ETHICAL CONSIDERATIONS IN DETERMINING LAWYER’S FEES

A. DEFINITION OF ATTORNEY’S FEES –

Attorney’s fees normally refer to the compensation for legal services performed by
an attorney (lawyer or law firm) for a client, in or out of court. At times, a professional fee
of a lawyer or law firm is denominated as the honorarium received for services rendered. A
lawyer’s entitlement to professional fees is premised on his engagement contract with the
client. The lawyer is entitled to be compensated for legal services performed at the instance
of the client.

B. SCOPE OF ATTORNEY’S FEES

Attorney fees may include, among others, the following items:
1. Acceptance fee
2. Initial consultation meeting fees
3. Subsequent Consultation
4. Contingency fees
5. Monthly retainer fees
6. Flat fees for specific engagement
7. Standard hourly rates
8. Costs and expenses
9. Referral fees where an expert witness is required

Attorney’s fees normally cover the services provided by lawyers to clients, in the form of
advice, research, resources, time, and government fees paid in relation to the referral. In a
number of cases, the fees are usually specified in the engagement contract between the
lawyer and his client. The client signifies conformity to the terms of the engagement by
signing the same.
Unfortunately, in the Philippines attorney’s fees are not standardized, and can range from
one firm to another. Sometimes, the professional fees are determined by the reputation of
the law firm, the education level of the handling lawyers and experience of the attorney
dealing with the case, the difficulty of the matter in issue, and other aspects of the service. 
Additional fees for various services and types of agreements cover costs and expenses
needed to successfully handle the referral.

C. NATURE OF PROFESSIONAL FEES

1. Attorney’s Fee and Acceptance Fee, distinguished; Two Concepts of Attorney’s Fee
An attorney's fee and an acceptance fee are different from each other because the former
depends on the nature and extent of the legal services rendered, while the other does not.
Attorney's fee is understood both in its ordinary and extraordinary concept. In its ordinary
concept, attorney's fee refers to the reasonable compensation paid to a lawyer by his client
for legal services rendered.
While in its extraordinary concept, attorney's fee is awarded by the court to the successful
litigant to be paid by the losing party as indemnity for damages. An award of attorney’s fees
under Article 2208 demands factual, legal, and equitable justification to avoid speculation and
conjecture surrounding the grant thereof. Due to the special nature of the award of attorney’s fees,
a rigid standard is imposed on the courts before these fees could be granted. Hence, it is imperative
that they clearly and distinctly set forth in their decisions the basis for the award thereof. It is not
enough that they merely state the amount of the grant in the dispositive portion of their decisions.  
The award of attorney’s fees is an exception rather than the general rule; thus, there must be
compelling legal reason to bring the case within the exceptions provided under Article 2208 of the
Civil Code to justify the award. (cited in EUGENIO E. CORTEZ v. ATTY. HERNANDO P. CORTES,
Tijam, J., A.C. No. 9119, March 12, 2018)
Article 111 of the Labor Code deals with the extraordinary concept of attorney’s fees. It
regulates the amount recoverable as attorney's fees in the nature of damages sustained by

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and awarded to the prevailing party. It may not be used as the standard in fixing the
amount payable to the lawyer by his client for the legal services he rendered. The Court
may in its discretion adjust the prevailing rate of 10% as provided under the Labor Code.
Circumstances may warrant a higher attorney’s fees.
The acceptance fee is the fee charged by the lawyer for merely accepting the case. The
rationale behind this is, once the lawyer agrees to act on behalf of a client, he generally
loses the opportunity to handle cases for the opposing party. The opportunity cost of mere
acceptance is thus indemnified by the payment of acceptance fee. However, since
acceptance fee compensates the lawyer only for lost opportunity, the same is not measured
by the nature and extent of the legal services rendered. .. Thus, a lawyer’s acceptance of a
case would mean that he is forgoing prospective work for the other party. The acceptance
fee is normally applied in litigation, and coupled with a per stage or per activity type of
billing, where the lawyer divides his professional fees depending on the stage of the
proceedings.

2. Initial Consultation Fee

The initial consultation fee is what a person can expect the lawyer will charge for an initial
meeting which normally includes a disclosure of the nature of the referral and a
preliminary assessment of the same. This may tackle possible legal options. Some lawyers
may bill on an hourly basis which rate may be reduced during the initial consultation. The
standard hourly rate may then be imposed if the person agrees to the engagement of the
legal services of the lawyer or the firm.

3. Hourly Rate Charges

In law offices, the hourly rate will be charged by each of the participating lawyers in the
team. The rates differ based on the rank of lawyer in the law firm. Under a time-based
arrangement, the client is billed at the end of every billing cycle. This billing cycle may fall
on those dates when a significant milestone is achieved in a referral. The bill includes the
time in conducting research, answering client calls, consultations, meetings, attendance in
hearing and follow-up work. In some cases, the minimum rate charged is in block of six (6)
minutes.

4. Monthly Retainer Fee

A monthly retainer fee is a fixed amount for any legal work performed on a regular basis. In
a retainer agreement with a company, the scope of services covers drafting minutes of
board meetings and board resolutions, secretary’s certifications, notarial services and
other similar routine documents. The lawyer or the law firm has the right to charge
additional professional fees for work beyond the services not covered by the retainer
agreement. Such additional services may call upon the lawyer to prepare specialized
agreements or handling court cases on behalf of the company.

