Forum shopping is a practice adopted by litigants to get their cases heard in a

particular court that is likely to provide a favorable judgment. Foreign litigants are
attracted to the U.S. because of its wide acceptance of personal jurisdiction and
favorable litigation environment.
A plaintiff can select one forum on the following grounds:
1.The forum is not convenient to the defendant or his/her witnesses. There may be
problems of expense of travel, health, or visa or entry permit.
2.The court, the judge, or the law is most likely to favour the plaintiff's case.
A defendant can select a forum following on the following grounds:
1.The forum is not convenient to him/her; or
2.The court, the judge, or the law is most likely to favour the plaintiff's case.
The following is an example of a case law defining forum shopping:
To curb the malpractice of a party from instituting two or more actions or proceedings grounded on the same
cause with the intention of getting a favorable decision from one or the other courts, the Rules now require that
every case filed must be accompanied by a "Certificate of Non-Forum Shopping". The plaintiff or the principal
party shall certify under oath in the complaint or other initiatory pleading asserting a claim for relief that he has
not commenced any action or filed any complaint involving the same issues in any other court and that no such
other action is pending therein. Without such certification, the case will be dismissed (Section 5, Rule 7 Rules of
Court).

BANTOLINO, vs. COCA-COLA BOTTLERS PHILS., INC., G.R. No. 153660, June 10,
2003
Facts: Petitioners are employees of respondent Coca-Cola Bottlers, Inc. Petitioners filed a
complaint against respondents for unfair labor practice through illegal dismissal, violation
of their security of tenure and the perpetuation of the "Cabo System." For failure to
prosecute as they failed to either attend the scheduled mandatory conferences or submit
their respective affidavits, the claims of the other complainant-employees were
dismissed. Labor Arbiter conducted clarificatory hearings to elicit information from the
remaining complainants (petitioners herein). In lieu of a position paper, respondent
company filed a motion to dismiss complaint for lack of jurisdiction and cause of action.
On 29 May 1998 Labor Arbiter rendered a decision ordering respondent company to
reinstate complainants. Thereafter, the NLRC also sustained the findings of the Labor
Arbiter.
However, Respondent Coca-Cola Bottlers appealed to the Court of Appeals, although the
CA affirmed the finding of the NLRC that an employer-employee relationship, but
nonetheless agreed with respondent that the affidavits of some of the complainants,
namely, Prudencio Bantolino, et al. should not have been given probative value for their
failure to affirm the contents thereof and to undergo cross-examination. As a
consequence, the appellate court dismissed their complaints for lack of sufficient
evidence. Hence, this petition according to petitioners, the Rules of Court should not be
strictly applied in this case specifically by putting them on the witness stand to be crossexamined because the NLRC has its own rules of procedure which were applied by the
Labor Arbiter in coming up with a decision in their favor.
Issue: Whether or not the Rules of Court should be strictly applied in giving evidentiary
value to the affidavits despite the failure of the affiants to undergo the test of crossexamination?
Ruling: NO. In the oft-cited case of Rabago v. NLRC, the Supreme Court held that
"the argument that the affidavit is hearsay because the affiants were not presented for
cross-examination is not persuasive because the rules of evidence are not strictly
observed in proceedings before administrative bodies like the NLRC where decisions may
be reached on the basis of position papers only." Moreover, in Southern Cotabato Dev.
and Construction Co. v. NLRC, it held that under Art. 221 of the Labor Code, the rules of
evidence prevailing in courts of law do not control proceedings before the Labor Arbiter
and the NLRC. Further, it notes that the Labor Arbiter and the NLRC are authorized to
adopt reasonable means to ascertain the facts in each case speedily and objectively and
without regard to technicalities of law and procedure, all in the interest of due process.
Hence, to reiterate, administrative bodies like the NLRC are not bound by the technical
niceties of law and procedure and the rules obtaining in courts of law. Indeed, the
Revised Rules of Court and prevailing jurisprudence may be given only stringent
application, i.e., by analogy or in a suppletory character and effect.
In the case at bar, the submission by respondent, that an affidavit not testified to in a
trial, is mere hearsay evidence and has no real evidentiary value, cannot find relevance
in the present case considering that a criminal prosecution requires a quantum of
evidence different from that of an administrative proceeding. Under the Rules of the
Commission, the Labor Arbiter is given the discretion to determine the necessity of a
formal trial or hearing. Hence, trial-type hearings are not even required as the cases may
be decided based on verified position papers, with supporting documents and their
affidavits.

SECOND DIVISION
[G.R. No. 153660. June 10, 2003]
PRUDENCIO BANTOLINO, NESTOR ROMERO, NILO ESPINA, EDDIE LADICA,
ARMAN QUELING, ROLANDO NIETO, RICARDO BARTOLOME, ELUVER GARCIA,
EDUARDO GARCIA and NELSON MANALASTAS, petitioners, vs. COCA-COLA
BOTTLERS PHILS., INC., respondent.
DECISION
BELLOSILLO, J.:
This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the Decision of the Court of Appeals[1] dated 21 December 2001 which affirmed
with modification the decision of the National Labor Relations Commission promulgated
30 March 2001.[2]

On 15 February 1995 sixty-two (62) employees of respondent Coca-Cola

Bottlers, Inc., and its officers, Lipercon Services, Inc., Peoples Specialist Services,
Inc., and Interim Services, Inc., filed a complaint against respondents for unfair
labor practice through illegal dismissal, violation of their security of tenure and the
perpetuation of the Cabo System. They thus prayed for reinstatement with full
back wages, and the declaration of their regular employment status.
For failure to prosecute as they failed to either attend the scheduled mandatory
conferences or submit their respective affidavits, the claims of fifty-two (52)
complainant-employees were dismissed. Thereafter, Labor Arbiter Jose De Vera
conducted clarificatory hearings to elicit information from the ten (10) remaining
complainants (petitioners herein) relative to their alleged employment with
respondent firm.
In substance, the complainants averred that in the performance of their duties as
route helpers, bottle segregators, and others, they were employees of respondent
Coca-Cola Bottlers, Inc. They further maintained that when respondent company
replaced them and prevented them from entering the company premises, they
were deemed to have been illegally dismissed.
In lieu of a position paper, respondent company filed a motion to dismiss
complaint for lack of jurisdiction and cause of action, there being no employeremployee relationship between complainants and Coca-Cola Bottlers, Inc., and
that respondents Lipercon Services, Peoples Specialist Services and Interim
Services being bona fide independent contractors, were the real employers of the
complainants.[3] As regards the corporate officers, respondent insisted that they
could not be faulted and be held liable for damages as they only acted in their
official capacities while performing their respective duties.
On 29 May 1998 Labor Arbiter Jose De Vera rendered a decision ordering
respondent company to reinstate complainants to their former positions with all
the rights, privileges and benefits due regular employees, and to pay their full
back wages which, with the exception of Prudencio Bantolino whose back wages

must be computed upon proof of his dismissal as of 31 May 1998, already

amounted to an aggregate of P1,810,244.00.[4]
In finding for the complainants, the Labor Arbiter ruled that in contrast with the
negative declarations of respondent companys witnesses who, as district sales
supervisors of respondent company denied knowing the complainants personally,
the testimonies of the complainants were more credible as they sufficiently
supplied every detail of their employment, specifically identifying who their
salesmen/drivers were, their places of assignment, aside from their dates of
engagement and dismissal.
On appeal, the NLRC sustained the finding of the Labor Arbiter that there was
indeed an employer-employee relationship between the complainants and
respondent company when it affirmed in toto the latters decision. In a resolution
dated 17 July 2001 the NLRC subsequently denied for lack of merit respondents
motion for consideration.
Respondent Coca-Cola Bottlers appealed to the Court of Appeals which, although
affirming the finding of the NLRC that an employer-employee relationship existed
between the contending parties, nonetheless agreed with respondent that the
affidavits of some of the complainants, namely, Prudencio Bantolino, Nestor
Romero, Nilo Espina, Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and Nelson
Manalastas, should not have been given probative value for their failure to affirm
the contents thereof and to undergo cross-examination.
As a consequence, the appellate court dismissed their complaints for lack of
sufficient evidence. In the same Decision however, complainants Eddie Ladica,
Arman Queling and Rolando Nieto were declared regular employees since they
were the only ones subjected to cross-examination.[5]
Thus - (T)he labor arbiter conducted clarificatory hearings to ferret out the truth
between the opposing claims of the parties thereto. He did not submit the case
based on position papers and their accompanying documentary evidence as a fullblown trial was imperative to establish the parties claims.
As their allegations were poles apart, it was necessary to give them ample
opportunity to rebut each others statements through cross-examination. In fact,
private respondents Ladica, Quelling and Nieto were subjected to rigid crossexamination by petitioners counsel.
However, the testimonies of private respondents Romero, Espina, and Bantolino
were not subjected to cross-examination, as should have been the case, and no
explanation was offered by them or by the labor arbiter as to why this was
dispensed with. Since they were represented by counsel, the latter should have
taken steps so as not to squander their testimonies. But nothing was done by their
counsel to that effect.[6]
Petitioners now pray for relief from the adverse Decision of the Court of
Appeals; that, instead, the favorable judgment of the NLRC be reinstated.
In essence, petitioners
argue that the Court of
Appeals should not have
given
weight
to
respondents claim of
failure to cross-examine
them. They insist that,

In its disavowal
of
liability,
respondent
commented that since
the
other
alleged
affiants
were
not
presented in court to
affirm their statements,

The
petition
is
impressed with merit.
The issue confronting
the Court is not without
precedent
in
jurisprudence. The oftcited case of Rabago v.

unlike regular courts,

much less to be crosslabor cases are decided
examined,
their
based merely on the
affidavits should, as the
parties position papers
Court of Appeals rightly
and affidavits in support
held, be stricken off the
of their allegations and
records for being selfsubsequent
pleadings
serving, hearsay and
that
may
be
filed
inadmissible
in
thereto.
As
such,
evidence.
according to petitioners, With respect to Nestor
the
Rules
of
Court
Romero,
respondent
should not be strictly
points out that he
applied in this case
should not have been
specifically by putting
impleaded in the instant
them on the witness
petition since he already
stand
to
be
crossvoluntarily executed a
examined because the
Compromise
NLRC has its own rules
Agreement, Waiver and
of procedure which were
Quitclaim
in
applied by the Labor
consideration
of
Arbiter in coming up
P450,000.00.
Finally,
with a decision in their
respondent argues that
favor.
the
instant
petition
should be dismissed in
view of the failure of
petitioners[7] to sign
the petition as well as
the
verification
and
certification
of
nonforum shopping, in clear
violation of the principle
laid down in Loquias v.
Office
of
the
Ombudsman.[8]
The
crux
of
the
controversy
revolves
around the propriety of
giving evidentiary value to
the affidavits despite the
failure of the affiants to
affirm their contents and
undergo the test of crossexamination.

