the culpable party may be assessed attorney's fees equivalent to ten percent of the
amount of the wages recovered.

Contrary to Evangelinas proposition, Article 111 of the Labor Code deals with the extraordinary concept of attorneys fees. It regulates the amount recoverable as attorney's fees in
the nature of damages sustained by and awarded to the prevailing party. It may not be used as the standard in fixing the amount payable to the lawyer by his client for the legal
services he rendered.[17]

In this regard, Section 24, Rule 138 of the Rules of Court should be observed in determining Atty. Gos compensation. The said Rule provides:

SEC. 24. Compensation of attorney's; agreement as to fees. An attorney shall be entitled to have and recover from his client no more than a reasonable
compensation for his services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional
standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such
testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by
the court to be unconscionable or unreasonable.[18]
The retainer contract between Atty. Go and Evangelina provides for a contingent fee. The contract shall control in the determination of the amount to be paid, unless found by the
court to be unconscionable or unreasonable.[19] Attorney's fees are unconscionable if they affront one's sense of justice, decency or reasonableness. [20] The decree of
unconscionability or unreasonableness of a stipulated amount in a contingent fee contract will not preclude recovery. It merely justifies the fixing by the court of a reasonable
compensation for the lawyer's services.[21]

The criteria found in the Code of Professional Responsibility are also to be considered in assessing the proper amount of compensation that a lawyer should receive. Canon 20,
Rule 20.01 of the said Code provides:

CANON 20 A LAWYER SHALL CHARGE ONLY FAIR AND REASONABLE FEES.

Rule 20.01. A lawyer shall be guided by the following factors in determining his fees:

(a) The time spent and the extent of the services rendered or required;

(b) The novelty and difficulty of the question involved;

(c) The importance of the subject matter;

(d) The skill demanded;

(e) The probability of losing other employment as a result of acceptance of the proffered case;

(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;

(g) The amount involved in the controversy and the benefits resulting to the client from the service;

(h) The contingency or certainty of compensation;


(i) The character of the employment, whether occasional or established; and

(j) The professional standing of the lawyer.

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients may be protected from unjust charges.[22] The amount of contingent fees
agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much higher compensation is allowed
as contingent fees because of the risk that the lawyer may get nothing if the suit fails. [23] The Court finds nothing illegal in the contingent fee contract between Atty. Go and
Evangelinas husband. The CA committed no error of law when it awarded the attorneys fees of Atty. Go and allowed him to receive an equivalent of 39% of the monetary award.

The issue of the reasonableness of attorney's fees is a question of fact. Well-settled is the rule that conclusions and findings of fact of the CA are entitled to great weight on appeal
and will not be disturbed except for strong and cogent reasons which are absent in the case at bench. The findings of the CA, which are supported by substantial evidence, are
almost beyond the power of review by the Supreme Court. [24]

Considering that Atty. Go successfully represented his client, it is only proper that he should receive adequate compensation for his efforts. Even as we agree with the reduction of
the award of attorney's fees by the CA, the fact that a lawyer plays a vital role in the administration of justice emphasizes the need to secure to him his honorarium lawfully earned
as a means to preserve the decorum and respectability of the legal profession. 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 alone to ensure that a lawyer acts in a proper and lawful manner, but also to see that
a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is
entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the
best in him to secure justice for his client, he himself would not get his due. [25]

WHEREFORE, in view of the foregoing, the Decision dated October 31, 2007 and the Resolution dated June 6, 2008 of the Court of Appeals in CA-G.R. SP No. 96279 are
hereby AFFIRMED.

SO ORDERED.

G.R. No. 191247, July 10, 2013


FRANCISCO L. ROSARIO, JR., Petitioner, v. LELLANI DE GUZMAN, ARLEEN DE GUZMAN, PHILIP RYAN DE GUZMAN, AND ROSELLA DE GUZMAN
BAUTISTA, Respondents.

DECISION
MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the November 23, 20091 and the February 11, 20102 Orders of the Regional Trial
Court, Branch 7, Manila (RTC), in Civil Case No. 89-50138, entitled "Loreta A. Chong v. Sps. Pedro and Rosita de Guzman," denying the Motion to Determine Attorney's Fees
filed by the petitioner.
The Facts

Sometime in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de Guzman) engaged the legal services of Atty. Francisco L. Rosario, Jr. (petitioner) as defense counsel
in the complaint filed against them by one Loreta A. Chong (Chong) for annulment of contract and recovery of possession with damages involving a parcel of land in Parañaque
City, covered by Transfer Certificate of Title (TCT) No. 1292, with an area of 266 square meters, more or less. Petitioner’s legal services commenced from the RTC and ended up
in this Court.3 Spouses de Guzman, represented by petitioner, won their case at all levels. While the case was pending before this Court, Spouses de Guzman died in a vehicular
accident. Thereafter, they were substituted by their children, namely: Rosella de Guzman-Bautista, Lellani de Guzman, Arleen de Guzman, and Philip Ryan de Guzman
(respondents).4

On September 8, 2009, petitioner filed the Motion to Determine Attorney’s Fees 5 before the RTC. He alleged, among others, that he had a verbal agreement with the deceased
Spouses de Guzman that he would get 25% of the market value of the subject land if the complaint filed against them by Chong would be dismissed. Despite the fact that he had
successfully represented them, respondents refused his written demand for payment of the contracted attorney’s fees. Petitioner insisted that he was entitled to an amount
equivalent to 25% percent of the value of the subject land on the basis of quantum meruit.

On November 23, 2009, the RTC rendered the assailed order denying petitioner’s motion on the ground that it was filed out of time. The RTC stated that the said motion was filed
after the judgment rendered in the subject case, as affirmed by this Court, had long become final and executory on October 31, 2007. The RTC wrote that considering that the
motion was filed too late, it had already lost jurisdiction over the case because a final decision could not be amended or corrected except for clerical errors or mistakes. There
would be a variance of the judgment rendered if his claim for attorney’s fees would still be included.

Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of merit. Hence, this petition.
The Issues

This petition is anchored on the following grounds:cralavvonlinelawlibrary


I

THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE MOTION TO DETERMINE ATTORNEY’S FEES ON THE GROUND THAT IT LOST
JURISDICTION OVER THE CASE SINCE THE JUDGMENT IN THE CASE HAS BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary
II

THE TRIAL COURT SERIOUSLY ERRED IN DECLARING THAT PETITIONER’S CLAIM FOR ATTORNEY’S FEES WOULD RESULT IN A VARIANCE OF THE
JUDGMENT THAT HAS LONG BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary
III
THE TRIAL COURT ERRED IN NOT DECLARING THAT THE FINALITY OF THE DECISION DID NOT BAR PETITIONER FROM FILING THE MOTION TO
RECOVER HIS ATTORNEY’S FEES.6nadcralavvonlinelawlibrary

Petitioner claims that Spouses de Guzman engaged his legal services and orally agreed to pay him 25% of the market value of the subject land. He argues that a motion to recover
attorney’s fees can be filed and entertained by the court before and after the judgment becomes final. Moreover, his oral contract with the deceased spouses can be considered a
quasi-contract upon which an action can be commenced within six (6) years, pursuant to Article 1145 of the Civil Code. Because his motion was filed on September 8, 2009, he
insists that it was not yet barred by prescription.7

