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[G.R. No. 138075. April 17, 2006]

BALGOS & PEREZ vs. COURT OF APPEALS, SECURITIES & EXCHANGE COMMISSION, BF HOMES, INC. AND BF HOME REHABILITATION RECEIVER

Third Division

Sirs/Mesdames:

Quoted, hereunder, for your information, is a resolution of this Court dated APR. 17, 2006

G.R. No. 138075 (Balgos & Perez vs. Court of Appeals, Securities & Exchange Commission, BF Homes, Inc. and BF Home Rehabilitation Receiver)

The instant petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assails the Court of Appeals Decision dated October 16, 1998 and Resolution dated March 16, 1999 in CA-G.R. SP No. 44236. The issuance of the Appellate Court affirmed the Decision dated May 8, 1997 of the Securities and Exchange Commission (SEC) which set aside the award of attorney's fees in favor of petitioner Balgos & Perez.

Petitioner is a law partnership duly organized and existing under and by virtue of the laws of the Philippines. Among its former clients was private respondent-corporation BF Homes, Inc., which petitioner served as counsel from the time of the latter's inception up to 1993. During petitioner's period of service for private respondent, petitioner allegedly handled all of the cases for or against private respondent which the latter had referred to it. It was claimed that at the time of the attorney-client relationship, private respondent had failed to pay petitioner legal fees for the rendition of services in more than 100 different cases. [1] cralaw

In 1984, private respondent filed a petition with the SEC for "Rehabilitation and for a Declaration in a State of Suspension of Payments Under Sec. 4 of P.D. 1758". [2] cralaw The Petition was docketed as SEC Case No. 2693. On the basis of the petition, the SEC appointed a management committee, FBO Management Network, Inc., with Florencio Orendain as Chairman. The committee then recommended the rehabilitation of private respondent with a rehabilitation plan consisting of three (3) phases, which was accordingly approved by the SEC. The management committee was then dissolved, and in 1988, Orendain was appointed as Rehabilitation Receiver. A new Committee of Receivers was created by the Hearing Panel on 7 November 1994, composed of the 11 members of the Board of Directors of private respondents. This Committee was in turn dissolved by the SEC En Banc on 28 November 1996, which appointed Albert C. Aguirre as the sole receiver of private respondent.

On 14 April 1994, petitioner filed an Urgent Motion for Payment of Attorney's Fees with the SEC. This was followed by a Manifestation dated 29 April 1994, which listed 182 cases that petitioner had handled for private respondent. Said manifestation submitted that petitioner was requesting for the payment of its professional fees for the cases handled in the amount of P2,455,000.00; attorney's fees for its successful litigation of G.R. No. L-74851 in the amount of P2,325,000.00; and reimbursement of out-of-pocket expenses in the total amount of P182,000.00. On 19 September 1994, petitioner filed another Manifestation wherein it declared that "it [was] exercising its charging lien on the properties of [private respondent]." [3] cralaw

On 7 November 1994, the SEC Hearing Panel rendered an Omnibus Order directing petitioner to submit further details on the 145 cases, particularly the "case numbers/captions, date/s of filing the same, the action undertaken therein, and the end result thereof." [4] cralaw The same Order did acknowledge that "resting upon equitable principle that one should not unjustly enrich himself at the expense of counsel after the acceptance of benefits derived from legal services rendered, the motion is thus given due course." At the same time, despite noting that there was "no objection from the Receiver Orendain/FBO on the payment" of attorney's fees to the petitioner, the SEC Hearing Panel qualified that "before payment could be made... that all legal services rendered should be formally presented, enumerated and/or particularized with the corresponding details." [5] cralaw

Pursuant thereto, petitioner submitted its Compliance on 28 November 1994, which provided a brief description and summation of 145 cases. Petitioner also manifested therein that the records of these cases had already been turned over to the Receiver, hence the absence of certain details in the descriptions such as the dates when the cases were individually filed. Petitioner thus prayed that it be paid the sum of P5,000,000.00 on quantum meruit as its fees for its services rendered in the cases listed in the Compliance.

