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JESUS M. MONTEMAYOR v. VICENTE D. MILLORA

FACTS:

Respondent Atty. Vicente D. Millora borrowed P400,000.00 from petitioner Dr. Jesus M. Montemayor and executed a promissory note as evidence of the loan. They also entered into a loan contract, which stated a 2% monthly interest rate. Later, they agreed to increase the interest rate to 3.5%. After Vicente failed to make payments for four months, Jesus demanded payment and eventually filed a complaint against Vicente. Vicente, in his answer, counterclaimed for attorney's fees. The trial court ruled in favor of Jesus, ordering Vicente to pay his monetary obligation and Jesus to pay Vicente attorney's fees equivalent to Vicente's liability. The trial court denied Vicente's motion for reconsideration but granted his motion for a writ of execution for the attorney's fees. The Court of Appeals affirmed the trial court's decision and denied Vicente's petition for certiorari. The legal issue is whether the counterclaim for attorney's fees, despite the absence of a specific amount in the decision, can be offset against the specific amount awarded to Jesus. Jesus argues that the decision cannot be implemented since the amount of attorney's fees is uncertain. Vicente argues that the decision has already become final and cannot be reviewed, and that Jesus did not file a motion for reconsideration or appeal. Vicente's motion for reconsideration and notice of appeal were denied.

ISSUES:

  1. Whether the October 27, 1999 Decision of the RTC is already final and executory and can no longer be the subject of an appeal.

  2. Whether legal compensation is possible even if the exact amount of attorney's fees is not specified in the RTC Decision.

  3. Whether the lawyer-client relationship between the parties was severed because of the instant case.

  4. Whether the attorney's fees awarded to the defendant should be set off by the amount recoverable from him by the plaintiff.

  5. The issue in this case is whether or not the decision of the Court of Appeals is affirmed.

RULING:

  1. The petition lacks merit. The October 27, 1999 Decision of the RTC is already final and executory, hence, immutable. Once a judgment attains finality, it becomes immutable and unalterable. The doctrine of finality of judgment is grounded on fundamental considerations of public policy. Therefore, Jesus is bound by the decision and cannot impugn it.

  2. Compensation is possible even if the exact amount of attorney's fees is not specified in the RTC Decision. For legal compensation to take place, the requirements set forth in Articles 1278 and 1279 of the Civil Code must be present. Among these requirements is that the debts be liquidated and demandable. A debt is considered liquidated when its existence and amount are determined, and it is enough that the exact amount is known. In this case, both obligations are liquidated as the amount of the debt and the attorney's fees have been determined by the RTC. Therefore, compensation is possible.

  3. The lawyer-client relationship between the parties was severed because of the instant case. However, the court acknowledged the defendant's legal services rendered to the plaintiff and awarded compensation to the defendant on a "quantum meruit" basis.

  4. The attorney's fees awarded to the defendant should be set off by the amount recoverable from him by the plaintiff. This means that any amount due in favor of the plaintiff and against the defendant is set off by an equivalent amount awarded as attorney's fees to the defendant for his past legal services.

  5. The ruling in this case is that the decision of the Court of Appeals is affirmed.

PRINCIPLES:

  • Once a judgment attains finality, it becomes immutable and unalterable, even if there are perceived erroneous conclusions of fact or law.

  • Compensation can take place if the debts are liquidated and demandable, and the exact amount is known, even if one of the debts is not specified in the judgment.

  • A lawyer may be entitled to compensation on a "quantum meruit" basis even if the lawyer-client relationship is severed.

  • Set-off can be applied when there are mutual claims and liabilities between parties, such that the amount due to one party is set off by an equivalent amount owed to the other party.

  • The decision of the Court of Appeals may be affirmed if it is found to be in accordance with the facts and the law.

  • The Supreme Court has the power to affirm the decisions of the Court of Appeals.