For their part, respondents counter that the motion was belatedly filed and, as such, it could no longer be granted. In addition, the RTC had already resolved the issue when it
awarded the amount of ?10,000.00 as attorney’s fees. Respondents further assert that the law, specifically Article 2208 of the Civil Code, allows the recovery of attorney’s fees
under a written agreement. The alleged understanding between their deceased parents and petitioner, however, was never put in writing. They also aver that they did not have any
knowledge or information about the existence of an oral contract, contrary to petitioner’s claims. At any rate, the respondents believe that the amount of 25% of the market value of
the lot is excessive and unconscionable.8
The Court’s Ruling

Preliminarily, the Court notes that the petitioner filed this petition for review on certiorari under Rule 45 of the Rules of Court because of the denial of his motion to determine
attorney’s fees by the RTC. Apparently, the petitioner pursued the wrong remedy. Instead of a petition for review under Rule 45, he should have filed a petition for certiorari under
Rule 65 because this case involves an error of jurisdiction or grave abuse of discretion on the part of the trial court.

Moreover, petitioner violated the doctrine of hierarchy of courts which prohibits direct resort to this Court unless the appropriate remedy cannot be obtained in the lower
tribunals.9 In this case, petitioner should have first elevated the case to the Court of Appeals (CA) which has concurrent jurisdiction, together with this Court, over special civil
actions for certiorari.10 Even so, this principle is not absolute and admits of certain exceptions, such as in this case, when it is demanded by the broader interest of justice.11

Indeed, on several occasions, this Court has allowed a petition to prosper despite the utilization of an improper remedy with the reasoning that the inflexibility or rigidity of the
application of the rules of procedure must give way to serve the higher ends of justice. The strict application of procedural technicalities should not hinder the speedy disposition of
the case on the merits.12 Thus, this Court deems it expedient to consider this petition as having been filed under Rule 65.

With respect to the merits of the case, the Court finds in favor of petitioner.

In order to resolve the issues in this case, it is necessary to discuss the two concepts of attorney’s fees – ordinary and extraordinary. In its ordinary sense, it is the reasonable
compensation paid to a lawyer by his client for legal services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing
party as indemnity for damages.13 Although both concepts are similar in some respects, they differ from each other, as further explained below:cralavvonlinelawlibrary
The attorney’s fee which a court may, in proper cases, award to a winning litigant is, strictly speaking, an item of damages. It differs from that which a client pays his counsel for
the latter’s professional services. However, the two concepts have many things in common that a treatment of the subject is necessary. The award that the court may grant to a
successful party by way of attorney’s fee is an indemnity for damagessustained by him in prosecuting or defending, through counsel, his cause in court. It may be decreed
in favor of the party, not his lawyer, in any of the instances authorized by law. On the other hand, the attorney’s fee which a client pays his counsel refers to the compensation
for the latter’s services. The losing party against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his liability dependent upon, the fee
arrangement of the prevailing party with his lawyer. The amount stipulated in such fee arrangement may, however, be taken into account by the court in fixing the amount of
counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries against the losing party. The client and his lawyer
may, however, agree that whatever attorney’s fee as an element of damages the court may award shall pertain to the lawyer as his compensation or as part thereof. In such a case,
the court upon proper motion may require the losing party to pay such fee directly to the lawyer of the prevailing party.
The two concepts of attorney’s fees are similar in other respects. They both require, as a prerequisite to their grant, the intervention of or the rendition of professional services by a
lawyer. As a client may not be held liable for counsel fees in favor of his lawyer who never rendered services, so too may a party be not held liable for attorney’s fees as damages
in favor of the winning party who enforced his rights without the assistance of counsel. Moreover, both fees are subject to judicial control and modification. And the rules
governing the determination of their reasonable amount are applicable in one as in the other. 14 [Emphases and underscoring supplied]

In the case at bench, the attorney’s fees being claimed by the petitioner refers to the compensation for professional services rendered, and not as indemnity for damages. He is
demanding payment from respondents for having successfully handled the civil case filed by Chong against Spouses de Guzman. The award of attorney’s fees by the RTC in the
amount of P10,000.00 in favor of Spouses de Guzman, which was subsequently affirmed by the CA and this Court, is of no moment. The said award, made in its extraordinary
concept as indemnity for damages, forms part of the judgment recoverable against the losing party and is to be paid directly to Spouses de Guzman (substituted by respondents)
and not to petitioner. Thus, to grant petitioner’s motion to determine attorney’s fees would not result in a double award of attorney’s fees. And, contrary to the RTC ruling, there
would be no amendment of a final and executory decision or variance in judgment.

The Court now addresses two (2) important questions: (1) How can attorney’s fees for professional services be recovered? (2) When can an action for attorney’s fees for
professional services be filed? The case of Traders Royal Bank Employees Union-Independent v. NLRC15 is instructive:cralavvonlinelawlibrary
As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondent’s present claim for attorney’s fees may be
filed before the NLRC even though or, better stated, especially after its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney’s fees
may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney’s fees as an incident of the main action may be availed of only when something is due to the
client. Attorney’s fees cannot be determined until after the main litigation has been decided and the subject of the recovery is at the disposition of the court. The issue
over attorney’s fees only arises when something has been recovered from which the fee is to be paid.

While a claim for attorney’s fees may be filed before the judgment is rendered, the determination as to the propriety of the fees or as to the amount thereof will have to
be held in abeyance until the main case from which the lawyer’s claim for attorney’s fees may arise has become final. Otherwise, the determination to be made by the
courts will be premature. Of course, a petition for attorney’s fees may be filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to
the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private respondent was well within his rights
when he made his claim and waited for the finality of the judgment for holiday pay differential, instead of filing it ahead of the award’s complete resolution. To declare
that a lawyer may file a claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his aforestated options and
render ineffective the foregoing pronouncements of this Court. [Emphases and underscoring supplied]

In this case, petitioner opted to file his claim as an incident in the main action, which is permitted by the rules. As to the timeliness of the filing, this Court holds that the questioned
motion to determine attorney’s fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on October 31, 2007. There is no dispute that petitioner filed his Motion to Determine
Attorney’s Fees on September 8, 2009, which was only about one (1) year and eleven (11) months from the finality of the RTC decision. Because petitioner claims to have had an
oral contract of attorney’s fees with the deceased spouses, Article 1145 of the Civil Code 16 allows him a period of six (6) years within which to file an action to recover
professional fees for services rendered. Respondents never asserted or provided any evidence that Spouses de Guzman refused petitioner’s legal representation. For this reason,
petitioner’s cause of action began to run only from the time the respondents refused to pay him his attorney’s fees, as similarly held in the case of Anido v. Negado:17
In the case at bar, private respondent’s allegation in the complaint that petitioners refused to sign the contract for legal services in October 1978, and his filing of the complaint
only on November 23, 1987 or more than nine years after his cause of action arising from the breach of the oral contract between him and petitioners point to the conclusion that
the six-year prescriptive period within which to file an action based on such oral contract under Article 1145 of the Civil Code had already lapsed.

