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Ô ere are two concepts of attorney¶s fees. Ô e ordinary refers to t e reasonable
compensation paid to a lawyer by is client for t e legal services e as rendered to t e latter.
Ô e ot er concept is t e amount of damages w ic t e court may award to be paid by t e
losing party to t e prevailing party.1
Ô e rule t at t e practice of law is a profession and not a money-making trade does not
operate to deny a lawyer t e rig t to attorney¶s fees for is professional services. He may
expect t at is client will pay im is just fees in t e same manner t at a client may expect t at
is counsel will exert is best efforts to protect is interests.2
He as t e rig t to ave and recover from is client a fair and reasonable compensation
for is services, except in cases w ere e as agreed to render service gratuitously or as been
appointed counsel de oficio.3

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1. Existence of attorney-client relations ip.
2. Rendition by t e lawyer of services to t e client
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1. -c± it is t e reasonable compensation paid to t e lawyer for t e legal services e
ad rendered in favor of is client. Ô e basis of t is compensation is t e fact of
employment by t e client

2. 0 -c± an indemnity for damages ordered by t e court to be paid by t e losing


party to t e prevailing party in a litigation. Ô e basis of t is is any of t e cases aut orized
by law and is payable not to t e lawyer but to t e client unless t ere is an agreement
t at t e award s all pertain to t e lawyer as an additional compensation or as part
t ereof
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)-2 Only t e client w o engaged t e services of counsel eit er personally or
t roug an aut orized agent is liable for t e attorney¶s fees. A party w o was not privy to t e
employment contract or w o did not aut orize t e lawyer¶s retainer is not liable for counsel fees.
Ô ere are recognized exceptions to t e foregoing rule. Suc exceptions rest on t e
equitable principle t at a person w o accepts t e benefits of t e legal representation impliedly
agrees to pay t e lawyer¶s services for e may not unjustly enric imself at t e expense of t e
lawyer.
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As a general rule, a person w o ad no knowledge of, or objected to, t e lawyer¶s
representation may not be eld liable for attorney¶s fees even t oug suc representation
redounded to is benefit.4 Ô e objection to t e lawyer¶s appearance s ould be raised before
and not after beneficial services s all ave been rendered by t e lawyer, ot erwise t e party
w o benefited from t e lawyer¶s representation may be required to pay counsel fees.5 Ô e
liability is based on equity. For it is neit er just t at t e client w o retained t e lawyer s ould
alone pay t e latter¶s fees nor is it fair t at t ose w o, investing not ing and assuming no risk,
received t e benefits of t e legal representation s ould not contribute t eir proportionate s are
to t e counsel fees.

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1
Compania Maritima, Inc. vs. Court of Appeals. 318 SCRA 169 (1999).c
2
Albano vs. Coloma. 21 SCRA 411 (1967) c
3
Corpuz vs. Court of Appeals. 98 SCRA 424 (1980); Canon 20, Rule 2.04, Code of Professional Responsibilityc
4
Orosco vs. Heirs of Hernandez. 1 P il.77. (1901.) c
5
Martinez vs. Union Maquinistas. 19 SCRA 167 (1967.)cc
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Since an assignee of all interests pendent elite usually steps into t e s oes of t e
assignor and acquires all of t e latter¶s rig ts and obligations in t e action, t e assignee may be
eld liable for counsel fees from out of t e proceeds of a favorable judgment. Ô at obligation
gives t e assignee t e rig t to intervene in t e matter of fixing t e amount of fees w ic may be
a proper c arge against t e judgment rendered in t e action.
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A lawyer w o represents a union and its members and wit w om e as a retainer for
payment of a fixed percentage of amounts recovered from t e company is entitled to be paid is
fees not only by t e union members but by t e non-union members as well w o derive benefits
from is services. It is but just and fair t at t e lawyer w o represented t e struggling members
of t e union to secure benefits for all employees be paid is just fees by all t ose w o received
.suc benefits.6
Attorney¶s fees in labor cases may not be more t an w at t e law provides and t ey may
not be c ecked off from any amount due t e employees wit out t eir written consent.7
Ô e expiration of t e retainer contract between t e parties during t e pendency of t e
labor case does not extinguis t e respondent¶s rig t to attorney¶s fees.8

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W ere, in a derivative suit, t e professional services of counsel w o instituted t e action
upon request of a stock older are beneficial to t e corporation, t e counsel fees may be
properly c arged against corporate funds. But as any stock older may file a derivative suit on
be alf of t e corporation, any ot er stock older may intervene and oppose t e grant of suc
fees as a c arge against funds of t e corporation.9

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c Ô e assets under receivers ip may be eld liable for t e fees of a lawyer employed by a
receiver to elp im in t e disc arge of is duties. However, attorney¶s fees of t e counsel for a
defendant in a receivers ip proceeding are personal obligations of t e defendant and may not
be paid out of t e funds in t e ands of t e receiver, unless t e services rendered by t e lawyer
ave redounded to t e benefit of t e receivers ip or of t e plaintiff w o asked for t e
appointment of t e receiver.10

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Ô e rule is t at a trustee may be indemnified out of t e trust estate for is expenses in
rendering and proving is accounts and for t e counsel fees in connection t erewit . Ô e same
rule applies in guardians ip proceedings. Ô e property of t e ward may lawfully answer for
counsel fees of t e lawyer employed by t e guardian. However, no assets of t e ward may be
spent for attorney¶s fees wit out prior approval of t e guardians ip court.

