CELZO-CANON XX; Quantum meruit; Attorney Fees

CASE Number 1

Cortes v. Court of Appeals, et.al

G.R. No. 121771, January 13, 2003

Austria-Martinez, J:

FACTS OF THE CASE:

Spouses Edmundo and Elnora Cortes retained the services of Atty. Felix
Moya for the purpose of representing them in the case for specific performance with
damages filed against them by F.S. Management and Development Corporation
(FSMDC). However, they did not agree on the amount of compensation for the
services to be rendered by Atty. Moya. Before the full-blown trial, spouses Cortes
and FSMDC entered into a compromise agreement.

Defendants spouses received from plaintiff FSMDC, three checks totaling

P2,754,340.00 which represents the remaining balance of the purchase price of the
subject land. Atty. Moya filed an "Urgent Motion to Fix Attorney's Fees, Etc."
praying that he be paid a sum equivalent to thirty-five percent (35%) of the amount
received by the defendant spouses which the latter opposed contending that the
amount Atty. Moya seeks to recover is utterly excessive and is not commensurate to
the nature, extent and quality of the services he had rendered.

Spouses Cortes and Atty. Moya settled their differences in open court that the
former will pay the latter the amount of P100,000.00 as his attorney's fees.
Subsequently, the Cortes spouses terminated the services of Atty. Moya and retained
the services of another lawyer. About six months after, the trial court issued an Order
directing the Cortes spouses to pay Atty. Moya the sum of P100,000. On appeal, the
Court of Appeals affirmed the decision of the trial court with modification that the
Cortes spouses were ordered to pay six percent (6%) per annum as legal interest
from July 25, 1992 until fully paid. Hence, spouses Cortes filed the instant petition
for review on certiorari.

ISSUE:
Whether or not the amount of P100,000.00 awarded to the private respondent
is in consonance with the prevailing principles and guidelines governing
compensation due to attorneys for the professional services they have rendered in
accordance with Canon 20 of the Code of Professional Responsibility.

RULING:
NO. The reasonableness of the amount of attorney's fees awarded to private
respondent should be properly gauged on the basis of the long-standing rule of
quantum meruit, meaning, "as much as he deserves." Canon 20, Rule 20.1 of the
Code of Professional Responsibility, serves as a guideline in fixing a reasonable
compensation for services rendered by a lawyer on the basis of quantum meruit: a)
The time spent and the extent of the services rendered or required; b) The novelty
and difficulty of the questions involved; c) The importance of the subject matter; d)
The skill demanded; e) The probability of losing other employment as a result of
acceptance of the proffered case; f) The customary charges for similar services and
the schedule of fees of the IBP chapter to which he belongs; g) The amount involved
in the controversy and the benefits resulting to the client from the services; h) The
contingency or certainty of compensation; i) The character of the employment,
whether occasional or established; and j) The professional standing of the lawyer.
 In the present case, it is undisputed that private respondent had rendered
services as counsel for the petitioners. He prepared petitioners' Answer and Pre-Trial
Brief, appeared at the Pre-Trial Conference, attended a hearing, cross-examined the
witness of FSMDC, and was present in the conference at the Manila Hotel between
the parties and their respective counsels. All these services were rendered in the
years 1990 and 1991 where the value of the peso is higher. Thus, the Court found
the sum of P100,000.00 awarded to private respondent as his attorney's fees to be
disproportionate to the services rendered by him to petitioners. Accordingly, the
amount of P50,000.00 as compensation for the services rendered by Atty. Moya was
just and reasonable and the imposition of legal interest on the amount payable to
private respondent was unwarranted and should be deleted.

CASE Number 2

Atty. Bulseco Jr. v. Heirs of Pedro Miramon represented by Pichay-Evilla

G.R. No. 198371, December 7, 2015
Bruselas, J:

FACTS OF THE CASE:

On March 9, 2004, a complaint for annulment of sale and cancellation of title

with reconveyance of an 8,247-sq.m. land located in Tallungan, Aparri, Cagayan
was led by the respondents against the heirs of Fernando Campo in the RTC of
Aparri, Cagayan. The respondents were represented by Atty. Bulseco Jr. through a
Contract of Services wherein it was explicitly provided that a favorable judgment
obtained by the respondents shall obligate them to convey, cede and transfer a 500-
sq.m. portion of the lot under litigation, to be taken from the northernmost portion
thereof, in favor of the petitioner. Paragraph 3 of the same contract provided that the
same shall be effective during the lifetime of the civil action and shall cease after its
final determination before the RTC of Aparri, Cagayan.

