Gubat v. National Power Corporation
REITERATIONFacts
1. The Antecedents: Plaintiffs Ala Mambuay, Norma Maba, and Acur Macarampat filed separate civil suits against the National Power Corporation (NPC) for damages arising from the destruction of their land improvements due to the construction of the Marawi-Malabang Transmission Line. They were represented by Atty. Mangontawar M. Gubat and Atty. Linang Mandangan, with an agreed attorney's fee of P30,000.00 per case plus appearance fees. The cases were consolidated due to similar causes of action. The RTC of Lanao del Sur declared NPC in default and subsequently rendered a decision in favor of the plaintiffs, awarding them sums for improvements, attorney's fees, damages, and costs. 2. Procedural History: NPC appealed the RTC decision to the Court of Appeals (CA). During the pendency of the appeal, Atty. Gubat filed a notice of attorney's lien for P96,000.00. NPC subsequently moved to dismiss its appeal, alleging an out-of-court settlement with the plaintiffs, evidenced by acknowledgment receipts. The CA, however, annulled and set aside the default order and the RTC decision, remanding the cases for new trial. Following the remand, Atty. Gubat filed a Motion for Partial Summary Judgment for his attorney's fees, alleging that the settlement was executed in bad faith to deprive him of his compensation. The RTC granted the motion, ordering NPC and the plaintiffs to pay Atty. Gubat jointly and solidarily. NPC filed a petition for certiorari with the CA, which set aside the RTC's order. Atty. Gubat then filed the present petition with the Supreme Court. 3. The Petition: Petitioner Atty. Mangontawar M. Gubat seeks to reverse the CA's decision, which annulled the trial court's order granting his motion for partial summary judgment. He argues that his claim for attorney's fees is independent of the vacated decision and is based on the bad faith of his clients and NPC in entering into a compromise agreement without his knowledge to deprive him of his fees. He contends that the CA erred in entertaining NPC's petition for certiorari, arguing it was the wrong mode of appeal and that the issue of bad faith was a factual matter not suitable for certiorari. The Supreme Court, however, dismissed the petition, finding that the resort to summary judgment was improper as bad faith was a genuine issue of fact requiring trial, and that the CA correctly exercised its discretion in setting aside the RTC's order.
Issue(s)
Whether the Court of Appeals erred in entertaining the Petition for Certiorari filed by the National Power Corporation. Whether the Regional Trial Court erred in granting Atty. Gubat's Motion for Partial Summary Judgment. Whether the National Power Corporation can be held solidarily liable for Atty. Gubat's attorney's fees.
Ruling
The petition is dismissed. The September 9, 2002 Decision of the Court of Appeals and its January 19, 2005 Resolution are affirmed.
Ratio Decidendi
On the propriety of the Petition for Certiorari: The Supreme Court held that while NPC's resort to a petition for certiorari instead of an ordinary appeal might have been the wrong remedy, the CA soundly exercised its discretion in liberally applying the rules. This is because the RTC's order holding NPC solidarily liable for attorney's fees amounted to an oppressive exercise of judicial authority, constituting grave abuse of discretion. The Court emphasized that there are exceptions to the rule that certiorari is not available when an appeal is a plain, speedy, and adequate remedy, particularly when the questioned order is null or amounts to an oppressive exercise of judicial authority. The Court also noted that the petition was filed beyond the reglementary period for an ordinary appeal, making the certiorari petition a substitute for a lost appeal, but still found substantive reasons to relax procedural rules to prevent a patently wrong judgment from being implemented. On the propriety of the summary judgment: The Supreme Court ruled that the RTC erred in granting the motion for summary judgment. A summary judgment is proper only when there is no genuine issue as to any material fact and the movant is entitled to a judgment as a matter of law. In this case, Atty. Gubat's claim that NPC and his clients connived in bad faith to deprive him of his fees presented a genuine issue of fact. Bad faith requires proof of dishonest purpose or moral obliquity, which necessitates the presentation of evidence in a formal trial. The Court found that the existence of bad faith was contested by NPC, making summary judgment inappropriate. Furthermore, the validity and interpretation of the compromise agreement itself were still in issue, as indicated by the CA's earlier remand for new trial. On the liability of the National Power Corporation: The Supreme Court clarified that while a client has the right to compromise a suit without the lawyer's intervention, the terms of the compromise should not deprive the counsel of their compensation. If the client and the adverse party intentionally deprive the lawyer of fees, the compromise terms prejudicing the lawyer can be set aside, making both parties accountable. However, the primary obligation to pay attorney's fees rests with the client. NPC would only be solidarily liable if it was shown that it connived with Atty. Gubat's clients or acted in bad faith to deprive him of his lawful claims. Since the issue of bad faith was a factual matter that required a full trial and could not be resolved through summary judgment, the RTC's order holding NPC solidarily liable was premature and improper. The Court reiterated that the determination of bad faith is significant only if the adverse party is to be held liable for the attorney's fees.
Main Doctrine
A client may compromise a suit without the intervention of the lawyer, but the terms of the agreement should not deprive the counsel of his compensation. If the client and the adverse party intentionally deprive the lawyer of fees, the compromise terms prejudicing the lawyer will be set aside, making both parties accountable. However, the client remains primarily bound to pay the lawyer's fees. A summary judgment is improper when the existence of bad faith, which would make the adverse party solidarily liable, is a genuine issue of fact requiring presentation of evidence.