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RepublicofthePhilippines
SUPREMECOURT
Manila

FIRSTDIVISION

G.R.No.104600July2,1999

RILLORAZA,AFRICA,DEOCAMPOandAFRICA,petitioner,
vs.
EASTERNTELECOMMUNICATIONSPHILS.,INC.andPHILIPPINELONGDISTANCETELEPHONECOMPANY,
respondents.

PARDO,J.:

The basic issue submitted for consideration of the Court is whether or not petitioner is entitled to recover
attorney's fees amounting to Twenty Six Million Three Hundred Fifty Thousand Seven Hundred Seventy Nine
Pesos and Ninety One Centavos (P26,350,779.91) for handling the case for its client Eastern
Telecommunications Philippines, Inc. filed with the Regional Trial Court, Makati, though its services were
terminatedinmidstreamandtheclientdirectlycompromisedthecasewiththeadverseparty.

TheFacts

Ingivingduecoursetothepetition,wecarefullyconsideredthefactsattendanttothecase.OnAugust28,1987,
EasternTelecommunicationsPhilippines,Inc.(ETPI)representedbythelawfirmSanJuan,Africa,Gonzalesand
San Agustin (SAGA), filed with the Regional Trial Court, Makati, a complaint for recovery of revenue shares
againstPhilippineLongDistanceTelephoneCompany(PLDT).Atty.FranciscoD.Rilloraza,apartnerofthefirm
appearedforETPI.

AfterETPIresteditscase,itpaidSAGAthebilledamountofOneHundredThousandPesos(P100,000.00).On
September18,1987,thetrialcourtissuedaresolutiongrantingETPI'sapplicationforpreliminaryrestrictiveand
mandatoryinjunctions.Duringthisperiod,SAGAwasdissolvedandfourofthejuniorpartnersformedthelawfirm
Rilloraza,Africa,DeOcampo&Africa(RADA),whichtookoverascounselinthecaseforETPI.Thelattersigned
aretaineragreementwithcounseldatedOctober1,1987.1

Petitionerspresentedthethreeaspectsofthemaincaseinthetrialcourt.First,thetrafficrevenueshareswhich
ETPI sought to recover from PLDT in accordance with the contract between them. Second, ETPI sought
preventive injunctive relief against the PLDT's threats to deny ETPI access to the Philippines international
gateway switch. Third, ETPI called this the "foreign correspondentships aspect" where ETPI sought preventive
injunctive relief against PLDT's incursions and inducements directed at ETPI's foreign correspondents in
Hongkong, Taiwan and Singapore, to break their correspondentship contracts with PLDT, using the threat of
denyingthemaccesstotheinternationalgatewayasleverage.

Inthisconnection,ETPIfiledwiththetrialcourttwourgentmotionsforrestrainingorder,oneonOctober30,1987
and another on November 4, 1987. As the applications were not acted upon, ETPI brought the case up to the
CourtofAppealsbypetitionforcertiorari.

On June 28, 1988, petitioner received a letter from ETPI signed by E. M. Villanueva, President and Chief
ExecutiveOfficer.Insubstance,theletterstatedthatETPIwasterminatingtheretainercontractdatedOctober1,
1987,effectiveJune30,1988.

OnJune29,1988,petitionerfiledwiththeRegionalTrialCourtanoticeofattorney'slien,furnishingcopiestothe
plaintiffETPI,tothesignatoryoftheterminationletterandPLDT.Onthesamedate,petitioneradditionallysenta
letter to ETPI attaching its partial billing statement. In its notice, RADA informed the court that there were
negotiationstowardsacompromisebetweenETPIandPLDT.

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In April 1990, petitioner confirmed that indeed the parties arrived at an amicable settlement and that the same
wasenteredasajudgment.OnApril26,1990,petitionerfiledamotionfortheenforcementofattorney'slienwith
theRegionalTrialCourtofMakatiandthenappraisedtheSupremeCourtthereofbymanifestation.2Wenotedthe
manifestationinaresolutiondatedJuly23,1990.

OnMay24,1990,PLDTfiledwiththetrialcourtamanifestationthatitisnotapartytonorinanymannerinvolved
in the attorney's lien being asserted by Atty. Rilloraza for and in behalf of the law firm, 3 while ETPI filed its
oppositiontheretoonJune11,1990.