NLRC[9]
squarely
grapples
a
similar
challenge involving the
propriety of the use of
affidavits without the
presentation of affiants
for cross-examination.
In that case, we held
that the argument
that the affidavit is
hearsay because the
affiants
were
not
presented for crossexamination is not
persuasive because
the rules of evidence
are
not
strictly
observed
in
proceedings before
administrative
bodies like the NLRC
where decisions may
be reached on the
basis
of
position
papers only.

In Rase v. NLRC,[10] this Court likewise sidelined a similar challenge when it ruled
that it was not necessary for the affiants to appear and testify and be crossexamined by counsel for the adverse party. To require otherwise would be to
negate the rationale and purpose of the summary nature of the
proceedings mandated by the Rules and to make mandatory the
application of the technical rules of evidence.

Southern Cotabato Dev. and Construction Co. v. NLRC[11] succinctly states that
under Art. 221 of the Labor Code, the rules of evidence prevailing in courts
of law do not control proceedings before the Labor Arbiter and the NLRC.
Further, it notes that the Labor Arbiter and the NLRC are authorized to
adopt reasonable means to ascertain the facts in each case speedily and
objectively and without regard to technicalities of law and procedure, all
in the interest of due process. We find no compelling reason to deviate
therefrom.
To reiterate, administrative bodies like the NLRC are not bound by the
technical niceties of law and procedure and the rules obtaining in courts
of law. Indeed, the Revised Rules of Court and prevailing jurisprudence may be
given only stringent application, i.e., by analogy or in a suppletory character and
effect. The submission by respondent, citing People v. Sorrel,[12] that an affidavit
not testified to in a trial, is mere hearsay evidence and has no real evidentiary
value, cannot find relevance in the present case considering that a criminal
prosecution requires a quantum of evidence different from that of an
administrative proceeding. Under the Rules of the Commission, the Labor Arbiter is
given the discretion to determine the necessity of a formal trial or hearing. Hence,
trial-type hearings are not even required as the cases may be decided
based on verified position papers, with supporting documents and their
affidavits.
As to whether petitioner Nestor Romero should be properly impleaded in
the instant case, we only need to follow the doctrinal guidance set by Periquet v.
NLRC[13] which outlines the parameters for valid compromise agreements,
waivers and quitclaims Not all waivers and quitclaims are invalid as against public policy. If the
agreement was voluntarily entered into and represents a reasonable settlement, it
is binding on the parties and may not later be disowned simply because of a
change of mind. It is only where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or the terms of settlement are
unconscionable on its face, that the law will step in to annul the questionable
transaction. But where it is shown that the person making the waiver did so
voluntarily, with full understanding of what he was doing, and the consideration for
the quitclaim is credible and reasonable, the transaction must be recognized as a
valid and binding undertaking.
In closely examining the subject agreements, we find that on their face the
Compromise Agreement[14] and Release, Waiver and Quitclaim[15] are devoid of
any palpable inequity as the terms of settlement therein are fair and just. Neither
can we glean from the records any attempt by the parties to renege on their
contractual agreements, or to disavow or disown their due execution.
Consequently, the same must be recognized as valid and binding transactions and,
accordingly, the instant case should be dismissed and finally terminated insofar as
concerns petitioner Nestor Romero.
We cannot likewise accommodate respondents contention that the failure of all
the petitioners to sign the petition as well as the Verification and Certification of
Non-Forum Shopping in contravention of Sec. 5, Rule 7, of the Rules of Court will
cause the dismissal of the present appeal. While the Loquias case requires the
strict observance of the Rules, it however provides an escape hatch for the
transgressor to avoid the harsh consequences of non-observance. Thus x x x x We find that substantial compliance will not suffice in a matter
involving strict observance of the rules. The attestation contained in the
certification on non-forum shopping requires personal knowledge by the party who
executed the same. Petitioners must show reasonable cause for failure to

personally sign the certification. Utter disregard of the rules cannot justly be
rationalized by harking on the policy of liberal construction (underscoring
supplied).
In their Ex Parte Motion to Litigate as Pauper Litigants, petitioners made a request
for a fifteen (15)-day extension, i.e., from 24 April 2002 to 8 May 2002, within
which to file their petition for review in view of the absence of a counsel to
represent them.[16] The records also reveal that it was only on 10 July 2002 that
Atty. Arnold Cacho, through the UST Legal Aid Clinic, made his formal entry of
appearance as counsel for herein petitioners. Clearly, at the time the instant
petition was filed on 7 May 2002 petitioners were not yet represented by counsel.
Surely, petitioners who are non-lawyers could not be faulted for the procedural
lapse since they could not be expected to be conversant with the nuances of the
law, much less knowledgeable with the esoteric technicalities of procedure. For
this reason alone, the procedural infirmity in the filing of the present petition may
be overlooked and should not be taken against petitioners.
WHEREFORE, the petition is GRANTED. The Decision of the Court of
Appeals is REVERSED and SET ASIDE and the decision of the NLRC dated
30 March 2001 which affirmed in toto the decision of the Labor Arbiter dated 29
May 1998 ordering respondent Coca-Cola Bottlers Phils., Inc., to reinstate
Prudencio Bantolino, Nilo Espina, Eddie Ladica, Arman Queling, Rolando Nieto,
Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and Nelson Manalastas to their
former positions as regular employees, and to pay them their full back wages, with
the exception of Prudencio Bantolino whose back wages are yet to be computed
upon proof of his dismissal, is REINSTATED, with the MODIFICATION that herein
petition is DENIED insofar as it concerns Nestor Romero who entered into a valid
and binding Compromise Agreement and Release, Waiver and Quitclaim with
respondent company.
SO ORDERED.
Quisumbing, Austria-Martinez, and Callejo, Sr., JJ., concur

Shipside Inc v Court of Appeals.

Facts:
The petitioner filed a certiorari with the CA containing the requisite certification on nonforum shopping but failed to attach proof that the person signing the certification was

authorized to do so. The CA dismissed the petition. The petitioner submits a motion for
reconsideration which attached a secretarys certificate attesting to the signatorys
authority to sign certificates against forum shopping on behalf of the petitioner. When
the court of CA denied the motion, the petitioner sought relief with the SC.
Facts:
On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor
of Rafael Galvez, over four parcels of land - Lot 1 with 6,571 square meters; Lot 2, with
16,777 square meters; Lot 3 with 1,583 square meters; and Lot 4, with 508 square
meters. On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of
Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat in a deed of sale
which was inscribed as Entry No. 9115 OCT No.0-381 on August 10, 1960. August 16,
1960, Mamaril, et al. sold Lots No. 1 and 4 to Lepanto Consolidated Mining Company.
On February 1, 1963, unknown to Lepanto Consolidated Mining Company, the Court of
First Instance of La Union, Second Judicial District, issued an order declaring OCT No. 0381 of the Registry of Deeds for the Province of La Union issued in the name of Rafael
Galvez, null and void, and ordered the cancellation thereof.
On October 28, 1963, Lepanto Consolidated Mining Company sold to herein petitioner
Lots No. 1 and 4. In the meantime, Rafael Galvez filed his motion for reconsideration
against the order issued by the trial court declaring OCT No. 0-381 null and void. The
motion was denied. The Court of Appeals ruled in favor of the Republic of the Philippines.
Thereafter, the Court of Appeals issued an Entry of Judgment, certifying that its decision
dated August 14, 1973 became final and executory on October 23, 1973. Twenty four
long years, thereafter, on January 14, 1999, the Office of the Solicitor General received a
letter dated January 11, 1999 from Mr. Victor G. Floresca, Vice-President, John Hay Poro
Point Development Corporation, stating that the aforementioned orders and decision of
the trial court in L.R.C. No. N-361 have not been executed by the Register of Deeds, San
Fernando, La Union despite receipt of the writ of execution. On April 21, 1999, the Office
of the Solicitor General filed a complaint for revival of judgment and cancellation of titles
before the Regional Trial Court of the First Judicial Region (Branch 26, San Fernando, La
Union)
Issue:
Whether the CA erred in dismissing the petition of Shipside Inc.
Ruling:
Yes, the CA erred in the dismissal of the petition. The SC revised the decision of CA
recognizing the belated filing of the certifications against forum shopping as permitted in
exceptional circumstances. It further held that with more reason should a petition be
given due course when this incorporates a certification on non-forum shopping without
evidence that the person signing the certifications was an authorized signatory and the
petitioner subsequently submits a secretarys certificate attesting to the signatorys
authority in its motion for consideration.
The court allows belated submission of certifications showing proof of the
signatorys authority in signing the certification of forum shopping.

