Canon 20. A lawyer shall charge only fair and reasonable 2.
2. Contingent fee – a fee that is conditioned on the securing of
Fees
GR: Only lawyers are entitled to attorney’s fees. The same
cannot be shared with a non-lawyer. It is unethical.
XPNs: A lawyer may divide a fee for legal services with
persons not licensed to practice law: (CPR)
1. A lawyer undertakes to complete the unfinished legal
business of a deceased lawyer;
2. There is a Pre-existing agreement with a partner or associate
that, upon the latter’s death, money shall be paid over a
reasonable period of time to his estate or to persons specified
in the agreement;
3. A lawyer or law firm includes non-lawyer employees in
Retirement plan, even if the plan is based, in whole or in part,
on a profit-sharing agreement. (CPR, Rule 9.02)
NOTE: Entitlement to lawyer’s fees is presumed (Funa, 2009).
Unless otherwise expressly stipulated, rendition of
professional services by a lawyer is for a fee or compensation
and is not gratuitous (Research and Services Realty, Inc. v.
CA, G.R. No. 124074, Jan. 27,1997).
Rule 20.01, Canon 20
A lawyer shall be guided by the following factors in
determining his fees:
a. The time spent and the extent of the service
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 he
belongs;
g. The amount involved in the controversy and the
benefits resulting to the client from the service;
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.
NOTE: Generally, the amount of attorney’s fees due is that
stipulated in the retainer agreement which is conclusive as to
the amount of lawyer’s compensation (Funa, 2009) unless the
stipulated amount in the written contract is found by the court
to be unconscionable or unreasonable (Sec. 24, Rule 138,
RRC). In the absence thereof, the amount of attorney’s fees is
fixed on the basis of quantum meruit (Sesbreno v.Court of
Appeals, G.R. No. 117438, June 8, 1995; Funa, 2009).
Kinds of payment
1. Fixed or absolute fee that which is payable regardless of the
result of the case.
a. A fixed fee payable per appearance
b. A fixed fee computed upon the number of hours
spent
c. A fixed fee based on piece work
d. Combination of any of the above
a favorable judgment and recovery of money or property and
the amount of which may be on a percentage basis.
Requisites for the accrual of attorney’s fees
1. Existence of attorney-client relationship; and
2. Rendition by the lawyer of services to the client.
NOTE: A pauper, while exempted from payment of legal fees
is not exempted from payment of attorney’s fees (Cristobalv.
Employees Compensation Commission, G.R. No. L-49280,
Feb. 26, 1981).
Factors in determining the attorney’s fees (1994 Bar
Question)
In determining what is fair and reasonable, a lawyer shall be
guided by the following factors: (STIPSNACCC)
1. Skill demanded;
2. Time spent and the extent of the services rendered
or required;
3. Importance of the subject matter;
4. Probability of losing other employment as a result
of acceptance of the proffered case;
5. Professional Standing of the lawyer;
6. Novelty and difficulty of the questions involved;
7. Amount involved in the controversy and the
benefits resulting to the client from the services;
8. Customary Charges for similar services and the
schedule of fees of the IBP chapter to which he belongs;
9. Contingency or certainty of compensation; and
10. Character of the employment, whether occasional
or established. (Rule 20.01)
NOTE: Imposition of interest in the payment of attorney’s fees
is not justified (Funa, 2009). Contracts for attorney’s services
in this jurisdiction stand upon an entirely different footing
from other contract for the payment of compensation for any
other services (Mambulao Lumber Co. v. Philippine National
Bank, 130 Phil. 366).
NOTE: No court shall be bound by the opinion of attorneys as
expert witnesses as to the proper compensation, and may
disregard such testimony and base its conclusion on its
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 (RRC, Sec. 24,
Rule 138).
Factors to consider in determining the amount of
attorney’s fees in the absence of any fee arrangement
(TINS)
1. Time spent and the services rendered or required – A
lawyer is justified in fixing higher fees when the case is so
complicated and requires more time and effort in fixing it.
2. Importance of subject matter – The more important the
subject matter or the bigger the value of the interest of the
property in litigation, the higher is the attorney’s fees.
3. Novelty and difficulty of questions involved – When the
questions in a case are novel and difficult, greater effort,
deeper study and research are bound to burn the lawyer’s
time and stamina considering that there are no local precedents
to rely upon.
4. Skill demanded of a lawyer – The totality of the lawyer’s
experience provides him skill and competence admired in
lawyers.
