G.R. No. 70099. January 07, 1987
MODESTA BORCENA, ANTONIO GIMENO, JR., ESTELA GIMENO ROLANDO GIMENO, EDGARDO GIMENO AND ANELIA GIMENO, PETITIONERS, VS. INTERMEDIATE APPELLATE COURT, HON. CLEMENTE D. PAREDES, RO…
GUTIERREZ, JR., J.:
The petitioners question the amount which the respondent Court of
Appeals and the trial court ordered to be paid to their former lawyer, as his
compensation.
On July 6,
1981, the petitioners engaged the legal services of respondent Gil P.
de Guzman under the following terms and conditions:
“Dear Atty. de Guzman:”For purposes of handling our case against Nam
Kwang, Socea Bonna, Metropolitan Waterworks and Sewerage System, and
other persons who are parties to the total or partial destruction of some of our
road and residential lots at the Memorial Park
Subdivision, Bigti, Norzagaray, Bulacan, we hereby
retain and employ the legal services of your Law Office towards its
prosecution. For your services, we hereby offer you the following
schedule:“a) 20% of our total
claim, for and as attorney’s fees;“b) 5% of our total
claim, for and as representation and miscellaneous expenses;TOTAL: 25%
which shall be payable to you and
may be collected from us anytime after its complete payment by the said
defendants, either solidarily or collectively.
It is hereby understood that apart from this, whatever judgment
attorney’s fees may be awarded by the court against said defendants, the same
shall accrue to you which shall not form part of our
contingent fee.
“We hope that you will handle this case for us.
MODESTA BORCENA, ANTONIO GIMENO, JR. ESTELA GIMENO, ROLANDO GIMENO, EDGARDO GIMENO, AND ANELIA GIMENO
CONFORME: By: GIL DE GUZMAN ROLANDO GIMENO”
On this same date, respondent de Guzman filed
a complaint for damages against the Metropolitan Waterworks and
Sewerage System, (hereinafter called MWSS) Nam Kwang,
Socea Bonna and Chun Bae Kim, which was docketed as Civil Case No. SM-1208. The pertinent allegations of the
complaint are as follows:
xxx
“11. That sometime in February, 1980, or immediately
preceding or subsequent thereto defendants, without any notice and against the
will and consent of herein plaintiffs, entered a portion of said property and
bulldozed the fully developed lots, and committed waste, destruction and
depredation thereon, causing all monuments of title, drainage system,
subdivision lots, ornamental trees resulting to total wreck to 23 fully
developed lots and flood of about 16 lots causing them wanton and unseconded (sic) damages founded in the books of
law;
xxx
“12. That defendants, despite previous repeated
demands from plaintiffs to indemnify them for damages and losses they have
caused the plaintiffs, failed and refused and still continue to fail and
refuse to pay actual and compensatory damages in the amount of
P670,000.00;
xxx
“13. That due to the unlawful acts of the defendants
violating the rights, plaintiffs, the latter suffered and still continue to
suffer sleepless nights, loss of business standing, serious anxieties and
besmirched reputation assessable as moral damages in the amount of
P30,000.00;
“14.
That to serve as an example to other would-be
defendants similarly situated with defendants herein, plaintiffs are entitled
against the defendants corrective and exemplary damages in the amount of
P10,000.00;
“15. The plaintiffs in order to protect their rights
and interest so unduly abused by herein defendants are constrained to litigate
and to retain the professional services of counsel in the amount of 20%
representing the total claim of plaintiffs against the defendants, for and as
reasonable attorney’s fees;”
The complaint was later amended by dropping Chun Bae Kim as defendant. Defendants Nam Kwang and Socea Gonna were subsequently declared in
default.
On June 18,
1982, Atty. de Guzman filed a motion for preliminary attachment
praying that an order be issued attaching properties of the defendants amounting
to P710,000.00 plus 20% thereof representing attorney’s
fees, or a total of P852,000.00. The motion was granted upon
plaintiffs’ posting a bond of P852,000.00 issued by a
bonding company acceptable to the court.
The MWSS was directed to hold in
trust the P852,000.00 payable to
Nam Kwang prompting the plaintiffs to file a motion
for them to take custody of the P852,000.00. The motion was denied
in the order dated October 20,
1982.
