Santiago v Fojas AC 4103
excuse for the respondents inability to exercise due
FACTS:
An expulsion case was faced by the complainants
contending that they have illegally removed from the
union (FEUFA) membership Mr. Paulino Salvador. The
lower court resolved in favor of Salvador and ordered
the complainants to pay, jointly and severally, Mr.
Salvador. The case was then elevated to the Court of
Appeals. The complainants lost in their petition at the
Court of Appeals due to abandonment, failure to act
accordingly, or serious neglect of their counsel, Atty.
Fojas to answer the civil complaint on an expulsion
case. Atty. Fojas assured them that everything was
in order and he had already answered the complaint.
However, the appellants soon discovered that he
never answered it after all because, according to
him, he was a very busy man. Atty. Fojas admitted
his mistake in failing to file an answer for the
expulsion case, but he alleges that it was cured by
his filing of a motion for reconsideration. However,
such motion for reconsideration was denied. Atty.
Fojas defended his negligence with the reason that
the case was a losing cause after all. Atty. Fojas also
asserts that he was about to appeal the said decision
to this Court, but his services as counsel for the
complainants and for the union were illegally and
unilaterally terminated by complainant.
Complainants then filed for a disbarment case.
ISSUE:
Whether the respondent committed culpable
negligence, as would warrant disciplinary action, in
failing to file for the complainants an answer
HELD:
Yes. The Supreme Court upheld Canon 14 of the Code
of Professional Responsibility. Once he agrees to take
up the cause of a client, the lawyer owes fidelity to
such cause and must always be mindful of the trust
and confidence reposed in him. This means that his
client is entitled to the benefit of any and every
remedy and defense that is authorized by the law of
the land and he may expect his lawyer to assert
every such remedy or defense. In his motion for
reconsideration of the default order, the respondent
explained his non-filing of the required answer by
impliedly invoking forgetfulness occasioned by a
large volume and pressure of legal work, while in his
Comment in this case he attributes it to honest
mistake and excusable neglect due to his
overzealousness to question the denial order of the
trial court. Whether it be the first or the second
ground, the fact remains that the respondent did not
comply with his duty to file an answer.
Pressure and large volume of legal work provide no
diligence in the performance of his duty to file an
answer. Every case a lawyer accepts deserves his full
attention, diligence, skill, and competence,
regardless of its importance and whether he accepts
it for a fee or for free. Furthermore, a breach of
Canon 18 of the Code of Professional Responsibility
which requires him to serve his clients, the
complainants herein, with diligence and, more
specifically, Rule 18.03 thereof which provides: A
lawyer shall not neglect a legal matter entrusted to
him, and his negligence in connection therewith shall
render him liable.
Atty. Fojass negligence is not excused by his claim
that Civil Case No. 3526-V-91 was in fact a losing
cause. The Supreme Court held that he should have
seasonably informed the complainants thereof. Rule
15.05, Canon 15 of the Code of Professional
Responsibility expressly provides: A lawyer, when
advising his client, shall give a candid and honest
opinion on the merits and probable results of the
clients case, neither overstating nor understanding
the prospects of the case.
REPRIMANDED AND ADMONISHED
Blandina Hilado vs Jose Gutierrez David
84 Phil 569 Legal Ethics Existence of Attorney-
Client Relationship
In April 1945, Blandina Hilado filed a complaint to
have some deeds of sale annulled against Selim
Assad. Attorney Delgado Dizon represented Hilado.
Assad was represented by a certain Atty. Ohnick.
In January 1946, Atty. Vicente Francisco replaced Atty.
Ohnick as counsel for Assad and he thenafter entered
his appearance in court.
In May 1946 or four months later, Atty. Dizon filed a
motion to have Atty. Francisco be disqualified
because Atty. Dizon found out that in June 1945,
Hilado approached Atty. Francisco to ask for
additional legal opinion regarding her case and for
which Atty. Francisco sent Hilado a legal opinion
letter.
Atty. Francisco opposed the motion for his
disqualification. In his opposition, he said that no
material information was relayed to him by Hilado;
that in fact, upon hearing Hilados story, Atty.
Francisco advised her that her case will not win in
court; but that later, Hilado returned with a copy of
the Complaint prepared by Atty. Dizon; that however,
when Hilado returned, Atty. Francisco was not around
but an associate in his firm was there (a certain Atty.
Federico Agrava); that Atty. Agrava attended to
Hilado; that after Hilado left, leaving behind the legal
documents, Atty. Agrava then prepared a legal
opinion letter where it was stated that Hilado has no
cause of action to file suit; that Atty. Agrava had Atty.
Francisco sign the letter; that Atty. Francisco did not
read the letter as Atty. Agrava said that it was merely
a letter explaining why the firm cannot take on
Hilados case.
Atty. Francisco also pointed out that he was not paid
for his advice; that no confidential information was
relayed because all Hilado brought was a copy of the
Complaint which was already filed in court; and that,
if any, Hilado already waived her right to disqualify
Atty. Francisco because he was already representing
Assad in court for four months in the said case.
Judge Jose Gutierrez David ruled in favor of Atty.
Francisco.
ISSUE: Whether or not Atty. Francisco should be
disqualified in the said civil case.
HELD: Yes. There already existed an attorney-client
relationship between Hilado and Atty. Francisco.
Hence, Atty. Francisco cannot act as counsel against
Hilado without the latters consent.
As ruled by the Supreme Court, to constitute an
attorney-client relationship, 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.
Further:
An attorney is employed-that is, he is engaged in his
professional capacity as a lawyer or counselor-when
he is listening to his clients preliminary statement of
his case, or when he is giving advice thereon, just as
truly as when he is drawing his clients pleadings, or
advocating his clients cause in open court.
Anent the issue of what information was relayed by
Hilado to Atty. Francisco: It does not matter if the
information relayed is confidential or not. So long as
the attorney-client relationship is established, the
lawyer is proscribed from taking other
representations against the client.
Anent the issue that the legal opinion was not
actually written by Atty. Francisco but was only
signed by him: It still binds him because Atty.
Agrava, assuming that he was the real author, was
part of the same law firm. An information obtained
from a client by a member or assistant of a law firm
is information imparted to the firm, his associates or
his employers.
Anent the issue of the fact that it took Hilado four
months from the time Atty. Francisco filed his entry of
appearance to file a disqualification: It does not
matter. The length of time is not a waiver of her
right. The right of a client to have a lawyer be
disqualified, based on previous atty-client
relationship, as counsel against her does not
prescribe. Professional confidence once reposed can
never be divested by expiration of professional
employment.
FIRST DIVISION
[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:
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.

