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Santiago v Fojas AC 4103 Pressure and large volume of legal work provide no

excuse for the respondents inability to exercise due

FACTS: diligence in the performance of his duty to file an
answer. Every case a lawyer accepts deserves his full
attention, diligence, skill, and competence,
An expulsion case was faced by the complainants regardless of its importance and whether he accepts
contending that they have illegally removed from the it for a fee or for free. Furthermore, a breach of
union (FEUFA) membership Mr. Paulino Salvador. The Canon 18 of the Code of Professional Responsibility
lower court resolved in favor of Salvador and ordered which requires him to serve his clients, the
the complainants to pay, jointly and severally, Mr. complainants herein, with diligence and, more
Salvador. The case was then elevated to the Court of specifically, Rule 18.03 thereof which provides: A
Appeals. The complainants lost in their petition at the lawyer shall not neglect a legal matter entrusted to
Court of Appeals due to abandonment, failure to act him, and his negligence in connection therewith shall
accordingly, or serious neglect of their counsel, Atty. render him liable.
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. Atty. Fojass negligence is not excused by his claim
However, the appellants soon discovered that he that Civil Case No. 3526-V-91 was in fact a losing
never answered it after all because, according to cause. The Supreme Court held that he should have
him, he was a very busy man. Atty. Fojas admitted seasonably informed the complainants thereof. Rule
his mistake in failing to file an answer for the 15.05, Canon 15 of the Code of Professional
expulsion case, but he alleges that it was cured by Responsibility expressly provides: A lawyer, when
his filing of a motion for reconsideration. However, advising his client, shall give a candid and honest
such motion for reconsideration was denied. Atty. opinion on the merits and probable results of the
Fojas defended his negligence with the reason that clients case, neither overstating nor understanding
the case was a losing cause after all. Atty. Fojas also the prospects of the case.
asserts that he was about to appeal the said decision
to this Court, but his services as counsel for the REPRIMANDED AND ADMONISHED
complainants and for the union were illegally and
unilaterally terminated by complainant.
Complainants then filed for a disbarment case.
Blandina Hilado vs Jose Gutierrez David
84 Phil 569 Legal Ethics Existence of Attorney-
Client Relationship
Whether the respondent committed culpable
negligence, as would warrant disciplinary action, in
failing to file for the complainants an answer In April 1945, Blandina Hilado filed a complaint to
have some deeds of sale annulled against Selim
Assad. Attorney Delgado Dizon represented Hilado.
HELD: Assad was represented by a certain Atty. Ohnick.

Yes. The Supreme Court upheld Canon 14 of the Code In January 1946, Atty. Vicente Francisco replaced Atty.
of Professional Responsibility. Once he agrees to take Ohnick as counsel for Assad and he thenafter entered
up the cause of a client, the lawyer owes fidelity to his appearance in court.
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 In May 1946 or four months later, Atty. Dizon filed a
remedy and defense that is authorized by the law of motion to have Atty. Francisco be disqualified
the land and he may expect his lawyer to assert because Atty. Dizon found out that in June 1945,
every such remedy or defense. In his motion for Hilado approached Atty. Francisco to ask for
reconsideration of the default order, the respondent additional legal opinion regarding her case and for
explained his non-filing of the required answer by which Atty. Francisco sent Hilado a legal opinion
impliedly invoking forgetfulness occasioned by a letter.
large volume and pressure of legal work, while in his
Comment in this case he attributes it to honest Atty. Francisco opposed the motion for his
mistake and excusable neglect due to his disqualification. In his opposition, he said that no
overzealousness to question the denial order of the material information was relayed to him by Hilado;
trial court. Whether it be the first or the second that in fact, upon hearing Hilados story, Atty.
ground, the fact remains that the respondent did not Francisco advised her that her case will not win in
comply with his duty to file an answer. 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. Anent the issue that the legal opinion was not
Federico Agrava); that Atty. Agrava attended to actually written by Atty. Francisco but was only
Hilado; that after Hilado left, leaving behind the legal signed by him: It still binds him because Atty.
documents, Atty. Agrava then prepared a legal Agrava, assuming that he was the real author, was
opinion letter where it was stated that Hilado has no part of the same law firm. An information obtained
cause of action to file suit; that Atty. Agrava had Atty. from a client by a member or assistant of a law firm
Francisco sign the letter; that Atty. Francisco did not is information imparted to the firm, his associates or
read the letter as Atty. Agrava said that it was merely his employers.
a letter explaining why the firm cannot take on
Hilados case. Anent the issue of the fact that it took Hilado four
months from the time Atty. Francisco filed his entry of
Atty. Francisco also pointed out that he was not paid appearance to file a disqualification: It does not
for his advice; that no confidential information was matter. The length of time is not a waiver of her
relayed because all Hilado brought was a copy of the right. The right of a client to have a lawyer be
Complaint which was already filed in court; and that, disqualified, based on previous atty-client
if any, Hilado already waived her right to disqualify relationship, as counsel against her does not
Atty. Francisco because he was already representing prescribe. Professional confidence once reposed can
Assad in court for four months in the said case. never be divested by expiration of professional
Judge Jose Gutierrez David ruled in favor of Atty.

ISSUE: Whether or not Atty. Francisco should be
disqualified in the said civil case.
[A.M. No. RTJ-05-1900. January 28, 2005]

HELD: Yes. There already existed an attorney-client

relationship between Hilado and Atty. Francisco. SHIRLEY LORIA TOLEDO and ROSIE LORIA DAJAC,
Hence, Atty. Francisco cannot act as counsel against complainants, vs. JUDGE ALFREDO E. KALLOS,
Hilado without the latters consent. respondent.

As ruled by the Supreme Court, to constitute an RESOLUTION

attorney-client relationship, it is not necessary that
any retainer should have been paid, promised, or DAVIDE, JR., C.J.:
charged for; neither is it material that the attorney
consulted did not afterward undertake the case
For our resolution is the verified complaint, written in
about which the consultation was had. If a person, in
the vernacular and dated 21 August 2002, of siblings
respect to his business affairs or troubles of any kind,
Shirley Loria Toledo and Rosie Loria Dajac against
consults with his attorney in his professional capacity
respondent Judge Alfredo E. Kallos, Presiding Judge of
with the view to obtaining professional advice or
the Regional Trial Court (RTC) of Legazpi City, Branch
assistance, and the attorney voluntarily permits or
10, for violation of the Code of Judicial Conduct, the
acquiesces in such consultation, then the
Code of Professional Responsibility, and Article 1491
professional employment must be regarded as
(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,
An attorney is employed-that is, he is engaged in his Branch 4, involving the recovery of hereditary shares
professional capacity as a lawyer or counselor-when with damages. On 25 March 1979, a judgment was
he is listening to his clients preliminary statement of rendered ordering the defendants to, among other
his case, or when he is giving advice thereon, just as things, turn over to herein complainants, the
truly as when he is drawing his clients pleadings, or plaintiffs therein, the possession and ownership of
advocating his clients cause in open court. the total area of 4,514 square meters of lot 2082
Albay Cadastre. On appeal, the decision was affirmed
Anent the issue of what information was relayed by by the Court of Appeals and became final and
Hilado to Atty. Francisco: It does not matter if the executory on 16 December 1985.[2]
information relayed is confidential or not. So long as
the attorney-client relationship is established, the Several years thereafter, or in February 2002, the
lawyer is proscribed from taking other respondent filed in the same action, Civil Case No.
representations against the client. 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 In his Comment dated 25 November 2002, the
awarded in favor of the complainants representing respondent denies the allegations against him and
his attorneys fee. He based his motion on a written asserts that he is only claiming what is due him. He
contingency agreement on attorneys fees for vehemently denies that he appeared in the case only
professional services rendered whereby he is entitled during the execution stage, pointing to the Minutes
to one-third share of what would be awarded to the of Hearing and the Order, both dated 05 October
complainants. He claimed that this agreement had 1973, which show that he entered his appearance as
already been implemented when one of the three (3) counsel for the complainants as early as 5 October
lots levied upon by the sheriff to answer for the 1973, or two months after the complaint was filed.
award of damages was given to (him) as his one-third He continuously handled the case from then on, as
share while the other two lots went to the plaintiffs shown by copies of the minutes of the hearings and
as their two-third share [as] evidenced by the orders issued by the RTC, until a favorable judgment
Definite Deed of Sale and Transfer Certificate of Titles was rendered on 25 March 1979 and the subject
Nos. T-77728, T-77458 and T-77459. However, he properties were levied upon on execution to satisfy
misplaced a copy of said written agreement. the judgment. He insists that he was never remiss in
the performance of his duties and responsibilities as
In the meantime, or on 5 September 2002, the complainants counsel.
complainants filed before this Court, through the
Office of the Court Administrator, the subject verified The respondent further alleges that the existence of
complaint. Here, complainants pray for three things. the agreement on attorneys fees was admitted by
First, they pray for an order directing the respondent complainant Shirley Loria Toledo as evidenced by the
to stop demanding his 1/3 share attorneys fees. They order issued by the court on 01 March 2002, which
assert that the respondent has no basis for his claim states that Ms. Toledo came to the court informally
because he failed to show in court proof of the informing it that she had a copy of the contract on
alleged written contingency fee agreement. They attorneys fees.[4]
also belie respondents insistence in his Omnibus
Motion that the said agreement had already been As regards the Deed of Absolute Sale, respondent
implemented when, on execution, one of three lots admits that he was still complainants lawyer when
levied upon by the sheriff was given to him as his 1/3 the lot was transferred in his name. The lot was given
share. They emphasize that all the lots levied by the to him by the complainants and their mother,
sheriff were given to them. However, the respondent pursuant to their written contingency agreement, as
forced them to sign a Deed of Absolute Sale on 16 his 1/3 share in the three parcels of land levied upon
January 1990 involving a parcel of land valued in the by the sheriff to settle the accrued rentals awarded
document at P10,000, but actually worth more than in the second paragraph of the dispositive portion of
P500,000, in payment of his attorneys fees. While the decision. He did not pay for it. The figure
they did not want to sign the document because appearing on the document was written only to
respondent appeared in their case only during facilitate the transaction. He never compelled the
execution, they were constrained to do so for fear complainants and their mother to sell to him the
that something adverse might happen to their case, parcel of land. Neither did he tell them that nothing
as the respondent so warned them. The latter told would happen to their case without him.
them that they would not have won the case were it
not for his services.
Finally, the respondent asserts that his claim for
attorneys fees is still being litigated in Civil Case No.
The complainants thus seek, as their second prayer, 4879. Thus, the instant complaint is premature.
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 In their Rejoinder dated 7 January 2003, the
from buying their clients properties when the same complainants insist that there is no basis for
are still the object of litigation. To prove that the respondents claim for attorneys fees for the following
respondent was still their counsel when the sale took reasons: (1) the respondent failed to present the
place, the complainants attached to their complaint agreement on attorneys fees; (2) attorneys fees were
the Motion to Terminate Services dated 23 June 1994, not awarded by the RTC or the Court of Appeals; and
which was based on respondents being remiss in his (3) Civil Case No. 4879 is in its execution stage.
duties and responsibilities as their lawyer, and the
Order of the court dated 29 June 1994, approving the After evaluating the pleadings submitted by the
termination. parties, the Court Administrator found[5] that
respondent was, indeed, complainants counsel in
Third, the complainants pray for the removal of the Civil Case No. 4879, and he should therefore be
respondent from his position as RTC judge for his compensated for his services. The act of demanding
alleged abusive conduct unbecoming a judge. 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 In this case, the respondent is not being charged for
this, the Court Administrator stated: 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
On the question of whether respondent violated
Article 1491(5) of the Civil Code, the Court principle is the same, in that, the matter is still
judicial in nature.
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 We agree with Justice Mendoza.
Associate Justice of the Court of Appeals pursuant to
Section 3, Rule 140 of the Rules of Court. On the It is fundamental that a claim for attorneys fees may
basis of this recommendation, we referred the matter be asserted either in the very action in which the
to Associate Justice Jose Mendoza of the Court of services of a lawyer had been rendered or in a
Appeals for investigation, report, and separate action.[7] The respondent chose to file his
recommendation. claim for attorneys fees in the same case in which he
served as counsel for the complainants. As
In his Report,[6] Justice Mendoza found that the mentioned, this is a proper remedy under our
respondent indeed represented the complainants in jurisdiction and is preferred to an independent action
Civil Case No. 4879. Like the Court Administrator, he as it avoids multiplicity of suits. Besides, the right to
expresses the view that the act of demanding recover attorneys fees is but an incident of the case
attorneys fees for services rendered is not a ground in which the services of counsel have been rendered.
for administrative sanction. He finds that when the Moreover, the court trying the case is to a certain
respondent made the demand, he did so as a lawyer degree already familiar with the nature and extent of
who obtained a favorable judgment for his client, and the lawyers services[8] and is in a better position to
not as a judge. As a lawyer, it is but just that he be decide the question of fees.
fairly compensated for his services. And his filing of a
claim for attorneys fees in Civil Case No. 4879 was an Undisputably, respondents claim for attorneys fees is
appropriate legal remedy. Considering the pendency under litigation. We find in the records an Order
of such claim, Justice Mendoza recommends the dated 7 January 2004 issued in Civil Case No. 4879
suspension of the determination of the instant which granted respondents prayer for 1/3 share of
administrative complaint until the rendition of a final attorneys fees in the proceeds of litigation as claimed
judicial ruling on the matter of respondents attorneys in his Omnibus Motion dated 14 February 2002. This
fees; thus: Order is the subject of a motion for reconsideration
by the complainants, as stated in respondents
As the said issue is still being litigated in the Regional Manifestation dated 24 January 2004[9] filed in the
Trial Court in Civil Case No. 4879, it is the view of the investigation proceedings conducted by Justice
undersigned that the complaint is still premature . Mendoza. Also part of the records is respondents
Affidavit dated 1 December 2003, filed in the same
In other words, the complaint is not yet ripe for investigation proceedings, alluding to the
complainants filing of a Petition for Certiorari and
administrative evaluation. The hearing on the matter
being conducted by the court below should be Mandamus in the Court of Appeals, docketed as CA-
G.R. SP No. 80090, seeking to reverse the Order of
allowed to run its course as that court is the
appropriate forum for a ruling on the dispute. the trial court denying complainants Motion to
Dismiss respondents Omnibus Motion.