The civil action of the respondents prospered and the RTC ordered the
defendants a quo to reconvey an area of 2,749 sq. m. each of the land in favor of the
heirs of Gregorio Miramon and the heirs of Agustin Miramon, respectively.
Respondents, however, changed counsel and availed of the legal services of a new
lawyer to represent them upon the appeal. While the appeal is pending, the petitioner
wrote a letter to the Register of Deeds (RD) of Cagayan regarding his agreement
with his former clients (the respondents) about the transfer of 500-sq.m. portion of
the property in litigation as evidenced by the Contract of Services in payment for
legal services he rendered.

The Court of Appeals affirmed the RTC ruling. The respondents then filed a
Motion for Execution to implement the CA decision. On one hand, the petitioner
also led a motion for execution before the RTC pursuant to Section 37, Rule 137 of
the 1997 Rules of Court for the enforcement of his agreement with the respondents
that in the event they obtain a favorable judgment, they will convey, cede and
transfer a portion of the lot to the petitioner.

The respondents however claimed that they entered into a new Contract of
Services with him on December 16, 2003 as he was in urgent need for cash for his
annual trip to the United States of America (USA); that the previous stipulation as
contained in paragraph (2) of the Contract of Services dated June 11, 2003 was
converted when he agreed to be paid with cash in the amount of P30,000.00 plus
P500.00 fee per court appearance.

The RTC granted the motion of the petitioner and awarded him with an area
of 500 sq.m. of the subject land as his attorney's lien since there was no specific
provision in the second contract which expressly novated the contents of the first
contract; that there was no proof that the P30,000.00 stated in paragraph (b) has been
paid during the execution of the second contract.

Due to the denial of their motion of reconsideration, the respondents elevated

the matter before the CA. The CA granted the petition. The CA pronounced that a
contingent fee arrangement in a lawyer-client relationship is allowed in its
jurisdiction subject to judicial supervision as to its reasonableness. Even if there
were no irreconcilable differences between the two Contracts of Services, still the
first contract was considered void insofar as paragraph (2) thereof is concerned.
Citing Rule 16.03 of the Code of Professional Responsibility and Section 37 of Rule
138 of the Rules of Court, the CA opined that a charging lien in favor of a lawyer is
proper only when a money judgment favorable to the client has been secured in the
action. Here, the action was not for a money judgment but for reconveyance of
property. Therefore, there being no valid case made out for a charging lien and
considering the parties' contract, the petitioner was considered not entitled to claim
the same.

ISSUE: Whether or Not Atty. Bulseco Jr. is entitled to the 500-sq.m. portion of the
property in litigation as evidenced by the Contract of Services in payment for legal
services he rendered in accordance with Canon 20 of the Code of Professional
Responsibility.

RULING: NO. It is well-settled that "[a]n attorney's fee, in its ordinary concept,
refers to the reasonable compensation paid to a lawyer for the legal services he has
rendered to a client. The client and his lawyer may enter into a written contract
whereby the latter would be paid attorney's fees only if the suit or litigation ends
favorably to the client. This is called a contingency fee contract. The amount of
attorney's fees in this contract may be on a percentage basis, and a much higher
compensation is allowed in consideration of the risk that the lawyer may get nothing
if the suit fails. As aptly explained by the CA, contingent fees should be reasonable
under all the circumstances of the case and should always be subject to the
supervision of a court, pursuant to Canon 20 of the Code of Professional
Responsibility, which states that a lawyer is tasked to charge only fair and reasonable
fees. Here, the legal services of the petitioner were engaged by the respondents to
recover a certain parcel of land in Civil Case No. II-2971 as heirs. The judgment
obtained by the respondents in such case was not a money judgment which,
according to the CA, is among the requisites in order for a charging lien to be valid.
Thus, such judgment did not entitle the petitioner to claim any charging lien because
the land involved may not be used to pay for his legal services.
CASE Number 3

Cueto v. Jimenez Jr.

A.C. No. 5798, January 20, 2005

Corona, J:

FACTS OF THE CASE:

Engr. Alex Cueto filed a disciplinary action with the Integrated Bar of the
Philippines (IBP), Commission on Bar Discipline against Atty. Jose Jimenez.

