TRADERS ROYAL BANK vs. NLRC & ATTY. EMMANUEL NOEL A.
CRUZ
Facts:
Petitioner Traders Royal Bank (TRB) Employees Union and private respondent Atty. Emmanuel Noel A.
Cruz entered into a retainer agreement on February 26, 1987.
Whereby the former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration
of the law firm's undertaking to render the services enumerated in their contract.
Parenthetically, said retainer agreement was terminated by the union on April 4, 1990.
During the existence of that agreement, petitioner union referred to private respondent the claims of its
members for holiday, mid-year and year-end bonuses against TRB. And filed a complaint with the NLRC.
NLRC rendered a decision in favor of the employees.
The NLRC, acting on a motion for the issuance of a writ of execution filed by private respondent as
counsel for petitioner union, raffled the case to Labor Arbiter Oswald Lorenzo.
However, pending the hearing of the application for the writ of execution, TRB challenged the decision of
the NLRC before the SC.
SC rendered a decision in favor of the employees.
TRB voluntarily complied with such final judgment and determined the holiday pay differential which the
petitioner never contested. The latter duly paid its concerned employees their respective entitlement in
said sum through their payroll.
After private respondent received SC decision, he notified the petitioner union, the TRB management and
the NLRC of his right to exercise and enforce his attorney's lien over the award of holiday pay differential
through a letter.
Thereafter, private respondent filed a motion before Labor Arbiter Lorenzo for the determination of his
attorney's fees.
The labor arbiter ordered that the TRADERS ROYAL BANK EMPLOYEES UNION with offices at Kanlaon
Towers, Roxas Boulevard is hereby ordered (sic) to pay without delay the attorney's fees due the movant
law firm, E.N.A. CRUZ and ASSOCIATES.
The labor arbiter relied on Art. 111:
FIRST. Art. 111 of the Labor Code, as amended, clearly declares movant's right to a ten (10%) per
cent of the award due its client. In addition, this right to ten (10%) per cent attorney's fees is
supplemented by Sec. 111, Rule VIII, Book III of the Omnibus Rules Implementing the Labor
Code, as amended.
Petitioner filed an appeal with the NLRC seeking a reversal of that order.
NLRC promulgated a resolution affirming the order of the labor arbiter.
Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack of jurisdiction
in upholding the award of attorney's fees in violation of the retainer agreement; and that the challenged
resolution of the NLRC is null and void, for the reasons hereunder stated.
Issue: Whether or not NLRC failed to comply with Rule 20.01. YES.
Ruling:
The measure of compensation for private respondent's services as against his client should properly be
addressed by the rule of quantum meruit long adopted in this jurisdiction. Quantum meruit, meaning "as
much as he deserves," is used as the basis for determining the lawyer's professional fees in the absence
of a contract, but recoverable by him from his client.
Where a lawyer is employed without a price for his services being agreed upon, the courts shall fix the
amount onquantum meruit basis. In such a case, he would be entitled to receive what he merits for his
services.
The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable
postulate that it is unjust for a person to retain benefit without paying for it.
The SC has laid down guidelines in ascertaining the real worth of a lawyer's services, which are now
codified in Rule 20.01, Canon 20 of the Code of Professional Responsibility and should be considered in
fixing a reasonable compensation for services rendered by a lawyer on the basis of quantum meruit.
These are: (a) the time spent and the extent of services 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 the lawyer
belongs; (g) the amount involved in the controversy and the benefits resulting to the client from the
services; (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.
Here, then, shows the flaw in the award for attorney's fees in favor of private respondent.
Instead of adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount of
attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on the operation of
Article 111 when he fixed the amount of attorney's fees.
As already stated, Article 111 of the Labor Code regulates the amount recoverable as attorney's fees in
the nature of damages sustained by and awarded to the prevailing party. It may not be used therefore, as
the lone standard in fixing the exact amount payable to the lawyer by his client for the legal services he
rendered. Also, while it limits the maximum allowable amount of attorney's fees, it does not direct the
instantaneous and automatic award of attorney's fees in such maximum limit.
In the case at bar, the criteria found in the Code of Professional Responsibility are to be considered, and
not disregarded, in assessing the proper amount. Here, the records do not reveal that the parties were
duly heard by the labor arbiter on the matter and for the resolution of private respondent's fees.
