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THIRD DIVISION

G.R. No. 191247, July 10, 2013

FRANCISCO L. ROSARIO, JR., Petitioner, v. LELLANI DE GUZMAN, ARLEEN

DE GUZMAN, PHILIP RYAN DE GUZMAN, AND ROSELLA DE GUZMAN
BAUTISTA, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set
aside the November 23, 20091 and the February 11, 20102 Orders of the Regional Trial
Court, Branch 7, Manila (RTC), in Civil Case No. 89-50138, entitled "Loreta A. Chong v.
Sps. Pedro and Rosita de Guzman," denying the Motion to Determine Attorney's Fees
filed by the petitioner.

The Facts

Sometime in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de Guzman)
engaged the legal services of Atty. Francisco L. Rosario, Jr. (petitioner) as defense
counsel in the complaint filed against them by one Loreta A. Chong (Chong) for
annulment of contract and recovery of possession with damages involving a parcel of
land in Parañaque City, covered by Transfer Certificate of Title (TCT) No. 1292, with an
area of 266 square meters, more or less. Petitioner’s legal services commenced from the
RTC and ended up in this Court.3 Spouses de Guzman, represented by petitioner, won
their case at all levels. While the case was pending before this Court, Spouses de Guzman
died in a vehicular accident. Thereafter, they were substituted by their children, namely:
Rosella de Guzman-Bautista, Lellani de Guzman, Arleen de Guzman, and Philip Ryan de
Guzman (respondents).4

On September 8, 2009, petitioner filed the Motion to Determine Attorney’s Fees5 before

the RTC. He alleged, among others, that he had a verbal agreement with the deceased
Spouses de Guzman that he would get 25% of the market value of the subject land if the
complaint filed against them by Chong would be dismissed. Despite the fact that he had
successfully represented them, respondents refused his written demand for payment of the
contracted attorney’s fees. Petitioner insisted that he was entitled to an amount equivalent
to 25% percent of the value of the subject land on the basis of quantum meruit.

On November 23, 2009, the RTC rendered the assailed order denying petitioner’s motion
on the ground that it was filed out of time. The RTC stated that the said motion was filed
after the judgment rendered in the subject case, as affirmed by this Court, had long
become final and executory on October 31, 2007. The RTC wrote that considering that
the motion was filed too late, it had already lost jurisdiction over the case because a final
decision could not be amended or corrected except for clerical errors or mistakes. There
would be a variance of the judgment rendered if his claim for attorney’s fees would still
be included.
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Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of
merit. Hence, this petition.

The Issues

This petition is anchored on the following grounds:cralavvonlinelawlibrary

THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE

MOTION TO DETERMINE ATTORNEY’S FEES ON THE GROUND THAT IT LOST
JURISDICTION OVER THE CASE SINCE THE JUDGMENT IN THE CASE HAS
BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary

II

THE TRIAL COURT SERIOUSLY ERRED IN DECLARING THAT PETITIONER’S

CLAIM FOR ATTORNEY’S FEES WOULD RESULT IN A VARIANCE OF THE
JUDGMENT THAT HAS LONG BECOME FINAL AND
EXECUTORY;chanroblesvirtualawlibrary

III

THE TRIAL COURT ERRED IN NOT DECLARING THAT THE FINALITY OF THE
DECISION DID NOT BAR PETITIONER FROM FILING THE MOTION TO
RECOVER HIS ATTORNEY’S FEES.6nadcralavvonlinelawlibrary

Petitioner claims that Spouses de Guzman engaged his legal services and orally agreed to
pay him 25% of the market value of the subject land. He argues that a motion to recover
attorney’s fees can be filed and entertained by the court before and after the judgment
becomes final. Moreover, his oral contract with the deceased spouses can be considered a
quasi-contract upon which an action can be commenced within six (6) years, pursuant to
Article 1145 of the Civil Code. Because his motion was filed on September 8, 2009, he
insists that it was not yet barred by prescription. 7

For their part, respondents counter that the motion was belatedly filed and, as such, it
could no longer be granted. In addition, the RTC had already resolved the issue when it
awarded the amount of ?10,000.00 as attorney’s fees. Respondents further assert that the
law, specifically Article 2208 of the Civil Code, allows the recovery of attorney’s fees
under a written agreement. The alleged understanding between their deceased parents and
petitioner, however, was never put in writing. They also aver that they did not have any
knowledge or information about the existence of an oral contract, contrary to petitioner’s
claims. At any rate, the respondents believe that the amount of 25% of the market value
of the lot is excessive and unconscionable.8

The Court’s Ruling

Preliminarily, the Court notes that the petitioner filed this petition for review
on certiorari under Rule 45 of the Rules of Court because of the denial of his motion to
determine attorney’s fees by the RTC. Apparently, the petitioner pursued the wrong
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remedy. Instead of a petition for review under Rule 45, he should have filed a petition
for certiorari under Rule 65 because this case involves an error of jurisdiction or grave
abuse of discretion on the part of the trial court.

