GR 167239; (May, 2010) (Digest)
G.R. No. 167239 ; May 5, 2010
HICOBLINO M. CATLY (Deceased), Substituted by his wife, LOURDES A. CATLY, Petitioner, vs. WILLIAM NAVARRO, et al., and AYALA LAND, INC., Respondents.
FACTS
The respondents (Navarro, et al.), represented by petitioner Atty. Hicoblino Catly, filed a complaint against Ayala Land, Inc. (ALI) for annulment of title and recovery of possession of a 32-hectare land. The respondents were permitted to litigate as paupers, exempt from paying filing fees. During the pendency of the case, the parties entered into a Compromise Agreement, approved by the RTC, wherein ALI agreed to pay the respondents P20,000,000.00. The agreement was silent on attorney’s fees.
Petitioner Catly subsequently filed a motion for attorney’s fees, claiming a contingent fee of 50% of the P20,000,000.00 settlement pursuant to a written retainer agreement. The respondents opposed, contending the agreement was void for being excessive and that they had already paid Catly P1,000,000.00. The RTC awarded Catly an additional P1,000,000.00, not the P10,000,000.00 he claimed.
ISSUE
Whether the Regional Trial Court erred in fixing the amount of attorney’s fees at only P1,000,000.00, instead of enforcing the 50% contingent fee contract.
RULING
The Supreme Court affirmed the RTC’s ruling. The enforcement of a contingent fee contract is subject to the court’s power of supervision and determination of the reasonable value of the attorney’s services. While such contracts are generally binding, courts may reduce the stipulated amount if it is found to be unconscionable or unreasonable.
The legal logic is grounded on the fiduciary nature of the attorney-client relationship and the court’s inherent authority to protect clients from unjust agreements. In assessing reasonableness, the Court considered the nature and extent of the services rendered, the amount involved in the controversy, and the professional standing of the lawyer. Here, the case was settled via compromise before full-blown trial, significantly reducing the legal work required. The RTC’s award of an additional P1,000,000.00, on top of the P1,000,000.00 already received, was deemed just and equitable compensation for Catly’s services under the circumstances. The Court upheld the RTC’s discretion, finding no grave abuse in its assessment that the 50% contingent fee was excessive relative to the actual legal services performed.