5. Contingent Fee
A contingent fee arrangement is valid in the Philippine jurisdiction and is generally
recognized as valid and binding but must be laid down in an express contract. The amount
of contingent fee agreed upon by the parties is subject to the stipulation that counsel will
be paid for his legal services only if the suit or litigation prospers. A much higher
compensation is allowed as contingent fee in consideration of the risk that the lawyer may
get nothing if the suit fails. Contracts of this nature are permitted because they redound to
the benefit of the client who may not have sufficient funds to pursue the case. The lawyer
deserves to collect a higher fee especially in cases where the client has meritorious cause of
action, but no means with which to pay for legal services. As sanctioned by the Supreme
Court in a number of cases, parties may execute a contract for a contingent fee to be paid
out of the proceeds of the litigation. Oftentimes, the contingent fee arrangement is the only
means by which the poor and helpless can seek redress for injuries sustained and have
their rights vindicated. (cited in EUGENIO E. CORTEZ v. ATTY. HERNANDO P. CORTES,
supra)

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6. Fixed Fee
In some cases, the lawyer and the client may agree on a fixed fee for handling a referral.
The lawyer and client agree in advance a fixed fee for a specific legal work. This is normally
resorted to in the preparation of contracts for specific transactions which are non-
contentious. These may cover a one-time transaction or recurring transactions. Lawyers
may also agree on a fixed fee for some civil cases like annulment of marriage or unlawful
detainer cases.

7. Fee based on the Principle of Quantum Meruit

In the absence of the written agreement, the lawyer's compensation shall be based
on quantum meruit, which means "as much as he deserved." The determination of
attorney's fees on the basis of quantum meruit is also authorized "when the counsel, for
justifiable cause, was not able to finish the case to its conclusion."  Moreover, quantum
meruit becomes the basis of recovery of compensation by the attorney where the
circumstances of the engagement indicate that it will be contrary to the parties' expectation
to deprive the attorney of all compensation. (cited in RAMON R. VILLARAMA v. ATTY.
CLODUALDO C. DE JESUS, Peralta, J., G.R. No. 217004, April 17, 2017)

8. Uplift/Success/Premium Fee
Most lawyers and law firms charge success fees or premium fees for a successful handling
of a referral, whether this involves court litigation, contract negotiations or arbitration
matters. The success fee may be covered by the engagement contract. In several instances,
the success fee or the premium fee will be dictated by the benefits the client will enjoy after
the termination of the referral. Under this arrangement, a lawyer or a law firm justifies its
higher fees with claim that the matter involved was delicate, complex and/or completed at
an unbelievable speed.

9. Expert’s Fees
In some cases, there is a need to employ the services of an expert in order to pursue a claim
or a cause of action. The expert need not be lawyer as in environmental cases, parties and
even the courts are allowed to resort to the specialized knowledge of a person based his
scientific or technical background. The fee of the expert witness is separate of the
professional fees of counsel.

10. Costs and Other Expenses

Apart from professional fees, clients will pay under a separate invoice other costs related to
a legal referral. Some referrals may require payment of court docket fees or filing fees
before administrative agencies. Other costs may involve payment of fines, penalties and
surcharges. Out-of-pocket expenses are likewise charged to clients. These items include,
among others, transportation costs and meals of lawyers; stenographer’s fees, sheriff’s fees
and server’s fees; notarial fee and certification fees of official documents; postage cost,
photocopying costs, transportation costs and meals of paralegals; and appearance fee of
counsel.

D. JURISPRUDENCE DEALING WITH PROFESSIONAL FEES

1. Albano v. Atty. Perpetua Coloma, Fernando, J., A.C. No. 528, October 11, 1967: The
Court dismissed the disbarment case filed by the complainant. The Court said that
counsel, any counsel, who is worthy of his hire, is entitled to be fully recompensed for
his services. With his capital consisting solely of his brains and with his skill, acquired
at tremendous cost not only in money but in the expenditure of time and energy, he is
entitled to the protection of any judicial tribunal against any attempt on the part of a
client to escape payment of his fees. It is indeed ironic if after putting forth the best
that is in him to secure justice for the party he represents, he himself would not get
his due. Such an eventuality this Court is determined to avoid. It views with
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 disapproval any and every effort of those benefited by counsel's services to deprive
him of his hard-earned honorarium. Such an attitude deserves condemnation.
The Court allowed Atty. Coloma to recover the professional fees based on the agreed
contingency fee consisting of one third of the property recovered by the complainant
and his mother.

2. Research and Services Realty, Inc. v. Court of Appeals and Atty. Manuel S. Fonacier, Jr., ,
DAVIDE, JR., J., G.R. No. 124074. January 27, 1997: This case settles the claim of Atty.
Fonacier for payment of his contingency fee for having successfully concluded a
contract in favor of Research and Services Realty. With the execution of the contract,
Research and Services Realty which entitled it to receive P28M from Filsteam
Company. It is the contention of the petitioner that Atty. Fonacier was only entitled to
the agreed amount of retainer fee of P800.00 a month.
The Court said that unless expressly stipulated, rendition of professional services by a
lawyer is for a fee or compensation and is not gratuitous. This is implicit from the
opening clause of Section 24, Rule 138 of the Rules of Court, which states that "[a]n
attorney shall be entitled to have and recover from his client no more than a
reasonable compensation for his services . . .," and by virtue of the innominate
contract of facio ut des (I do and you give). This is based on the principle that "no one
shall unjustly enrich himself at the expense of another." 

