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METROPOLITAN BANK v. CA

FACTS:

Metropolitan Bank and Trust Company (Metrobank) is the petitioner in this case, while Arturo Alafriz and Associates is the private respondent. The dispute revolves around attorney's fees in civil cases filed by the respondents on behalf of the petitioner. These civil cases were for the nullification of certain deeds of sale and damages. Celedonio Javier initially bought seven parcels of land owned by Eustaquio Alejandro, et al., which were later mortgaged to Metrobank to secure a loan obligation. After defaulting on the loan, Metrobank foreclosed the mortgages and acquired the properties. Alejandro sued Javier and included Metrobank as a defendant. Meanwhile, Metrobank sold the properties to its sister corporation, Service Leasing Corporation, and this corporation resold them to Herby Commercial and Construction Corporation. Herby then mortgaged the properties with Banco de Oro. Subsequently, Metrobank filed a motion for substitution of party due to the transfer of the properties. The private respondent, Arturo Alafriz and Associates, filed a motion to enter its charging lien for attorney's fees, which the lower court granted. The plaintiffs in the civil cases later moved for the dismissal of their complaints, which the court granted. The private respondent then filed a motion to determine its attorney's fees, based on quantum meruit, which the court granted, ordering Metrobank and Herby to pay P936,000.00 as attorney's fees. The petitioner appealed this decision to the Court of Appeals, which affirmed the trial court's order.

ISSUES:

  1. Whether a charging lien can be enforced by an attorney when the civil cases were dismissed without any money judgment or monetary award.

  2. Whether the charging lien attaches to the "proceeds of a judgment of whatever nature."

  3. Whether Philippine case law supports the interpretation that a charging lien only attaches to judgments for money and executions in pursuance of such judgment.

  4. Whether the termination of the cases, not at the instance of the client but the opposing party, can defeat the attorney's right to his charging lien.

  5. Whether the court has the jurisdiction to pass upon a petition to determine attorney's fees.

  6. Whether a hearing is necessary in fixing a reasonable compensation for attorney's fees.

RULING:

  1. The charging lien cannot be enforced by an attorney in this case since the civil cases were dismissed without any money judgment or monetary award.

  2. The charging lien does not attach to the "proceeds of a judgment of whatever nature."

  3. Philippine case law supports the interpretation that a charging lien only attaches to judgments for money and executions in pursuance of such judgment.

  4. The termination of the cases, not at the instance of the client but the opposing party, does not defeat the attorney's right to his charging lien.

  5. The court has the jurisdiction to pass upon a petition to determine attorney's fees if the charging lien is valid and enforceable.

  6. A hearing is necessary in fixing a reasonable compensation for attorney's fees.

PRINCIPLES:

  • A charging lien can only be enforced by an attorney when there is a money judgment and execution in pursuance of such judgment.

  • The charging lien does not attach to the "proceeds of a judgment of whatever nature."

  • Philippine case law supports the interpretation that a charging lien only attaches to judgments for money and executions in pursuance of such judgment.

  • An attorney's lien is a personal claim enforceable by a writ of execution and does not attach to the property in litigation.

  • A client cannot defeat an attorney's right to his charging lien by dismissing the case, terminating the services of his counsel, waiving his cause or interest in favor of the adverse party or compromising his action.

  • An enforceable charging lien, duly recorded, is within the jurisdiction of the court trying the main case and this jurisdiction subsists until the lien is settled.

  • The rule against multiplicity of suits applies if the charging lien is valid and enforceable under the rules.

  • A petition for recovery of attorney's fees has to be prosecuted and the allegations therein established like any other money claim.

  • The determination of a reasonable compensation for attorney's fees is based on the importance of the subject matter in controversy, the extent of the services rendered, and the professional standing of the lawyer.

  • A full-blown trial is necessary for private respondent to adduce evidence to establish its right to lawful attorney's fees and for petitioner to oppose or refute the same.

  • The proper legal remedy should be availed of and the procedural rules duly observed to prevent abuse or prejudice.