As a lawyer, private respondent should have known that he only had six years from the time petitioners refused to sign the contract for legal services and to acknowledge
that they had engaged his services for the settlement of their parents’ estate within which to file his complaint for collection of legal fees for the services which he
rendered in their favor. [Emphases supplied]

At this juncture, having established that petitioner is entitled to attorney’s fees and that he filed his claim well within the prescribed period, the proper remedy is to remand the case
to the RTC for the determination of the correct amount of attorney’s fees. Such a procedural route, however, would only contribute to the delay of the final disposition of the
controversy as any ruling by the trial court on the matter would still be open for questioning before the CA and this Court. In the interest of justice, this Court deems it prudent to
suspend the rules and simply resolve the matter at this level. The Court has previously exercised its discretion in the same way in National Power Corporation v. Heirs of
Macabangkit Sangkay:18
In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention of the courts is sought, the determination requires that there be evidence
to prove the amount of fees and the extent and value of the services rendered, taking into account the facts determinative thereof. Ordinarily, therefore, the determination of the
attorney’s fees on quantum meruit is remanded to the lower court for the purpose. However, it will be just and equitable to now assess and fix the attorney’s fees of both
attorneys in order that the resolution of “a comparatively simple controversy,” as Justice Regalado put it in Traders Royal Bank Employees Union-Independent v. NLRC,
would not be needlessly prolonged, by taking into due consideration the accepted guidelines and so much of the pertinent data as are extant in the records.19 [Emphasis supplied]

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s considered view that he is deserving of it and that the amount should be based on quantum
meruit.
Quantum meruit – literally meaning as much as he deserves – is used as basis for determining an attorney’s professional fees in the absence of an express agreement. The recovery
of attorney’s fees on the basis of quantum meruit is a device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying
for it and also avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to reasonable compensation for the effort in pursuing the
client’s cause, taking into account certain factors in fixing the amount of legal fees. 20

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of attorney fees, to wit:cralavvonlinelawlibrary
Rule 20.1 – A lawyer shall be guided by the following factors in determining his fees:cralavvonlinelawlibrary
a) The time spent and the extent of the services rendered or required;chanroblesvirtualawlibrary

b) The novelty and difficulty of the questions involved;chanroblesvirtualawlibrary

c) The importance of the subject matter;chanroblesvirtualawlibrary

d) The skill demanded;chanroblesvirtualawlibrary

e) The probability of losing other employment as a result of acceptance of the proffered case;chanroblesvirtualawlibrary

f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;chanroblesvirtualawlibrary

g) The amount involved in the controversy and the benefits resulting to the client from the service;chanroblesvirtualawlibrary

h) The contingency or certainty of compensation;chanroblesvirtualawlibrary

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.


Petitioner unquestionably rendered legal services for respondents’ deceased parents in the civil case for annulment of contract and recovery of possession with damages. He
successfully represented Spouses de Guzman from the trial court level in 1990 up to this Court in 2007, for a lengthy period of 17 years. After their tragic death in 2003, petitioner
filed a notice of death and a motion for substitution of parties with entry of appearance and motion to resolve the case before this Court.21 As a consequence of his efforts, the
respondents were substituted in the place of their parents and were benefited by the favorable outcome of the case.

As earlier mentioned, petitioner served as defense counsel for deceased Spouses de Guzman and respondents for almost seventeen (17) years. The Court is certain that it was not an
easy task for petitioner to defend his clients’ cause for such a long period of time, considering the heavy and demanding legal workload of petitioner which included the research
and preparation of pleadings, the gathering of documentary proof, the court appearances, and the various legal work necessary to the defense of Spouses de Guzman. It cannot be
denied that petitioner devoted much time and energy in handling the case for respondents. Given the considerable amount of time spent, the diligent effort exerted by petitioner,
and the quality of work shown by him in ensuring the successful defense of his clients, petitioner clearly deserves to be awarded reasonable attorney’s fees for services rendered.
Justice and equity dictate that petitioner be paid his professional fee based on quantum meruit.

The fact that the practice of law is not a business and the attorney plays a vital role in the administration of justice underscores the need to secure him his honorarium lawfully
earned as a means to preserve the decorum and respectability of the legal profession. A layer is as much entitled to judicial protection against injustice, imposition or fraud on the
part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty to
see that a lawyer is paid his just fees. With his capital consisting of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and
energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after
putting forth the best in him to secure justice for his client he himself would not get his due. 22

The Court, however, is resistant in granting petitioner's prayer for an award of 25% attorney's fees based on the value of the property subject of litigation because petitioner failed
to clearly substantiate the details of his oral agreement with Spouses de Guzman. A fair and reasonable amount of attorney's fees should be 15% of the market value of the
property.

WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion to Determine Attorney's Fees filed by petitioner Atty. Francisco L. Rosario, Jr. Based
on quantum meruit, the amount of attorney's fees is at the rate of 15% of the market value of the parcel of land, covered by Transfer Certificate of Title No. 1292, at the time of
payment.

