SPOUSES MAMERTO and ADELIA*TIMADO, Petitioners
vs.
RURAL BANK OF SAN JOSE, INC., TEDDY MONASTERIO, in
his capacity as its President/Manager, and ATTY. AVELINO
SALES, Respondents
FACTS:
Petition for review on certiorari assailing the March 30,
2012 decision of the Court of Appeals (CA) that affirmed
with modification the October 31, 2006 Regional Trial
Court (RTC) joint decision in Civil Case No. IR-2974 and
Special Civil Action No. IR-3187. The CA decision affirmed
the RTC's decision dismissing the complaint for
reformation of instruments and the petition for indirect
contempt filed by spouses Mamerto and Delia Timado
(petitioners) against Rural Bank of San Jose, Inc. (Rural
Bank) and Teddy Monasterio, in his capacity as Rural
Bank’s Manager (collectively as respondents), and
awarded them exemplary damages, attorney’s fees, and
costs of litigation.||
FACTS:
- On August 15, 1994, the petitioners obtained a loan from
Rural Bank amounting to ₱178,000.00. As security for the
loan, they executed a real estate mortgage over a parcel
of land and a chattel mortgage.
The petitioners eventually failed to pay their loan
amortizations. Consequently, the bank informed the
petitioners of its intention to foreclose the real estate and
chattel mortgages to cover the unpaid balance.
The petitioners filed a complaint for reformation of
instruments against the respondents before the RTC.
- Rural Bank proceeded with the extrajudicial foreclosure
of the real estate mortgage and sold the property at a
public auction where it emerged as the highest bidder. The
petitioners failed to redeem the property.
- The petitioners filed a petition for indirect contempt with
damages against the respondents, alleging that the latter
had pre-empted judicial authority by foreclosing the
mortgages and selling the properties at a public auction
during the pendency of the reformation of instruments
case.
- While the reformation of instruments and indirect
contempt cases were pending, Rural Bank filed an ex-parte
petition for issuance of writ of possession over the subject
property. Because of this, the petitioners filed their third
petition for indirect contempt.
- The trial court subsequently ordered the consolidation of
the reformation of instruments and the indirect contempt
cases, and the dismissal of the second and third petitions
for indirect contempt.
-The RTC dismissed the complaint for reformation of
instruments and petition for indirect contempt filed by the
petitioners and ordered the Clerk of Court to issue a writ
of possession in favor of the respondents. It also awarded
damages as follows:
I. In Civil Case No. IR-2974 – against plaintiffs spouses
Mamerto Timado and Delia Timado and in favor of
defendants Rural Bank of San Jose, Inc., and Teddy
Monasterio, in his capacity as its manager, to wit:
1. Dismissing the amended complaint;
2. On defendants’ counterclaim, condemning plaintiff
spouses:
a. To pay defendant Teddy Monasterio the amount of
₱500,000.00 as moral damages, and P300,000.00 as
exemplary damages;
b. To pay defendants Rural Bank of San Jose, Inc. and
Teddy Monasterio the amount of ₱50,000.00 for legal
counsel’s acceptance fee and ₱1,500.00 per appearance of
counsel; and,
c. To pay defendants Rural Bank of San Jose, Inc., and
Teddy Monasterio other expenses of litigation and/or cost
of suit.1âwphi1
II. In Spec. Civil Action No. IR-3187 – against petitioners
spouses Mamerto Timado and Delia Timado and in favor
of respondents Rural Bank of San Jose, Inc., Teddy
Monasterio, and Atty. Avelino V. Sales, Jr., to wit:
1. Dismissing the petition;
2. Condemning petitioners spouses Mamerto Timado and
Delia Timado:
1. To pay respondent Teddy Monasterio the amount of
₱200,000.00 as moral damages and ₱50,000.00 as
exemplary damages; and,
2. To pay respondents Rural Bank of San Jose, Inc., and
Teddy Monasterio the amount of ₱50,000.00 for the
services of counsel
- On appeal, the CA affirmed with modification the RTC
decision. CA deleted the award of moral damages for lack
of legal justification and reduced the amount of exemplary
damages awarded in Civil Case No. IR-2974 to
₱100,000.00.
ISSUE/S: Whether the award of attorney’s fees is
supported by the factual and legal premises in the text of
the RTC decision. - YES.
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DOCTRINES | HELD: The law is clear that in the absence of
stipulation, attorney’s fees may be awarded as actual or
compensatory damages under any of the circumstances
provided for in Article 2208 of the Civil Code.
RULING: The general rule is that attorney’s fees cannot be
recovered as part of damages because of the policy that
no premium should be placed on the right to litigate. They
are not to be awarded every time a party wins a suit. The
power of the court to award attorney’s fees under Article
2208 demands factual, legal, and equitable justification.
Even when a claimant is compelled to litigate with third
persons or to incur expenses to protect his rights, still
attorney’s fees may not be awarded where no sufficient
showing of bad faith could be reflected in a party’s
persistence in a case other than an erroneous conviction
of the righteousness of his cause.
The award of attorney’s fees to the winning party lies
within the discretion of the court, taking into account the
circumstances of each case. This means that such an
award should have factual, legal, and equitable basis, not
founded on pure speculation and conjecture. In addition,
the court should state the reason for the award of
attorney’s fees in the body of the decision. Its unheralded
appearance in the dispositive portion, as a rule, is not
allowed.
The petitioners' filing of unfounded actions forced the
respondents to litigate to protect their interests.
For these reasons, we find the award of attorney's fees
proper under Article 2208(4)28 of the Civil Code, but we
modify the amount to ₱l00,000.00 which would be just
and reasonable under the circumstances.
WHEREFORE, the petition is PARTIALLY GRANTED. The
March 30, 2012 decision of the Court of Appeals in CA-G.R.
CV No. 89866 is AFFIRMED with the MODIFICATION as
follows: the award of exemplary damages is deleted and
the amount of attorney's fees is fixed at ₱l00,000.00. Costs
against spouses Mamerto and Delia Timado.
DOLORES SILVA Vda. DE FAJARDO, complainant, vs. Atty.
REXIE EFREN A. BUGARING, respondent.
FACTS: Lawyers must be completely truthful, more so
when they plead their own causes against former clients.
In the present case, the lawyer misrepresented facts in his
claim for attorneys fees; hence, he must be sanctioned.
