G.R. No. 211478 - Duhay et al. vs. Ombudsman

Case Summary (G.R. No. 211478)

Factual Background

In August 1990 Spouses Pedro and Rosita de Guzman engaged FRANCISCO L. ROSARIO, JR. as defense counsel in an annulment of contract and recovery of possession case filed by Loreta A. Chong concerning a parcel of land in Parañaque City covered by Transfer Certificate of Title No. 1292, containing approximately 266 square meters. The litigation proceeded from the Regional Trial Court to the Supreme Court, and the Spouses de Guzman, represented by petitioner, prevailed at all judicial levels. While the case was pending before this Court, the Spouses de Guzman died in a vehicular accident and were later substituted by their four children, the respondents herein.

Motion to Determine Attorneys Fees and Trial Court Rulings

On September 8, 2009 petitioner filed a Motion to Determine Attorneys Fees before the RTC, alleging an oral agreement with the deceased Spouses de Guzman entitling him to twenty-five percent of the market value of the subject land if the complaint were dismissed, and asserting his entitlement alternatively on quantum meruit. The RTC denied the motion by order dated November 23, 2009 on the ground that it was filed after the judgment had become final and executory on October 31, 2007, holding that the court had lost jurisdiction to amend or vary a final judgment except for clerical errors or mistakes. Petitioner’s motion for reconsideration was denied by order dated February 11, 2010.

Petition and Fundamental Procedural Objection

Petitioner filed this Court a petition for review on certiorari under Rule 45, Rules of Court to challenge the RTC orders. The Supreme Court observed preliminarily that the petitioner invoked the wrong remedy, because the case involved alleged jurisdictional error or grave abuse of discretion and should have been the subject of a petition for certiorari under Rule 65. The Court also noted the doctrine of hierarchy of courts which ordinarily requires elevation to the Court of Appeals where concurrent jurisdiction exists. The Court nonetheless declined dismissal on procedural grounds and, invoking recognized exceptions where justice so requires, exercised its discretion to treat the pleading as if filed under Rule 65 and reached the merits.

Parties’ Contentions

Petitioner contended that he had an oral agreement to receive twenty-five percent of the market value of the property and that his motion to recover attorneys fees was timely because an action founded on an oral contract accrues a six-year prescriptive period under Art. 1145, Civil Code, and his motion, filed on September 8, 2009, was within that period measured from respondents’ refusal to pay. Respondents countered that the motion was belated, that attorneys fees previously awarded by the RTC in the amount of P10,000.00 had already resolved the matter, that Art. 2208, Civil Code permits recovery of attorneys fees only under a written agreement, and that there was no evidence of any written contract or prior knowledge by respondents of an oral agreement. Respondents also asserted that twenty-five percent of the market value was excessive.

Nature of Attorneys Fees: Ordinary and Extraordinary

The Court analyzed the two distinct conceptions of attorneys fees: the ordinary fee, which is the compensation paid by a client to his counsel for professional services; and the extraordinary fee, which is an award by the court to the successful party as an item of damages to be paid by the losing party. The Court emphasized that the two concepts differ in ownership and function: the fee awarded as damages belongs to the litigant and forms part of the judgment recoverable against the losing party, while a contractual or consensual fee is the lawyer’s compensation, though the court may, upon motion, direct that an award of attorneys fees as damages be paid directly to counsel.

No Double Recovery and Jurisdictional Effect of Finality

Applying the foregoing distinction, the Court concluded that petitioner’s claim sought compensation for professional services rendered and not attorneys fees as an item of damages. Therefore, the prior award of P10,000.00 in the underlying judgment, which was made in the extraordinary sense as indemnity to the prevailing parties, did not satisfy petitioner’s contractual or quasi-contractual claim and would not result in double recovery if petitioner’s motion were granted. The Court further held that granting petitioner’s motion would not amend or vary a final and executory judgment because petitioner’s claim concerns a separate obligation arising from an oral contract or quasi-contract and thus does not alter the substance of the final judgment.