Different types of fee arrangements
1. Retainer’s fee where the lawyer is paid for services for an
agreed amount for the case.
2. The lawyer agrees to be paid per court appearance.
3. Contingent fee where the lawyer is paid for his services
depending on the success of the case. This applies usually in
civil suits for money or property where the lawyer’s fee is
taken from the award granted by the court.
4. Attorney de officio. The attorney is appointed by the court to
defend the indigent litigant in a criminal case. The client is not
bound to pay the attorney for his services although he may be
paid a nominal fee taken from a public fund appropriated for
the purpose.
5. Legal aid. The attorney renders legal services for those who
could not afford to engage the services of paid counsel.
6. Quantum meruit basis. If there is no specific contract
between the lawyer and the client, the lawyer is paid on
quantum meruit basis, that is, what the lawyer deserves for his
services.
Q: Concept Placement retained the services of Atty. Funk.
Under their retainer contract, Atty. Funk is to render
various legal services except litigation, quasi-judicial and
administrative proceedings and similar actions for which
there will be separate billings.
Thereafter, Atty. Funk represented Concept Placement in
the case filed against it for illegal dismissal. While the
labor case was still pending, Concept Placement
terminated the services of Atty. Funk. Nevertheless, Atty.
Funk continued handling the case. Atty. Funk then advised
Concept Placement of the POEA’s favorable decision and
requested the payment of his attorney’s fees. Concept
Placement refused. Is Atty. Funk entitled to attorney’s
fees for assisting Concept Placement as counsel in the
labor case even if the services of Atty. Funk were already
terminated?
A: Yes. The expiration of the retainer contract between the
parties during the pendency of the labor case does not
extinguish the respondent’s right for attorney’s fees. The
Court found that while the petitioner and the respondent did
not execute a written agreement on the fees in the labor case
aside from the Retainer Agreement, the petitioner did
categorically and unequivocally admit in its Compulsory
Counterclaim that it has engaged the services of the
respondent as its counsel for a fee of P60, 000, etc. (Concept
Placement Resources Inc. v. Atty. Funk, G.R. No. 137680, Feb.
6, 2004).
Kinds of Retainer Agreements on Attorney’s Fees
1. General retainer or retaining fee – It 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 ordinary business
of the client and referred to him for legal action. The client
pays fixed retainer fees, which could be monthly or otherwise.
The fees are paid whether or not there are cases referred to the
lawyer;
2. Special retainer – It is a fee for a specific or particular case
or service rendered by the lawyer for a client.
Q: Atty. Francisco’s retainer agreement with RXU said
that his attorney's fees in its case against CRP “shall be 15%
of the amounts collected.” Atty. Francisco asked the trial
court to issue a temporary restraining order against CRP
but this was denied, prompting him to file a petition for
certiorari with the Court of Appeals to question the order
of denial. At this point, RXU terminated Atty. Francisco’s
services. When the parties later settled their dispute
amicably, CRP paid RXU P100 million. Because of this,
Atty. Francisco came around and claimed a 15% share in
the amount. What should be his attorney’s fees? (2011 Bar
Question)
A: A reasonable amount that the court shall fix upon proof of
quantum meruit which means “as much as he deserves”.
Instances when the measure of quantum meruit may be
resorted to (2007 Bar Question)
1. There is no express contract for payment of attorney’s fees
agreed upon between the lawyer and the client;
2. Although there is a formal contract for attorney’s fees, the
stipulated fees are found unconscionable or unreasonable by
the court;
3. The contract for attorney’s fees is void due to purely formal
matters or defects of execution;
4. The counsel, for justifiable cause, was not able to finish the
case to its conclusion;
5. Lawyer and client disregard the contract for attorney’s fees;
and
6. The client dismissed his counsel before the termination of
the case.
Q: A client refuses to pay Atty. A his contracted attorney's
fees on the ground that counsel did not wish to intervene in
the process of effecting a fair settlement of the case. Decide.
(2001 Bar Question)
A: Rule 1.04 of the Code of Professional Responsibility
provides that "a lawyer shall encourage his clients to avoid,
end or settle a controversy if it will admit of a fair settlement".
If a lawyer should refuse to intervene in a settlement
proceeding, his entitlement to his attorney's fees may be
affected. However, if he has already rendered some valuable
services to the client, he must be paid his attorney's fees on the
basis of quantum meruit, even if it is assumed that he is
dismissed.