To make a determination at this time on whether the

respondent violated Article 1491 (A) would be to We, therefore, find no cogent reason for us to resolve
complainants first two issues raised in the verified
preempt the lower court in its resolution of the issue.
Any recommendation by the undersigned in this complaint, for they are inextricably inherent in the
claim of the respondent in his Omnibus Motion, which
administrative case and subsequent resolution by the
Honorable Supreme Court on the matter would is pending judicial determination. Since respondents
claim for attorneys fees in the main case has not yet
certainly affect or influence the thinking of the trial
court before which the matter is pending. In such a become final, the objection of prematurity obtains, as
a contrary holding may be preemptive of a final
case, it will be unfair to either party. At any rate, the
party who would feel aggrieved might still elevate judicial determination of factual and evidentiary
matters inherent in the claim.[10] Clearly, the reliefs
the decision to the higher courts.
asked by the complainants are judicial in nature.[11]
And, if only for an orderly administration of justice,
This recommendation is not without precedent. In the the proceedings in Civil Case No. 4879 should be
case of Spouses De Leon v. Hon. Bonifacio, Adm. allowed to continue and take its course, and the
Case No. 4467, October 10, 1997, the then Deputy claim of the respondent judicially settled first.
Court Administrator, Hon. Reynaldo Suarez,
recommended the dismissal of the case for being
But while we give deference to the wisdom of the
judicial in nature or, at least, premature.
trial court to initially decide respondents claim for
attorneys fees, we deem it appropriate to reiterate The third issue raised in the verified complaint
certain principles governing the payment of deserves a short shrift. No evidence was presented
attorneys fees and impart our observations on the to prove respondents alleged abusive conduct
instant claim. Foremost of these principles is that the unbecoming a judge. The complainants do not
act of demanding attorneys fees for services dispute the fact that the respondent was not yet a
rendered is not a ground for an administrative judge when the assailed action or conduct was
sanction. On the contrary, Canon 20 of the Code of allegedly committed by him. As such, and to that
Professional Responsibility allows lawyers to charge extent, there is no reason to bind him by the strict
fair and reasonable fees. As long as a lawyer standards of the Code of Judicial Conduct for acts
honestly and in good faith serves and represents the committed as counsel to a case prior to his
interest of the client, he should have a reasonable appointment as a judge.
compensation for his service.[12]
WHEREFORE, the instant administrative complaint
Lawyers are thus as much entitled to judicial is DISMISSED for being premature and for lack of
protection against injustice on the part of their merit.
clients as the clients are against abuses on the part
of counsel. The duty of the court is not only to see SO ORDERED.
that lawyers act in a proper and lawful manner, but
also to see that lawyers are paid their just and lawful
fees.[13] Thus, in J.K. Mercado and Sons Agricultural
Enterprises, Inc. v. De Vera,[14] citing Albano v.
Coloma,[15] we stressed:

While, indeed, the practice of law is not a business

venture, a lawyer, nevertheless, is entitled to be duly
compensated for professional services rendered. So,
also, he must be protected against clients who
wrongly refuse to give him his just due. In Albano vs.
Coloma, this Court has said:

Counsel, any counsel, who is worthy of his hire, is

entitled to be fully recompensed for his services.
With his capital consisting solely of his brains and
with his skill, acquired at tremendous cost not only in
money but in the expenditure of time and energy, he
is entitled to the protection of any judicial tribunal
against any attempt on the part of a client to escape
payment of his fees. It is indeed ironic if after putting
forth the best that is in him to secure justice for the
party he represents, he himself would not get his
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
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
for attorney's fees against the private respondent.
It appears that Atty. Armovit was engaged as counsel public policy, as prayed for by
for the private respondent in a complaint to have an Attys. Armovit and Aglipay, it
extrajudicial foreclosure of certain properties by the hereby withdrawn. The parties,
Government Service Insurance System declared null therefore are hereby directed to co
and void; that the parties allegedly agreed that the ply faithfully with their respective
private respondent shall pay P15,000.00 as initial obligations.
compensation and twenty percent in contingent fees;
that after trial, the defunct Court of First Instance 2
rendered judgment annulling foreclosure and
ordering the Government Service Insurance System
to restructure the private respondent's loan; that However, upon the turnover of the money to the
thereafter, the System appealed; the on appeal, the private respondent, Mrs. Brenda Bengson (wife of
Court of Appeals affirmed the decision of lower court; Romualdo Bengzon delivered to Atty. Armovit the
and that the Appellate Court's judgment has since sum of P300,000.00 only. Armovit protested and
attained finality. 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.
It also appears that when Atty. Armovit sought
execution with the court a quo, he was informed by
Romualdo Bengson president of the respondent On November 4, 1988, however, Atty. Armovit
corporation, that the firm has retained the services of received a order emanating from the trial court in the
Atty. Pacifico Yadao. He was also informed that the tenor as follows:
company would pay him the agreed compensation
and that Atty. Yadao's fees were covered by a During the hearing on the petition
separate agreement. The private respondent, to record attorney's charge lien on
however, later ignored his billings and over the October 11, 1988, Attys. Armovit
phone, directed him allegedly not to take part in the and Aglipay withdrew their petition
execution proceedings. Forthwith, he sought the to record attorney's charging lien,
entry of an attorney's lien in the records of the case. which was duly approve petition to
The lower court allegedly refused to make the entry recordby the Court, after which the
and on the contrary issued an order ordering the Court directed the parties to comp
Philippine National Bank to "release to the custody of faithfully with their respective
Mr. Romualdo F. Bengzon and/or Atty Pacifico Yadao" 1 obligations.
the sum of P2,760,000.00 (ordered by the Court of
Appeals as rentals payable by the Government
In compliance with the Order of this
Service Insurance System).
Court, the plaintiff submitted a
pleading denominated as
Atty. Armovit then moved, apparently for the hearing compliance alleging that petition
of hi motion to recognize attorney's lien, and (Atty. Armovit) has already received
thereafter, the trial court. issued an order in the from the plaintiff the sum
tenor as follows: P300,000.00, Philippine Currency,
as and by way of attorney's fees
When this case was called for With the receipt by the petitioner
hearing on the petition to record from the plaintiff of this amount,
attorney's charging lien, Attys. the latter has faithfully complied
Armovit and Aglipay appeared for with its obligation.
the petitioners.
WHEREFORE, the Order of this
Atty. Armovit informed the Court Court dated October 11, 1988
that they are withdrawing the approving the withdrawal of the
petition considering that they are petition to record attorney's
in the process of amicably settling charging lien, on motion of the
their differences with the plaintiff, petitioner, is now final.
which manifestation was confirmed
by Atty. Yadao as well as the SO ORDERED. 3

plaintiffs, Romualdo Bengson and

Brenda Bengson, who are present
Reconsideration having been denied, Atty. Armovit
went the Court of Appeals on a petition for certiorari
and prohibition.
In view of this development, the
petition to record attorney charging
On August 25, 1989, the Court of Appeals 4 rendered
lien, the same being in order and
judgment dismissing the petition. Reconsideration
not contrary to law, moral and
having been likewise denied by the Appellate Court, a) P15,000.00 by way of
Atty. Armovit instituted the instant appeal. acceptance and study fee, payable
within five (5) days from date;
Shortly thereafter, we required the private
respondent comment. b) 20% contingent fee computed
on the value to be recovered b
favorable judgment in the cases;
The private respondent did not materially traverse
Atty. Armorvit's chronicle of events but added: that and
the private respondent hired the petitioner after the
Government Service Insurance System had answered c) the execution and signing of a
and that it was Atty. Benjam Bernardino who final retainer agreement complete
prepared the complaint; that for his appearances, with all necessary details. 7
Atty. Armovit was paid a total of P108,000.00, not to
mention "beach resort accommodations"; 5 that Atty. (While the parties' agreement speaks of "a final
Armovit did not inform the private respondent that retain agreement" 8 to be executed later, it does not
the court had rendered judgment which they would appear that the parties did enter into a "final"
have appealed; that they lost an appeal on account agreement thereafter.)
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 private respondent's version however is that
the Court Appeals (on GSIS's appeal). 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 private respondent also alleged that it opposed the trial court, per its Order of October 11, 1988.
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 The Court is inclined to believe that Atty. Armovit
fees demanded. 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 private respondent also insisted that the retainer the parties were "in the process of amicably settling
agreement was signed by only one of seven their differences" 9 and not because Atty. Armovit had
directors, and it could no bind the corporation. Atty. agreed to accept a lower amount as full payment.
Armovit, in any event, had also been allegedly more There is nothing, on top of that, Atty. Armovit's
than sufficiently compensated. manifestation that would suggest that he was
accepting the sum of P300,00.00 as agreed final
The private respondent alleged that Atty. Armovit payment, other than the fact that an agreement was
had bee paid P300,000.00 an amount approved by supposedly certain. We quote:
the court, and an amount he accepted and for which
he is allegedly estoppel from claiming a higher ATTY. ARMOVIT:
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 Your Honor, we
executory. would like to
manifest in Court
that we served
The disposition of the Court of Appeals was that since notice to the
the receipt evidencing payment to Atty. Armovit of counsel of the
the sum P300,000.00 "was without any qualification plaintiff, Bengson
as 'advance' 'partial' or 'incomplete'," 6 the intention Commercial
of the parties was that was full payment. The Building, a copy
Appellate Court also noted Atty. Armorvit's of the petition to
withdrawal of his motion to record attorney's lien and record attorney's
figured that Atty. Armovit was satisfied with the charging lien,
payment P300,000,00. and together with
the president of
The only issue is whether or not Atty. Armovit is the corporation,
entitled to the sum of P252,000.00 more, in addition Mr. Romualdo
to the sum P300,000.00 already paid him by the Bengson, and his
private respondent.There is no question that the wife, Mrs. Brenda
parties had agreed on a compensation as follows: Bengson, we
have discussed
the problem and
we all agreed
upon is an The PNB is hereby ordered and
earnest one at directed to release to the custody
this time, this of Mr. Romualdo F. Bengson and /or
representation is Atty. Pacifico Yadao, counsel for the
withdrawing his plaintiff, the sum of Two Million
petition to record Seven Hundred Sixty Thousand
charging lien. Pesos (P2,760,000.00), Philippine
Currency for the satisfaction of the
ATTY. YADAO: rentals of the Bengson Building
against the GSIS. 14

No objection,
Your Honor, in spite of the fact that Atty. Armovit had remained
the private respondent's counsel of record. It is
because we have
to agree with fundamental that unless a lawyer has been validly
discharged, his authority to act for his client
Atty. Armovit. I
am in full accord continues and should be recognized by the court. 15
with this. 10
The fact that the receipt evidencing payment by the
There is nothing there that would indicate Atty. private respondent of the amount of P300,000.00
"was without any qualification as 'advance' or
Armovit's willingness to accept, in fact, a lower figure
in consideration of his withdrawal of his request to 'partial' or 'incomplete'," 16 as the Court of Appeals
noted and the Court of Appeals took to mean "full
enter attorney's lien. What the Court takes his
statement to mean is that he was withdrawing his payment", will not weaken Atty. Armovit's demand for
the balance. There is nothing in the receipt that will
request on the certainty that the private respondent
would pay him the money, presumably, under more suggest that will suggest that it was full payment
either, and the fact that Atty. Armovit accepted it
becoming circumstances.
does not mean that he was satisfied that it was final
payment. The fact of the matter is that the private
The Court does not therefore see how the private respondent had assured him that the balance was
respondent can hold Atty. Armovit to have been in forthcoming.

