Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 160334             September 11, 2006

GUENTER BACH, petitioner,
vs.
ONGKIKO KALAW MANHIT & ACORDA LAW OFFICES, respondent.

D E C I S I O N

CHICO-NAZARIO, J.:

This Petition for Review on Certiorari seeks to reverse the Decision1 dated 8 October 2003 of the Court of Appeals in CA-G.R. CV No. 74445, entitled, "Ongkiko Kalaw Manhit & Accorda Law Offices v. Guenter Bach."

The facts as culled from the records of the case are as follows:

On 7 November 1994, petitioner Guenter Bach engaged the services of respondent law firm Ongkiko Kalaw Manhit & Accorda Law Offices to represent him in a Petition for Declaration of Nullity of Marriage filed before the Regional Trial Court (RTC) of Makati City, Branch 143, docketed as Civil Case No. 95-224. The parties signed a "Fee Agreement," for the legal services to be rendered by respondent. The provision for payment of the legal services reads:

(a) seven and one-half (7 % ) of all cash recoveries, including damages, interests, attorney's fees and costs; as well as

(b) five percent (5 %) of the market value of all properties awarded to [the petitioner] by the court or obtained through the compromise agreement, valued at the time of recovery.2

However, on 5 December 1995, respondent withdrew its appearance as counsel of petitioner, due to policy differences. On 18 December 1995, respondent sent the termination billing3 for the services they rendered and billed petitioner the total amount of P1,000,000.00 plus 2% interest for every month of delay in payment, based on the provision for termination of services stated in their Fee Agreement, thus:

(C) Interest for late payment

All fees mentioned herein are payable within seven (7) days from receipt of our statement of account. It is understood that all late payments shall be subject to interest payment at the rate of 2 % per month of delay, a fraction of a month being considered as one month, counted from the date the fees shall fall due, without need of prior demand.

x x x x

(F) Termination Clause

It is understood that you may terminate our services at any time. In such an event, we shall be entitled to collect fees for legal services already performed and results obtained based on quantum meruit."4

On 7 March 1996, respondent filed with the RTC a Notice5 of Charging Lien over the properties of the spouses Bach.

On 5 February 1997, the RTC issued an Order6 directing the annotation of the charging lien in the amount of P1,000,000.00 on all the titles of the spouses Bach's personal and real properties enumerated in the notice of charging lien.

On 11 February 1999, respondent received a copy of the Order7 dated 8 June 1998, granting petitioner's Motion to Withdraw his petition in Civil Case No. 95-224.

Despite respondent's demands for his legal fees, petitioner failed and refused to pay. Thus, respondent filed a Complaint8 for a sum of money also before the RTC of Makati, Branch 148, docketed as Civil Case No. 99-514. Respondent prayed for the payment of the following: P1,000,000.00 as the latter's lawful fees for services rendered in Civil Case No. 95-224, plus 2% interest from date of final demand until paid; P250,000.00 as exemplary damages; P200,000.00 representing billable time spent in prosecuting the case, plus another P150,000.00 for any appeal taken; and P50,000.00 as litigation expenses and the cost of suit.

Within the period for filing an Answer, petitioner filed a Motion9 to dismiss on the ground that respondent's claim had already been paid, waived, abandoned or otherwise extinguished. Petitioner contended that prior to respondent's withdrawal as counsel in Civil Case No. 95-224, petitioner had already paid respondent's services in the total amount of P200,000.00. On 9 August 1999, the Motion to Dismiss was denied10 by the RTC for lack of merit. Petitioner failed to file his Answer; thus, he was declared in default and respondent was allowed to present its evidence ex parte.11

On 24 January 2002, the RTC rendered its judgment in favor of the respondent, the dispositive portion of which reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant and the latter is hereby ordered to pay the following:

1. The amount of P750,000.00 as plaintiff's lawful fees for services rendered under Civil Case No. 95-224, plus interest at the rate of 2% per month from the date of demand until paid;

2. P700,000.00 representing billable time which was spent in prosecuting this case;

3. P50,000.00 as and litigation expenses, and

4. Costs of suit.12

Not satisfied, petitioner appealed to the Court of Appeals, which modified the RTC Decision, thus:

WHEREFORE, Based on the foregoing premises, the instant appeal is PARTLY GRANTED and the appealed January 24, 2002 Decision of the Regional Trial Court of Makati City-Branch 148 in Civil Case No. 99-514 is hereby MODIFIED. Accordingly, the award of P700,000.00 representing billable time allegedly spent in the prosecution of the case a quo is hereby DELETED. All other aspects of the appealed DECISION are UPHELD.13

Hence, this Petition filed by petitioner Guenter Bach raising the following issues to wit:

WHETHER OR NOT UNDER THE CONCEPT OF QUANTUM MERUIT, THE AMOUNT OF P750,000.00 AS FEES FOR SERVICES RENDERED WITH INTEREST PEGGED AT 2% A MONTH FROM DATE OF DEMAND UNTIL FULLY PAID IS REASONABLE

WHETHER OR NOT THERE IS LEGAL BASIS TO AWARD P50,000.00 AS AND FOR LITIGATION EXPENSES AND COSTS OF SUIT.14

On the first issue, petitioner contends that the P750,000.00 awarded to the respondent by way of quantum meruit, with interest of 2% a month from date of demand until fully paid, is excessive, unreasonable and confiscatory. Thus, petitioner prays for reduction of the same.

Both the Court of Appeals and the trial court approved the attorney's fees in the total amounts of P750,000.00 plus 2 % interest for the services rendered by respondent in Civil Case No. 95-224. In this regard, the rule is that the issue of the reasonableness of attorney's fees based on quantum meruit is a question of fact, and well-settled is the rule that conclusions and findings of fact by the lower courts are entitled to great weight on appeal and will not be disturbed except for strong and cogent reasons. The findings of the Court of Appeals by itself, which are supported by substantial evidence, are almost beyond the power of review by the Supreme Court.15 Thus, in the exercise of the Supreme Court's power of review the findings of facts of the Court of Appeals are conclusive and binding on the Supreme Court. There are, however, recognized exceptions to this rule, namely: (1) when the findings are grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on misapprehension of facts; (5) when the findings of facts are conflicting; (6) when in making the findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both the appellee and the appellant; (7) when the findings are contrary to the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent; (10) when the findings of facts are premised on the supposed absence of evidence and contradicted by the evidence on record; and (11) when the Court of Appeals manifestly overlooked certain relevant facts not disputed by the parties, which if properly considered, would justify a different conclusion.16 Exceptions (4) and (11) are present in the case at bar, and so this Court shall make its own determination of the facts relevant for the resolution of the case.

Ordinarily, therefore, we would have remanded this case for further reception of evidence as to the extent and value of the services rendered by respondent to petitioner. However, so as not to needlessly prolong the resolution of a comparatively simple controversy, we deem it just and equitable to fix in the present recourse a reasonable amount of attorney's fees in favor of respondent.

There are two concepts of attorney's fees. In the ordinary sense, attorney's fees represent the reasonable compensation paid to a lawyer by his client for the legal services rendered to the latter. On the other hand, in its extraordinary concept, attorney's fees may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party.17

The issue in this case concerns attorney's fees in the ordinary concept. Generally, the amount of attorney's fees due is that stipulated in the retainer agreement which is conclusive as to the amount of the lawyer's compensation. In the absence thereof, the amount of attorney's fees is fixed on the basis of quantum meruit, i.e., the reasonable worth of the attorney's services. Courts may ascertain also if the attorney's fees are found to be excessive, what is reasonable under the circumstances.18 In no case, however, must a lawyer be allowed to recover more than what is reasonable, pursuant to Section 24, Rule 138 of the Rules of Court, which provides:

SEC. 24. Compensation of attorney's fees; agreement as to fees.- An attorney shall be entitled to have and recover from his client no more than a reasonable compensation for his services, with a view to the importance of the subject - matter of the controversy, the extent of the services rendered, and the professional standing of the attorney. No court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable. (Underscoring supplied.)

We have identified the circumstances to be considered in determining the reasonableness of a claim for attorney's fees as follows: (1) the amount and character of the service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or business in which the services were rendered; (4) the responsibility imposed; (5) the amount of money or the value of the property affected by the controversy or involved in the employment; (6) the skill and experience called for in the performance of the services; (7) the professional character and social standing of the attorney; (8) the results secured; and (9) whether the fee is absolute or contingent, it being recognized that an attorney may properly charge a much larger fee when it is contingent than when it is not.19

Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the following factors which should guide a lawyer in determining his fees:

(a) the time spent and extent of services rendered or required;

(b) the novelty and difficulty of the questions involved;

(c) the importance of the subject matter;

(d) the skill demanded;

(e) the probability of losing other employment as a result of the acceptance of the proffered case;

(f) the customary charges for similar services and the schedule of fees of the IBP Chapter to which he belongs;

(g) the amount involved in the controversy and the benefits resulting to the client from the service;

(h) the contingency or certainty of compensation;

(i) the character of the employment, whether occasional or established; and

(j) the professional standing of the lawyer.