This case involves one for disbarment instituted by
complainant Dolores Silva for untruthful statements made
by Atty. Rexie Efren Bugaring in allegedly trying to obtain
from complainant the amount of P3,532,170 in attorneys
fees.
Complainant along with her co-heirs was having legal
disputes against the Cruz family over certain parcels of
land (Lot 2434 and 2454) located in Sta. Rosa, Laguna,
which was inherited from Jose and Buenaventura Silva.
The Cruz family was then represented by Atty. Ricardo
Dantes, who recommended the services of Atty. Bugaring
to complainant herein. Complainant, not knowing it was
improper and unethical for lawyers of the same firm to
handle conflicting interests, accepted the
recommendation to engage the services of Atty. Bugaring.
Atty. Bugaring then assisted complainant with their
problems with tenants of the concerned lots, as well as
with the disputes between them and their co-heirs against
the Cruz family. The legal battle with the Cruz family
eventually led to the filing of the case Alicia Cruz et. al., v
Dolores Fajardo et. al. with the RTC (hereinafter the
Mother Case). For all these disputes, Atty. Bugaring
represented complainant and her co-heirs. He was treated
with utmost accommodation and courtesy by
complainant, even having the driver of complainants pick
him up and drive him back to his home/residence after
every hearing. An appearance fee of P1,000 was also
given, whether hearings were postponed or not.
At this point, complainant had always asked Atty. Bugaring
of his professional fees, to which Atty. Bugaring
would respond, “Huwag niyo na alalahanin iyon. Para ko
na kayong nanay o lola.” As the dispute over the
concerned parcels of land worsened, the Mother Case
eventually branched out into 11 cases, in which Atty.
Bugaring continued to represent complainant and her co-
heirs. In all of these cases, complainant again would ask of
the professional fees, which effected to the same
response.
Later, the co-heirs had a meeting with complainant to
express their (co-heirs’) discontent with the way Atty.
Bugaring was handling the Mother Case as this was
2
derailing their intended sale of Lots 2343 and 2454 to
Golden Bay Realty and Development Corporation.
Complainant could not give and firm or certain answer to
their queries as there was really no agreement or contract
between her and Atty. Bugaring. Atty. Bugaring, after
having been informed by complainant of this concern,
then told complainant that he could draw up 2 fictitious
contracts (dated December 11, 1992: one for the Mother
Case, and the other for the Catalina Roberto v Dolores
Fajardo case) for his services to be shown to the co-heirs,
providing amongst others that: an acceptance fee of
P50,000.00, per appearance fee of P1,000.00 and upon the
termination of the case, an additional attorneys fee
equivalent to 25% of the value of the subject property in
litigation. Complainant was assured that the contracts
were not valid and binding, telling her that “Ito ho ay para
lamang may maipakita kayo sa kanila, per hindi ito totoo.”
Eventually, a compromise agreement was entered into by
all the parties to this case (the complaiant and her co-
heirs, the Cruz family, and the tenants), thus leading to a
judgment on the Mother Case and the consequent
dismissal of the offshoot cases.
The complaiant thus tendered the amount of P100,000
which they believed was appropriate for the services given
by Atty. Bugaring. Bugaring rejected and proposed a deal
with complainant that he be given only P85,000 but that
he shall charge the amount of P1,200,000 against the
estate. This, complainant rejected. It had been almost 3
years before complainant heard from Atty. Bugaring again,
who had already instituted a collection case before the
RTC of Quezon City, with a prayer for preliminary
attachment for collection of his legal fees.
Atty. Bugaring, by way of comment, avers that from 1991
to May 1994, complainant retained his services as her
personal legal consultant and x x x lawyer in nineteen (19)
court cases. The basis for his claim of attorney’s fees were
the contracts for his services, dated December 11, 1992.
Due to complainant’s and her counsel’s failure to appear,
the court declared complainant in default and Atty.
Bugaring was allowed to present evidence ex-parte. The
trial court rendered judgment favoring Atty. Bugaring,
which was affirmed by the Court of Appeals.
However, the evaluation and recommendation of the IBP
provided that Atty. Bugaring was guilty of gross
misconduct for making untruthful statements and for
misleading the trial courts on several occasions in the civil
cases herein.
ISSUE/S: W/N respondent Atty. Bugaring is entitled to his
attorney’s fees. – NO.
DOCTRINES | HELD: Canon 10 of the Code of Professional
Responsibility provides that a lawyer owes candor,
fairness and good faith to the courts. Accordingly, Rule
10.01 requires a member of the bar not [to tell] any
falsehood, nor consent to the doing of any in court, nor
shall he mislead, or allow the court to be misled by any
artifice. Moreover, Section 20(d) of Rule 138 of the Rules
of Court provides that a lawyer must employ such means
only as are consistent with truth and honor, and never
seek to mislead the judge or any judicial officer by any
artifice or false statement of fact or law.
Indeed, respondent has not completely been honest when
he claimed that the entire estate of Adela Silva was the
subject of litigation in the case for partition. For one thing,
it is clear that Lots 2434 and 2454 were the only properties
mentioned in the Complaint for partition. Also, the
Compromise Agreement and the Judgment in the Mother
Case for partition did not indicate that the subject of
partition was the late Adela Silvas estate, but they did
refer to the other properties belonging to her.
As regards his professional fees, we stress that the proper
time to deal with this delicate issue is upon the
commencement of the lawyer-client relationship. In this
case, respondent should have determined and entered
into an agreement regarding his fees in 1991 at the latest,
when he was first retained by complainant as her counsel
in the partition case. Such prudence would have spared
the Court this controversy over a lawyer’s compensation,
a suit that should be avoided except to prevent imposition,
injustice or fraud.
To be sure, a lawyer is entitled to the protection of the
courts against any attempt on the part of a client to escape
payment of legitimate attorney’s fees. However, such
protection must not be sought at the expense of truth.
Complete candor or honesty is expected from lawyers,
particularly when they appear and plead before the courts
for their own causes against former clients, as in this case.