[G.R. No. 143377. February 20, 2001]

SHIPSIDE INCORPORATED, petitioner, vs. THE HON. COURT OF APPEALS [Special
Former Twelfth Division], HON. REGIONAL TRIAL COURT, BRANCH 26 (San
Fernando City, La Union) & The REPUBLIC OF THE PHILIPPINES, respondents.
DECISION
MELO, J.:
Before the Court is a petition for certiorari filed by Shipside Incorporated under Rule 65 of
the 1997 Rules on Civil Procedure against the resolutions of the Court of Appeals
promulgated on November 4, 1999 and May 23, 2000, which respectively, dismissed a
petition for certiorari and prohibition and thereafter denied a motion for reconsideration.
The antecedent facts are undisputed:

On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor
of Rafael Galvez, over four parcels of land Lot 1 with 6,571 square meters; Lot
2, with 16,777 square meters; Lot 3 with 1,583 square meters; and Lot 4, with 508
square meters.
On April 11, 1960, Lots No. 1 and 4 were conveyed by Rafael Galvez in favor of
Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat in a deed of
sale which was inscribed as Entry No. 9115 OCT No. 0-381 on August 10, 1960.
Consequently, Transfer Certificate No. T-4304 was issued in favor of the buyers
covering Lots No. 1 and 4.
Lot No. 1 is described as:

A parcel of land (Lot 1, Plan PSU-159621, L. R. Case No. N-361; L. R. C.

Record No. N-14012, situated in the Barrio of Poro, Municipality of San
Fernando, Province of La Union, bounded on the NE, by the Foreshore;
on the SE, by Public Land and property of the Benguet Consolidated Mining
Company; on the SW, by properties of Rafael Galvez (US Military
Reservation Camp Wallace) and Policarpio Munar; and on the NW, by an old
Barrio Road. Beginning at a point marked 1 on plan, being S. 74 deg.
11W. , 2670. 36 from B. L. L. M. 1, San Fernando, thence
Lot No. 4 has the following technical description:
o A parcel of land (Lot 4, Plan PSU-159621, L. R. Case No. N-361 L. R. C.
Record No. N-14012), situated in the Barrio of Poro, Municipality of San
Fernando, La Union. Bounded on the SE by the property of the Benguet
Consolidated Mining Company; on the S. by property of Pelagia Carino; and
on the NW by the property of Rafael Galvez (US Military Reservation, Camp
Wallace). Beginning at a point marked 1 on plan, being S. deg. 24W.
2591. 69 m. from B. L. L. M. 1, San Fernando, thence S. 12 deg. 45W., 73.
03 m. to point 2; N. 79 deg. 59W., 13.92 m. to point 3; N. 23 deg. 26E. ,
75.00 m. to the point of beginning; containing an area of FIVE HUNDED AND
EIGHT (508) SQUARE METERS, more or less. All points referred to are
indicated in the plan and marked on the ground; bearings true, date of
survey, February 4-21, 1957.
On August 16, 1960, Mamaril, et al. sold Lots No. 1 and 4 to Lepanto
Consolidated Mining Company. The deed of sale covering the aforesaid
property was inscribed as Entry No. 9173 on TCT No. T-4304. Subsequently,
Transfer Certificate No. T-4314 was issued in the name of Lepanto Consolidated
Mining Company as owner of Lots No. 1 and 4.
On February 1, 1963, unknown to Lepanto Consolidated Mining Company, the
Court of First Instance of La Union, Second Judicial District, issued an Order in Land
Registration Case No. N-361 (LRC Record No. N-14012) entitled Rafael Galvez,
Applicant, Eliza Bustos, et al., Parties-In-Interest; Republic of the Philippines,
Movant declaring OCT No. 0-381 of the Registry of Deeds for the Province of
La Union issued in the name of Rafael Galvez, null and void, and ordered the
cancellation thereof.
o

The Order pertinently provided:

o Accordingly, with the foregoing, and without prejudice on the rights of
incidental parties concerned herein to institute their respective appropriate
actions compatible with whatever cause they may have, it is hereby
declared and this court so holds that both proceedings in Land Registration
Case No. N-361 and Original Certificate No. 0-381 of the Registry of Deeds
for the province of La Union issued in virtue thereof and registered in the
name of Rafael Galvez, are null and void; the Register of Deeds for the
Province of La Union is hereby ordered to cancel the said original
certificate and / or such other certificates of title issued subsequent
thereto having reference to the same parcels of land; without
pronouncement as to costs.
On October 28, 1963, Lepanto Consolidated Mining Company sold to herein
petitioner Lots No. 1 and 4, with the deed being entered in TCT NO. 4314 as entry
No. 12381. Transfer Certificate of Title No. T-5710 was thus issued in favor of the
petitioner which starting since then exercised proprietary rights over Lots No. 1
and 4.

In the meantime, Rafael Galvez filed his motion for reconsideration against the
order issued by the trial court declaring OCT No. 0-381 null and void. The motion
was denied on January 25, 1965.
On appeal, the Court of Appeals ruled in favor of the Republic of the Philippines in
a Resolution promulgated on August 14, 1973 in CA-G. R. No. 36061-R.
Thereafter, the Court of Appeals issued an Entry of Judgment, certifying that its
decision dated August 14, 1973 became final and executory on October 23, 1973.
On April 22, 1974, the trial court in L. R. C. Case No. N-361 issued a writ of
execution of the judgment which was served on the Register of Deeds, San
Fernando, La Union on April 29, 1974.
Twenty four long years thereafter, on January 14, 1999, the Office of the Solicitor
General received a letter dated January 11, 1999 from Mr. Victor G. Floresca,
Vice-President, John Hay Poro Point Development Corporation, stating that the
aforementioned orders and decision of the trial court in L. R. C. No. N-361 have not
been executed by the Register of Deeds, San Fernando, La Union despite receipt of
the writ of execution.
On April 21, 1999, the Office of the Solicitor General filed a complaint for revival of
judgment and cancellation of titles before the Regional Trial Court of the First
Judicial Region (Branch 26, San Fernando, La Union) docketed therein as Civil Case
No. 6346 entitled, Republic of the Philippines, Plaintiff, versus Heirs of Rafael
Galvez, represented by Teresita Tan, Reynaldo Mamaril, Elisa Bustos, Erlinda
Balatbat, Regina Bustos, Shipside Incorporated and the Register of Deeds of La
Union, Defendants.
The evidence shows that the impleaded defendants (except the Register of Deeds
of the province of La Union) are the successors-in-interest of Rafael Galvez (not
Reynaldo Galvez as alleged by the Solicitor General) over the property covered by
OCT No. 0-381, namely: (a) Shipside Inc. which is presently the registered owner
in fee simple of Lots No. 1 and 4 covered by TCT No. T-5710, with a total area of
7,079 square meters; (b) Elisa Bustos, Jesusito Galvez, and Teresita Tan who are
the registered owners of Lot No. 2 of OCT No. 0-381;and (c) Elisa Bustos, Filipina
Mamaril, Regina Bustos and Erlinda Balatbat who are the registered owners of Lot
No. 3 of OCT No. 0-381, now covered by TCT No. T-4916, with an area of 1,583
square meters.
In its complaint in Civil Case No. 6346, the Solicitor General argued that since the
trial court in LRC Case No. 361 had ruled and declared OCT No. 0-381 to be null
and void, which ruling was subsequently affirmed by the Court of Appeals, the
defendants-successors-in-interest of Rafael Galvez have no valid title
over the property covered by OCT No. 0-381, and the subsequent Torrens
titles issued in their names should be consequently cancelled.
On July 22, 1999, petitioner Shipside, Inc. filed its Motion to Dismiss,
based on the following grounds: (1) the complaint stated no cause of action
because only final and executory judgments may be subject of an action for revival
of judgment; (2) the plaintiff is not the real party-in-interest because the real
property covered by the Torrens titles sought to be cancelled, allegedly part of
Camp Wallace (Wallace Air Station), were under the ownership and administration
of the Bases Conversion Development Authority (BCDA) under Republic Act No.
7227; (3) plaintiffs cause of action is barred by prescription; (4) twenty-five years
having lapsed since the issuance of the writ of execution, no action for revival of
judgment may be instituted because under Paragraph 3 of Article 1144 of the Civil
Code, such action may be brought only within ten (10) years from the time the
judgment had been rendered.

An opposition to the motion to dismiss was filed by the Solicitor General on August
23, 1999, alleging among others, that: (1) the real party-in-interest is the Republic
of the Philippines;and (2) prescription does not run against the State.
On August 31, 1999, the trial court denied petitioners motion to dismiss and on
October 14, 1999, its motion for reconsideration was likewise turned down.
On October 21, 1999, petitioner instituted a petition for certiorari and prohibition
with the Court of Appeals, docketed therein as CA-G.R. SP No. 55535, on the
ground that the orders of the trial court denying its motion to dismiss and its
subsequent motion for reconsideration were issued in excess of jurisdiction.
On November 4, 1999, the Court of Appeals dismissed the petition in CA-G.R. SP
No. 55535 on the ground that the verification and certification in the petition,
under the signature of Lorenzo Balbin, Jr., was made without authority, there being
no proof therein that Balbin was authorized to institute the petition for and in
behalf and of petitioner.
On May 23, 2000, the Court of Appeals denied petitioners motion for
reconsideration on the grounds that:
(1) a complaint filed on behalf of a
corporation can be made only if authorized by its Board of Directors, and in the
absence thereof, the petition cannot prosper and be granted due course;and (2)
petitioner was unable to show that it had substantially complied with the rule
requiring proof of authority to institute an action or proceeding.