TheLowerCourt'sRuling

The trial court in its resolution dated September 14, 1990 denied the motion for enforcement of attorney's lien.
Thus:

WHEREFORE,premisesconsidered,thecourtfindsthattheNoticeofAttorney'sLienfiledbythelaw
firmofRilloraza,Africa,DeOcampoandAfricahasnobasisinfactandinlaw,andthereforedenies
theMotionforEnforcementofAttorney'sLien.

SOORDERED.

Makati,MetroManila,September4,1990.

(s/t)ZEUSC,ABROGAR

Judge4

OnOctober10,1990,petitionerfiledwiththetrialcourtanoticeofappealfromtheabovementionedordertothe
SupremeCourt.OnNovember6,1990,ETPIfiledaMotiontoDismissAppealcontendingthatthecasecouldbe
brought to the Supreme Court only via a petition for review on certiorari, not by a mere notice of appeal. In an
orderdatedJanuary16,1991,thetrialcourtdismissedRADA'sappeal.

Thetrialcourtsaid:

There is no more regular appeal from the Regional Trial Court to the Supreme Court. Under the
amendmentofSection17oftheJudiciaryActbyR.A.5440,ordersandjudgmentsoftheRegional
TrialCourtmaybeelevatedtotheSupremeCourtonlybypetitionforreviewoncertiorari.

xxxxxxxxx

Wherefore, premises considered, the order dated September 14, 1990 is hereby reconsidered and
setaside.TheNoticeofAppealfiledbymovantRADAisdismissed.

SOORDERED.

Giventhis16thdayofJanuary,1991,atMakati,MetroManila.

(s/t)ZEUSC,ABROGAR

Judge5

Hence,onFebruary9,1991,petitionerfiledapetitionforcertiorariwiththeSupremeCourt,whichweremanded
to the Court of Appeals. The latter dismissed the petition in a decision promulgated on November 14, 1991, 6
rulingthatthejudgecommittednoabuseofdiscretionindenyingpetitioner'smotionforenforcementofattorney'slien.Thus:

Wethereforerulethatrespondentjudgecommittednoabuseofdiscretion,muchlessagraveone,in
denyingpetitioner'smotionforenforcementofattorney'slien.

Assumingthatrespondentjudgecommittedanerrorindenyingpetitioner'smotionforenforcementof
attorney'slien,itcannotbecorrectedbycertiorari.

WHEREFORE, the writs prayed for are DENIED, and the petition is hereby DISMISSED, with cost
againstpetitioner.

SOORDERED.

(s/t)REGINAG.ORDOEZBENITEZ

AssociateJustice
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WECONCUR:

(s/t)JOSEA.R.MELO(s/t)EMETERIOC,CUI

AssociateJusticeAssociateJustice7

DISCUSSION

A.TheProceduralAspect

There is nothing sacrosanct about procedural rules, which are liberally construed in order to promote their
objectives and assist the parties in obtaining just, speedy and inexpensive determination of every action or
proceeding.8Inanalogouscase, 9weruledthatwheretherigidapplicationoftheruleswouldfrustratesubstantialjustice
10,orbarthevindicationofalegitimategrievance,thecourtsarejustifiedinexemptingaparticularcasefromtheoperation
oftherules.

InAOneFeeds,Inc.vs.CourtofAppeals,wesaid

Litigationsshould,asmuchaspossible,bedecidedonthemeritsandnotontechnicality.Dismissal
ofappealspurelyontechnicalgroundsisfrownedupon,andtherulesofprocedureoughtnottobe
appliedinaveryrigid,technicalsense,fortheyareadoptedtohelpsecure,notoverride,substantial
justiceandtherebydefeattheirveryclaims.AshasbeentheconstantrulingofthisCourt,everyparty
litigantshouldbeaffordedtheamplestopportunityfortheproperandjustdeterminationofhiscause,
freefromtheconstraintsoftechnicalities.11

Abasiclegalprincipleisthatnooneshallbeunjustlyenrichedattheexpenseofanother.12Thisprincipleisoneof
themainstaysofeverylegalsystemforcenturiesandwhichtheCivilCodeechoes:

Art.22.Everypersonwhothroughanactofperformancebyanother,oranyothermeans,acquires
orcomesintopossessionofsomethingattheexpenseofthelatterwithoutjustorlegalground,shall
returnthesametohim.13

TheCodeCommission,itsreport,emphasizedthat:

It is most needful that this ancient principle be clearly and specifically consecrated in the proposed
CivilCodetotheendthatincasesnotforeseenbythelawmaker,noonemayunjustlybenefithimself
totheprejudiceofanother.TheGermanCivilCodehasasimilarprovision(Art.812).14

Withthisinmind,onecouldeasilyunderstandwhy,despitetechnicaldeficiencies,weresolvedtogiveduecourse
tothispetition.Moreimportantly,thecaseonitsfaceappearstobeimpressedwithmerit.