When and How Attorneys Fees for Professional Services May Be Recovered

Relying on precedent, particularly Traders Royal Bank Employees Union-Independent v. NLRC, the Court stated that a lawyer may assert a claim for professional fees either as an incident in the main action or in a separate action, and that such a claim may be presented before or after review by a higher tribunal; however, determination of the fee is ordinarily deferred until something is due to the client or the judgment in the main case has become final so that there is a fund or recovery from which fees may be paid. The Court recognized that the lawyer therefore has two options and that filing a claim for fees after finality does not per se render the claim premature or untimely.

Prescription and Accrual of Cause of Action

The Court addressed prescription under Art. 1145, Civil Code, observing that actions upon an oral contract must be commenced within six years and that the cause of action for a lawyer’s fee arising from an oral contract accrues when the client refuses to pay. The Court found that petitioner filed his motion within six years of the judgment’s finality—approximately one year and eleven months after October 31, 2007—and that respondents did not assert that the Spouses de Guzman had refused payment at an earlier date. Hence, the petition to determine fees was seasonably filed.

Application of Quantum Meruit and Assessment Factors

The Court held that petitioner was entitled to reasonable compensation under quantum meruit because he rendered exten

Case Syllabus (G.R. No. 211478)

Parties and Posture

FRANCISCO L. ROSARIO, JR. was the petitioner who filed a Motion to Determine Attorneys Fees before the RTC and thereafter instituted a petition for review on certiorari under Rule 45 to the Supreme Court.
LELLANI DE GUZMAN, ARLEEN DE GUZMAN, PHILIP RYAN DE GUZMAN, and ROSELLA DE GUZMAN BAUTISTA were the respondents who succeeded their deceased parents as parties in the underlying litigation.
The underlying action was Loreta A. Chong v. Sps. Pedro and Rosita de Guzman which involved a parcel of land covered by Transfer Certificate of Title No. 1292.
The petition sought review of the RTC’s November 23, 2009 and February 11, 2010 orders denying the Motion to Determine Attorneys Fees.

Key Facts

Spouses Pedro and Rosita de Guzman engaged petitioner in August 1990 to defend them in an annulment of contract and recovery of possession action filed by Loreta A. Chong.
The litigation proceeded from the RTC up to the Supreme Court, with finality reached after this Court affirmed the favorable judgment.
The deceased Spouses de Guzman died in a vehicular accident and were later substituted by their children who are the respondents.
Petitioner alleged an oral agreement by which he would receive twenty-five percent of the market value of the subject land if the complaint was dismissed.
Petitioner filed the Motion to Determine Attorneys Fees on September 8, 2009, which the RTC denied as untimely because the judgment became final and executory on October 31, 2007.

Procedural History

The RTC rendered an August 8, 1994 decision which became final and executory on October 31, 2007.
Petitioner filed the Motion to Determine Attorneys Fees on September 8, 2009 before the RTC in Civil Case No. 89-50138.
The RTC denied the motion on November 23, 2009 on the ground of loss of jurisdiction due to finality of judgment, and denied reconsideration on February 11, 2010.
Petitioner filed a Rule 45 petition with the Supreme Court which the Court treated as a petition under Rule 65.

Issues Presented

Whether the RTC erred in denying the Motion to Determine Attorneys Fees on the ground that it lost jurisdiction because the judgment had become final and executory.
Whether permitting petitioner’s claim for attorneys fees would result in a variance of a final and executory judgment.
Whether the finality of the decision barred petitioner from filing a motion to recover his attorneys fees under an alleged oral agreement.

Parties' Contentions

Petitioner contended that he had an oral agreement entitling him to twenty-five percent of the market value of the lot and that his claim was timely within the six-year prescriptive period under Article 1145 of the Civil Code.
Respondents contended that the motion was belated and barred by finality, that any prior award of P10,000.00 for attorneys fees in the extraordinary sense settled the issue, that Article 2208 of the Civil Code requires a written agreement for recovery, and that twenty-five percent was excessive and unconscionable.

Lower Court Rulings

The RTC denied the Motion to Determine Attorneys Fees on the ground that it had lost jurisdiction because the judgment had become final and executory on October 31, 2007.
The RTC previously awarded P10,000.00 as attorneys fees in the extraordinary sense, which the