The private respondent can not justifiably downplay

The fact that Atty. Armovit did not, after all, accept Atty. Armovit as negligent (for failing to appeal) or his
the sum of P300,000.00 as final compensation is demand for fees excessive (that he had been paid
indeed indicated by the behavior of the private enough). Atty. Armovit, after all, succeeded in
respondent, through Mrs. Romualdo Bengson, when obtaining a favorable decision for his client, an
she assured Atty. Armovit that the balance was although his prayer for various damages were
forthcoming. 11 According to Mrs. Bengson, she denied, he secceeded in obtaining a substantial
wished the rest of the Bengsons to witness the final award (P1,900,00.00 in unpaid rentals) for his client.
payment and when the occasion was present, wished On appeal, the Court of Appeals sustained his theory.
for a postponement on account of "All Saints Day." 12 It should be noted that the private respondent had in
fact stood to lose substantial properties on
The parties never therefore amended their original foreclosure Atty. Armovit not only restored to the
agreement, and what appears to the Court is a clear private respondent its foreclosured properties, he
effort on the part of a client, with the apparent succeeded in having the private respondent's loans
approval of the trial court, to renege on a valid restructed and the Government Service Insurance
agreement with its lawyer. System pay rentals. No client can ask a better result
from a lawyer.
The Court believes that the trial court, in accepting
the private respondent's "compliance" as a final Obviously, the private respondent's effort to
payment of Atty. Armovit's fees, was guilty of a grave downgrade Atty. Armovit's performance is a wild, if
abuse of discretion. The private respondent had not cheap, shot of a client out to evade its
nothing with which to comply, and the parties, as obligations to its lawyer. The fact that Atty. Armovit
manifested by Atty. Armovit, were "in the process may have been paid substantially (in initial fees)
[merely] of amicably settling their differences." 13 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
It is apparent furthermore that the trial judge himself
progress of litigation are independent of the
was out to deny Atty. Armovit the agreed
contingent fees. 17
compensation. In his order of October 4, 1988, he
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 GUTIERREZ, JR., J.:
respondent can not now deny him the balance bay
alleging lack of authority of the Bengson spouses.
The practice of law is a profession rather than trade.
Courts must guard against the charging of
Contingent fees are valid in this jurisdiction. 18 It is unconscionable and excessive fees by lawyers for
true that attorney's fees must at all times be their services when engaged as counsel. Whether or
reasonable; 19 however, we do not find Atty. Armovit's not the award of attorney's fees in this case is
claim for "twenty percent of all recoveries" to be reasonable, being in the nature of contingent fees, is
unreasonable. In the case of Aro v. Naawa, 20 the principal issue.
decided in 1969, this Court awarded the agreed fees
amid the efforts of the client to deny him fees by This petition for review on certiorari assails:
terminating his services. In parallel vein, we are
upholding Atty. Armovit's claim for P252,000.00 more
1) The Decision of the public respondent dated
pursuant to the contingent fee agreement amid
September 12, 1989 which dismissed the petitioners'
the private respondent's own endeavours to evade appeal thereby upholding the reasonableness of the
its obligations. respondent lawyer's lien as attorney's fees over the
properties of his clients; and
Several times, we have come down hard on erring
practitioners. We will not however be slow either, in 2) The Resolution of the public respondent dated
coming to the rescue of aggrieved brother-lawyers in January 30, 1990 which denied the petitioners'
protecting the integrity of the bar from unscrupulous motion for reconsideration.
The grounds relied upon by the petitioners are as
WHEREFORE, premises considered, the petition is follows:
GRANTED. The private respondent is ORDERED to
pay the petitioner the sum of P252,000.00. Costs The respondent Court, in upholding the
against the private respondent. 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.
Melencio-Herrera (Chairperson), Paras, Padilla and
Regalado, JJ., concur. 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

G.R. No. 91958 January 24, 1991 the case at bar:

WILFREDO D. LICUDAN and CRISTINA LICUDAN- The respondent lawyer was retained as counsel by
CAMPOS, petitioners, his brother-in-law and sister, the now deceased
vs. petitioners' parents, spouses Aurelio and Felicidad
THE HONORABLE COURT OF APPEALS and ATTY. Licudan. His services as counsel pertained to two
TEODORO O. DOMALANTA, respondents. 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
Arnold V. Guerrero & Associates for petitioners. the property subject matter of the two cases covered
Teodoro O. Domalanta for and on his behalf as by Transfer Certificate of Title No. 818 of the Register
private respondent. of Deeds of Quezon City. In both cases, the
respondent lawyer obtained a judgment in favor of payment of the required legal fees. (CA
his clients. Decision, pp. 7-8; Rollo, pp. 36-37)

On August 13,1979, the respondent lawyer filed a The Contract for Professional Services dated August
Petition for Attorney's Lien with Notification to his 30, 1979 differs from the earlier contractual
Clients which substantially alleged that his clients provisions in that it entitled the respondent lawyer to
executed two written contracts for professional one-third (1/3) of the subject property or 90.5 square
services in his favor which provided that: 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
a) The undersigned counsel is entitled to
consideration. (Annex "J" of the Petition; Rollo, p. 59)
own 97.5 square meters of the plaintiff's
share of the lot in question.
On July 25, 1985, the respondent lawyer filed a
motion ex parte to amend the Order dated
b) The undersigned counsel shall have a
September 19, 1979 so as to conform with an
usufructuary right for a period of ten (10)
additional professional fee covering 31 square
years of plaintiffs' share of the lot in
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
c) And that all damages accruing to Licudan in favor of the respondent lawyer.
plaintiffs to be paid by the defendant is for
the undersigned counsel.(Annex "H" of the
On September 6, 1985, the trial court ordered the
Petition, Rollo, p. 54)
respondent lawyer to submit a subdivision plan in
conformity with his attorney's fees contract under
On September 19, 1979, the trial court handling Civil which one-third (1/3) of the property or 90.5 square
Case No. Q-12254 ordered the annotation at the back meters was alloted to him.
of TCT No. 818 of the Register of Deeds of Quezon
City of the respondent lawyer's Contract for
On September 23, 1985, the respondent lawyer filed
Professional Services dated August 30, 1979 signed
a motion for reconsideration praying for the
by petitioner Wilfredo Licudan and Aurelio Licudan on
amendment of the Order dated September 19, 1979
his own behalf and on behalf of his daughter,
to conform with the Deed of Absolute Sale dated May
petitioner Cristina Licudan-Campos. The said trial
1, 1983 which was executed after the annotation of
court's Order, being one of two Orders being
the original attorney's lien of 90.5 square meters.
essentially challenged in this petition, is reproduced
On September 30, 1985, the trial court denied the
motion on the ground that the respondent lawyer
Before the court for consideration is a
cannot collect attorney's fees for other cases in the
Petition for Attorney's Lien filed by Atty.
action for partition.
Teodoro D. Domalanta, counsel for the
plaintiff, praying that his attorney's fees be
annotated as a lien at the back of Transfer On October 4, 1985, the respondent lawyer filed a
Certificate of Title No. 818 of the Register of second motion for reconsideration of the Order dated
Deeds of Quezon City, subject matter of this September 6, 1985 explaining that what he sought to
case. 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
For the protection of the plaintiffs, the court
the partition case and further manifesting that the
required the plaintiff Aurelio Licudan as well
additional 31 square meters as compensation for the
as his son to appear this morning. Plaintiff
redemption case must be merged with the 90.5
Aurelio Licudan together with his son
square meters for the partition case to enable the
Wilfredo Licudan, who appears to be
said respondent lawyer to comply with the Order
intelligent and in fact he speaks (the)
dated September 6,1985 which directed him to
English language well, appeared. Both
submit a subdivision plan as required.
Aurelio and Wilfredo Licudan manifested
that they have freely and voluntarily signed
the Contract for Professional Services, dated On October 21, 1985, the trial court issued the
August 30, 1979 and notarized before second Order being assailed in this petition. The said
Notary Public Amado Garrovillas as Doc. No. Order reads:
32, Page 8, Book No. XIX, Series of 1979.
Acting on the "Second Motion for
Considering the manifestation of plaintiff, Reconsideration" filed by Atty. Teodoro
Aurelio Licudan and Alfredo (sic) Licudan Domalanta and finding the same to be
that they have entered freely and justified, let an attorney's lien be annotated
voluntarily in the said contract of in the title of the property for 31 square
professional services, let the same be meters as attorney's fees of said Atty.
annotated at the back of TCT 818 of the Teodoro Domalanta in addition to the
Register of Deeds of Quezon City, upon
original 90.5 square meters. (CA Decision, p. court awarded him attorney's fees for P1,000.00 only
8; Rollo, p. 37) 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
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' The petitioners contend that under the award for
deceased clients filed a motion to set aside orders on professional services, they may have won the case
the ground that the award of professional fees but would lose the entire property won in litigation to
covering 121.5 square meters of the 271.5 square their uncle-lawyer. They would be totally deprived of
meter lot is unconscionable and excessive. 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
After the respondent lawyer filed his Opposition to
square meters and the remaining portion of 150
the above petitioners' motion, the lower court, on
square meters would also go to attorney's fees since
August 29, 1986, finding that the petitioners as
the said portion pertains to the lawyer's son by way
substituted plaintiffs are not in full agreement with
of usufruct for ten (10) years.
the respondent lawyer's claim for attorney's fees, set
aside its Orders dated September 6, 1985 and
October 21, 1985. The aforesaid submissions by the petitioners merit
our consideration.
On September 16, 1986, the respondent lawyer filed
a motion for reconsideration stressing the fact that It is a well-entrenched rule that attorney's fees may
the payment of the professional services was be claimed in the very action in which the services in
pursuant to a contract which could no longer be question have been rendered or as an incident of the
disturbed or set aside because it has already been main action. The fees may be properly adjudged
implemented and had since then become final. This after such litigation is terminated and the subject of
motion was denied on October 3, 1986. 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
On November 15, 1986, the respondent lawyer filed
769 [1989]).
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 It is an equally deeply-rooted rule that contingent
21, 1985 have become final and are already fees are not per se prohibited by law. They are
implemented. The respondent lawyer further asked sanctioned by Canon 13 of the Canons of Professional
for the modification of the October 21, 1985 Order to Ethics and Canon 20, Rule 20.01 of the recently
reflect 60.32 square meters instead of 31 square promulgated Code of Professional Responsibility.
meters only since the stipulation in the Additional However, as we have held in the case of Tanhueco v.
Contract for Professional Services entitled him to De Dumo (172 SCRA 760 [1989]):
60.32 square meters.
. . . When it is shown that a contract for a
After the petitioners' Opposition to the said motion contingent fee was obtained by undue
was filed, the trial court, on February 26, 1987, influence exercised by the attorney upon his
rendered an Order with the following dispositive client or by any fraud or imposition, or that
portion: the compensation is clearly excessive, the
Court must and will protect the aggrieved
party. (Ulanday v. Manila Railroad Co., 45
WHEREFORE, this Court has no alternative
Phil. 540 [1923]; Grey v. Insular Lumber Co.,
but to set aside its orders of 29 August 1986
97 Phil. 833 [1955]).
and 3 October 1986 and declare its Orders
of 19 September 1979 and 21 October 1985
irrevocably final and executory. (CA In the case at bar, the respondent lawyer caused the
Decision, p. 5; Rollo, p. 34) 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
On Appeal, the Court of Appeals ruled in favor of the
Services dated August 30, 1979. We find reversible
respondent lawyer by dismissing the appeal and the
error in the Court of Appeals' holding that:
prayed for writ of preliminary injunction. Their
subsequent motion for reconsideration having been
denied', the petitioners filed the instant petition. 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
The petitioners fault the respondent Court for its
had not been questioned by the client, and
failure to exercise its inherent power to review and
the said orders had already become final
determine the propriety of the stipulated attorney's
and executory, the same could no longer be
fees in favor of the respondent lawyer and accuse
disturbed, not even by the court which
the respondent lawyer of having committed an unfair
rendered them (Taada v. Court of Appeals,
advantage or legal fraud by virtue of the Contract for
Professional Services devised by him after the trial
139 SCRA 419). (CA Decision p. 7; Rollo, p. c) The importance of the subject matter;
d) The skill demanded;
On the contrary, we rule that the questioned Orders
dated September 19, 1979 and October 21, 1985
e) The probability of losing other
cannot become final as they pertain to a contract for
employment as a result of acceptance of the
a contingent fee which is always subject to the
proferred case;
supervision of the Court with regard to its
reasonableness as unequivocally provided in Section
13 of the Canons of Professional Ethics which reads: f) The customary charges for similar
services and the schedule of fees of the IBP
Chapter to which he belongs;
13. Contingent Fees.