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An executor or administrator may employ an attorney to assist im in t e execution of
is trust. Ô e professional services are rendered to t e executor or administrator and for t at
reason, t e attorney may not old t e estate directly liable for is fees; t e liability for payment
rests on t e executor or administrator w o may, if services are beneficial to t e estate, eit er
seek reimbursement from t e estate if e as already paid t em or include t em in is account
wit due notice to all parties interested.11
Ô e attorney¶s fees of a lawyer employed by an executor to secure t e approval of a will may, if
t e lawyer is successful, be properly c arged against t e estate. But t e estate may not be
liable for counsel fees for services rendered to annul a will at t e request of t e executor, t e
latter¶s duty being to enforce and not to invalidate t e will; only t e executor may be eld liable
personally t erefore.12
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6
Union de Empleados de Ôrenes vs. Kapisanan ng mga Manggagawa sa MRRCO. 110 P il. 308 (1962.) c
7
Gabriel vs. Secretary of Labor. 328 SCRA 247 (2000.) c
8
Uy vs. Gonzales A.C. No. 5280, Marc 2004c
9
Lic auco vs. Court of appeals. 63 SCRA 123. (1975.) c
10
P ilippine National Bank vs. Pardo/ 67 P il 570 (1939.) c
11
Oceña vs. Marquez. 60 SCRA 38. (1974.) c
12
Francisco vs. Matias. 10 SCRA 89. (1964.)cc
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Ô e lawyer w o as been engaged by a client is t e one entitled to ave and recover no
more t an a reasonable compensation for is services. Partners in a law firm s are in t e profits
in accordance wit t eir partners ip agreement even t oug only of t em actually rendered t e
service. If several lawyers separately employed by a client do not ave express agreement wit
t e client as to t e amount of fees eac would respectively receive or if t ey ave rendered
services at one time or anot er in t e action, eac of t em will be entitled to no more t an w at
is services actually performed are reasonably wort .
Ô e rig t of a lawyer to s are in t e professional fees rests on services performed or on
is being, based on an agreement, a partner of anot er or in a law firm. However, a ³lawyer
s all, in cases of referral, wit t e consent of t e client, be entitled to a division of fees in
proportion to t e work performed and responsibility assumed.´13 It is improper for an attorney to
receive compensation for merely recommending anot er lawyer to is client. Suc practice, if
permitted, would tend to germinate t e evils of commercialism and to destroy t e proper
appreciation of professional responsibility.14

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Ô e statutory rule t at ³an attorney s all be entitled to ave and recover from is client
no more t an a reasonable compensation for is services´15 requires t e existence of an
attorney-client relations ip as a condition to t e recovery of attorney¶s fees. Suc relations ip
cannot exist unless t e client¶s representative in court is a lawyer. A non-lawyer cannot recover
attorney¶s fees even if t ere is a law aut orizing im to represent a litigant in court.
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(a) t e time spent and t e extent of t e service rendered or required;
(b) t e novelty and difficulty of t e questions involved;
(c) Ô e importance of t e subject matter;
(d) Ô e skill demanded;
(e) Ô e probability of losing ot er employment as a result of acceptance of t e proffered case;
(f) Ô e customary c arges for similar services and t e sc edule of fees of t e IBP c apter to
w ic e belongs;
(g) Ô e amount involved in t e controversy and t e benefits resulting to t e client from t e
service;
( ) Ô e contingency or certainty of compensation;
(i) Ô e c aracter of t e employment, w et er occasional or establis ed; and
(j) Ô e professional standing of t e lawyer.
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)c!: Attorney¶s Fees as damages is not recoverable because it is not t e fact
of winning t at ipso facto justifies t e award but t e attendance of any of t e special
circumstances.
It is not t e fact of winning alone but t e attendance of any of t e special circumstances
and, in t e case of a public litigant, t e existence of t e rig t to private counsel t at justify t e
award of attorney¶s fees as damages in favor of t e prevailing party.
Public policy requires t at no penalty be placed on t e rig t to litigate. Suc rig t is so
fundamental t at damages may not be c arged against t ose w o may exercise it erroneously.
A different rule will put a premium on t e rig t to redress grievances in court. It may also open
t e door of temptation to a party and is counsel to swell t e fees to undue proportion and
discourage out-of-court settlement of actions in violation of t e public policy on t e matter.
Ô e claim for attorney¶s fees in t e concept of damages and t e ground relied upon must
be pleaded. In t e absence of suc allegation, neit er t e trial court not t e appellate court may
grant attorney¶s fees. Wit t e claim for attorney¶s fees aving been set up, t e appellate court
may grant suc fees even if t e party so granted did not appeal from t e lower court¶s judgment
denying t e award.
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13
Canon 20.2, Code of Professional Responsibility. c
14
A.B.A. Op. 97 (May 3, 1933.) c
15
Rule 138, Sec. 24, Rules of Court.cc
Ôo merit t e award of attorney¶s fees as an item of damages, t e amount t ereof must
be proved and it must be specifically prayed for, not just in ³suc ot er relief and remedy as t e
court may deem just and equitable.´16 For it is settled t at t e award of attorney¶s fess is t e
exception rat er t an t e rule; ence, t e trial court s ould make findings of fact and law, w ic
would bring t e case wit in t e exception and justify t e award.

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1. Ô ere is an agreement;
2. Exemplary damages are awarded;
3. Defendant's action or omission in gross bad fait compelled plaintiff to litigate;
4. In criminal cases of malicious prosecution
a. e was acquitted
b. person w o c arged im knowingly made t e false statement of facts or t at t e
filing was prompted by sinister design to vex im;
5. Action is clearly unfounded and is so untenable t at it amounts to gross bad fait ;
6. Actions for legal support;
7. Cases for t e recovery of wages;
8. Defendant acted in gross and evident bad fait ;
9. In actions for indemnity under workmen's compensation and employees liability laws;
10. In separate civil action arising from a crime;
11. W en at least double costs are awarded w ic is usually awarded to frivolous actions;
12. W en t e court deems it just and equitable; and
13. A special law so aut orizes
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1. Act of a client by w ic e engages t e services of an attorney to render legal advice or
to defend or prosecute is cause in court
2. Fee w ic a client pays to t e attorney
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1. General retainer - t e fee paid to a lawyer to secure is future services as µgeneral
counsel¶ for any ordinary legal problem t at may arise in t e ordinary business of t e
client and referred to im for legal action. Ô e client pays fixed retainer fees, w ic could
be mont ly or ot erwise. Ô e fees are paid w et er or not t ere are cases referred to
t e lawyer; or
2. Special retainer - fee for a specific case or service rendered by t e lawyer for t e client.