Instances when counsel cannot recover the full amount
despite written contract for attorneys’ fees
(2006 Bar Question)
1. When the services called for were not performed as when
the lawyer withdrew before the case was finished, he will be
allowed only reasonable fees
2. When there is a justified dismissal of the attorney, the
contract will be nullified and payment will be on the basis of
quantum meruit only. A contrary stipulation will be invalid
3. When the stipulated attorney’s fees are unconscionable,
when it is disproportionate as compared to the value of
services rendered and is revolting to human conscience;
4. When the stipulated attorney’s fees are in excess of what is
expressly provided by law;
5. When the lawyer is guilty of fraud or bad faith toward his
client in the matter of his employment;
6. When the counsel’s services are worthless because of his
negligence;
7. When contract is contrary to law, morals or public policy;
and
8. Serving adverse interest unless the lawyer proves that it
was with the consent of both parties.
Rationale behind the rule that the court may reduce
unconscionable attorney’s fees
1. Indubitably intertwined with the lawyer’s duty to charge
only reasonable fees is the power of the court to reduce the
amount of attorney’s fees if the same is excessive and
unconscionable (Roxas v. De Zuzuarregui, Jr., G. R. No.
152072, Jan. 31, 2006).;
2. A lawyer is primarily an officer of the court hence fees
should be subject to judicial control;
3. Sound public policy demands that courts disregard
stipulations for attorney’s fees when they appear to be a
source of speculative profit at the expense of the debtor or
mortgagor (Borcena v. IAC, et. al., G.R. No. 70099, Jan. 7,
1987).
NOTE: A trial judge may not order the reduction of the
attorney’s fees on the ground that the attorney is “below
average standard of a lawyer.” The opinion of the judge as to
the capacity of a lawyer is not a basis of the right to a lawyer’s
fees (Fernandez v. Hon. Bello, No. L-14277, Apr. 30, 1960).
EPTANCE
Q: Rose engaged the services of Atty. Jack as counsel for
five cases. In the Retainer Agreement, Rose agreed to pay
Atty. Jack the amount of 200,000 as Acceptance Fee for
the five cases plus an additional 1,500 Appearance Fee per
hearing and in the event that damages are recovered, she
would pay Atty. Jack 10% as success fee. Rose issued two
checks amounting to 51,716.54 in favor of Atty. Jack
however despite receipt of said amounts he failed to file a
case in one of the five cases referred to him; one case was
dismissed due to untimely appeal; and another case was
dismissed but he failed to inform Rose about it before she
left for abroad. Dissatisfied with the outcome of her cases
she demanded from Atty. Jack the return of all the records
she had entrusted to him however he returned only two of
the five cases. She filed a complaint charging him with
violation of Canon 16 and 16.03 of the Code of Professional
Responsibility. Was there a violation of the said Canon by
the respondent?
A: None. From the records of the case, it was found that four
of the cases referred by Rose were filed but were dismissed or
terminated for causes not attributable to Atty. Jack; and that
there was no probable cause to maintain the suit. No fault or
negligence can be attributed to the Atty. Jack. Rose still owes
payment of acceptance fee because she only paid 51, 716.54.
An acceptance fee is not a contingent fee, but is an absolute
fee arrangement which entitles a lawyer to get paid for his
efforts regardless of the outcome of the litigation.
Dissatisfaction from the outcome of the cases would not
render void the retainer agreement for Atty. Jack appears to
have represented the interest of Rose (Yu v Bondal, A.C. No.
5534, Jan. 17, 2005).
NOTE: The expiration of the retainer contract between the
parties during the pendency of the labor case does not
extinguish the respondent’s right to attorney’s fees ( Uy v.
Gonzales, A.C. No. 5280, Mar. 30, 2004).
Contingency fee contract
One which stipulates that the lawyer will be paid for his legal
services only if the suit or litigation ends favorably to the
client (Taganas vs. NLRC, G.R. No. 118746, September 7,
1995). It is like a contract subject to a suspensive condition
wherein the obligation to pay the counsel is based upon the
outcome of the case.
Contingent fees are sanctioned by the CPE and by the CPR
subject to certain limitations (Licudan vs. CA, G.R.
No. 91958, January 24, 1991).
NOTE: If a lawyer employed on contingent basis dies or
becomes disabled before the final adjudication or settlement of
the case has been obtained, he or his estate will be allowed to
recover the reasonable value of the services rendered. The
recovery will be allowed only after the successful termination
of the litigation in the client’s favor (Morton v. Forsee, Ann.