Hence, the instant petition.

In support of its petition, Shipside, Inc. asseverates that:

1. The Honorable Court of Appeals gravely abused its discretion in dismissing the
petition when it made a conclusive legal presumption that Mr. Balbin had no
authority to sign the petition despite the clarity of laws, jurisprudence and
Secretarys certificate to the contrary;
2. The Honorable Court of Appeals abused its discretion when it dismissed the
petition, in effect affirming the grave abuse of discretion committed by the lower
court when it refused to dismiss the 1999 Complaint for Revival of a 1973
judgment, in violation of clear laws and jurisprudence.
Petitioner likewise adopted the arguments it raised in the petition and
comment/reply it filed with the Court of Appeals, attached to its petition as Exhibit
L and N, respectively.
In his Comment, the Solicitor General moved for the dismissal of the instant
petition based on the following considerations: (1) Lorenzo Balbin, who signed for
and in behalf of petitioner in the verification and certification of non-forum
shopping portion of the petition, failed to show proof of his authorization to
institute the petition for certiorari and prohibition with the Court of Appeals, thus
the latter court acted correctly in dismissing the same; (2) the real party-in-interest
in the case at bar being the Republic of the Philippines, its claims are
imprescriptible.
In order to preserve the rights of herein parties, the Court issued a temporary
restraining order on June 26, 2000 enjoining the trial court from conducting further
proceedings in Civil Case No. 6346.
The issues posited in this case are: (1) whether or not an authorization from
petitioners Board of Directors is still required in order for its resident manager to
institute or commence a legal action for and in behalf of the corporation; and (2)
whether or not the Republic of the Philippines can maintain the action for revival of
judgment herein.

We find for petitioner.

Anent the first issue:

The Court of Appeals dismissed the petition for certiorari on the ground that Lorenzo
Balbin, the resident manager for petitioner, who was the signatory in the verification and
certification on non-forum shopping, failed to show proof that he was authorized by
petitioners board of directors to file such a petition.
A corporation, such as petitioner, has no power except those expressly conferred on it by
the Corporation Code and those that are implied or incidental to its existence. In turn, a
corporation exercises said powers through its board of directors and / or its duly
authorized officers and agents. Thus, it has been observed that the power of a
corporation to sue and be sued in any court is lodged with the board of directors that
exercises its corporate powers (Premium Marble Resources, Inc. v. CA, 264 SCRA 11
[1996]). In turn, physical acts of the corporation, like the signing of documents, can be
performed only by natural persons duly authorized for the purpose by corporate by-laws
or by a specific act of the board of directors.
It is undisputed that on October 21, 1999, the time petitioners Resident Manager Balbin
filed the petition, there was no proof attached thereto that Balbin was authorized to sign
the verification and non-forum shopping certification therein, as a consequence of which
the petition was dismissed by the Court of Appeals. However, subsequent to such
dismissal, petitioner filed a motion for reconsideration, attaching to said motion a
certificate issued by its board secretary stating that on October 11, 1999, or ten days
prior to the filing of the petition, Balbin had been authorized by petitioners board of
directors to file said petition.
The Court has consistently held that the requirement regarding verification of a pleading
is formal, not jurisdictional (Uy v. LandBank, G.R. No. 136100, July 24, 2000). Such
requirement is simply a condition affecting the form of the pleading, non-compliance with
which does not necessarily render the pleading fatally defective. Verification is simply
intended to secure an assurance that the allegations in the pleading are true and correct
and not the product of the imagination or a matter of speculation, and that the pleading
is filed in good faith. The court may order the correction of the pleading if verification is
lacking or act on the pleading although it is not verified, if the attending circumstances
are such that strict compliance with the rules may be dispensed with in order that the
ends of justice may thereby be served.
On the other hand, the lack of certification against forum shopping is generally not
curable by the submission thereof after the filing of the petition. Section 5, Rule 45 of
the 1997 Rules of Civil Procedure provides that the failure of the petitioner to submit the
required documents that should accompany the petition, including the certification
against forum shopping, shall be sufficient ground for the dismissal thereof. The same
rule applies to certifications against forum shopping signed by a person on behalf of a
corporation which are unaccompanied by proof that said signatory is authorized to file a
petition on behalf of the corporation.
In certain exceptional circumstances, however, the Court has allowed the belated filing of
the certification. In Loyola v. Court of Appeals, et. al. (245 SCRA 477 [1995]), the Court
considered the filing of the certification one day after the filing of an election protest as
substantial compliance with the requirement. In Roadway Express, Inc. v. Court of

Appeals, et. al. (264 SCRA 696 [1996]), the Court allowed the filing of the certification 14
days before the dismissal of the petition. In Uy v. LandBank, supra, the Court had
dismissed Uys petition for lack of verification and certification against non-forum
shopping. However, it subsequently reinstated the petition after Uy submitted a motion
to admit certification and non-forum shopping certification. In all these cases, there were
special circumstances or compelling reasons that justified the relaxation of the rule
requiring verification and certification on non-forum shopping.
In the instant case, the merits of petitioners case should be considered special
circumstances or compelling reasons that justify tempering the requirement in regard to
the certificate of non-forum shopping. Moreover, in Loyola, Roadway, and Uy, the Court
excused non-compliance with the requirement as to the certificate of non-forum
shopping. With more reason should we allow the instant petition since petitioner herein
did submit a certification on non-forum shopping, failing only to show proof that the
signatory was authorized to do so. That petitioner subsequently submitted a secretarys
certificate attesting that Balbin was authorized to file an action on behalf of petitioner
likewise mitigates this oversight.
It must also be kept in mind that while the requirement of the certificate of non-forum
shopping is mandatory, nonetheless the requirements must not be interpreted too
literally and thus defeat the objective of preventing the undesirable practice of forumshopping (Bernardo v. NLRC, 255 SCRA 108 [1996]). Lastly, technical rules of procedure
should be used to promote, not frustrate justice. While the swift unclogging of court
dockets is a laudable objective, the granting of substantial justice is an even more urgent
ideal.
Now to the second issue:
The action instituted by the Solicitor General in the trial court is one for revival of
judgment which is governed by Article 1144(3) of the Civil Code and Section 6, Rule 39 of
the 1997 Rules on Civil Procedure.
Article 1144(3) provides that an action upon a
judgment must be brought within 10 years from the time the right of action accrues."
On the other hand, Section 6, Rule 39 provides that a final and executory judgment or
order may be executed on motion within five (5) years from the date of its entry, but that
after the lapse of such time, and before it is barred by the statute of limitations, a
judgment may be enforced by action. Taking these two provisions into consideration, it is
plain that an action for revival of judgment must be brought within ten years from the
time said judgment becomes final.
From the records of this case, it is clear that the judgment sought to be revived became
final on October 23, 1973. On the other hand, the action for revival of judgment was
instituted only in 1999, or more than twenty-five (25) years after the judgment had
become final. Hence, the action is barred by extinctive prescription considering that
such an action can be instituted only within ten (10) years from the time the cause of
action accrues.
The Solicitor General, nonetheless, argues that the States cause of action in the
cancellation of the land title issued to petitioners predecessor-in-interest is
imprescriptible because it is included in Camp Wallace, which belongs to the government.
The argument is misleading.
While it is true that prescription does not run against the State, the same may not be
invoked by the government in this case since it is no longer interested in the subject

matter. While Camp Wallace may have belonged to the government at the time Rafael
Galvezs title was ordered cancelled in Land Registration Case No. N-361, the same no
longer holds true today.
Republic Act No. 7227, otherwise known as the Bases Conversion and Development Act
of 1992, created the Bases Conversion and Development Authority. Section 4 pertinently
provides:
Section 4. Purposes of the Conversion Authority. The Conversion Authority shall have
the following purposes:
(a) To own, hold and/or administer the military reservations of John Hay Air Station,
Wallace Air Station, ODonnell Transmitter Station, San Miguel Naval Communications
Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those portions of Metro Manila
military camps which may be transferred to it by the President;
Section 2 of Proclamation No. 216, issued on July 27, 1993, also provides:
Section 2.
Transfer of Wallace Air Station Areas to the Bases Conversion and
Development Authority. All areas covered by the Wallace Air Station as embraced and
defined by the 1947 Military Bases Agreement between the Philippines and the United
States of America, as amended, excluding those covered by Presidential Proclamations
and some 25-hectare area for the radar and communication station of the Philippine Air
Force, are hereby transferred to the Bases Conversion Development Authority
With the transfer of Camp Wallace to the BCDA, the government no longer has a right or
interest to protect. Consequently, the Republic is not a real party in interest and it may
not institute the instant action. Nor may it raise the defense of imprescriptibility, the
same being applicable only in cases where the government is a party in interest. Under
Section 2 of Rule 3 of the 1997 Rules of Civil Procedure, every action must be
prosecuted or defended in the name of the real party in interest. To qualify a person to
be a real party in interest in whose name an action must be prosecuted, he must appear
to be the present real owner of the right sought to enforced (Pioneer Insurance v. CA,
175 SCRA 668 [1989]). A real party in interest is the party who stands to be benefited or
injured by the judgment in the suit, or the party entitled to the avails of the suit. And by
real interest is meant a present substantial interest, as distinguished from a mere
expectancy, or a future, contingent, subordinate or consequential interest (Ibonilla v.
Province of Cebu, 210 SCRA 526 [1992]). Being the owner of the areas covered by Camp
Wallace, it is the Bases Conversion and Development Authority, not the Government,
which stands to be benefited if the land covered by TCT No. T-5710 issued in the name of
petitioner is cancelled.
Nonetheless, it has been posited that the transfer of military reservations and their
extensions to the BCDA is basically for the purpose of accelerating the sound and
balanced conversion of these military reservations into alternative productive uses and to
enhance the benefits to be derived from such property as a measure of promoting the
economic and social development, particularly of Central Luzon and, in general, the
countrys goal for enhancement (Section 2, Republic Act No. 7227). It is contended that
the transfer of these military reservations to the Conversion Authority does not amount
to an abdication on the part of the Republic of its interests, but simply a recognition of
the need to create a body corporate which will act as its agent for the realization of its
program. It is consequently asserted that the Republic remains to be the real party in
interest and the Conversion Authority merely its agent.

