Research and Services Realty, Inc v. CA G.R. No. 124074, January 27, 1997

Facts: The petitioner entered into a Joint Venture Agreement with the Carreons. The Carreons instituted before the RTC an action against the petitioner rescission of the Joint Venture Agreement. They prayed for among others, therein that the petitioner be ordered to pay the PNB the stipulated 15% per annum of the outstanding obligation and to pay the plaintiffs attorney’s fees, exemplary damages, expenses of litigation, and costs of suit. In its answer, which was prepared and signed by Atty. Apolonio G. Reyes, the petitioner sought the denial of the writ of preliminary injunction, the dismissal of the complaint, and payment in its favor of (a) P10 million by way of actual damages; (b) P5 million by way of return to the petitioner of the amount advanced to the Carreons, payments to the PNB, and cost of the work on the subdivision; (c) P100,000.00 by way of exemplary damages; (d) any and all damages up to the amount of P4,638,420.00 which the petitioner may suffer under the terms of its Performance Bond in favor of the National Housing Authority; (e) P50,000.00 as attorney’s fees; and (f) costs of suit. On 9 April 1985, the petitioner engaged the services of private respondent Atty. Manuel S. Fonacier, Jr.,4 who then entered his appearance in Civil Case No. 612. While the said case was pending, or on 24 July 1992, 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. In 1993, the petitioner terminated the legal services of the private respondent. At the time the petitioner had already received P7 million from Filstream. Upon knowing the existence of the MOA, the private respondent filed in Civil Case No. 612 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. After hearing the motion, the trial court issued an order directing the petitioner to pay the private respondent the sum of P600,000.00 as attorney’s fees on the basis of quantum meruit. Petitioner’s motion for reconsideration was denied by the RTC. The petitioner appealed to the Court of Appeals which the Court affirmed the challenged order of the trial court. Hence the petitioner then came to the SC to petition for review.

Issue: Whether the Respondent Lawyer is entitled to an Attorney’s fee for a case of the Petitioner that the former has no direct participation.

Held: No, the court cannot sustain the private respondent’s theory that he could collect attorney’s fees on contingent basis because in the other “non-collection” cases he handled for the petitioner, he was paid on contingent basis at the rate of 10% of what was awarded to the petitioner. In the first place, Civil Case No. 612 is still unresolved, and no judgment has yet been rendered in favor of the petitioner. The amount in the memorandum of agreement could not be made the basis of a “contingent fee” in the said case for at least three reasons. First, in his own Urgent Motion to Direct Payment of Attorney’s Fees and/or Register Attorney’s Charging Lien, the private respondent based the contingent fee not only in Civil Case No. 612 but in a “multitude of peripheral cases,” and the contingent fee would become due and collectible only if and when the petitioner obtains a judgment in his favor in Civil Case No. 612. Second, the amount of P28 million, which Filstream agreed to pay the petitioner, was not a judgment or award in favor of the petitioner in Civil Case No. 612. Indisputably then, the private respondent’s attorney’s fee on “contingent basis” in Civil Case No. 612 is unwarranted. If at all, he could only be entitled to attorney’s fees on quantum meruit basis as of the expiration of his retainer contract on 31 March 1993.

Quantum meruit simply means “as much as he deserves.” 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.

This Court had earlier declared the following as circumstances to be considered in determining the reasonableness of a claim for attorney’s fees: (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. Rule 20.1, Canon 20 of the Code of Professional Responsibility enumerates the factors which should guide a lawyer in determining his fees.


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