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
G.R. No. 90983 September 27, 1991
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 LAW FIRM OF RAYMUNDO A. ARMOVIT, petitioner
him of his hard-earned honorarium. Such an attitude vs.
deserves condemnation. COURT OF APPEALS, JUDGE GENARO C. GINES,
Presiding Judge of Branch XXVI, Regional Trial
Court, First Judicial Region, San Fernando, La
It should be stressed in this connection that the
Union, and BENGSON COMMERCIAL BUILDING,
absence of a written contract will not preclude the
INC., respondents.
finding that there was a professional relationship that
justifies the collection of attorneys fees for
professional services rendered. Documentary Raymundo A. Armovit and Rafael R. Armovit for
formalism is not an essential element in the petitioner.
employment of an attorney; the contract may be
express or implied. To establish the relation, it is Pacifico C. Yadao for private respondent.
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 SARMIENTO, J.:p
must determine the propriety of respondents claim
for attorneys fees and the reasonable amount
Before the Court is Atty. Raymundo Armovit's claim
thereof.
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.
2
SO ORDERED.
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 Appeals 4 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; 19 however, we do not find Atty. Armovit's
claim for "twenty percent of all recoveries" to be
unreasonable. In the case of Aro v. Naawa, 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 (Taada 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 exceptionthat 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.1wphi1 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.
Fernan, C.J., Feliciano and Bidin, JJ., concur.
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. Blanco 8 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
2. Reply of Atty. Cabarroguis of even date: 11
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
4. Letter of Atty. Cabarroquis to Atty. Ta-asan dated
November 29, 1990: 13
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.
Narvasa, C.J., Feliciano, Regalado and Campos, Jr., JJ.,
concur.
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 % ) 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
Notice5 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 Order7 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 Complaint8 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 Motion9 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 notice24 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 Dasmarias, 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 oppositions30 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 admitted39 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.

Panganiban, C.J., Chairperson, Ynares-Santiago,

Austria-Martinez, Callejo, Sr., J.J., concur.
 Promu

Febru

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

RESOLUTION

NACHURA, J.:

EVANGELINA MASMUD (as substitute complainant for

ALEXANDER J. MASMUD),

Petitioner,

- versus -

Before the Court is a petition for review on

certiorari1[1] assailing the Decision 2[2] dated October
NATIONAL LABOR RELATIONS COMMISSION (First 31, 2007 and the Resolution dated June 6, 2008 of
Division) and ATTY. ROLANDO B. GO, JR., the Court of Appeals (CA) in CA-G.R. SP No. 96279.