We, however, must not lose sight of the fact that the BCDA is an entity invested with a
personality separate and distinct from the government. Section 3 of Republic Act No.
7227 reads:
Section 3. Creation of the Bases Conversion and Development Authority. There is
hereby created a body corporate to be known as the Conversion Authority which shall
have the attribute of perpetual succession and shall be vested with the powers of a
corporation.
It may not be amiss to state at this point that the functions of government have been
classified into governmental or constituent and proprietary or ministrant. While public
benefit and public welfare, particularly, the promotion of the economic and social
development of Central Luzon, may be attributable to the operation of the BCDA, yet it is
certain that the functions performed by the BCDA are basically proprietary in nature. The
promotion of economic and social development of Central Luzon, in particular, and the
countrys goal for enhancement, in general, do not make the BCDA equivalent to the
Government. Other corporations have been created by government to act as its agents
for the realization of its programs, the SSS, GSIS, NAWASA and the NIA, to count a few,
and yet, the Court has ruled that these entities, although performing functions aimed at
promoting public interest and public welfare, are not government-function corporations
invested with governmental attributes. It may thus be said that the BCDA is not a mere
agency of the Government but a corporate body performing proprietary functions.
Moreover, Section 5 of Republic Act No. 7227 provides:
Section 5. Powers of the Conversion Authority. To carry out its objectives under this
Act, the Conversion Authority is hereby vested with the following powers:
(a) To succeed in its corporate name, to sue and be sued in such corporate name and to
adopt, alter and use a corporate seal which shall be judicially noticed;
Having the capacity to sue or be sued, it should thus be the BCDA which may file an
action to cancel petitioners title, not the Republic, the former being the real party in
interest. One having no right or interest to protect cannot invoke the jurisdiction of the
court as a party plaintiff in an action (Ralla v. Ralla, 199 SCRA 495 [1991]). A suit may be
dismissed if the plaintiff or the defendant is not a real party in interest. If the suit is not
brought in the name of the real party in interest, a motion to dismiss may be filed, as was
done by petitioner in this case, on the ground that the complaint states no cause of
action (Tanpingco v. IAC, 207 SCRA 652 [1992]).
However, E. B. Marcha Transport Co. , Inc. v. IAC (147 SCRA 276 [1987]) is cited as
authority that the Republic is the proper party to sue for the recovery of possession of
property which at the time of the institution of the suit was no longer held by the national
government but by the Philippine Ports Authority. In E. B. Marcha, the Court ruled:
It can be said that in suing for the recovery of the rentals, the Republic of the Philippines,
acted as principal of the Philippine Ports Authority, directly exercising the commission it
had earlier conferred on the latter as its agent. We may presume that, by doing so, the
Republic of the Philippines did not intend to retain the said rentals for its own use,
considering that by its voluntary act it had transferred the land in question to the
Philippine Ports Authority effective July 11, 1974. The Republic of the Philippines had
simply sought to assist, not supplant, the Philippine Ports Authority, whose title to the
disputed property it continues to recognize. We may expect then that the said rentals,

once collected by the Republic of the Philippines, shall be turned over by it to the
Philippine Ports Authority conformably to the purposes of P. D. No. 857.
E. B. Marcha is, however, not on all fours with the case at bar. In the former, the Court
considered the Republic a proper party to sue since the claims of the Republic and the
Philippine Ports Authority against the petitioner therein were the same. To dismiss the
complaint in E. B. Marcha would have brought needless delay in the settlement of the
matter since the PPA would have to refile the case on the same claim already litigated
upon. Such is not the case here since to allow the government to sue herein enables it to
raise the issue of imprescriptibility, a claim which is not available to the BCDA. The rule
that prescription does not run against the State does not apply to corporations or
artificial bodies created by the State for special purposes, it being said that when the title
of the Republic has been divested, its grantees, although artificial bodies of its own
creation, are in the same category as ordinary persons (Kingston v. LeHigh Valley Coal
Co., 241 Pa 469). By raising the claim of imprescriptibility, a claim which cannot be
raised by the BCDA, the Government not only assists the BCDA, as it did in E. B. Marcha,
it even supplants the latter, a course of action proscribed by said case.
Moreover, to recognize the Government as a proper party to sue in this case would set a
bad precedent as it would allow the Republic to prosecute, on behalf of governmentowned or controlled corporations, causes of action which have already prescribed, on the
pretext that the Government is the real party in interest against whom prescription does
not run, said corporations having been created merely as agents for the realization of
government programs.
Parenthetically, petitioner was not a party to the original suit for cancellation of title
commenced by the Republic twenty-seven years for which it is now being made to
answer, nay, being made to suffer financial losses.
It should also be noted that petitioner is unquestionably a buyer in good faith and for
value, having acquired the property in 1963, or 5 years after the issuance of the original
certificate of title, as a third transferee. If only not to do violence and to give some
measure of respect to the Torrens System, petitioner must be afforded some measure of
protection.
One more point.
Since the portion in dispute now forms part of the property owned and administered by
the Bases Conversion and Development Authority, it is alienable and registerable real
property.
We find it unnecessary to rule on the other matters raised by the herein parties.
WHEREFORE, the petition is hereby granted and the orders dated August 31, 1999
and October 4, 1999 of the Regional Trial Court of the First National Judicial Region
(Branch 26, San Fernando, La Union) in Civil Case No. 6346 entitled Republic of the
Philippines, Plaintiff, versus Heirs of Rafael Galvez, et. al., Defendants as well as the
resolutions promulgated on November 4, 1999 and May 23, 2000 by the Court of Appeals
(Twelfth Division) in CA-G. R. SP No. 55535 entitled Shipside, Inc., Petitioner versus Hon.
Alfredo Cajigal, as Judge, RTC, San Fernando, La Union, Branch 26, and the Republic of
the Philippines, Respondents are hereby reversed and set aside. The complaint in Civil
Case No. 6346, Regional Trial Court, Branch 26, San Fernando City, La Union entitled
Republic of the Philippines, Plaintiff, versus Heirs of Rafael Galvez, et al." is ordered

dismissed, without prejudice to the filing of an appropriate action by the Bases

Development and Conversion Authority.
SO ORDERED.
Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ. , concur.
Vitug, J. , Please see separate opinion.

G.R. No. 118746

September 7, 1995

ATTY. WILFREDO TAGANAS, petitioner,

vs.
NATIONAL LABOR RELATIONS COMMISSION, MELCHOR ESCULTURA, ET AL.,
respondents.
RESOLUTION
FRANCISCO, J.:

Petitioner Atty. Wilfredo E. Taganas represented herein private respondents in

a labor suit for illegal dismissal, underpayment and non-payment of wages,
thirteenth-month pay, attorney's fees and damages conditioned upon a contingent
fee arrangement granting the equivalent of fifty percent of the judgment award
plus three hundred pesos appearance fee per hearing.
1 The Labor Arbiter ruled in favor of private respondents and ordered Ultra Clean
Services (Ultra) and the Philippine Tuberculosis Society, Inc., (PTSI) respondents
therein, jointly and severally to reinstate herein private respondents with full
backwages, to pay wage differentials, emergency cost of living allowance,
thirteenth-month pay and attorney's fee, but disallowed the claim for damages for
lack of basis.
2 This decision was appealed by Ultra and PTSI to the National Labor Relations
Commission (NLRC), and subsequently by PTSI to the Court but to no avail. During
the execution stage of the decision, petitioner moved to enforce his attorney's
charging lien.

3 Private respondents, aggrieved for receiving a reduced award due to the

attorney's charging lien, contested the validity of the contingent fee arrangement
they have with petitioner, albeit four of the fourteen private respondents have
expressed their conformity thereto.
4 Finding the arrangement excessive, the Labor Arbiter ordered the reduction
of petitioner's contingent fee from fifty percent of the judgment award to
ten percent, except for the four private respondents who earlier expressed their
conformity.
5 Petitioner appealed to NLRC which affirmed with modification the Labor Arbiter's
order by ruling that the ten percent contingent fee should apply also to the four
respondents even if they earlier agreed to pay a higher percentage.
6 Petitioner's motion for reconsideration was denied, hence this petition for
certiorari.

ISSUE:
The sole issue in this petition is whether or not the reduction of petitioner's
contingent fee is warranted.