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1. Fixed or Absolute Fee - w ic is payable regardless of t e result of t e case
a. A fixed fee payable Per Appearance
b. A fixed fee computed upon t e Number of Hours Spent
c. A fixed fee based on Piecework
d. Combination of any of t e above

2.    c  - t at is conditioned on t e securing of a favorable judgment and


recovery of money or property and t e amount of w ic may be on a percentage basis.
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It is not unusual in a contingent fee contract t at a client pays an initial fee eit er before
or during t e progress of t e litigation. Ô at suc fee is paid does not detract from t e
contingent nature of t e fees, as long as t e bulk t ereof is made dependent upon t e
successful outcome of t e action.

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16
Ôrans-Asia S ipping Lines, Inc. vs. Court of Appeals. 254 SCRA 260 (1996.)cc
A contingent fee is not pro ibited by law and is impliedly sanctioned. It is closely
supervised by t e court to safeguard t e client from unjust c arges or abuse on t e part of is
counsel. Its validity depends upon t e reasonableness of t e amount fixed as contingent fee
under t e circumstances of t e case.
A contingent fee contract is generally valid and binding, unless it is obtained by fraud,
imposition or suppression of facts, or t e fee is so clearly excessive as to amount to an
extortion. A contract for contingent fee, w ere sanctioned by law, s ould be reasonable under
all t e circumstances of t e case including t e risk and uncertainty of t e compensation, but
s ould always be subject to t e supervision of a court as to its reasonableness.
In t e instant case, Atty. Roxas and Pastor received an amount w ic was equal to forty-
four percent (44%) of t e just compensation paid or an amount equivalent to P23,980,000.00 of
t e P54,500,000.00. Considering t at t ere was no full blown earing in t e expropriation case,
ending as it did in a Compromise Agreement, t e 44% is, undeniably, unconscionable an
excessive under t e circumstances.17

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1. Services, w ere not performed; as w en t e counsel wit drew before t e case is
finis ed, except w en wit drawal is justified.
2. Justified dismissal of t e attorney. Payment will be based on quantum meruit.
3. Stipulated Attorney's fees are in excess of w at is expressly fixed by law; under t e
Labor Code, Attorney's fees cannot exceed 10%.
4. W en t e lawyer is guilty of fraud or bad fait toward is client in t e matter of is
employment.
5. Counsel's services were wort less because of is negligence.
6. Contract of employment is illegal.
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It means as muc as t e lawyer deserves or suc amount w ic is services merit. It is
essential for t e proper operation of t e principle t at t ere is an acceptance of t e benefits by
one soug t to be c arged for t e services rendered under circumstances as reasonably to notify
im t at t e lawyer performing t e task is expecting to be paid compensation t erefor. Ô e
doctrine of quantum meruit is a device to prevent undue enric ment based on t e equitable
postulate t at it is unjust for a person to retain benefit wit out paying for it.18
Ô e circumstance t at t e services rendered by a lawyer were purely administrative in
c aracter and did not require ig degree of professional skill and experience does not affect
is rig t to fees.19 Professional services to prepare and prosecute just claims for compensation
before an administrative tribunal are as legitimate as services rendered in court in arguing a
cause to convince t e court t at t e claim presented or defense set up against t e claim by t e
ot er party oug t to be allowed or rejected. Parties in suc cases require advocates, and
members of t e legal profession must ave a rig t to accept suc employment and to receive
compensation for t eir services.

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1. Ô ere is no express contract for payment of attorney's fees agreed upon between t e
lawyer and t e client;
2. W en alt oug t ere is a formal contract for attorney's fees, t e fees stipulated are
found unconscionable;
3. W en t e contract for attorney's fees is void due to purely formal defects of execution;
4. W en, for justifiable cause, t e lawyer was not able to finis t e case;
5. W en t e lawyer and t e client disregard t e contract for attorney¶s fees; and
6. W en t e client dismissed is counsel before t e termination of t e case or t e latter
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17
Roxas, et al. vs De Zuzuarregui, Jr., et al. G.R. No. 152072, Januaray 31, 2006. c
18
Ôraders Royal Bank Employees Union-Independent vs. National Labor Relations Court. 269 SCRA 733. (1997).c
19
Sato vs. Rallos. 12 SCRA 84. (1964). c
wit drew t erefrom for valid reasons.

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1. Ôime spent and extent of t e services rendered or required - a lawyer is justified in fixing
ig er fees w en t e case is so complicated and requires more time and effort to finis it
2. Importance of subject matter - t e more important t e subject matter or t e bigger t e
value of t e interest of property in litigation, t e ig er is t e attorney's fees
3. Novelty and difficulty of questions involved - w en t e questions in a case are novel and
difficult, greater effort, deeper study and researc are bound to burn t e lawyer's time
and stamina considering t at t ere are no local precedents to rely upon
4. Skill demanded of a lawyer - t e totality of t e lawyer's experience provides im t e skill
and competence admired in lawyers

#" !%c ' - one w ere t e lawyer stipulates wit is client in t e prosecution of
t e case t at e will bear all of t e expenses for t e recovery of t ings or property being claimed
by t e client, and t e latter agrees to pay t e former a portion of t e t ing or property recovered
as compensation. It is void for being against public policy

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Contingent fee is payable in cas Payable in kind ONLY
Lawyers do not undertake to pay all expenses Lawyers undertake to pay all expenses of
of litigation litigation
Valid Void

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Rule 20.02 is not in t e nature of a broker¶s commission. Ô e referral of a client by a


lawyer to anot er lawyer does not entitle t e former to a commission or a portion of t e
attorney¶s fees. He will be entitled to a fee w en e performs legal service or assumes
responsibility in t e case in addition to t e referral.

