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BAR REVIEWER ON LABOR LAW 2014 (2nd) Edition - By Prof. Joselito Guianan Chan

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[G.R. No. 127598.January 28, 2002]




Quoted hereunder, for your information, is a resolution of this Court dated 28 JAN 2002.

G.R. No. 127598 (Manila Electric Company v. The Hon. Secretary of Labor Leonardo Quisumbing, et al.)

For our resolution is a "Motion to Approve and Enforce Contract of Professional Service" filed by Atty. Manuel B. Tomacruz, counsel for First Line Association of Meralco Supervisory Employees (FLAMES).

On March 15, 1999, Atty. Tomacruz and FLAMES entered into a "Contract for Professional Service,"[1]cralaw under which FLAMES undertook to pay Atty. Tomacruz for his legal services, as follows:

            Professional Fees:

            (1)Acceptance Fee - P50,000.00, payable upon signing of the agreement.

            (2)Contingent Fee - 15% of benefits which may accrue to client and/or its members as a result of judgment, compromise agreement/amicable settlement, or otherwise, at any stage. The fee is payable upon the termination of the case by any of said manner.

The contract also specified the nature and scope of professional services to be rendered by Atty. Tomacruz, to wit:

Handling of Client's intervention in the Supreme Court, until the case is finished, by judgment or by compromise agreement or amicable settlement, or otherwise at any stage.

On the same date of the execution of the service contract, Atty. Tomacruz, as counsel for FLAMES, forthwith filed a "Motion for Leave to intervene and to Treat this as Movant's intervention.

According to Atty. Tomacruz, FLAMES President Emilio E. Diokno intimated that pursuant to the Court's Resolution dated August 1, 2000, each of the more than 3,000 members of FLAMES would receive P25,000.00 in salary increases for the first three years of their 1997-2002 CBA. FLAMES expressed satisfaction with this latest Court ruling to Atty. Tomacruz and relayed its decision not to move for a reconsideration of the said Resolution.[2]cralaw

By this time, FLAMES had already delivered to Atty. Tomacruz the P50,000.00 as acceptance fee and another P50,000.00 representing his contingent fee under their contract. FLAMES explained to Atty. Tomacruz that pending efforts to collect from its members, it could only effect partial payment of his fee due to financial constraints. FLAMES nevertheless assured Atty. Tomacruz that it intends to honor its contractual obligation.[3]cralaw

After the lapse of more than a year with no payments being made, Atty. Tomacruz wrote FLAMES demanding the balance of his stipulated fee under the contract of service, computed at 15% of the amount which each FLAMES member received from MERALCO or P25,000.00 per member.[4]cralaw However, on September 26, 2001, Atty. Tomacruz received a letter[5]cralaw from FLAMES, expressing its refusal to make further payments. FLAMES stated that the 15% contingent fee had no actual basis "since no benefit was in fact obtained by the members of FLAMES consequent to the filing of the Motion for intervention." FLAMES added that the amounts already received by Atty. Tomacruz was reasonable compensation for his services and was commensurate to what was actually worked out by him.

Hence, on October 22, 2001, Atty. Tomacruz filed this present motion.

Atty. Tomacruz seeks from this Court, an order for the enforcement of the contract of services against FLAMES, directing the latter to pay him the amount equivalent to 15% of P25,000.00 or P3,750.00 each, for the more or less 3,000 members comprising the union.

On the other hand, FLAMES resists the claim of Atty. Tomacruz and states, in its opposition to the motion,[6]cralaw that the Court did not incorporate in its February 22, 2000 resolution any award in FLAMES' favor, upon which the contingency fee may be based. Even as FLAMES admitted that Atty. Tomacruz raised in his pleadings for FLAMES, "worthy arguments" that were "quite salutary" and done with the "trademark of legal craftsmanship," FLAMES asserts that it did not gain anything from the case, which would justify the award of attorney's fees other than those already received by Atty. Tomacruz.

The contract of professional service entered into by Atty. Tomacruz and FLAMES is clear and unambiguous. The contingency fee arrangement, which is valid in our jurisdiction,[7]cralaw indubitably calls for the payment of 15% of any benefit which may accrue to the union and its members, as a result of the judgment in the case.Per computation, the professional fees being claimed by Atty. Tomacruz would amount to P11,250,000.00, computed by multiplying the number of FLAMES members, which stand at 3,000, with 15% of P25,000.00 - the amount allegedly received as wage increase by each FLAMES member under the CBA.

Generally speaking, where the employment of an attorney is under an express valid contract fixing the compensation for the attorney, such contract is conclusive as to the amount of compensation.[8]cralaw A stipulation on a lawyer's compensation in a written contract for professional services ordinarily controls the amount of fees that the contracting lawyer may be allowed, unless the court finds such stipulated amount unreasonable or unconscionable.[9]cralaw The degree of unconscionability or unreasonableness of a stipulated amount in a contingent fee contract, will not however, preclude recovery. It merely justifies the court's fixing a reasonable amount for the lawyer's services.[10]cralaw

In this case, we believe that the sum of money being claimed by Atty. Tomacruz is indeed excessive. It must be pointed out that FLAMES intervened in this case only after the Court had already rendered its Decision on January 27, 1999. Atty. Tomacruz did not participate in the proceedings below and was called upon to argue in favor of only one issue. Apart from the fact that his engagement as counsel merely extended for a little more than a year, the number of pleadings filed by Atty. Tomacruz in behalf of FLAMES totaled only five.