With his armada of legal knowledge and skills, respondent
clearly enjoyed the upper hand. More important, he had
the sole opportunity to present evidence in the collection
case after complainant was declared in default, and after
he was allowed to present his evidence ex parte. Again,
respondent should have determined and entered into an
agreement regarding his fees in 1991 at the latest, when
he was first retained by complainant as her counsel in the
3
partition case. Such prudence would have spared the
Court this controversy over a lawyer’s compensation, a
suit that should be avoided except to prevent imposition,
injustice or fraud. RULING: WHEREFORE, Respondent
Rexie Efren A. Bugaring is found LIABLE for gross
misconduct and is hereby SUSPENDED from the practice of
law for a period of ONE (1) YEAR, effective upon the finality
of this Decision. He is WARNED that a repetition of the
same or of a similar misconduct will be dealt with more
severely.
FRANCISCO L. ROSARIO, JR., Petitioner
vs.
LELLANI DE GUZMAN, ARLEEN DE GUZMAN, PHILIP RYAN
DE GUZMAN, and ROSELLA DE GUZMAN BAUTISTA,
Respondents
FACTS: August 1990: Spouses Pedro and Rosita de Guzman
engaged the legal services of Atty. Francisco L. Rosario, Jr,
(petitioner) as defense counsel in a complaint filed against
them by one Loreta A. Chong for annulment of contract
and recovery of possession with damages involving a
parcel of land in Parañaque City.
The case was commenced in the RTC and even ended in
the Supreme Court with Spouses De Guzman winning at all
levels.
While the case was pending in the SC, the spouses died in
a vehicular accident and were then substituted by their
children who are the respondents in this case.
September 8, 2009: Petitioner Rosario filed a Motion to
Determine Attorney’s Fees before RTC alleging that he had
a verbal agreement with the spouses that he would get
25% of the market value of the subject land if the case filed
by Chong would be dismissed.
The respondents refused despite a written demand by the
petitioner.
Petitioner: insists that he is entitled to an amount
equivalent to 25% of the market value of the subject land
on the basis of quantum meruit.
RTC denied the motion on the ground it was filed out of
time. Judgment in the subject case had long become final
and executory on October 31, 2007. RTC lost jurisdiction
over the case because the final decision could not be
amended or corrected except for clerical errors or
mistakes. There would be variance of the judgment if
attorney’s fees would still be included. Motion for
Reconsideration was also denied. Petitioner elevated to
the SC.
Petitioner’s contention: A motion to recover attorney’s
fees can be filed and entertained by the court before and
after a judgment has become final. Moreover, the oral
contract with the deceased spouses can be considered a
quasi-contract upon which an action can be commenced
within 6 years pursuant to Art. 1145 of the Civil Code.
Motion filed on Sept. 6, 2009 so not bared by prescription.
Respondents’ contention: Motion was filed late. The RTC
has already resolved the issue when it awarded the
amount of P10,000.00 as attorney’s fees. Article 2208 of
the Civil Code allows recovery of attorney’s fees under a
written agreement. The alleged understanding by the
petitioner with the deceased spouses was never put into
writing and the respondents have no knowledge or
information of such oral contract. Lastly, the 25% of
market value of the land is excessive and unconscionable.
ISSUE/S:
Whether or not Petitioner’s claim for attorney’s fees is
valid and if a judgment that has been rendered final and
executory bars him from claiming such fees. - NO
DOCTRINES | HELD:
There are two concepts of attorney’s fees: ordinary and
extraordinary.
Ordinary sense: reasonable compensation paid to a lawyer
by his client for legal services rendered.
Extraordinary sense: awarded by the court to the
successful litigant to be paid by the losing party as
indemnity for damages. It may be decreed to in favor of
the party, not his lawyer, in any of the instances
authorized by law.
The losing party is not bound by nor his liability dependent
upon on the fee arrangement of the prevailing party with
his lawyer. However, it may be taken into account of the
court in fixing the amount of counsel fees as an element of
damages.
The fee as an item of damages belongs to the party litigant
and not to his lawyer. It forms part of the judgment. The
client and his lawyer may, however, agree that whatever
attorney’s fee awarded by the court shall pertain to the
lawyer as compensation or part thereof. In such case, the
4
court upon proper motion may require the losing party to
pay it directly to the lawyer.
The two concepts of attorney’s fees require, as a
prerequisite to their grant, the intervention of or the
rendition of professional services by the lawyer. A client is
not liable to pay counsel fees in favor of a lawyer who
never rendered services, so too a losing party may not be
held liable to pay for attorney’s fees as damages in favor
of a winning party who enforced his rights without the
assistance of a counsel. Moreover, both fees are subject to
judicial control and modification.
The rules governing the determination of their reasonable
amount are applicable in one as in the other.
It is well settled that a claim for attorney’s fees may be
asserted either in the very action in which the services of
the lawyer had been rendered or in a separate action.
Attorney’s fees cannot be determined until after the main
litigation has been decided and the subject of the recovery
is at the disposition of the court. Though while a claim for
attorney’s fees may be filed before the judgment is
rendered, the determination of the propriety of such fees
is held in abeyance until the main case has become final.
Otherwise, the determination is premature.
Quantum meruit – literally meaning as much as he
deserves – is used as a basis of determining attorney’s fees
in the absence of an express agreement. It is a device that
prevents unscrupulous clients from running away with the
fruits of the legal services of counsel without paying for it.
It also avoids unjust enrichment of the client.
An attorney must show that he is entitled to a reasonable
compensation for the effort in pursuing the client’s cause,
taking into account certain factors in fixing the amount of
fees.
Rule 20.01 of the Code of Professional Responsibility lists
the guidelines in determining the proper amount of
attorney’s fees. (please refer to such Rule)
Practice of law is not a business and the attorney plays a
vital role in the administration of justice underscores the
need to secure him an honorarium lawfully earned as a
means to preserve the decorum and respectability of the
legal profession.
A lawyer is entitled to judicial protection against injustice,
imposition or fraud on the part of his client. The duty of
the court is not alone to see a lawyer acts in a proper and
lawful manner; it is also its duty to see that the lawyer is
paid his just fees. 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.
RULING:
In this case, petitioner filed his motion on September 8,
2009, one (1) year and eleven (11) months from the finality
of the RTC decision on October 31, 2008.
Petitioner claims to have an oral contract of attorney’s
fees, Art. 1145 of the Civil code allows him a period of six
(6) years to file an action for recovery of professional fees.
SC ins in the view that the petitioner is deserving to the
claimed attorney’s fees and that the amount should be
based on quantum meruit.