Ô is rule makes it improper for a lawyer to receive compensation for merely


recommending anot er lawyer to is client for if suc practice is permitted, it would tend to
germinate t e evils of commercialism and to destroy t e proper appreciation of professional
responsibility. Ô e referral of a client by a lawyer to anot er lawyer does not entitle t e former to
a commission nor to a portion of t e attorney¶s fees. It is only w en, in addition to t e referral,
e performs legal service or assumes responsibility in t e case t at e will be entitled to a fee.

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Rule 20.03 is for t e purpose of removing suspicion on t e part of t e client t at is


lawyer is receiving a fee, reward, commission, or compensation in connection wit t e case
from t ird persons wit ostile interests. Ô e exception is t at a lawyer may receive
compensation from a person ot er t an is client w en t e latter as full knowledge and
approval t ereof. (Rule 138, Sec. 20 e)

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ð Ô e money received from t e judgment creditor by t e lawyer of t e judgment debtor
as consideration for t e lawyer¶s desisting from participating in t e execution sale of
t e debtor¶s property is owned by and must be turned over to t e client.
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ð A lawyer may not claim t e attorney¶s fees in t e concept of damages awarded by
t e court in favor of is client, t e latter and not t e former being entitled t ereto

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ð Except w en e and is client ave agreed t at w atever amount t e court may
award as attorney¶s fees would form part of t e lawyer¶s compensation.c
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As a general rule, a lawyer s ould avoid t e filing of any case against a client for t e
enforcement of attorney's fees. Ô e exceptions to t is rule are: (1) Ôo prevent imposition; (2) Ôo
prevent injustice; and (3) Ôo prevent fraud.
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ð He may take judicial action to protect is rig t to fees eit er in t e main action w ere
is services were rendered or in an independent civil suit against is client.
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)-2cA contract of professional services may eit er be oral or in writing. Ô e fee
stipulated may be absolute or contingent; it may be a fixed percentage of t e amount recovered
in t e action. Ô e contract may call for a down payment; it may also provide a fee per
appearance, per piece of work or on an ourly basis. It may be a combination of t ese
arrangements.
A written retainer as a distinct advantage over an oral contract. In case of controversy
as to t e question of fees, a written contract generally controls t e amount t ereof. An in t e
event of a lawyer¶s dismissal by t e client before t e conclusion of t e litigation wit out a
justifiable cause, t e attorney may be entitled to t e full amount of t e fees as stipulated in t e
written agreement. Wit out suc written agreement, e may only recover t e reasonable wort
of is services up to t e date of is dismissal.c
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1. If t e nullification is due to t e ILLEGALIÔY OF IÔS OBJECÔ t e lawyer is precluded
from recovering; and
2. lf t e nullity is due to a FORMAL DEFECÔ or because t e court as found t e AMOUNÔ
to be UNCONSCIONABLE, t e lawyer may recover for any services rendered based on
Ruantum meruit
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Generally: It as been said t at t ere is an irreconcilable conflict of interest between a
client and is lawyer as to t e matter of fees. Ô at conflict s ould not, of course, interfere wit
t e disc arge by t e lawyer of is duty of undivided fidelity to is client¶s cause. Nor s ould it
diminis is zeal in t e prosecution or defense of t e client¶s interests. But w en t at conflict
as reac ed suc a point t at it not only becomes t e lawyer¶s duty to wit draw from t e action
but to assert is rig t to compensation because of t e intolerable attitude assumed by is client,
e may, in order to prevent injustice, fraud or imposition, rig tfully resort to lawsuit to recover is
fees. He may take judicial action to protect is rig t to fees eit er in t e main action w ere is
services were rendered or in an independent civil suit against is client.
A lawyer may enforce is rig t to fees by filing t e necessary petition as an incident of
t e main action in w ic is services were rendered only w en somet ing is due t e client in t e
action from w ic t e fee is to be paid or w en t e client settles or waives is cause in favor of
t e adverse party in fraud of t e lawyer¶s claim for compensation.
Ô e enforcement of t e lawyer¶s rig t to attorney¶s fees as an incident of t e main action
in w ic is services were rendered is preferable t an in an independent action as it avoids
multiplicity of suits.20
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20
Palanca vs. Pecson. 94 P il. 419 (1954.) c
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1. Ô e very action in w ic t e services in question ave been rendered; or
Suc is preferable t an in an independent action as it avoids multiplicity of suit. Also, t e
court is already familiar wit t e lawyer¶s services in suc litigation, and can properly determine
t e circumstances suc as w et er t e client dismisses is counsel wit out just cause, or
waives is action in bad fait to defeat t e rig t of t e lawyer to fees.