Petitioner argues that respondent NLRC failed to apply the pertinent laws and
jurisprudence on the factors to be considered in determining whether or not the
stipulated amount of petitioner's contingent fee is fair and reasonable.
Moreover, he contends that the invalidation of the contingent fee agreement
between petitioner and his clients was without any legal justification especially
with respect to the four clients who manifested their conformity thereto.
We are not persuaded.
A contingent fee arrangement is an agreement laid down in an express
contract between a lawyer and a client in which the lawyer's professional fee,
usually a fixed percentage of what may be recovered in the action is made to
depend upon the success of the litigation.
o 7 This arrangement is valid in this jurisdiction.
o 8 It is, however, under the supervision and scrutiny of the court to protect
clients from unjust charges.
o 9 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". Likewise, Rule 138, Section 24 of the Rules of Court
provides:
o Sec. 24.
Compensation of attorneys; agreement as to fees. An
attorney shall be entitled to have and recover from his client no more than a
reasonable compensation for his services, with a view to the importance of
the subject-matter of the controversy, the extent of the services rendered,
and the professional standing of the attorney. No court shall be bound by
the opinion of attorneys as expert witnesses as to the proper compensation
but may disregard such testimony and base its conclusion on its own
professional knowledge. A written contract for services shall control the
amount to be paid therefor unless found by the court to be unconscionable
or unreasonable.
o When it comes, therefore, to the validity of contingent fees, in large
measure it depends on the reasonableness of the stipulated fees under the

o
o

circumstances of each case. The reduction of unreasonable attorney's fees

is within the regulatory powers of the courts. 10
We agree with the NLRC's assessment that fifty percent of the
judgment award as attorney's fees is excessive and unreasonable.
The financial capacity and economic status of the client have to be taken
into account in fixing the reasonableness of the fee.
11 Noting that petitioner's clients were lowly janitors who receive miniscule
salaries and that they were precisely represented by petitioner in the labor
dispute for reinstatement and claim for backwages, wage differentials,
emergency cost of living allowance, thirteenth-month pay and attorney's
fees to acquire what they have not been receiving under the law and to
alleviate their living condition, the reduction of petitioner's contingent
fee is proper. Labor cases, it should be stressed, call for compassionate
justice.
Furthermore, petitioner's contingent fee falls within the purview of Article
111 of the Labor Code. This article fixes the limit on the amount of
attorney's fees which a lawyer, like petitioner, may recover in any judicial or
administrative proceedings since the labor suit where he represented
private respondents asked for the claim and recovery of wages. In fact, We
are not even precluded from fixing a lower amount than the ten percent
ceiling prescribed by the article when circumstances warrant it.
12 Nonetheless, considering the circumstances and the able handling of the
case, petitioner's fee need not be further reduced.
The manifestation of petitioner's four clients indicating their conformity with
the contingent fee contract did not make the agreement valid. The
contingent fee contract being unreasonable and unconscionable the same
was correctly disallowed by public respondent NLRC even with respect to the
four private respondents who agreed to pay higher percentage. Petitioner is
reminded that as a lawyer he is primarily an officer of the court charged
with the duty of assisting the court in administering impartial justice
between the parties. When he takes his oath, he submits himself to the
authority of the court and subjects his professional fees to judicial control.
13
WHEREFORE, finding no grave abuse of discretion the assailed NLRC
decision is hereby affirmed in toto.

[G.R. No. 120592. March 14, 1997]

TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT, petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION and EMMANUEL NOEL A. CRUZ,
respondents.
DECISION
REGALADO, J.:
Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel
Noel A. Cruz, head of the E.N.A. Cruz and Associates law firm, entered into a retainer
agreement on February 26, 1987 whereby the former obligated itself to pay the latter a
monthly retainer fee of P3,000.00 in consideration of the law firms undertaking to render
the services enumerated in their contract.[1] Parenthetically, said retainer agreement
was terminated by the union on April 4, 1990.[2]
During the existence of that agreement, petitioner union referred to private respondent
the claims of its members for holiday, mid-year and year-end bonuses against their

employer, Traders Royal Bank (TRB). After the appropriate complaint was filed by private
respondent, the case was certified by the Secretary of Labor to the National Labor
Relations Commission (NLRC) on March 24, 1987 and docketed as NLRC-NCR Certified
Case No. 0466.[3]
On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the
employees, awarding them holiday pay differential, mid-year bonus differential, and yearend bonus differential.[4] The NLRC, acting on a motion for the issuance of a writ of
execution filed by private respondent as counsel for petitioner union, raffled the case to
Labor Arbiter Oswald Lorenzo.[5]
However, pending the hearing of the application for the writ of execution, TRB challenged
the decision of the NLRC before the Supreme Court.
The Court, in its decision
promulgated on
August 30, 1990,[6] modified the decision of the NLRC by deleting the
award of mid-year and year-end bonus differentials while affirming the award of holiday
pay differential.[7]
The bank voluntarily complied with such final judgment and determined the holiday pay
differential to be in the amount of P175,794.32. Petitioner never contested the amount
thus found by TRB.[8] The latter duly paid its concerned employees their respective
entitlement in said sum through their payroll.[9]
After private respondent received the above decision of the Supreme Court on
September 18, 1990,[10] he notified the petitioner union, the TRB management and the
NLRC of his right to exercise and enforce his attorneys lien over the award of holiday pay
differential through a letter dated October 8, 1990.[11]
Thereafter, on July 2, 1991, private respondent filed a motion before Labor Arbiter
Lorenzo for the determination of his attorneys fees, praying that ten percent (10%) of
the total award for holiday pay differential computed by TRB at P175,794.32, or the
amount of P17,579.43, be declared as his attorneys fees, and that petitioner union be
ordered to pay and remit said amount to him.[12]
The TRB management manifested before the labor arbiter that they did not wish to
oppose or comment on private respondents motion as the claim was directed against
the union,[13] while petitioner union filed a comment and opposition to said motion on
July 15, 1991.[14] After considering the position of the parties, the labor arbiter issued an
order[15] on November 26, 1991 granting the motion of private respondent, as follows:
WHEREFORE, premises considered, it is hereby ordered that the TRADERS ROYAL BANK
EMPLOYEES UNION with offices at Kanlaon Towers, Roxas Boulevard is hereby ordered
(sic) to pay without delay the attorneys fees due the movant law firm, E.N.A. CRUZ and
ASSOCIATES the amount of P17,574.43 or ten (10%) per cent of the P175,794.32
awarded by the Supreme Court to the members of the former.
This constrained petitioner to file an appeal with the NLRC on December 27, 1991,
seeking a reversal of that order.[16]
On October 19, 1994, the First Division of the NLRC promulgated a resolution affirming
the order of the labor arbiter.[17] The motion for reconsideration filed by petitioner was
denied by the NLRC in a resolution dated May 23, 1995,[18] hence the petition at bar.
Petitioner maintains that the NLRC committed grave abuse of discretion amounting to
lack of jurisdiction in upholding the award of attorneys fees in the amount of P17,574.43,

or ten percent (10%) of the P175,794.32 granted as holiday pay differential to its
members, in violation of the retainer agreement; and that the challenged resolution of
the NLRC is null and void,[19] for the reasons hereunder stated.
Although petitioner union concedes that the NLRC has jurisdiction to decide claims for
attorneys fees, it contends that the award for attorneys fees should have been
incorporated in the main case and not after the Supreme Court had already reviewed and
passed upon the decision of the NLRC. Since the claim for attorneys fees by private
respondent was neither taken up nor approved by the Supreme Court, no attorneys fees
should have been allowed by the NLRC.
Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of
attorneys fees, as said act constituted a modification of a final and executory judgment
of the Supreme Court which did not award attorneys fees. It then cited decisions of the
Court declaring that a decision which has become final and executory can no longer be
altered or modified even by the court which rendered the same.
On the other hand, private respondent maintains that his motion to determine attorneys
fees was just an incident of the main case where petitioner was awarded its money
claims. The grant of attorneys fees was the consequence of his exercise of his
attorneys lien. Such lien resulted from and corresponds to the services he rendered in
the action wherein the favorable judgment was obtained. To include the award of the
attorneys fees in the main case presupposes that the fees will be paid by TRB to the
adverse party. All that the non-inclusion of attorneys fees in the award means is that the
Supreme Court did not order TRB to pay the opposing party attorneys fees in the
concept of damages. He is not therefore precluded from filing his motion to have his own
professional fees adjudicated.
In view of the substance of the arguments submitted by petitioner and private
respondent on this score, it appears necessary to explain and consequently clarify the
nature of the attorneys fees subject of this petition, in order to dissipate the apparent
confusion between and the conflicting views of the parties.
There are two commonly accepted concepts of attorneys fees, the so-called ordinary and
extraordinary.[20] In its ordinary concept, an attorneys fee is the reasonable
compensation paid to a lawyer by his client for the legal services he has rendered to the
latter. The basis of this compensation is the fact of his employment by and his
agreement with the client.
In its extraordinary concept, an attorneys fee is an indemnity for damages ordered by
the court to be paid by the losing party in a litigation. The basis of this is any of the
cases provided by law where such award can be made, such as those authorized in
Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they
have agreed that the award shall pertain to the lawyer as additional compensation or as
part thereof.
It is the first type of attorneys fees which private respondent demanded before the labor
arbiter. Also, the present controversy stems from petitioners apparent misperception
that the NLRC has jurisdiction over claims for attorneys fees only before its judgment is
reviewed and ruled upon by the Supreme Court, and that thereafter the former may no
longer entertain claims for attorneys fees.
It will be noted that no claim for attorneys fees was filed by private respondent before
the NLRC when it acted on the money claims of petitioner, nor before the Supreme Court