SO ORDERED.
RESEARCH and SERVICES REALTY, INC., petitioner, vs. COURT OF APPEALS and MANUEL S. FONACIER, JR., respondents.
DECISION
DAVIDE, JR., J.:
This petition for review on certiorari under Rule 45 of the Rules of Court questions the propriety of the award for, and the reasonableness of the amount of, attorney's fees
granted in favor of the private respondent by the Regional Trial Court (RTC) of Makati City, Branch 64, [1] in Civil Case No. 612,[2] which the Court of Appeals affirmed in its
decision[3] of 31 March 1995 in CA-G.R. CV No. 44839.
The undisputed facts are as follows:
On 3 November 1969, the petitioner entered into a Joint Venture Agreement with Jose, Fidel, and Antonia Carreon. Under the said agreement, the petitioner undertook to
develop, subdivide, administer, and promote the sale of the parcels of land owned by the Carreons. The proceeds of the sale of the lots were to be paid to the Philippine National
Bank (PNB) for the landowner's mortgage obligation, and the net profits to be shared by the contracting parties on a 50-50 basis.
On 4 April 1983, the Carreons and a certain Patricio C. Sarile instituted before the RTC of Makati City an action against the petitioner for rescission of the Joint Venture
Agreement.They prayed therein that pending the hearing of the case, a writ of preliminary injunction be issued to enjoin the petitioner from selling the lots subject of the agreement
and that after hearing, the writ be made permanent; the agreement be rescinded; and the petitioner be ordered to pay the PNB the stipulated 15% per annum of the outstanding
obligation and to pay the plaintiffs attorney's fees, exemplary damages, expenses of litigation, and costs of suit. This case was docketed as Civil Case No. 612 at Branch 64 of the
said court.
In its answer, which was prepared and signed by Atty. Apolonio G. Reyes, the petitioner sought the denial of the writ of preliminary injunction, the dismissal of the
complaint, and payment in its favor of (a) P10 million by way of actual damages; (b) P5 million by way of return to the petitioner of the amount advanced to the Carreons,
payments to the PNB, and cost of the work on the subdivision; (c) P100,000.00 by way of exemplary damages; (d) any and all damages up to the amount of P4,638,420.00 which
the petitioner may suffer under the terms of its Performance Bond in favor of the National Housing Authority; (e) P50,000.00 as attorney's fees; and (f) costs of suit.
[4]
On 9 April 1985, the petitioner engaged the services of private respondent Atty. Manuel S. Fonacier, Jr., who then entered his appearance in Civil Case No. 612.
While the said case was pending, or on 24 July 1992, the petitioner, without the knowledge of the private respondent, entered into a Memorandum of Agreement
(MOA)[5] with another land developer, Filstream International, Inc. (hereinafter Filstream). Under this MOA, the former assigned its rights and obligations under the Joint Venture
Agreement in favor of the latter for a consideration of P28 million, payable within twenty-four months.
On 31 March 1993, the petitioner terminated the legal services of the private respondent. At the time the petitioner had already received P7 million from Filstream.
Upon knowing the existence of the MOA, the private respondent filed in Civil Case No. 612 an Urgent Motion to Direct Payment of Attorney's Fees and/or Register
Attorney's Charging Lien praying, among other things, that the petitioner be ordered to pay him the sum of P700,000.00 as his contingent fee in the case.[6]
After hearing the motion, the trial court issued an order dated 11 October 1993 directing the petitioner to pay the private respondent the sum of P600,000.00 as attorney's fees
on the basis of quantum meruit.
The trial court justified the award in this manner:
Insofar as material to the resolution of this Motion the records of this case show that movant Atty. Fonacier became the counsel of defendant Research in May 1985 while this case
has been in progress. (Records, p.770). By this time also, the defendant Research has been enjoined by the Court from executing Contracts To Sell involving Saranay Homes
Subdivision . . . . (Order dated December 3, 1984, Records pp. 625-626). However, the said counsel for defendant Research prepared for the latter various pleadings and
represented it in Court (See Records after May 1985). Until his services were terminated the lawyer client relationship between Atty. Fonacier and Research was governed by a
"contract" embodied in a letter addressed to Atty. Fonacier on April 19, 1985 [sic], the pertinent portion of which is reproduced below, as follows . . .
xxx
Soon after said letter, cases were referred to him including this case. In accordance with their agreement, there were instances that Research gave Atty. Fonacier ten (10%) percent
of the amount received as the latter's attorney's fees pursuant to their agreement.
The instant case in which defendant is praying to be awarded attorney's fees, is an action for rescission of the Joint Venture Agreement between plaintiffs, Patricio Sarile, et al., as
owners of a parcel of land and defendant Research & Service Realty, Inc., as developer of the land. At the time Atty. Fonacier entered his appearance as counsel for defendant
Research, the Court has issued a preliminary injunction against Research. Thus all developmental and commercial activities of defendant had to stop. In this regard, Atty. Fonacier
did spade work towards persuading the plaintiffs to agree to the relaxation of the effects of the injunction to pave the way to a negotiation with a third-party, the Filstream. Atty.
Fonancier's efforts were complemented by the efforts of his counterpart in the plaintiff's side. The third-party Filstream Inc., became the assignee of defendant Research. In this
connection, a memorandum of agreement was entered into between them. By the terms of agreement, defendant Research will be receiving from the third party Filstream
International, Inc. (Filstream) the following amount. . . .
xxx
The termination of the legal services of Atty. Fonacier was made definite on March 31, 1993 at which time the Memorandum of Agreement which Research entered into with
Filstream, Inc., has already been effective. By this time also, defendant Research has already received the first two stipulated consideration of the agreement in the total sum of Six
Million (P6,000,000.00). The necessary and legal consequence of said "Memorandum of Agreement" is the termination of the case insofar as plaintiff Patricio Sarile, et al. and
defendant Research is concerned. The conclusion of the Memorandum of Agreement insofar as the cause of Research is concerned, is a legal victory for defendant Research. What
could have been a loss in investment has been turned to a legal victory. Atty. Fonancier's effort contributed to defendant's victory, albeit outside the Court which would not have
been possible without the legal maneuvering of a lawyer.
The dismissal of the case before this Court will come in a matter of time considering that plaintiffs, with the assumption by the third party, Filstream Inc., of what were supposed to
be the obligations to them of defendant Research pursuant to their Joint Venture Agreement, is no longer interested in pursuing the rescission.
It is a matter of record that Atty. Fonacier is the last of the three lawyers who handled this case. Moreover it is Atty. Fonacier who contributed to the forging of the memorandum
of agreement as testified to by Atty. Rogel Atienza one of the two retained counsels of plaintiffs.
Considering the importance which is attached to this case, certainly it would not be fair for Atty. Fonacier if his attorney's fees in this case would be equated only to the measly
monthly allowance of (P800.00) Pesos and office space and other office facilities provided by defendant Research. Ten (10%) per cent of the amount which Research had received
from Filstream at the time of the termination of a lawyer-client relationship between Atty. Fonacier and Research or P600,000.00 will be a just and equitable compensation for
Atty. Fonancier's legal services, by way of quantum meruit (See Cabildo v. Provincial Treasurer, Ilocos Norte, et al., 54 SCRA 26).[7]
In its Order[8] of 12 January 1994, the trial court denied the petitioner's motion for reconsideration of the above order.
The petitioner appealed to the Court of Appeals. In its Appellant's Brief,[9] the petitioner alleged that the private respondent was not entitled to attorney's fees under the
retainer contract.Moreover, the private respondent did not exert any effort to amicably settle the case, nor was he even present during the negotiations for the settlement of the
same. There was, therefore, no legal and factual justification for the private respondent's "fantastic and unreasonable claim for attorney's fees of P600,000.00."
On the other hand, the private respondent asserted that he was assured by the petitioner that non-collection cases were included in the contingent fee arrangement specified in
the retainer contract wherein there was to be contingent compensation for any award arising from any lawsuit handled by him. According to him, Civil Case No. 612 was not the
only "non-collection" case he handled for the petitioner. There was a "right of way" dispute where the petitioner was awarded P50,000.00, and the latter paid him P5,000.00, or
10% of the award as attorney's fees. He thus stressed that since under the memorandum of agreement the petitioner was to receive P28 million, he should be entitled to 10% thereof
