G.R. No. L-23467. March 27, 1968
AMALGAMATED LABORERS’ ASSOCIATION AND/OR FELISBERTO M. JAVIER FOR HIMSELF AND AS GENERAL PRESIDENT, ATTY. JOSE UR. CARBONELL, ET AL., PETITIONERS, VS. HON. COURT OF INDUSTRIAL R…
SANCHEZ, J.:
Controversy over
attorneys’ fees for legal services rendered in CIR Case No. 70-ULP-Cebu.
The background facts are
as follows:
On May 30, 1956, Florentino Arceo and 47 others
together with their union, Amalgamated Laborers’ Association, and/or Felisberto Javier,
general president of said union, lodged a complaint[1] in the in the Court of Industrial Relations
(CIR), for unfair labor practices specified in Sec. 4 (a) 1, 2, 3 and 4 of the Industrial Peace
Act. Made respondents were their former
employer, Binalbagan Sugar Central Company, Inc. (Biscom), Rafael Jalandoni, its
president and general manager; Gonzalo Guillen, its
chief engineer and general factory superintendent; and Fraternal Labor
Organization and/or Roberto Poli, its president.
Failing in their attempts
to dismiss the complaint (motions to dismiss dated June 30, 1956 and July 6, 1956),[2] respondents Biscom, Jalandoni, and Guillen,
on July 9, 1957,
answered and counterclaimed. Respondents
Fraternal Labor Union and Poli also filed their
answer dated July 12, 1957.
With the issues joined,
the case on the merits was heard before a trial commissioner.
At the hearings, only ten of the forty-eight complainant laborers
appeared and testified. Two of these ten
were permanent (regular) employees of respondent company; the remaining eight
were seasonal workers. The regular
employees were Arsenio Reyes and Fidel Magtubo. Seasonal
workers were Catalino Bangoy,
Juan Fernandez, Jose Garlitos, Dionisio
Pido, Santiago Talagtag, Dominador Tangente, Felimon Villaluna and Brigido Casas.
On November 13, 1962, CIR, thru Associate Judge Arsenio I. Martinez, rendered judgment, which provides, inter
alia, that the two regular employees (Reyes and Magtubo)
be reinstated “to their former positions, without loss of seniority and other benefits which should have accrued to
them had they not been illegally dismissed, with full back wages from the time
of their said dismissals up to the time of their actual reinstatements, minus
what they have earned elsewhere in the meantime,” and that the eight
seasonal workers “be readmitted to their positions as seasonal workers of respondent company (Biscom),
with back wages as seasonal
workers from the time they were not rehired at the start of the 1955-1956
milling season on October 1, 1955 up to the time they are actually reinstated,
less the amount earned elsewhere during the period of their lay-off.”
Respondents Biscom, Jalandoni
and Guillen appealed direct to this Court.[3] On March 28, 1963, this Court dismissed the appeal, without
costs. Ground: Petitioners therein did not seek reconsideration
of CIR’s decision of November 13, 1962.
The judgment became final.
Upon the ten complainants’ motion to name an official computer to
determine the actual money due them, CIR, on June 4, 1963, directed the Chief Examiner of its Examining
Division to go to the premises of Biscom and compute
the back wages due the ten complainants.
On August 9,
1963, the Chief
Examiner reported that the total net back wages due the ten complainants were P79,755.22. Biscom and
the complainants moved for reconsideration:
Biscom on August 17, 1963;
complainants on September 24, 1963.
In the interim, Atty.
Leonardo C. Fernandez (a respondent herein) filed on July 15, 1963 in the same
case – CIR Case No. 70 ULP-Cebu – a “Notice of
Attorney’s Lien.” He alleged therein that he had been the attorney of
record for the laborers in CIR Case No. 70-ULP-Cebu “since the inception
of the preliminary hearings of said case up to the Supreme Court on appeal, as chief counsel thereof”; that he “had actually rendered legal
services to the laborers who are subject of this present litigation [CIR Case
No. 70-ULP-Cebu] since the year 1956, more or less”; that the
laborers “have voluntarily agreed to give [him], representing his
attorney’s fees on contingent basis such amounts equivalent to 25% thereof
which agreement is evidenced by a Note”; and that the 25% attorney’s fee
so contracted is “reasonable and proper taking into consideration the length
of services he rendered and the nature of the work actually performed by
him.”
On September
25, 1963, Atty.
