Philippine Supreme Court Jurisprudence

Before Us is a Petition for Certiorari¹ under Rule 65 of the Rules of Court assailing the Decision² dated April 14, 2011 and Resolution³ dated January 8, 2013 of the Court of Appeals (CA) in CA-G.R. SP No. 03908 dismissing the petition filed by the National Power Corporation (NPC) for being filed out of time.

The Antecedent Facts

The case stemmed from Civil Case No. 05-28553 filed by Spouses Romulo and Elena Javellana (Spouses Javellana) to fix lease rental and just compensation; collection of sum of money and damages against NPC and National Transmission Corporation (Transco).⁴

On July 26, 2007, the RTC rendered a Decision⁵ in favor of the Spouses Javellana. NPC and Transco filed their respective appeal.⁶ On the other hand, Spouses Javellana filed a Motion for Execution Pending Appeal.⁷ On January 4, 2008, the RTC, in its Order⁸ granted the motion for execution pending appeal.

In the meantime, Transco negotiated with Spouses Javellana for the extra-judicial settlement of the case. As a result, Transco agreed to buy the property of the Spouses Javellana affected by the transmission lines. Subsequently, Spouses Javellana received the amount of P80,380,822.00 from Transco.⁹

Thereafter, Atty. Rex C. Muzones (Atty. Muzones), the counsel of the Spouses Javellana filed a Notice of Attorney's lien.¹⁰

Transco then filed a Motion to Dismiss¹¹ the case in view of the extra-judicial settlement of the case. On his part, Atty. Muzones filed a Motion for Partial Satisfaction of Judgment and Opposition to the Motion to Dismiss.¹²

On June 27, 2008, the respondent judge issued an Order¹³ ordering NPC and Transco to pay Atty. Muzones the amount of P52,469,660.00 as his attorney's lien, to wit:

WHEREFORE, premises considered, an Entry for the satisfaction of the Judgment claims of [Spouses Javellana], in the amount of P80,380,822.00 be made in the records and the same DISMISSED against [NPC and Transco].

[NPC and Transco] are hereby directed to pay [Spouses Javellana's] counsel, [Atty. MUZONES], his Lawyer's Lien in the amount of P52,469,660.00, within a period of TEN (10) days from receipt of this Order.

Pending compliance the Motion to Dismiss is held in abeyance.

SO ORDERED.¹⁴

On June 30, 2008, the respondent judge issued a Clarificatory Order¹⁵ stating that the attorney's fees of P52,469,660.00 is separate and distinct from the amount to be paid to the Spouses Javellana, the dispositive portion of which reads:

WHEREFORE, premises considered, an Entry for the satisfaction of the judgment claims of [Spouses Javellana], in the amount of P80,380,822.00 be made in the records and the same DISMISSED against [NPC and Transco].

[NPC and Transco] are hereby directed to pay [Spouses Javellana's] counsel, [Atty. MUZONES], his Lawyer's lien in the amount of P52,469,660.00, within a period of TEN (10) days from receipt of this Order, which payment is aside from, separate and different from the amount of P80380.822.00 paid by [NPC and Transco] to [Spouses Javellana].

Pending compliance the Motion to Dismiss is held in abeyance.

SO ORDERED.¹⁶ (Underscoring in the original)

Transco filed a Motion for Reconsideration of the orders, while NPC filed its comment to the Clarificatory Order.¹⁷

On August 6, 2008, the respondent judge denied¹⁸ the motion for reconsideration and the comment of NPC, thus:

WHEREFORE, premises considered, the reliefs prayed for in the Motion for Reconsideration filed by [NPC], dated July 15, 2008 and the Comment filed by [NPC] dated July 21, 2008 are hereby DENIED.

The Order dated June 27, 2008 and Clarificatory Order dated June 30, 2008, stands.

SO ORDERED.¹⁹

NPC then filed a motion for reconsideration²⁰ of the Order dated August 6, 2008. The respondent judge however denied the same in his Order²¹ dated September 22, 2008.

Aggrieved, NPC filed a Petition for Certiorari²² with the CA assailing the Orders dated June 27, 2008, June 30, 2008, August 6, 2008 and September 22, 2008.

In its Decision²³ dated April 14, 2011, the CA dismissed NPC's petition for being filed beyond the 60-day reglementary period.

Thus, NPC comes before Us assailing the CA's dismissal of its petition.

The petition is GRANTED.

Petition for Certiorari is the wrong remedy.

At the outset, NPC filed a Petition for Certiorari under Rule 65 of the Rules of Court which is a wrong remedy.

"A petition for certiorari under Rule 65 of the Rules of Court is a special civil action that may be resorted to only in the absence of appeal or any plain, speedy and adequate remedy in the ordinary course of law."²⁴ In the instant case, NPC has a plain, speedy and adequate remedy to appeal the CA decision, which is to file a Petition for Review on Certiorari under Rule 45 of the Rules of Court.