Petitioner represented the deceased spouses in the civil
case for annulment of contract and recovery of possession
with damages and has successfully done so from the trial
court level in 1990 up to the SC in 2007. It not an easy task
for the petitioner to defend his client’s cause for 17 years,
such a long period of time, considering the heavy and
demanding legal workload which includes research,
preparation of pleadings, gathering of documentary proof,
court appearances, and various legal work necessary to
the defense of the client.
It cannot be denied that the petitioner devoted much time
and energy in handling the case. Given the considerable
amount of time spent, diligent amount of effort exerted
and the quality of work, petitioner deserves to be awarded
reasonable attorney’s fees for his services. Justice and
equity dictate that petitioner be paid based on quantum
meruit.
The award of 25% based on the value of property was not
granted because the petitioner failed to clearly
substantiate the details of his oral agreement with
Spouses de Guzman. A fair and reasonable amount should
be 15% of market value of the subject property.
WHEREFORE, the petition is GRANTED. Accordingly, the
Court grants the Motion to Determine the Attorney’s Fees
filed by the petitioner Atty. Francisco L. Rosario, Jr. Based
on quantum meruit, the amount of attorney’s fees is at the
rate of 15% of the market value of the parcel of land,
covered by Transfer Certificate of Title No. 1292, at the
time of payment. SO ORDERED.
5
NAPOLEON PORTES, SR., , vs. SEGUNDA ARCALA,
FACTS:
-This case stems from a complaint for recovery of
possession and annulment of titles filed on 21 April 1977
by respondents Segunda, Eulalia, Salustancia, Vamerco,
Josefina, Felomino, Marciano, Lydia, and Salome, all
surnamed Arcala.
-Respondents claimed that as early as 1908, their parents,
Vicente and Felisa, had already occupied and developed
the disputed parcels of land, Lots 2 and 3. These two lots
are located in Sitio Pagba, Mansalanao, La Castellana,
Negros Occidental. On 20 June 1912, the Director of Lands
approved Vicente's homestead application for Lots 2 and
3. Vicente and Felisa were in open, exclusive and
continuous possession of Lots 2 and 3 until their deaths in
1930 and 1940, respectively. As Vicente and Felisa's heirs,
respondents succeeded them in their rights over Lots 2
and 3. Respondents then took possession of Lots 2 and 3.
-Respondents Cled the complaint against their cousins,
Vicente, Jr., Perfecta, Sotera, and Consolacion, all
surnamed Arcala.
-Respondents alleged that on 30 November 1917,
Felomina, the aunt of Luis, registered Lots 1, 2, 3, 4, 5 and
6 in her name. These lots are situated in Barrio
Mansalanao, Pontevedra, Negros Occidental and
described in Plan II-12285. The decree of registration
dated 11 November 1920 was issued to Felomina by the
Court of First Instance of Negros Occidental in GLRO Case
No. 15426. However, on 26 July 1930, the cadastral court
issued another decree of registration excluding Lots 2 and
3 from the decree of registration issued to Felomina. The
cadastral court amended Felomina's decree of registration
because Vicente and Felisa had already obtained a
homestead patent over Lots 2 and 3. The Director of Lands
issued another plan to Felomina. The new plan refLected
the true area of Felomina's land. From 196.3176 hectares,
Felomina's registered land area was reduced to 164.9178
hectares, composed only of Lots 1, 4, 5, and 6.
-Despite the amended decree of 26 July 1930, Felomina
was still able to have the title of Lot 2 reconstituted by
invoking GLRO Case No. 15426. On 31 March 1964, the
reconstituted title of Lot 2, OCT No. RO-8932, was issued
to Felomina. Felomina then subdivided Lot 2 into Lots 2-A
and 2-B. In December 1964, OCT No. RO-8932 was
cancelled. TCT No. T-39331 covering Lot 2-A was issued to
Luis while TCT No. T-39332 covering Lot 2-B was issued to
Felomina.
-In 1966, Vicente, Jr., Sotera and Perfecta had Lot 2-B
subdivided. Vicente, Jr. pretended to be the son of
Vicente, respondents' father, and had the subdivided
portions of Lot 2-B titled in this manner: Lot 2-B-3 covered
by TCT No. T-44568 in Vicente's name; Lot 2-B-1 covered
by TCT No. T-44566 in Perfecta's name; and Lot 2-B-2
covered by TCT CD Technologies Asia, Inc. © 2018
cdasiaonline.com No. T-44567 in Sotera's name.
-On 21 February 1967, Vicente, Jr., Sotera and Perfecta
executed a Deed of Absolute Sale over the properties in
favor of Enrique and Pacita.
-Luis sold Lot 2-A to Napoleon as evidenced by a "Deed of
Sale of Realty with Assumption of Mortgage" dated 28
December 1967.
-On 3 August 1970, Angel and a certain Eleuteria Espinosa
("Eleuteria"), reconstituted the title of Lot 3. OCT No. RO-
10754 (11988) was issued to Angel and Eleuteria.
-Respondents, who were still in possession of Lots 2 and 3,
learned of defendants' fraudulent acts in 1966 when
Vicente, Jr. claimed ownership of Lot 2. Segunda had the
land dispute investigated by the Bureau of Lands. The
investigation report of the Bureau of Lands dated 24
February 1970 was favorable to respondents. The
investigation report recommended the revocation of
Felomina's certificates of title over Lot 2.
-On 9 October 1970, Segunda caused the annotation of an
adverse claim on the transfer certificates of title of Lots 2
and 3. On 23 October 1970, certain persons acting in
behalf of Luis forcibly entered Lot 3. Luis allegedly caused
the imprisonment of Segunda and respondents' tenant,
Valentino Serapio ("Valentino") for refusing to give a share
of the land's produce to either Luis or Vicente, Jr.
-Respondents prayed for the nullification of petitioners'
certificates of title, turning over of possession of Lots 2 and
3 to respondents and payment of 30% of whatever may be
recovered as attorney's fees and litigation expenses.
The trial court ruled that respondents own Lots 2 and 3.
Felomina's reconstituted title over Lot 2 is void because
she had no right to reconstitute the title of this property.