Cas. 1914 D. 197; Lapena, 2009, Pineda, 2009).
Rationale for contingent fee contracts
Contracts of this nature (contingent fee contract) are permitted
because they redound to the benefit of the poor client and the
lawyer especially in cases where the client has meritorious
cause of action, but no means with which to pay for the legal
services unless he can, with the sanction of law, make a
contract for a contingent fee to be paid out of the proceeds of
the litigation (Francisco, 1949)
Limitation of the stipulation regarding contingent fee
contract
It must be reasonable based on the circumstance of the case.
Contingent fee contracts are under the supervision and close
scrutiny of the court in order that clients may be protected
from just charges. Its validity depends on the measure of
reasonableness of the stipulated fees under the circumstances
of the case. Stipulated attorney’s fees must not be
unconscionable wherein the amount is by far so
disproportionate compared to the value of the services
rendered as to amount to fraud perpetrated to the client
(Sesbreno vs. CA, G.R. No. 117438, June 8,
1995).
Q: The stipulation between the lawyer and counsel is as
follows, “the attorney’s fees of the Atty. X will be
½ of whatever the client might recover from his share in
the property subject of the litigation.” Is the stipulation
valid?
A: Yes. The stipulation made is one of a contingent fee which
is allowed by the CPE and the CPR. It does not violate the
prohibition of acquisition of property subject of the litigation
by the lawyer provided for in the Civil Code since the
prohibition applies only to a sale or assignment to the lawyer
by his client during the pendency of the litigation. The transfer
actually takes effect after the finality of the judgment and not
during the pendency of the case. As such it is valid stipulation
between the lawyer and client.
Acceptance of an initial fee before or during the progress
of the litigation detract from the contingent nature of the
fees
The acceptance of an initial fee before or during the progress
of the litigation does not detract from the contingent nature of
the fees, as long as the bulk thereof is made dependent upon
the successful outcome of the action (Francisco vs. Matias,
January 31, 1964, G.R. No. L-16349).
Q: Chester asked Laarni to handle his claim to a sizeable
parcel of land in Quezon City against a well-known
property developer on a contingent fee basis.
Laarni asked for 15% of the land that may be recovered or
15% of whatever monetary settlement that may be
received from the property developer as her only fee
contingent upon securing a favorable final judgment or
compromise settlement. Chestersigned the contingent fee
agreement. Assume the property developer settled the case
after the case was decided by the Regional Trial Court in
favor of Chester for P1 Billion. Chester refused to pay
Laarni P150 Million on the ground that it is excessive. Is
the refusal justified? Explain.
A: The refusal of Chester to pay is unjustified. A contingent
fee is impliedly sanctioned by Rule 20.01(f) of the CPR. A
much higher compensation is allowed as contingent fees is
consideration of the risk that the lawyer will get nothing if the
suit fails. In several cases, the Court has indicated that a
contingent fee of 30% of the money or property that may be
recovered is reasonable. Moreover, although the developer
settled the case, it was after the case was decided by the RTC
in favor of Chester, which shows that Atty. Laarni has already
rendered service to the client.
Q: Assume there was no settlement and the case eventually
reached the Supreme Court which promulgated a decision
in favor of Chester. This time Chester refused to convey to
Laarni 15% of the litigated land as stipulated on the
ground that the agreement violates Article 1491 of the
Civil Code, which prohibits lawyers from acquiring by
purchase properties and rights, which are the object of
litigation in which they take part by reason of their
profession. Is the refusal justified? Explain. (2008 Bar
Question)
A: Chester’s refusal is not justified. A contingent fee
arrangement is not covered by Art.1491 of the Civil
Code, because the transfer or assignment of the property in
litigation takes effect only upon finality of a favorable
judgment. (Director of Lands v. Ababa, No. L-26096, Feb. 27,
1979); (Macariola v. Asuncion, A.C.
No. 133-J, May 31, 1982).
Q: Evangelina Masmud’s husband, the late Alexander,
filed a complaint against his employer for nonpayment of
permanent disability benefits, medical expenses, sickness
allowance, moral and exemplary damages, and attorney’s
fees. He engaged the services of Atty. Go, as his counsel
and agreed to pay attorney’s fees on a contingent basis, as
follows: 20% of total monetary claims as settled or paid
and an additional 10% in case of appeal. The Labor
Arbiter granted the monetary claims of Alexander.