or P2.8 million as attorney's fees.
In its decision [10] of 31 March 1995, the Court of Appeals affirmed the challenged order of the trial court. It ratiocinated as follows:
Movant-appellee, on the other hand, correctly argues that it was the clear intention of appellant and counsel to compensate the latter for any legal services rendered by him to the
former. Stated otherwise, it was never the intention of the parties in the instant appeal that counsel's services shall be free or to be rendered ex gratia.
xxx
It must in addition be underscored that the retainer contract of April 9, 1985 is the law that governs the relationship between appellant and appellee. In fact, the following
provisions squarely and categorically supports the award of P600,000.00 to counsel, to wit:
Minimal allowance of P800 per month plus contingent fees and collection cases (case to case basis) aside from the attorney's fee recovered from any law suit.
(Paragraph 3, Retainer Contract)
In an American jurisprudence on this point cited in local annotation on the Canon of Professional Ethics, it was held that "if a lawyer renders valuable services to one who receives
the benefits thereof, a promise to pay a reasonable value is presumed, unless such services were intended to be gratuitous" (Young vs. Buere, 78 Cal. Am. 127) In effect, to
compensate a lawyer, we are faced with the pivotal question: "was the legal services intended to be free or not?" If it is not free, then, appellant must simply pay. The 10%
contingent fee of the amount collected and/or to be collected in Civil Case No. 612 of the lower court, is, to Our mind fair and reasonable. As ruled by the Supreme Court in the
case of Cosmopolitan Insurance Co. vs. Angel Reyes (G.R. L-20199, Nov. 23, 1965) 15% was even deemed reasonable. [11]
The petitioner filed a motion for reconsideration [12] on the ground among other things, that the decision is contrary to the evidence, as the trial court granted the claim for
attorney's fees based on quantum meruit, yet, the Court of Appeals granted the same on a contingent basis which it based on an erroneous quotation and comprehension of the
following provision of the retainer contract:
Minimal allowance of P800.00 per month plus contingent fees on collection cases (case to case basis) aside from the attorney's fees recovered from any law suit. (underscoring
ours) [13]
In its decision, the Court of Appeals substituted the word "on" after "contingent fees" with the word "and." Under the aforequoted paragraph, the private respondent was entitled to
attorney's fees on contingent basis in collection cases only. In non collection cases, he was entitled only to the attorney's fees that might be recovered in the lawsuit. [14] Since Civil
Case No. 612 is not a collection case but an action for rescission of a contract, then the aforequoted paragraph is not applicable as a basis for awarding attorney's fees to the private
respondent. [15]
Finding nothing new in the motion for reconsideration, the Court of Appeals denied it in the re-solution [16] of 15 February 1996.
The petitioner then came to us via this petition for review wherein it contends that
I
RESPONDENT COURT OF APPEALS HAD DECIDED THE CASE NOT IN ACCORD WITH LAW AND THE UNDISPUTED FACTS OF THE CASE.
II
RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AWARDING ON CONTINGENT BASIS RESPONDENT-APPELLEE'S
ATTORNEY'S FEES ON THE BASIS OF A MEMORANDUM OF AGREEMENT IN WHICH HE HAD NO PARTICIPATION IN THE NEGOTIATION AND
PREPARATION THEREOF.
III
RESPONDENT COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN AWARDING EXCESSIVE AND UNREASONABLE ATTORNEY'S FEES.
IV
THE TRIAL COURT AND THE RESPONDENT COURT OF APPEALS HAVE NO JURISDICTION TO SATISFY ATTORNEY'S CHARGING LIEN ON A SUM OF
MONEY THAT THE COURT HAD NO AUTHORITY TO DISPOSE OF AND OVER WHICH THE TRIAL COURT HAD MADE NO FINAL ADJUDICATION.
The petitioner's more important argument in support of the first error is the Court of Appeals' misquotation of the provision in the retainer contract regarding attorney's fees
on contingent basis, which the petitioner had stressed in its motion for reconsideration. The petitioner maintains that under the contract, attorney's fees on contingent basis could
only be awarded in collection cases, and Civil Case No. 612 is not a collection case. Hence, the Court of Appeals erred in affirming the award on that basis, while the trial court
was correct in applying the principle of quantum meruit.
In its second assigned error, the petitioner asserts that the private respondent admitted in his Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's
Charging Lien that he had not participated in the negotiations and preparation of the memorandum of agreement, thus:
Despite the dishonest concealment, by the light of Providence coupled with a streak of good luck, counsel discovered in the first week of March 1993 that the parties had
respectively entered into a meaningful agreement with a third-party as early as July 27, 1992, which in the case of client, case in the form of a "Memorandum of Agreement"
(MOA) . . . . [17]
The third assigned error is but a logical consequence of the second, and the petitioner maintains that since the private respondent "did not do anything spectacular or out of the
ordinary" in Civil Case No. 612, "except to ask for the suspension or postponement of the proceedings thereof from 1985 to 1993," the P600,000.00 attorney's fees, whether on
contingent basis or quantum meruit, is excessive and unreasonable.
In the fourth imputed error, the petitioner argues that the memorandum of agreement was never submitted to the trial court, and the trial court never made any disposition or
adjudication over the proceeds of the said agreement. What would eventually happen then is the dismissal of Civil Case No. 612, as the trial court itself had intimated in its
challenged order.Necessarily then, there would be no money adjudication in favor of the petitioner as the defendant therein. Since such lien is collectible only from an award of
money that a court would adjudicate in a judgment rendered in favor of the attorney's client pursuant to Section 37, Rule 138 of the Rules of Court, it would follow that no
attorney's charging lien could be validly entered.
We uphold the petitioner, but not necessarily on the strength of it arguments.
The parties are in agreement that the lawyer-client relationship between the petitioner and the private respondent, Atty. Manuel S. Fonacier, Jr., was governed by a retainer
contract dated 9 April 1985. The petitioner's undertakings thereunder are outlined as follows:
I. CORPORAT[ION]:
1. Corporation will provide the following:
a. Office space airconditioned
b. Furnishings, tables, executive chairs, visitor's chair & steel filing cabinet
c. Telephone facilities and partial secretarial services.
2. Legal service referrals by the corporation to its clients for additional income of the lawyer.
3. Minimal allowance of P800 per month plus contingent fees on contingent fees on collection cases (case to case basis) aside from the attorney's fees recovered from
any lawsuit.
4. That in case of legal problems to be attended to outside Metro Manila and Suburbs, the corporation shall defray expenses for transportation, lodging and other legal
expenses incidental in the case. [18]
An analysis of the contract clearly shows that it was a general retainer, since its primary purpose was to secure beforehand the services of the private respondent for any legal
problem which might afterward arise. [19] The fixed retaining fee was P800.00 a month. A retaining fee is a preliminary fee paid to ensure and secure a lawyer's future services, to
remunerate him for being deprived, by being retained by one party, of the opportunity of rendering services to the other party and of receiving pay from him. In the absence of an
agreement to the contrary, the retaining fee is neither made nor received in consideration of the services contemplated; it is apart from what the client has agreed to pay for the
services which he has retained him to perform. [20]
In the retainer contract in question, there was no intention to make the retaining fee as the attorney's fees for the services contemplated. This is evident from the provision
allowing additional attorney's fees in collection cases consisting of (1) a "contingent fee" and (2) whatever the petitioner might recover as attorney's fees in each case. The latter
could only refer to the attorney's fees which the court might award to the petitioner in appropriate cases.
While the contract did not mention non-collection cases, it is, nevertheless, clear therefrom that such cases were not excluded from the retainership, as borne out by the
provision requiring the private respondent to "make appearances in Court for cases involving the corporation or any allied cases pertaining to the latter." As to such cases, there
was no specific stipulation of additional attorney's fees. Nevertheless, nothing therein shows that the private respondent agreed to render professional service in such cases
gratuitously. The absence then of the stipulation of additional attorney's fees cannot be construed as a bar to the collection of additional attorney's fees in non-collection cases.
Two basic principles come into play. The first is as stated earlier, viz., that the retaining fee is neither made nor received in consideration of the services contemplated unless
the contract itself so provides. The second is that, unless expressly stipulated, rendition of professional services by a lawyer is for a fee or compensation and is not gratuitous. This
