CHAPTER XIII

COMPENSATION OF
ATTORNEY
 TWO CONCEPTS OF ATTORNEY’S
FEES

1. It refers to the reasonable compensation paid to a lawyer by

his client for the legal services he has rendered to the latter.

2. It is the amount of damages which the court may award to be

paid by the losing party to the prevailing party.
 GENERAL RULE

The practice of law is a profession and not a money- making

trade

EXCEPTION

The right of lawyer to attorney’s fees for the professional services

he has rendered to his client
 EXCEPTION TO THE EXCEPTION

1. He has agreed to render services gratuitously;

2. He has been appointed counsel de oficio.

- The compensation of a lawyer should be a mere incident of the

practice of law, the primary purpose of which is to render public
service.
- In Fixing his fees, the lawyer should never forget that
the practice of law is a profession and not a business
using methods to take large profits for those who
conduct it.
- He should avoid controversies with the clients
concerning compensation so far as shall be compatible
with self-respect and with his right to receive a
reasonable recompense for his services and he should
not resort to law suits with clients only to prevent
injustice, imposition or fraud.
 DUTY OF THE COURT

- It is not alone to see that the lawyer acts in proper and lawful
manner; it is also its duty to see that the lawyer is paid his just
fees.

- 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.
 REQUISITES FOR THE RIGHT TO
ACCRUE

1. Attorney-client relationship; and

2. Rendition by the lawyer of services to the client.

- The client’s obligation to pay attorney’s fees arises from the

inanimate contract of facias ut des ( I do and you give).
 QUANTUM MERUIT

Quantm meruit means as the lawyer deserves or such amount which his services
merit.
When recovery on the basis of quantum meruit is authorized?
(1) when there is no express contract for payment of attorney’s fees;
(2) when although there is a formal contract for attorney’s fees, the fees
stipulated are found unconscionable or unreasonable by the court;
(3) when the contract for attorney’s fees is void due to purely formal defects of
execution;
(4) when the lawyer, for justifiable cause, was not able to finish thecase to its
conclusion;
(5) when the lawyer and the client disregard the contract for attorney’s fees, and
(6) when the client dismissed his counsel before the termination of the case or
the latter withdrew therefrom for valid reasons.
 QUANTUM MERUIT

Quantm meruit means as the lawyer deserves or such amount which his services
merit.
When recovery on the basis of quantum meruit is authorized?
(1) when there is no express contract for payment of attorney’s fees;
(2) when although there is a formal contract for attorney’s fees, the fees
stipulated are found unconscionable or unreasonable by the court;
(3) when the contract for attorney’s fees is void due to purely formal defects of
execution;
(4) when the lawyer, for justifiable cause, was not able to finish thecase to its
conclusion;
(5) when the lawyer and the client disregard the contract for attorney’s fees, and
(6) when the client dismissed his counsel before the termination of the case or
the latter withdrew therefrom for valid reasons.
 WHO IS LIABLE FOR ATTORNEY’S
FEES?

General Rule:
The general rule is that only the client who engaged the
services of counsel either personally or through an authorized agent
is liable for the attorney’s fees.

Exception:
A person who accepts the benefits of the legal representation impliedly agrees
to pay the lawyer’s services for he may not unjustly enrich himself at
the expense of the lawyer.
 LIABILITY OF ASSIGNEE.

The assignee may be held liable for counsel fees from out of the
proceeds of a favorable judgment. That obligation gives the
assignee the right to intervene in the matter of fixing the amount
of fees which may be a proper charge against the judgment
rendered in the action.
 LIABILITY IN LABOR CASES.

A lawyer who represents a union and its members and with

whom he has a retainer for payment of a fixed percentage of amounts
recovered from the company is entitled to be paid his fees not only
by the union members but by the non-union members as well who
derive benefits from his services.
 LIABILITY IN DERIVATIVE SUITS

Where, in a derivative suit, the professional services of counsel

who instituted the action upon request of a stockholder are beneficial
to the corporation, the counsel fees may be properly charged against
corporate funds. But as any stockholder may file a derivative suit
on behalf of the corporation, any other stockholder may intervene
and oppose the grant of such fees as a charge against funds of the
corporation.
 LIABILITY IN RECEIVERSHIP
PROCEEDINGS

The assets under receivership may be liable for the fees of a

lawyer employed by a receiver to help him in the discharge of his
duties.41 However, the attorney’s fees of the counsel for a defendant in
a receivership proceeding are personal obligations of the defendant
and may not be paid out of the funds in the hands of the receiver,
unless the services rendered by the lawyer have redounded to the
benefit of the receivership or of the plaintiff who asked for the
appointment of the receiver.
 LIABILITY IN TRUSTEESHIP OR
GUARDIANSHIP PROCEEDINGS.