g) The amount involved in the controversy

A contract for a contingent fee, where
and the benefits resulting to the client from
sanctioned by law, should be reasonable
the service;
under all the circumstances of the case
including the risk and uncertainty of the
compensation, but should always be subject h) The contingency or certainty of
to the supervision of a court, as to its compensation;
reasonableness. (Emphasis supplied).
i) The character of the employment,
There is no dispute in the instant case that the whether occasional or established; and
attorney's fees claimed by the respondent lawyer are
in the nature of a contingent fee. There is nothing
j) The professional standing of the lawyer.
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 A similar provision is contained under Section 24,
on contingent fees by the parties concerned and as Rule 138 of the Revised Rules of Court which partly
long as the said contract does not contain states that:
stipulations which are contrary to law, good morals,
good customs, public policy or public order.
Sec. 24. Compensation of attorneys;
agreement as to fees. An attorney shall
Although the Contract for Professional Services dated be entitled to have and recover from his
August 30, 1979 was apparently voluntarily signed client no more than a reasonable
by the late Aurelio Licudan for himself and on behalf compensation for his services, with a view
of his daughter, petitioner Cristina Licudan-Campos to the importance of the subject matter of
and by the petitioner Wilfredo Licudan who both the controversy, the extent of the services
manifested in open court that they gave their free rendered, and the professional standing of
and willing consent to the said contract we cannot the attorney. . . . A written contract for
allow the said contract to stand as the law between services shall control the amount to be paid
the parties involved considering that the rule that in therefor unless found by the court to be
the presence of a contract for professional services unconscionable or unreasonable.
duly executed by the parties thereto, the same
becomes the law between the said parties is not
All that the respondent lawyer handled for his
absolute but admits an exceptionthat the
deceased sister and brother-in-law was a simple case
stipulations therein are not contrary to law, good
of partition which necessitated no special skill nor
morals, good customs, public policy or public order
any unusual effort in its preparation. The subsequent
(see Philippine American Life Insurance Company v.
case for redemption was admittedly but an offshot of
Pineda, 175 SCRA 416 [1989]; Syjuco v. Court of
the partition case. Considering the close blood and
Appeals, 172 SCRA 111 [1989]).
affinal relationship between the respondent lawyer
and his clients, there is no doubt that Atty.
Under Canon 20 of the Code of Professional Domalanta took advantage of the situation to
Responsibility, a lawyer shall charge only fair and promote his own personal interests instead of
reasonable fees.1wphi1 In determining whether or protecting the legal interests of his clients. A careful
not the lawyer fees are fair and reasonable, Rule 20- perusal of the provisions of the contract for
01 of the same Code enumerates the factors to be professional services in question readily shows that
considered in resolving the said issue. They are as what the petitioners won was a pyrrhic victory on
follows: 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
a) The time spent and the extent of the
litigation. This is because aside from the 121.5
services rendered or required;
square meters awarded to Atty. Domalanta as
attorney's fees, the said contract for professional
b) The novelty and difficulty of the questions services provides that the remaining portion shall
involved; 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 NOCON, J.:
entire property involved in the litigation. It is
unconscionable for the victor in litigation to lose
While in bed the
everything he won to the fees of his own lawyer.
sick man's lying,
While in Court
The respondent lawyer's argument that it is not he your client's
but his son Teodoro M. Domalanta, Jr. who is claiming cause you're
the usufructuary right over the remaining portion of
the subject lot is inaccurate. The records show that
That's the time to
the matter of usufruct is tied up with this case since
the basis for the said usufructuary right is the get your fee.
contract for professional services the reasonableness For, when the
of which is being questioned in this petition. We find sick man has
the ten-year usufruct over the subject lot part and recovered.
parcel of the attorney's fees being claimed by the And the lawsuit's
respondent lawyer. won or
In resolving the issue of reasonableness of the He will never
attorney's fees, we uphold the time-honoured legal think of thee. 1
maxim that a lawyer shall at all times uphold the
integrity and dignity of the legal profession so that Petitioners spouses Ernesto and Marietta Roldan
his basic ideal becomes one of rendering service and claim that the attorney's fees claimed by the private
securing justice, not money-making. For the worst respondent, Commercial Credit Corporation of Davao
scenario that can ever happen to a client is to lose
City, being gargantuan, exhorbitant and
the litigated property to his lawyer in whom an trust
unconscionable, should be proportionately reduced
and confidence were bestowed at the very inception
of the legal controversy. We find the Contract for on the basis of quantum meruit. Private respondent
Professional Services dated August 30, 1979, Commercial Credit Corporation of Davao demurs and
unconscionable and unreasonable. The amount of states that the amount is reasonable or conscionable
P20,000.00 as attorney's fees, in lieu of the 121.5 considering the difficulty it has encountered in
square meters awarded to the respondent lawyer collecting from the petitioners.
and the ten-year usufructuary right over the
remaining portion of 150 square meters by the
Culled from private respondent's statement of facts
respondent lawyer's son, is, in the opinion of this
Court, commensurate to the services rendered by are the following antecedents of this case. On June 7,
Atty. Domalanta. 1971, petitioners purchased fifteen (15) trucks on
installment basis for P1,250,000.00 from private
respondent. Since they could not fully pay their
WHEREFORE, IN VIEW OF THE FOREGOING, the obligation, private respondent sued them on
instant petition is GRANTED. The Court of Appeals'
November 21, 1981. On July 28, 1987, the trial court
decision of September 12, 1989 is hereby REVERSED
rendered its decision, which in its dispositive portion
and SET ASIDE. Atty. Domalanta is awarded
reasonable attorney's fees in the amount of reads as follows:
IN VIEW WHEREOF, judgment is
SO ORDERED. hereby rendered ordering the
defendants to pay in solidum the
plaintiff the following sums:
Fernan, C.J., Feliciano and Bidin, JJ., concur.

1. Five Hundred Seventy Nine

Thousand Five Hundred Sixty
G.R. No. 97006 February 9, 1993 Seven Pesos and Thirteen Centavos
representing the principal balance
with interest at 12% to be
ERNESTO F. ROLDAN and MARIETTA A. ROLDAN, computed from November 24, 1981
petitioners, until fully paid;
CREDIT CORPORATION OF DAVAO, respondents. 2. Twenty Thousand Two Hundred
Eighty Five and Forty Three
Centavos representing the past due
Rodolfo B. Ta-asan for petitioners. charges as of November 23, 1981
with interest of 12% per annum to
Honesto A. Cabarroguis for private respondent. be computed from November 24,
1981 until fully paid;
3. One Hundred Ninety Three petitioner Radiowealth questioned the
Thousand One Hundred Sixty Nine reasonableness of the amount of attorney's fees
Pesos and Seventy Two Centavos therein and asked whether this Court has the power
representing liquidated damages to modify the attorney's fees previously agreed upon
as of November 23, 1981 with by the parties under a valid contractual stipulation.
interest of 12% per annum to be
computed from November 24, 1981 The Court ruled there as follows:
until fully paid;

As a basic premise, the contention

4. Attorney's fees equivalent to of petitioners that this Court may
25% of the total amount due in alter, modify or change even an
favor of the plaintiff; admittedly valid stipulation
between the parties regarding
5. Two Hundred Fifty Pesos and attorney's fees is conceded. The
Seventy Five Centavos high standards of the legal
representing the value of the check profession as prescribed by law and
which was drawn by the defendant, the Canons of Professional Ethics
accepted by the plaintiff and regulate if not limit the lawyer's
dishonored by the drawee bank. freedom in fixing his professional
fees. The moment he takes his
6. Costs of suit. oath, ready to undertake his duties
first, as a practitioner in the
exercise of his profession, and
SO ORDERED. 2 second, as an officer of the court in
the administration of justice, the
Seeking appellate review, the matter was elevated to lawyer submits himself to the
the Court of Appeals which dismissed petitioners' authority of the court. It becomes
appeal for lack of merit 3 and so with their Motion for axiomatic therefore, that power to
Reconsideration. 4 determine the reasonableness or
the unconscionable character of
attorney's fees stipulated by the
Hence, this petition.
parties is a matter falling within the
regulatory prerogative of the courts
Petitioners do not dispute the facts but only that (Panay Electric Co., Inc. vs. Court of
portion of the findings of fact of the trial court, as Appeals, 119 SCRA 456 [1982]; De
affirmed by the appellate court on the alleged Santos vs. City of Manila, 45 SCRA
exhorbitant attorney's fees, excessive liquidated 409 [1972]; Rolando vs. Luz, 34
damages and usurious interest on the loan. SCRA 337 [1970]; Cruz vs. Court of
Industrial Relations, 8 SCRA 826
Settled is the rule, that in petitions for review under [1963]). And this Court has
Rule 45 of the Rules of Court, only questions of law consistently ruled that even with
may be raised since factual findings of the Court of the presence of an agreement
Appeals are deemed conclusive on the Supreme between the parties, the court may
Court subject to certain exceptions. 5 nevertheless reduce attorney's
fees though fixed in the contract
when the amount thereof appears
Thus, the issues raised by petitioners on (1) the to be unconscionable or
alleged lack of basis for liquidated damages imposed unreasonable (Borcena vs.
as a penalty for litigation as determined by the trial Intermediate Appellate Court, 147
court and (2) the alleged usurious interests rate they SCRA 111 [1987]; Mutual Paper Inc.
were charged on the contract of loan as evidenced vs. Eastern Scott Paper Co., 110
by the promissory note has been disposed of by the SCRA 481 [1981]; Gorospe vs.
trial court and the Court of Appeals. Thus, the Gochango, 106 Phil. 425 [1959];
findings of fact are binding on Us. Turner vs. Casabar, 65 Phil. 490
[1938]; F.M. Yap Tico & Co. vs.
The matter, however, of the attorney's fees Alejano, 53 Phil. 986 [1929]). For
gargantuan, exhorbitant and unconscionable as the law recognizes the validity of
alleged by petitioners is what this Court will rule stipulations included in documents
upon. such as negotiable instruments and
mortgages with respect to
attorney's fees in the form of
This is not the first time that the amount of
penalty provided that they are not
attorney's fees has been questioned. In Radiowealth
unreasonable or unconscionable
Finance Co., Inc. vs. International Corporate Bank, 6
(Philippine Engineering Co. vs. xxx xxx xxx
Green, 48 Phil. 466). 7 (Emphasis
supplied) 2. To pay P50,000.00 pesos cash
downpayment and balance with
Before We proceed any further, it is worthwhile real properties located in M'lang,
recalling what Polytrade vs. Blanco 8 has to say on Cotabato, Philippines to be paid to
the matter of attorney's fees, to wit: the plaintiff's counsel for his
attorney's fees and other legal
To be borne in mind is that the
attorneys' fees here provided is
not, strictly speaking, the xxx xxx xxx
attorneys' fees recoverable as
between attorney and client It is my client's fervent wish and
spoken of and regulated by the desire that your client will
Rules of Court. Rather, the favorably consider our proposal to
attorneys' fees here are in the satisfy their respective claims and
nature of liquidated damages and interests.
the stipulation therefor is aptly
called a penal clause. It has been
said that so long as such xxx xxx xxx
stipulation does not contravene
law, morals, or public order, it is 2. Reply of Atty. Cabarroguis of even date: 11

strictly binding upon defendant.

The attorney's fees so provided are
Atty. R. Taa-san
awarded in favor of the litigant, not
Brgly Bldg. Davao City
his counsel. It is the litigant, not
counsel, who is the judgment
creditor entitled to enforce the Re: Your letter (Roldan Case) can
judgment by execution. 9 we meet over coffee tomorrow at
(Emphasis supplied). JALTAN Coffee Shop along A. Pichon
St? Please confirm.
Private respondent's counsel must have forgotten
this as evident from the following exchange of letters Regards.
between the parties, as follows:
H Cabarroguis
1. Letter of Atty. Ta-asan to Atty. Cabarroguis dated 11-16-90
November 16, 1990: 10
3. Letter of Atty. Ta-asan to petitioner Marietta A.
ATTY. HONESTO A. CABARROGUIS Roldan dated November 17, 1990: 12
Hacalex Bldg., Brokenshire
Complex, A. Pichon St., MRS. MARIETTA A. ROLDAN
Davao City, Philippines MacArthur Highway, Matina,
Davao City, Philippines
Dear Atty. Cabarroguis,
Dear Mrs. Roldan,
I wish to inform you of the outcome
This is with reference to CA-G.R. CV of my conference with
No. 15939 entitled Commercial Atty. Honesto A. Cabarroguis, legal
Credit Corporation of Davao vs. counsel of the Commercial Credit
Ernesto F. Roldan and Marietta A. Corporation (CCC), last Saturday
Roldan. My client, Mr. & Mrs. November 17, 1990. During the
Roldan, have sought my conference, we made known to
intercession instructing me to Atty. Cabarroguis your previous
present to you a proposal to proposal which I laid down in
amicably settle the above entitled writing. However, Atty. Cabarroguis
case. suggested some modifications. He
has made the following proposal:
My client wishes to make the following proposal:
xxx xxx xxx
2. The attorney's fees of Atty. Private respondent's counsel glaring cupidity is
Cabarroquis has not been altered. beyond Us. It could be that private respondent might
He is to be paid the full amount of have contracted with its counsel that the latter would
P577,320.20 with P100,000.00 as get the 25% attorney's fees stipulated in the
initial downpayment. The promissory note as his attorney's fees. 14 The record
remaining balance can be paid in however, does not show such an agreement. But
installments. You can make a even if this were so, it is no excuse for Atty.
proposal as to when you can fully Cabarroguis, private respondent's counsel, to act in
satisfy his fees provided that you such a manner as to evoke disgust from non-
put up either a surety bond or real members of the Bar.
property located in Davao City
commensurate to the amount of A lawyer is to uphold the integrity and dignity of the
your obligation; legal profession 15 and one who acts like a
middleman always out on grabs for what he can get
xxx xxx xxx certainly lessens the dignity of the legal profession.