In determining a reasonable fee to be paid to respondent as compensation for their services on quantum meruit, based on the factors abovequoted, it is proper to consider all the facts and circumstances obtaining in this case.

It is undisputed that respondent firm had rendered services as counsel for the petitioners in Civil Case No. 95-244. The services rendered consist of the following:

1. Respondent was able to annotate a notice20 of lis pendens on the property of Spouses Bach in Caloocan City covered by TCT No. C-12112, thereby preventing easy disposition of the property by Luzviminda Bach;

2. Respondent was likewise able to annotate a notice21 of lis pendens on the property of Spouses Bach in Pasig City covered by TCT No. 48223, thereby preventing disposition of the property by Luzviminda Bach;

3. Further, respondent annotated a notice22 of lis pendens on the property of Spouses Bach in Dasmarinas, Cavite covered by TCT No. T-339282, thereby preventing disposition of the property by Luzviminda Bach;

4. Additionally, respondent annotated a notice23 of lis pendens on the property of Spouses Bach in Tanza, Cavite, covered by TCT No. T-255263, thereby preventing disposition of the property by Luzviminda Bach;

5. Respondent also worked on the annotation of the notice24 of lis pendens on the property of Spouses Bach in Makati, covered by TCT No. S-62541, thereby preventing disposition of the property by Luzviminda Bach;

6. Respondent worked on the annotation of a notice of lis pendens on the property of Spouses Bach in Dasmariñas, Cavite, covered by TCT No. T-380848, thereby preventing disposition of the property by Luzviminda Bach;

7. Respondent annotated a notice25 of lis pendens on the property of Spouses Bach situated in Tagaytay City, covered by TCT No. P-705, thereby preventing disposition of the property by Luzviminda Bach;

8. Respondent filed the Petition26 for Declaration of Nullity of Marriage and Dissolution of the Conjugal Partnership of Gains of petitioner with his wife;

9. Respondent prepared an affidavit27 in favor of petitioner attesting to the fact of petitioner's marriage and their properties acquired during his marriage with Luzviminda Bach:

10. Respondent prepared an ex parte motion28 to declare petitioner's wife to have waived her right to file answer for failure to file the same within the period granted by law and to direct the public prosecutor to determine whether or not a collusion exist;

11. Respondent prepared a Petition29 for appointment of a receiver and to compel petitioner's wife to render an accounting;

12. Other services included the filling of several oppositions30 to certain motions filed by petitioner's wife;

13. Respondent filed a motion31 to set the case for preliminary investigation;

14. Respondent filed an ex parte motion32 to declare petitioner's wife in default;

15. Respondent submitted a supplemental comment33 on the motion for leave to withdraw funds from Certificate of Participation filed by petitioner's wife;

16. Respondent filed a manifestation and motion34 praying the court to direct petitioner's wife to designate her lead counsel in the case;

17. Respondent prepared a Reply35 to comments on opposition of petitioner;

18. Respondent was able to secure an Order36 from the said court freezing the United Coconut Planters Bank (UCPB) account in the name of petitioner's wife, Luzviminda Bach, containing about P6,500,000.00, representing the balance of the proceeds from the sale of their conjugal property in Pasig City;

19. Respondent represented petitioner in numerous hearings in Civil Case No. 95-224, evidenced by the signatures of the lawyers of respondent Law Firm in the minutes dated 25 April 1995, 27 April, 1995, 14 June 1995, 27 June 1995, 1 August 1995, 11 August 1995, 22 September 1995,10 October 1995, 17 October 1995, 1 December 1995, 7 December 1995, 29 March 1996 and 16 January 1997;37

20. Conducted several preliminary and post litigation conferences in the proceedings for preliminary injunction leading to the freezing of the bank account of the parties; and

21. Prepared and sent out numerous letters to third parties and entities to protect the interest of petitioner and notices to petitioner updating him of the status of the case and the courses of action taken by respondent Law Firm.38