The rule is that a trustee may be indemnified out of the trust

estate for his expenses in rendering and proving his accounts and
for the counsel fees in connection therewith. The court, in the light
of the peculiar circumstances obtaining in each case, may determine
whether or not a trustee may be allowed expenses for attorney’s fee
and permitted to charge the same against the trust estate.43 The
same rule applies in a guardianship proceeding. The property of the
ward may lawfully answer for counsel fees of the lawyer employed
by the guardian. However, no assets of the ward may be spent
for attorney’s fees without the prior approval of the guardianship
court.
 LIABILITY IN ESTATE
PROCEEDINGS.

- The liability for payment rests on the executor or

administrator who may, the services are beneficial to the estate,
either seek reimbursement from the estate if he has already paid
them or include them in his account with due notice to all parties
interested.
- If the assets have already been distributed, the distributees
or heirs will have to contribute their share to the counsel fees as
the obligations of the estate follow the assets wherever they are
except in the hands of a purchaser in good faith.
General Rule:
The estate may not be liable for counsel fees for services
rendered to annul a will at the request of the executor, the latter’s
duty being to enforce and not to invalidate the will; only the
executor may be liable personally therefore.

Exception:
A lawyer who acted as counsel for an administrator to secure
the invalidation of a will may have his fees charged against the
estate if its disapproval would mean bigger share in the
inheritance of the administrator as an heir and other heirs
similarly situated.
 WHO ARE ENTITLED TO OR TO
SHARE IN ATTORNEY’S FEES.

- The lawyer who has been engaged by a client. However, if

more than one lawyer have been employed by a client to handle
the case for him, the question of division of fees may arise.
- General rule is that lawyers who jointly represent a
common client for a given fee, in the absence of an agreement as
to division of fees, share equally as they are special partners for a
special purpose.
- Partners in a law firm share in the profits in accordance
with their partnership agreement even though only one of them
actually rendered the service.

- On the other hand, the fees of lawyer’s separately

employed by a client to prosecute or defend his cause depend
upon their respective fee arrangements with the client.
 NON-LAWYER NOT ENTITLED TO
FEES.

The statutory rule that “an attorney shall be entitled to have

and recover from his client no more than a reasonable
compensation for his services” requires the existence of an
attomey-client relationship as a condition to the recovery of
attorney’s fees. Such relationship cannot exist unless the client’s
representative in court is a lawyer.
 RESTRICTIONS ON SOME
LAWYERS TO CHARGE FEES.

- A lawyer who is absolutely disqualified from engaging in

the private practice of law by reason of his government position
may neither practice law nor, should he do so illegally, charge
attorney’s fees for such services.
- While a local sanggunian member who is a lawyer may
appear as counsel in any administrative proceeding involving the
local government unit of which he is an official, he is prohibited
from collecting any fee for his appearance therein.
An executor or administrator is prohibited from charging the
estate under his administration of his professional fees for
services rendered by him as a lawyer. The prohibition is based on
the legal maxim that one acting in a fiduciary capacity must not
place himself in such a position as to make his interests
antagonistic with those of his principal.
 RIGHT OF COUNSEL DE OFICIO
TO FEES

A court may require a lawyer to render professional services

in favor of an indigent litigant. In the absence of a law allowing
compensation, the lawyer designated as counsel de oficio cannot
charge the government nor the indigent litigant for his
professional services. The reason for this is that one of the
obligations which an attorney willingly assumed when he took his
oath as a lawyer is to render free legal services whenever required
by the court to do so.
The Rules of Court provide a token compensation for an
attorney de oficio. Subject to the availability of funds as may be
provided by law the court may, in its discretion, order an attorney
employed as counsel de oficio to be compensated in such sum as
the court may reasonably fix, which shall not be less than thirty
pesos in any case nor more than fifty pesos in light felonies; one
hundred pesos in less grave felonies; two hundred pesos in grave
felonies other than capital offenses; and five hundred pesos in
capital offenses. The compensation for counsel de oficio is not,
however, intended as a source of regular income.
 WITHDRAWAL OF COUNSEL
FROM THE CASE.