Vicente, Jr., Sotera, Perfecta, Consolacion, Luis, Napoleon
and the spouses Enrique and Pacita, the subsequent
buyers of the subdivided portions of Lot 2, were not
6
innocent purchasers. All of them had notice of the Laws of
the certificates of title. Vicente, Jr., Sotera, Perfecta, and
Consolacion were declared in default because of their
failure to file their answer despite notice. Angel and
Eleuteria also had no prior title over Lot 3 to reconstitute.
Angel and Eleuteria's title over Lot 3 is thus void.
-The defendants were also ordered to pay plaintiffs, by
way of attorney's fee[s] 20% per centum of the fair market
value of the land they each possessed.
ISSUE/S:WON the award of attorney’s fees is valid.- YES
DOCTRINES | HELD:
Attorney's fees may be awarded when the defendant's act
or omission has compelled the plaintiff to incur expenses
to protect his interest. 24 The trial court ordered
petitioners to pay 20% of the fair market value of the land
they each possessed as attorney's fees. We modify the
award of attorney's fees. The heirs of Napoleon shall pay
attorney's fees of P50,000.
RULING:
The heirs of Napoleon Portes, Sr., Maria, Napoleon, Jr.,
Nestor, Rebecca, Rosalina, and Nicanor all surnamed
PORTES shall pay P50,000 attorney's fees, and deliver and
turn over possession of Lot 2-A to respondents Segunda,
Eulalia, Salustancia, Vamerco, JoseCna, Felomino,
Marciano, Lydia, and Salome, all surnamed ARCALA. The 5
September 1994 Decision of the Regional Trial Court of
Negros Occidental, 6th Judicial Region, Branch 51, Bacolod
City in Civil Case No. 1815 is FINAL and EXECUTORY on
Felomina Gustilo, Angel Gustilo, Luis Gustilo, spouses
Vicente, Jr. and Ramona Arcala, Perfecta and Roberto
Cadongon, Sotera and Alfredo Magsico, Consolacion and
Martin Mujas, and Enrique and Pacita Palmares. Costs
against petitioners.
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION v.
APAC MARKETING CORPORATION, represented by CESAR
M. ONG, JR.
FACTS: The present case involves a simple purchase
transaction between defendant-appellant Philippine
National Construction Corporation (PNCC), represented by
defendants-appellants Rogelio Espiritu and Rolando
Macasaet, and plaintiff-appellee APAC, represented by
Cesar M. Ong, Jr., involving crushed basalt rock delivered
by plaintiff-appellee to defendant-appellant PNCC.
Plaintiff-appellee filed with the trial court a complaint
against defendants-appellees for collection of sum of
money with damages. Alleging that (i) in March 1998,
defendants-appellants engaged the services of plaintiff-
appellee by buying aggregates materials from plaintiff-
appellee, for which the latter had delivered and supplied
good quality crushed basalt rock; (ii) the parties had
initially agreed on the terms of payment, whereby
defendants-appellants would issue the check
corresponding to the value of the materials to be
delivered, or "Check Before Delivery," but prior to the
implementation of the said payment agreement,
defendants-appellants requested from plaintiff-appellee a
30-day term from the delivery date within which to pay,
which plaintiff-appellee accepted; and (iii) after making
deliveries pursuant to the purchase orders and despite
demands by plaintiff-appellee, defendants appellants
failed and refused to pay and settle their overdue
accounts.
Defendants-appellants filed a motion to dismiss, alleging
that the complaint was premature considering that
defendant-appellant PNCC had been faithfully paying its
obligations to plaintiff-appellee, as can be seen from the
substantial reduction of its overdue account as of August
1999.
The trial court rendered a Decision, the dispositive portion
of which reads: ₱782,296.80 as actual damages;
₱50,000.00 as attorney’s fees, plus ₱3,000.00 per court
appearance; Cost of suit.
Defendants-appellants filed a motion for reconsideration,
alleging that during the pendency of the case, the principal
obligation was fully paid and hence, the award by the trial
court of actual damages in the amount of ₱782,269.80 was
without factual and legal bases. the trial court considered
defendants-appellants’ claim of full payment of the
principal obligation, but still it ordered them to pay legal
interest of twelve per cent (12%) per annum.
On 9 July 2009, the Special Fourth Division of the CA
promulgated a Decision3 in CA-G.R. CV No. 88827,
affirming with modification the assailed Decision of the
court a quo. petitioner filed a Motion for Reconsideration,
which raised the lone issue of the propriety of the award
of attorney’s fees in favor of respondent.4 It should be
noted that in said motion, petitioner fully agreed with the
CA Decision imposing 6% legal interest per annum on the
principal obligation and absolving Rogelio Espiritu and
Rolando Macasaet from any liability as members of the
7
board of directors of PNCC. Thus, the main focus of the
Motion for Reconsideration was on the CA’s affirmation of
the court a quo’s Decision awarding attorney’s fees in
favor of respondent. However, the appellate court’s
Former Special Fourth Division denied petitioner’s Motion
for Reconsideration in a Resolution dated 18 January 2010
ISSUE/S: whether the CA gravely erred in awarding
attorney’s fees to respondent. Yes
DOCTRINES | HELD: an award of attorney’s fees under
Article 2208 demands factual, legal, and equitable
justification to avoid speculation and conjecture
surrounding the grant thereof.10 Due to the special nature
of the award of attorney’s fees, a rigid standard is imposed
on the courts before these fees could be granted. Hence,
it is imperative that they clearly and distinctly set forth in
their decisions the basis for the award thereof. It is not
enough that they merely state the amount of the grant in
the dispositive portion of their decisions.11 It bears
reiteration that the award of attorney’s fees is an
exception rather than the general rule; thus, there must
be compelling legal reason to bring the case within the
exceptions provided under Article 2208 of the Civil Code
to justify the award.12
We have perused the assailed CA’s Decision, but cannot
find any factual, legal, or equitable justification for the
award of attorney’s fees in favor of respondent. The
appellate court simply quoted the portion of the RTC
Decision that granted the award as basis for the
affirmation thereof. There was no elaboration on the
basis. There is therefore an absence of an independent CA
finding of the factual circumstances and legal or equitable
basis to justify the grant of attorney’s fees. The CA merely
adopted the RTC’s rational for the award, which in this
case we find to be sorely inadequate. The only discernible
reason proffered by the trial court in granting the award
was that respondent, as complainant in the civil case, was
forced to litigate to protect the latter’s interest. Thus, we
find that there is an obvious lack of a compelling legal
reason to consider the present case as one that falls within
the exception provided under Article 2208 of the Civil
Code. Absent such finding, we hold that the award of
attorney’s fees by the court a quo, as sustained by the
appellate court, was improper and must be deleted.