Section 1 of Rule 45 states that "A party desiring to appeal by certiorari from a judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition for review on certiorari. The petition shall raise only questions of law which must be distinctly set forth."

Here, the Decision dated April 14, 2011 of the CA dismissed the NPC's petition for being filed out of time, thus it was a final judgment rendered by the CA. There is nothing left to be done by the CA in respect to the said case. Thus, NPC should have filed an appeal by petition for review on certiorari under Rule 45 before this Court, not a petition for certiorari under Rule 65.

In the case of Malayang Manggagawa ng Stay fast Phils., Inc. v. NLRC, et al.,²⁵ it is stated that the existence of an appeal prohibits the parties' resort to a petition for certiorari, thus:

The proper remedy to obtain a reversal of judgment on the merits, final order or resolution is appeal. This holds true even if the error ascribed to the court rendering the judgment is its lack of jurisdiction over the subject matter, or the exercise of power in excess thereof, or grave abuse of discretion in the findings of fact or of law set out in the decision, order or resolution. The existence and availability of the right of appeal prohibits the resort to certiorari because one of the requirements for the latter remedy is that there should be no appeal.²⁶ (Citation omitted and emphasis ours)

We agree with the CA that the Comment filed by NPC is in the nature of a motion for reconsideration. The allegations of NPC and even the prayer²⁷ of NPC in its comment sought the reconsideration of the June 30, 2008 Clarificatory Order. Thus, upon the RTC's denial of the "Comment", NPC should have already filed for a Petition for Certiorari before the CA, not a second motion for reconsideration before the RTC. Thus, upon NPC's filing of its Petition for Certiorari on December 2, 2008, the 60-day reglementary period of filing the same has already lapsed.

Notwithstanding the procedural lapses in this case, We opt not to deny the case based on merely technical grounds. We must be reminded that deciding a case is not a mere play of technical rules. If We are to abide by Our mandate to provide justice for all, We should be ready to set aside technical rules of procedure when the same hampers justice rather than to serve the same.

The Contract of Legal Services²⁸ executed between Spouses Javellana and Atty. Muzones, fixed the contingency fee at 12.5% of whatever amount realized, to wit:

That the CLIENT engages the legal services of the herein LAWYER under the following terms and conditions, to wit:

Preparation and filing of a Complaint to Fix Lease Rental and Just Compensation; Collection of a Sum of Money and Damages against NPC and NTC before the RTC, Iloilo City and appearance at every stage of the proceedings until terminated - a Contingent Fee at the rate of 12.5% of whatever award or monetary consideration realized.²⁹

A contingent fee arrangement is permitted in this jurisdiction because they redound to the benefit of the poor client.³⁰ In the case of Rayos v. Atty. Hernandez,³¹ We stated that:

A contingent fee arrangement is valid in this jurisdiction and is generally recognized as valid and binding but must be laid down in an express contract. The amount of contingent fee agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much higher compensation is allowed as contingent fee in consideration of the risk that the lawyer may get nothing if the suit fails. Contracts of this nature are permitted because they redound to the benefit of the poor client and the lawyer "especially in cases where the client has meritorious cause of action, but no means with which to pay for legal services unless he can, with the sanction of law, make a contract for a contingent fee to be paid out of the proceeds of the litigation. Oftentimes, the contingent fee arrangement is the only means by which the poor and helpless can seek redress for injuries sustained and have their rights vindicated.

Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients may be protected from unjust charges. Section 13 of the Canons of Professional Ethics states that "a contract for a contingent fee, where sanctioned by law, should be reasonable under all the circumstances of the case including the risk and uncertainty of the compensation, but should always be subject to the supervision of a court, as to its reasonableness. x x x[.]³² (Citations and emphasis omitted)

It appears on the records that the contingency fee arrangement executed between Spouses Javellana and Atty. Muzones, fixed the contingency fee at 12.5% of whatever amount realized,³³ this Court deems the said arrangement as reasonable since the Spouses Javellana did not dispute the said percentage nor questioned Atty. Muzones' right to claim such amount.

However, the RTC erred when it computed the 12.5% contingent fee on the basis of the original award of P419,757,280.00.³⁴ It is clear in the Contract of Legal Services that the 12.5% contingency fee should be computed on the amount of whatever award or monetary consideration realized. Since the the amount actually received by the Spouses Javellana under the compromise agreement was only P80,380,822.00,³⁵ then the 12.5% contingency fee should be pegged on this amount. As such, Atty. Muzones is only entitled to the amount of P10,047,602.75.

NPC is not liable to pay the attorney's fees.

Notwithstanding Our finding that Atty. Muzones is entitled to the amount of P10,047,602.75, NPC is still not liable to pay such amount. It is settled that payment of attorney's fees is the personal obligation of the clients.³⁶

As held in the case of Atty. Gubat v. National Power Corporation,³⁷ the client, in this case, Spouses Javellana, has the right to settle the case even without the participation of Atty. Muzones, thus:

[A] client has an undoubted right to settle a suit without the intervention of his lawyer, for he is generally conceded to have the exclusive control over the subject-matter of the litigation and may, at any time before judgment, if acting in good faith, compromise, settle, and adjust his cause of action out of court without his attorney's intervention, knowledge, or consent, even though he has agreed with his attorney not to do so. Hence, a claim for attorney's fees does not void the compromise agreement and is no obstacle to a court approval.