Fernandez filed an “Amended Notice of Attorney’s Lien,” which in part
reads:
“3. That the laborers, subject of this present
litigation, sometime on February 3, 1956, had initially voluntarily agreed to
give Undersigned Counsel herein, representing his Attorney’s fees on contingent
basis, such amounts as equivalent to Thirty Per Cent (30%) of whatever money
claims that may be adjudicated by this Honorable Court, copy of said Agreement,
in the local Visayan dialect and a translation of the
same in the English language are hereto attached as annexes ‘A’ ‘A-1’ hereof;
4. That subsequently thereafter, when the
above-entitled Case was already decided in their favor, Arsenio
Reyes, in behalf of his co-laborers who are also Complainants in this Case
begged from the Undersigned Counsel herein that he reduce his attorney’s fees
to Twenty-Five Per Cent (25%) only for the reason that they have to share and
satisfy also Atty. Jose Ur. Carbonell in the
equivalent amount of Five Per Cent (5%) although the latter’s actual services
rendered was so insignificant thereof;
5. That because of the pleadings of said Arsenio Reyes, who is the President of said Union, the Undersigned
Counsel herein finally agreed and consented that his attorney’s fees be reduced
to only Twenty-Five Per Cent (25%) instead of Thirty Per Cent (30%) as
originally agreed upon in 1956.”
On October 7, 1963,
Atty. Jose Ur. Carbonell
(a petitioner herein) filed in court a document labelled
“Discharge” informing CIR of the discharge, release and dismissal –
thru a union board resolution (attached
thereto as Annex A thereof)- of Atty. Leonardo C. Fernandez as one of the
lawyers of the complainants in CIR Case No. 70-ULP-Cebu, effective February 28,
1963.
On October 14, 1963,
Atty. Fernandez replied. He averred that
the grounds for his discharge specified in the board resolution were
“malicious and motivated by greed and ungratefulness” and that the unjustifiable
discharge did not affect the already stipulated contract for attorneys’ fees.
On March 19, 1964,
CIR Judge Arsenio
I. Martinez
resolved Biscom’s and complainants’ motions for
reconsideration objecting to the Chief Examiner’s Report and also respondent
Fernandez’ Amended Notice of Attorney’s Lien.
Judge Martinez’ order
reads in part:
“(b) Respondent company is further directed to
deposit the amount representing 25% of P79,755.22 with the Cashier of this
Court, as attorney’s fees;
x x x
(d) The amount representing attorney’s fees to be
deposited by the respondent company is hereby awarded and granted to Atty.
Leonardo C. Fernandez, and he may collect the same from the Cashier of the
Court upon the finality of this order, subject to existing auditing procedures;
x x x.”
Biscom complied with the order of deposit.[4]
On April 10, 1964,
Atty. Carbonell moved to reconsider the March 19, 1964 order with respect to
the award of attorneys’ fees. Amongst
his grounds are that CIR has no jurisdiction to determine the matter in
question, and that the award of 25% as attorneys’ fees to Atty. Fernandez is excessive, unfair and illegal. This motion was denied on April 28, 1964 by CIR en banc.
On June 9,
1964, a motion for
reconsideration of the April 28, 1964 resolution was filed by Atty. Carbonell. This was
amplified by a similar motion filed on June 11, 1964.
On June 25, 1964,
two things happened: First. CIR en banc
denied the motion of June 11, 1964. Second. On Atty. Fernandez’ motion, Judge Martinez
authorized the Cashier of the court to disburse to Fernandez the amount of
P19,938.81 representing attorneys’ fees and deducting therefrom
all legal fees incident to such deposit.
Petitioners herein, Atty. Carbonell,
Amalgamated Laborers’ Association, and the ten employees, appealed from the June 25, 1964 resolution of CIR, direct to this Court.
1. Petitioners press upon this Court the view that CIR is bereft of authority to adjudicate contractual disputes over attorneys’
fees. Their reasons: (1) a dispute arising from contracts for
attorneys’ fees is not a labor dispute and is not one among the cases ruled to be within CIR’s authority; and (2) to consider such a dispute to be a mere incident to a case over which CIR may validly assume
jurisdiction is to disregard the special and limited nature of said court’s jurisdiction.
These arguments are
devoid of merit.
The present controversy over attorneys’ fees is but an epilogue
or a tail-end feature of the main case, CIR Case No. 70-ULP-Cebu, which
undoubtedly is within CIR’s jurisdiction. And, it has been held that “once the
Court of Industrial Relations has acquired jurisdiction over a case under the
law of its creation, it retains that jurisdiction until the case is completely
decided, including all the incidents related
thereto.”[5] Expressive of the rule on this point is this
–
“4. It is well settled that:
‘A grant of jurisdiction implies the necessary and usual incidental
powers essential to effectuate it, and every regularly constituted court has
power to do all things reasonably necessary for the administration of justice
within the scope of its jurisdiction, and for the enforcement of its judgments
and mandates, even though the court may thus
be called upon to decide matters which
would not be within its cognizance as original causes of action.