RULING: WHEREFORE, the foregoing Petition is GRANTED.
The assailed Decision dated 9 July 2009 of the Court of
Appeals in CA-G.R. CV No. 88827 is MODIFIED, in that the
award of attorney’s fees in the amount of ₱50,000 as
acceptance fee and ₱3,000 as appearance fee, in favor of
respondent APAC Marketing Incorporated, is hereby
DELETED.
Bondoc v. Datu
FACTS: In November 2006, Edigardo V. Bondoc consulted
Atty. Olimpio R. Datu regarding a civil case for damages he
intended to file against John Paul Mercado. Bondoc
disclosed to Datu that he figured in a vehicular accident
caused by Mercado, for which he was hospitalized and was
forced to spend P100,000 in medical expenses. An attempt
to settle ensued, but he was paid a small sum of P30,000.
Hence, Bondoc sought to hire Datu to file a civil case for
damages. Bondoc and Datu then agreed that Datu will
handle the filing of the case. In return, Bondoc undertook
to pay Datu P25,000 in attorney’s fees, to which Bondoc
with in two installments paid on February 6, 2007 and
August 6, 2007. The checks were received by a certain Tess
Pano, a staff in Datu’s office. Bondoc also turned over to
Datu all the documents pertinent to the case and regularly
followed up on the progress of the same but Datu told him
to give the court more time.
More than a year later, Datu still made no reports to
Bondoc regarding the civil case for damages. When
Bondoc inquired with the trial court in San Fernando City,
he was informed that no civil suit for damages was filed
against Mercado in his behalf. He was later showed by
Datu a letter sent to Mercado, inviting the latter to a
meeting to discuss a possible settlement of the case. On
the date set for the conference, only Bondoc attended.
Datu related to Bondoc that he had talked to Mercado’s
lawyer who informed him that Mercado had already paid
Bondoc P500,000 in settlement. Bondoc denied this and
presented to Datu the acknowledgement receipt showing
that he was only paid P30,000. Because of this, Bondoc
demanded the return of the P25,000 which he paid as
attorney’s fees. However, Datu refused to comply with
the demand.
IBP Commissioner Jaime Oracion recommended that Datu
be found liable for violation Rule 16.03 of Canon 16, Canon
17, and Rule 18.03 of Canon 18 of the Code of Professional
Responsibility, suspended for three months, and ordered
to pay Bondoc P25,000 with legal interest. IBP Board of
Governors increased the amount from P25,000 to
P30,000.
8
ISSUE/S: Whether or not Datu breached his obligation
under the Code of Professional Responsibility. YES
DOCTRINES | HELD: Canon 17 of the Code of Professional
Responsibility reminds lawyers that they owe fidelity to
the cause of their client. Inextricably linked to this duty is
Rule 18.03 of Canon 18 which impresses upon lawyers not
to neglect a legal matter entrusted to them. In Camara v.
Reyes, the Court held that the duty of fidelity and the
obligation not to neglect a legal matter entrusted by the
client mean nothing short of entire devotion to the client’s
genuine interest and warm zeal in the defense of his or her
rights. Lawyers must exert their best efforts to preserve
their clients’ cause. Unwavering loyalty displayed to a
client also serves the ends of justice.
This Court has consistently penalized lawyers who fall
short of their obligation to manifest devotion and
diligence to protect the interest of the client by failing to
file his or her client’s initiatory action after receiving
attorney’s fees.
In addition to the imposition of disciplinary action, this
Court has also consistently ordered the return of
attorney’s fees received with legal interest pursuant to
Rule 16.03 of Canon 16, which mandates that “[a] lawyer
shall deliver the funds and property of his client when due
or upon demand.”
Applying the foregoing, this Court finds that Datu fell short
of the fidelity and diligence that he owed his client
Bondoc. Datu failed to protect Bondoc’s interest by: (a) not
acting on the complaint he promised to file on behalf of
Bondoc; (b) acting on the matter only after 18 months and
after Bondoc’s persistent inquiries; and (c) by believing
that Mercado’s alleged payment to Bondoc without as
much as demanding any proof of this payment. Rather
than securing Bondoc’s interest, Datu chose to side with
Mercado. This is not the kind of unwavering loyalty and
diligence that is expected of members of the legal
profession.
Further, having failed to render legal services, Datu has the
legal and moral obligation to return the P25,000 which he
received.
RULING: WHEREFORE, in view of the foregoing, we
AFFIRM WITH MODIFICATION Resolution No. XX-2013-374
of the IBP Board of Governors. We impose upon Atty.
Olimpio R. Datu the penalty of SIX MONTHS SUSPENSION
from the practice of law for violation of Rule 16.03, Rule
18.03, and Canon 17 of the Code of Professional
Responsibility.
VALENTIN C. MIRANDA, Complainant, - versus- ATTY.
MACARIO D. CARPIO, Respondent.
FACTS: Complainant initiated Land Registration
Commission (LRC) Case No. M-226 for the registration of
the aforesaid property. During the course of the
proceedings, complainant engaged the services of
respondent Atty. Carpio as counsel in the said case when
his original counsel, Atty. Samuel Marquez, figured in a
vehicular accident.
In complainant's Affidavit, complainant and respondent
agreed that complainant was to pay respondent Twenty
Thousand Pesos (PhP20,000.00) as acceptance fee and
Two Thousand Pesos (PhP2,000.00) as appearance fee.
Complainant paid respondent the amounts due him, as
evidenced by receipts duly signed by the latter. During the
last hearing of the case, respondent demanded the
additional amount of Ten Thousand Pesos (PhP10,000.00)
for the preparation of a memorandum, which he said
would further strengthen complainant's position in the
case, plus twenty percent (20%) of the total area of the
subject property as additional fees for his services.
Complainant did not accede to respondent's demand for
it was contrary to their agreement. Moreover,
complainant co-owned the subject property with his
siblings, and he could not have agreed to the amount
being demanded by respondent without the knowledge
and approval of his co-heirs. As a result of complainant's
refusal to satisfy respondent's demands, the latter became
furious and their relationship became sore.
