G.R. No. 212346 - Funk vs. Santos Ventura Hocorma Foundation, Inc.

Atty. Richard V. Funk, petitioner, represented Teodoro Santos in 1983 in connection with a collection case against Philbank Corporation and in a property transfer involving the Santos Ventura Hocorma Foundation, Inc. (the Foundation).
The attorney was compensated by agreed fees based on percentages of the market value of the recovered properties, and Teodoro Santos executed a Special Power of Attorney (SPA) authorizing Atty. Funk to collect these fees from the Foundation.
The Foundation later failed to fully pay the attorney’s fees leading to the initiation of a collection case with the Regional Trial Court (RTC) in Makati City.

On February 14, 1994, the RTC ordered the Foundation to pay attorney’s fees – P150,000.00 for the collection case and P500,000.00 for the transfer of properties.
Upon Atty. Funk’s motion for reconsideration, the RTC increased the attorney’s fees to P918,919.50 and declared him a de facto co-owner of 10% of the properties, though the Court of Appeals (CA) later held that he had no entitlement to co-ownership.

On appeal, the CA affirmed the RTC’s award on fees while disallowing the claim for co-ownership of the properties.
The Foundation subsequently appealed to the Supreme Court in a separate “mother case” (G.R. No. 131260), where the Supreme Court denied the Foundation’s appeal, confirming that the SPA had been validly approved and that the retainer agreements were to be implemented.
The decision in the mother case became final and executory, forming the backdrop for all subsequent execution motions.

Atty. Funk filed a first motion for execution with the RTC, which ultimately resulted in the Foundation paying the total attorney’s fees of P1,450,501.02. However, the Foundation withheld P167,735.48 for taxes (remitted to the Bureau of Internal Revenue or BIR) and deducted a bill of costs amounting to P20,281.00.
On February 16, 2009, the RTC upheld the remittance of the withholding taxes but denied the inclusion of the bill of costs on the ground that Atty. Funk did not comply with Section 8, Rule 142 of the Rules of Court.
Despite a subsequent urgent motion filed directly with the Supreme Court, the motion was denied and expunged from the record because it bypassed the proper appellate hierarchy.
Atty. Funk later filed a second motion for execution of costs with the RTC, which was also denied on October 23, 2009, based on the finality of the February 16, 2009 order and his failure to duly contest the ruling through reconsideration or appeal.

Atty. Funk, unsatisfied with the CA and RTC rulings, filed a petition for review on certiorari challenging:

The application of Section 8, Rule 142 regarding the execution of costs.
The timeliness of his motions for execution under Section 6, Rule 39 of the Rules of Court.
The binding nature of the BIR’s opinion on the withholding of taxes on his attorney’s fees.

The respondents contended that Atty. Funk’s failure to comply with the procedural requirements and his lack of timely appeal or reconsideration rendered the RTC order final and immutable.

Whether the costs of suit may still be executed despite the RTC’s denial of the first and second motions for execution.
Whether the procedural requirements set forth in Section 8, Rule 142 and Section 6, Rule 39 of the Rules of Court were correctly applied in denying Atty. Funk’s motions.

Whether Atty. Funk can recover the P167,735.48 withheld and remitted to the BIR, in light of the BIR’s opinion and its binding effect on the matter.