B.TheAttorney'sFees

We understand that Atty. Francisco Rilloraza handled the case from its inception until ETPI terminated the law
firm's services in 1988. Petitioner's claim for attorney's fees hinges on two grounds: first, the fact that Atty.
RillorazapersonallyhandledthecasewhenhewasworkingforSAGAandsecond,theretaineragreementdated
October1,1987.

We agree that petitioners are entitled to attorneys' fees. We, however, are not convinced with the petitioner's
argumentsthattheservicesRADArenderedmerittheamounttheyareclaiming.

First, petitioner contends that Atty. Rilloraza initiated the filing of the complaint. When a client employs the
services of a law firm, he does not employ the services of the lawyer who is assigned to personally handle the
case. Rather, he employs the entire law firm. In the event that the counsel appearing for the client resigns, the
firm is bound to provide a replacement. Thus, RADA could not claim to have initiated the filing of the complaint
consideringthatETPIhiredSAGA.Whatismore,onSeptember17,1987,ETPIpaidSAGAtheamountofOne
Hundred Thousand Pesos (P100,00.00) 15 representing services performed prior to September 17, 1987. SAGA
assigned one of its associates, Atty. Francisco Rilloraza, to handle the case for the firm. Although Atty. Rilloraza handled
thecasepersonally,hedidsoforandinbehalfofSAGA.

Second,petitionerclaimsthatundertheretaineragreement,whichprovides:

6.2B.CourtCases:

Should recourse to judicial action be necessary to effect collection or judicial action be taken by
adverseparty,ourattorney'sfeesshallbefifteenpercent(15%)oftheamountscollectedorthevalue
ofthepropertyacquiredorliabilitysaved.16
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thefirmisentitledtothefeesagreedupon.

However, the retainer agreement has been terminated. True, Attorney Rilloraza played a vital role during the
inception of the case and in the course of the trial. We cannot also ignore the fact that an attorneyclient
relationshipbetweenpetitionerandrespondentnolongerexistedduringitsculminationbyamicableagreement.
To award the attorneys' fees amounting to 15% of the sum of One Hundred Twenty Five Million Six Hundred
SeventyOneThousandEightHundredEightySixPesosandFourCentavos(P125,671,886.04)plusFiftyMillion
Pesos(P50,000,000.00)paidbyPLDTtoETPIwouldbetoounconscionable. 1 w p h i1 .n t

"Inanycase,whetherthereisanagreementornot,thecourtsshallfixareasonablecompensationwhichlawyers
mayreceivefortheirprofessionalservices."17"Alawyerhastherighttobepaidforthelegalserviceshehasextended
to his client, which compensation must be reasonable." 18 A lawyer would be entitled to receive what he merits for his
services.Otherwisestated,theamountmustbedeterminedonaquantummeruitbasis.

"Quantummeruit,meaning'asmuchashedeserved'isusedasabasisfordeterminingthelawyer'sprofessional
feesintheabsenceofacontractbutrecoverablebyhimfromhisclient. 19Recoveryofattorney'sfeesonthebasis
ofquantummeruitisauthorizedwhen(1)thereisnoexpresscontractforpaymentofattorney'sfeesagreeduponbetween
the lawyer and the client (2) when although there is a formal contract for attorney's fees, the fees stipulated are found
unconscionable or unreasonable by the court and (3) when the contract for attorney's fee's is void due to purely formal
defectsofexecution(4)whenthecounsel,forjustifiablecause,wasnotabletofinishthecasetoitsconclusion(5)when
lawyerandclientdisregardthecontractforattorney's
fees,20

Infixingareasonablecompensationfortheservicesrenderedbyalawyeronthebasisofquantummeruit, the
elementstobeconsideredaregenerally(1)theimportanceofthesubjectmatterincontroversy,(2)theextentof
services rendered, and (3) the professional standing of the lawyer. A determination of these factors would
indispensably require nothing less than a fullblown trial where private respondents can adduce evidence to
establishtherighttolawfulattorney'sfeesandforpetitionertoopposeorrefutethesame.21Thetrialcourthasthe
principaltaskoffixingtheamountofattorney'sfees.22Hence,thenecessityofahearingisbeyondcavil.