‘While a court may be expressly granted the incidental powers
necessary to effectuate its jurisdiction, a grant of jurisdiction, in the
absence of prohibitive legislation, implies
the necessary and usual incidental powers essential to effectuate it (In re
Stinger’s Estate, 201 P. 693), and, subject to existing laws and constitutional
provisions, every regularly constituted court has power to do all things that
are reasonably necessary for the administration of justice within the scope of its jurisdiction, and for the enforcement
of its judgments and mandates. So
demands, matters, or questions ancillary or
incidental to, or growing out
of, the main action, and coming within the
above principles, may be taken cognizance
of by the court and determined, since
such jurisdiction is in aid of its
authority over the principal matter, even
though the court may thus be called
on to consider and decide matters which,
as original causes of action, would not
be within its cognizance (Bartholomew vs. Shipe, 251 S.W. 1031),’ (21 C.J.S. pp. 136-138.)
Thus, in Gomez vs. North Camarines Lumber Co., G.R.
No. L-11945, August 18, 1958,
and Serrano vs. Serrano, G.R. No. L-19562, May 23, 1964, we held that the court having jurisdiction
over the main cause of action, may grant the relief incidental thereto, even if
they would otherwise, be outside its competence.”[6]
To direct that the
present dispute be lodged in another court as petitioners advocate would only
result in multiplicity of suits,[7] a situation abhorred by the rules. Thus it is, that usually the application to fix the attorneys’ fees is
made before the court which renders the judgment.[8] And,
it has been observed that “[a]n approved procedure, where a charging lien
has attached to a judgment or where money has been paid into court, is for the attorney to file an intervening
petition and have the amount and extent of his lien judicially
determined.”[9] Appropriately to be recalled at this
point is the recent ruling in Martinez vs. Union de Maquinistas, 1967A Phild.
142, 144, January 30, 1967, where, speaking
thru Mr. Justice Arsenio P. Dizon,
explicit pronouncement was made
by this Court that: “We are of the opinion that since the
Court of Industrial Relations obviously had jurisdiction over the main cases, x x x it likewise had full jurisdiction to consider and decide all matters collateral
thereto, such as claims for attorney’s fees made by the members of the bar who appeared
therein”.[10]
2. The parties herein join hands in one point – the ten (10)
successful complainants in CIR Case No. 70-ULP-Cebu should pay as attorneys’
fees 30% of the amount adjudicated by the court in the latter’s favor
(P79,755.22).
They are at odds,
however, on how to split the fees.
Respondent Atty. Fernandez claims twenty-five per cent (25%) of
the 30% attorneys’ fees. He explains
that upon the plea of Arsenio Reyes, union president
and one of the 10 successful complainants, he had to reduce his fees to 25%
since “they have to share and satisfy also Atty. Jose Ur. Carbonell in the equivalent amount of Five Per Cent
(5%).” Atty. Fernandez exhibited a contract purportedly dated February 3, 1956 – before the 48
employees have even filed their complaint in CIR. The stipulated fee is 30% of whatever amount the
ten might recover. Strange
enough, this contract was signed only by 8 of the 10 winning claimants. What happened to the others? Why did not the union intervene in the
signing of this contract? Petitioners dispute said contract. They say that Atty. Fernandez required the
ten to sign the contract only after the receipt of the decision.
Petitioners, on the other hand, contend that the verbal agreement
entered into by the union and its officers thru its President Javier and said
two lawyers, Atty. Carbonell and Atty. Fernandez, is
that the 30% attorneys’ fees shall be divided equally (“share and share
alike”) amongst Atty. Carbonell, Atty. Fernandez
and Felisberto Javier, the union president.
After hearing, CIR Associate Judge
Arsenio I.
Martinez awarded 25% attorneys’
fees to respondent Atty. Fernandez. CIR
noted that “the active conduct and prosecution of the above-entitled case
was done by Atty. Fernandez up to the appeal in the Supreme Court,” and
that petitioner Atty. Carbonell manifested that
“Atty. Leonardo C. Fernandez was the counsel mainly responsible for the
conduct of the case.” It noted,
too, that petitioner Atty. Carbonell did not file any
notice of Attorney’s Lien.