3. Dominguez et al. v. Court of Appeals et al., Cuevas, Jr., J. G.R. No. L-52715 February 28,
1985: Benito E. Dominguez, Jr. in his capacity as President of ICSI engaged the legal
services of respondent Atty. Juan T. David. The engagement letter reads in part:
“ 1. In the cement cases.
a. Retainer fee for the duration of the cases...................................................... P 20,000.00
b. If the release of said cement, under bond, is secured....................................... 50,000.00
c. For each shipment exempted from the penalty of forfeiture 20% of the invoice
value thereof
2. In Criminal Case I.S. No. 67-1697
a. Retainer fee for the duration of the case........................................................... P 5,000.00
b. For the successful termination of said case......................................................... 25,000.00
It also provides that Atty. David "will not charge any professional fee if said cases
are unsuccessful."
A conflict ensued when Dominguez failed to pay the attorney’s fees of Atty. David
after the goods were ordered released by the Bureau of Customs. This prompted
David to institute an action for collection of attorney's fees before the Court of First
Instance of Manila, against defendants Benito E. Dominguez, Jr., Integrated
Construction Services, Inc. and Filipinas Integrated Services Corporation. The trial
court dismissed the case as against Filipinas Services Corporation and it held
Dominguez and Integrated Construction Services, Inc. liable to pay sums of money to
Atty. David for his professional fees of P207,000.00 based on the agreement; P
10,000.00 as and for attorney's fees; P 20,000.00 as exemplary damages; and costs
of this suit.
Dominguez appealed the ruling.
The Court affirmed the ruling. It said that the basic rule is that when one has
rendered services to another and these services were accepted by the latter, in the
absence of proof that the services were rendered gratuitously, it is but just that the
recipient should make compensation therefor, pursuant to well-known and
accepted principle of law that no one should be permitted to enrich himself at the
expense of another.

4. Spouses Vizarra et al . v. Rodriguez et al., Tinga, J., G.R. NO. 148014, December 5,
2006:
The power of courts to grant damages and attorney's fees demands factual, legal and
equitable justifications, its basis cannot be left to speculation or conjecture. The award

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 of attorney’s fees must be supported by evidence. Without justification, the ward of
attorney’s fees is a conclusion without a premise. The Court said that if there bad faith
on the part of the client, an award for damages cannot be sustained.

5. Czarina Malvar v. Kraft Foods Philippines, Bellosillo, J., G.R. No. 183952, September 9,
2013: The Court said that although the practice of law is not a business, an attorney is
entitled to be properly compensated for the professional services rendered for the
client, who is bound by her express agreement to duly compensate the attorney. The
client may not deny her attorney such just compensation. This is a dispute over
attorney's fees between the winning employee and her attorney after she entered into
a compromise agreement with her employer under circumstances that the attorney
has bewailed as designed to prevent the recovery of just professional fees. Malvar
served as Vice President for Finance in the Southeast Asia Region of Kraft Foods
International. She was terminated for breach of trust and confidence and for willful
violation of company rules and regulations. The NLRC and the Court of Appeals ruled
in favor of Malvar but the latter was not satisfied with the monetary award so she
appealed the case before the Supreme Court. During the pendency of the case before
the Supreme Court, Malvar and her employer entered into a compromise agreement
wherein she agreed to a settlement amount of Philippine Pesos Forty Million (Php
40,000,000.00), which is in addition to the Philippine Pesos Fourteen Million Two
Hundred Fifty-Two Thousand One Hundred Ninety-Two and Twelve Centavos
(Php14,252,192.12) already paid to and received by Ms. Malvar. The Law Firm of
Dasal, Llasos and Associates, through its Of Counsel Retired Supreme Court Associate
Justice Josue N. Bellosillo, filed a Motion to Intervene since the settlement of
professional fees based on a contingency arrangement was not included in the
Compromise Agreement. On considerations of equity and fairness, the Court
disapproves of the tendencies of clients compromising their cases behind the backs of
their attorneys for the purpose of unreasonably reducing or completely setting to
naught the stipulated contingent fees. The Court held that the law firm is entitled to
recover  10% of ₱41,627,593.75, and the sum equivalent to 10% of the value of the
stock option of Ms. Malvar.

6. Emiliano Court Townhouses Homeowners Association v. Atty. Michael Dioneda,

Bellosillo, J., Adm. Case No. 5162. March 20, 2003: The complainant and respondent
lawyer agreed under a retainer agreement for a professional fee of P20,000.00 and an
appearance fee of P1,000.00 per hearing. The complainant insists that the agreement
covered a civil case only but Atty. Dioneda said that the agreement included a case
before the HLURB. Not satisfied with the manner by which the erring lawyer
continued to ignore the calls of the President of the homeowners association, it was
constrained to institute the disbarment case against Atty. Dioneda. The Court said that
It is reasonable to conclude that under the doctrine of res ipsa loquitur, respondent
committed an infringement of ethical standards. The act of receiving money as
acceptance fee for legal services in handling the case of complainant ECTHA against
LVF Realty, and subsequently failing to render such service is a clear violation of
Canons 17 and 18 of the Code of Professional Responsibility. 
The Court suspended Atty. Michael Dioneda from the practice of law for six (6)
months, was ordered to return the amount of P20,000.00 representing his
professional fees to Emiliano Court Townhouses Homeowners Association.

7. Sencio v. Calvadores, Davide,Jr., J, A. C. No. 5841. January 20, 2003: The complainant’s
son died in a vehicular accident. She asked that an independent civil action be filed by
respondent lawyer. The complainant paid the respondent the amount of P12,000.00
as attorney’s fees and for other expenses relating to the case. To the dismay of
complainant, she found out that Calvadores failed to institute the case. She asked for
the return of the money she paid but the respondent refused to reply to the demand.