when it reviewed the decision of the NLRC. It was only after the High Tribunal modified
the judgment of the NLRC awarding the differentials that private respondent filed his
claim before the NLRC for a percentage thereof as attorneys fees.
It would obviously have been impossible, if not improper, for the NLRC in the first
instance and for the Supreme Court thereafter to make an award for attorneys fees
when no claim therefor was pending before them. Courts generally rule only on issues
and claims presented to them for adjudication. Accordingly, when the labor arbiter
ordered the payment of attorneys fees, he did not in any way modify the judgment of
the Supreme Court.
As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR
Certified Case No. 0466, private respondents present claim for attorneys fees may be
filed before the NLRC even though or, better stated, especially after its earlier decision
had been reviewed and partially affirmed. It is well settled that a claim for attorneys
fees may be asserted either in the very action in which the services of a lawyer had been
rendered or in a separate action.[21]
With respect to the first situation, the remedy for recovering attorneys fees as an
incident of the main action may be availed of only when something is due to the client.
[22] Attorneys fees cannot be determined until after the main litigation has been
decided and the subject of the recovery is at the disposition of the court. The issue over
attorneys fees only arises when something has been recovered from which the fee is to
be paid.[23]
While a claim for attorneys fees may be filed before the judgment is rendered, the
determination as to the propriety of the fees or as to the amount thereof will have to be
held in abeyance until the main case from which the lawyers claim for attorneys fees
may arise has become final. Otherwise, the determination to be made by the courts will
be premature.[24] Of course, a petition for attorneys fees may be filed before the
judgment in favor of the client is satisfied or the proceeds thereof delivered to the client.
[25]
It is apparent from the foregoing discussion that a lawyer has two options as to when to
file his claim for professional fees. Hence, private respondent was well within his rights
when he made his claim and waited for the finality of the judgment for holiday pay
differential, instead of filing it ahead of the awards complete resolution. To declare that
a lawyer may file a claim for fees in the same action only before the judgment is
reviewed by a higher tribunal would deprive him of his aforestated options and render
ineffective the foregoing pronouncements of this Court.
Assailing the rulings of the labor arbiter and the NLRC, petitioner union insists that it is
not guilty of unjust enrichment because all attorneys fees due to private respondent
were covered by the retainer fee of P3,000.00 which it has been regularly paying to
private respondent under their retainer agreement. To be entitled to the additional
attorneys fees as provided in Part D (Special Billings) of the agreement, it avers that
there must be a separate mutual agreement between the union and the law firm prior to
the performance of the additional services by the latter. Since there was no agreement
as to the payment of the additional attorneys fees, then it is considered waived.
En contra, private respondent contends that a retainer fee is not the attorneys fees
contemplated for and commensurate to the services he rendered to petitioner. He
asserts that although there was no express agreement as to the amount of his fees for
services rendered in the case for recovery of differential pay, Article 111 of the Labor

Code supplants this omission by providing for an award of ten percent (10%) of a money
judgment in a labor case as attorneys fees.
It is elementary that an attorney is entitled to have and receive a just and reasonable
compensation for services performed at the special instance and request of his client. As
long as the lawyer was in good faith and honestly trying to represent and serve the
interests of the client, he should have a reasonable compensation for such services.[26]
It will thus be appropriate, at this juncture, to determine if private respondent is entitled
to an additional remuneration under the retainer agreement[27] entered into by him and
petitioner.
The parties subscribed therein to the following stipulations:
x
x

The Law Firm shall handle cases and extend legal services under the parameters of the
following terms and conditions:
A. GENERAL SERVICES
1. Assurance that an Associate of the Law Firm shall be designated and be available on a
day-to-day basis depending on the Unions needs;
2. Legal consultation, advice and render opinion on any actual and/or anticipatory
situation confronting any matter within the clients normal course of business;
3. Proper documentation and notarization of any or all transactions entered into by the
Union in its day-to-day course of business;
4. Review all contracts, deeds, agreements or any other legal document to which the
union is a party signatory thereto but prepared or caused to be prepared by any other
third party;
5. Represent the Union in any case wherein the Union is a party litigant in any court of
law or quasi-judicial body subject to certain fees as qualified hereinafter;
6. Lia(i)se with and/or follow-up any pending application or any papers with any
government agency and/or any private institution which is directly related to any legal
matter referred to the Law Firm.
B. SPECIAL LEGAL SERVICES
1. Documentation of any contract and other legal instrument/documents arising and/or
required by your Union which do not fall under the category of its ordinary course of
business activity but requires a special, exhaustive or detailed study and preparation;
2. Conduct or undertake researches and/or studies on special projects of the Union;
3. Render active and actual participation or assistance in conference table negotiations
with TRB management or any other third person(s), juridical or natural, wherein the
presence of counsel is not for mere consultation except CBA negotiations which shall be
subject to a specific agreement (pursuant to PD 1391 and in relation to BP 130 & 227);

4. Preparation of Position Paper(s), Memoranda or any other pleading for and in behalf of
the Union;
5. Prosecution or defense of any case instituted by or against the Union; and,
6. Represent any member of the Union in any proceeding provided that the particular
member must give his/her assent and that prior consent be granted by the principal
officers. Further, the member must conform to the rules and policies of the Law Firm.
C. FEE STRUCTURE
In consideration of our commitment to render the services enumerated above when
required or necessary, your Union shall pay a monthly retainer fee of THREE THOUSAND
PESOS (PHP 3,000.00), payable in advance on or before the fifth day of every month.
An Appearance Fee which shall be negotiable on a case-to-case basis.
Any and all Attorneys Fees collected from the adverse party by virtue of a successful
litigation shall belong exclusively to the Law Firm.
It is further understood that the foregoing shall be without prejudice to our claim for
reimbursement of all out-of-pocket expenses covering filing fees, transportation,
publication costs, expenses covering reproduction or authentication of documents related
to any matter referred to the Law Firm or that which redound to the benefit of the Union.
D. SPECIAL BILLINGS
In the event that the Union avails of the services duly enumerated in Title B, the Union
shall pay the Law Firm an amount mutually agreed upon PRIOR to the performance of
such services. The sum agreed upon shall be based on actual time and effort spent by
the counsel in relation to the importance and magnitude of the matter referred to by the
Union. However, charges may be WAIVED by the Law Firm if it finds that time and efforts
expended on the particular services are inconsequential but such right of waiver is duly
reserved for the Law Firm.
x
x

The provisions of the above contract are clear and need no further interpretation; all that
is required to be done in the instant controversy is its application. The P3,000.00 which
petitioner pays monthly to private respondent does not cover the services the latter
actually rendered before the labor arbiter and the NLRC in behalf of the former. As
stipulated in Part C of the agreement, the monthly fee is intended merely as a
consideration for the law firms commitment to render the services enumerated in Part A
(General Services) and Part B (Special Legal Services) of the retainer agreement.
The difference between a compensation for a commitment to render legal services and a
remuneration for legal services actually rendered can better be appreciated with a
discussion of the two kinds of retainer fees a client may pay his lawyer. These are a
general retainer, or a retaining fee, and a special retainer.[28]
A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future
services as general counsel for any ordinary legal problem that may arise in the routinary
business of the client and referred to him for legal action. The future services of the

lawyer are secured and committed to the retaining client. For this, the client pays the
lawyer a fixed retainer fee which could be monthly or otherwise, depending upon their
arrangement. The fees are paid whether or not there are cases referred to the lawyer.
The reason for the remuneration is that the lawyer is deprived of the opportunity of
rendering services for a fee to the opposing party or other parties. In fine, it is a
compensation for lost opportunities.
A special retainer is a fee for a specific case handled or special service rendered by the
lawyer for a client. A client may have several cases demanding special or individual
attention. If for every case there is a separate and independent contract for attorneys
fees, each fee is considered a special retainer.
As to the first kind of fee, the Court has had the occasion to expound on its concept in
Hilado vs. David[29] in this wise:
There is in legal practice what is called a retaining fee, the purpose of which stems
from the realization that the attorney is disabled from acting as counsel for the other side
after he has given professional advice to the opposite party, even if he should decline to
perform the contemplated services on behalf of the latter. It is to prevent undue
hardship on the attorney resulting from the rigid observance of the rule that a separate
and independent fee for consultation and advice was conceived and authorized. A
retaining fee is a preliminary fee given to an attorney or counsel to insure and secure his
future services, and induce him to act for the client. It is intended to remunerate counsel
for being deprived, by being retained by one party, of the opportunity of rendering
services to the other and of receiving pay from him, and the payment of such fee, in the
absence of an express understanding to the contrary, is neither made nor received in
payment of the services contemplated; its payment has no relation to the obligation of
the client to pay his attorney for the services for which he has retained him to perform.
(Emphasis supplied).
Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the
union and the law firm refers to a general retainer, or a retaining fee, as said monthly fee
covers only the law firms pledge, or as expressly stated therein, its commitment to
render the legal services enumerated. The fee is not payment for private respondents
execution or performance of the services listed in the contract, subject to some particular
qualifications or permutations stated there.
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.[30] We cannot, however, apply the foregoing rule in the instant
petition and treat the fixed fee of P3,000.00 as full and sufficient consideration for private
respondents services, as petitioner would have it.
We have already shown that the P3,000.00 is independent and different from the
compensation which private respondent should receive in payment for his services.
While petitioner and private respondent were able to fix a fee for the latters promise to
extend services, they were not able to come into agreement as to the law firms actual
performance of services in favor of the union. Hence, the retainer agreement cannot
control the measure of remuneration for private respondents services.
We, therefore, cannot favorably consider the suggestion of petitioner that private
respondent had already waived his right to charge additional fees because of their failure
to come to an agreement as to its payment.

