Lawyers cannot charge excessive fees – SC

Published January 22, 2021, 3:25 PM

by Rey Panaligan 

Lawyers cannot charge excessive fees from their clients because “lawyering is not a money-making venture and lawyers are not merchants.”

This was stressed by the Supreme Court (SC) in a resolution released last Thursday as it pointed out that “law advocacy is not capital that yields profits.”


“The returns it (law advocacy) births are simple rewards for a job done or service rendered,” it said.

“It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government interference, is impressed with a public interest, for which it is subject to State regulation,” it added quoting from its 2006 decision.

The SC resolution granted the petition of the Metropolitan General Hospital Employees Association (MGHEA) which pleaded for the reversal of a Court of Appeals (CA) ruling that, in effect, allowed  Atty. Gennodin V. Nilong to collect additional fees as union’s lawyer.

 The resolution stated that Nilong was hired by MGHEA in 2005 as counsel in the union’s labor-related case against the Metropolitan General Hospital (MGH).

The retainer’s agreement stated that Nilong will get a monthly retainer’s fee equivalent to 50 per cent of the monthly union dues and 10 per cent of all monetary awards as success fee.

MGHEA won its case when the National Labor Relations Commission (NLRC) directed MGH to pay the union more than P30.9 million as judgment reward. A writ of execution was issued by the NLRC.

Thereafter, an amicable settlement was reached between MGHEA and MGH wherein the hospital will pay attorney’s fees of P3.09 million divided into two tranches — P1.92 million and P1.17 million for which the hospital will issue a postdated check.  The NLRC approved the settlement agreement.  

However, MGHEA moved to nullify the amicable settlement agreement claiming that the attorney’s fees should not be interpreted in its ordinary sense but as a form of damages for which it, not the lawyer, is entitled to.

In 2011, the NLRC denied the plea of MGHEA with a ruling that the union cannot renege on its obligation to pay its counsel and that the settlement was a judgment on compromise that was immediately executory.

In 2012, the NLRC directed MGH to issue to MGHEA a postdated check for P1.17 million as payment for attorney’s fees. Nilong contested the directive but the NLRC did not agree.

When MGHEA terminated Nilong’s services, the lawyer sought a writ of execution for his fee of P1.17 million on top of the P1.92 million that has been already paid to him. The NLRC issued the writ.

The union elevated the issue before the CA, which on June 20, 2016 ruled in favor of NLRC’s ruling on the writ of execution.

At the SC, the MGHEA pointed out that Nilong was not entitled to an additional P1.17 million as attorney’s fees since its case was previously handled by a law firm and that the P1.92 million paid to Nilong was more than sufficient compensation for his services.

Nilong invoked the amicable settlement on his attorney’s fees and pointed out that the agreement had become final and executory.

For its part, MGH stressed it cannot be held liable for Nilong’s attorney’s fees since it had paid the amount to MGHEA based on the 2014 NLRC resolution.

Resolving the issue, the SC said that while Nilong was entitled to attorney’s fees, “the services he rendered do not merit the amount he is claiming from petitioner” (MGHEA).

It said it was a law firm that handled the unfair labor practice case filed by MGHEA in its entirety until a favorable decision was obtained.

“Indeed, it was the law firm… which represented petitioner in the unfair labor practice case that resulted in victory for petitioner. Atty. Nilong merely entered the picture after petitioner obtained a favorable judgment,” the SC said.

Nilong, it said, merely filed a writ of execution for MGHEA and assisted the latter in the negotiation for amicable settlement and its execution.

“He (Nilong) did not represent petitioner in the unfair labor practice case from which he is now claiming attorney’s fees,” the SC said as it pointed out that the P1.92 million already paid “constitutes reasonable and fair compensation for the legal services he rendered to petitioner,” the SC said.

“The whole 10 per cent of the judgment award is too excessive and unreasonable for the services rendered by Atty. Nilong considering that petitioner had also paid the law firm… for successfully handling the unfair labor practice case,” it added.

 “Wherefore, the petition in granted. The Jan. 20, 2016 decision and April 22, 2016 resolution of the Court of Appeals… are reversed and set aside.  The remaining attorney’s fees amounting to P1.17 million decreed to be paid by petitioner to Atty. Gennodin V. Nilong is deleted,” the SC ruled.