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 The Court found Calvadores guilty of violation of the lawyer’s oath, malpractice and
gross misconduct, suspended for six (6) months, and ordered to return to his client
the amount of P12,000.00 with interest at 12% per annum from the date of the
promulgation of the resolution until the return of the amount.

8. Martess Garcia v. Atty. Iluminado Manuel, Davide,Jr., J.,  A.C. No. 5811, January 20, 2003:
The Court suspended the respondent lawyer from the practice of law for six (6)
months and ordered him to render an accounting of all monies he received from the
complainant. Maritess Garcia sought the services of Atty. Manuel for a fee of
P70,000.00 to seek support for her child and the eviction of her husband. The
agreement included a contingency fee of 5% from whatever can be recovered from
her husband, Fauni. She also gave P10,000.00 to cover the filing fees for the ejectment
case. She found out, however, that the case was never filed. An altercation occurred
between Garcia and Manuel. Manuel returned all the documents he received from
Garcia. After serious exchange of words, respondent returned to complainant all of
her documents. No amount of money was, however, returned by respondent to
complainant despite the latter's demand for its return.
The Court found untenable respondent's claim that since complainant was already in
arrears with his fees, it was proper for him to apply the filing fees to his attorney's
fees. It has been held that an attorney's lien is not an excuse for a lawyer's non-
rendition of accounting.

9. Rabanal v. Atty. Faustino Tugade, Mendoza, J., A.C. No. 1372. June 27, 2002: The Court
suspended Atty. Tugade for six months for his failure to file the appellant brief of
Cayetano Rabanal in a homicide case in Tuguegarao, Cagayan despite receipt of funds
from the Spouses Rabanal. The Court said that the absence of a written contract does
not preclude a finding that there was a professional relationship which merits
attorney’s fees for professional services rendered. A written contract is not an
essential element in the employment of an attorney; the contract may be express or
implied. To establish the relation, it is sufficient that the advice and assistance of an
attorney is sought and received in any matter pertinent to his profession. This took 27
years to resolve for failure of respondent to update his failure to inform the IBP of his
change of address.

10.   Spouses Galen v. Paguirigan, Mendoza, J., A.C. No. 5558 March 7, 2002:  The
respondent lawyer failed to file a brief to the detriment of their respective client and
was suspended by the Court for six (6) months on the first offense and ordered him to
reimburse the amount of P10,000 which he received to cover the filing fees and other
litigation costs. The complainants won the civil suit before the trial court but lost the
appeal on appeal for failure of Atty. Paguirigan to file the appellant’s brief.

11.Philippine National Construction Corporation v. Apac Marketing Corporation

represented by Cesar M. Ong, Jr., Sereno, C.J., G.R. No. 190957, June 5, 2013: The trial
court and Court of Appeals awarded attorney’s fees because the only discernible
reason proffered by the trial court in granting the award was that respondent, as
complainant in the civil case, was forced to litigate to protect the latter’s interest. The
Court said that the law is clear that in the absence of stipulation, attorney’s fees may
be recovered as actual or compensatory damages under any of the circumstances
provided for in Article 2208 of the Civil Code. The general rule is that attorney’s fees
cannot be recovered as part of damages because of the policy that no premium should
be placed on the right to litigate. They are not to be awarded every time a party wins a
suit. The power of the court to award attorney’s fees under Article 2208 demands
factual, legal, and equitable justification. Even when a claimant is compelled to litigate
with third persons or to incur expenses to protect his rights, still attorney’s fees may
not be awarded where no sufficient showing of bad faith could be reflected in a party’s

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 persistence in a case other than an erroneous conviction of the righteousness of his
cause.

12.ABS-CBN Broadcasting Corp. v. CA, David, C.J., G.R. No. 128690 January 21, 1999: The
Court reversed the award of attorney’s fees holding that attorney’s fees are not to be
awarded every time a party wins a suit. The power of the court to award attorney's
fees under Article 2208 demands factual, legal, and equitable justification. The Court
said that settled is the rule that the adverse result of an action does not per se make
the action wrongful and subject the actor to damages, for the law could not have
meant to impose a penalty on the right to litigate. If damages result from a person's
exercise of a right, it is damnum absque injuria.

13.Filomena Benedicto v. Antonio Villaflores, Nachura, J., G.R. No. 185020, October 6,
2010: The Court denied the claim for attorney’s fees of Benedicto despite the fact that
she was adjudged the true owner of the land in question.
In this case, the Court explained the reason behind the need for the courts to arrive
upon an actual finding to serve as basis for a grant of attorney’s fees, considering the
dual concept of these fees as ordinary and extraordinary. It said that it is settled that
the award of attorney's fees is the exception rather than the general rule; counsel's
fees are not awarded every time a party prevails in a suit because of the policy that no
premium should be placed on the right to litigate. Attorney's fees, as part of damages,
are not necessarily equated to the amount paid by a litigant to a lawyer. In the
ordinary sense, attorney's fees represent the reasonable compensation paid to a
lawyer by his client for the legal services he has rendered to the latter; while in its
extraordinary concept, they may be awarded by the court as indemnity for damages to
be paid by the losing party to the prevailing party. Attorney's fees as part of damages
are awarded only in the instances specified in Article 2208 of the Civil Code. As such, it
is necessary for the court to make findings of fact and law that would bring the case
within the ambit of these enumerated instances to justify the grant of such award, and
in all cases it must be reasonable.