is implicit from the opening clause of Section 24, Rule 138 of the Rules of Court, which states that "[a]n attorney shall be entitled to have and recover from his client no more than
a reasonable compensation for his services . . .," and by virtue of the innominate contract of facio ut des (I do and you give), as enunciated by this Court in Corpus v. Court of
Appeals, [21] thus:
Moreover, the payment of attorney's fees . . . may also be justified by virtue of the innominate contract of facio ut des (I do and you give) which is based on the principle that "no
one shall unjustly enrich himself at the expense of another." Innominate contracts have been elevated to a codal provision in the New Civil Code by providing under Article 1307
that such contracts shall be regulated by the stipulations of the parties, by the general provisions or principles of obligations and contracts, by the rules governing the most
analogous nominate contracts, and by the customs of the people. The rationale of this article was stated in the 1903 case of Perez vs. Pomar (2 Phil. 682).
In Perez v. Pomar, [22] this Court stated:
[B]ut whether the plaintiff's services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by
the latter, we must consider that there was a tacit and mutual consent as to the rendition of the services. This gives rise to the obligation upon the person benefited by the services to
make compensation therefor, since the bilateral obligation to render service as interpreter, on the one hand, and on the other to pay for the services rendered, is thereby incurred.
(Arts. 1088, 1089, and 1262 of the Civil Code).
Accordingly, as to non-collection cases where the petitioner was either a plaintiff or a defendant, the private respondent could still collect attorney's fees, apart from his
regular retaining fee, on the basis of any-supplemental agreement or, in its absence, under the principle of quantum meruit. There was no such supplemental agreement in this case.
We cannot sustain the private respondent's theory that he could collect attorney's fees on contingent basis because in the other "non-collection" cases he handled for the
petitioner' he was paid on contingent basis at the rate of 10% of what was awarded to the petitioner. In the first place, Civil Case No. 612 is still unresolved, and no judgment has
yet been rendered in favor of the petitioner. The amount in the memorandum of agreement could not be made the basis of a "contingent fee" in the said case for at least three
reasons. First, in his own Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien, the private respondent based the contingent fee not only
in Civil Case No. 612 but in a "multitude of peripheral cases," and the contingent fee would become due and collectible only if and when the petitioner obtains a judgment in his
favor in Civil Case No. 612. The second paragraph of page 3 of the said motion reads as follows:
Hence, from May 1985 and continuously thru the years without interruption and surviving a series of no less than five (5) changes of Presiding Judges, the undersigned counsel
labored tirelessly in handling the defense of client. In addition to the instant lawsuit, a multitude of peripheral cases, civil, criminal and administrative, arising from the non-
delivery of titles by client on fully paid lots in the subdivision project were also filed as a consequence, not only against defendant but also against its President and Chief
Executive Officer (CEO). Needless to state, the undersigned was designated to handle majority of these cases for both, where he appeared and conducted trial without any
"appearance fees" for more than eight (8) long years solely relying on the contingent fee in case of recovery in the instant main case. [23] (underscoring supplied for emphasis)
Second, the amount of P28 million, which Filstream agreed to pay the petitioner, was not a judgment or award in favor of the petitioner in Civil Case No. 612. It was the
consideration of the assignment, transfer, and conveyance to Filstream of all the petitioner's "rights, interest and participation embodied and specified in the Joint Venture
Agreement (Annex "A") and in all the eight hundred seventy-five (875) parcels of land comprising the SARANAY HOMES subdivision. . . ." The plaintiffs in Civil Case No. 612
were not parties to the memorandum of agreement, and there is no showing that they agreed to the assignment of the petitioner's rights, interest, and participation in the Joint
Venture Agreement. While paragraph 10 of the memorandum of agreement provides that the petitioner
shall cause to sign a JOINT MOTION TO DISMISS, together with the CARREONS regarding Civil Case No. 612 of the Regional Trial Court of Makati and to further
DISMISS, the case filed against PNB docketed as Civil Case No. 6918 of the Regional Trial Court of Makati . . . [and] shall obtain the dismissal of all cases filed by lot
buyers against it now pending with the HLURB
the fact remains that no such motion to dismiss has been filed yet in Civil Case No. 612, and there is no assurance whatsoever that the plaintiffs therein will sign a joint motion to
dismiss. Third, as correctly posited by the petitioner, the private respondent had no participation in the negotiations leading to, and in the preparation of, the memorandum of
agreement.
Indisputably then, the private respondent's attorney's fee on "contingent basis" in Civil Case No. 612 is unwarranted. If at all, he could only be entitled to attorney's fees
on quantum meruit basis as of the expiration of his retainer contract on 31 March 1993.
Quantum meruit simply means "as much as he deserves." [24] In no case, however, must a lawyer be allowed to recover more than what is reasonable pursuant to Section 24,
Rule 138 of the Rules of Court, which provides:
SEC. 24. Compensation of attorneys, agreement as to fees. An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his
services, with a view to the importance of the subject-matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be
bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional
knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable.
This Court had earlier declared the following as circumstances to be considered in determining the reasonableness of a claim for attorney's fees: (1) the amount and character
of the service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility
imposed; (5) the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the
performance of the services; (7) the professional character and social standing of the attorney; (8) the results secured; and (9) whether the fee is absolute or contingent, it being
recognized that an attorney may properly charge a much larger fee when it is contingent than when it is not. [25]
Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the following factors which should guide a lawyer in determining his fees:
(a) The time spent and the extent of the services rendered or required;
(b) The novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered case;
(f) The customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.
It was incumbent upon the private respondent to prove the reasonable amount of attorney's fees, taking into account the foregoing factors or circumstances. The records
before us and the trial court's 11 October 1993 order do not confirm that the private respondent proved by either testimonial or documentary evidence that the award
of P600,000.00 was reasonable. The private respondent's testimony thereon was crucial. Yet, it does not appear from the 11 October 1993 order that he took the witness stand.
From the Minutes of the trial court attached to the Rollo of CA-G.R. CV No. 44839, [26] it appears that only Atty. Atienza and Mr. Suazo gave oral testimony on the motion.
It necessarily follows then that the 11 October 1993 order has insufficient factual basis, and the trial court committed grave abuse of discretion in arbitrarily fixing the private
respondent's attorney's fees at P600,000.00. The affirmance of the said order by the Court of Appeals premised on the provision in the retainer contract regarding contingent fee is
thus fatally flawed.
The interest for both the petitioner and the private respondent demands that the trial court should conduct further proceedings in Civil Case No. 612 relative to the private
respondent's motion for the payment of attorney's fees and, thereafter, fix it in light of Section 24, Rule 138 of the Rules of Court; Rule 20.1, Canon 20 of the Code of Professional
Responsibility; and the jurisprudentially established guiding principles in determining attorney's fees on quantum meruit basis.
WHEREFORE, the instant petition is GRANTED. The challenged Decision of 31 March 1995 of the Court of Appeals in CA-G.R. CV No. 44839 and the Order of 11
October 1993 of the Regional Trial Court of Makati, Branch 64, in Civil Case No. 612 are hereby SET ASIDE. The trial court is further DIRECTED to set for further hearing the
private respondent's Urgent Motion to Direct Payment of Attorney's Fees and/or Register Attorney's Charging Lien and thereafter to fix the private respondent's attorney's fees in
Civil Case No. 612 as of 31 March 1993 when his contract with the petitioner was effectively terminated, taking into account Section 24, Rule 138 of the Rules of Court; Rule
20.1, Canon 20 of the Code of Professional Responsibility; and the jurisprudentially established guiding principles in determining attorney's fees on quantum meruit basis.
No pronouncement as to costs.
SO ORDERED.

