CASE BrieF NO. 2015-0077

CASE: Augusto M. Aquino vs. Hon. Ismael P. Casabar, as Presiding Judge Regional Trial Court and Ma. Ala F. Domingo and Margarita Irene F. Domingo, substituting Heirs of the deceased Angel T. Domingo [G.R. No. 191470 January 26, 2015]

PONENTE: Associate Justice Diosdado M. Peralta

SUBJECT:

  1. Legal Ethics:
    i. Attorney’s Fee – Concept
    ii. Contingency Fee
    iii. Quantum Meruit
    iv. Code of Professional Responsibility – Guidelines for determining the proper amount of attorney fees
  2. Civil Law:
    i. Prescription – oral contract

Contingent fees depend upon an express contract, without which the attorney can only recover on the basis of quantum meruit.”


FACTS:
Atty. Angel T. Domingo verbally contracted Atty. Augusto M. Aquino to represent him in Agrarian Case on a contingency fee basis. It was agreed that Atty. Aquino will get paid 30% of the increase of the just compensation to be awarded to Atty. Domingo if they won the case. The case was for the determination of the just compensation for the expropriation and taking of Atty. Domingo’s rice lands by the Department of Agrarian Reform (DAR). The DAR and the Land Bank initially valued Atty. Domingo’s property at ₱484,236.27, which the latter, through Atty. Aquino, opposed in courts. Eventually, the RTC, acting as Special Agrarian Court issued a Decision fixing the just compensation for Atty. Domingo’s property at ₱2,459,319.70 or an increase of ₱1,975,083.43 over the initial DAR and the Land Bank valuation. Land Bank questioned the RTC decision before the CA but the latter affirmed the Decision of the RTC.

Meanwhile, Atty. Domingo died. Atty. Aquino filed a Manifestation of the fact of Atty. Domingo’s death and the substitution of the latter by his legal heirs, Ma. Ala F. Domingo and Margarita Irene F. Domingo (the Domingos).

Landbank went up to the Supreme Court via a petition for review on certiorari. However, in a Resolution the Court denied the same. The Court denied with finality Land Bank’s motion for reconsideration.

Thereafter, Atty. Aquino wrote the Domingos and informed her of the finality of the RTC decision as affirmed by the CA and the SC. He then requested her to inform the Land Bank of the segregation of Atty. Aquino’s thirty percent (30%) contingent attorney’s fees out of the increase of the just compensation for the subject property. Atty. Aquino claimed never to have received a reply from the Domingos.

On March 30, 2009, Atty. Aquino received a copy of the entry of judgment from the Supreme Court certifying that its Resolution has already become final and executory on March 3, 2009.

On August 14, 2009, the Domingos, through their new counsel, Atty. Antonio Conde, filed a Motion for Execution of the RTC Decision.

Atty. Aquino filed a Motion for Approval of Charging Attorney’s Lien and for the Order of Payment.  He further executed an Affidavit dated August 10, 2009, attesting to the circumstances surrounding the legal services he has rendered for the deceased Atty. Domingo and the successful prosecution of the Agrarian case from the RTC through the CA and the SC.

The Domingos filed a Motion to Dismiss/Expunge Atty. Aquino’s Motion.  Presiding Judge Casabar denied the same. But when the Domingos moved for reconsideration,  Judge Casabar issued the disputed Order denying Atty. Aquino’s motion for approval of attorney’s lien, the dispositive portion of which reads:

x x x x

“Examining the basis of the instant motion for reconsideration, this court agrees with respondents – movants that this 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. Accordingly, the motion for reconsideration is granted and the motion for approval of (Attorney’s) lien is denied and or expunged from the records of the case.”

Thus, the instant petition for certiorari via Rule 65.

Atty. Aquino maintains that he filed the motion for charging attorney’s lien and order of payment in the very same case, Agrarian Case, as an incident thereof, wherein he was the counsel during the proceedings.

The Domingos, on the other hand, counter that the motion was belatedly filed and that it was filed without the payment of docket fees, thus, the court a quo did not acquire jurisdiction over the case.

ISSUES:

A.       What are the two concepts of attorney’s fees?
a) What kind of attorney’s fees is Atty. Aquino claiming?
B.       Whether the RTC did not acquire jurisdiction over the Motion for Approval of Attorney’s Lein due to Atty. Aquino’s failure to pay docket fees.
C.       How and when attorney’s fees for professional services can be recovered?
D.      Is the RTC correct in denying Atty. Aquino’s Motion for filing it after the main case as become final and executory?
F.       Did Atty. Ernesto seasonably filed his motion for approval of charging Attorney’s Lien?
G.      Whether Atty. Aquino is entitled to the Contingent fee of 30% of the increase of the just compensation award or on the basis of quantum meruit?
a) What is Quantum meruit?
b) What are the guidelines for determining an attorney’s professional fees?)