On December 7,
1982, the court directed the MWSS to turn over the P852,000.00 to the deputy sheriff and for the latter to deposit
the same with the Sta. Maria Municipal Treasury. The court also
ordered that withdrawals must be upon its orders. This order was
amended on December 15,
1982 when MWSS was directed to prepare and issue the check in the
name of Rolando Gimeno for the amount of P852,000.00, and to release said check to him upon proper
identification. At the same time, the deputy sheriff was directed
to receive the check from Rolando Gimeno and deposit
the same with the municipal treasurer of Sta. Maria, Bulacan.
In compliance with the court orders, MWSS issued and released —
(1) PNB Check No. 070925 in the amount of P746,111.71
and (2) PNB Check No. 070928 in the amount of P105,888.29, both dated December 20, 1982 payable to Rolando
Gimeno for deposit with the Municipal Treasurer of
Sta. Maria, Bulacan.
On January 11, 1983, De Guzman filed a
manifestation questioning the restriction on the checks that the same be
deposited only with the Municipal Treasurer of Sta. Maria, Bulacan as uncalled for and contrary to the court’s order of
December 7,
1982 as modified by the December 15, 1982
order.
On March 17, 1983, Rolando Gimeno on behalf of the other plaintiffs (petitioners
herein) and in his own behalf sent a letter to Atty. de Guzman terminating his
services as their counsel. The relevant portions of the letter
read as follows:
xxx
“Sir:
“We regret to inform you that your services as our Counsel in
all our cases and legal problems are terminated
effective immediately.
“The decision to terminate your services was engendered
by your failure and/or refusal to return to Mr. Rolando B. Gimeno the PNB Checks for deposit with the Municipal
Treasurer of Sta. Maria, Bulacan, although the
same are now almost three (3) months old and may become stale.
Furthermore, transfer of said deposit to a bank may be asked from the
Court so that said money can earn interests. Undersigned have lost
interest earnings on said money for three (2) months now.
“Kindly return to Mr. Rolando B. Gimeno all our case records involving all our legal problems
still in your possession; and bill us for your services rendered thus far, and
we assure your goodself you will be amply
compensated.”
xxx
On March 24,
1983, Atty. Perpetuo L. B. Alonzo entered
his appearance as new counsel for the petitioners.
On March 25, 1983, Atty. de Guzman filed an
opposition to Gimeno’s ex-parte motion to
transfer deposit of garnished amount. He claimed that he never
received the PNB checks, that Gimeno’s affidavit of
loss admits having received the checks from MWSS, and that Rolando Gimeno lost them. Atty. de Guzman also filed
his comment stating that he has no objection to the substitution of counsel
provided that the agreed honorarium is complied with, and subject to the
attorney’s lien.
On April 16, 1983, Atty. de Guzman filed an
attorney’s lien on the garnished amount of P852,000.00
pursuant to Section 26 of Rule 138. A motion dated
April 18,
1983, prayed for the issuance of an
order:
“1. Ordering the deposit of PNB Checks Nos. 070925 and
070928 both dated December 20, 1982 with PNB Branch in Malolos, Bulacan in the name of
plaintiff Rolando Gimeno and movant Atty. Gil de Guzman under the following schedule, to
wit:
“(a)
Rolando Gimeno, as plaintiff
and attorney-in-fact ———————–P532,500.00
“(b)
Atty. Gil de Guzman, for
his attorney’s fees
————————–319,500.00
Total—————————P852,000.00
to be withdrawn only upon order of the
Court.
“2. Upon said deposit,
ordering the depository bank to allow movant Atty. Gil
de Guzman to withdraw, deducting from said account the amount of P319,500.00 as
his lawful fees;
“3. Allowing the withdrawal
of appearance of Atty. Gil de Guzman as counsel of record for
plaintiffs.
“4. Granting such further and
other reliefs just and
equitable.”
On May 14, 1983, the petitioners filed a manifestation and
motion praying that: (1) the Court ascertain and fix the fees of
Atty. de Guzman to be paid after the judgment award to the petitioners shall
have been satisfied; and (2) that Atty. de Guzman be ordered to deposit in Court
the PNB Checks and to deliver to the petitioners all documents in his
possession.