3. We strike down the alleged oral agreement that the union
president should share in the attorneys’ fees.
Canon 34 of Legal Ethics
condemns this arrangement in terms clear and explicit. It says: “No division of fees for legal services
is proper, except with another lawyer, based upon a division of service or
responsibility.” The union
president is not the attorney for the laborers.
He may seek compensation only as such president. An agreement whereby a union president is
allowed to share in attorneys’ fees is immoral. Such a contract we emphatically reject. It cannot be justified.
4. A contingent fee contract specifying the percentage of recovery
an attorney is to receive in a suit “should be reasonable under all the
circumstances of the case, including the risk and uncertainty of the
compensation, but should always be subject to the supervision of a court, as to
its reasonableness.”[11]
Lately, we said:[12]
“The principle that courts should reduce stipulated
attorney’s fees whenever it is found under the circumstances of the case that
the same is unreasonable, is now deeply rooted in this jurisdiction. x x x.
x x x
Since then this Court has invariably fixed
counsel fees on a quantum meruit basis
whenever the fees stipulated appear excessive, unconscionable, or unreasonable,
because a lawyer is primarily a court officer charged with the duty of
assisting the court in administering impartial justice between the parties, and
hence, the fees should be subject to judicial control. Nor should it be ignored that sound public
policy demands that courts disregard stipulations for counsel fees, whenever
they appear to be a source of speculative profit at the expense of the debtor
or mortgagor. See, Gorospe
et al. v. Gochangco, G.R. No. L-12735, October 30, 1959. And it is not material that the present
action is between the debtor
and the creditor, and not between attorney and client. As courts have power to fix the fee as
between attorney and client, it must necessarily have the right to say whether
a stipulation like this, inserted in a mortgage contract, is valid. Bachrach v. Golingco,
39 Phil. 138.”
In the instant case, the stipulated 30% attorneys’ fee is
excessive and unconscionable.
With the exception of Arsenio Reyes
who receives a monthly salary of P175, the other successful complainants were mere wage earners paid a daily rate
of P4.20 to P5.00.[13] Considering the long period of time that they
were illegally and arbitrarily deprived of their just pay, these laborers
looked up to the favorable money
judgment as a serum to their
pitiful economic malaise. A thirty per
cent (30%) slice therefrom immensely dilutes the
palliative ingredient of this judicial antidote.
The ten complainants involved herein are mere laborers. It is
not far-fetched to assume that they have not reached an educational attainment
comparable to that of petitioner Carbonell or
respondent Fernandez who, on the other hand, are lawyers. Because of the inequality of the situation
between laborers and lawyers, courts should go slow in awarding huge sums by
way of attorneys’ fees based solely on contracts.[14]
For, as in the present case, the real objective of the CIR judgment in CIR Case
No. 70-ULP-Cebu is to benefit the complainant laborers who were unjustifiedly dismissed from service. While it is true that laborers should not be
allowed to develop that atavistic proclivity to bite the hands that fed them,
still lawyers should not be permitted to get a lion’s share of the benefits due
by reason of a worker’s labor. What is
to be paid to the laborers is not a windfall but a product of the sweat of
their brow. Contracts for legal services
between laborer and attorney should then be zealously scrutinized to the end
that a fair share of the benefits be not denied the former.
5. An examination of the record of this case will readily show
that an award of twenty-five per cent (25%) attorneys’ fees reasonably
compensates the whole of the legal services rendered in CIR Case No.
70-ULP-Cebu. This fee must be shared by
petitioner Atty. Carbonell and respondent Atty.
Fernandez. For, after all, they are the counsel of record
of the complainants. Respondent Atty.
Fernandez cannot deny this fact. The
pleadings filed even at the early stages of the proceedings reveal the
existence of an association between said attorneys. The pleadings were filed under the name of
“Fernandez & Carbonell.” This imports a
common effort of the two. It cannot be
denied though that most of those pleadings up to judgment were signed for
Fernandez & Carbonell by respondent Fernandez.
We note that a break-up in the professional tie-up between
Attorneys Fernandez and Carbonell began when
petitioner Atty. Carbonell, on November 26, 1962, complained to CIR that
respondent Atty. Fernandez “failed to communicate with him nor to inform
him about the incidents of this case.”
He there requested that he be furnished “separately copies of the
decision of the court and other pleadings and subsequent orders as well as
motions in connection with the case.”
Subsequent pleadings filed in the case unmistakably show the widening
rift in their professional relationship.