However, private respondent filed a Comment to the Compliance dated 19 December 1994, seeking deferment on the ruling on petitioner's claims, and a more comprehensive and detailed description of the nature and particulars of the 145 cases, since it needed sufficient information to reach an intelligent conclusion on whether the payment of the fees was justified. Private respondent alleged that the description of the nature of the cases enumerated in the Compliance were "in many cases, very vague". It also claimed that its financial position made it impossible to pay the P5 Million Pesos sought as attorney's fees, considering its continuing financial distress.

Petitioner then filed a Manifestation dated 12 January 1995, together with a Certification dated 13 January 1994 with the Office of the Rehabilitation Receiver, stating that from 1 January 1989 to 30 December 1993, a total of P2,207,294.20 was paid to petitioner for legal fees by private respondent.

Then on 2 November 1995, petitioner filed a Motion for Execution, alleging that since the Omnibus Order of 7 November 1994 recognized the services rendered to private respondent on quantum meruit had not been contested by the Receiver, and was thus for all legal purposes, final and executory. On that basis, petitioner prayed that the SEC issue an order requiring the Receiver to pay the sum of P5,000,000.00 as attorney's fees. This motion was duly opposed by private respondent and the Committee of Receivers.

On 31 July 1996, the SEC Hearing Panel issued an Omnibus Order [6] cralaw directing the payment of P5,000,000.00 to petitioner. This Order was challenged by private respondent through a petition for certiorari filed with the SEC En Banc, praying that such payment of attorney's fees be deferred until a more comprehensive and detailed description of the nature of the cases were submitted; when private respondent had sufficient cash to answer for any award in favor of petitioners, and until such time "the issues relating to the management by the former rehabilitation receivers shall have been resolved." [7] cralaw

On 8 May 1997, the SEC En Banc issued a Decision [8] cralaw setting aside the directive in the 31 July 1996 Order for the payment of P5,000,000.00 to petitioners. The SEC En Banc concluded that the hearing panel which rendered said order "committed grave abuse of discretion in ordering [private respondent] to pay the attorney's fees of [petitioner] as claimed by them without satisfactory proof presented as to the extent of legal services rendered to the corporation upon which the amount of the attorney's fees may be determined. Absent any proof to justify and substantiate the amount being claimed, it was incumbent upon the hearing panel to deny the same." [9] cralaw

This Decision was challenged before the Court of Appeals, but to no avail. In a Decision [10] cralaw dated 16 October 1998, the Court of Appeals affirmed the ruling of the SEC En Banc. The appellate court agreed that the claim for attorney's fees was not sufficiently proven, and that a full-blown trial was necessary to prove such claim. The Court of Appeals likewise noted that since petitioner had submitted itself to the jurisdiction of the SEC, by the presentation of its claim for payment of attorney's fees, it necessarily became a party to SEC Case No. 2693. The Court of Appeals elaborated:

x x x For, after the appointment of a receiver, the claimants of the corporate property or any interest therein may enforce their claims only by permission of the SEC which appointed the receiver. A claimant may be made a party to the suit in order to establish his claim, or he may petition the SEC to have his claim heard, or he may, by express permission of the SEC, being a suit for the possession, care being taken to protect the receiver. But the receiver will not be ordered to deliver a property to a claimant until his right is established in one of those modes. x x x The procedure in the presentation of claims against a receivership is either by motion or petition on the same proceeding, or by way of intervention. But which procedure is followed, all parties in interest must be notified of each claim, which shall be determined not in a summary manner, but after regular hearing. The property under receivership is property in custodia legis which should remain under the administration and control of the receivership court, through its creation, the receiver, for the purpose of preservation and for the benefit of the party who may be adjudged entitled to it; that the effect of the appointment of a receiver is to remove the parties to the suit from the possession of the property. These principles of law being true, there must be a hearing of some form or a regular trial of the issues.

Petitioner moved for the reconsideration of said Decision, albeit unsuccessfully. Hence the present petition.

