RAMON R. VILLARAMA, Petitioner, Vs. ATTY. CLODUALDO C. DE JESUS, Respondent.
G.R. No. 217004
April 17, 2017
FACTS:
Sometime in October 1996, the petitioner and the respondent entered into a contract wherein it was agreed upon that the latter shall render services for the petitioner in order for him to take full possession of a property, which is a parcel of land, and the titling of the same property under the petitioner’s name. In the event the Client is successful in retaining possession and having said property titled under the name of the Client, Counsel shall be paid Php1,000,000.00. Thereafter, in conformance to the contract, Atty. De Jesus handled 8 cases that involved petitioner in relation to the property mentioned in the contract.
The subject property was formerly registered in the name of Petitioner’s sister and her husband. The property was then sold to Crisanto Guno. Prudential Bank lent Guno some amount as partial payment for the purchase of the subject property secured by a mortgage of the same property. Guno failed to pay the loan so the said property was foreclosed by Prudential Bank, thus, the 8 cases handled by Atty. De Jesus stemmed from such premise.
Atty. De Jesus was able to obtain favorable judgments by having the Decision of the Metropolitan Trial Court and RTC of Makati. Petitioner has retained 70% of the property, what remains to be titled is only the 30% portion of the property from Prudential Bank.
As such, Atty. De Jesus claims that the first condition for the payment of the success fee, petitioner's retention of possession, had been fulfilled. Subsequently, Atty. De Jesus stopped rendering legal services to petitioner after the former drafted the letter offer stating that petitioner is offering to buy Prudential Bank's ownership of the 30% portion of the subject property. Atty. De Jesus further made a formal demand for petitioner to settle at least 50% of the ₱1,000,000.00 stipulated in the contract as success fee.
Petitioner, on the other hand, claims that he has not paid the success fee because one condition for the payment thereof - the property being titled to his name has not yet been fulfilled. However, petitioner still paid Atty. De Jesus the amount of ₱100,000.00 after the latter made a demand.
Atty. De Jesus filed a complaint for the collection of sum of money with damages with the RTC, but the said complaint was denied for lack of merit. Atty. De Jesus then elevated the case to the CA which reversed and set aside the decision of the RTC.
ISSUES:
1. Whether the Court of Appeals is correct in holding that the respondent is discharged from fulfilling the second condition for the entitlement of the ₱1,000,000.00 success fee because the same has been rendered legally impossible due to the final decision annulling Prudential Bank's title to the subject property.
2. Whether respondent is entitled to fifty percent (50%) of the success fee less the ₱100,000.00 previously paid by the petitioner to respondent.
RULING:
1. Upon consideration of the arguments of both parties, the SC finds that the reasoning of the CA is erroneous. There is no legal impossibility in the fulfillment of the second condition. There is still a remedy upon which petitioner may be able to transfer the title of the subject property under his name. In fact, respondent admitted in his Comment that there was no legal impossibility and that the only hindrance was the refusal of petitioner to pay Prudential Bank the value of the 30% equity of the property in the amount of ₱1,325,000.00. Although petitioner insists that it has already taken steps in offering Prudential Bank an amount to settle the issue, this still negates the finding of the CA that it is legally impossible for petitioner to transfer the title of the property under his name.
2. The fact remains that petitioner was already awarded 70% of the subject property by virtue of the RTC's decision through the services of Atty. De Jesus. Thus, this Court finds that Atty. De Jesus is entitled to have and receive a just and reasonable compensation for services performed at the special instance and request of his client. Once the attorney has performed the task assigned to him in a valid agreement, his compensation is determined on the basis of what he and the client agreed. In the absence of the written agreement, the lawyer's compensation shall be based on quantum meruit, which means "as much as he deserved." The determination of attorney's fees on the basis of quantum meruit is also authorized "when the counsel, for justifiable cause, was not able to finish the case to its conclusion." Moreover, quantum meruit becomes the basis of recovery of compensation by the attorney where the circumstances of the engagement indicate that it will be contrary to the parties' expectation to deprive the attorney of all compensation. In this case, since respondent was not able to fulfill one of the conditions provident in the Contract for Legal Services, his attorney's fees shall be based on quantum meruit.
Based on the considerations set forth in Rule 20.01 of the Code of Professional Responsibility, the SC rules that the CA was correct in its determination that Atty. De Jesus is entitled to the extent of 50% of the Php1,000,000.00 success fee stipulated in the contract.
In fine, Villarama, under the Contract of Legal Services, is obliged to pay Atty. De Jesus his success fee to a fair and reasonable extent of 50% or Php500,000.00 considering the latter's substantial performance of his part of the contract. The previous payment made by Villarama in the amount of Php100,000.00 shall be considered as an advanced payment deductible from the Php500,000.00 of which Atty. De Jesus is entitled.
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