On June
1, 1983, the lower court
issued the challenged order declaring the termination of the legal services of
Atty. de Guzman by the petitioners as unjustified. The dispositive portion of the order
reads:
“WHEREFORE, in view of all the foregoing, the Court hereby fixes
counsel Atty. Gil de Guzman’s attorney’s fees in the sum of
P177,500.00 as per contract of legal services plus and apart from 20% of
whatever attorney’s fees may be finally awarded to plaintiffs should they
ultimately prevail, and it is hereby further ordered that:
“1) Counsel, Atty. Gil de Guzman, should deliver
within a period of 5 days from receipt hereof PNB checks Nos. 070928 in the sum
of P105,888.29 and 070925 in the sum of P745,111.71 both dated December 20,
1982, to the Branch Clerk of this Court;
“2)
The Branch Clerk of Court of this Court, upon
receipt thereof, shall immediately deposit said checks in a savings deposit with
the Malolos Branch of the Philippine National Bank in
Malolos, Bulacan, in the
names of Atty. Gil de Guzman and plaintiff and attorney-in-fact Rolando Gimeno, and to keep in his custody the savings deposit book,
the deposit to be withdrawable only upon orders of
this court;
“3) Plaintiffs to pay the sum
of P177,500.00 to counsel Atty. Gil de Guzman in payment of the 25% attorney’s
fees,
“4) Atty. Gil de Guzman, upon
payment of his 25% attorney’s fees by plaintiffs, shall turn over
to the latter all documents and records of the case, and thereafter, to cease as
counsel for plaintiffs; and
“5) The P852,000.00 deposit
to remain deposited with the depository Bank, until further orders of this
Court, subject to a first lien in favor of Atty. Gil de Guzman on account of his
20% judgment attorney’s fees.”
On October 20, 1983, the lower court
denied the petitioners’ motion for reconsideration and opposition to the motion
for execution pending appeal, and granted the motion
for execution pending appeal.
On November 3, 1983, a writ of execution
pending appeal for P177,500.00 attorney’s compensation
was issued by the court.
As stated earlier, the Intermediate Appellate Court denied
due course to the petition questioning the execution pending
appeal.
Hence, this
petition.
The pivotal issue in this case hinges on the amount of
compensation to which Atty. Gil de Guzman is entitled for his legal services to
the petitioners in Civil Case No. SM-1208.
The petitioners contend that the attorney’s compensation
provided for in the contract was neither fixed nor absolute but was contingent
on the outcome of the final judgment. They maintain that “total
claim” in paragraphs “a” and “b” of the contract should be construed in the
context of the qualifying sentence “which shall be payable to you and may be
collected from us anytime after its complete payment
by the said defendants, either solidarily or collectively”.
They also maintain that Atty. Gil de Guzman was dismissed for a
justifiable cause and that the amount of attorney’s compensation granted by the
lower court was unconscionable and unreasonable. The petitioners
submit that the compensation of Atty. de Guzman should be determined and fixed
on the basis of quantum meruit.
Both Sections 24 and 26 of Rule 138 of the Revised Rules of
Court cited by the parties apply to the case at bar. Paragraph 2,
Section 26, provides:
“A client may at any time dismiss his attorney or substitute another
in his place, but if the contract between client and attorney has been reduced
to writing and the dismissal of the attorney was without justifiable cause, he
shall be entitled to recover from the client the full compensation stipulated in
the contract. However, the attorney may, in the discretion of the
court, intervene in the case to protect his rights. For the
payment of his compensation the attorney shall have a lien upon all judgments
for the payment of money, and executions issued in pursuance of such judgment,
rendered in the case wherein his services had been retained by the
client.”
while Section 24
states:
“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.” (Italics supplied)
The stipulation of attorney’s compensation in a contract for
professional services can be reduced by the courts if found unconscionable and
unreasonable. We have explained this well-entrenched
principle:
“‘Contracts for attorney’s services in this jurisdiction stand upon
an entirely different footing from contracts for the payment of compensation for
any other services. By express provision of section 29 of the Code
of Civil Procedure, an 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.
x x x.
“Since then this Court has invariably fixed counsel fees on a
quantum meruit basis whenever the fees stipulated appear excessive,
unconsionable, 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, L-12735,
October 30, 1959).” (Mambulao
Lumber Co. v. Philippine National Bank, 22 SCRA 359, 371).
The lower court fixed the attorney’s compensation of Atty. Gil de
Guzman as follows: (1) P177,500.00
payable immediately and (2) 20% of whatever attorney’s fees the petitioners may
be awarded in Civil Case No. SM-1208 as attorney’s
lien.