2. A separate civil action


W en a judgment as become final wit out payment of attorney¶s fees, a motion for
payment of suc fees is improper because t e court cannot amend its final decision. Ô e proper
action will be a separate and independent action to recover is fees.21

A lawyer may enforce is rig t to fees by filing t e necessary petition as an incident to t e


main action w en:
1. Somet ing is due t e client in t e action from w ic t e fee is to be paid;22
2. Ô e client settles or waives is cause in favor of t e adverse party in fraud of t e
lawyer¶s claim for compensation.23
Ô e remedy cannot be availed if t e client recovers not ing from t e main action
because t e fees cannot be determined until after t e litigation as been decided and t e
subject of recovery is at t e disposition of t e court.24
Ô e petition may be filed wit t e court before t e judgment in favor of t e client. Ô e
court, before judgment is rendered, may not require t e client to pay counsel fees, t ere being
not ing from w ic t ey may be paid, except w en it is certain. Ô ose certain may be as in
estate proceedings, t at some funds are due t e client25 or t e client ended t e lawyer¶s
services before t e termination of t e action and funds are available for t e purpose26
c
"%cc%  c' %c
'!2c
1. Lawyer to ask t e administrator or executor to pay im is fee

2. If refused or fails to make payment, t e lawyer as to remedies


a. File an independent civil action against t e administrator or executor in is personal
capacity, and s ould judgment be secured and t e latter pays, t e administrator or
executor may include t e amount so paid in is account filed wit t e probate court.
b. File a petition wit t e probate court praying t at t e court, after due notice to all
persons interested, allow is claim and direct t e administrator or executor to pay is
fees as expenses of administration27

3. If t e administrator dies before t e fees are paid, t e lawyer may claim against t e
estate of t e deceased administrator or executor or a petition for t e allowance of is
fees wit t e probate court.

Ô e lawyer may enforce is rig t to fees before t e proceeding is finally terminated and
t e assets are distributed because in suc cases t e probate court loses t e jurisdiction to
adjudicate t e matter of fees.28Ô e exception is w en t e petition for allowance of fees is filed
before suc closure or asset distribution is made wit out prejudice to t e claim of attorney¶s
fees.29

ccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc
21
Lizardo, sr. vs Montano 332 SCRA 163 (2000)
22
Quirante vs IAC, 169 SCRA 769 (1989).
23
Aro vs Nañawa, 27 SCRA 1090 (1969)
24
Lic auco vs CA 63 SCRA 123 (1975)
25
Dias vs Corduño, 49 P il 165 (1962.)
26
Bernardo Guerrero & Associates vs Ôan, 14 SCRA 451 (1965.)
27
Aldamis vs CFI of Mindoro, 85 P il 228 (1949)
28
Sato vs Rallos 12 SCRA (1964.)
29
Berceño vs ocampo 74 PHIL 227 (1943) c
 c3c' c
% '%c1#cc c3c' c c'3c -6%c%c%c'%%-c
1. Main action is dismissed or not ing is awarded;
2. Court as decided t at it as no jurisdiction over t e action or as already lost it;
3. Person liable for attorney's fees is not a party to t e main action;
4. Court reserved to t e lawyer t e rig t to file a separate civil suit for recovery of attorney's
fees;
5. Services for w ic t e lawyer seeks payment are not connected wit t e subject
litigation;30
6. Judgment debtor as fully paid all of t e judgment proceeds to t e judgment creditor and
t e lawyer as not taken any legal step to ave is fees paid directly to im from t e
judgment proceeds.31

! c(!%' c


Ô e court aving jurisdiction over t e main action as jurisdiction to pass upon t e
question of fees to t e lawyer rendering services in suc main action. Conversely, t e court can
ave no power to award and fix t e attorney¶s fees w en t e court as no jurisdiction over t e
subject matter of t e main action or as already lost jurisdiction over it.32 However, t e lawyer
may enforce is claim in a separate civil action.
c
'%% -c
c# c
A petition for recovery of attorney¶s fees, eit er as a separate civil suit or as an incident
of t e main action, as to be prosecuted and t e allegations t erein establis ed as any ot er
money claim. Ô e persons w o are entitled to or must pay attorney¶s fees ave t e rig t to be
eard upon t e question of t eir propriety or amount.
Suc persons include t e following:
1. Ô e lawyer imself
2. Ô e client
3. Ô e client¶s assignee of t e interest in litigation
4. Ô e obligor in an action for support stock olders in a derivative suit concerning
attorney¶s fees soug t to be c arged against corporate funds
5. Ô e employees in a labor case w o benefited from t e lawyer¶s services, and
6. Ô e administrator, executor, eir and creditor in estate proceedings.

Ô e Burden of proof is upon t e lawyer. Ô e trial court may not aut orize any payment of
counsel fees until t ere s all ave been a earing at w ic all parties concerned were given t e
opportunity to be eard.


%%c
An action for recovery of attorney¶s fees is subject to t e usual defenses applicable to an
ordinary civil suit, suc as:
1) Want of jurisdiction
? Res judicata
3) Prescription of action
4) Nullity of t e contract for professional services
5) Negligence in t e disc arge of t e lawyer¶s duties
6) Lack of attorney-client relations ip
7) Payment or unconscionableness of t e amount claimed.

c
c
ccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc
30
Albano vs Ramos, 20 SCRA 171 (1967.) c
31
Lizardo, Sr. vs Montano, 332 SCRA 163 (2000.) c
32
Meralco Workers Union vs Gaerlan, 97 SCRA 840 (1970).c
0'! c
A final award of attorney¶s fees may be enforced by execution. Ô e award may be
enforced against any property of t e client, including t e proceeds of t e judgment secured for
t e client in t e main action.