- The lawyer’s unceremonious withdrawal from or abandonment

of the action which prejudices the client negates his right to
compensation for services rendered in the action. It constitutes a
breach of his implied undertaking to prosecute or defend the client’s
cause until the termination of the litigation
- Similarly, a lawyer who, for reasons attributable to his fault or
misconduct, is forced to resign from the case with the client’s conformity or in
accordance with the prescribed procedure, may lose his right to fees earned
therein..
 REPRESENTATION OF ADVERSE
INTERESTS.

The simultaneous representation by a lawyer of opposing

parties to a controversy, in the absence of the client’s consent to the
dual representation made after full disclosure of the facts, negates
the lawyer’s right to receive compensation from both of them. If
the dual representation is improper, then the claim for attorney’s
fees for services rendered by the lawyer in that dual capacity is also
improper.
 THE FEE WHICH A CLIENT MAY
AGREE TO PAY HIS LAWYER MAY BE

1. General retainer- is the fee paid to a lawyer to secure his future services as
general counsel for any ordinary legal problem that may arise in the routinary
business of the client and referred
to him for legal action. The future services of the lawyer are secured
and committed to the to the retaining client.
2. Special retainer- a fee for a specific case handled or special
service rendered by the lawyer for a client. A client may have several
cases demanding special or individual attention. If for every case
there is a separate and independent contract for attorney’s fees,
each fee is considered a special retainer.
 EFFECT OF NULLITY OF
CONTRACT.

- The nullity of a professional contract which results from the

illegality of the object sought to be achieved by the performance of the
professional services precludes a lawyer from recovering his fees for
such services.
- However, if the nullity of the contract is due to want
of authority on the part of one of the contracting parties or to some
irregularity in its formal execution or to the unreasonable amount
of the fees fixed therein, the lawyer will be entitled to recover what
is justly due him for his services on the basis of quantum meruit.
 EFFECT OF UNCONSCIONABILITY
OF AMOUNT.

The unconscionability of the stipulated amount will not preclude

recovery; it will only justify the court to fix the reasonable worth
of the lawyer’s services on the basis of quantum meruit.
 CONTINGENT FEE CONTRACT.

A contract for a contingent fee is an agreement in writing in

which the fee, usually a fixed percentage of what may be recovered
in the action, is made to depend upon the success in the effort to
enforce or defend a supposed right.
 EFFECT OF AGREEMENT TO PAY
LITIGATION EXPENSES.

The rules of the profession forbid a lawyer from agreeing to

pay or bear the expenses of litigation; he may, however, in good
faith advance the expenses as a matter of convenience but subject
to reimbursement.1
 CONSTRUCTION OF
PROFESSIONAL CONTRACT.

In construing a contract of professional services between a

lawyer and his client, the general rule is to adopt such
construction as would be more favorable to the client even if it
would work prejudice to the lawyer
 MEASURE OF COMPENSATION

1.Agreement;
2. Quantum meruit
(a) the agreement as
to counsel fees is invalid for some reason other than the illegality of
the object of performance; (b) the amount stipulated in the contract
is unconscionable; (c) no agreement as to fees exists between the
parties; (d) the client rejects the amount fixed in the contract as
unconscionable and is found to be so; and (e) some act or event has
precluded the lawyer from concluding the litigation without fault on
his part; and (f) the client has dismissed
 FACTORS TAKEN INTO ACCOUNT.

1. The time spent and the extent of the services

rendered or required;
2. he novelty and difficulty of the questions involved;
3. he importance of the subject matter;
4. The skill demanded;
5. The probability of losing other employment as a
result of acceptance of the professed case;
6. The customary charges for similar services and the schedule of fees of the IBP
Charter to which he belongs;
7. The amount involved in the controversy and the benefits resulting to the client from
the service;
8. he contingency or certainty of compensation;
9. he character of the employment, whether occasional or established; and
10. The professional standing of the lawyer.
 FEES IN CASES OF REFERRAL.