Engr. Cueto alleged that he engaged the services of respondent as notary

public, the latter being the father of the owner of the building subject of the
Construction Agreement to be notarized. After notarizing the agreement, respondent
demanded P50,000 as notarial fee. Despite his surprise as to the cost of the notarial
service, complainant informed respondent that he only had P30,000 in cash.
Respondent persuaded complainant to pay the P30,000 and to issue a check for the
remaining P20,000. Being unfamiliar with the cost of notarial services, complainant
paid all his cash and issued a Far East Bank check for the balance.

Before the maturity date of the check, complainant requested respondent not
to deposit the same for lack of sufficient funds. He also informed respondent that the
latter's son Jose Jimenez III had not yet paid his services as general contractor. Still,
respondent deposited the check which was consequently dishonored for insufficient
funds. Meanwhile, the P2,500,000 check issued by respondent's son to complainant
as initial payment pursuant to the Construction Agreement was itself dishonored for
having been drawn against a closed account.

Subsequently, Atty. Jimenez lodged a complaint for violation of BP 22 against

Cueto before the City Prosecutor's Office in Angeles City.
 Cueto filed his own administrative complaint against Jimenez and alleged that
Jimenez violated the Code of Professional Responsibility and Canons of
Professional Ethics when he filed the criminal case against Cueto, so he could collect
the balance of his notarial fee and also claimed that respondent's P50,000 notarial
fee was exorbitant.

ISSUES:

1. Whether or Not, Atty. Jimenez is guilty of violating Canon 20, Rule 20.4, Canon
14 and 15 of the Code of Professional Responsibility

2. Whether or Not, the notarial fee is exorbitant

RULING:

1. YES. IBP Commission on Bar Discipline found respondent guilty of violating

Canon 20, Rule 20.4 of the Code of Professional Responsibility and recommended
that Atty. Jose B. Jimenez, Jr. be reprimanded.

Canon 20, Rule 20.4 of the Code of Professional Responsibility mandates that
"[a] lawyer shall avoid controversies with clients concerning his compensation and
shall resort to judicial action only to prevent imposition, injustice or fraud."
Likewise, in Canon 14 of the Canons of Professional Ethics it states that,
"[c]ontroversies with clients concerning compensation are to be avoided by the
lawyer so far as shall be compatible with his self-respect and with his right to receive
reasonable recompense for his service; and lawsuits with the clients should be
resorted to only to prevent injustice, imposition or fraud." There was clearly no
imposition, injustice or fraud obtaining in this case to justify the legal action taken
by respondent. As borne out by the records, complainant Cueto had already paid
more than half of respondent's fee. To resort to a suit to recover the balance reveals
a certain kind of shameful conduct and inconsiderate behavior that clearly
undermines the tenet embodied in Canon 15 that "[A] lawyer should observe candor,
fairness and loyalty in all his dealings and transactions with his client."

Respondent's conduct in filing a criminal case for violation of BP 22 against

complainant (when the check representing the P20,000 balance was dishonored for
insufficient funds) was highly improper. Although the court acknowledge that every
lawyer must be paid what is due to him, he must never resort to judicial action to
recover his fees, in a manner that detracts from the dignity of the profession.

2. NO. It is a recognized legal practice in real estate transactions and construction

projects to base the amount of notarial fees on the contract price. Based on the
amount demanded by respondent, the fee represented only 1% of the contract price
of P5,000,000. It cannot be said therefore that respondent notary demanded more
than a reasonable recompense for his service. The two contracting parties implicitly
agreed on the cost of Jimenez's notarial service. It was Cueto's responsibility to first
inquire how much he was going to be charged for notarization. And once informed,
he was free to accept or reject it, or negotiate for a lower amount. Moreover, his
failure to negotiate the amount of the fee was an implicit acquiescence to the terms
of the notarial service. His subsequent act of paying in cash and in check all the more
proved it.
CASE Number 4

Researched Cases

Sesbreño v Court of Appeals

G.R. No. 117438, June 8, 1995

Romero, J:

FACTS OF THE CASE:

Fifty-two employees sued the Province of Cebu and then Espina for
reinstatement and back wages. Petitioner, Raul H. Sesbreño, replaced the employees'
former counsel Atty. Catalino Pacquiao. Thirty-two of the fifty-two employees
agreed to pay petitioner 30% as attorney's fees and 20% as expenses to be taken from
their back salaries.