Firstly, there is no showing that private respondent unequivocally opted to waive the
additional charges in consonance with Part D of the agreement. Secondly, the prompt
actions taken by private respondent, i.e., serving notice of charging lien and filing of
motion to determine attorneys fees, belie any intention on his part to renounce his right
to compensation for prosecuting the labor case instituted by the union. And, lastly, to
adopt such theory of petitioner may frustrate private respondents right to attorneys
fees, as the former may simply and unreasonably refuse to enter into any special
agreement with the latter and conveniently claim later that the law firm had relinquished
its right because of the absence of the same.
The fact that petitioner and private respondent failed to reach a meeting of the minds
with regard to the payment of professional fees for special services will not absolve the
former of civil liability for the corresponding remuneration therefor in favor of the latter.
Obligations do not emanate only from contracts.[31] One of the sources of extracontractual obligations found in our Civil Code is the quasi-contract premised on the
Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in
our law,[32] certain lawful, voluntary and unilateral acts give rise to the juridical relation
of quasi-contract to the end that no one shall be unjustly enriched or benefited at the
expense of another.
A quasi-contract between the parties in the case at bar arose from private respondents
lawful, voluntary and unilateral prosecution of petitioners cause without awaiting the
latters consent and approval. Petitioner cannot deny that it did benefit from private
respondents efforts as the law firm was able to obtain an award of holiday pay
differential in favor of the union. It cannot even hide behind the cloak of the monthly
retainer of P3,000.00 paid to private respondent because, as demonstrated earlier,
private respondents actual rendition of legal services is not compensable merely by said
amount.
Private respondent is entitled to an additional remuneration for pursuing legal action in
the interest of petitioner before the labor arbiter and the NLRC, on top of the P3,000.00
retainer fee he received monthly from petitioner. The law firms services are decidedly
worth more than such basic fee in the retainer agreement. Thus, in Part C thereof on
Fee Structure, it is even provided that all attorneys fees collected from the adverse
party by virtue of a successful litigation shall belong exclusively to private respondent,
aside from petitioners liability for appearance fees and reimbursement of the items of
costs and expenses enumerated therein.
A quasi-contract is based on the presumed will or intent of the obligor dictated by equity
and by the principles of absolute justice. Some of these principles are: (1) It is presumed
that a person agrees to that which will benefit him; (2) Nobody wants to enrich himself
unjustly at the expense of another; and (3) We must do unto others what we want them
to do unto us under the same circumstances.[33]
As early as 1903, we allowed the payment of reasonable professional fees to an
interpreter, notwithstanding the lack of understanding with his client as to his
remuneration, on the basis of quasi-contract.[34] Hence, it is not necessary that the
parties agree on a definite fee for the special services rendered by private respondent in
order that petitioner may be obligated to pay compensation to the former. Equity and
fair play dictate that petitioner should pay the same after it accepted, availed itself of,
and benefited from private respondents services.

We are not unaware of the old ruling that a person who had no knowledge of, nor
consented to, or protested against the lawyers representation may not be held liable for
attorneys fees even though he benefited from the lawyers services.[35] But this
doctrine may not be applied in the present case as petitioner did not object to private
respondents appearance before the NLRC in the case for differentials.
Viewed from another aspect, since it is claimed that petitioner obtained respondents
legal services and assistance regarding its claims against the bank, only they did not
enter into a special contract regarding the compensation therefor, there is at least the
innominate contract of facio ut des (I do that you may give).[36] This rule of law, likewise
founded on the principle against unjust enrichment, would also warrant payment for the
services of private respondent which proved beneficial to petitioners members.
In any case, whether there is an agreement or not, the courts can fix a reasonable
compensation which lawyers should receive for their professional services.[37] However,
the value of private respondents legal services should not be established on the basis of
Article 111 of the Labor Code alone. Said article provides:
ART. 111. Attorneys fees. - (a) In cases of unlawful withholding of wages the culpable
party may be assessed attorneys fees equivalent to ten percent of the amount of the
wages recovered.
x x x
The implementing provision[38] of the foregoing article further states:
Sec. 11. Attorneys fees. - Attorneys fees in any judicial or administrative proceedings
for the recovery of wages shall not exceed 10% of the amount awarded. The fees may
be deducted from the total amount due the winning party.
In the first place, the fees mentioned here are the extraordinary attorneys fees
recoverable as indemnity for damages sustained by and payable to the prevailing part.
In the second place, the ten percent (10%) attorneys fees provided for in Article 111 of
the Labor Code and Section 11, Rule VIII, Book III of the Implementing Rules is the
maximum of the award that may thus be granted.[39] Article 111 thus fixes only the limit
on the amount of attorneys fees the victorious party may recover in any judicial or
administrative proceedings and it does not even prevent the NLRC from fixing an amount
lower than the ten percent (10%) ceiling prescribed by the article when circumstances
warrant it.[40]
The measure of compensation for private respondents services as against his client
should properly be addressed by the rule of quantum meruit long adopted in this
jurisdiction. Quantum meruit, meaning as much as he deserves, is used as the basis
for determining the lawyers professional fees in the absence of a contract,[41] but
recoverable by him from his client.
Where a lawyer is employed without a price for his services being agreed upon, the
courts shall fix the amount on quantum meruit basis. In such a case, he would be
entitled to receive what he merits for his services.[42]
It is essential for the proper operation of the principle that there is an acceptance of the
benefits by one sought to be charged for the services rendered under circumstances as
reasonably to notify him that the lawyer performing the task was expecting to be paid
compensation therefor. The doctrine of quantum meruit is a device to prevent undue

enrichment based on the equitable postulate that it is unjust for a person to retain
benefit without paying for it.[43]
Over the years and through numerous decisions, this Court has laid down guidelines in
ascertaining the real worth of a lawyers services. These factors are now codified in Rule
20.01, Canon 20 of the Code of Professional Responsibility and should be considered in
fixing a reasonable compensation for services rendered by a lawyer on the basis of
quantum meruit. These are: (a) the time spent and the extent of services rendered or
required; (b) the novelty and difficulty of the questions involved; (c) the importance of
the subject matter; (d) the skill demanded; (e) the probability of losing other employment
as a result of acceptance of the proffered case; (f) the customary charges for similar
services and the schedule of fees of the IBP chapter to which the lawyer belongs; (g) the
amount involved in the controversy and the benefits resulting to the client from the
services; (h) the contingency or certainty of compensation; (i) the character of the
employment, whether occasional or established; and (j) the professional standing of the
lawyer.
Here, then, is the flaw we find in the award for attorneys fees in favor of private
respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but
erroneously set the amount of attorneys fees on the basis of Article 111 of the Labor
Code. He completely relied on the operation of Article 111 when he fixed the amount of
attorneys fees at P17,574.43.[44] Observe the conclusion stated in his order.[45]
x x x
FIRST. Art. 111 of the Labor Code, as amended, clearly declares movants right to a ten
(10%) per cent of the award due its client. In addition, this right to ten (10%) per cent
attorneys fees is supplemented by
Sec. 111, Rule VIII, Book III of the Omnibus Rules
Implementing the Labor Code, as amended.
x x x
As already stated, Article 111 of the Labor Code regulates the amount recoverable as
attorneys fees in the nature of damages sustained by and awarded to the prevailing
party. It may not be used therefore, as the lone standard in fixing the exact amount
payable to the lawyer by his client for the legal services he rendered. Also, while it limits
the maximum allowable amount of attorneys fees, it does not direct the instantaneous
and automatic award of attorneys fees in such maximum limit.
It, therefore, behooves the adjudicator in questions and circumstances similar to those in
the case at bar, involving a conflict between lawyer and client, to observe the above
guidelines in cases calling for the operation of the principles of quasi-contract and
quantum meruit, and to conduct a hearing for the proper determination of attorneys
fees. The criteria found in the Code of Professional Responsibility are to be considered,
and not disregarded, in assessing the proper amount. Here, the records do not reveal
that the parties were duly heard by the labor arbiter on the matter and for the resolution
of private respondents fees.
It is axiomatic that the reasonableness of attorneys fees is a question of fact.[46]
Ordinarily, therefore, we would have remanded this case for further reception of evidence
as to the extent and value of the services rendered by private respondent to petitioner.
However, so as not to needlessly prolong the resolution of a comparatively simple
controversy, we deem it just and equitable to fix in the present recourse a reasonable
amount of attorneys fees in favor of private respondent. For that purpose, we have duly

taken into account the accepted guidelines therefor and so much of the pertinent data as
are extant in the records of this case which are assistive in that regard. On such
premises and in the exercise of our sound discretion, we hold that the amount of
P10,000.00 is a reasonable and fair compensation for the legal services rendered by
private respondent to petitioner before the labor arbiter and the NLRC.
WHEREFORE, the impugned resolution of respondent National Labor Relations
Commission affirming the order of the labor arbiter is MODIFIED, and petitioner is hereby
ORDERED to pay the amount of TEN THOUSAND PESOS (P10,000.00) as attorneys fees
to private respondent for the latters legal services rendered to the former.
SO ORDERED.
Romero, Puno, Mendoza, and Torres, Jr., JJ., concur