Moreover, petitioner violated the doctrine of hierarchy of courts which prohibits direct
resort to this Court unless the appropriate remedy cannot be obtained in the lower
tribunals.9 In this case, petitioner should have first elevated the case to the Court of
Appeals (CA) which has concurrent jurisdiction, together with this Court, over special
civil actions for certiorari.10 Even so, this principle is not absolute and admits of certain
exceptions, such as in this case, when it is demanded by the broader interest of justice. 11

Indeed, on several occasions, this Court has allowed a petition to prosper despite the
utilization of an improper remedy with the reasoning that the inflexibility or rigidity of
the application of the rules of procedure must give way to serve the higher ends of justice.
The strict application of procedural technicalities should not hinder the speedy disposition
of the case on the merits.12 Thus, this Court deems it expedient to consider this petition as
having been filed under Rule 65.

With respect to the merits of the case, the Court finds in favor of petitioner.

In order to resolve the issues in this case, it is necessary to discuss the two concepts of
attorney’s fees – ordinary and extraordinary. In its ordinary sense, it is the reasonable
compensation paid to a lawyer by his client for legal services rendered. In its
extraordinary concept, it is awarded by the court to the successful litigant to be paid by
the losing party as indemnity for damages.13 Although both concepts are similar in some
respects, they differ from each other, as further explained below:cralavvonlinelawlibrary

The attorney’s fee which a court may, in proper cases, award to a winning litigant is,
strictly speaking, an item of damages. It differs from that which a client pays his counsel
for the latter’s professional services. However, the two concepts have many things in
common that a treatment of the subject is necessary. The award that the court may
grant to a successful party by way of attorney’s fee is an indemnity for
damages sustained by him in prosecuting or defending, through counsel, his cause in
court. It may be decreed in favor of the party, not his lawyer, in any of the instances
authorized by law. On the other hand, the attorney’s fee which a client pays his counsel
refers to the compensation for the latter’s services. The losing party against whom
damages by way of attorney’s fees may be assessed is not bound by, nor is his liability
dependent upon, the fee arrangement of the prevailing party with his lawyer. The amount
stipulated in such fee arrangement may, however, be taken into account by the court in
fixing the amount of counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It
forms part of his judgment recoveries against the losing party. The client and his lawyer
may, however, agree that whatever attorney’s fee as an element of damages the court may
award shall pertain to the lawyer as his compensation or as part thereof. In such a case,
the court upon proper motion may require the losing party to pay such fee directly to the
lawyer of the prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as a
prerequisite to their grant, the intervention of or the rendition of professional services by a
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lawyer. As a client may not be held liable for counsel fees in favor of his lawyer who
never rendered services, so too may a party be not held liable for attorney’s fees as
damages in favor of the winning party who enforced his rights without the assistance of
counsel. Moreover, both fees are subject to judicial control and modification. And the
rules governing the determination of their reasonable amount are applicable in one as in
the other.14 [Emphases and underscoring supplied]

In the case at bench, the attorney’s fees being claimed by the petitioner refers to the
compensation for professional services rendered, and not as indemnity for damages. He is
demanding payment from respondents for having successfully handled the civil case filed
by Chong against Spouses de Guzman. The award of attorney’s fees by the RTC in the
amount of P10,000.00 in favor of Spouses de Guzman, which was subsequently affirmed
by the CA and this Court, is of no moment. The said award, made in its extraordinary
concept as indemnity for damages, forms part of the judgment recoverable against the
losing party and is to be paid directly to Spouses de Guzman (substituted by respondents)
and not to petitioner. Thus, to grant petitioner’s motion to determine attorney’s fees
would not result in a double award of attorney’s fees. And, contrary to the RTC ruling,
there would be no amendment of a final and executory decision or variance in judgment.

