Quirante vs. IAC

A lawyer’s motion to confirm contractual attorney’s fees as an incident of the principal action is premature and must be held in abeyance until the main case has been finally decided and the subject of recovery is at the court’s disposition. Because the fee arises only from what has been recovered, the claim cannot be determined while the underlying judgment remains under appellate review and the amount recoverable is uncertain.

Dr. Indalecio Casasola engaged contractor Norman Guerrero for a building project, with Philippine American General Insurance Co., Inc. (PHILAMGEN) as surety. After Guerrero defaulted, Dr. Casasola, represented by Attorneys John C. Quirante and Dante Cruz, sued Guerrero and PHILAMGEN for damages in the Court of First Instance of Manila (later Regional Trial Court). The trial court rendered a decision awarding damages and P30,000.00 in attorney’s fees as an item of damages under Article 2208 of the Civil Code. PHILAMGEN sought to appeal, but its notice of appeal was denied due course. While PHILAMGEN litigated the appealability of the main case up to the Supreme Court, Dr. Casasola died, and Atty. Quirante moved in the trial court for confirmation of a separate contingent fee arrangement allegedly made with the deceased and confirmed by some heirs. The trial court granted confirmation, prompting two non-signatory heirs to challenge the orders.

• The Main Action: Dr. Indalecio Casasola, represented by Attorneys John C. Quirante and Dante Cruz, sued contractor Norman Guerrero and his surety, PHILAMGEN, in the then Court of First Instance of Manila for damages due to Guerrero’s delay and non-completion of a building contract. PHILAMGEN cross-claimed against Guerrero for indemnification.
• The RTC Decision: On October 16, 1981, the trial court rescinded the contract and ordered Guerrero and PHILAMGEN to pay, jointly and severally, P129,430.00 in actual damages, P50,000.00 in moral damages, P40,000.00 in exemplary damages, and P30,000.00 in attorney’s fees. Guerrero alone was ordered to pay liquidated damages of P300.00 per day from December 15, 1978 to July 16, 1979, and PHILAMGEN was ordered to pay the P120,000.00 surety bond. The P30,000.00 attorney’s fees awarded formed part of the damages under Article 2208 of the Civil Code, thus belonging to the client, not to counsel.
• Post-Judgment Proceedings: PHILAMGEN’s motion for reconsideration was denied on November 4, 1982. Its notice of appeal was not given due course for alleged late filing, and a writ of execution issued. PHILAMGEN’s petition to quash the writ and compel the trial court to give due course to its appeal was dismissed by the Intermediate Appellate Court on May 4, 1983, and the matter was elevated to the Supreme Court in G.R. No. 64334.
• Death of the Client and Alleged Fee Agreement: Dr. Casasola died on November 16, 1981, survived by his widow Asuncion Vda. de Casasola and several children. Petitioner Quirante alleged that an oral contingent fee agreement had been made with the deceased, later confirmed in writing by the widow and two daughters, Mely C. Garcia and Virginia C. Nazareno. Under the agreement, attorney’s fees would be P30,000.00 upon recovery of the P120,000.00 surety bond; any damages awarded in excess of the bond would be divided equally among the heirs, Atty. Quirante, and Atty. Dante Cruz.
• Motion for Confirmation: While G.R. No. 64334 was pending in the Supreme Court, Atty. Quirante filed a motion in the trial court on June 18, 1983 for confirmation of these attorney’s fees. Despite opposition from other heirs, the trial court granted the motion on March 20, 1984 and denied reconsideration on May 25, 1984.
• Challenge by Heirs: Private respondents Manuel C. Casasola and Estrellita C. Casasola, children of the deceased who did not sign the written confirmation, filed a petition for certiorari in the Intermediate Appellate Court to annul the two orders.

• Propriety of the Motion for Confirmation: Petitioners argued that a claim for attorney’s fees may properly be asserted as an incident of the same action in which the services were rendered, and the trial court, being familiar with the nature and extent of their services, correctly entertained the motion.
• Validity of the Fee Agreement: Petitioner Quirante maintained that the oral contingent fee arrangement with the deceased was binding on the estate, having been confirmed in writing by the widow and two daughters, thereby entitling him and Atty. Cruz to the stipulated shares.

• Prematurity: Private respondents contended that the confirmation was premature because the main case awarding damages was not final; PHILAMGEN’s appeal remained pending in the Supreme Court, so the amount ultimately recoverable was uncertain.
• Non-binding Effect on Non-signatories: They argued that the written confirmation signed by only some of the heirs could not bind the other heirs who did not consent to the fee arrangement.

