4. Attorney’s Fees and Expenses of Litigation

Requisites for the prohibition to apply to attorneys and their clients properties:

• Existence of attorney client relationship;
• Property is the subject matter in litigation;
• While in litigation (from filing of complaint to final judgment)

NOTE: Exception to the prohibition against attorneys: contingent fee arrangement where the amount of legal fees is based on a value of property involved in litigation (rationale: the transfer or assignment of the property takes effect only after the finality of a favorable judgment and is always subject to supervision by the court) (Fabillo v. IAC, G.R. No. L-68838, 1991)

ATTORNEY’S FEES AND EXPENSES OF LITIGATION

Two concepts of Attorney’s fees

• Ordinary – reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter.
• Extraordinary – awarded by the court to the successful litigant to be paid by the losing party as indemnity for damages. (Aquino v. Casabar, G.R. No. 191470, January 26, 2015). They are actual damages due to the plaintiff.

Payable not only to the lawyer but to the client, unless they have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof. (Benedicto v. Villaflores, G.R. No. 185020, October 6, 2010).

NOTE: In all cases, the attorney’s fees and expenses of litigation must be reasonable. (NCC, Art. 2208)

Recovery of attorney’s fees as actual damages (BAR AREA)

GR: Attorney’s fees cannot be recovered as actual damages.

XPNs: (SWISS- MUD- ERC)

• Stipulation between parties;
• Recovery of Wages of household helpers, laborers and skilled workers;
• Actions for Indemnity under workmen's compensation and employer liability laws;
• Legal Support actions;
• Separate civil action to recover civil liability arising from crime;
• In criminal cases of malicious prosecution against the plaintiff;
• Clearly Unfounded civil action or proceeding against plaintiff;
• When at least double judicial costs are awarded;
• When Exemplary damages are awarded;
• The defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim;
• When defendant's act or omission Compelled plaintiff to litigate with third persons or incur expenses to protect his interest; and
• In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

NOTE: It was held that, in respect of attorney’s fees, where a claim therefore arises out of the filing of the complaint, they too should be considered as in the nature of a compulsory counterclaim. They should be pleaded or prayed for in the answer to the complaint in order to be recoverable, otherwise, they would be barred. (Tiu Po v. Bautista, G.R. No. L-55514, March 17, 1981; Lafarge Cement Philippines, Inc., et. al. v. Continental Cement Corporation, et. al., G.R. No. 155173, November 23, 2004)

Furthermore, moral damages and attorney’s fees cannot be consolidated for they are different in nature and each must be separately determined. (Philippine Veterans Bank v. NLRC, G.R. No. 130439, October 26, 1999) Attorney’s fees are recoverable only in the concept of actual not moral damages. (Pedro Mirasol v. Hon. Rafael dela Cruz and Dominador Mendoza, G.R. No. L32552, July 31, 1978)

In Dalusong, attorney’s fees were denied because no basis for the award, including bad faith in resisting the worker’s claim, was established. Bad faith is not indispensable where another ground under Article 2208 of the Civil Code applies. (Dalusong v. Eagle Clark Shipping Philippines, Inc., G.R. No. 204233, September 3, 2014)

Q: Philippine Transmarine Carriers, Inc. for and on behalf of its foreign principal, respondent Marine Ship management Ltd. hired petitioner as a Chief Cook while carrying provisions, suddenly felt a severe pain on his waist, abdomen, and down to his left scrotum. As the pain persisted for a number of days, he was airlifted to a hospital in Belgium where he was diagnosed with "infection with the need to rule out Epididymitis and Prostatitis" and advised to undergo repatriation. Upon arrival in the Philippines, petitioner claimed that he immediately reported to PTCI and asked for referral for further treatment, but was ignored. Thus, he filed a complaint for, inter alia, permanent and total disability benefits against PTCI, Marine, and respondent Captain Marlon L. Malanao as the crewing manager (respondents). Was it proper for the CA to delete the award of attorney’s fees?

A: NO, the instances when these may be awarded are enumerated in Article 2208 of the Civil Code and is payable not to the lawyer but to the client, unless the client and his lawyer have agreed that the award shall accrue to the lawyer as additional or part of compensation. Particularly, Article 2208 of the Civil Code reads:

Article 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest

(8) In actions for indemnity under workmen's compensation and employer's liability laws

In this case, suffice it to say that the CA erred in deleting the award of attorney's fees, considering that petitioner was found to be entitled to permanent and total disability benefits and was forced to litigate to protect his valid claim. Thus, the reinstatement of such award is in order. (Ariel P. Horlador, v. Philippine Transmarine Carriers, Inc., MarineShipmanagement, G.R. No. 236576, September 05, 2018).