The Court now addresses two (2) important questions: (1) How can attorney’s fees for
professional services be recovered? (2) When can an action for attorney’s fees for
professional services be filed? The case of Traders Royal Bank Employees Union-
Independent v. NLRC15 is instructive:cralavvonlinelawlibrary

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-
NCR Certified Case No. 0466, private respondent’s present claim for attorney’s fees may
be filed before the NLRC even though or, better stated, especially after its earlier decision
had been reviewed and partially affirmed. It is well settled that a claim for attorney’s
fees may be asserted either in the very action in which the services of a lawyer had
been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney’s fees as an incident
of the main action may be availed of only when something is due to the
client. Attorney’s fees cannot be determined until after the main litigation has been
decided and the subject of the recovery is at the disposition of the court. The issue
over attorney’s fees only arises when something has been recovered from which the fee is
to be paid.
While a claim for attorney’s fees may be filed before the judgment is rendered, the
determination as to the propriety of the fees or as to the amount thereof will have to
be held in abeyance until the main case from which the lawyer’s claim for attorney’s
fees may arise has become final. Otherwise, the determination to be made by the
courts will be premature. Of course, a petition for attorney’s fees may be filed before
the judgment in favor of the client is satisfied or the proceeds thereof delivered to
the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to
file his claim for professional fees. Hence, private respondent was well within his
rights when he made his claim and waited for the finality of the judgment for
holiday pay differential, instead of filing it ahead of the award’s complete resolution.
To declare that a lawyer may file a claim for fees in the same action only before the
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judgment is reviewed by a higher tribunal would deprive him of his aforestated

options and render ineffective the foregoing pronouncements of this Court.
[Emphases and underscoring supplied]

In this case, petitioner opted to file his claim as an incident in the main action, which is
permitted by the rules. As to the timeliness of the filing, this Court holds that the
questioned motion to determine attorney’s fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on
October 31, 2007. There is no dispute that petitioner filed his Motion to Determine
Attorney’s Fees on September 8, 2009, which was only about one (1) year and eleven
(11) months from the finality of the RTC decision. Because petitioner claims to have had
an oral contract of attorney’s fees with the deceased spouses, Article 1145 of the Civil
Code16 allows him a period of six (6) years within which to file an action to recover
professional fees for services rendered. Respondents never asserted or provided any
evidence that Spouses de Guzman refused petitioner’s legal representation. For this
reason, petitioner’s cause of action began to run only from the time the respondents
refused to pay him his attorney’s fees, as similarly held in the case of Anido v. Negado:17

In the case at bar, private respondent’s allegation in the complaint that petitioners refused
to sign the contract for legal services in October 1978, and his filing of the complaint only
on November 23, 1987 or more than nine years after his cause of action arising from the
breach of the oral contract between him and petitioners point to the conclusion that the
six-year prescriptive period within which to file an action based on such oral contract
under Article 1145 of the Civil Code had already lapsed.

As a lawyer, private respondent should have known that he only had six years from
the time petitioners refused to sign the contract for legal services and to
acknowledge that they had engaged his services for the settlement of their parents’
estate within which to file his complaint for collection of legal fees for the services
which he rendered in their favor. [Emphases supplied]

At this juncture, having established that petitioner is entitled to attorney’s fees and that he
filed his claim well within the prescribed period, the proper remedy is to remand the case
to the RTC for the determination of the correct amount of attorney’s fees. Such a
procedural route, however, would only contribute to the delay of the final disposition of
the controversy as any ruling by the trial court on the matter would still be open for
questioning before the CA and this Court. In the interest of justice, this Court deems it
prudent to suspend the rules and simply resolve the matter at this level. The Court has
previously exercised its discretion in the same way in National Power Corporation v.
Heirs of Macabangkit Sangkay:18

In the event of a dispute as to the amount of fees between the attorney and his client, and
the intervention of the courts is sought, the determination requires that there be evidence
to prove the amount of fees and the extent and value of the services rendered, taking into
account the facts determinative thereof. Ordinarily, therefore, the determination of the
attorney’s fees on quantum meruit is remanded to the lower court for the
purpose. However, it will be just and equitable to now assess and fix the attorney’s
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fees of both attorneys in order that the resolution of “a comparatively simple

controversy,” as Justice Regalado put it in Traders Royal Bank Employees Union-
Independent v. NLRC, would not be needlessly prolonged, by taking into due
consideration the accepted guidelines and so much of the pertinent data as are extant in
the records.19 [Emphasis supplied]

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s
considered view that he is deserving of it and that the amount should be based
on quantum meruit.