"% c c1#'#cc  -c%c  c c cc5%c' -c


1. M   c c - He is entitled to t e reasonable attorney's fees agreed upon, or in
t e absence t ereof, on Ruantum meruit basis.
2. M   c c  - Ô e counsel may not demand from t e accused attorney's fees
even if e wins t e case. He may, owever, collect from t e government funds, if
available based on t e amount fixed by t e court.
3.  cM - not entitled to attorney's fees

c  cccc
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c
 %c""%%c3%c8%-c'9 c c(193 SCRA 540)
Held: Anent t e contention of FICI t at t e trial court erred in ordering Vispac to pay to FICI
attorney's fees equivalent to only 10% of t e amount due despite t e fact t at Vispac bound
itself to pay to FICI attorney's fees equivalent to 20% of t e total amount due but in no case less
t an P200.00 as per t eir Indemnity Agreement (Ex ibit "1-FICI"), it as been eld t at a
stipulation regarding t e payment of attorney's fees is neit er illegal nor immoral and is
enforceable as t e law between t e parties (Santiago v. Dimayuga, 3 SCRA 919 [1961]), as
long as suc stipulation does not contravene law, good morals, good customs, public order or
public policy (Polytrade Corp. v. Blanco, 30 SCRA 187 [1969]; Social Security Commission v.
Almeda, 168 SCRA 474 [1988]).

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c%c(186 SCRA 375)c
Held: Ô e award to private respondent of attorney's fees, owever, must be disallowed
considering t at t e award of exemplary damages was eliminated by respondent court and t e
text of t e decision of t e trial court, w ic was aimed by t e Court of Appeals, is bereft of any
findings of fact and law to justify suc award. Ô e accepted rule is t at t e reason for t e award
of attorney's fees must be stated in t e text of t e court's decision; ot erwise, if it is stated only
in t e dispositive portion of t e decision, t e same must be disallowed on appeal. Ô e award of
attorney's fees being an exception rat er t an t e general rule, it is necessary for t e court to
make findings of facts and law t at would bring t e case wit in t e exception and justify t e
grant of suc award.

´   '-cc'  -c


c'"% c
A contingent fee contract is one w ic stipulates t at t e lawyer will be paid for is legal
services only if t e suit or litigation ends favorably to t e client.33

'!c3%c! c
c% (193 SCRA 293)
Held: It is an equally deeply-rooted rule t at contingent fees are not per se pro ibited by law.
Ô ey are sanctioned by Canon 13 of t e Canons of Professional Et ics and Canon 20, Rule
20.01 of t e recently promulgated Code of Professional Responsibility. However, as we ave
eld in t e case of Tanhueco v. De Dumo(172 SCRA 760 [1989]):

. . . W en it is s own t at a contract for a contingent fee was obtained by undue


influence exercised by t e attorney upon is client or by any fraud or imposition,
or t at t e compensation is clearly excessive, t e Court must and will protect t e
aggrieved party. (Ulanday v. Manila Railroad Co., 45 P il. 540 [1923]; Grey v.
Insular Lumber Co., 97 P il. 833 [1955]).
ccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccc
cFelicer v. Madrilejos, 51 P il 24; Jayme v. Bualan, 58 P il 422; Ôaganas v. NLRC, 248 SCRA 133c
´  ' c
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c %c3%c&& (88 SCRA 513)
Held:c Petitioners contend t at a contract for a contingent fee violates Article 1491 because it
involves an assignment of a property subject of litigation. Ô at article provides:

Article 1491. Ô e following persons cannot acquire by purc ase even at a public or judicial
auction, eit er in person or t roug t e petition of anot er.

xxxxxxxxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior and ot er o
and employees connected wit t e administration of justice, t e property and rig ts in
litigation or levied upon an execution before t e court wit in w ose jurisdiction or
territory t ey exercise t eir respective functions; this prohibition includes the act of
acRuiring by assignment and shall apply to lawyers, with respect to the property and
rights which may be the object of any litigation in which they may take part by virtue of
their profession (Emphasis supplied).

Ô is contention is wit out merit. Article 1491 pro ibits only t e sale or assignment between t e
lawyer and is client, of property w ic is t e subject of litigation, as t e Court as already
stated: " Ô e pro ibition in said article applies only to a sale or assignment to t e lawyer by is
client of t e property w ic is t e subject of litigation. In ot er words, for t e pro ibition to
operate, t e sale or transfer of t e property must take place during the pendency of t e litigation
involving t e property" (Rosario Vda. de Laig vs. Court of Appeals, et al., L-26882, November
21, 1978).

Likewise, under American Law, t e pro ibition does not apply to "cases w ere after completion
of litigation t e lawyer accepts on account of is fee, an interest t e assets realized by t e
litigation" (Drinker, Henry S., Legal Et ics, p. 100 [1953], citing App. A, 280; N.Y. Ciu 714).
"Ô ere is a clear distraction between suc cases and one in w ic t e lawyer speculates on t e
outcome of t e matter in w ic e is employed" (Drinker, supra, p. 100 citing A.B.A. Op. 279).

A contract for a contingent fee is not covered by Article 1491 because t e transfer or
assignment of t e property in litigation takes effect only after t e finality of a favorable judgment.
In t e instant case, t e attorney's fees of Atty. Fernandez, consisting of one- alf (1/2) of
w atever Maximo Abarquez mig t recover from is s are in t e lots in question, is contingent
upon t e success of t e appeal. Hence, t e payment of t e attorney's fees, t at is, t e transfer
or assignment of one- alf (1/2) of t e property in litigation will take place only if t e appeal
prospers. Ô erefore, t e tranfer actually takes effect after t e finality of a favorable judgment
rendered on appeal and not during t e pendency of t e litigation involving t e property in
question. Consequently, t e contract for a contingent fee is not covered by Article 1491

xxxx xxxx xxxx

Petitioners furt er contend t at a contract for a contingent fee violates t e Canons of