G.R. No. 104600 July 2, 1999


RILLORAZA, AFRICA, DE OCAMPO and AFRICA, petitioner,
vs.
EASTERN TELECOMMUNICATIONS PHILS., INC. and PHILIPPINE LONG DISTANCE TELEPHONE COMPANY, respondents.

PARDO, J.:
The basic issue submitted for consideration of the Court is whether or not petitioner is entitled to recover attorney's fees amounting to Twenty Six Million Three Hundred Fifty
Thousand Seven Hundred Seventy Nine Pesos and Ninety One Centavos (P26,350,779.91) for handling the case for its client Eastern Telecommunications Philippines, Inc. filed
with the Regional Trial Court, Makati, though its services were terminated in midstream and the client directly compromised the case with the adverse party.
The Facts
In giving due course to the petition, we carefully considered the facts attendant to the case. On August 28, 1987, Eastern Telecommunications Philippines, Inc. (ETPI) represented
by the law firm San Juan, Africa, Gonzales and San Agustin (SAGA), filed with the Regional Trial Court, Makati, a complaint for recovery of revenue shares against Philippine
Long Distance Telephone Company (PLDT). Atty. Francisco D. Rilloraza, a partner of the firm appeared for ETPI.
After ETPI rested its case, it paid SAGA the billed amount of One Hundred Thousand Pesos (P100,000.00). On September 18, 1987, the trial court issued a resolution granting
ETPI's application for preliminary restrictive and mandatory injunctions. During this period, SAGA was dissolved and four of the junior partners formed the law firm Rilloraza,
Africa, De Ocampo & Africa (RADA), which took over as counsel in the case for ETPI. The latter signed a retainer agreement with counsel dated October 1, 1987. 1
Petitioners presented the three aspects of the main case in the trial court. First, the traffic revenue shares which ETPI sought to recover from PLDT in accordance with the contract
between them. Second, ETPI sought preventive injunctive relief against the PLDT's threats to deny ETPI access to the Philippines international gateway switch. Third, ETPI called
this the "foreign correspondentships aspect" where ETPI sought preventive injunctive relief against PLDT's incursions and inducements directed at ETPI's foreign correspondents
in Hongkong, Taiwan and Singapore, to break their correspondentship contracts with PLDT, using the threat of denying them access to the international gateway as leverage.
In this connection, ETPI filed with the trial court two urgent motions for restraining order, one on October 30, 1987 and another on November 4, 1987. As the applications were
not acted upon, ETPI brought the case up to the Court of Appeals by petition for certiorari.
On June 28, 1988, petitioner received a letter from ETPI signed by E. M. Villanueva, President and Chief Executive Officer. In substance, the letter stated that ETPI was
terminating the retainer contract dated October 1, 1987, effective June 30, 1988.
On June 29, 1988, petitioner filed with the Regional Trial Court a notice of attorney's lien, furnishing copies to the plaintiff ETPI, to the signatory of the termination letter and
PLDT. On the same date, petitioner additionally sent a letter to ETPI attaching its partial billing statement. In its notice, RADA informed the court that there were negotiations
towards a compromise between ETPI and PLDT.
In April 1990, petitioner confirmed that indeed the parties arrived at an amicable settlement and that the same was entered as a judgment. On April 26, 1990, petitioner filed a
motion for the enforcement of attorney's lien with the Regional Trial Court of Makati and then appraised the Supreme Court thereof by manifestation. 2 We noted the manifestation
in a resolution dated July 23, 1990.
On May 24, 1990, PLDT filed with the trial court a manifestation that it is not a party to nor in any manner involved in the attorney's lien being asserted by Atty. Rilloraza for and
in behalf of the law firm, 3 while ETPI filed its opposition thereto on June 11, 1990.
The Lower Court's Ruling
The trial court in its resolution dated September 14, 1990 denied the motion for enforcement of attorney's lien. Thus:
WHEREFORE, premises considered, the court finds that the Notice of Attorney's Lien filed by the law firm of Rilloraza, Africa, De Ocampo and Africa has no
basis in fact and in law, and therefore denies the Motion for Enforcement of Attorney's Lien.
SO ORDERED.
Makati, Metro Manila, September 4, 1990.
(s/t) ZEUS C, ABROGAR
Judge 4
On October 10, 1990, petitioner filed with the trial court a notice of appeal from the above-mentioned order to the Supreme Court. On November 6, 1990, ETPI filed a Motion to
Dismiss Appeal contending that the case could be brought to the Supreme Court only via a petition for review on certiorari, not by a mere notice of appeal. In an order dated
January 16, 1991, the trial court dismissed RADA's appeal.
The trial court said:
There is no more regular appeal from the Regional Trial Court to the Supreme Court. Under the amendment of Section 17 of the Judiciary Act by R.A. 5440,
orders and judgments of the Regional Trial Court may be elevated to the Supreme Court only by petition for review on certiorari.
xxx xxx xxx
Wherefore, premises considered, the order dated September 14, 1990 is hereby reconsidered and set aside. The Notice of Appeal filed by movant RADA is
dismissed.
SO ORDERED.
Given this 16th day of January, 1991, at Makati, Metro Manila.
(s/t) ZEUS C, ABROGAR
Judge 5
Hence, on February 9, 1991, petitioner filed a petition for certiorari with the Supreme Court, which we remanded to the Court of Appeals. The latter dismissed the petition in a
decision promulgated on November 14, 1991, 6 ruling that the judge committed no abuse of discretion in denying petitioner's motion for enforcement of attorney's lien. Thus:
We therefore rule that respondent judge committed no abuse of discretion, much less a grave one, in denying petitioner's motion for enforcement of attorney's
lien.
Assuming that respondent judge committed an error in denying petitioner's motion for enforcement of attorney's lien, it cannot be corrected by certiorari.
WHEREFORE, the writs prayed for are DENIED, and the petition is hereby DISMISSED, with cost against petitioner.
SO ORDERED.
(s/t) REGINA G. ORDOÑEZ-BENITEZ
Associate Justice
WE CONCUR:
(s/t) JOSE A. R. MELO (s/t) EMETERIO C, CUI
Associate Justice Associate Justice 7
DISCUSSION
A. The Procedural Aspect
There is nothing sacrosanct about procedural rules, which are liberally construed in order to promote their objectives and assist the parties in obtaining just, speedy and inexpensive
determination of every action or proceeding. 8 In analogous case, 9 we ruled that where the rigid application of the rules would frustrate substantial justice 10, or bar the vindication
of a legitimate grievance, the courts are justified in exempting a particular case from the operation of the rules.
In A-One Feeds, Inc. vs. Court of Appeals, we said —
Litigations should, as much as possible, be decided on the merits and not on technicality. Dismissal of appeals purely on technical grounds is frowned upon, and
the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice and thereby
defeat their very claims. As has been the constant ruling of this Court, every party litigant should be afforded the amplest opportunity for the proper and just
determination of his cause, free from the constraints of technicalities. 11
A basic legal principle is that no one shall be unjustly enriched at the expense of another. 12 This principle is one of the mainstays of every legal system for centuries and which the