However, counsel is not without remedy. As the validity of a compromise agreement cannot be prejudiced, so should not be the payment of a lawyer's adequate and reasonable compensation for his services should the suit end by reason of the settlement. The terms of the compromise subscribed to by the client should not be such that will amount to an entire deprivation of his lawyer's fees, especially when the contract is on a contingent fee basis. In this sense, the compromise settlement cannot bind the lawyer as a third party. A lawyer is as much entitled to judicial protection against injustice or imposition of fraud on the part of his client as the client is against abuse on the part of his counsel. The duty of the court is not only to ensure that a lawyer acts in a proper and lawful manner, but also to see to it that a lawyer is paid his just fees.³⁸ (Citations omitted)

However, NPC cannot be held liable to pay the attorney's fees of Atty. Muzones since the same is a personal obligation of the Spouses Javellana who benefited from the legal services of Atty. Muzones. Thus, the RTC committed a reversible error when it held NPC and Transco are solidarily liable to pay the amount of P52,469,660.00, representing Atty. Muzones' attorney's fees. The contract for the payment of attorney's fees is strictly a contract between Spouses Javellana and Atty. Muzones. It is basic that a contract takes effect only between the parties, their assigns, and heirs.³⁹ Thus, NPC cannot be affected by the contract between Spouses Javellana and Atty. Muzones, specially as to the payment of attorney's fees. Therefore, any action as to the satisfaction of the attorney's fees should be brought against the Spouses Javellana and not against NPC.

WHEREFORE, the petition is GRANTED. The Decision dated April 14, 2011 and Resolution dated January 8, 2013 of the Court of Appeals in CA-G.R. SP No. 03908 are REVERSED and SET ASIDE. Accordingly, the Order dated June 27, 2008, the Clarificatory Order dated June 30, 2008 are MODIFIED by DELETING the joint and solidary liability of National Power Corporation and National Transmission Corporation for the payment of the attorney's fees in the amount of P52,469,660.00 to Atty. Rex C. Muzones.

This is without prejudice to any action Atty. Rex C. Muzones may bring against Spouses Romulo and Elena Javellana for the satisfaction of his attorney's fees under the Contract for Legal Services.

SO ORDERED.

Leonardo-De Castro,^*Peralta,^** and Del Castillo, JJ., concur.
Sereno, C.J. (Chairperson), on leave.

Endnotes:

^* Designated as Acting Chairperson pursuant to Special Order No. 2540 dated February 28, 2018.

^** Designated additional Member per Raffle dated October 4, 2017 vice Associate Justice Francis H. Jardeleza.

¹Rollo, pp. 10-42.

² Penned by Associate Justice Eduardo B. Peralta, Jr., concurred in by Associate Justices Pampio A. Abarintos and Gabriel T. Ingles; id. at 50-57.

³ Id. at 47-48.

⁴ Id. at 12.

⁵ Rendered by Judge Jose D. Azarraga; id. at 58-42.

⁶ Id. at 13.

⁷ Id. at 82-84.

⁸ Id. at 85-89.

⁹ Id. at 14.

¹⁰ Id. at 96-97.

¹¹ Id. at 99-102.

¹² Id. at 157-159.

¹³ Id. at 160-161.

¹⁴ Id. at 161.

¹⁵ Id. at 162-163.

¹⁶ Id.

¹⁷ Id. at 16.

¹⁸ Id. at 167-169.

¹⁹ Id. at 168-169.

²⁰ Id. at 170-172.

²¹ Id. at 173-175.

²² Id. at 176-205.

²³ Id. at 50-57.

²⁴Sps. Dycoco v. CA, et. al., 715 Phil. 550, 560 (2013).

²⁵ 716 Phil. 500 (2013).

²⁶ Id. at 512-513.

²⁷WHEREFORE, premises considered, it is most respectfully prayed that the Order of this Honorable Court directing [NPC and Transco] to pay FIFTY FOUR MILLION to [Spouses Javellana's] counsel be recalled and set aside, and that the instant case be finally dismissed. Rollo, p. 165 (Emphasis ours)

²⁸ Id. at 294.

²⁹ Id.

³⁰Ramon R. Villarama v. Atty. Clodualdo C. De Jesus, G.R. No. 217004, April 17, 2017.

³¹ 544 Phil. 447 (2007).

³² Id. at 460-461.

³³Rollo, p. 171.

³⁴ Id. at 15.

³⁵ Id. at 16.

³⁶Atty. Agustin, et al. v. Cruz-Herrera, 726 Phil. 533, 549 (2014).

³⁷ 627 Phil. 551 (2010).

³⁸ Id. at 566-567.

³⁹ Article 1311 of the New Civil Code.