Rule 20.02 of the Code provides that “A lawyer shall, in cases

of referral, with the consent of the client, be entitled to a division
of fees in proportion to the work performed and responsibility
assumed/
 A LAWYER SHALL NOT RECEIVE FEE
FROM ANOTHER WITHOUT
CLIENT’S CONSENT.

Rule 20.03 of the Code requires that “A

lawyer shall not, without the full knowledge and consent of the
client, accept fee, reward, cost, commission, interest, rebate or
forwarding allowance or other compensation whatsoever related
to his employment from anyone other than the client.”
 PROCEDURE TO RECOVER FEES

1. the main action where his services were rendered

or (A lawyer may enforce his right to fees by filing the
necessary petition as an incident of the main action in
which his services were rendered only when something
is due the client in)
2. In an independent civil suit against his client
(a) the court trying the main action in which the lawyer’s services
were rendered dismissed the client’s action or awarded nothing
to the client; (b) the court that decided the main litigation had no
jurisdiction over the action or had already lost it; (c) the person
liable for attorney’s fees is not a party in the main action; (d) the
court reserved to the lawyer the right to file a separate civil suit
for the recovery of his fees; (e) the services for which the lawyer
seeks payment were rendered in connection with a matter not in
litigation; and (f) the court rendered judgment in the case without
requiring payment for attorney’s fees and the judgment had become
final.
 LAWYER’S APPLICATION TO PAY
HIS FEES.

Under Canon 16, Rule 16.03 of the Code of Professional

Responsibility, a lawyer may apply so much of the client’s funds
that come into his possession as may be necessary to satisfy his
fees and disbursements, giving notice promptly thereafter to his
client.
 REMEDIES IN ESTATE
PROCEEDINGS.

Proceed against the Administrator or executor.

If the administrator or executor refuses or fails
1. an independent civil action against the administrator or
executor in his personal capacity,
2. file a petition with the probate court praying that the
court, after due notice to all persons interested, allow his
claim and direct the administrator or executor
to pay his fees as expenses of administration.
 NECESSITY OF HEARING.

A petition for recovery of attorney’s fees, either as a separate

civil suit or as an incident of the main action, has to be
prosecuted and the allegations therein established as any other
money claim.
 DEFENSES.

An action for recovery of attorney’s fees is subject to the

usual defenses applicable to an ordinary civil suit, such as want
of jurisdiction, res judicata, prescription of action, nullity of the
contract for professional services, negligence in the discharge of
the lawyer’s duties, lack of attomey-client relationship, payment or
unconscionableness of the amount claimed.
 EXECUTION.

A final award of attorney’s fees may be enforced by execution.

The award may be enforced against any property of the client,
 ATTORNEY’S FEES AS DAMAGES

GR:
The general rule is that attorney’s fees in the concept of
damages are not recoverable.
Exceptions:
1. When there is agreement.
2. When exemplary damages are awarded.
3. When defendants action or omission compelled plaintiff to
litigate.
 4. In criminal cases of malicious prosecution.
5. When the action is clearly unfounded.
6. When defendant acted in gross and evident bad faith
7. In actions for support.
8. In cases of recovery of wages
9. In actions for indemnity under workmen’s compensation
and employee’s liability laws.
10. In a separate civil action arising from a crime.
 11. When at least double costs are awarded.
12. When the court deems it just and equitable
13. When a special law so authorizes.
 RIGHT TO PRIVATE COUNSEL A
PRECONDITION.

To entitle a party to recover attorney’s fees as an item of

damages, he must not only show that the case falls under any of
the exceptions that may warrant the award thereof; he must have
employed and, in the case of a public litigant, must show his right
to employ a private counsel as well.
 AWARD OF ATTORNEY’S FEES
DISCRETIONARY.

It is well settled that the award of attorney’s fees in favor

of the prevailing party in a case is essentially
discretionary with the trial court.
 PLEADING AND PRACTICE.

The claim for attorney’s fees in the concept of damages and

the ground relied upon must be pleaded. In the absence of such
allegation, neither the trial court nor the appellate court may
grant it.