Eventually, after several appeals, the decision being
favorable to Evangelina (substituted her deceased
husband), the decision became final and executory. Upon
motion of Atty. Go, the surety company delivered to the
NLRC Cashier, the check amounting to P3,454,079.20.
Thereafter, Atty. Go moved for the release of the said
amount to Evangelina. Out of the said amount, Evangelina
paid Atty. Go the sum of P680,000.00. Dissatisfied, Atty.
Go filed a motion to record and enforce the attorney’s lien
alleging that Evangelina reneged on their contingent fee
agreement. Evangelina manifested that Atty. Go’s claim
for attorney’s fees of 40% of the total monetary award was
null and void based on Article 111 of the Labor Code. Is
her contention correct?
A: No. Art. 111. Attorney's fees. (a) In cases of unlawful
withholding of wages, the culpable party may be assessed
attorney's fees equivalent to ten percent of the amount of the
wages recovered. Contrary to Evangelina’s proposition,
Article 111 of the Labor Code deals with the extraordinary
concept of attorney’s fees.
It regulates the amount recoverable as attorney's fees in the
nature of damages sustained by and awarded to the prevailing
party. It may not be used as the standard in fixing the amount
payable to the lawyer by his client for the legal services he
rendered.
In this regard, Section 24, Rule 138 of the Rules of Court
should be observed in determining Atty. Go’s compensation.
The said Rule provides:
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.
The retainer contract between Atty. Go andEvangelina
provides for a contingent fee. The contract shall control in the
determination of the amount to be paid, unless found by the
court to be unconscionable or unreasonable. The criteria found
in the Code of Professional Responsibility are also to be
considered in assessing the proper amount of compensation client owes him attorney’s fees (Rayos v. Hernandez, GR No.
that a lawyer should receive (CPR, Canon 20, Rule 20.01; 169079, Feb. 12, 2007).
Evangelina Masmud v. NLRC, et. al., G.R. No. 183385, Feb.
13, 2009).

Champertous contract Requisites in order for an attorney to be able to exercise

Is one where the lawyer stipulates with his client in the
prosecution of the case that he will bear all the expenses for
the recovery of things or property being claimed by the client,
and the latter agrees to pay the former a portion of the thing or
property recovered as compensation. It is void for being
against public policy (like gambling).
his retaining lien (ALU)
1. Attorney-client relationship;
2. Lawful possession by the lawyer of the client’s funds,
documents and papers in his professional capacity; and
3. Unsatisfied claim for attorney’s fees or disbursements.
Attorney’s charging lien

NOTE: A champertous contract is considered void due to A charging lien is the right of a lawyer to the same extent
public policy, because it would make him acquire a stake in upon all judgments for the payment of money, and executions
the outcome of the litigation which might lead him to place his issued in pursuance of such judgments which he has secured
own interest above that of the client (Bautista v. Gonzales, in a litigation of his client, from and after the time when he
A.M. No. 1625, Feb. 12, 1990). shall have caused a statement of his claim of such lien to be
entered upon the records of the court rendering such judgment,
or issuing such execution, and shall have caused written notice
Contingent v. Champertous contract thereof to be delivered to his client and to the adverse party;
and he shall have the same right and power over such
Contingent Champertous judgments and executions as his client would have to enforce
Payable in cash – dependent Payable in kind – a portion of his lien and secure the payment of his fees and disbursements
on the success of the the thing or property (RRC, Sec. 37, Rule 138).
litigation recovered as compensation
Lawyers do not undertake to Lawyers undertake to pay all Requisites in order for an attorney to be able to exercise
pay all expenses of litigation expenses of litigation his charging lien
1. Existence of attorney-client relationship;
VALID VOID 2. The attorney has rendered services;
3. Favorable money judgment secured by the counsel for his
client;
CONTINGENT
4. The attorney has a claim for attorney’s fees or advances;
CONTRACT
and
Q: The contract of attorney's fees entered into by Atty.
5. A statement of the claim has been duly recorded in the case
Quintos and his client, Susan, stipulates that if a judgment
with notice thereof served upon the client and the adverse
is rendered in favor of the latter, Atty. Quintos gets 60% of
party.
the property recovered as contingent fee. In turn, he will
NOTE: A charging lien, to be enforceable as a security for the
assume payment of all expenses of the litigation. May Atty.
payment of attorney’s fees, requires as a condition sine qua
Quintos and Susan increase the amount of the contingent
non a judgment for money and execution in pursuance of such
fee to 80%? (2006 Bar Question)
judgment secured in the main action by the attorney in favor
of his client.