Professional Et ics. t is is likewise wit out merit Ô is posture of petitioners overlooked Canon
13 of t e Canons w ic expressly contingent fees by way of exception to Canon 10 upon w ic
petitioners relied. For w ile Canon 10 pro ibits a lawyer from purc asing ...any interest in t e
subject matter of t e litigation w ic e is conducting", Canon 13, on t e ot er and, allowed a
reasonable contingent fee contract, t us: "A contract for a con. tangent fee w ere sanctioned by
law, s ould be reasonable under all t e circumstances of t e ca including t e risk and
uncertainty of t e compensation, but s ould always be subject to t e supervision of a court, as
to its reasonableness

xxxx xxxx xxxx

Contracts of t is nature are permitted because t ey redound to t e benefit of t e poor client and
t e lawyer "especially in cases w ere t e client as meritorious cause of action, but no means
wit w ic to pay for legal services unless e can, wit t e sanction of law, make a contract for
a contingent fee to be paid out of t e proceeds of t e litigation" (Francisco, Legal Et ics, p. 294
[1949], citing Lipscomb vs. Adams 91 S.W. 1046, 1048 [1949]). Oftentimes, contingent fees are
t e only means by w ic t e poor and elpless can redress for injuries sustained and ave t eir
rig ts vindicated

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:c3%c5c (107 P il. 1140)

Held: In is answer before t is Court respondent judge justifies is order for t e return of t e
P200.00 on t e ground t at petitioner is "below average standard of a lawyer." Ô e opinion of a
judge as to t e capacity of a lawyer is not t e basis of t e rig t to a lawyer's fee. It is t e
contract between t e lawyer and client and t e nature of t e services rendered. Petitioner
claims t at e won a civil case for is client, t e deceased fat er of t e guardian and t e wards.
Ô at P200.00 is t e amount of t e fee of petitioner is admitted by t e guardian. We find t at t e
court's order directing petitioner to return t e P200.00, and in effect denying im t e rig t to
collect t e same, is not justified, to say t e least.

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c"cc%-c3%c % c=257 SCRA 511)

Held: Petitioner comes before us t roug t e instant petition for certiorari raising a sole question
of law, t at is, w et er or not t e RÔC ad jurisdiction to award attorney's fees after affirming
t e dismissal of t e case by t e MÔCC for lack of jurisdiction to try, ear and decide t e case.
Petitioner asseverates t at as t e MÔCC and t e RÔC ad no jurisdiction over t e principal
action for unlawful detainer, t en it ad no jurisdiction over t e compulsory counterclaim of
attorney's fees eit er. Ô e petition is meritorious.

A counterclaim is compulsory w ere: (1) it arises out of, or is necessarily connected wit , t e
transaction or occurrence t at is t e subject matter of t e opposing party's claim; (2) it does not
require t e presence of t ird parties of w om t e court cannot acquire jurisdiction; and, (3) t e
trial court as jurisdiction to entertain t e claim. Ôested by t ese requirements, private
respondent's claim for attorney's fees is indubitably in t e nature of a compulsory counterclaim.

And We ave consistently eld t at a compulsory counterclaim cannot remain pending for
independent adjudication by t e court

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c!%   % (22 SCRA 1266)

Held: Petitioners, on t e ot er and, contend t at t e verbal agreement entered into by t e


union and its officers t ru its President Javier and said two lawyers, Atty. Carbonell and Atty.
Fernandez, is t at t e 30% attorneys' fees, s all be divided equally ("s are and s are alike")
amongst Atty. Carbonell, Atty. Fernandez and Felisberto Javier, t e union president.

xxx

We strike down t e alleged oral agreement t at t e union president s ould s are in t e


attorneys' fees. Canon 34 of Legal Et ics condemns t is arrangement in terms clear and
explicit. It says: "No division of fees for legal services is proper, except wit anot er lawyer,
based upon a division of service or responsibility." Ô e union president is not t e attorney for
t e laborers. He may seek compensation only as suc president. An agreement w ereby a
union president is allowed to s are in attorneys' fees is immoral. Suc a contract we
emp atically reject. It cannot be justified.
!c+c
c
:c3%c7!, 45 P il 848 (1932)
Ô is action for malpractice broug t by Vicente Diaz against Attorney Ruperto Kapunan,
as to do wit t e conduct of Attorney Kapunan during t e legal proceedings w ic followed t e
business troubles of Vicente Diaz and Secundino de Mendezona, and particularly relates to t e
conduct of Attorney Kapunan in civil case No. 2098 of t e Court of First Instance of Leyte. Ô e
ultimate question concerns t e agreement between Diaz and Kapunan at t e time of t e sale of
t e property of Mendoza, w ereby Kapunan, on t e promise of Diaz to pay im P1,000, agreed
to desist from furt er participation in t e sale, all in alleged violation of article 1459 of t e Civil
Code and article 542 of t e Penal Code.
Ô e more puzzling question relates to t e alleged violation by Attorney Kapunan of
article 542 of t e Penal Code. Ô is article punis es "any person w o s all solicit any gift or
promise as a consideration for agreeing to refrain from taking part in any public auction." Ô e
crime is consummated by t e mere act of soliciting a gift or promise for t e purpose of
abstaining from taking part in t e auction.

HELD: Ô e money received from t e judgment creditor by t e lawyer of t e judgment debtor as


consideration for t e lawyer¶s desisting from participating in t e execution sale of t e debtor¶s
property is owned by and must be turned over to t e client.

 cc3%c', 30 SCRA 187 (1969)


Suit before t e Court of First Instance of Bulacan on four causes of action to recover t e
purc ase price of raw ide delivered by plaintiff to defendant.1 Plaintiff corporation as its
principal office and place of business in Makati, Rizal. Defendant is a resident of Meycauayan,
Bulacan. Defendant moved to dismiss upon t e ground of improper venue. He claims t at by
contract suit may only be lodged in t e courts of Manila. Ô e Bulacan court overruled im. He
did not answer t e complaint. In consequence, a default judgment was rendered against im on
September 21, 1966
In addition, defendant s all pay plaintiff attorney's fees amounting to 25% of t e principal
amount due in eac cause of action, and t e costs of t e suit. Ô e amount of P400.00 s all be
deducted from t e total amount due plaintiff in accordance wit t is judgment. Defendant
appealed.