Granting that the dismissal of Atty. Gil de Guzman was
unjustified, it is obvious that, in the light of the services rendered,
the stipulation of attorney’s fees in the contract for legal services becomes
unconscionable and unreasonable. Moreover, we tend to agree with
the petitioners that Atty. de Guzman was dismissed for a justifiable
cause. The petitioners contend that Rolando Gimeno delivered to Atty. de Guzman the PNB checks in the
amount of P852,000.00 issued by the MWSS as a result of the writ of
attachment and ordered them to be
deposited with the municipal treasurer of Sta. Maria, Bulacan; that after three months, Atty. de Guzman had not
delivered said checks so that Gimeno decided to take
the checks and deposit them himself but Atty. de Guzman denied halving the
checks and refused to return them forcing the petitioners to dismiss him.
This assertion is given credence considering the explanation of the
petitioners which is borne out by the records, to wit:
xxx
“x x x [T]hat
after claiming that he ‘never and did not receive said checks nor (had them) in
his possession’, he finally admitted having possession thereof with
a ludicrous explanation of such possession in his motion dated April 18, 1983
above quoted wherein he alleged that: ‘On April 11, 1983, about
4:00 p.m., plaintiff Rolando Gimeno came to the office
of the undersigned counsel and admitted his fault and turned over PNB Checks
Nos. 070925 and 070928 both dated December 20, 1982 in the total sum of
P852,000.00 in the name of Rolando Gimeno as plaintiff
and attorney-in-fact which are now in counsel’s possession and custody’, after
Atty. Alonzo had filed on April 14, 1983 a motion to declare him in contempt of
court for denying and refusing to hand over said checks for deposit pursuant to
the court’s order of December 15, 1983. Respondent Atty. de
Guzman’s concocted claim that Rolando Gimeno turned
over the said checks to him on April
11, 1983 is patently incredible because it is preposterous and
utterly untrue, but typically characteristic of his dealings with petitioners as
clients. If petitioner Rolando Gimeno
had the checks and he and his new counsel had been demanding that respondent
Atty. de Guzman hand over said checks in his possession to them so the same can
be deposited in compliance with the court’s order and had dismissed him for
refusing to do so, why will he (Rolando Gimeno)
suddenly turn over the checks to respondent Atty. de Guzman who is no longer his
lawyer? x x x.”
Considering that: (1) the
stipulation on payment for legal services appears unconscionable and
unreasonable; and (2) Atty. Gil de Guzman was dismissed for justifiable cause,
the amount due to the lawyer should be fixed on a quantum meruit
(Mambulao Lumber Co. v. Philippine
national Bank, supra). This
Court has stated that:
“In determining the compensation of an attorney, the following
circumstances should be considered: the amount and character of
the services rendered; the responsibility imposed; the amount of money or the
value of the property affected by the controversy, or involved in the
employment; the skill and experience called for in the performance of the
service; the professional standing of the attorney; the results secured; and
whether or not the fee is contingent or absolute, it being a recognized rule
that an attorney may properly charge a much larger fee when it is to be
contingent than when it is not. (Delgado v.
De la Rama, 43 Phil. 419) x x x.”
Within the period of his employment by the petitioners,
Atty. de Guzman filed the complaint, had the defendants Nam Kwang and Socea Bonna declared in default and finally, on his motion, the
lower court issued the writ of attachment against MWSS. At the
time of Atty. de Guzman’s termination as counsel, the case had not gone through
pre-trial.
Nothing in the case so far appears complicated and no extra
ordinary skill was needed for Atty. de Guzman to accomplish what he had done in
the case before he was terminated. There was no way of determining
at that point how much the petitioners would recover or whether they would even
recover anything.
For these services of Atty. de Guzman, we rule that he is
entitled to the amount of P10,000.00 as reasonable
attorney’s compensation.
WHEREFORE, the petition is hereby
GRANTED. The questioned decision of the then Intermediate
Appellate Court is REVERSED and SET ASIDE. The petitioners are
ordered to pay Atty. Gil de Guzman the amount of TEN THOUSAND PESOS (P10,000.00) as payment for his legal services in Civil Case No.
SM-1208.
SO
ORDERED.
Feria, (Chairman), Fernan, Alampay, and
Feliciano, JJ., concur.
Paras, J., no part