GREGORIO E. FAJARDO, PETITIONER, VS. COURT OP INDUSTRIAL RELATION, JOSE C. ESPINAS AMD SISENANDO VILLALUS RESPONDENTS.

Fajardo versus Court of Industrial Relations

The Case

This is a petition for certiorari and mandamus brought by Attorney Gregorio Fajardo against the Court of Industrial Relations, joined by Attorneys Jose Espinas and Sisenando Villaluz as respondents. Fajardo asks the Supreme Court to reverse the orders of the Court of Industrial Relations, sitting en banc, which denied his claim for attorney's fees arising from his representation of one hundred thirty-eight non-union employees of the Manila Railroad Company. The case matters because it fixes the rule on a lawyer's compensation for services that merely extend to his clients a benefit already won by others, and it clarifies when an attorney's lien may attach to the wages of non-union workers.

Procedural History

The controversy began in two cases before the Court of Industrial Relations. In October 1958 that court granted a temporary monthly salary increase of fifteen pesos, effective July 1, 1957, to all employees of the Manila Railroad Company affiliated with two unions, the Union de Maquinistas, Fogoneros y Motormen and the Union de Empleados de Trenes. On November 19, 1958, Kapisanan Ng Mga Manggagawa sa MRRCo., as intervenor through Attorney Sisenando Villaluz, moved that the increase be extended to its members. The Company opposed, claiming the increase was intended only for permanent employees who were on strike on October 6 and 7, 1957. On October 19, 1959, after hearing, the Court of Industrial Relations ordered the Company to pay the fifteen-peso increase to the members of the intervenor.

On November 9, 1959, one hundred thirty-eight employees who were not members of the unions, through Attorney Fajardo, moved for leave to intervene and asked that the increase be extended to them under the Collective Bargaining Agreement of November 4, 1957. The Company opposed. On January 11, 1960, the trial judge denied the motion to intervene. On January 18, 1960, the intervenors, through Attorneys Fajardo, Santiago and Villaluz, moved for reconsideration. On January 6, 1961, the Court en banc granted the motion for reconsideration, allowing the intervenors to intervene and litigate their claims, and returned the records to the trial court for further proceedings.

On October 18, 1961, Attorneys Fajardo, Villaluz and Santiago filed a joint motion praying for an award of attorney's fees to be paid out of the accumulated salary increase due to the non-union employees, and for an injunction against direct payment to those employees until the question of fees was decided. On October 30, 1961, the Court issued an order recognizing the attorney's lien of Attorneys Villaluz, Santiago and Espinas, but denying Fajardo's claim on the ground that his intervention was limited to the filing of the petition to intervene, which came after the temporary increase had already been granted. On November 20, 1961, Fajardo moved for reconsideration, which the Court en banc denied. Hence this petition for review.

Facts

The Manila Railroad Company had granted, by order of the Court of Industrial Relations in October 1958, a temporary monthly salary increase of fifteen pesos to its employees affiliated with two unions, effective July 1, 1957. The union Kapisanan Ng Mga Manggagawa sa MRRCo. then intervened and succeeded in having the increase extended to its own members by order of October 19, 1959.

One hundred thirty-eight employees who belonged to no union, through Attorney Fajardo, sought to intervene and to share in the same increase under the Collective Bargaining Agreement. Their motion was initially denied by the trial judge in January 1960, but the Court en banc reversed that denial in January 1961 and allowed them to litigate their claims, returning the records for further proceedings.

When the Company was about to pay the increase to the non-union employees as well, the three lawyers filed a joint motion for attorney's fees. The Court recognized the liens of Villaluz, Santiago and Espinas but denied Fajardo's claim, finding that his intervention came after the increase had already been granted. Fajardo sought reconsideration, which was denied, prompting his petition to the Supreme Court.

Issues

• Whether or not Attorney Fajardo rendered legal services to the one hundred thirty-eight non-union intervenors entitling him to reasonable attorney's fees.
• Whether or not the Court of Industrial Relations erred in denying his claim for attorney's fees on the ground that his intervention was limited to the filing of the motion to intervene after the temporary increase had already been granted.
• Whether or not the amount of attorney's fees should be computed on the basis of the full benefit awarded to his clients or only on the benefit actually produced by his services.

Applicable Provisions

Article 2208 of the Civil Code, on when attorney's fees may be recovered, bears on the claim for compensation:

In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen's compensation and employer's liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

This provision frames the Court's power to award reasonable compensation to counsel for services rendered to clients who benefited from the proceedings.

Ruling

On the first issue, the Court held that Fajardo did render legal services to the one hundred thirty-eight intervenors. The record showed that he filed in their behalf a motion for leave to intervene which also prayed that the temporary increase be extended to them, and that he appeared in court for his clients on November 9, on December 12, 1959, and during the hearings en banc held on March 10, 1960 and October 25, 1961, contrary to the lower court's finding that he appeared only once. The Court therefore held that he is entitled to a reasonable compensation.

On the second issue, the Court rejected the reasoning that denied his claim. Since his services produced a benefit for his clients, the denial of fees could not stand, and the order recognizing the liens of the other counsel while denying his own was modified.

On the third issue, the Court calibrated the fee to the benefit actually produced. Considering that his services resulted only in extending to his clients the benefits of the temporary increase already granted to the permanent employees of the Company, the Court held that his fees shall be computed on the basis of two and one-half percent of the total amount to be awarded to the former by reason of said temporary increase.

Doctrine

A lawyer who renders actual legal services to clients in a labor proceeding is entitled to reasonable attorney's fees, and the mere fact that his intervention came after a benefit had already been granted to others does not defeat his claim where his services extended that benefit to his own clients. The measure of the fee is proportionate to the benefit actually produced by counsel's services, not to the entire benefit enjoyed by the clients from earlier orders. Where counsel's work merely extended to non-union employees a temporary increase already won for union members, a fee of two and one-half percent of the total amount awarded to his clients by reason of that increase is reasonable. The doctrine ties back to Article 2208 of the Civil Code, under which the court may award attorney's fees when it deems it just and equitable, measured here by the actual benefit conferred.

Disposition

The main order appealed from was affirmed with modification, granting Attorney Fajardo fees at two and one-half percent of the total amount awarded to his clients by reason of the temporary increase, and the resolution denying his motion for reconsideration was set aside, without costs.

Remember This

The single line to memorize: attorney's fees are measured by the benefit actually produced by counsel's services, so a lawyer who merely extends an existing increase to his clients earns a proportionate fee, fixed here at two and one-half percent. Examiners use this case to test the computation of attorney's fees in labor cases and the rule that an attorney's lien attaches only to the extent of the benefit his own services secured.