Thus, on May 23, 1963,
a “Motion to Name and Authorize Official Computer” was filed with
CIR. On the same day, a “Motion to
Issue Writ of Execution” was also registered in the same court. Although filed under the name of “Carbonell & Fernandez,” these pleadings were
signed solely by petitioner Atty. Carbonell.
On September 16, 1963,
an “Opposition to respondent Biscom’s Motion for
Reconsideration” was filed by petitioner Atty. Carbonell. On September
24, 1963, he filed a “Motion for Clarification” of the November 13, 1962 judgment of CIR
regarding the basic pay of Arsenio Reyes and Fidel Magtubo. On September 24, 1963, he also filed a
“Motion to Reconsider Report of Chief Examiner.” These, and other pleadings that were filed later were signed solely by petitioner Atty. Carbonell, not in the name of “Carbonell
& Fernandez.” While it was
correctly observed by CIR that a good portion of the court battle was fought by
respondent Atty. Fernandez, yet CIR cannot close its eyes to the legal services also rendered by Atty. Carbonell. For,
important and numerous, too, were his services.
And, they are not negligible. The
conclusion is inevitable that petitioner Atty. Carbonell
must have a share in the twenty-five per cent (25%) attorneys’ fees awarded
herein. As to how much, this is a
function pertaining to CIR.
6. We note that CIR’s cashier was
authorized on June 25, 1964
to disburse to Atty. Leonardo C. Fernandez the sum of P19,938.81 which is 25%
of the amount recovered. In the event
payment actually was made, he should be required to return whatever is in
excess of the amount to which he is entitled in line with the opinion expressed
herein.[15]
IN VIEW OF THE FOREGOING, the award of twenty-five per cent
(25%) attorneys’ fees solely to respondent Atty. Fernandez contained in CIR’s order of March 19, 1964 and affirmed by said court’s en
banc resolutions of April 28, 1964 and June 25, 1964, is hereby set
aside; and the case is hereby remanded to the Court of Industrial Relations
with instructions to conduct a hearing on, and determine, the respective
shares of Attorney Leonardo C. Fernandez and Attorney Jose Ur. Carbonell in the
amount of P19, 938.81 herein awarded as attorneys’ fees for both.
No costs.
SO ORDERED.
Reyes, Dizon, Makalintal,
Bengzon, Zaldivar, Ruiz
Castro, Angeles, and Fernando, JJ., concur.
Concepcion, C.J., on leave.
[1]
CIR Case No. 70-ULP-Cebu, “Amalgamated Laborers’
Association, et al., Complainants, vs. Binalbagan
Sugar Central Company, Inc., et al., Respondents.”
[2]
See: CIR order dated June 25,
1957.
[3]
G.R. No. L-20572, entitled “Binalbagan Sugar
Central Co., Inc., et al., Petitioners, vs. Amalgamated Laborers’
Association, et al., Respondents.”
Notice of Appeal was filed below on December 3, 1962.
[4]
See: Compliance
filed by Biscom on April 7, 1964.
[5]
Cebu Portland Cement Co. vs. Court of
Industrial Relations, 94 Phil. 509, 514, citing cases; emphasis
supplied.
[6]
Philippine Air Lines Employees’ Association vs. Philippine Air Lines,
Inc., G.R. No. L-18559, June 30, 1964;
emphasis supplied.
[7]
Fabie vs. Inocencio,
84 Phil. 857, 860.
[8]
Palanca vs. Pecson,
94 Phil. 419, 423. See also: Dahlke vs. Viña, 51 Phil. 707, 711; Apo
Workers Union vs. Castillo, G.R. No. L-7480, October 31, 1955; Olave vs.
Canlas, G.R. No. L-12709, February 28, 1962; Cruz vs. Court of
Industrial Relations, G.R. No. L-18277, August
31, 1963.
[9]
7 Am. Jur. 2d, p. 215.
[10]
Emphasis supplied.
[11]
Canon 13, Code of Legal Ethics. See: Sec. 24, Rule 138 of the Revised Rules of
Court
[12]
Mambulao Lumber Company vs. Philippine
National Bank, G.R. No. L-22973, January
30, 1968.
[13] See:
Appendix 2 of the Report of the Chief Examiner.
[14]
Article 24 of the New Civil
Code provides: “In all contractual, property or other relations, when one
of the parties is at a disadvantage
on account of his moral dependence, ignorance, indigence, mental weakness,
tender age or other handicap, the courts must be vigilant for his
protection.”
[15]
Espere vs. Santos
(Resolution), Adm. Case 151, April 30,
1955.