Respondents.

2
The facts of the case are as follows:
On July 9, 2003, Evangelina Masmuds
(Evangelina) husband, the late Alexander J. Masmud
(Alexander), filed a complaint3[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
3 6
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[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[5]
Alexanders employers filed a petition for
certiorari6[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.
4
5
Thereafter, Atty. Go moved for the release of the said due movant-counsel (or the
amount of P839,587.39) be
amount to Evangelina.
recorded as lien upon all the
monies that may still be paid to
substitute complainant Evangelina
Masmud.

Accordingly, the NLRC

On January 10, 2005, the LA directed the
Cashier is directed to pay movant-
NLRC Cashier to release the amount of counsel the amount of P677,589.96
which is currently deposited therein
P3,454,079.20 to Evangelina. Out of the said amount,
to partially satisfy the lien.
Evangelina paid Atty. Go the sum of P680,000.00.

SO ORDERED.8[8]

Dissatisfied, Atty. Go filed a motion to record

and enforce the attorneys lien alleging that
Evangelina reneged on their contingent fee
Evangelina questioned the February 14, 2005 Order
agreement. Evangelina paid only the amount of
of the LA before the NLRC. On January 31, 2006, the
P680,000.00, equivalent to 20% of the award as
NLRC issued a Resolution9[9] dismissing the appeal
attorneys fees, thus, leaving a balance of 10%, plus
for lack of merit.
the award pertaining to the counsel as attorneys
fees.

Evangelina then elevated the case to the CA via a

petition for certiorari.10[10] On October 31, 2007, the
In response to the motion filed by Atty. Go,
CA rendered a Decision11[11] partially granting the
Evangelina filed a comment with motion to release
petition. The dispositive portion of the decision reads:
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
WHEREFORE, the petition is
Labor Code.
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.
On February 14, 2005, the LA issued an is declared fully compensated by
Order7[7] granting Atty. Gos motion, the fallo of which the amount of P1,347,950.11 that
he has already received.
reads:
SO ORDERED.12[12]

8
WHEREFORE, premises
considered, and further considering
the substitute complainants initial 9
payment of 20% to movant-counsel
of the monetary claims as paid, let
the balance or unpaid twenty 10
(20%) per cent of attorneys fees

7 11
 to the prevailing party, 15[15] such that, in any of the
cases provided by law where such award can be
Evangelina filed a motion for reconsideration.
made, e.g., those authorized in Article 2208 of the
However, on June 6, 2008, the CA issued a
Civil Code, the amount is payable not to the lawyer
Resolution13[13] denying the motion for
but to the client, unless they have agreed that the
reconsideration for lack of merit.
award shall pertain to the lawyer as additional
compensation or as part thereof.16[16]

Hence, the instant petition.

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
Evangelina presented this issue, viz.:
her husband, before the labor tribunals and before
the court.

THE COURT OF APPEALS

COMMITTED SERIOUS AND
REVERSIBLE ERROR OF LAW IN ITS Evangelina maintains that Article 111 of the
DECISION DATED 31 OCTOBER
Labor Code is the law that should govern Atty. Gos
2007 AND RESOLUTION DATED 6
JUNE 2008 INSOFAR AS IT UPHOLDS compensation as her counsel and assiduously
RESPONDENT LAWYERS CLAIM OF
opposes their agreed retainer contract.
FORTY PERCENT (40%) OF THE
MONETARY AWARD IN A LABOR
CASE AS ATTORNEYS FEES.14[14]

Article 111 of the said Code provides:

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.
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
There are two concepts of attorney's fees. In
wages recovered.
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
Contrary to Evangelinas proposition, Article
the other hand, in its extraordinary concept,
111 of the Labor Code deals with the extraordinary
attorney's fees may be awarded by the court as
concept of attorneys fees. It regulates the amount
indemnity for damages to be paid by the losing party
recoverable as attorney's fees in the nature of
damages sustained by and awarded to the prevailing
12 party. It may not be used as the standard in fixing the

13 15

14 16
amount payable to the lawyer by his client for the the court of a reasonable compensation for the
17
legal services he rendered. [17] lawyer's services.21[21]

