Title
Rosario Jr. vs. De Guzman
Case
G.R. No. 191247
Decision Date
Jul 10, 2013
Atty. Rosario sought attorney’s fees after successfully defending Spouses de Guzman in a land dispute. The Supreme Court ruled his claim timely, upheld jurisdiction, and awarded 15% of the property’s value based on quantum meruit.

Case Summary (G.R. No. 211522)

Factual Background and Procedural History

In August 1990, Spouses Pedro and Rosita de Guzman engaged Atty. Francisco L. Rosario, Jr. to defend them in a civil case for annulment of contract and recovery of possession filed by Loreta A. Chong, involving the subject parcel of land. Petitioner successfully represented the Spouses de Guzman throughout all judicial levels, culminating in the Supreme Court’s affirmation of their victory. While the case was still pending before the Supreme Court, both spouses died in a vehicular accident and were subsequently substituted by their children—the respondents. On September 8, 2009, petitioner filed a Motion to Determine Attorney’s Fees before the Regional Trial Court (RTC), asserting an oral agreement to receive 25% of the subject land’s market value as his fee. The RTC denied this motion for being untimely, stating it lost jurisdiction over the case after the judgment became final and executory on October 31, 2007. A motion for reconsideration was also denied, prompting petitioner to elevate the matter to the Supreme Court via a Rule 45 petition for review on certiorari.

Issues Presented for Resolution

  1. Whether the RTC erred in denying the motion to determine attorney’s fees on the basis of lack of jurisdiction due to the finality of the judgment;
  2. Whether the RTC erred in ruling that awarding attorney’s fees would cause a variance in the final judgment;
  3. Whether the finality of the decision barred petitioner from filing the motion to recover attorney’s fees.

Petitioner’s Arguments

Petitioner claimed the existence of a verbal contract entitling him to 25% of the market value of the land if the complaint against the de Guzmans was dismissed. He argued the Motion to Determine Attorney’s Fees was timely, having been filed within six years from the denial of payment, consistent with the prescriptive period under Article 1145 of the Civil Code governing actions upon oral or quasi-contracts. Petitioner further contended that an attorney’s fees claim may be presented either as an incident to the main action or as a separate action, and may be entertained before or even after the judgment becomes final.

Respondents’ Counterarguments

Respondents contended that the motion was belated and thus properly denied. They cited that attorney’s fees may only be recovered under a valid written agreement as per Article 2208 of the Civil Code, which petitioner lacked. They denied knowledge of any oral agreement and asserted the 25% claim was excessive and unconscionable. They emphasized that attorney’s fees awarded by the RTC earlier were already resolved and formed part of the damages recoverable by Spouses de Guzman, not the petitioner.

Jurisdictional and Procedural Considerations

The Supreme Court noted petitioner’s improper recourse under Rule 45 instead of Rule 65, which pertains to special civil actions for certiorari arising from grave abuse of discretion or lack of jurisdiction. Jurisdictionally, petitioner should have sought recourse with the Court of Appeals first, per the doctrine of hierarchy of courts, unless broader interests of justice justified deviation. The Court opted to treat the petition as filed under Rule 65 to ensure substantive justice.

Distinction Between Ordinary and Extraordinary Attorney’s Fees

The Court elaborated on the dual nature of attorney’s fees:

  • Ordinary attorney’s fees refer to reasonable compensation paid by a client to a lawyer for professional services rendered pursuant to a contract;
  • Extraordinary attorney’s fees are court-awarded indemnities payable by the losing party to the prevailing party for damages sustained in litigation.

The fees awarded earlier by the RTC (P10,000.00) concerned the extraordinary attorney’s fees, payable to the client (Spouses de Guzman or their heirs), not directly to petitioner. The instant claim concerns ordinary attorney’s fees due petitioner under an alleged oral contract. Therefore, awarding these fees would not result in double recovery nor cause any variance in the final judgment.

Recovery and Timing of Attorney’s Fees for Professional Services

Referencing jurisprudence, the Court reaffirmed that attorney’s fees for professional services may be claimed either as an incident to the main action or in a separate action, and may be filed before or after the finality of the main case’s judgment. The key principle is that the claim must be filed within the prescriptive period, which is six years for actions based on oral or quasi-contracts under Article 1145 of the Civil Code. In this case, petitioner’s Motion to Determine Attorney’s Fees filed on September 8, 2009, was within this period measured from the finality of the RTC’s decision on October 31, 2007.

Application of Prescriptive Period and Cause of Action

Petitioner’s cause of action did not accrue when services were rendered but began upon respondents’ refusal to pay his fees. Respondents failed to show any renunciation or refusal prior to the motion, thus the claim is not yet barred by prescription. This principle parallels prior Supreme Court rulings holding that the six-year prescriptive period for an oral contract accrues upon breach or refusal to pay, rather than when services were performed.

Quantum Meruit as Basis for Attorney’s Fees

Absent a clear or sufficiently substantiated oral agreement, attorney’s fees should be awarded on the basis of quantum meruit — i.e., as reasonable compensation based on the value of services rendered. Quantum meruit prevents unjust enrichment of clients who benefit from legal services without just payment and protects attorneys from unjust deprivation of fees.

Factors Governing Reasonable Attorney’s Fees

Under Rule 20.1 of the Code of Professional Responsibility, the following factors inform proper attorney’s fees:

  • Time and extent of services rendered;
  • Novelty and difficulty of questions involved;
  • Importance of subject matter;
  • Skill required;
  • Risk of losing other employment;
  • Customary charges and IBP fee schedules;
  • Amount involved and benefits to client;
  • Contingency/certainty of compensation;
  • Character of employment (occasional or established);
  • Professional standing of the lawyer.

Petitioner represented de Guzman

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