14.Spouses Chung v. Ulanday Construction, Inc., Brion, J., G.R. No. 156038 : October
11,2010:
This case involves a dispute over a construction contract of the house of the
petitioners in Urdaneta Village. The contractor instituted an action before the trial
court of Makati to collect the unpaid obligation of the Spouses Chung. RTC found that
both parties have not complied strictly with the requirements of the contract. Both
parties appealed the decision. The Court of Appeals affirmed the RTC decision, but
increased the payment on the unpaid balance of the change orders to P740,587.11. It
likewise ordered the petitioners to pay 6% interest on the unpaid amounts from the
day of formal demand and until the finality of the decision, and 12% interest after
finality of the decision, plus P50,000.00 as exemplary damages. Both parties moved
for reconsideration and the C.A. modified the decision by granting the respondents
motion for reconsideration by awarding it attorneys fees equal to 10% of the total
award. The Court reversed the decision of C.A. holding that attorneys fees may be
awarded only when a party is compelled to litigate or to incur expenses to protect his
interest by reason of an unjustified act of the other party, as when the defendant acted
in gross and evident bad faith in refusing the plaintiffs plainly valid, just and
demandable claim. The Court did not see the presence of these circumstances in the
present case. The refusal of Spouses Chung to pay the change orders was based on a
valid ground lack of their prior written approval. There, too, is the matter of defective
construction.

15.Santos Ventura Hocorma Foundation, Inc., represented by Gabriel H. Abad v. Atty.

Richard V. Funk, Abad, J., A.C. NO. 9094, August 15, 2012: Atty Funk claimed that before
Santos, the founding member of the petitioner, left for America in August 1983 for

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 medical treatment, he entered into a retainer agreement with him. They agreed that
Atty. Funk would be paid for his legal services out of the properties that he donated or
sold to the Hocorma Foundation. The foundation approved that compensation
agreement on December 13, 1983. But it reneged and would not pay Atty. Funk's legal
fees. Funk claims that in 1985 when Hocorma Foundation refused to pay his
attorney's fees, he severed his professional relationship with it. On November 9, 1989,
four years later, he filed a complaint against the foundation for collection of his
attorney's fees. The trial court, the Court of Appeals (CA), and the Supreme Court
decided the claim in his favor.
The foundation, however, instituted a disbarment case against Atty. Funk for
representing conflicting interests when he filed the civil cases against the foundation
involving properties of the foundation and to collect his professional fees. . The Court
held that the evidence showed that Hocorma Foundation availed itself of the legal
services of Atty. Funk in connection with, among others, the transfer of one of the
properties subject of the several suits that the lawyer subsequently filed against the
foundation. Indeed, Atty. Funk collected attorney's fees from the foundation for such
services. Thus, he had an obligation not to use any knowledge he acquired during that
relationship, including the fact that the property under litigation existed at all, when
he sued the foundation. For his infraction, Atty. Funk was suspended for one year.

16. Keld Stemmerik, represented by Attys. Herminio A. Liwanag and Winston P.L. Esguerra
v. Atty. Leonuel N. Mas, Per Curiam, A.C. No. 8010, June 16, 2009: Keld Stemmerik is a
citizen and resident of Denmark. In one of his trips to the Philippines, he was
introduced to respondent Atty. Leonuel N. Mas. That was his misfortune. Respondent
prepared and notarized a deed of sale in which a certain Bonifacio de Mesa sold and
conveyed the property to a certain Ailyn Gonzales for ₱3.8 million. Respondent also
drafted and notarized an agreement between complainant and Gonzales stating that it
was complainant who provided the funds for the purchase of the property.
Complainant then gave respondent the full amount of the purchase price (₱3.8
million) for which respondent issued an acknowledgment receipt. He was also paid
his professional fees amounting to P400,000.00.
Complainant filed a complaint for disbarment against respondent in the Commission
on Bar Discipline (CBD) of the IBP.  He deplored respondent’s acts of serious
misconduct. In particular, he sought the expulsion of respondent from the legal
profession for gravely misrepresenting that a foreigner could legally acquire land in
the Philippines and for maliciously absconding with complainant’s ₱3.8 million and
collecting professional fees for his services in the transaction. Despite his absence
during the proceedings, the respondent was disbarred and ordered to return to
complainant Keld Stemmerik the total amount of ₱4.2 million with interest at 12% per
annum from the date of promulgation of this resolution until full payment The
National Bureau of Investigation (NBI) was likewise ordered to locate Atty. Mas and
file the appropriate criminal charges against him.

17.Modesta Borcena, Antonio Gimeno, Jr., Estela Gimeno, Rolando Gimeno, Edgardo Glmeno
and Anelia Gimeno v. Intermediate Appellate Court, Hon. Clemente D. Paredes, Romulo
C. Basa, Leovino Legaspi and Hon. Zotico Tolete, Gutierrez, J., G.R. No. 70099 January 7,
1987: The petitioners question the amount which the respondent Court of Appeals
and the trial court ordered to be paid to their former lawyer, as his compensation. The
pivotal issue in this case hinges on the amount of compensation to which Atty. Gil de
Guzman is entitled for his legal services to the petitioners. The lower court fixed the
attorney's compensation of Atty. Gil de Guzman as follows: (1) P177,500.00 which
represents 25% of the award as stipulated in the contract of engagement; and (2)
20% of whatever attorney's fees the petitioners may be awarded in the pending case
as attorney's lien.
The Court found the award unconscionable and unreasonable even if it was stipulated
in the contract. The Court held that contracts for attorney's services in this