• Prematurity: Whether the trial court’s confirmation of petitioners’ attorney’s fees was prematurely granted while the principal action for damages remained unresolved on appeal.
• Effect of Partial Written Confirmation: Whether the alleged written confirmation of the fee agreement signed by three of the heirs bound the non-signatory heirs.

• Prematurity: The confirmation was premature and was correctly set aside. A claim for contractual attorney’s fees asserted as an incident of the main action may be adjudicated only when something has been recovered from which the fee is to be paid. As the Supreme Court’s own subsequent decision in G.R. No. 64334 later ordered the trial court to give due course to PHILAMGEN’s appeal, the finality and amount of the damages award remained contingent. The alleged fee agreement itself was expressly contingent on the amounts recovered, reinforcing that no determination could be made while the main judgment was under appellate review.
• Effect of Partial Written Confirmation: The question of whether the fee agreement bound the non-signatory heirs was likewise premature. The orderly administration of justice required the trial court to first determine the respective participations of all heirs after the final adjudication of the main case, and to receive evidence on the basis of petitioner Dante Cruz’s entitlement and the binding effect of the agreement on all heirs. The appellate court’s categorical statement that the confirmation should not adversely affect non-signatories was therefore pre-emptive and was set aside.

• Prematurity of Attorney’s Fee Claim as an Incident of the Main Action — A lawyer’s claim for contractual attorney’s fees, when elected to be asserted as an incident of the same action in which the services were rendered, cannot be determined until the main litigation has been finally decided and the subject of recovery is at the court’s disposition. The issue over attorney’s fees arises only when something has been recovered from which the fee is to be paid. This is distinct from attorney’s fees awarded as damages under Article 2208 of the Civil Code, which belong to the litigant, not to counsel, and are enforceable by the litigant as judgment creditor.
• Dual Remedy for Attorney’s Fees — Counsel may assert a claim for professional compensation either in the same action in which the services were rendered or in a separate action. If the first alternative is chosen, the court may pass upon the claim even if the amount is below the jurisdictional minimum, on the theory that the right to attorney’s fees is a mere incident of the main case and the court is already familiar with the nature and extent of the services rendered.

• “[A]n attorney's fee cannot be determined until after the main litigation has been decided and the subject of recovery is at the disposition of the court. The issue over attorney's fee only arises when something has been recovered from which the fee is to be paid.” — This passage, citing Otto Gmur, Inc. v. Revilla and Lichauco v. Court of Appeals, forms the ratio decidendi on prematurity.
• “What is being claimed here as attorney's fees by petitioners is, however, different from attorney's fees as an item of damages provided for under Article 2208 of the Civil Code, wherein the award is made in favor of the litigant, not of his counsel, and the litigant, not his counsel, is the judgment creditor who may enforce the judgment for attorney's fees by execution.” — This distinguishes the two distinct types of attorney’s fees awards and clarifies that the P30,000.00 awarded in the RTC decision belonged to the Casasola estate, not to the lawyers.

• Tolentino v. Escalona, et al., 26 SCRA 613 (1969) — Followed for the rule that a claim for attorney’s fees may be asserted in the same action and the court may pass upon it even if the amount falls below the jurisdictional minimum.
• Otto Gmur, Inc. v. Revilla, et al., 55 Phil. 627 (1931); Lichauco v. Court of Appeals, et al., 63 SCRA 123 (1975) — Followed as controlling authorities that an attorney’s fee cannot be determined until after the main litigation has been decided and the recovery is at the court’s disposition.
• Corpus v. Cuaderno, 13 SCRA 591 (1965); Carino, et al. v. Agricultural Credit & Cooperative Financing Administration, et al., 18 SCRA 183 (1966); Gan Tion v. Court of Appeals, et al., 28 SCRA 235 (1969) — Cited for the settled distinction that attorney’s fees awarded as damages under Article 2208 of the Civil Code belong to the litigant, not to his counsel.

• Article 2208, Civil Code of the Philippines — Referred to in distinguishing attorney’s fees recoverable as an item of damages by a litigant from attorney’s fees claimed by counsel under a contract for professional services. The RTC’s award of P30,000.00 as attorney’s fees fell under this article and thus pertained to the client, not the lawyers.

Melencio-Herrera, J., Padilla, J., Sarmiento, J.

N/A (Paras, J., took no part.)