Quantum meruit – literally meaning as much as he deserves – is used as basis for

determining an attorney’s professional fees in the absence of an express agreement. The
recovery of attorney’s fees on the basis of quantum meruit is a device that prevents an
unscrupulous client from running away with the fruits of the legal services of counsel
without paying for it and also avoids unjust enrichment on the part of the attorney
himself. An attorney must show that he is entitled to reasonable compensation for the
effort in pursuing the client’s cause, taking into account certain factors in fixing the
amount of legal fees.20

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining

the proper amount of attorney fees, to wit:cralavvonlinelawlibrary

Rule 20.1 – A lawyer shall be guided by the following factors in determining his
fees:cralavvonlinelawlibrary

a) The time spent and the extent of the services rendered or

required;chanroblesvirtualawlibrary

b) The novelty and difficulty of the questions involved;chanroblesvirtualawlibrary

c) The importance of the subject matter;chanroblesvirtualawlibrary

d) The skill demanded;chanroblesvirtualawlibrary

e) The probability of losing other employment as a result of acceptance of the proffered

case;chanroblesvirtualawlibrary

f) The customary charges for similar services and the schedule of fees of the IBP chapter
to which he belongs;chanroblesvirtualawlibrary

g) The amount involved in the controversy and the benefits resulting to the client from the
service;chanroblesvirtualawlibrary

h) The contingency or certainty of compensation;chanroblesvirtualawlibrary

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

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Petitioner unquestionably rendered legal services for respondents’ deceased parents in the
civil case for annulment of contract and recovery of possession with damages. He
successfully represented Spouses de Guzman from the trial court level in 1990 up to this
Court in 2007, for a lengthy period of 17 years. After their tragic death in 2003, petitioner
filed a notice of death and a motion for substitution of parties with entry of appearance
and motion to resolve the case before this Court. 21 As a consequence of his efforts, the
respondents were substituted in the place of their parents and were benefited by the
favorable outcome of the case.

As earlier mentioned, petitioner served as defense counsel for deceased Spouses de

Guzman and respondents for almost seventeen (17) years. The Court is certain that it was
not an easy task for petitioner to defend his clients’ cause for such a long period of time,
considering the heavy and demanding legal workload of petitioner which included the
research and preparation of pleadings, the gathering of documentary proof, the court
appearances, and the various legal work necessary to the defense of Spouses de Guzman.
It cannot be denied that petitioner devoted much time and energy in handling the case for
respondents. Given the considerable amount of time spent, the diligent effort exerted by
petitioner, and the quality of work shown by him in ensuring the successful defense of his
clients, petitioner clearly deserves to be awarded reasonable attorney’s fees for services
rendered. Justice and equity dictate that petitioner be paid his professional fee based
on quantum meruit.

The fact that the practice of law is not a business and the attorney plays a vital role in the
administration of justice underscores the need to secure him his honorarium lawfully
earned as a means to preserve the decorum and respectability of the legal profession. A
layer is as much entitled to judicial protection against injustice, imposition or fraud on the
part of his client as the client against abuse on the part of his counsel. The duty of the
court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty
to see that a lawyer is paid his just fees. With his capital consisting of his brains and with
his skill acquired at tremendous cost not only in money but in expenditure of time and
energy, he is entitled to the protection of any judicial tribunal against any attempt on the
part of his client to escape payment of his just compensation. It would be ironic if after
putting forth the best in him to secure justice for his client he himself would not get his
due.22

The Court, however, is resistant in granting petitioner's prayer for an award of 25%
attorney's fees based on the value of the property subject of litigation because petitioner
failed to clearly substantiate the details of his oral agreement with Spouses de Guzman. A
fair and reasonable amount of attorney's fees should be 15% of the market value of the
property.

WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion to
Determine Attorney's Fees filed by petitioner Atty. Francisco L. Rosario, Jr. Based
on quantum meruit, the amount of attorney's fees is at the rate of 15% of the market value
of the parcel of land, covered by Transfer Certificate of Title No. 1292, at the time of
payment.

SO ORDERED.