A Decision was rendered, granting the petition for
registration, which Decision was declared final and
executory in an Order dated June 5, 1998. On March 24,
2000, the Land Registration Authority (LRA) sent
complainant a copy of the letter addressed to the Register
of Deeds (RD) of Las Pias City, which transmitted the
decree of registration and the original and owner's
duplicate of the title of the property.
Complainant went to the RD to get the owner's duplicate
of the Original Certificate of Title (OCT) bearing No. 0-94.
He was surprised to discover that the same had already
been claimed by and released to respondent on March 29,
2000. On May 4, 2000, complainant talked to respondent
9
on the phone and asked him to turn over the owner's
duplicate of the OCT, which he had claimed without
complainant's knowledge, consent and authority.
Respondent insisted that complainant first pay him the
PhP10,000.00 and the 20% share in the property
equivalent to 378 square meters, in exchange for which,
respondent would deliver the owner's duplicate of the
OCT. Once again, complainant refused the demand, for
not having been agreed upon.
In a letter dated May 24, 2000, complainant reiterated his
demand for the return of the owner's duplicate of the OCT.
On June 11, 2000, complainant made the same demand on
respondent over the telephone. Respondent reiterated his
previous demand and angrily told complainant to comply,
and threatened to have the OCT cancelled if the latter
refused to pay him.
On June 26, 2000, complainant learned that on April 6,
2000, respondent registered an adverse claim on the
subject OCT wherein he claimed that the agreement on
the payment of his legal services was 20% of the property
and/or actual market value. To date, respondent has not
returned the owner's duplicate of OCT No. 0-94 to
complainant and his co-heirs despite repeated demands to
effect the same.
In defense of his actions, respondent relied on his alleged
retaining lien over the owner's duplicate of OCT No. 0-94.
Respondent admitted that he did not turn over to
complainant the owner's duplicate of OCT No. 0-94
because of complainant's refusal, notwithstanding
repeated demands, to complete payment of his agreed
professional fee consisting of 20% of the total area of the
property covered by the title, i.e., 378 square meters out
of 1,890 square meters, or its equivalent market value at
the rate of PhP7,000.00 per square meter, thus, yielding a
sum of PhP2,646,000.00 for the entire 378-square-meter
portion and that he was ready and willing to turn over the
owner's duplicate of OCT No. 0-94, should complainant
pay him completely the aforesaid professional fee.
Respondent admitted the receipt of the amount of
PhP32,000.00, however, he alleged that the amount
earlier paid to him will be deducted from the 20% of the
current value of the subject lot. He alleged that the
agreement was not reduced into writing, because the
parties believed each other based on their mutual trust.
He denied that he demanded the payment of
PhP10,000.00 for the preparation of a memorandum,
since he considered the same unnecessary.
In addition to the alleged agreement between him and
complainant for the payment of the 20% professional fees,
respondent invoked the principle of quantum meruit to
justify the amount being demanded by him.
ISSUE/S: WON the professional fees claimed by
respondent are valid. NO
DOCTRINES | HELD: Respondent's claim for his unpaid
professional fees that would legally give him the right to
retain the property of his client until he receives what is
allegedly due him has been paid has no basis and, thus, is
invalid.
Section 37, Rule 138 of the Rules of Court specifically
provides:
Section 37. Attorneys liens. An attorney shall have a lien
upon the funds, documents and papers of his client, which
have lawfully come into his possession and may retain the
same until his lawful fees and disbursements have been
paid, and may apply such funds to the satisfaction thereof.
He shall also have a lien to the same extent upon all
judgments for the payment of money, and executions
issued in pursuance of such judgments, which he has
secured in a litigation of his client, from and after the time
when he shall have caused a statement of his claim of such
lien to be entered upon the records of the court rendering
such judgment, or issuing such execution, and shall have
caused written notice thereof to be delivered to his client
and to the adverse party; and he shall have the same right
and power over such judgments and executions as his
client would have to enforce his lien and secure the
payment of his just fees and disbursements.
An attorney's retaining lien is fully recognized if the
presence of the following elements concur: (1) lawyer-
client relationship; (2) lawful possession of the client's
funds, documents and papers; and (3) unsatisfied claim for
attorney's fees.
Further, the attorney's retaining lien is a general lien for
the balance of the account between the attorney and his
client, and applies to the documents and funds of the
client which may come into the attorney's possession in
the course of his employment.
In the present case, complainant claims that there is no
such agreement for the payment of professional fee
consisting of 20% of the total area of the subject property
and submits that their agreement was only for the
payment of the acceptance fee and the appearance fees.
10
As correctly found by the IBP-CBD, there was no proof of
any agreement between the complainant and the
respondent that the latter is entitled to an additional
professional fee consisting of 20% of the total area
covered by OCT No. 0-94. The agreement between the
parties only shows that respondent will be paid the
acceptance fee and the appearance fees, which the
respondent has duly received. Clearly, there is no
unsatisfied claim for attorney's fees that would entitle
respondent to retain his client's property. Hence,
respondent could not validly withhold the title of his client
absence a clear and justifiable claim.
Respondent's unjustified act of holding on to
complainant's title with the obvious aim of forcing
complainant to agree to the amount of attorney's fees
sought is an alarming abuse by respondent of the exercise
of an attorney's retaining lien, which by no means is an
absolute right, and cannot at all justify inordinate delay in
the delivery of money and property to his client when due
or upon demand.
RULING: WHEREFORE, Atty. Macario D. Carpio is
SUSPENDED from the practice of law for a period of six (6)
months, effective upon receipt of this Decision. He is
ordered to RETURN to the complainant the owner's
duplicate of OCT No. 0-94 immediately upon receipt of this
decision. He is WARNED that a repetition of the same or
similar act shall be dealt with more severely.
AUGUSTO M. AQUINO, vs. HON. ISMAEL P. CASABAR,
FACTS: On June 2002, Atty. Angel T. Domingo (now
deceased) verbally contracted Augusto Aquino
(Petitioner) to represent him in an Agrarian Case on a
contingency fee basis. The case was for the determination
of the just compensation for the expropriation and taking
of Atty. Domingo's ricelands consisting of 60.5348
hectares, situated in Guimba, Nueva Ecija, by the
Department of Agrarian Reform (DAR), pursuant to
Presidential Decree (P.D.)27. The DAR and the Land Bank
of the Philippines (Land Bank) initially valued Atty.