RULING:
A. In the case of Rosario, Jr. v. De Guzman (2008), the SC clarified a similar issue and discussed the two concepts of attorney’s fees – that is, ordinary and extraordinary. In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages. Although both concepts are similar in some respects, they differ from each other, as further explained below:

The attorney’s fees which a court may, in proper cases, award to a winning litigant is, strictly speaking, an item of damages. It differs from that which a client pays his counsel for the latter’s professional services. However, the two concepts have many things in common that a treatment of the subject is necessary. The award that the court may grant to a successful party by way of attorney’s fee is an indemnity for damages sustained by him in prosecuting or defending, through counsel, his cause in court. It may be decreed in favor of the party, not his lawyer, in any of the instances authorized by law. On the other hand, the attorney’s fee which a client pays his counsel refers to the compensation for the latter’s services. The losing party against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his liability dependent upon, the fee arrangement of the prevailing party with his lawyer. The amount stipulated in such fee arrangement may, however, be taken into account by the court in fixing the amount of counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries against the losing party. The client and his lawyer may, however, agree that whatever attorney’s fee as an element of damages the court may award shall pertain to the lawyer as his compensation or as part thereof. In such a case, the court upon proper motion may require the losing party to pay such fee directly to the lawyer of the prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as a prerequisite to their grant, the intervention of or the rendition of professional services by a lawyer. As a client may not be held liable for counsel fees in favor of his lawyer who never rendered services, so too may a party be not held liable for attorney’s fees as damages in favor of the winning party who enforced his rights without the assistance of counsel. Moreover, both fees are subject to judicial control and modification. And the rules governing the determination of their reasonable amount are applicable in one as in the other.

In the instant case, the attorney’s fees being claimed by Atty. Aquino is the compensation for professional services rendered, and not an indemnity for damages. He is claiming payment from the Domingos for the successful outcome of the agrarian case which he represented.

B. The SC is unconvinced that the court a quo did not acquire jurisdiction over the motion solely due to non-payment of docket fees. Atty. Aquino’s failure to pay the docket fees pertinent to his motion should not be considered as having divested the court a quo’s jurisdiction. The SC note that, in this case, there was no showing that Atty. Aquino intended to evade the payment of docket fees as in fact he manifested willingness to pay the same should it be necessary.

Likewise, pursuant to the ruling in Sun Insurance Office, Ltd. (SIOL) v. Asuncion (2011), should there be unpaid docket fees, the same should be considered as a lien on the judgment. Thus, even on the assumption that additional docket fees are required as a consequence of Atty. Aquino’s motion, its non-payment will not result in the court’s loss of jurisdiction over the case.

C. With regards to how attorney’s fees for professional services can be recovered, the case of Traders Royal Bank Employees Union-Independent v. NLRC (1997) is instructive:

x x x It is well settled that a claim for attorney’s fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

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

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

D.      No. Apparently Atty. Aquino 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, Atty. Aquino’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 Atty. Aquino’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 Domingos.

E. The RTC decision became final and executory on March 3, 2009, and Atty. Aquino filed his Motion to Determine Attorney’s Fees on August 10, 2009, or only about four (4) months from the finality of the RTC decision. Considering that Atty. Aquino and Atty. Domingo’s agreement was contracted verbally, Article 1145 of the Civil Code allows Atty. Aquino 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.

F. Atty. Aquino claims that he and Atty. Domingo agreed to a contract for contingent fees equivalent to thirty percent (30%) of the increase of the just compensation awarded, albeit verbally. However, a contract for contingent fees is an agreement in writing by which the fees, usually a fixed percentage of what may be recovered in the action, are made to depend upon the success in the effort to enforce or defend a supposed right. Contingent fees depend upon an express contract, without which the attorney can only recover on the basis of quantum meruit. Here, considering that the contract was made verbally and that there was no evidence presented to justify the 30% contingent fees being claimed by Atty. Aquino, the only way to determine his right to appropriate attorney’s fees is to apply the principle of quantum meruit.

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

Further, 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.

The Domingos never rebutted the fact that Atty. Aquino rendered legal services in the subject case. It is likewise undisputed that it was him who successfully represented Atty. Domingo in Agrarian Case before the RTC, in the CA, and before SC where the case eventually attained finality. It is, therefore, through Atty. Aquino’s effort for a lengthy period of seven (7) years that the just compensation for the property owned by deceased Atty. Domingo increased. It cannot be denied then that the Domingos benefited from the said increase in the just compensation. Thus, considering Atty. Aquino’s effort and the amount of time spent in ensuring the successful disposition of the case, he rightfully deserves to be awarded reasonable attorney’s fees for services rendered.

Ordinarily, this Court would have left it to the trial court the determination of attorney’s fees based on quantum meruit, however, following the several pronouncements of the Court that it will be just and equitable to now assess and fix the attorney’s fees in order that the resolution thereof would not be needlessly prolonged, 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 Atty. Aquino’s attorney’s fees at fifteen percent (15%) of the increase in the just compensation awarded.

The Fallo

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.

Related Case BrieFs:

  1. Rosario, Jr. v. De Guzman (2008)
  2. Sun Insurance Office, Ltd. (SIOL) v. Asuncion (2011)

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THINGS DECIDED:

A) There are two concepts of attorney’s fees – that is, ordinary and extraordinary. In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal services rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages.

B) Should there be unpaid docket fees, the same should be considered as a lien on the judgment. Thus, even on the assumption that additional docket fees are required as a consequence of Atty. Aquino’s motion, its non-payment will not result in the court’s loss of jurisdiction over the case.

C) It is well settled that a claim for attorney’s fees may be asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

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

E) Contingent fees depend upon an express contract, without which the attorney can only recover on the basis of quantum meruit.

F) Quantum meruit– literally meaning as much as he deserves – is used as basis for determining an attorney’s professional fees in the absence of an express agreement.

G) 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.

 ‘Stand by things decided’ ~ Stare Decisis


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