Issue: W et er t e sum is "exorbitant and unconscionable."


HELD: Ôo be borne in mind is t at t e attorneys' fees ere provided is not, strictly speaking, t e
attorneys' fees recoverable as between attorney and client spoken of and regulated by t e
Rules of Court. Rat er, t e attorneys' fees ere are in t e nature of liquidated damages and t e
stipulation t erefor is aptly called a penal clause.4 It as been said t at so long as suc
stipulation does not contravene law, morals, or public order, it is strictly binding upon
defendant.5 Ô e attorneys' fees so provided are awarded in favor of t e litigant, not is counsel.
It is t e litigant, not counsel, w o is t e judgment creditor entitled to enforce t e judgment by
execution.
A lawyer may not claim t e attorney¶s fees in t e concept of damages awarded by t e
court in favor of is client, t e latter and not t e former being entitled t ereto

' c3%c5c.c#c;@ (1956)


Mrs. Harden soug t Recto's services to protect er interest in t e conjugal property in
preparation for a divorce proceeding in US. S e won but on appeal, t e SPS mutually agreed to
desist claiming from eac ot er. Since Recto's Attorney's Fees is 20% of Mrs. Harden's part in
t e conjugal property, e now contests t e agreement. As a defense, t e American sps.
Claimed divorce is not valid in RP, t us, invalid object of contract, t us, cannot be enforced in
RP

Held: RECÔO can still recover. Object valid (not really for divorce). Except w en e and is
client ave agreed t at w atever amount t e court may award as attorney¶s fees would form
part of t e lawyer¶s compensation.
c
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c

'c3%c'%, 94 P il 419 (1954)


In Special Proceedings No. 12126 of t e Court of First Instance of Manila, Rafael
Dinglasan was t e attorney of Sebastian Palanca, one of t e eirs and an oppositor to t e
probate of t e will of is deceased fat er Carlos Palanca y Ôanguinlay. Due to differences of
opinion, Sebastian Palanca did away wit t e services of Atty. Dinglasan w o in fact wit drew
as Palanca's counsel after t e appeal from t e decision of t e Court of First Instance of Manila
probating t e will ad been elevated to t e Supreme Court. On July 7, 1952, Atty. Dinglasan
filed in t e testate proceedings a notice of attorney's lien, alleging t at e was counsel of
Sebastian Palanca from September 1950 until Marc 1952; t at t e reasonable value of is
services is at least P20,000; t at Palanca ad paid upon account only t e sum of P3,083,
leaving an unpaid balance of P16,917; and praying t at t e statement be entered upon t e
records to be encefort a lien on t e property or money t at may be adjudged to Sebastian
Palanca, or t at may be ordered paid to im by t e court. On August 16, 1952, Judge
Potenciano Pecson ordered t at t e notice of attorney's lien be attac ed to t e record for all
legal intents and purposes. On July 9, 1952, Atty. Dinglasan filed in t e same testate
proceedings a petition, praying t e Court of First Instance of Manila to fix and declare is
attorney's fees at not less t an P20,000 and to enforce t e unpaid balance of P16,917 as a lien
upon t e property or money t at may be adjudged in favor of Sebastian Palanca or upon any
sum t at may be ordered paid to t e latter. Sebastian Palanca moved to dismiss t e foregoing
petition, but t e motion was denied on August 30, 1952. Palanca's subsequent motion for
reconsideration was also denied for lack of merit. Ô e action of Judge Pecson in ordering t at
Atty. Dinglasan's notice of attorney's lien be attac ed to t e record and in taking cognizance of
t e petition to determine is fees in Special Proceedings No. 12126, is assailed by Sebastian
Palanca in a petition for certiorari filed wit t is Court against Judge Potenciano Pecson and
Rafael Dinglasan (G.R. No. L-6334).

Issue: W et er t e notice of attorney's lien may be allowed at t e stage w en it was filed,


namely, before final judgment in favor of Palanca was secured by respondent attorney.

Held:
Section 24 of Rule 127, w ic as amended by Republic Act No. 636 provides as follows:
"A client may at anytime dismiss is attorney or substitute anot er in is place, but if t e
contract between client and attorney as been reduced to writing and t e dismissal of t e
attorney was wit out justifiable cause, e s all be entitled to recover from t e client t e full
compensation stipulated in t e contract. For t e payment of suc compensation t e attorney
s all ave a lien upon all judgments, for t e payment of money and executions issued in
pursuance of suc judgment rendered in t e cases w erein is services ad been retained by
t e client." Ô e petitioner, owever, argues t at t is provision cannot be availed of by
respondent Dinglasan because t ere is neit er a written contract for attorney's fees nor a
s owing t at is dismissal was unjustified. Ô is argument is wit out merit, inasmuc as if t ere
was a written contract and t e dismissal was unjustified, Atty. Dinglasan would be entitled to t e
entirety of t e stipulated compensation, even if t e case was not yet finis ed w en e was
dismissed. In situations like t at of respondent Dinglasan t e lawyer may claim compensation
only up to t e date of is dismissal. For t e payment of suc compensation e s all
nevert eless ave a lien "upon all judgments, for t e payment of money and executions issued
in pursuance of suc judgments rendered in t e cases w erein is services ave been retained
by t e client." Section 24 does not state t at t e judgment must be secured by t e attorney
claiming t e lien.
He may take judicial action to protect is rig t to fees eit er in t e main action w ere is
services were rendered or in an independent civil suit against is client.