Domingo's property at ₱484,236.27 or ₱7,999.30 per
hectare, which Domingo opposed in courts. Eventually,
the RTC, acting as Special Agrarian Court (RTC/SAC) issued
a Decision fixing the just compensation for Atty.
Domingo's property at ₱2,459,319.70 or ₱40,626.54 per
hectare. The appellate court affirmed in toto the SAC
Decision.
Meanwhile, in 2007, when Atty. Domingo died, he was
substituted by his legal heirs
Petitioner wrote the legal heir Ma. Ala Domingo (private
respondent) and informed them of the finality of the
decision which was affirmed by the Supreme Court. He
then requested her to inform Land Bank of the segregation
of the 30% contingent attorney’s fees based on the
increase of the just compensation.
The decision became final and executory on March 3,
2009.
Petitioner received a Notice of Appearance filed by Atty.
Antonio Conde replacing him as counsel for the private
respondents/legal heirs.
On August 6, 2009, Private Respondents filed a Motion for
Execution through Atty. Conde, while Petitioner filed a
Motion for Approval of Charging Attorney’s Lien and Order
of Payment on August 12, 2009. Private Resp. filed a
motion to dismiss.
RTC - Ruled in favor of Private Resp. It ruled that the court
has no jurisdiction over Atty. Aquino's motion for approval
of charging (Attorney's) lien having been filed after the
judgment has become final and executory.
ISSUE/S: Whether the trial court committed a reversible
error in denying the motion to approve attorney's lien and
order of payment on the ground that it lost jurisdiction
over the case since judgment in the case has already
become final and executory. - YES
DOCTRINES | HELD: The fee as an item of damages belongs
to the party litigant and not to his lawyer. It forms part of
his judgment recoveries against the losing party. The client
and his lawyer may, however, agree that whatever
attorney’s fee as an element of damages the court may
award shall pertain to the lawyer as his compensation or
as part thereof. In such a case, the court upon proper
motion may require the losing party to pay such fee
directly to the lawyer of the prevailing party.
Similarly, in the instant case, the attorney’s fees being
claimed by the petitioner is the compensation for
professional services rendered, and not an indemnity for
damages. Petitioner is claiming payment from private
respondents for the successful outcome of the agrarian
case which he represented. We see no valid reason why
11
public respondent cannot pass upon a proper petition to
determine attorney's fees considering that it is already
familiar with the nature and the extent of petitioner's legal
services. If we are to follow the rule against multiplicity of
suits, then with more reason that petitioner's motion
should not be dismissed as the same is in effect incidental
to the main case.
We are, likewise, unconvinced that the court a quo did not
acquire jurisdiction over the motion solely due to non-
payment of docket fees. Petitioner's failure to pay the
docket fees pertinent to his motion should not be
considered as having divested the court a quo's
jurisdiction. We note that, in this case, there was no
showing that petitioner intended to evade the payment of
docket fees as in fact he manifested willingness to pay the
same should it be necessary.
Private respondent was well within his rights when he
made his claim and waited for the finality of the judgment
for holiday pay differential, instead of filing it ahead of the
award’s complete resolution. To declare that a lawyer may
file a claim for fees in the same action only before the
judgment is reviewed by a higher tribunal would deprive
him of his aforestated options and render ineffective the
foregoing pronouncements of this Court. Here, apparently
petitioner filed his claim as an incident of the main action,
as in fact, his motion was for the court's approval of
charging attorney's lien and the prayer thereto was to
direct the entry into the case records the attorney's fees
he is claiming. Needless to say, petitioner's motion for
approval of charging attorney's lien and order of payment
was not intended to be filed as a separate action.
Nevertheless, it is within petitioner's right to wait for the
finality of the judgment, instead of filing it ahead of the
court's resolution, since precisely the basis of the
determination of the attorney's fees is the final disposition
of the case, that is, the just compensation to be awarded
to the private respondents.
Moreover, the RTC/SAC decision became final and
executory on March 3, 2009, and petitioner filed his
Motion to Determine Attorney’s Fees on August 10, 2009,
or only about four (4) months from the finality of the
RTC/SAC decision. Considering that petitioner and Atty.
Domingo’s agreement was contracted verbally, Article
1145 of the Civil Code allows petitioner a period of six (6)
years within which to file an action to recover professional
fees for services rendered. Thus, the disputed motion to
approve the charging of attorney's lien and the order of
payment was seasonably filed.
However, considering that the contract was made verbally
and that there was no evidence presented to justify the
30% contingent fees being claimed by petitioner, the only
way to determine his right to appropriate attorney’s fees
is to apply the principle of quantum meruit (as much as he
deserves). The recovery of attorney’s fees on the basis of
quantum meruitis a device that prevents an unscrupulous
client from running away with the fruits of the legal
services of counsel without paying for it and also avoids
unjust enrichment on the part of the attorney himself. This
Court, which holds and exercises the power to fix
attorney's fees on quantum meruit basis in the absence of
an express written agreement between the attorney and
the client, deems it fair to fix petitioner's attorney's fees at
fifteen percent (15%) of the increase in the just
compensation awarded to private respondents.
RULING: WHEREFORE, the petition is GRANTED.
Accordingly, the Court grants the Motion for Approval of
Charging Attorney's Lien filed by petitioner Atty. Augusto
M. Aquino. Based on quantum meruit, the amount of
attorney's fees is at the rate of fifteen percent (15%) of the
amount of the increase in valuation of just compensation
awarded to the private respondents.
NOTES: Rule 20.01 of the Code of Professional
Responsibility lists the guidelines for determining the
proper amount of attorney fees, to wit:
Rule 20.1 – A lawyer shall be guided by the following
factors in determining his fees:
a) The time spent and the extent of the services rendered
or required;
b) The novelty and difficult of the questions involved;
c) The important of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result
of acceptance of the proffered case;
f) The customary charges for similar services and the
schedule of fees of the IBP chapter to which he belongs;
g) The amount involved in the controversy and the
benefits resulting to the client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or
established; and
j) The professional standing of the lawyer.
12