4. Letter of Atty. Cabarroquis to Atty. Ta-asan dated The trial court found:
November 29, 1990: 13
4. That one of the terms of
Atty. Rodolfo Ta-asan, Jr. Promissory Note is that in case of
Davao City. litigation, ". . . the makers and
indorsers shall in addition pay 25%
of the amount due as attorney's
Re: CCC of Davao vs. Ernesto
Roldan et. als. fees and 33 1/3 more of the
principal due and unpaid as
liquidated damages . . ." (Exh. "F-
Dear Atty. Ta-asan, 2").

Further to our conference Twenty-five (25%) percent of the balance of the

yesterday afternoon and previous Promissory Note due which the trial court pegged at
ones in connection with captioned P579,576.13 is P579,576.13 x 0.25 = P144,894.03,
case, I just came back from the which amount would be due the private respondent
office of the Register of Deeds of NOT its counsel as attorney's fees. It is clear
Davao City where I checked the that the liquidated damages and other charges are
partial list of 334-titles in the name not to be included for computation of the attorney's
of Marietta A. Roldan which was fees. The reason why respondent's counsel came up
furnished me by said office and with his attorney's fees of P577,320.20 is that he
which I showed you yesterday. erroneously added the liquidated damages and other
charges and interests due to the balance of the
xxx xxx xxx promissory note to get the total due to which he
applied the 25% stipulated fee.
May I suggest that the amount of
One Hundred Thousand WHEREFORE, in view of the foregoing, this Petition is
(P100,000.00) which is ready and partially granted. The private respondent is hereby
available be paid to me AWARDED attorney's fees in the amount of ONE
immediately by your clients, in HUNDRED FORTY FOUR THOUSAND, EIGHT HUNDRED
partial payment of my fees from NINETY FOUR PESOS AND THREE CENTAVOS
them and from my client. In turn, I (P144,894.03). The other awards of the trial court, as
could do a lot to help them get the affirmed by the respondent Court of Appeals, are
waivers they are requesting from hereby RETAINED.
my clients through me. However,
with all of these lots available in SO ORDERED.
Davao City to be levied upon on
execution or to be the subject-
matter of your proposed Narvasa, C.J., Feliciano, Regalado and Campos, Jr., JJ.,
settlement, we shall in the
meantime disregard their offer of
lots in M'lang to settle an otherwise G.R. No. 160334 September 11, 2006
favorable judgment already by the
Court of Appeals.

xxx xxx xxx

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.

GUENTER BACH, petitioner,

vs. xxxx
OFFICES, respondent. (F) Termination Clause

DECISION It is understood that you may terminate our

services at any time. In such an event, we
CHICO-NAZARIO, J.: shall be entitled to collect fees for legal
services already performed and results
obtained based on quantum meruit."4
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 On 7 March 1996, respondent filed with the RTC a
Kalaw Manhit & Accorda Law Offices v. Guenter Notice5 of Charging Lien over the properties of the
Bach." spouses Bach.

The facts as culled from the records of the case are On 5 February 1997, the RTC issued an Order6
as follows: 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
On 7 November 1994, petitioner Guenter Bach enumerated in the notice of charging lien.
engaged the services of respondent law firm Ongkiko
Kalaw Manhit & Accorda Law Offices to represent him
On 11 February 1999, respondent received a copy of GRANTED and the appealed January 24,
the Order7 dated 8 June 1998, granting petitioner's 2002 Decision of the Regional Trial Court of
Motion to Withdraw his petition in Civil Case No. 95- Makati City-Branch 148 in Civil Case No. 99-
224. 514 is hereby MODIFIED. Accordingly, the
award of P700,000.00 representing billable
time allegedly spent in the prosecution of
Despite respondent's demands for his legal fees,
petitioner failed and refused to pay. Thus, respondent the case a quo is hereby DELETED. All other
aspects of the appealed DECISION are
filed a Complaint8 for a sum of money also before the
RTC of Makati, Branch 148, docketed as Civil Case UPHELD.13
No. 99-514. Respondent prayed for the payment of
the following: P1,000,000.00 as the latter's lawful Hence, this Petition filed by petitioner Guenter Bach
fees for services rendered in Civil Case No. 95-224, raising the following issues to wit:
plus 2% interest from date of final demand until paid;
P250,000.00 as exemplary damages; P200,000.00 WHETHER OR NOT UNDER THE CONCEPT OF
representing billable time spent in prosecuting the QUANTUM MERUIT, THE AMOUNT OF
case, plus another P150,000.00 for any appeal taken; P750,000.00 AS FEES FOR SERVICES
and P50,000.00 as litigation expenses and the cost of RENDERED WITH INTEREST PEGGED AT 2%
Within the period for filing an Answer, petitioner filed
a Motion9 to dismiss on the ground that respondent's WHETHER OR NOT THERE IS LEGAL BASIS
claim had already been paid, waived, abandoned or TO AWARD P50,000.00 AS AND FOR
otherwise extinguished. Petitioner contended that LITIGATION EXPENSES AND COSTS OF SUIT.14
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 On the first issue, petitioner contends that the
P200,000.00. On 9 August 1999, the Motion to P750,000.00 awarded to the respondent by way of
Dismiss was denied10 by the RTC for lack of merit. quantum meruit, with interest of 2% a month from
Petitioner failed to file his Answer; thus, he was date of demand until fully paid, is excessive,
declared in default and respondent was allowed to unreasonable and confiscatory. Thus, petitioner prays
present its evidence ex parte.11 for reduction of the same.

On 24 January 2002, the RTC rendered its judgment Both the Court of Appeals and the trial court
in favor of the respondent, the dispositive portion of approved the attorney's fees in the total amounts of
which reads: 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
WHEREFORE, premises considered, reasonableness of attorney's fees based on quantum
judgment is hereby rendered in favor of the meruit is a question of fact, and well-settled is the
plaintiff and against the defendant and the rule that conclusions and findings of fact by the lower
latter is hereby ordered to pay the following: courts are entitled to great weight on appeal and will
not be disturbed except for strong and cogent
1. The amount of P750,000.00 as plaintiff's reasons. The findings of the Court of Appeals by
lawful fees for services rendered under Civil itself, which are supported by substantial evidence,
Case No. 95-224, plus interest at the rate of are almost beyond the power of review by the
2% per month from the date of demand Supreme Court.15 Thus, in the exercise of the
until paid; Supreme Court's power of review the findings of facts
of the Court of Appeals are conclusive and binding on
2. P700,000.00 representing billable time the Supreme Court. There are, however, recognized
exceptions to this rule, namely: (1) when the findings
which was spent in prosecuting this case;
are grounded entirely on speculation, surmises or
conjectures; (2) when the inference made is
3. P50,000.00 as and litigation expenses, manifestly mistaken, absurd or impossible; (3) when
and there is grave abuse of discretion; (4) when the
judgment is based on misapprehension of facts; (5)
4. Costs of suit.12 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
Not satisfied, petitioner appealed to the Court of
contrary to the admissions of both the appellee and
Appeals, which modified the RTC Decision, thus:
the appellant; (7) when the findings are contrary to
the trial court; (8) when the findings are conclusions
WHEREFORE, Based on the foregoing without citation of specific evidence on which they
premises, the instant appeal is PARTLY are based; (9) when the facts set forth in the petition
as well as in the petitioner's main and reply briefs are to be unconscionable or unreasonable.
not disputed by the respondent; (10) when the (Underscoring supplied.)
findings of facts are premised on the supposed
absence of evidence and contradicted by the We have identified the circumstances to be
evidence on record; and (11) when the Court of considered in determining the reasonableness of a
Appeals manifestly overlooked certain relevant facts claim for attorney's fees as follows: (1) the amount
not disputed by the parties, which if properly and character of the service rendered; (2) labor,
considered, would justify a different conclusion. 16 time, and trouble involved; (3) the nature and
Exceptions (4) and (11) are present in the case at importance of the litigation or business in which the
bar, and so this Court shall make its own services were rendered; (4) the responsibility
determination of the facts relevant for the resolution imposed; (5) the amount of money or the value of
of the case. the property affected by the controversy or involved
in the employment; (6) the skill and experience
Ordinarily, therefore, we would have remanded this called for in the performance of the services; (7) the
case for further reception of evidence as to the professional character and social standing of the
extent and value of the services rendered by attorney; (8) the results secured; and (9) whether the
respondent to petitioner. However, so as not to fee is absolute or contingent, it being recognized that
needlessly prolong the resolution of a comparatively an attorney may properly charge a much larger fee
simple controversy, we deem it just and equitable to when it is contingent than when it is not.19
fix in the present recourse a reasonable amount of
attorney's fees in favor of respondent. Rule 20.1, Canon 20 of the Code of Professional
Responsibility enumerates the following factors
There are two concepts of attorney's fees. In the which should guide a lawyer in determining his fees:
ordinary sense, attorney's fees represent the
reasonable compensation paid to a lawyer by his (a) the time spent and extent of services
client for the legal services rendered to the latter. On rendered or required;
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 (b) the novelty and difficulty of the
to the prevailing party.17 questions involved;

The issue in this case concerns attorney's fees in the (c) the importance of the subject matter;
ordinary concept. Generally, the amount of
attorney's fees due is that stipulated in the retainer (d) the skill demanded;
agreement which is conclusive as to the amount of
the lawyer's compensation. In the absence thereof,
(e) the probability of losing other
the amount of attorney's fees is fixed on the basis of
employment as a result of the acceptance of
quantum meruit, i.e., the reasonable worth of the
the proffered case;
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, (f) the customary charges for similar
however, must a lawyer be allowed to recover more services and the schedule of fees of the IBP
than what is reasonable, pursuant to Section 24, Rule Chapter to which he belongs;
138 of the Rules of Court, which provides:
(g) the amount involved in the controversy
SEC. 24. Compensation of attorney's fees; and the benefits resulting to the client from
agreement as to fees.- An attorney shall be the service;
entitled to have and recover from his client
no more than a reasonable compensation (h) the contingency or certainty of
for his services, with a view to the compensation;
importance of the subject - matter of the
controversy, the extent of the services
rendered, and the professional standing of (i) the character of the employment,
the attorney. No court shall be bound by the whether occasional or established; and
opinion of attorneys as expert witnesses as
to the proper compensation, but may (j) the professional standing of the lawyer.
disregard such testimony and base its
conclusion on its own professional
In determining a reasonable fee to be paid
knowledge. A written contract for
to respondent as compensation for their
services shall control the amount to be
services on quantum meruit, based on the
paid therefor unless found by the court
factors abovequoted, it is proper to consider
all the facts and circumstances obtaining in 9. Respondent prepared an affidavit27 in
this case. favor of petitioner attesting to the fact of
petitioner's marriage and their properties
acquired during his marriage with
It is undisputed that respondent firm had rendered
services as counsel for the petitioners in Civil Case Luzviminda Bach:
No. 95-244. The services rendered consist of the
following: 10. Respondent prepared an ex parte
motion28 to declare petitioner's wife to have
waived her right to file answer for failure to
1. Respondent was able to annotate a
notice20 of lis pendens on the property of file the same within the period granted by
law and to direct the public prosecutor to
Spouses Bach in Caloocan City covered by
TCT No. C-12112, thereby preventing easy determine whether or not a collusion exist;
disposition of the property by Luzviminda
Bach; 11. Respondent prepared a Petition29 for
appointment of a receiver and to compel
petitioner's wife to render an accounting;
2. Respondent was likewise able to annotate
a notice21 of lis pendens on the property of
Spouses Bach in Pasig City covered by TCT 12. Other services included the filling of
No. 48223, thereby preventing disposition of several oppositions30 to certain motions filed
the property by Luzviminda Bach; by petitioner's wife;

3. Further, respondent annotated a notice22 13. Respondent filed a motion31 to set the
of lis pendens on the property of Spouses case for preliminary investigation;
Bach in Dasmarinas, Cavite covered by TCT
No. T-339282, thereby preventing 14. Respondent filed an ex parte motion32 to
disposition of the property by Luzviminda declare petitioner's wife in default;