C.ChargingLien

PetitionercontendsthatpursuanttoRule138oftheRevisedRulesofCourt,itisentitledtoacharginglien.The
ruleprovides:

Sec.37.Attorney'sliens.Anattorneyshallhavealienuponthefunds,documentsandpapersof
hisclient,whichhavelawfullycomeintohispossessionandmayretainthesameuntilhislawfulfees
and disbursements have been paid, and may apply such funds to the satisfaction thereof. He shall
also have a lien to the same extent upon all judgments for the payment of money, and executions
issued in pursuance of such judgments, which he has secured in a litigation of his client, from and
afterthetimewhenheshallhavecausedastatementofhisclaimofsuchlientobeentereduponthe
records of the court rendering such judgment, or issuing such execution, and shall have caused
written notice thereof to be delivered to his client and to the adverse party and he shall have the
same right and power over such judgments and executions as his client would have to enforce his
lienandsecurethepaymentofhisjustfeesanddisbursements."(Emphasissupplied).

Wedonotagree.Acharginglientobeenforceableassecurityforthepaymentofattorney'sfeesrequiresasa
conditionsinequanonajudgmentformoneyandexecutioninpursuanceofsuchjudgmentsecuredinthemain
actionbytheattorneyinfavorofhisclient 23. A charging lien presupposes that the attorney has secured a favorable
moneyjudgmentforhisclient.24Fromthefactsofthecaseitwouldseemthatpetitionerhadnohandinthesettlementthat
occurred,nordiditeverobtainafavorablejudgmentforETPI.

ETPI entered into a compromise agreement when it ended the services of petitioner and through the effort of
ETPI'snewlawyers,thelawfirmRomulo,Mabanta,Buenaventura,SayocandDelosAngeles.Whethertherewas
bad faith in the substitution of the lawyers to avoid compliance with the retainer agreement could only be
determinedafteratrialofthecaseonthemerits.

Thisdecision,however,shouldnotbeinterpretedastoimposeuponpetitioneranyadditionalburdenincollecting
itsattorney'sfees.Thepetitionermustavailitselfoftheproperremedyinordertoforestallthepossibilityofany
injusticeonorunjustenrichmentofanyoftheparties.

TheJudgment(Fallo)

ACCORDINGLY,theCourtGRANTSthepetition,REVERSESthedecisionoftheCourtofAppealsinCAG.R.SP
No.24463andREMANDSthecasetothecourtoforiginforthedeterminationoftheamountofattorney'sfeesto
whichpetitionerisentitled.

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Nocosts.

SOORDERED

Davide,Jr.,C.J.KapunanandYnaresSantiago,JJ.,concur.

Melo,J.,tooknopart.

Footnotes

1Petition,AnnexF,Rollo,pp.8185.

2datedJuly9,1990

3Petition,Annex"F",CARollo,pp.7273.

4Petition,Annex"D",RegionalTrialCourtOrder,Rollo,pp.7378.

5RegionalTrialCourtOrder,Rollo,pp.7980.

6PennedbyJusticeReginaG.OrdoezBenitezwithJusticeJoseA.R.Melo(nowanAssociateJusticeof
theSupremeCourt)andJusticeEmeterioC.Cui,concurring.

7CourtofAppealsdecisiondatedNovember14,1991,Rollo,pp.5158.

8Nervesvs.CivilServiceCommission,276SCRA610.

9Nervesvs.CivilServiceCommission,supra.

10Ibid.,citingBlancovs.Bernabe,63Phil.124.

11100SCRA590.

12Coralesvs.EEC,198Phil.224.

13Art.22,CivilCodeofthePhilippines.

14LeticiaCovs.PNB,114SCRA842,864.

15Petition,Rollo,pp.848.

16Petition,Annex"F",Rollo,p.83.

17 Traders Royal Bank Employees UnionIndependent vs. National Labor Relations Commission, 269
SCRA733,750,citingPanisvs.Yangco,52Phil.499.

18Sattarvs.Lopez,271SCRA290,300301.

19TradersRoyalBankEmployeesUnionIndependentvs.NLRC,supra,atp.751.

20LegalandJudicialEthics,byErnestoL.Pineda,1995ed.,pp.225226.

21MetropolitanBankandTrustCompanyvs.CourtofAppeals,181SCRA367.

22NinoyAquinoInternationalAirportAuthorityvs.CourtofAppeals,272SCRA495.

23MetropolitanBankandTrustCompanyvs.CourtofAppeals,supra.

24Ibid.,citingAmpilvs.JulianoAgrava,34SCRA370.

TheLawphilProjectArellanoLawFoundation

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