G.R. No. 190994; September 7, 2011
TONGONAN HOLDINGS AND DEVELOPMENT CORPORATION, Petitioner, vs. ATTY. FRANCISCO ESCAÑO, JR., Respondent.

FACTS

Petitioner Tongonan Holdings and Development Corporation (THDC) was the defendant-intervenor in an eminent domain case (Civil Case No. 3392-0) before the Regional Trial Court (RTC) of Ormoc City. It was represented by respondent Atty. Francisco Escaño, Jr., initially through his law firm from February 24, 1997 to June 30, 1999, and then individually from July 1, 1999 until his services were terminated by THDC in April 2005. The RTC awarded THDC just compensation. Based on a Memorandum of Agreement (MOA) stipulating 30% attorney’s fees, Atty. Escaño sought to enforce an attorney’s lien. The RTC and later the Court of Appeals (CA) found 30% unconscionable and fixed the fees at 15% of the judgment award for the law firm partners.
After the main case became final and executory, Atty. Escaño filed a “Motion to Enter Into the Records Attorney’s Lien” demanding an additional 15% for his services rendered individually after the firm’s dissolution (July 1, 1999 to April 29, 2005), and another 33.7% for alleged consultants, totaling 63.7%. The RTC denied this motion in its September 26, 2005 Order, holding that his continued services were still covered by the original MOA, and approved only the 15% lien. Atty. Escaño filed a Notice of Appeal. The RTC initially gave due course to the appeal on April 2, 2007, ordering the execution proceeds to be held in escrow. However, upon THDC’s motion, the RTC reversed itself in a June 25, 2007 Resolution, ruling that the order on attorney’s fees was interlocutory and not appealable, and set aside the escrow order.
Atty. Escaño filed a Petition for Certiorari with the CA, which granted it in its August 12, 2009 Decision. The CA set aside the RTC’s June 25, 2007 and November 19, 2008 Orders, revived the April 2, 2007 Order giving due course to the appeal, and directed the proceeds to be put in escrow pending resolution of the attorney’s fees issue. THDC’s motion for reconsideration was denied.

ISSUE

Whether the Court of Appeals erred in ruling that the RTC’s September 26, 2005 Order (denying the additional attorney’s fees) was appealable and in ordering the revival of the April 2, 2007 Order (which gave due course to the appeal and directed an escrow of funds).

RULING

The Supreme Court GRANTED the petition and REVERSED the Court of Appeals Decision.
The Court held that the RTC’s September 26, 2005 Order, which denied Atty. Escaño’s motion for additional attorney’s fees, was an interlocutory order. An interlocutory order is one that does not dispose of the case completely but leaves something more to be done by the court regarding the merits of the case. The denial of the motion for additional fees did not terminate the proceedings concerning the enforcement of the judgment or fully resolve the rights of the parties over the judgment award; it was merely incidental to the main action. As a settled rule, an interlocutory order cannot be the subject of an appeal; the proper remedy against it is a petition for certiorari under Rule 65 if there is grave abuse of discretion. Therefore, Atty. Escaño’s Notice of Appeal was an improper remedy. The RTC correctly corrected its initial error in its June 25, 2007 Resolution by setting aside the April 2, 2007 Order that gave due course to the appeal.
Consequently, the CA erred in reviving the RTC’s April 2, 2007 Order and declaring it immediately executory. The CA should have dismissed Atty. Escaño’s petition for lack of merit, as the RTC did not commit grave abuse of discretion in correcting itself and ruling that the interlocutory order was not appealable. The Court also noted that the claim for additional attorney’s fees, being a separate issue from the execution of the main judgment, could be pursued in a separate action. The Temporary Restraining Order issued by the Supreme Court on October 6, 2010 was made permanent.