15. Respondent submitted a supplemental

4. Additionally, respondent annotated a comment33 on the motion for leave to
notice23 of lis pendens on the property of withdraw funds from Certificate of
Spouses Bach in Tanza, Cavite, covered by Participation filed by petitioner's wife;
TCT No. T-255263, thereby preventing
disposition of the property by Luzviminda
Bach; 16. Respondent filed a manifestation and
motion34 praying the court to direct
petitioner's wife to designate her lead
5. Respondent also worked on the counsel in the case;
annotation of the notice24 of lis pendens on
the property of Spouses Bach in Makati,
covered by TCT No. S-62541, thereby 17. Respondent prepared a Reply35 to
preventing disposition of the property by comments on opposition of petitioner;
Luzviminda Bach;
18. Respondent was able to secure an
6. Respondent worked on the annotation of Order36 from the said court freezing the
a notice of lis pendens on the property of United Coconut Planters Bank (UCPB)
Spouses Bach in Dasmarias, Cavite, account in the name of petitioner's wife,
covered by TCT No. T-380848, thereby Luzviminda Bach, containing about
preventing disposition of the property by P6,500,000.00, representing the balance of
Luzviminda Bach; the proceeds from the sale of their conjugal
property in Pasig City;

7. Respondent annotated a notice25 of lis

pendens on the property of Spouses Bach 19. Respondent represented petitioner in
situated in Tagaytay City, covered by TCT numerous hearings in Civil Case No. 95-224,
No. P-705, thereby preventing disposition of evidenced by the signatures of the lawyers
the property by Luzviminda Bach; 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
8. Respondent filed the Petition26 for 1995, 22 September 1995,10 October 1995,
Declaration of Nullity of Marriage and 17 October 1995, 1 December 1995, 7
Dissolution of the Conjugal Partnership of December 1995, 29 March 1996 and 16
Gains of petitioner with his wife; January 1997;37
20. Conducted several preliminary and post Contracts for attorney's services in this
litigation conferences in the proceedings for jurisdiction stands upon an entirely
preliminary injunction leading to the different footing from contracts for the
freezing of the bank account of the parties; payment of compensation for any other
and services. x x x [A]n attorney is not entitled
in the absence of express contract to
21. Prepared and sent out numerous letters recover more than a reasonable
compensation for his services; and even
to third parties and entities to protect the
interest of petitioner and notices to when an express contract is made, the court
can ignore it and limit the recovery to
petitioner updating him of the status of the
case and the courses of action taken by reasonable compensation if the amount of
the stipulated fee is found by the court to be
respondent Law Firm.38
unreasonable. This is a very different rule
from that announced in section 1091 of the
In sum, the services rendered by the respondent as Civil Code with reference to the obligation of
enumerated above and as admitted39 by Atty. Mario contracts in general, where it is said that
Ongkiko during the ex parte hearing, consist of such obligation has the force of law between
annotating notice of lis pendens on the conjugal the contracting parties. Had the plaintiff
properties of petitioner and his wife; filing the herein made an express contract to pay his
Petition for Declaration of Nullity of Marriage; attorney an uncontingent fee of P2,115.25
preparing and filing various pleadings and for the services to be rendered in reducing
documents relevant to the case; obtaining a freeze the note here in suit to judgment, it would
order of petitioner's funds in the UCPB; attending not have been enforced against him had he
hearings in Civil Case No. 05-224, and sending seen fit to oppose it, as such a fee is
notices to petitioner updating the latter of the status obviously far greater than is necessary to
of the case. Nothing in Civil Case No. 95-224 so far remunerate the attorney for the work
appears complicated and no extra ordinary skill was involved and is therefore unreasonable. In
needed for lawyers of respondent Law Firm to order to enable the court to ignore an
accomplish what they had done in the case before express contract for attorney's fees, it is
they withdrew their appearance. We do not find necessary to show, as in other contracts,
herein a situation so intricate that demands more that it is contrary to morality or public
than a careful scrutiny of the legal matters involved. policy (Art.1255, Civil Code). It is enough
These are simply the normal duties of a lawyer that that it is unreasonable or unconscionable.
he is bound by law to render to his clients with (Emphases supplied.)
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 We have held that lawyering is not a moneymaking
venture and lawyers are not merchants.43 Law
appearance due to policy differences with petitioner,
the case was still in its initial stage. 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,
Guided by the above yardstick and so much of the unlike mercantile pursuits which enjoy a greater deal
pertinent data as are extant in the records of this of freedom from governmental interference, is
case and in the exercise of our sound discretion, we impressed with a public interest, for which it is
hold that the amount of P500,000.00 is a reasonable subject to State regulation.44
and fair compensation for the legal services rendered
by respondent to the petitioner.
A lawyer is not merely the defender of his client's
cause and a trustee of his client's cause of action and
The imposition of legal interest on the amount assets; he is also, and first and foremost, an officer of
payable to private respondent as attorney's fees is the court and participates in the fundamental
unwarranted. Even as we agree that parties can function of administering justice in society. 45 It follows
freely stipulate on the terms of payment, still the that a lawyer's compensation for professional
imposition of interest in the payment of attorney's services rendered are subject to the supervision of
fees is not justified. In the case of Cortes v. Court of the court, not just to guarantee that the fees he
Appeals,40 we ruled that Article 220941 of the Civil charges and receives remain reasonable and
Code does not even justify the imposition of legal commensurate with the services rendered, but also
interest on the payment of attorney's fees as it is a to maintain the dignity and integrity of the legal
provision of law governing ordinary obligations and profession to which he belongs. Upon taking his
contracts. It deleted the 6% interest imposed by the attorney's oath as an officer of the court, a lawyer
appellate court on the payment of attorney's fees. It submits himself to the authority of the courts to
ratiocinated by citing Mambulao Lumber Co. v. regulate his right to charge professional fees. 46
Philippine National Bank,42 thus:

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

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


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

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





EVANGELINA MASMUD (as substitute complainant for



- 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.


The facts of the case are as follows: fees equivalent to ten percent
(10%) of the total monetary award.

[Alexanders] claim for

payment of medical expenses is
dismissed for lack of basis.
On July 9, 2003, Evangelina Masmuds
(Evangelina) husband, the late Alexander J. Masmud SO ORDERED.4[4]
(Alexander), filed a complaint3[3] against First Victory
Shipping Services and Angelakos (Hellas) S.A. for
non-payment of permanent disability benefits, Alexanders employer filed an appeal before
medical expenses, sickness allowance, moral and the National Labor Relations Commission (NLRC).
exemplary damages, and attorneys fees. Alexander During the pendency of the proceedings before the
engaged the services of Atty. Rolando B. Go, Jr. (Atty. NLRC, Alexander died. After explaining the terms of
Go) as his counsel. 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
In consideration of Atty. Gos legal services, Alexander filed a motion for reconsideration. The NLRC denied
agreed to pay attorneys fees on a contingent basis, the same in an Order dated October 26, 2004.
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 On appeal before the CA, the decision of the
to respondents law firm as compensation. 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,
On November 21, 2003, the Labor Arbiter the Court issued a Resolution dismissing the case for
(LA) rendered a Decision granting the monetary lack of merit.
claims of Alexander. The dispositive portion of the
decision, as quoted in the CA Decision, reads:

Eventually, the decision of the NLRC became final

and executory. Atty. Go moved for the execution of
WHEREFORE, foregoing the NLRC decision, which was later granted by the
considered, judgment is rendered LA. The surety bond of the employer was garnished.
finding the [First Victory Shipping
Services and Angelakos (Hellas) Upon motion of Atty. Go, the surety company
S.A.] jointly and severally liable to delivered to the NLRC Cashier, through the NLRC
pay [Alexanders] total permanent
disability benefits in the amount of Sheriff, the check amounting to P3,454,079.20.
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 4
time of payment; and to pay
further the amount of P200,000.00
as moral damages, P100,000.00 as 5
exemplary damages and attorneys

3 6
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

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.


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

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.
Resolutions dated January 31, 2006
and July 18, 2006 are hereby
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.

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.


REVERSIBLE ERROR OF LAW IN ITS Evangelina maintains that Article 111 of the
Labor Code is the law that should govern Atty. Gos
JUNE 2008 INSOFAR AS IT UPHOLDS compensation as her counsel and assiduously
opposes their agreed retainer contract.

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
legal services he rendered. [17] lawyer's services.21[21]

In this regard, Section 24, Rule 138 of the Rules of The criteria found in the Code of Professional
Court should be observed in determining Atty. Gos Responsibility are also to be considered in assessing
compensation. The said Rule provides: 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
have and recover from his client no
more than a reasonable
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
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;
(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.


20 21
Contingent fee contracts are subject to the the part of his client as the client is against abuse on
supervision and close scrutiny of the court in order the part of his counsel. The duty of the court is not
that clients may be protected from unjust charges. 22 alone to ensure that a lawyer acts in a proper and
[22] The amount of contingent fees agreed upon by lawful manner, but also to see that a lawyer is paid
the parties is subject to the stipulation that counsel his just fees. With his capital consisting of his brains
will be paid for his legal services only if the suit or and with his skill acquired at tremendous cost not
litigation prospers. A much higher compensation is only in money but in expenditure of time and energy,
allowed as contingent fees because of the risk that he is entitled to the protection of any judicial tribunal
the lawyer may get nothing if the suit fails. 23[23] The against any attempt on the part of his client to
Court finds nothing illegal in the contingent fee escape payment of his just compensation. It would
contract between Atty. Go and Evangelinas husband. be ironic if after putting forth the best in him to
The CA committed no error of law when it awarded secure justice for his client, he himself would not get
the attorneys fees of Atty. Go and allowed him to his due.25[25]
receive an equivalent of 39% of the monetary award.

WHEREFORE, in view of the foregoing, the Decision

The issue of the reasonableness of attorney's fees is dated October 31, 2007 and the Resolution dated
a question of fact. Well-settled is the rule that June 6, 2008 of the Court of Appeals in CA-G.R. SP
conclusions and findings of fact of the CA are entitled No. 96279 are hereby AFFIRMED.
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

Considering that Atty. Go successfully

represented his client, it is only proper that he should
receive adequate compensation for his efforts. Even
[G.R. No. 124074. January 27, 1997]
as we agree with the reduction of the award of
attorney's fees by the CA, the fact that a lawyer
RESEARCH and SERVICES REALTY, INC., petitioner, vs.
plays a vital role in the administration of justice COURT OF APPEALS and MANUEL S. FONACIER, JR.,
emphasizes the need to secure to him his
honorarium lawfully earned as a means to preserve
the decorum and respectability of the legal
profession. A lawyer is as much entitled to judicial DAVIDE, JR., J.:
protection against injustice or imposition of fraud on
This petition for review on certiorari under Rule 45 of
the Rules of Court questions the propriety of the
22 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
23 Makati City, Branch 64,i[1] in Civil Case No. 612,ii[2]
which the Court of Appeals affirmed in its

24 25
decisioniii[3] of 31 March 1995 in CA-G.R. CV No. Upon knowing the existence of the MOA, the private
44839. 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
The undisputed facts are as follows:
other things, that the petitioner be ordered to pay
him the sum of P700,000.00 as his contingent fee in
On 3 November 1969, the petitioner entered into a the[6]
Joint Venture Agreement with Jose, Fidel, and Antonia
Carreon. Under the said agreement, the petitioner
After hearing the motion, the trial court issued an
undertook to develop, subdivide, administer, and
order dated 11 October 1993 directing the petitioner
promote the sale of the parcels of land owned by the
to pay the private respondent the sum of
Carreons. The proceeds of the sale of the lots were to
P600,000.00 as attorney's fees on the basis of
be paid to the Philippine National Bank (PNB) for the
quantum meruit.
landowner's mortgage obligation, and the net profits
to be shared by the contracting parties on a 50-50
basis. The trial court justified the award in this manner:

On 4 April 1983, the Carreons and a certain Patricio Insofar as material to the resolution of this Motion
C. Sarile instituted before the RTC of Makati City an the records of this case show that movant Atty.
action against the petitioner for rescission of the Joint Fonacier became the counsel of defendant Research
Venture Agreement. They prayed therein that in May 1985 while this case has been in progress.
pending the hearing of the case, a writ of preliminary (Records, p.770). By this time also, the defendant
injunction be issued to enjoin the petitioner from Research has been enjoined by the Court from
selling the lots subject of the agreement and that executing Contracts To Sell involving Saranay Homes
after hearing, the writ be made permanent; the Subdivision . . . . (Order dated December 3, 1984,
agreement be rescinded; and the petitioner be Records pp. 625-626). However, the said counsel for
ordered to pay the PNB the stipulated 15% per defendant Research prepared for the latter various
annum of the outstanding obligation and to pay the pleadings and represented it in Court (See Records
plaintiffs attorney's fees, exemplary damages, after May 1985). Until his services were terminated
expenses of litigation, and costs of suit. This case the lawyer client relationship between Atty. Fonacier
was docketed as Civil Case No. 612 at Branch 64 of and Research was governed by a "contract"
the said court. embodied in a letter addressed to Atty. Fonacier on
April 19, 1985 [sic], the pertinent portion of which is
reproduced below, as follows . . .
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 xxx
complaint, and payment in its favor of (a) P10 million
by way of actual damages; (b) P5 million by way of
Soon after said letter, cases were referred to him
return to the petitioner of the amount advanced to
including this case. In accordance with their
the Carreons, payments to the PNB, and cost of the
agreement, there were instances that Research gave
work on the subdivision; (c) P100,000.00 by way of
Atty. Fonacier ten (10%) percent of the amount
exemplary damages; (d) any and all damages up to
received as the latter's attorney's fees pursuant to
the amount of P4,638,420.00 which the petitioner
their agreement.
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. 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,
On 9 April 1985, the petitioner engaged the services
Patricio Sarile, et al., as owners of a parcel of land
of private respondent Atty. Manuel S. Fonacier, Jr.,
iv and defendant Research & Service Realty, Inc., as
[4] who then entered his appearance in Civil Case
developer of the land. At the time Atty. Fonacier
No. 612.
entered his appearance as counsel for defendant
Research, the Court has issued a preliminary
While the said case was pending, or on 24 July 1992, injunction against Research. Thus all developmental
the petitioner, without the knowledge of the private and commercial activities of defendant had to stop.
respondent, entered into a Memorandum of In this regard, Atty. Fonacier did spade work towards
Agreement (MOA)v[5] with another land developer, persuading the plaintiffs to agree to the relaxation of
Filstream International, Inc. (hereinafter Filstream). the effects of the injunction to pave the way to a
Under this MOA, the former assigned its rights and negotiation with a third-party, the Filstream. Atty.
obligations under the Joint Venture Agreement in Fonancier's efforts were complemented by the efforts
favor of the latter for a consideration of P28 million, of his counterpart in the plaintiff's side. The third-
payable within twenty-four months. party Filstream Inc., became the assignee of
defendant Research. In this connection, a
memorandum of agreement was entered into
On 31 March 1993, the petitioner terminated the
between them. By the terms of agreement,
legal services of the private respondent. At the time
defendant Research will be receiving from the third
the petitioner had already received P7 million from
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

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
fees and collection cases (case to case basis) aside
case, certainly it would not be fair for Atty. Fonacier if
from the attorney's fee recovered from any law suit.
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 (Paragraph 3, Retainer Contract)
by defendant Research. Ten (10%) per cent of the
amount which Research had received from Filstream
In an American jurisprudence on this point cited in
at the time of the termination of a lawyer-client
local annotation on the Canon of Professional Ethics,
relationship between Atty. Fonacier and Research or
it was held that "if a lawyer renders valuable services
P600,000.00 will be a just and equitable
to one who receives the benefits thereof, a promise
compensation for Atty. Fonancier's legal services, by
to pay a reasonable value is presumed, unless such
way of quantum meruit (See Cabildo v. Provincial
services were intended to be gratuitous" (Young vs.
Treasurer, Ilocos Norte, et al., 54 SCRA 26).vii[7]
Buere, 78 Cal. Am. 127) In effect, to compensate a
lawyer, we are faced with the pivotal question: "was
In its Orderviii[8] of 12 January 1994, the trial court the legal services intended to be free or not?" If it is
denied the petitioner's motion for reconsideration of not free, then, appellant must simply pay. The 10%
the above order. 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
The petitioner appealed to the Court of Appeals. In its
Supreme Court in the case of Cosmopolitan
Appellant's Brief,ix[9] the petitioner alleged that the
Insurance Co. vs. Angel Reyes (G.R. L-20199, Nov. 23,
private respondent was not entitled to attorney's
1965) 15% was even deemed reasonable. xi[11]
fees under the retainer contract. Moreover, the
private respondent did not exert any effort to
amicably settle the case, nor was he even present The petitioner filed a motion for reconsideration
during the negotiations for the settlement of the [12] on the ground among other things, that the
same. There was, therefore, no legal and factual decision is contrary to the evidence, as the trial court
justification for the private respondent's "fantastic granted the claim for attorney's fees based on
and unreasonable claim for attorney's fees of quantum meruit, yet, the Court of Appeals granted
P600,000.00." the same on a contingent basis which it based on an
erroneous quotation and comprehension of the petitioner had stressed in its motion for
following provision of the retainer contract: reconsideration. The petitioner maintains that under
the contract, attorney's fees on contingent basis
could only be awarded in collection cases, and Civil
Minimal allowance of P800.00 per month plus
Case No. 612 is not a collection case. Hence, the
contingent fees on collection cases (case to case
Court of Appeals erred in affirming the award on that
basis) aside from the attorney's fees recovered from
basis, while the trial court was correct in applying the
any law suit. (underscoring ours) xiii[13]
principle of quantum meruit.

In its decision, the Court of Appeals substituted the

In its second assigned error, the petitioner asserts
word "on" after "contingent fees" with the word
that the private respondent admitted in his Urgent
"and." Under the aforequoted paragraph, the private
Motion to Direct Payment of Attorney's Fees and/or
respondent was entitled to attorney's fees on
Register Attorney's Charging Lien that he had not
contingent basis in collection cases only. In non
participated in the negotiations and preparation of
collection cases, he was entitled only to the
the memorandum of agreement, thus:
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 Despite the dishonest concealment, by the light of
contract, then the aforequoted paragraph is not Providence coupled with a streak of good luck,
applicable as a basis for awarding attorney's fees to counsel discovered in the first week of March 1993
the private respondent. xv[15] 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
Finding nothing new in the motion for
form of a "Memorandum of Agreement" (MOA) . . . .
reconsideration, the Court of Appeals denied it in the xvii
re-solution xvi[16] of 15 February 1996.

The third assigned error is but a logical consequence

The petitioner then came to us via this petition for
of the second, and the petitioner maintains that since
review wherein it contends that
the private respondent "did not do anything
spectacular or out of the ordinary" in Civil Case No.
I 612, "except to ask for the suspension or
postponement of the proceedings thereof from 1985
to 1993," the P600,000.00 attorney's fees, whether
on contingent basis or quantum meruit, is excessive
and unreasonable.

In the fourth imputed error, the petitioner argues that

the memorandum of agreement was never submitted
to the trial court, and the trial court never made any
RESPONDENT COURT OF APPEALS COMMITTED disposition or adjudication over the proceeds of the
GRAVE ABUSE OF DISCRETION IN AWARDING ON said agreement. What would eventually happen then
CONTINGENT BASIS RESPONDENT-APPELLEE'S is the dismissal of Civil Case No. 612, as the trial
ATTORNEY'S FEES ON THE BASIS OF A MEMORANDUM court itself had intimated in its challenged order.
OF AGREEMENT IN WHICH HE HAD NO PARTICIPATION Necessarily then, there would be no money
IN THE NEGOTIATION AND PREPARATION THEREOF. 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
RESPONDENT COURT OF APPEALS GRAVELY ABUSED the Rules of Court, it would follow that no attorney's
ITS DISCRETION IN AWARDING EXCESSIVE AND charging lien could be validly entered.
We uphold the petitioner, but not necessarily on the
IV strength of it arguments.

THE TRIAL COURT AND THE RESPONDENT COURT OF The parties are in agreement that the lawyer-client
APPEALS HAVE NO JURISDICTION TO SATISFY relationship between the petitioner and the private
ATTORNEY'S CHARGING LIEN ON A SUM OF MONEY respondent, Atty. Manuel S. Fonacier, Jr., was
THAT THE COURT HAD NO AUTHORITY TO DISPOSE governed by a retainer contract dated 9 April 1985.
OF AND OVER WHICH THE TRIAL COURT HAD MADE The petitioner's undertakings thereunder are outlined

The petitioner's more important argument in support I.CORPORAT[ION]:

of the first error is the Court of Appeals' misquotation
of the provision in the retainer contract regarding
1. Corporation will provide the following:
attorney's fees on contingent basis, which the
a. Office space airconditioned no specific stipulation of additional attorney's fees.
b. Nevertheless, nothing therein shows that the private
respondent agreed to render professional service in
Furnishing such cases gratuitously. The absence then of the
s, tables, stipulation of additional attorney's fees cannot be
executive construed as a bar to the collection of additional
chairs, attorney's fees in non-collection cases.
chair & Two basic principles come into play. The first is as
steel filing stated earlier, viz., that the retaining fee is neither
cabinet made nor received in consideration of the services
c. Telephone facilities and partial secretarial contemplated unless the contract itself so provides.
services. The second is that, unless expressly stipulated,
rendition of professional services by a lawyer is for a
2. Legal service referrals by the fee or compensation and is not gratuitous. This is
corporation to its clients for implicit from the opening clause of Section 24, Rule
additional income of the lawyer. 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
3. Minimal allowance of P800 per for his services . . .," and by virtue of the innominate
month plus contingent fees on contract of facio ut des (I do and you give), as
contingent fees on collection cases enunciated by this Court in Corpus v. Court of
(case to case basis) aside from the Appeals, xxi[21] thus:
attorney's fees recovered from any
Moreover, the payment of attorney's fees . . . may
also be justified by virtue of the innominate contract
4. That in case of legal problems to be of facio ut des (I do and you give) which is based on
attended to outside Metro Manila the principle that "no one shall unjustly enrich
and Suburbs, the corporation shall himself at the expense of another." Innominate
defray expenses for transportation, contracts have been elevated to a codal provision in
lodging and other legal expenses the New Civil Code by providing under Article 1307
incidental in the case. xviii[18] that such contracts shall be regulated by the
stipulations of the parties, by the general provisions
An analysis of the contract clearly shows that it was or principles of obligations and contracts, by the
a general retainer, since its primary purpose was to rules governing the most analogous nominate
secure beforehand the services of the private contracts, and by the customs of the people. The
respondent for any legal problem which might rationale of this article was stated in the 1903 case
afterward arise. xix[19] The fixed retaining fee was of Perez vs. Pomar (2 Phil. 682).
P800.00 a month. A retaining fee is a preliminary fee
paid to ensure and secure a lawyer's future services, In Perez v. Pomar, xxii
[22] this Court stated:
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 [B]ut whether the plaintiff's services were solicited or
him. In the absence of an agreement to the contrary, whether they were offered to the defendant for his
the retaining fee is neither made nor received in assistance, inasmuch as these services were
consideration of the services contemplated; it is accepted and made use of by the latter, we must
apart from what the client has agreed to pay for the consider that there was a tacit and mutual consent
services which he has retained him to perform. xx[20] 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
In the retainer contract in question, there was no bilateral obligation to render service as interpreter,
intention to make the retaining fee as the attorney's on the one hand, and on the other to pay for the
fees for the services contemplated. This is evident services rendered, is thereby incurred. (Arts. 1088,
from the provision allowing additional attorney's fees 1089, and 1262 of the Civil Code).
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 Accordingly, as to non-collection cases where the
refer to the attorney's fees which the court might petitioner was either a plaintiff or a defendant, the
award to the petitioner in appropriate cases. 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,
While the contract did not mention non-collection under the principle of quantum meruit. There was no
cases, it is, nevertheless, clear therefrom that such such supplemental agreement in this case.
cases were not excluded from the retainership, as
borne out by the provision requiring the private
respondent to "make appearances in Court for cases We cannot sustain the private respondent's theory
involving the corporation or any allied cases that he could collect attorney's fees on contingent
pertaining to the latter." As to such cases, there was 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 no participation in the negotiations leading to, and in
petitioner. In the first place, Civil Case No. 612 is still the preparation of, the memorandum of agreement.
unresolved, and no judgment has yet been rendered
in favor of the petitioner. The amount in the
Indisputably then, the private respondent's
memorandum of agreement could not be made the
attorney's fee on "contingent basis" in Civil Case No.
basis of a "contingent fee" in the said case for at
612 is unwarranted. If at all, he could only be entitled
least three reasons. First, in his own Urgent Motion to
to attorney's fees on quantum meruit basis as of the
Direct Payment of Attorney's Fees and/or Register
expiration of his retainer contract on 31 March 1993.
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 Quantum meruit simply means "as much as he
contingent fee would become due and collectible deserves." xxiv[24] In no case, however, must a lawyer
only if and when the petitioner obtains a judgment in be allowed to recover more than what is reasonable
his favor in Civil Case No. 612. The second paragraph pursuant to Section 24, Rule 138 of the Rules of
of page 3 of the said motion reads as follows: Court, which provides:

Hence, from May 1985 and continuously thru the SEC. 24.Compensation of attorneys, agreement as to
years without interruption and surviving a series of fees. An attorney shall be entitled to have and
no less than five (5) changes of Presiding Judges, the recover from his client no more than a reasonable
undersigned counsel labored tirelessly in handling compensation for his services, with a view to the
the defense of client. In addition to the instant importance of the subject-matter of the controversy,
lawsuit, a multitude of peripheral cases, civil, the extent of the services rendered, and the
criminal and administrative, arising from the non- professional standing of the attorney. No court shall
delivery of titles by client on fully paid lots in the be bound by the opinion of attorneys as expert
subdivision project were also filed as a consequence, witnesses as to the proper compensation, but may
not only against defendant but also against its disregard such testimony and base its conclusion on
President and Chief Executive Officer (CEO). Needless its own professional knowledge. A written contract
to state, the undersigned was designated to handle for services shall control the amount to be paid
majority of these cases for both, where he appeared therefor unless found by the court to be
and conducted trial without any "appearance fees" unconscionable or unreasonable.
for more than eight (8) long years solely relying on
the contingent fee in case of recovery in the instant
This Court had earlier declared the following as
main case. xxiii[23] (underscoring supplied for
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)
Second, the amount of P28 million, which Filstream labor, time, and trouble involved; (3) the nature and
agreed to pay the petitioner, was not a judgment or importance of the litigation or business in which the
award in favor of the petitioner in Civil Case No. 612. services were rendered; (4) the responsibility
It was the consideration of the assignment, transfer, imposed; (5) the amount of money or the value of
and conveyance to Filstream of all the petitioner's the property affected by the controversy or involved
"rights, interest and participation embodied and in the employment; (6) the skill and experience
specified in the Joint Venture Agreement (Annex "A") called for in the performance of the services; (7) the
and in all the eight hundred seventy-five (875) professional character and social standing of the
parcels of land comprising the SARANAY HOMES attorney; (8) the results secured; and (9) whether the
subdivision. . . ." The plaintiffs in Civil Case No. 612 fee is absolute or contingent, it being recognized that
were not parties to the memorandum of agreement, an attorney may properly charge a much larger fee
and there is no showing that they agreed to the when it is contingent than when it is not. xxv[25]
assignment of the petitioner's rights, interest, and
participation in the Joint Venture Agreement. While
Rule 20.1, Canon 20 of the Code of Professional
paragraph 10 of the memorandum of agreement
Responsibility enumerates the following factors
provides that the petitioner
which should guide a lawyer in determining his fees:

shall cause to sign a JOINT MOTION TO DISMISS,

(a) The time spent and the extent of the
together with the CARREONS regarding Civil
services rendered or required;
Case No. 612 of the Regional Trial Court of
(b) The novelty and difficulty of
Makati and to further DISMISS, the case filed
the questions involved;
against PNB docketed as Civil Case No. 6918 of
(c) The importance of the subject
the Regional Trial Court of Makati . . . [and] shall
obtain the dismissal of all cases filed by lot
(d) The skill demanded;
buyers against it now pending with the HLURB
(e) The probability of
losing other employment as a
the fact remains that no such motion to dismiss has result of acceptance of the
been filed yet in Civil Case No. 612, and there is no proffered case;
assurance whatsoever that the plaintiffs therein will (f) The customary
sign a joint motion to dismiss. Third, as correctly charges for similar services
posited by the petitioner, the private respondent had and the schedule of fees of
the IBP Chapter to which he No pronouncement as to costs.
(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 G.R. No. 104600 July 2, 1999
established; and
(j) The professional standing of RILLORAZA, AFRICA, DE OCAMPO and AFRICA,
the lawyer.
It was incumbent upon the private respondent to EASTERN TELECOMMUNICATIONS PHILS., INC.
prove the reasonable amount of attorney's fees, and PHILIPPINE LONG DISTANCE TELEPHONE
taking into account the foregoing factors or COMPANY, respondents.
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 The basic issue submitted for consideration of the
trial court attached to the Rollo of CA-G.R. CV No. Court is whether or not petitioner is entitled to
44839, xxvi[26] it appears that only Atty. Atienza and recover attorney's fees amounting to Twenty Six
Mr. Suazo gave oral testimony on the motion. Million Three Hundred Fifty Thousand Seven Hundred
Seventy Nine Pesos and Ninety One Centavos
It necessarily follows then that the 11 October 1993 (P26,350,779.91) for handling the case for its client
order has insufficient factual basis, and the trial court Eastern Telecommunications Philippines, Inc. filed
committed grave abuse of discretion in arbitrarily with the Regional Trial Court, Makati, though its
fixing the private respondent's attorney's fees at services were terminated in midstream and the client
P600,000.00. The affirmance of the said order by the directly compromised the case with the adverse
Court of Appeals premised on the provision in the party.
retainer contract regarding contingent fee is thus
fatally flawed.
The Facts
The interest for both the petitioner and the private
respondent demands that the trial court should In giving due course to the petition, we carefully
conduct further proceedings in Civil Case No. 612 considered the facts attendant to the case. On
relative to the private respondent's motion for the August 28, 1987, Eastern Telecommunications
payment of attorney's fees and, thereafter, fix it in Philippines, Inc. (ETPI) represented by the law firm
light of Section 24, Rule 138 of the Rules of Court; San Juan, Africa, Gonzales and San Agustin (SAGA),
Rule 20.1, Canon 20 of the Code of Professional filed with the Regional Trial Court, Makati, a
Responsibility; and the jurisprudentially established complaint for recovery of revenue shares against
guiding principles in determining attorney's fees on
Philippine Long Distance Telephone Company (PLDT).
quantum meruit basis.
Atty. Francisco D. Rilloraza, a partner of the firm
appeared for ETPI.
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 After ETPI rested its case, it paid SAGA the billed
October 1993 of the Regional Trial Court of Makati, amount of One Hundred Thousand Pesos
Branch 64, in Civil Case No. 612 are hereby SET (P100,000.00). On September 18, 1987, the trial
ASIDE. The trial court is further DIRECTED to set for court issued a resolution granting ETPI's application
further hearing the private respondent's Urgent for preliminary restrictive and mandatory injunctions.
Motion to Direct Payment of Attorney's Fees and/or During this period, SAGA was dissolved and four of
Register Attorney's Charging Lien and thereafter to the junior partners formed the law firm Rilloraza,
fix the private respondent's attorney's fees in Civil Africa, De Ocampo & Africa (RADA), which took over
Case No. 612 as of 31 March 1993 when his contract as counsel in the case for ETPI. The latter signed a
with the petitioner was effectively terminated, taking retainer agreement with counsel dated October 1,
into account Section 24, Rule 138 of the Rules of 1987. 1
Court; Rule 20.1, Canon 20 of the Code of
Professional Responsibility; and the jurisprudentially
established guiding principles in determining Petitioners presented the three aspects of the main
attorney's fees on quantum meruit basis. 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,
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.

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: 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
WHEREFORE, premises considered, dismissed the petition in a decision promulgated on
the court finds that the Notice of November 14, 1991, 6 ruling that the judge
Attorney's Lien filed by the law firm committed no abuse of discretion in denying
of Rilloraza, Africa, De Ocampo and petitioner's motion for enforcement of attorney's lien.
Africa has no basis in fact and in Thus:
We therefore rule that respondent justice and thereby defeat their
judge committed no abuse of very claims. As has been the
discretion, much less a grave one, constant ruling of this Court, every
in denying petitioner's motion for party litigant should be afforded
enforcement of attorney's lien. the amplest opportunity for the
proper and just determination of
Assuming that respondent judge his cause, free from the constraints
of technicalities. 11
committed an error in denying
petitioner's motion for enforcement
of attorney's lien, it cannot be A basic legal principle is that no one shall be unjustly
corrected by certiorari. 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:
WHEREFORE, the writs prayed for
are DENIED, and the petition is
hereby DISMISSED, with cost Art. 22. Every person who through
against petitioner. 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:

WE CONCUR: It is most needful that this ancient

principle be clearly and specifically
(s/t) JOSE A. R. consecrated in the proposed Civil
MELO (s/t) Code to the end that in cases not
EMETERIO C, CUI foreseen by the lawmaker, no one
may unjustly benefit himself to the
prejudice of another. The German
Associate Justice
Civil Code has a similar provision
Associate Justice
(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
A. The Procedural Aspect case on its face appears to be impressed with merit.

There is nothing sacrosanct about procedural rules, B. The Attorney's Fees

which are liberally construed in order to promote
their objectives and assist the parties in obtaining
We understand that Atty. Francisco Rilloraza handled
just, speedy and inexpensive determination of every
the case from its inception until ETPI terminated the
action or proceeding. 8 In analogous case, 9 we ruled
law firm's services in 1988. Petitioner's claim for
that where the rigid application of the rules would
attorney's fees hinges on two grounds: first, the fact
frustrate substantial justice 10, or bar the vindication
that Atty. Rilloraza personally handled the case when
of a legitimate grievance, the courts are justified in
he was working for SAGA; and second, the retainer
exempting a particular case from the operation of the
agreement dated October 1, 1987.

We agree that petitioners are entitled to attorneys'

In A-One Feeds, Inc. vs. Court of Appeals, we said
fees. We, however, are not convinced with the
petitioner's arguments that the services RADA
Litigations should, as much as rendered merit the amount they are claiming.
possible, be decided on the merits
and not on technicality. Dismissal
First, petitioner contends that Atty. Rilloraza initiated
of appeals purely on technical
the filing of the complaint. When a client employs the
grounds is frowned upon, and the
services of a law firm, he does not employ the
rules of procedure ought not to be
services of the lawyer who is assigned to personally
applied in a very rigid, technical
handle the case. Rather, he employs the entire law
sense, for they are adopted to help
firm. In the event that the counsel appearing for the
secure, not override, substantial
client resigns, the firm is bound to provide a
replacement. Thus, RADA could not claim to have by the court; and (3) when the contract for attorney's
initiated the filing of the complaint considering that fee's is void due to purely formal defects of
ETPI hired SAGA. What is more, on September 17, execution; (4) when the counsel, for justifiable cause,
1987, ETPI paid SAGA the amount of One Hundred was not able to finish the case to its conclusion; (5)
Thousand Pesos (P100,00.00) 15 representing when lawyer and client disregard the contract for
services performed prior to September 17, 1987. attorney's
SAGA assigned one of its associates, Atty. Francisco fees, 20
Rilloraza, to handle the case for the firm. Although
Atty. Rilloraza handled the case personally, he did so In fixing a reasonable compensation for the services
for and in behalf of SAGA. rendered by a lawyer on the basis of quantum
meruit, the elements to be considered are generally
Second, petitioner claims that under the retainer (1) the importance of the subject matter in
agreement, which provides: controversy, (2) the extent of services rendered, and
(3) the professional standing of the lawyer. A
determination of these factors would indispensably
6.2 B.Court Cases:
require nothing less than a full-blown trial where
private respondents can adduce evidence to
Should recourse to judicial action establish the right to lawful attorney's fees and for
be necessary to effect collection or petitioner to oppose or refute the same. 21 The trial
judicial action be taken by adverse court has the principal task of fixing the amount of
party, our attorney's fees shall be attorney's fees. 22 Hence, the necessity of a hearing
fifteen percent (15%) of the is beyond cavil.
amounts collected or the value of
the property acquired or liability
C. Charging Lien
saved. 16

the firm is entitled to the fees agreed upon. Petitioner contends that pursuant to Rule 138 of the
Revised Rules of Court, it is entitled to a charging
lien. The rule provides:
However, the retainer agreement has been
terminated. True, Attorney Rilloraza played a vital
Sec. 37. Attorney's liens. An
role during the inception of the case and in the
course of the trial. We cannot also ignore the fact attorney shall have a lien upon the
funds, documents and papers of his
that an attorney-client relationship between
petitioner and respondent no longer existed during client, which have lawfully come
into his possession and may retain
its culmination by amicable agreement. To award the
attorneys' fees amounting to 15% of the sum of One the same until his lawful fees and
disbursements have been paid, and
Hundred Twenty Five Million Six Hundred Seventy
One Thousand Eight Hundred Eighty Six Pesos and may apply such funds to the
satisfaction thereof. He shall also
Four Centavos (P125,671,886.04) plus Fifty Million
Pesos (P50,000,000.00) paid by PLDT to ETPI would have a lien to the same extent
upon all judgments for the
be too unconscionable.1wphi1.nt
payment of money, and executions
issued in pursuance of such
"In any case, whether there is an agreement or not, judgments, which he has secured
the courts shall fix a reasonable compensation which in a litigation of his client, from and
lawyers may receive for their professional services. " after the time when he shall have
"A lawyer has the right to be paid for the legal caused a statement of his claim of
services he has extended to his client, which such lien to be entered upon the
compensation must be reasonable." 18 A lawyer records of the court rendering such
would be entitled to receive what he merits for his judgment, or issuing such
services. Otherwise stated, the amount must be execution, and shall have caused
determined on a quantum meruit basis. written notice thereof to be
delivered to his client and to the
"Quantum meruit, meaning 'as much as he deserved' adverse party; and he shall have
is used as a basis for determining the lawyer's the same right and power over
professional fees in the absence of a contract but such judgments and executions as
recoverable by him from his client. 19 Recovery of his client would have to enforce his
attorney's fees on the basis of quantum meruit is lien and secure the payment of his
authorized when (1) there is no express contract for just fees and disbursements."
payment of attorney's fees agreed upon between the (Emphasis supplied).
lawyer and the client; (2) when although there is a
formal contract for attorney's fees, the fees We do not agree. A charging lien to be enforceable as
stipulated are found unconscionable or unreasonable 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