A: No. Atty. Quintos and Susan cannot agree to increase the
amount of the contingent fee to 80% because the agreement is
Retaining lien v. Charging lien
champertous. Even if there is no champertous provision
present, the contingent fee of 80% of the PROPERTY
recovered could still be considered as unconscionable, because Retaining Charging lien
it is so disproportionate as to indicate that an unjust advantage lien
had been taken of the client, and is revolting to human As to Nature Passive lien. Active lien. It
conscience. Contracts for attorney's fees are always subject to It cannot be can be enforced
control by the courts. TTORNEY’S LIENS actively by execution. It
enforced. It is a special lien.
Attorney’s retaining lien is a general
A retaining lien is the right of an attorney to retain the funds, lien.
documents and papers of his client who have lawfully come As to Basis Lawful Securing of a
into his possession and may retain the same until his lawful possession of Favorable
fees and disbursements have been paid, and may apply such papers, money
funds to the satisfaction thereof. documents, judgment for
property client.
NOTE: A lawyer is not entitled to unilaterally appropriate his belonging to
client’s money for himself by the mere fact alone that the the client.
As to Coverage Covers Covers all
papers, judgments for S AND CONTROVERSIES WITH CLIENTS
documents, the payment of FEES AND CONTROVERSIES WITH CLIENTS
and money and
properties in execution issued Rule 20.02, Canon 20. A lawyer shall, in cases of referral,
the lawful in pursuance of with the consent of the client, be entitled to a division of
possession of such judgment. fees in proportion to the work performed and
the attorney responsibility assumed.
by reason of
his This is not in the nature of a broker’s commission.
professional
employment. Lawyer-referral system
As to Effect As soon as As soon as the Under this system, if another counsel is referred to the client,
the attorney claim for and the latter agrees to take him as collaborating counsel, and
gets attorney’s fees there is no express agreement on the payment of attorney’s
possession of had been fees, the said counsel will receive attorney’s fees in proportion
papers, entered into the to the work performed and responsibility assumed. The
documents, records of the lawyers and the client may agree upon the proportion but in
or property. case. case of disagreement, the court may fix the proportional
As to May be Generally, division of fees (Lapena, 2009).
Applicability exercised exercised only
before when the Rule 20.03 A lawyer shall not, without the full knowledge
judgment or attorney had and consent of the client, accept any fee, reward, costs,
execution or already secured commission, interest, rebate or forwarding allowance or
regardless a favorable other compensation whatsoever related to his professional
thereof. judgment for his employment from anyone other than the client. (1997, 2003
client. Bar Questions)
As to When When client
Extinguishment possession loses action as It is intended to secure the fidelity of the lawyer to his client’s
lawfully lien may only be cause and to prevent a situation in which the receipt by him of
ends as when enforced against a rebate or commission from another with the client’s business
lawyer judgment may interfere with the full discharge of his duty to his client.
voluntarily awarded in (Report of the IBP Committee)
parts with favor of client,
funds, proceeds GR: Fees shall be received from the client only.
documents, thereof/executed
and papers thereon. XPN: A lawyer may receive compensation from a person
of client or other than his client when the latter has full knowledge and
offers them approval thereof (Sec. 20 (e), Rule 138).
as evidence.
Rule 20.04, Canon 20 A lawyer shall avoid controversies
Victims of the OZONE Disco tragedy, was directed to with clients concerning his compensation and shall resort to
forward all the documents in his possession to Justice C. judicial action only to prevent imposition, injustice or fraud.
Atty. B refused, demanding full compensation pursuant to (1998 Bar Question)
their written contract. Sensing that a favorable judgment
was forthcoming, Atty. B filed a motion in court relative to GR: A lawyer should avoid the filing of any case against a
his attorney’s fees, furnishing his former clients with client for the enforcement of attorney’s fees.
copies thereof. Is Atty. B legally and ethically correct in
refusing to turn over the documents and in filing the NOTE: The legal profession is not a money-making trade but
motion? Explain. (1996 a form of public service. Lawyers should avoid giving the
Bar Question) impression that they are mercenary (Perez v. Scottish Union
A: Yes. He is entitled to a retaining lien which gives him the and National Insurance Co., C.A. No. 8977, Mar. 22, 1946). It
right to retain the funds, documents and papers of his client might even turn out to be unproductive for him for potential
which have lawfully come to his possession until his lawful clients are likely to avoid a lawyer with a reputation of suing
fees and disbursement have been paid (RRC, Sec. 37, Rule 138; his clients.