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 jurisdiction stand upon an entirely different footing from contracts for the payment of
compensation for any other services. By express provision of Section 29 of the Code of
Civil Procedure, an attorney is not entitled in the absence of express contract to
recover more than a reasonable compensation for his services; and even when an
express contract is made the court can ignore it and limit the recovery to reasonable
compensation if the amount of the stipulated fee is found by the court to be
unreasonable. This is a very different rule from that announced in Article 1091 of the
Civil Code with reference to the obligation of contracts in general where it is said that
such obligation has the force of law between the contracting parties. Considering that:
(1)the stipulation on payment for legal services appears unconscionable and
unreasonable; and (2) Atty. Gil de Guzman was dismissed for justifiable cause, the
amount due to the lawyer should be fixed on a quantum meruit. The Court ruled that
the lawyer was entitled to professional fees of P10,000.00.

18.Francisco A. Delgado,  v. Esteban De La Rama, Villamor, J., G.R. No. L-17760. June 1,

1922: In this case the plaintiff sought to recover from the defendant the sum of
P60,000, with interest thereon and costs, as the value of the professional services
rendered by him to the defendant in two civil cases filed in the Court of First Instance
of Occidental Negros for damages. In the first of said cases, the sum of P1,110,000 was
involved, and in the second, the sum of P72,952. The Court laid specific guidelines to
establish if the professional fees are reasonable. It said that in determining the
compensation of an attorney, the following circumstances should be considered:
a. the amount and character of the services rendered;
b. the responsibility imposed; the amount of money or the value of the property
affected by the controversy or involved in the employment;
c. the skill and experience caged for in the performance of the service; the
professional standing of the attorney; the results secured; and
d. whether or not the fee is contingent or absolute, it being a recognized rule that an
attorney may properly charge a much larger fee when it is to be contingent than
when it is not.
The Court reduced the professional fees of Atty. Delgado reduced to P15,000 as
reasonable compensation for the services rendered the defendant, by virtue of the
considerations above the set forth.

19.Sesbreno v. Court of Appeals et al., Romero, J., G.R. No. 117438, June 8, 1995: This case
involves an action for reinstatement and claim for backwages of some 52 employees
of the provincial government of Cebu. Raul H. Sesbreñ o, replaced the employees'
former counsel Atty. Catalino Pacquiao. The employees agreed to pay petitioner 30%
as attorney's fees and 20% as expenses to be taken from their back salaries. The
Supreme Court affirmed the lower court’s decision granting the reinstatement and
claim of backwages of the provincial employees. Before the execution of judgment, the
provincial government and the employees entered into a compromise agreement
wherein the employees waived their right to reinstatement.  P2,300,000.00 was
released to the petitioning employees through petitioner as "Partial Satisfaction of
Judgment." The amount represented back salaries, terminal leave pay and gratuity
pay due to the employees. The trial court fixed the fees of petitioner at 50% of the
amount released to the employees. The appellate court reduced this to 20%. Thus,
this appeal.
The Court ruled that 50% of all monies which private respondents may receive from
the provincial government, are excessive and unconscionable. It is a settled rule that
what a lawyer may charge and receive as attorney's fees is always subject to judicial
control.  A lawyer is primarily an officer of the court charged with the duty of assisting
the court in administering impartial justice between the parties. When he takes his
oath, he submits himself to the authority of the court and subjects his professional
fees to judicial control.

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20.Leah Taday v. Atty. Dionisio Apoya, Jr., PER CURIAM, A.C. No. 11981, EN BANC, July 3,
2018: Leah Taday, an OFW staying in Norway, asked her parents in the Philippines, to
seek legal services for the nullification of her marriage. Taday's parents found Atty.
Dionisio Apoya and contracted his legal services. Thereafter, a Retainer Agreement
was executed and parties agreed an acceptance fee of P140,000.00 paid in installment.
After notarizing the petition, Atty. Apoya filed it before the RTC of Caloocan and was
then raffled to Branch 131.
While on vacation in the Philippines on November 17, 2011, Atty. Apoya delivered a
Decision dated November 16, 2011 which granted the annulment of Taday’s marriage.
The said decision was promulgated by a certain Judge Ma. Elizabeth Becamon-Angeles
of RTC Branch 162. Taday became suspicious as the said decision came from a
different branch presided by a different judge where the case was originally filed.
After verification that the decision was fake because both RTC Branch 162 and Judge
Ma. Elizabeth Becamon-Angeles do not exist, Taday instituted a disbarment case
against Atty. Apoya.
The Court disbarred Atty. Apoya for unlawful, dishonest, immoral and deceitful
conduct which tends to lessen the confidence of the public in the legal system.