Petitioner alleges that the SEC Decision did not contain any finding of tact or law which justified the reversal of the award made by the SEC Hearing Panel. Petitioner emphasizes that it cannot be denied the payment of attorney's fees for its legal services rendered for private respondent. It notes that it had already turned over its case records to private respondent, hence making it difficult to supply the detailed information initially required by the SEC Hearing Panel on each of the cases.

The petition has no merit.

Whether there is an agreement or not, the courts shall fix a reasonable compensation which lawyers may receive for their professional services. A lawyer has the right to be paid for the legal services he has extended to his client, which compensation must be reasonable. A lawyer would be entitled to receive what he merits for his services. Otherwise stated, the amount must be determined on a quantum meruit basis. [11] cralaw

However, it is axiomatic that the reasonableness of attorney's fees is a question of fact. [12] cralaw In fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit , the elements to be considered are generally (1) the importance of the subject matter in controversy, (2) the extent of services rendered, and (3) the professional standing of the lawyer. A determination of these factors would indispensably require nothing less than a full-blown trial where petitioner can adduce evidence to establish the right to lawful attorney's fees and for private respondents to oppose or refute the same. The trial court has the principal task of fixing the amount of attorney's fees. Hence, the necessity of a hearing is beyond cavil. [13] cralaw

That petitioner rendered professional services as counsel for private respondent is not disputed. The only contentious issue is whether or not petitioner is entitled to attorney's fees in the amount of P5 million. In the absence of an express agreement or a written contract upon which to fix petitioner's compensation for legal services rendered, it is incumbent upon petitioner to justify the amount of compensation it is claiming by presenting sufficient proof thereof and the extent of legal services rendered, among others, which may be opposed by private respondent.

The case records indicate that petitioner was given the opportunity, if not ordered, to present substantial evidence to prove its claim for attorney's fees. Significantly, the November 7, 1994 Omnibus Order of the SEC Hearing Panel, while giving due course to petitioner's motion for payment of attorney's fees, conditioned the satisfaction of attorney's fees on petitioner's submission of an enumerated and particularized details of services rendered, including "case numbers/captions, date/s of filing the same, the action undertaken therein, and the end result thereof." Petitioner's compliance with the order of the SEC Hearing Panel was, however, found to be insufficient by the SEC en banc when the latter set aside the Omnibus Order issued by the SEC Hearing Panel on July 31, 1996 and ruled that the SEC Hearing Panel committed grave abuse of discretion in ordering the payment of attorney's fees to petitioner in the amount of P5 million without satisfactory proof. The Court of Appeals affirmed the Decision of the SEC en banc not only because petitioner failed to present substantial evidence to prove its claim of P5 million for attorney's fees but also because no full-blown trial was conducted to allow both parties to present controverting evidence.

The Court affirms the Court of Appeals finding that no sufficient evidence was presented to warrant the award of attorney's fees to petitioner. It is an established doctrine that findings of fact of the Court of Appeals are binding and conclusive upon this Court. [14] cralaw Well-settled is the rule that the Court is not a trier of facts. In a petition for review on certiorari, the Court's jurisdiction is limited to resolving only questions of law. Since the instant petition calls for a review of the sufficiency of petitioner's evidence, it deserves to be dismissed. Besides, the appellate court's appreciation of evidence (or insufficiency thereof) deserves great weight and respect and will not be disturbed by the Court absent any showing of grave abuse of discretion.

This is not the first occasion that a lawyer's claim for attorney's fees is denied for lack of factual basis. In Emiliano Court Townhouses vs. Atty. Dioneda , [15] cralaw despite a valid written contract on attorney's fees, the Court withheld the award for lack of factual support. The Court explained:

To deserve compensation for his legal services based on quantum meruit , respondent Dioneda must prove by substantial evidence that he is entitled to a reasonable fee for his efforts in pursuing the complainant's case with the Court taking into account certain factors in fixing the amount of his fees. However, due to respondent's conspicuous absence at the administrative hearings for his disbarment set by the IBP's Commission on Bar Discipline on at least five (5) different occasions, and the apparent lack of findings of fact to support the position of respondent, evidence required to establish attorney's fees was never adduced. For having missed several opportunities to present evidence in his favor without any satisfactory explanation as to his non-appearance, we are constrained to deny him compensation for his legal services on the basis of quantum meruit due to the lack of any factual basis to determine the value of his work a complainant's counsel. [16] cralaw

Petitioner justifies its failure to substantiate its claim for attorney's fees on the lack of case records, having allegedly turned over the same to the rehabilitation receiver.