Trial court decided in favor of the employees and ordered the Province of
Cebu to reinstate them and pay them back salaries. Said decision became final and
executory after it was affirmed in toto by the Court of Appeals. A compromise
agreement was entered into by the parties April 1979 whereby the former employees
waived their right to reinstatement among others. The Province of Cebu released
P2,300,000.00 to the petitioning employees through petitioner as "Partial
Satisfaction of Judgment." The amount represented back salaries, terminal leave
pays, and gratuity pay due to the employees.

Ten employees filed manifestations before the trial court asserting that they
agreed to pay Atty. Sesbreño 40% to be taken only from their back salaries. The
lower court issued two orders, with which petitioner complied, requiring him to
release P10,000.00 to each of the ten private respondents and to retain 40% of the
back salaries pertaining to the latter out of the P2,300,000.00 released to him. On
March 28, 1980, the trial court fixed the attorney’s fees a total of 60% of all monies
paid to the employees. However, trial court modified the award after noting that
petitioner’s attorney’s lien was inadvertently placed as 60% when it should have
been only 50%. Atty. Sesbreño appealed to the Court of Appeals claiming additional
fees for legal services but was even further reduced to 20%.

ISSUE: Whether or Not the Court of Appeals had the authority to reduce the amount
of attorney's fees awarded to petitioner Atty. Raul H. Sesbreño, notwithstanding the
contract for professional services signed by private respondents

RULING: YES. The CA ruling is affirmed. Fifty per cent of all monies which
private respondents may receive from the provincial government, according to the
Court of Appeals, is excessive and unconscionable, not to say, contrary to the
contract of professional services. What a lawyer may charge and receive as
attorney’s fees is always subject to judicial control. A stipulation on a lawyer’s
compensation in a written contract for professional services ordinarily controls the
amount of fees that the contracting lawyer may be allowed, unless the court finds
such stipulated amount unreasonable unconscionable. A contingent fee arrangement
is valid in this jurisdiction and is generally recognized as valid and binding but must
be laid down in an express contract. if the attorney’s fees are found to be excessive,
what is reasonable under the circumstances. Quantum meruit, meaning “as much as
he deserves,” is used as the basis for determining the lawyer’s professional fees in
the absence of a contract. The Supreme Court averred that in balancing the
allocation of the monetary award, 50% of all monies to the lawyer and the other 50%
to be allocated among all his 52 clients, is too lop-sided in favor of the lawyer. The
ratio makes the practice of law a commercial venture, rather than a noble
profession. It would, verily be ironic if the counsel whom they had hired to help
would appropriate for himself 50% or even 60% of the total amount collectible by
these employees. 20% is a fair settlement.
CASE Number 5

Pineda v. De Jesus

G.R. No. 15524, August 23, 2006

Corona, J:

FACTS OF THE CASE:

On April 6, 1993, Aurora Pineda filed an action for declaration of nullity of

marriage against petitioner Pineda in the RTC of Pasig City, Branch 151, docketed
as JDRC Case No. 2568. Petitioner was represented by respondents Attys. Clodualdo
de Jesus, Carlos Ambrosio and Mariano.

During the pendency of the case, Aurora proposed a settlement to petitioner

regarding her visitation rights over their minor child and the separation of their
properties. The proposal was accepted by petitioner and both parties subsequently
filed a motion for approval of their agreement. This was approved by the trial court.
On November 25, 1998, the marriage between petitioner and Pineda was declared
null and void.

Throughout the proceedings, respondent counsels were well-compensated.

They, including their relatives and friends, even availed of free products and
treatments from petitioner’s dermatology clinic. This notwithstanding, they billed
petitioner additional legal fees amounting to P16.5 million4 which the latter,
however, refused to pay. Instead, petitioner issued them several checks totaling
P1.12 million as "full payment for settlement."

Still not satisfied, respondents filed in the same trial court a motion for
payment of lawyers’ fees for P50 million.

On April 14, 2000, the trial court ordered petitioner to pay P5 million to Atty.
de Jesus, P2 million to Atty. Ambrosio and P2 million to Atty. Mariano.

On appeal, the Court of Appeals reduced the amount as follows: P1 million to

Atty. de Jesus, P500,000 to Atty. Ambrosio and P500,000 to Atty. Mariano. The
motion for reconsideration was denied. Hence, this recourse.