In sum, the services rendered by the respondent as enumerated above and as admitted39 by Atty. Mario Ongkiko during the ex parte hearing, consist of annotating notice of lis pendens on the conjugal properties of petitioner and his wife; filing the Petition for Declaration of Nullity of Marriage; preparing and filing various pleadings and documents relevant to the case; obtaining a freeze order of petitioner's funds in the UCPB; attending hearings in Civil Case No. 05-224, and sending notices to petitioner updating the latter of the status of the case. Nothing in Civil Case No. 95-224 so far appears complicated and no extra ordinary skill was needed for lawyers of respondent Law Firm to accomplish what they had done in the case before they withdrew their appearance. We do not find herein a situation so intricate that demands more than a careful scrutiny of the legal matters involved. These are simply the normal duties of a lawyer that he is bound by law to render to his clients with utmost fidelity for which his client must not be burdened to pay an extra price. It bears stressing that at the time respondent firm withdrew their appearance due to policy differences with petitioner, the case was still in its initial stage.

Guided by the above yardstick and so much of the pertinent data as are extant in the records of this case and in the exercise of our sound discretion, we hold that the amount of P500,000.00 is a reasonable and fair compensation for the legal services rendered by respondent to the petitioner.

The imposition of legal interest on the amount payable to private respondent as attorney's fees is unwarranted. Even as we agree that parties can freely stipulate on the terms of payment, still the imposition of interest in the payment of attorney's fees is not justified. In the case of Cortes v. Court of Appeals,40 we ruled that Article 220941 of the Civil Code does not even justify the imposition of legal interest on the payment of attorney's fees as it is a provision of law governing ordinary obligations and contracts. It deleted the 6% interest imposed by the appellate court on the payment of attorney's fees. It ratiocinated by citing Mambulao Lumber Co. v. Philippine National Bank,42 thus:

Contracts for attorney's services in this jurisdiction stands upon an entirely different footing from contracts for the payment of compensation for any other services. x x x [A]n attorney is not entitled in the absence of express contract to recover more than a reasonable compensation for his services; and even when an express contract is made, the court can ignore it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the court to be unreasonable. This is a very different rule from that announced in section 1091 of the Civil Code with reference to the obligation of contracts in general, where it is said that such obligation has the force of law between the contracting parties. Had the plaintiff herein made an express contract to pay his attorney an uncontingent fee of P2,115.25 for the services to be rendered in reducing the note here in suit to judgment, it would not have been enforced against him had he seen fit to oppose it, as such a fee is obviously far greater than is necessary to remunerate the attorney for the work involved and is therefore unreasonable. In order to enable the court to ignore an express contract for attorney's fees, it is necessary to show, as in other contracts, that it is contrary to morality or public policy (Art.1255, Civil Code). It is enough that it is unreasonable or unconscionable. (Emphases supplied.)

We have held that lawyering is not a moneymaking venture and lawyers are not merchants.43 Law advocacy, it has been stressed, is not capital that yields profits. The returns it births are simple rewards for a job done or service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from governmental interference, is impressed with a public interest, for which it is subject to State regulation.44

A lawyer is not merely the defender of his client's cause and a trustee of his client's cause of action and assets; he is also, and first and foremost, an officer of the court and participates in the fundamental function of administering justice in society.45 It follows that a lawyer's compensation for professional services rendered are subject to the supervision of the court, not just to guarantee that the fees he charges and receives remain reasonable and commensurate with the services rendered, but also to maintain the dignity and integrity of the legal profession to which he belongs. Upon taking his attorney's oath as an officer of the court, a lawyer submits himself to the authority of the courts to regulate his right to charge professional fees.46

Though we reduced the award of attorney's fees and disallowed the imposition of interest thereon, the fact that an attorney plays a vital role in the administration of justice underscores the need to secure to him his honorarium lawfully earned as a means to preserve the decorum and respectability of the legal profession. A lawyer is as much entitled to judicial protection against injustice, imposition of fraud on the part of his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his capital consisting only of his brains and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation. It would be ironic if after putting forth the best in him to secure justice for his client, he himself would not get his due.47

Thus, the Court of Appeals did not err in awarding expenses of litigation. Article 2208, paragraphs 2, 5 and 11, of the Civil Code, authorize the recovery of such fees "(2) When the defendant's act or omission has compelled the plaintiff to litigate x x x or to incur expenses to protect his interest; x x x (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; x x x and (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered." Considering the fact that respondent was drawn into this litigation by petitioner to protect and defend their interest and taking into account the services already rendered by respondent to petitioner, the sum of P30,000.00 as expenses of litigation and cost of suit would be reasonable under the premises.

