G.R. No. 160334 - Bach vs. Ongkiko Kalaw Manhit and Acorda Law Offices

On November 7, 1994, petitioner Guenter Bach engaged respondent law firm Ongkiko Kalaw Manhit & Accorda Law Offices to represent him in a Petition for Declaration of Nullity of Marriage filed before the RTC of Makati City, Branch 143 (Civil Case No. 95-224).
The parties executed a “Fee Agreement” which provided:

A fee of seven and one-half (7.5%) of all cash recoveries, including damages, interests, attorney’s fees, and costs; and
A fee of five percent (5%) of the market value of all properties awarded to petitioner or obtained via compromise, valued at the time of recovery.

On December 5, 1995, respondent withdrew as counsel due to policy differences with the petitioner.
On December 18, 1995, respondent sent a termination billing charging petitioner P1,000,000.00 plus 2% interest per month for delayed payment, based on a clause in their Fee Agreement that allowed for collection of fees on a quantum meruit basis upon termination.

On March 7, 1996, respondent filed a Notice of Charging Lien over the properties of the Bach spouses with the RTC.
On February 5, 1997, the RTC issued an order directing the annotation of the charging lien in the amount of P1,000,000.00 on all titles of the Bach spouses’ personal and real properties.
On February 11, 1999, respondent received a copy of an order dated June 8, 1998, granting petitioner’s motion to withdraw his petition in Civil Case No. 95-224.
Despite repeated demands for payment of fees, petitioner failed to settle the bill, prompting respondent to file a Complaint for a sum of money before the RTC of Makati, Branch 148 (Civil Case No. 99-514), where respondent prayed for:

P1,000,000.00 as lawful fees for services rendered (with 2% interest from demand until paid);
P250,000.00 as exemplary damages;
P200,000.00 for billable time spent in prosecuting the case, plus an additional P150,000.00 for any appeal; and
P50,000.00 for litigation expenses and cost of suit.

Petitioner moved to dismiss the complaint on the ground that prior payment of P200,000.00 had been made to respondent. This motion was denied on August 9, 1999, and petitioner was subsequently declared in default.

On January 24, 2002, the RTC rendered judgment in favor of respondent, awarding:

P750,000.00 as attorney’s fees for services rendered in Civil Case No. 95-224, with interest at 2% per month from the date of demand;
P700,000.00 for billable time spent in prosecuting the case; and
P50,000.00 for litigation expenses and cost of suit.

Petitioner appealed the RTC decision, contending that the fees based on quantum meruit were excessive and unreasonable.
The Court of Appeals modified the RTC decision by:

Deleting the award of P700,000.00 for billable time; and
Upholding the award of P750,000.00 (with interest) for attorney’s fees and P50,000.00 for litigation expenses and cost of suit.

Petitioner raised issues regarding the reasonableness of the quantum meruit fee and the legal basis for the imposition of litigation expenses.

Annotating several notices of lis pendens on the properties of the Bach spouses in various locations (Caloocan City, Pasig City, Dasmarias and Tanza in Cavite, Makati, and Tagaytay City), thereby restraining the disposition of the properties.
Filing the Petition for Declaration of Nullity of Marriage and Dissolution of the Conjugal Partnership of Gains.
Preparing an affidavit attesting to petitioner’s marriage and the properties acquired during the marriage.
Preparing and filing various motions, including an ex parte motion concerning the waiver of the right to file an answer by petitioner’s wife, a Petition for appointment of a receiver, motions for preliminary investigation, and subsequent pleadings during litigation.
Conducting numerous hearings in Civil Case No. 95-224, participating in preliminary and post-litigation conferences, and filing various correspondences to protect petitioner’s interests.
Securing a court order freezing funds in the United Coconut Planters Bank (UCPB) account in the name of petitioner’s wife, Luzviminda Bach.

The aggregate of these services, although detailed, reflected the normal duties of a lawyer and did not involve any extraordinary or highly complex legal maneuvers.

Whether under the concept of quantum meruit the awarded fee of P750,000.00 (with 2% monthly interest from the date of demand) was reasonable for services rendered by respondent.
Whether there was any legal basis to award litigation expenses (initially P50,000.00) as part of the respondent’s claim.