G.R. No. 167415 February 26, 2010
ATTY. MANGONTAWAR M. GUBAT, Petitioner, vs. NATIONAL POWER CORPORATION, Respondent.

FACTS

In August 1990, plaintiffs Ala Mambuay, Norma Maba, and Acur Macarampat, represented by Atty. Linang Mandangan and petitioner Atty. Mangontawar M. Gubat, filed separate civil suits for damages against the National Power Corporation (NPC) before the RTC of Lanao del Sur. The agreed attorney’s fees were ₱30,000.00 for each case plus ₱600.00 per appearance. The cases were consolidated. NPC was declared in default, and the RTC rendered a Decision on April 24, 1991, awarding damages and attorney’s fees to the plaintiffs. NPC appealed to the CA. During the pendency of the appeal, Atty. Gubat filed a Notice of Charging Lien for his fees totaling ₱96,000.00. NPC later moved to dismiss its appeal, alleging an out-of-court settlement with the plaintiffs, evidenced by acknowledgment receipts showing the plaintiffs received various sums in full satisfaction of their claims. Copies of the motion were furnished to the plaintiffs’ counsel, but only Atty. Mandangan’s signature appeared. The CA, on January 24, 1996, annulled and set aside the RTC’s orders and decision and remanded the cases for new trial. After remand, Atty. Gubat filed a Motion for Partial Summary Judgment on his attorney’s fees, claiming the plaintiffs and NPC deliberately did not inform him of the compromise agreement, conniving to deprive him of his fees. The RTC granted the motion, ordering the plaintiffs and NPC to pay Atty. Gubat ₱96,000.00 jointly and solidarily, finding bad faith in executing the compromise without his knowledge. NPC filed a Petition for Certiorari before the CA, which granted the petition, striking down the RTC’s orders, reasoning that Atty. Gubat was trying to enforce a part of a decision that had been vacated.

ISSUE

Whether the Court of Appeals erred in reversing the trial court’s grant of partial summary judgment in favor of Atty. Gubat for the payment of his attorney’s fees based on the alleged bad faith of his clients and NPC in entering into a compromise settlement without his knowledge.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Decision of the Court of Appeals. The Court held that a summary judgment is only proper when there is no genuine issue as to any material fact. In this case, there existed genuine issues of fact regarding whether NPC acted in bad faith and whether Atty. Gubat was entitled to his claimed fees, which required a full-blown trial. The Court found that the compromise agreement between NPC and the plaintiffs was valid and binding, and a client has the right to compromise a suit without the attorney’s intervention, subject to the attorney’s right to be paid the compensation due him. Atty. Gubat’s remedy was an action for payment of his fees against his clients, not a summary judgment against NPC. The Court also noted that the attorney’s fees awarded in the vacated RTC decision could not be the basis for the summary judgment, as that decision was annulled. Furthermore, the charging lien filed by Atty. Gubat during the appeal was ineffective because it was contingent on a favorable final judgment, which was not obtained due to the compromise and the vacating of the decision. The Court concluded that the CA correctly ruled that the RTC committed grave abuse of discretion in granting the motion for partial summary judgment.