The Court is not persuaded.

Had petitioner opted to pursue its claim in the manner sanctioned by the Revised Rules of Procedure in the SEC, it would have readily obtained the case records necessary to prove its claim. As an adjudicative body, the SEC, whether sitting en banc or through its Hearing Panel, is not without powers to compel the production of testimonial and/or documentary evidence in proceedings before it. For instance, Rule II, Section 2 of said rules expressly grant the Hearing Officer the power to issue subpoena duces tecum , to wit:

SECTION 2. Powers of a Hearing Officer - A Hearing Officer is empowered to hear and decide cases brought before the Commission. Pursuant thereto, he shall also have the power to administer oaths and affirmations, issue subpoena, receive evidence, and compel attendance of parties and witnesses and the production of any book, papers, correspondence, memoranda, and other records which are deemed relevant or material to the case, to punish for contempt of the Commission, both direct or indirect, in accordance with the pertinent provisions of, and penalties prescribed by the Rules of Court.

Rule IX, Section 1 of the same rules defines the coverage of a subpoena duces tecum , namely:

SECTION 1. Definition - Subpoena is a process directed to a person requiring him to attend and to testify at the hearing of an action before the Hearing officer or for the taking of his deposition which shall be conducted in accordance with the pertinent provisions of the Rules of Court. It may also require him to bring with him any books, documents or other things under his control, in which case it is called a subpoena duces tecum.

Without a doubt, petitioner could have easily obtained the records detailing the legal services rendered in behalf of private respondent upon proper motion for the issuance of a subpoena duces tecum before the SEC Hearing Panel to compel private respondent's receiver to produce the case records petitioner had allegedly turned over to the former. Petitioner has nobody to blame but itself for failing to take the proper procedural recourse to pursue its claim.

WHEREFORE, the petition for review on certiorari is DENIED and the Decision of the Court of Appeals dated October 16, 1998 is AFFIRMED. Costs against petitioner.

Very truly yours,

(Sgd.) LUCITA ABJELINA-SORIANO
Clerk of Court


Endnotes:

[1] cralaw Rollo , pp. 20-29.

[2] cralaw Id. at 89.

[3] cralaw Id. at 91.

[4] cralaw Id. at 29.

[5] cralaw Id. at 91.

[6] cralaw Id. at 218-224. Order signed by Hearing Officers Juanito B. Almosa, Jr., Lourdes Reyes, and Ysobel Yasay-Murillo.

[7] cralaw Rollo , p. 99.

[8] cralaw Decision signed by SEC Chairman Perfecto R. Yasay, Jr., Associate Commissioners Fe Eloisa C. Gloria and Edijer A. Martinez. Two other Associate Commissioners, Rosalinda U. Casiguran and Danilo L. Concepcion, concurred in the Decision but were on official business abroad at the time of its promulgation. See rollo , p. 295.

[9] cralaw Id. at 294.

[10] cralaw Penned by Associate Justice Artemon D. Luna, concurred in by Associate Justices Delilah Vidallon-Magtolis and Rodrigo V. Cosico.

[11] cralaw Rilloraza , Africa , De Ocampo, and Africa v. Eastern Telecoms, 369 Phil. 1, 11 (1999).

[12] cralaw Traders Royal Bank Employees Union-Independent v. NLRC, G.R. No. 120592, March 14, 1997.

[13] cralaw Supra note 11.

[14] cralaw Baricuatro , Jr. v. Court of Appeals, G.R. No. 105902, February 9, 2000.

[15] cralaw 447 Phil 408 (2003).

[16] cralaw Emiliano Court Townhouses v. Atty. Dioneda , A.M. No. 5162, March 20, 2003.


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