Civil Code echoes:
Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the
latter without just or legal ground, shall return the same to him. 13
The Code Commission, its report, emphasized that:
It is most needful that this ancient principle be clearly and specifically consecrated in the proposed Civil Code to the end that in cases not foreseen by the
lawmaker, no one may unjustly benefit himself to the prejudice of another. The German Civil Code has a similar provision (Art. 812). 14
With this in mind, one could easily understand why, despite technical deficiencies, we resolved to give due course to this petition. More importantly, the case on its face appears to
be impressed with merit.
B. The Attorney's Fees
We understand that Atty. Francisco Rilloraza handled the case from its inception until ETPI terminated the law firm's services in 1988. Petitioner's claim for attorney's fees hinges
on two grounds: first, the fact that Atty. Rilloraza personally handled the case when he was working for SAGA; and second, the retainer agreement dated October 1, 1987.
We agree that petitioners are entitled to attorneys' fees. We, however, are not convinced with the petitioner's arguments that the services RADA rendered merit the amount they are
claiming.
First, petitioner contends that Atty. Rilloraza initiated the filing of the complaint. When a client employs the services of a law firm, he does not employ the services of the lawyer
who is assigned to personally handle the case. Rather, he employs the entire law firm. In the event that the counsel appearing for the client resigns, the firm is bound to provide a
replacement. Thus, RADA could not claim to have initiated the filing of the complaint considering that ETPI hired SAGA. What is more, on September 17, 1987, ETPI paid
SAGA the amount of One Hundred Thousand Pesos (P100,00.00) 15 representing services performed prior to September 17, 1987. SAGA assigned one of its associates, Atty.
Francisco Rilloraza, to handle the case for the firm. Although Atty. Rilloraza handled the case personally, he did so for and in behalf of SAGA.
Second, petitioner claims that under the retainer agreement, which provides:
6.2 B.Court Cases:
Should recourse to judicial action be necessary to effect collection or judicial action be taken by adverse party, our attorney's fees shall be fifteen percent (15%)
of the amounts collected or the value of the property acquired or liability saved. 16
the firm is entitled to the fees agreed upon.
However, the retainer agreement has been terminated. True, Attorney Rilloraza played a vital role during the inception of the case and in the course of the trial. We cannot also
ignore the fact that an attorney-client relationship between petitioner and respondent no longer existed during its culmination by amicable agreement. To award the attorneys' fees
amounting to 15% of the sum of One Hundred Twenty Five Million Six Hundred Seventy One Thousand Eight Hundred Eighty Six Pesos and Four Centavos (P125,671,886.04)
plus Fifty Million Pesos (P50,000,000.00) paid by PLDT to ETPI would be too unconscionable.1âwphi1.nêt
"In any case, whether there is an agreement or not, the courts shall fix a reasonable compensation which lawyers may receive for their professional services. " 17 "A lawyer has the
right to be paid for the legal services he has extended to his client, which compensation must be reasonable." 18 A lawyer would be entitled to receive what he merits for his
services. Otherwise stated, the amount must be determined on a quantum meruit basis.
"Quantum meruit, meaning 'as much as he deserved' is used as a basis for determining the lawyer's professional fees in the absence of a contract but recoverable by him from his
client. 19 Recovery of attorney's fees on the basis of quantum meruit is authorized when (1) there is no express contract for payment of attorney's fees agreed upon between the
lawyer and the client; (2) when although there is a formal contract for attorney's fees, the fees stipulated are found unconscionable or unreasonable by the court; and (3) when the
contract for attorney's fee's is void due to purely formal defects of execution; (4) when the counsel, for justifiable cause, was not able to finish the case to its conclusion; (5) when
lawyer and client disregard the contract for attorney's
fees, 20
In fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the elements to be considered are generally (1) the importance of the
subject matter in controversy, (2) the extent of services rendered, and (3) the professional standing of the lawyer. A determination of these factors would indispensably require
nothing less than a full-blown trial where private respondents can adduce evidence to establish the right to lawful attorney's fees and for petitioner to oppose or refute the
same. 21 The trial court has the principal task of fixing the amount of attorney's fees. 22 Hence, the necessity of a hearing is beyond cavil.
C. Charging Lien
Petitioner contends that pursuant to Rule 138 of the Revised Rules of Court, it is entitled to a charging lien. The rule provides:
Sec. 37. Attorney's liens. — An attorney shall have a lien upon the funds, documents and papers of his client, which have lawfully come into his possession and
may retain the same until his lawful fees and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall also have a lien to the
same extent upon all judgments for the payment of money, and executions issued in pursuance of such judgments, which he has secured in a litigation of his
client, from and after the time when he shall have caused a statement of his claim of such lien to be entered upon the records of the court rendering such
judgment, or issuing such execution, and shall have caused written notice thereof to be delivered to his client and to the adverse party; and he shall have the same
right and power over such judgments and executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements."
(Emphasis supplied).
We do not agree. A charging lien to be enforceable as security for the payment of attorney's fees requires as a condition sine qua non a judgment for money and execution in
pursuance of such judgment secured in the main action by the attorney in favor of his client 23. A charging lien presupposes that the attorney has secured a favorable money
judgment for his client. 24 From the facts of the case it would seem that petitioner had no hand in the settlement that occurred, nor did it ever obtain a favorable judgment for ETPI.
ETPI entered into a compromise agreement when it ended the services of petitioner and through the effort of ETPI's new lawyers, the law firm Romulo, Mabanta, Buenaventura,
Sayoc and De los Angeles. Whether there was bad faith in the substitution of the lawyers to avoid compliance with the retainer agreement could only be determined after a trial of
the case on the merits.
This decision, however, should not be interpreted as to impose upon petitioner any additional burden in collecting its attorney's fees. The petitioner must avail itself of the proper
remedy in order to forestall the possibility of any injustice on or unjust enrichment of any of the parties.
The Judgment (Fallo)
ACCORDINGLY, the Court GRANTS the petition, REVERSES the decision of the Court of Appeals in CA-G. R. SP No. 24463 and REMANDS the case to the court of origin for
the determination of the amount of attorney's fees to which petitioner is entitled.
No costs.
SO ORDERED