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

SEC. 24. Compensation of

attorney's; agreement as to fees.
An attorney shall be entitled to
CANON 20 A LAWYER
have and recover from his client no
SHALL CHARGE ONLY FAIR AND
more than a reasonable
REASONABLE FEES.
compensation for his services, with
a view to the importance of the
Rule 20.01. A lawyer shall
subject matter of the controversy,
be guided by the following factors
the extent of the services
in determining his fees:
rendered, and the professional
standing of the attorney. No court
(a) The time spent and the
shall be bound by the opinion of
extent of the services rendered or
attorneys as expert witnesses as to
required;
the proper compensation, but may
disregard such testimony and base
(b) The novelty and difficulty
its conclusion on its own
of the question involved;
professional knowledge. A written
contract for services shall control
(c) The importance of the
the amount to be paid therefor
subject matter;
unless found by the court to be
unconscionable or unreasonable.18
(d) The skill demanded;
[18]
(e) The probability of losing
other employment as a result of
acceptance of the proffered case;
The retainer contract between Atty. Go and
(f) The customary charges for
Evangelina provides for a contingent fee. The
similar services and the schedule
contract shall control in the determination of the of fees of the IBP Chapter to which
he belongs;
amount to be paid, unless found by the court to be
unconscionable or unreasonable.19[19] Attorney's (g) The amount involved in
the controversy and the benefits
fees are unconscionable if they affront one's sense of
resulting to the client from the
justice, decency or reasonableness.20[20] The decree service;
of unconscionability or unreasonableness of a
(h) The contingency or
stipulated amount in a contingent fee contract will certainty of compensation;
not preclude recovery. It merely justifies the fixing by
(i) The character of the
employment, whether occasional or
17 established; and

(j) The professional standing

18 of the lawyer.

19

20 21
 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
[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[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[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
honorarium lawfully earned as a means to preserve
the decorum and respectability of the
profession. A lawyer is as much entitled to judicial
protection against injustice or imposition of fraud on
22
23
24
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[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.
[G.R. No. 124074. January 27, 1997]
RESEARCH and SERVICES REALTY, INC., petitioner, vs.
COURT OF APPEALS and MANUEL S. FONACIER, JR.,
respondents.
his
DECISION
legal
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,i[1] in Civil Case No. 612,ii[2]
which the Court of Appeals affirmed in its
25
decisioniii[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.
On 9 April 1985, the petitioner engaged the services
of private respondent Atty. Manuel S. Fonacier, Jr.,
iv
[4] 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)v[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.vi[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 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
The termination of the legal services of Atty. Fonacier
arrangement specified in the retainer contract
was made definite on March 31, 1993 at which time
wherein there was to be contingent compensation for
the Memorandum of Agreement which Research
any award arising from any lawsuit handled by him.
entered into with Filstream, Inc., has already been
According to him, Civil Case No. 612 was not the only
effective. By this time also, defendant Research has
"non-collection" case he handled for the petitioner.
already received the first two stipulated
There was a "right of way" dispute where the
consideration of the agreement in the total sum of
petitioner was awarded P50,000.00, and the latter
Six Million (P6,000,000.00). The necessary and legal
paid him P5,000.00, or 10% of the award as
consequence of said "Memorandum of Agreement" is
attorney's fees. He thus stressed that since under the
the termination of the case insofar as plaintiff Patricio
memorandum of agreement the petitioner was to
Sarile, et al. and defendant Research is concerned.
receive P28 million, he should be entitled to 10%
The conclusion of the Memorandum of Agreement
thereof or P2.8 million as attorney's fees.
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 In its decision x[10] of 31 March 1995, the Court of
legal victory. Atty. Fonancier's effort contributed to Appeals affirmed the challenged order of the trial
defendant's victory, albeit outside the Court which court. It ratiocinated as follows:
would not have been possible without the legal
maneuvering of a lawyer.
Movant-appellee, on the other hand, correctly argues
that it was the clear intention of appellant and
The dismissal of the case before this Court will come counsel to compensate the latter for any legal
in a matter of time considering that plaintiffs, with services rendered by him to the former. Stated
the assumption by the third party, Filstream Inc., of otherwise, it was never the intention of the parties in
what were supposed to be the obligations to them of the instant appeal that counsel's services shall be
defendant Research pursuant to their Joint Venture free or to be rendered ex gratia.
Agreement, is no longer interested in pursuing the
rescission.
xxx

It is a matter of record that Atty. Fonacier is the last

It must in addition be underscored that the retainer
of the three lawyers who handled this case. Moreover
contract of April 9, 1985 is the law that governs the
it is Atty. Fonacier who contributed to the forging of
relationship between appellant and appellee. In fact,
the memorandum of agreement as testified to by
the following provisions squarely and categorically
Atty. Rogel Atienza one of the two retained counsels
supports the award of P600,000.00 to counsel, to wit:
of plaintiffs.

