G.R. No. L-27771 August 29, 1975
MAXIMO CALALANG and QUIRICO T. CARAG, petitioners, vs. HON. JUAN DE BORJA, Judge of the CFI, Bulacan, 5th Judicial District, ENOC SANTOS and MAGDALENA SANTOS and NATIONAL GRAINS AUTHORITY, respondents.

FACTS

Petitioners Maximo Calalang and Quirico T. Carag, as assignees of the original counsel Atty. Virgilio V. David, represented private respondents Enoc and Magdalena Santos in Civil Case No. 2395 against the National Rice and Corn Corporation (RCA, later substituted by the National Grains Authority or NGA). The Santos spouses had a written contract with Atty. David promising him 20% of their total claim of P254,016.82, separate from any attorney’s fees recoverable from the adverse party. The trial court rendered a decision awarding the Santos spouses P78,104.38 and an additional P7,810.43 as attorney’s fees. Both parties appealed to the Court of Appeals.
While the appeal was pending, the petitioners learned of settlement negotiations. To protect their interest, they filed a notice of attorney’s lien with the Court of Appeals on October 4, 1966, for 20% of the principal award, and furnished copies to both the Santos spouses and the RCA. Neither party objected. The Court of Appeals recorded the lien in a resolution dated October 19, 1966. The appeal was later dismissed based on an amicable settlement, and the Santos spouses were paid the judgment amount. The petitioners received only a partial payment from their clients and subsequently filed a motion in the trial court to enforce their lien for the balance.

ISSUE

Whether the trial court erred in denying the petitioners’ motion to enforce their attorney’s lien on the ground of alleged non-compliance with the notice requirement under Section 37, Rule 138 of the Rules of Court.

RULING

The Supreme Court granted the petition and set aside the trial court’s orders. The legal logic is anchored on the proper enforcement of an attorney’s charging lien under Section 37, Rule 138. This provision grants an attorney a lien upon a money judgment secured for a client, enforceable from the time a statement of the claim is entered in the court records and written notice is delivered to the client and the adverse party. The Court found that the petitioners had strictly complied with this procedural requirement. They duly filed the notice of lien with the Court of Appeals and furnished copies to their clients (the Santos spouses) and the adverse party (RCA/NGA). The failure of both recipients to object to the lien rendered the matter res judicata; the lien became a matter of record that bound the parties.
The Court further held that the written contract for a 20% contingent fee was valid and binding. The subsequent amicable settlement between the Santos spouses and the RCA/NGA could not impair this vested contractual right of the attorneys. The dismissal of the appeal based on that settlement effectively revived the trial court’s final and executory decision, which included the recognition of the attorney’s fees. The Court also found the claimed fee not unconscionable given the nature of the case and the services rendered. Consequently, the NGA (as RCA’s successor) was ordered to pay the petitioners the balance of P11,726.22 to satisfy the lien.