WHEREFORE, the Decision appealed from is AFFIRMED WITH MODIFICATIONS to the effect that the attorney's fees awarded to respondent is REDUCED to P500,000.00, the legal interest of 2% on the amount due to respondent is DELETED, and the award of litigation expenses is REDUCED to P30,000.00.

SO ORDERED.

Panganiban, C.J., Chairperson, Ynares-Santiago, Austria-Martinez, Callejo, Sr., J.J., concur.


Footnotes

1 Penned by Associate Justice Elvi John S. Asuncion with Associate Justices Godardo A. Jacinto and Lucas P. Bersamin, concurring; rollo, pp. 16-22.

2 Records, Vol. I, p. 11.

3 Id. Vol. II, pp. 380-381.

4 Id. , Vol. I, pp. 11-12.

5 Id. at 154-158.

6 Id. at 38.

7 Id. at 22.

8 Id. at 1-8.

9 Id. at 29-35.

10 Id. at 55-60.

11 Id. at 65. Order dated 19 November 1999.

12 Id. at 236.

13 Rollo, pp. 21-22.

14 Id. at 7.

15 Pimentel v. Court of Appeals, 366 Phil. 494, 501 (1999), citing Atlantic Gulf and Pacific Company of Manila, Inc. v. Court of Appeals, 317 Phil. 707, 713 (1995).

16 Langkaan Realty Development, Inc v. United Coconut Planters Bank, G.R. No. 139437, 8 December 2000, 347 SCRA 542, 549; Nokom v. National Labor Relations Commission, 390 Phil. 1228, 1242-1243 (2000); Commissioner of Internal Revenue v. Embroidery and Garments Industries (Phils.), Inc., 364 Phil. 541, 546-547 (1999); Sta. Maria v. Court of Appeals, 349 Phil. 275, 282-283 (1998).

17 Traders Royal Bank Employees Union-Independent v. National Labor Relations Commission, 336 Phil. 705, 717 (1997).

18 Sesbreno v. Court of Appeals, 314 Phil. 884, 894 (1995).

19 Research and Services Realty, Inc. v. Court of Appeals, 334 Phil. 652, 668 (1997).

20 Records, Vol. 2, pp. 344-345.

21 Id. at 338-339.

22 Id. at 335-336.

23 Id. at 332-333.

24 Id. at 342-343.

25 Id. at 430-341.

26 Id. at 278-299.

27 Id., Exhibit R-1, pp. 384-395.

28 Id., Exhibit R-2, pp. 396- 397.

29 Id., Exhibit R-3, pp. 399-407.

30 Id., Exhibits R-4, pp. 408-413; R-5, pp. 414-417; R-8 pp. 423-427; R-9, pp. 428-430; Exhibit R-12, pp. 438-440;and Exhibit R-14, pp. 447-450.

31 Id., Exhibit R-6, pp. 418-419.

32 Id., Exhibit R-7, pp. 420-422.

33 Id., Exhibit R-10, pp 431-433.

34 Id., Exhibit R-11, pp. 434-437.

35 Id., Exhibit R-13, pp. 441-446.

36 Records, Vol. 2, p. 301.

37 Id. at 302-315.

38 Id. at 324-380.

39 TSN, 10 September 2001, pp. 10-11.

40 443 Phil. 42, 54 (2003).

41 Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six percent per annum.

42 130 Phil. 366, 381-382 (1968).

43 Canon 1, Canons of Professional Ethics.

44 Metropolitan Bank & Trust Company v. Court of Appeals, 181 SCRA 367, 377, citing Canlas v. Court of Appeals, G.R. No. L-77691, 8 August 1988, 164 SCRA 160.

45 Pineda v. Atty. De Jesus, G.R. No. 155224, 23 August 2006.

46 Sumaoang v. Judge, RTC, Br. XXXI, Guimba, Nueva Ecija, G.R. No. 78173, 26 October 1992, 215 SCRA 136, 143.

47 Agpalo, LEGAL ETHICS (4th Ed., 1989), pp. 302-303.


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