CPR, Rule 16.03). He is also legally and ethically correct in XPNs:
filing a motion in court relative to his fees. He is entitled to a 1. To prevent imposition
charging lien upon all judgments for the paying of money, and 2. To prevent injustice
executions issued in pursuance of such judgments, which he 3. To prevent fraud (CPR, Rule 20.04)
has secured in a litigation of his client, from and after the time
when the records of the court rendering such judgment or NOTE: A client may enter into a compromise agreement
issuing such execution. without the intervention of the lawyer, but the terms of the
agreement should not deprive the counsel of his compensation
for the professional services he had rendered.
If so, the compromise shall be subjected to said fees. If the
client and the adverse party who assented to the compromise
are found to have intentionally deprived the lawyer of his fees,
the terms of the compromise, insofar as they prejudice the
lawyer, will be set aside, making both parties accountable to
pay the lawyer’s fees. But in all cases, it is the client who is
bound to pay his lawyer for his legal representation (Atty.
Gubat v. NPC, G.R. No. 167415, Feb. 26, 2010),
Ways on how lawyers claim attorney's fees
1. In the same case – It may be asserted either in the very
action in which the services of a lawyer had been rendered or
in a separate action.
2. In a separate civil action – A petition for attorney's fees
may be filed before the judgment in favor of the client is
satisfied or the proceeds thereof delivered to the client.
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 lawyer's claim for attorney's fees
may arise has become final. Otherwise, the determination of
the courts will be premature.
Instances when an independent civil action to recover
attorney’s fees is necessary
1. Main action is dismissed or nothing is awarded;
2. Court has decided that it has no jurisdiction over the action
or has already lost it;
3. Person liable for attorney’s fees is not a party to the main
action;
4. Court reserved to the lawyer the right to file a separate civil
suit for recovery of attorney’s fees;
5. Services for which the lawyer seeks payment are not
connected with the subject litigation; and
6. Judgment debtor has fully paid all of the judgment proceeds
to the judgment creditor and the lawyer has not taken any legal
step to have his fees paid directly to him from the judgment
proceeds.
7. Failure to exercise Charging Lien
Effects of the nullity of contract on the right to attorney’s
fees
If the nullification is due to:
1. The illegality of its object - the lawyer is precluded from
recovering; and
2. Formal defect or because the court has found the amount to
be unconscionable - the lawyer may recover for any services
rendered based on quantum meruit.
Kinds of lawyer according to services rendered and the
compensation they are entitled to
1. Counsel de parte – He is entitled to the reasonable
attorney’s fees agreed upon, or in the absence thereof, on
quantum meruit basis.
2. Counsel de officio – The counsel may not demand from the
accused attorney’s fees even if he wins the case. He may,
however, collect from the government funds, if available
based on the amount fixed by the court.
3. Amicus Curiae – not entitled to attorney’s fees.
Two concepts of attorney’s fees
1. Ordinary attorney's fee – The reasonable compensation paid
to a lawyer by his client for the legal services he has rendered
to the latter (Pineda, 2009).
NOTE: The basis for this compensation is the fact of his
employment by and his agreement with the client.
2. Extraordinary attorney's fee – An indemnity for damages
ordered by the court to be paid by the losing party in litigation.
NOTE: The basis for this is any of the cases provided for by
law where such award can be made, such as those authorized
in Article 2208 of the Civil Code, and is payable to the client,
NOT to the lawyer unless they have agreed that the award
shall pertain to the lawyer as additional compensation or as
part thereof.
NARY CONCEPT OF ATTORNEY’S FEES
ORDINARY CONCEPT OF ATTORNEY’S FEES
Q: Aurora Pineda filed an action for declaration of nullity
of marriage against Vinson Pineda, who was represented
by Attys. Clodualdo de Jesus, Carlos Ambrosio and
Emmanuel Mariano. The parties' proposal for settlement
regarding Vinson's visitation rights over their minor child
and the separation of their properties was approved by the
court. The marriage was subsequently declared null and
void.
Throughout the proceedings counsels and their relatives
and friends, availed of free products and treatments from
Vinson’s dermatology clinic. This notwithstanding, they
billed him additional legal fees amounting to P16.5 million
which he, however, refused to pay. Instead, he issued them
several checks totaling P1.12 million as full payment for
settlement. Still not satisfied, the three lawyers filed in the
same court a motion for payment of lawyers' fees for P50
million, which is equivalent to 10% of the value of the
properties awarded to Pineda in the case. Are their claim
justified?