21.Helen Gradiola v. - Atty. Romulo A. Deles, Del Castillo, J., A.C. No. 10267, FIRST
DIVISION, June 18, 2018: Gradiola engaged the services of Atty. Deles in a civil case
then pending before the Court of Appeals (CA). Complainant, however, alleged that
respondent lawyer abetted the unauthorized practice of law by allowing Atty. Ernesto
S. Araneta to do the legal research works and the preparation of various pleadings
relative to the civil case. Moreover, Helen was “reassured” by both respondent lawyer
and Atty. Araneta who averred that they have a “contact man” in the CA in Cebu City.
Atty. Araneta" soon billed complainant for these expenses and issued her all the
receipts for these payments. These receipts all bore the signatures "Atty.
Ernie/Ernesto Araneta." From May 2005 until October 26, 2006, Helen paid this "Atty.
Araneta" a total of P207,500.00. Gradiola claimed that this "Atty. Araneta" split the
attorney's fees with respondent lawyer. She then discovered that this "Atty. Araneta"
had not only been disbarred from the practice of law; but worse, the aforementioned
November 13, 2006 CA Resolution was a total fabrication, even as the "position
paper" that was supposedly filed with this Court was an utter simulation. Upon
verification with the appellate, she learned that she lost her case and had lost her
right to appeal.
The IBP Board of Governors found Atty. Deles liable but the Court remanded the case
back to the IBP for its failure to accord respondent lawyer due process. The decretal
portion of the decision reads:
“WHEREFORE, Resolution No. XX-2013-511 of the Integrated Bar of the
Philippines adopting and approving the Report and Recommendation of the
Investigating Commissioner is hereby ANNULLED and SET ASIDE. This case
is ordered REMANDED to the Commission on Bar Discipline of the
Integrated Bar of the Philippines for further investigation, report and
recommendation. The Integrated Bar of the Philippines is hereby instructed
to: 1) require respondent lawyer's son, John P. Deles, to provide an update on
his father's health condition and, on the basis of such update: 2) to hold the
case in abeyance if respondent lawyer's stroke aftermath has significantly
impaired his cognitive ability and speech that he is not capable of presenting
his defense or 3) to direct respondent lawyer to file his Answer and continue
with the proceedings if he is found to be medically fit and his condition
having improved over time, having regained his cognitive and
communication skills.”

22. International Hotel Corporation v. Joaquin, G.R. No. 158361, April 10, 2013: : The
principle of quantum meruit justifies the payment of the reasonable value of the
services rendered by the lawyer and may be used to determine his compensation in

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 the absence of a written agreement for that purpose. It may be authorized in the
following cases:
a. There is no express contract for attorney’s fees agreed upon between the lawyer
and the client;
b. When although there is a formal contract of attorney’s fees, the stipulated fees are
bound unconscionable or unreasonable by the court;
c. When the contract for attorney’s fees is void due to purely formal matters or defects
of execution;
d. When the counsel, for justifiable cause, was not able to finish the case to its
conclusion;
e. When lawyer and client disregard the contract of attorney’s fees;
f. When there is a contract but no stipulation as to attorney’s fees; and
g. When the client dismissed his counsel or the latter withdrew therefrom, for valid
reasons.
When a client agrees to pay an attorney under a contingency fee agreement and
terminates the attorney before occurrence of the contingency, the attorney may
recover based on quantum meruit. In contrast to withdrawal, this rule applies
whether the client terminates the relationship with or without cause. However, there
are two exceptions to this rule:
1. If an attorney violates the CPR, then compensation is not available and
2. If the attorney substantially performs the duties owed to the client, then the
attorney may recover the full contingency, not just quantum meruit. The substantial
performance exception only applies in the rare case where full performance is
delinquent by "minor and relatively unimportant deviations. (Ross v. Scannell, 97
Wn.2d 598, 1982)

23.Spouses Nicasio v. Atty. Mendoza, A.C. No. 5440, November 26, 2014: An attorney’s
retaining lien is fully recognized if the presence of the following elements concurs: (1)
lawyer-client relationship; (2) lawful possession of the client’s funds, documents and
papers; and (3) unsatisfied claim for attorney’s fees. When there is no unsatisfied
claim for attorney’s fees, lawyers cannot validly retain their client’s funds or
properties. Furthermore, assuming that Atty. Mendoza had proven all the requisites
for a valid retaining lien, he cannot appropriate for himself his client’s funds without
the proper accounting and notice to the client.

24.National Power Corporation Drivers and Mechanics Association vs. National Power
Corporation, 565 SCRA 417: A charging or special lien is an attorney’s specific lien for
compensation on the fund or judgment which he has recovered by means of his
professional services for his client in a particular case. The lien shall attach to the
proceeds of the judgment and the client who receives the same, without paying his
attorney who was responsible for its recovery, shall hold said proceeds in trust for his
lawyer to the extent of the value of the lawyer’s recorded lien.

25.Metropolitan Bank and Trust Co. vs. Court of Appeals, 181 SCRA 367: A charging lien, to
be valid as security for payment of attorney's fees and lawful disbursements, requires
that the following requisites concur:
a. There must be an attorney-client relationship;
b. The attorney has rendered services;
c. A money-judgment favorable to the client has been secured in the action;
d. The attorney has a claim for attorney's fees or advances; and
e. A statement of his claim has been duly recorded in the case with notice thereof
served upon the client and the adverse party

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E. FACTORS TO CONSIDER IN THE DETERMINATION OF PROFESSIONAL FEES

CANON 20 of the Code of Professional Responsibility provides: “A lawyer shall charge only
fair and reasonable fees.”
Rule 20.01specifically provides – “A lawyer shall be guided by the following factors in
determining his fees:
(a) the time spent and the extent of the service rendered or required;
(b) the novelty and difficulty of the questions involved;
(c) The importance of the subject matter;
(d) The skill demanded;
(e) The probability of losing other employment as a result of acceptance of the proffered
case;
(f) The customary charges for similar services and the schedule of fees of the IBP chapter to
which he belongs;
(g) The amount involved in the controversy and the benefits resulting to the client from the
service;
(h) The contingency or certainty of compensation;
(i) The character of the employment, whether occasional or established; and
(j) The professional standing of the lawyer.”
Section 24 of Rule 138 likewise provides some measure by which the lawyer’s professional
fees may be determined. It provides-
“Compensation of attorneys; agreement as to fees. — An attorney shall be entitled to
have and recover from his client no more than a reasonable compensation for his
services, with a view to the importance of the subject matter of the controversy, the
extent of the services rendered, and the professional standing of the attorney. No
court shall be bound by the opinion of attorneys as expert witnesses as to the
proper compensation, but may disregard such testimony and base its conclusion on
its own professional knowledge. A written contract for services shall control the
amount to be paid therefor unless found by the court to be unconscionable or
unreasonable.”