This is not to say, however, that the efforts exerted by Atty. Tomacruz towards protecting and ensuring FLAMES' interest in the case, are minute and insignificant. On the contrary, it appears that he zealously and skillfully pursued his arguments in FLAMES' behalf and diligently worked for a modification of the Court's Decision. The astuteness of his arguments and his well-researched pleadings attest to this fact. Even FLAMES could not deny the quality of his professional service, as it so admitted in its opposition to the motion.

It is also worth noting that the question involved in FLAMES' motion for intervention and MEWA's motion for reconsideration, for that matter, was by all means complex. Although not novel in the strict sense of the word, it necessitated a close examination and comparison of jurisprudence on the matter and required extra effort to convince the Court to modify its earlier decision.

Undoubtedly, the points raised by Atty. Tomacruz in his various motions to support his arguments for FLAMES, contributed greatly to a clearer understanding and appreciation of the issue then at hand. FLAMES cannot rightfully claim that it did not benefit from the intervention of Atty. Tomacruz, which FLAMES itself solicited, because the modification of our first decision enabled FLAMES to finally determine what was monetarily due its members under its own CBA with MERALCO. The inclusion in the Court's subsequent resolutions of MEWA's 1995-1996 wage increase, upon which FLAMES' CBA salary differentials would be based, could, in large part, be attributed to Atty. Tomacruz's endeavors. Consequently, FLAMES cannot evade its obligation to Atty. Tomacruz, who has every right to demand a reasonable sum for his services.

As earlier stated, the contingent fee of P11,250,000.00 is clearly disproportionate to the extent of the services rendered by Atty. Tomacruz, even if we were to take into account the character of his intervention and the quality of his work. Thus, it is incumbent upon us to fix a more reasonable sum which, in relation to the prevailing circumstances, could be deemed as appropriate. In other words, we find here reason to apply the principle of quantum meruit.

"Quantum meruit," meaning "as much as he deserves," is used as a basis for determining the lawyer's professional fees in the absence of a contract, but recoverable by him from his client. Recovery of attorney's fees on the basis of quantum meruit is authorized when (1) although there is a contract, the fees stipulated are found unconscionable or unreasonable by the court; (2) the contract for attorney's fees is void due to purely formal defects of execution; (3) counsel, for justifiable cause, was not able to finish the case to its conclusion; and (4) the lawyer and client disregard the contract for attorney's fees.[11]cralaw

In fixing a reasonable compensation for services rendered by a lawyer on the basis of quantum meruit, the following factors are considered: (1) the time spent and extent of services rendered; (2) the novelty and difficulty of the questions involved; (3) the importance of the subject matter; (4) the skill demanded; (5) the probability of losing other employment as a result of the acceptance of the proffered case; (6) the amount involved in the controversy and the benefits resulting to the client; (7) the certainty of compensation; (8) the character of employment; and (9) the professional standing of the lawyer.[12]cralaw

Bearing in mind these factors and the matters already discussed above, the additional amount of P900,000.00 as attorney's fees is reasonable under the circumstances. In fixing this amount, we considered the fact that the contract executed between Atty. Tomacruz and FLAMES was contingent in nature and therefore, justified the charging of a higher fee, due to the lawyer's risk of gaining nothing in case of failure.[13]cralawAdditionally, the difficulty of obtaining reconsideration of the Court's decision and its importance to FLAMES, underscores the need to compensate Atty. Tomacruz fairly. The duty of the court is not alone to see that a lawyer acts in a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees.[14]cralaw

ACCORDINGLY, in view of the foregoing, FLAMES is ORDERED to pay Atty. Manuel B. Tomacruz the additional amount of NINE HUNDRED THOUSAND PESOS (P900,000.00) for services rendered in this case.KAPUNAN, J., NO PART.

Very truly yours,


Clerk of Court


[1]cralaw Per FLAMES Board Resolution, Rollo, p. 1779.

[2]cralaw Ibid., at 1789.

[3]cralaw Id., at 1790.

[4]cralaw Id., at 1791-1793.

[5]cralaw Id., at 1794-1798.

[6]cralaw RoIlo, pp. 1799-1810.

[7]cralaw Law Firm of Rayrnundo A. Armovit v. Court of Appeals, 202 SCRA 16, 24 (1991) citing Canlas v. Court of Appeals, 164 SCRA 160 (1988); Director of Lands v. Ababa, 88 SCRA 513 (1979).

[8]cralaw Traders Royal Bank Employees Union-Independent v. NLRC, 269 SCRA 733, 747 (1997), citing Francisco v. Matias, 10 SCRA 89 (1965).

[9]cralaw Sesbreno v. Court of Appeals, 245 SCRA 30, 36 (1995), citing Rule 138, Section 24, Revised Rules of Court; Francisco v. Matias, supra, Lopez v. Pan American Airways, 16 SCRA 431 (1966).

[10]cralaw Ibid., at 37.

[11]cralaw See Rilloraza, Africa, De Ocampo and Africa v. Eastern Telecommunications Phils., Inc., 309 SCRA 566, 575-576 (1999), citing Legal and Judicial Ethics, by Ernesto L. Pineda, 1995 ed., pp. 225-226.

[12]cralaw Compania Maritima, Inc. v. Court of Appeals, 318 SCRA 168, 176 (1999), citing Code of Professional Responsibility, Canon 20, Rule 20.1.

[13]cralaw See Legal and Judicial Ethics, Ernesto L. Pineda, 1999 ed., p. 263.

[14]cralaw Legal Ethics, Ruben E. Agpalo, 1997 ed., p. 292, citing Fernandez v. Bello, 107 Phil. 1140 (1960); and Albano v. Coloma, 21 SCRA 411 (1967).

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