A: No. Clearly, what they were demanding was additional
payment for legal services rendered in the same case.
Demanding P50 million on top of the generous sums and
perks already given to them was an act of unconscionable
greed. They could not charge Pineda a fee based on percentage,
absent an express agreement to that effect. The payments to
them in cash, checks, free products and services from Pineda’s
business more than sufficed for the work they did. The full
payment for settlement should have discharged Vinson's
obligation to them.
As lawyers, they should be reminded that they are members of
an honorable profession, the primary vision of which is justice.
It is the lawyer’s despicable behavior in the case at bar which
gives lawyering a bad name in the minds of some people. The
vernacular has a word for it: nagsasamantala. The practice of
law is a decent profession and not a money-making trade.
Compensation should be but a mere incident (Pineda v. de
Jesus, G.R. No. 155224, Aug. 23, 2006).
Q: DOY Mercantile Inc. refused to satisfy Atty. Gabriel,
Jr.’s attorney’s fees, prompting the latter to file with the
RTC a Motion to Allow Commensurate Fees and to
Annotate Attorney’s Lien on certain TCTs. The RTC fixed
Atty. Gabriel, Jr.’s fees and ordered that a lien be
annotated on the TCTs. A Writ of Execution was later
issued by the trial court in Atty. Gabriel, Jr.’s favor. Upon
Atty. Gabriel Jr.’s motion for reconsideration, the RTC
increased his fees. It then issued another Writ of Execution
to enforce the new award but denied the Motion to
Annotate the Award at the back of the TCTs. DOY, for its
part, filed several petitions to set aside the RTC Orders
involving the award of attorney’s fees. Eventually, CA
rendered a decision, fixing Atty. Gabriel, Jr.’s fees at
P200,000.00 and affirming the subsequent order of the
RTC not to annotate such award on the TCTs. Should the
court rely on the importance of the subject matter in
controversy and the professional standing of counsel in
awarding attorney’s fee?
12. When the court deems it just and equitable; and
13. When a special law so authorizes (NCC, Art.
2208).
Rationale behind the rule that the Court shall state the
reason for attorney’s fees in in its decision
The award of attorney’s fees being an exception rather than
the general rule, it is necessary for the court to make findings
of facts and law that would bring the case within the exception
and justify the grant of such award (Agustin vs. CA, G.R. No.
84751, June 6, 1990).
NOTE: Attorney’s fees must be specifically prayed for and
proven and justified in the decision itself (Trans-Asia
Shipping Lines, Inc. vs. CA, G.R. No. 118126, Mar. 4, 1996).

A: No. DOY’s contention that the appellate court should also

have taken into account the importance of the subject matter in
controversy and the professional standing of counsel in
determining the latter’s fees is untenable. Although Rule 138
of the Rules of Court and Rule 20.01, Canon 20 of the Code of
Professional
Responsibility lists several other factors in setting such fees,
these are mere guides in ascertaining the real
value of the lawyer’s service. Courts are not bound to consider
all these factors in fixing attorney’s fees.
While a lawyer should charge only fair and reasonable fees, no
hard and fast rule maybe set in the determination of what a
reasonable fee is, or what is not. That must be established
from the facts in each case (DOY Mercantile, Inc. v. AMA
Computer College, G.R. No. 155311, Mar. 31, 2004).

Rules on extraordinary concept of attorney’s fees

GR: Attorney’s fees as damages are not recoverable.

An adverse decision does not ipso facto justify their award in
favor of the winning party.

XPNs: Attorney’s fees in the concept of damages may be

awarded in any of the following circumstances:
1. When there is an agreement;
2. When exemplary damages are awarded;
3. When defendant’s action or omission compelled plaintiff to
litigate;
4. in criminal cases of malicious prosecution
a. Plaintiff was acquitted; and
b. The person who charged him knowingly made the false
statement of facts or that the filing was prompted by sinister
design to vex him;
5. When the action is clearly unfounded;
6. When defendant acted in gross and evident bad faith;
7. In actions for support;
8. In cases of recovery of wages;
9. In actions for indemnity under workmen’s compensation
and employee’s liability laws;
10. In a separate civil action arising from a crime;
11. When at least double costs are awarded (costs of suit does
not include attorney’s fees);