F. ETHICS AND PROFESSIONAL FEES

While the Code of Professional Responsibility stresses the duty of the lawyer to put
primacy t the interest the clients, charging professional fees puts a burden on the client.
Unless a lawyer agrees to handle a case on a pro bono basis; or a lawyer is appointed as
counsel de officio; or is obliged to handle a legal aid case under the program of the Supreme
Court, the collection of professional fees produces some degree of tension between the
lawyer and the client.
At best, the lawyer or the law firm must at the initial meeting define the parameters of the
engagement and must reduce the terms of the engagement as well the estimated fees to
include the professional fees, filing fees and other out-of-pocket costs to necessary to
successfully handle the referral.
There are no hard and fast rules to follow but a spirit of candidness must govern the
relationship of the lawyer or law firm and the client. A spirit of openness must be present
at the start of the lawyer-client relationship. This will allow the client to decide freely on
the terms of the engagement. The clarity of charging of professional fees will lay down the
foundation for a smooth lawyer-client relationship.
The issue of costs is a sensitive area among lawyers or law firm. Except for filing fees, there
is no standard when it comes to out-of-pocket costs which are charged to clients and
professional fees will definitely vary. As a general guidepost, it is said that the costs must be
proportionate to the nature and value of case. What is proportionate is a relative matter.

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In most cases handled by a law firm, professional fees cover more than legal representation
since the client has full access to advice and legal guidance, services, and the expertise of an
entire team of lawyers.
In view of the issues that clients have with lawyer’s fees, it is not therefore a surprise that a
number of administrative cases are lodged against lawyers. The issue of costs has not been
adequately addressed by the Integrated Bar of the Philippines. The cases involving lawyer’s
fees give the legal profession a bad reputation. Public confidence in the legal profession is
seriously affected by these issues.

G. SOURCES OF FUNDS TO SETTLE PROFESSIONAL AND OTHER LEGAL FEES

In the Philippines, the source of legal fees normally comes from personal funding of an
individual. For corporate cases, the fees are absorbed by the company.
For clients who do not have sufficient cash to cover legal representation, a contingency
arrangement may be executed between the lawyer and the client.
The Rules of Court allow litigants to plead as pauper litigants. The Rules of Procedure on
Environmental Cases will petitioners to plead without payment of docket fees.
The Integrated Bar of the Philippines has a National Committee on Legal Aid. All IBP
chapters nationwide have their legal aid programs. The Supreme Court provides financial
support to the IBP National Committee on Legal Aid and all other IBP chapters for their
respective legal aid programs. Legal representation covers civil, juvenile, and criminal
cases as well as administrative cases like labor cases based on the financial situation of the
party.

Some civic organizations also provide pro bono legal service and ensure that the party is
represented by a fully qualified attorney without payment. The Rules of Court also provide
for a court-appointed counsel. A counsel de oficio is the lawyer appointed by the court to
represent and defend the accused in case he cannot afford to employ one himself. Section 7
of Rule 116 of the Rules on Criminal Procedure provides:
“Section 7.  Appointment of counsel de oficio. — The court, considering the gravity of
the offense and the difficulty of the questions that may arise, shall appoint as
counsel de oficio only such members of the bar in good standing who, by reason of
their experience and ability, can competently defend the accused. But in localities
where such members of the bar are not available, the court may appoint any person,
resident of the province and of good repute for probity and ability, to defend the
accused.” 

There is no form of insurance policy which would allow the parties to cover
expenses related to rendition of legal services.

H. SUGGESTED CONTENTS OF A LETTER OF ENGAGEMENT

In order to avoid any possible conflict with clients, it is suggested that a letter of
engagement must include the following items:
1. Initial consultation with the client which should make a statement why the client
approached the lawyer or the firm;
2. Preliminary discussion as to the legal options offered to the client which would
delimit the parameters of engagement;
3. The option or the legal course of action chosen by the client which will not
specifically define the terms of engagement;
4. The standards and the estimated period to be covered by the engagement;
5. The lawyers to be assigned to the referral;
6. The schedule of fees and the out-of-pocket expenses; and
7. A statement as the policy on success fee or premium billing at the termination of
the engagement.
The lawyer or the law firm must ensure that the client must sign the letter of
engagement in order to make it binding to the parties.

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I. IBP CEBU CITY CHAPTER SCHEDULE OF FEES

The above schedule of fees has been recommended by the IBP Cebu City Chapter.
The national office of the Integrated Bar of the Philippines has not adopted any measure to
set the necessary guidelines on how the professional fees of lawyers should be structured.
A number of law offices have developed their own formula on how their professional fees
are charged. The cited cases in this paper will show that the Court may step in to review if
the fees imposed by lawyers are onerous or unfair in the sense that lawyers fail to render
services in accordance with the agreed terms of engagement. The Court looks also after the
welfare of lawyers when it checks on the schemes of clients in order to avoid payment of
fees of lawyers.

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