G.R. No. 250830 . October 12, 2022
MUNICIPALITY OF TIWI, PROVINCE OF ALBAY, PETITIONER, VS. ANTONIO B. BETITO, RESPONDENT.

FACTS

This case involves a dispute over attorney’s fees arising from a Contract of Legal Services. Respondent Antonio B. Betito, alongside another lawyer, entered into a contract with the Municipality of Tiwi, Albay, to assist in recovering the municipality’s share of realty taxes from the National Power Corporation (NPC). The contract stipulated a 10% contingent fee on any amount recovered through their efforts. The legal efforts, which included handling administrative complaints and court cases, allegedly led to the recovery of significant sums for Tiwi. However, Tiwi refused to pay the contingent fee. Betito filed a Complaint for Sum of Money to enforce the contract. The Regional Trial Court (RTC) ruled in favor of Betito, ordering Tiwi to pay the 10% fee. The Court of Appeals (CA) affirmed the RTC but deleted the imposed interest and remanded the case for the determination of a reasonable attorney’s fee, following the Supreme Court’s prior ruling in a related case (Municipality of Tiwi v. Betito, G.R. No. 171873 , July 9, 2010, or the 2010 Tiwi Case).
The procedural history is crucial. The 2010 Tiwi Case was a prior Supreme Court decision involving the same parties and contract. In that case, the Court declared the 10% contingent fee stipulated in the contract as unreasonable and unconscionable. It voided that specific provision but upheld the validity of the rest of the contract, recognizing Betito’s right to compensation for services rendered. The Supreme Court remanded that earlier case to the RTC to determine a reasonable amount of attorney’s fees based on specific guidelines, such as the extent of services rendered and the benefits conferred upon the client.

ISSUE

The core issue before the Supreme Court in this Petition for Review was whether the Court of Appeals erred in affirming the RTC’s decision which enforced the 10% contingent fee, and in subsequently remanding the case for a reasonableness determination instead of dismissing Betito’s complaint outright.

RULING

The Supreme Court GRANTED the petition, reversing and setting aside the CA Decision and Resolution. The Court held that the CA committed a reversible error by not dismissing Betito’s complaint. The legal logic is anchored on the doctrine of conclusiveness of judgment and the specific directives of the 2010 Tiwi Case. In the 2010 Tiwi Case, the Supreme Court had already definitively ruled that the 10% contingent fee clause was unconscionable and unenforceable. That prior decision constitutes the law of the case between the identical parties on the identical issue of compensation under the same contract.
Consequently, Betito’s present Complaint for Sum of Money, which sought to enforce precisely that voided 10% contingent fee, had no more legal leg to stand on. A cause of action based on a stipulation already declared void by the Supreme Court cannot prosper. The proper remedy for Betito was not a new action to enforce the void stipulation, but to actively participate in the remand proceedings ordered in the 2010 Tiwi Case to have his reasonable compensation determined. Therefore, the Supreme Court ruled that the CA should have dismissed Betito’s complaint outright. The Court clarified that Betito’s claim for reasonable compensation must be pursued solely within the framework of the earlier remanded case (Civil Case No. Q-99-39370), in strict adherence to the guidelines established in the 2010 Tiwi Case. The case was remanded to the RTC for further proceedings consistent with this ruling.