Minimal allowance of P800 per month plus contingent

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).vii[7]
In its Orderviii[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,ix[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."
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. xi[11]
The petitioner filed a motion for reconsideration
xii
[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) xiii[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. xiv[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. xv[15]
Finding nothing new in the motion for
reconsideration, the Court of Appeals denied it in the
re-solution xvi[16] of 15 February 1996.
The petitioner then came to us via this petition for
review wherein it contends that
I 612, "except to ask for the suspension or
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) . . . .
xvii
[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.
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.
Furnishing
s, 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. xviii[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. xix[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. xx[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, xxi[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, xxii
[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. xxiii[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." xxiv[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. xxv[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, xxvi[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, law, and therefore denies the
ETPI sought preventive injunctive relief against the Motion for Enforcement of
PLDT's threats to deny ETPI access to the Philippines Attorney's Lien.
international gateway switch. Third, ETPI called this
the "foreign correspondentships aspect" where ETPI SO ORDERED.
sought preventive injunctive relief against PLDT's
incursions and inducements directed at ETPI's foreign
correspondents in Hongkong, Taiwan and Singapore, Makati, Metro Manila, September 4,
to break their correspondentship contracts with 1990.
PLDT, using the threat of denying them access to the
international gateway as leverage. (s/t

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
On October 10, 1990, petitioner filed with the trial
applications were not acted upon, ETPI brought the
court a notice of appeal from the above-mentioned
case up to the Court of Appeals by petition for
order to the Supreme Court. On November 6, 1990,
certiorari.
ETPI filed a Motion to Dismiss Appeal contending that
the case could be brought to the Supreme Court only
On June 28, 1988, petitioner received a letter from via a petition for review on certiorari, not by a mere
ETPI signed by E. M. Villanueva, President and Chief notice of appeal. In an order dated January 16, 1991,
Executive Officer. In substance, the letter stated that the trial court dismissed RADA's appeal.
ETPI was terminating the retainer contract dated
October 1, 1987, effective June 30, 1988.
The trial court said:

On June 29, 1988, petitioner filed with the Regional

There is no more regular appeal
Trial Court a notice of attorney's lien, furnishing
from the Regional Trial Court to the
copies to the plaintiff ETPI, to the signatory of the
Supreme Court. Under the
termination letter and PLDT. On the same date,
amendment of Section 17 of the
petitioner additionally sent a letter to ETPI attaching
Judiciary Act by R.A. 5440, orders
its partial billing statement. In its notice, RADA
and judgments of the Regional Trial
informed the court that there were negotiations
Court may be elevated to the
towards a compromise between ETPI and PLDT.
Supreme Court only by petition for
review on certiorari.
In April 1990, petitioner confirmed that indeed the
parties arrived at an amicable settlement and that
xxx xxx xxx
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 Wherefore, premises considered,
and then appraised the Supreme Court thereof by the order dated September 14,
manifestation. 2 We noted the manifestation in a 1990 is hereby reconsidered and
resolution dated July 23, 1990. set aside. The Notice of Appeal
filed by movant RADA is dismissed.
On May 24, 1990, PLDT filed with the trial court a
manifestation that it is not a party to nor in any SO ORDERED.
manner involved in the attorney's lien being asserted
by Atty. Rilloraza for and in behalf of the law firm, 3 Given this 16th day of January,
while ETPI filed its opposition thereto on June 11, 1991, at Makati, Metro Manila.
1990.

(s/t
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
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. ORDOEZ-BENITEZ
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.1wphi1.nt
"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 avail itself of the proper remedy in order to forestall
and execution in pursuance of such judgment the possibility of any injustice on or unjust
secured in the main action by the attorney in favor of enrichment of any of the parties.
his client 23. A charging lien presupposes that the
attorney has secured a favorable money judgment The Judgment (Fallo)
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 ACCORDINGLY, the Court GRANTS the petition,
judgment for ETPI. 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
ETPI entered into a compromise agreement when it attorney's fees to which petitioner is entitled.
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. No costs.
Whether there was bad faith in the substitution of the
lawyers to avoid compliance with the retainer SO ORDERED
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
i

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iv

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vii

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ix

xi

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xvi

xvii

xviii

xix

xx

xxi

xxii

xxiii
xxiv

xxv

xxvi