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G.R. No. L-31865 – 54 SCRA 26 – Legal Ethics – Attorney’s Fees – Client May Enter Into Compromise Agreement Independent of Counsel – Quantum Meruit
The Northcotts, represented by Robert Northcott, were the owners of the Dungon-Dungon Estate in Ilocos Norte. Due to their failure to pay taxes, their land were sold to the Ilocos Norte Coconut Producers Association, Inc. in a public auction held by Provincial Treasurer Pedro Cabildo. The Northcotts later exercised their right of redemption but the same were opposed by INCPA. The Northcotts then filed a civil case against INCPA. Judge Ricardo Navarro initially ruled against the Northcotts but later reversed his decision based on the Motion for Reconsideration filed by the Northcotts. The case eventually reached the Supreme Court and this time the Northcotts were represented by Atty. Manuel San Jose with an arrangement of a 60% contingent fee of whatever properties Atty. San Jose may recover for the Northcotts.
But while the case was pending before the Supreme Court, the Northcotts entered into a compromise agreement with INCPA whereby the two agreed to 1.) drop the pending case, 2.) donate the land in question to the Province of Ilocos Norte except 14 hectares thereof where they will have 7 hectares each of the remaining 14 hectares.
Atty. San Jose then filed a Manifestation indicating that the donation and the compromise agreement entered into by his client was meant to defraud him of his attorney’s fees.
ISSUE: Whether or not Atty. San Jose is correct.
HELD: No. Atty. San Jose’s prior arrangement for attorney’s fees does not render the compromise agreement infirm and the same is not an obstacle to the validity and approval by the court of the compromise agreement for a client has an undoubted right to compromise a suit without the intervention of his lawyer. However, since it is not disputed that Atty. San Jose had rendered legal services (although short of recovery by the Northcotts of any property) as stipulated in the retainer contract, and the non-recovery may in the very least be partially attributable to the Northcotts’ entering into the compromise agreement, it is but fair and just that Atty. San Jose be compensated for his services on quantum meruit basis and, to assure the payment thereof, that a lien be constituted in favor of Atty. San Jose on the 7 hectares retained by the Northcotts under the deed of donation, without prejudice to the immediate effectivity of the compromise agreement.
Read the full text of the case here.