ISSUE: Whether or Not respondents were entitled to additional legal fees

RULING: NO. Professional engagement between petitioner and respondents was

governed by the principle of quantum meruit which means "as much as the lawyer
deserves." The recovery of attorney’s fees on this basis is permitted, as in this case,
where there is no express agreement for the payment of attorney’s fees. However,
pursuant to Rule 20.4 of the Code of Professional Responsibility advises lawyers to
avoid controversies with clients concerning their compensation and to resort to
judicial action only to prevent imposition, injustice or fraud. Suits to collect fees
should be avoided and should be filed only when circumstances force lawyers to
resort to it. In the case at bar, respondents’ motion for payment of their lawyers’ fees
was not meant to collect what was justly due them; the fact was, they had already
been adequately paid. Demanding P50 million on top of the generous sums and perks
already given to them was an act of unconscionable greed which is shocking to this
Court. Respondents’ claim for additional legal fees was not justified. They could not
charge petitioner a fee based on percentage, absent an express agreement to that
effect. The payments to them in cash, checks, free products and services from
petitioner’s business — all of which were not denied by respondents — more than
sufficed for the work they did. The "full payment for settlement" should have
discharged petitioner’s obligation to them. the award of additional attorney’s fees in
favor of respondents is hereby DELETED.
CASE Number 6

Research and Services Realty Inc. v CA

G.R. No. 124074, January 27, 1997

Davide Jr., J:

FACTS OF THE CASE OF THE CASE:

Atty. Manuel Fonacier was hired by petitioner when Jose, Fidel, and Antonia
Carreon and a certain Patricio C. Sarile instituted before the RTC of Makati City an
action against the petitioner for rescission of the Joint Venture Agreement. The JVA
provided that the petitioner shall undertake to develop, subdivide, administer, and
promote the sale of the parcels of land owned by the Carreons wherein the proceeds
of the sale of the lots were to be paid to the Philippine National Bank (PNB) for the
landowner's mortgage obligation, and the net profits to be shared by the contracting
parties on a 50-50 basis.

While case was pending, the petitioner, without the knowledge of the private
respondent, entered into a Memorandum of Agreement (MOA) with another land
developer, Filstream International, Inc. (hereinafter Filstream). Under this MOA, the
former assigned its rights and obligations under the Joint Venture Agreement in
favor of the latter for a consideration of P28 million, payable within twenty-four
months.

On March 31, 1993: petitioner terminated services of Fonacier. At the time

the petitioner had already received P7 million from Filstream

Upon knowing the existence of the MOA, the private respondent filed in a
civil case an Urgent Motion to Direct Payment of Attorney's Fees and/or Register
Attorney's Charging Lien praying, among other things, that the petitioner be ordered
to pay him the sum of P700,000.00 as his contingent fee in the case even if he had
no participation in the negotiation and preparation thereof.

The trial court issued an order dated 11 October 1993 directing the petitioner
to pay the private respondent the sum of P600,000.00 as attorney's fees based on
quantum meruit. The Court of Appeals granted the same on a contingent basis.

ISSUE: Whether or not, the attorney fees are excessive and unreasonable

RULING: YES. Rule 20.1, Canon 20 of the Code of Professional Responsibility

enumerates the following factors which should guide a lawyer in determining his
fees: a) The time spent and the extent of the services rendered or required; b) The
novelty and difficulty of the questions involved; c) The importance of the subject
matter; d) The skill demanded; e) The probability of losing other employment as a
result of acceptance of the proffered case; f) The customary charges for similar
services and the schedule of fees of the IBP chapter to which he belongs; g) The
amount involved in the controversy and the benefits resulting to the client from the
services; h) The contingency or certainty of compensation; i) The character of the
employment, whether occasional or established; and j) The professional standing of
the lawyer
It was incumbent upon the private respondent to prove the reasonable amount
of attorney's fees, considering the foregoing factors or circumstances. P600,000.00
attorney's fees, whether on contingent basis or quantum meruit is excessive and
unreasonable. Lawyer’s contribution was merely to ask for suspension or
postponement of proceedings. It necessarily follows then that the 11 October 1993
order has insufficient factual basis, and the trial court committed grave abuse of
discretion in arbitrarily fixing the private respondent's attorney's fees at P600,000.00.
The affirmance of the said order by the Court of Appeals premised on the provision
in the retainer contract regarding contingent fee is thus fatally flawed. The interest
for both the petitioner and the private respondent demands that the trial court should
conduct further proceedings in Civil Case No. 612 relative to the private respondent's
motion for the payment of attorney's fees and, thereafter, fix it in light of Section 24,
Rule 138 of the Rules of Court; Rule 20.1, Canon 20 of the Code of Professional
Responsibility; and the jurisprudentially established guiding principles in
determining attorney's fees on quantum meruit basis.