Dimayuga Law Offices v. Titan-Ikeda Construction
REITERATIONFacts
The Antecedents: Primetown Property Group, Inc. (Primetown Property) contracted with Titan-Ikeda Construction and Development Corporation (Titan-Ikeda Construction) for structural and architectural works on its condominium building. The payment for architectural works was to be made through condominium units and parking lots. Primetown Property later took over the completion of architectural works, alleging Titan-Ikeda Construction had only accomplished 48.71% of the work and was overpaid. Primetown Property filed a complaint for collection of sum of money, seeking the return of excess payments in the form of condominium units and parking slots. Titan-Ikeda Construction counterclaimed, asserting that additive works and delays caused by Primetown Property negated any overpayment and that Primetown Property owed them money. Titan-Ikeda Construction also filed a separate complaint with the HLURB regarding Primetown Property's failure to deliver keys and management certificates for units paid for. Procedural History: The Regional Trial Court (RTC) initially dismissed Primetown Property's complaint and granted Titan-Ikeda Construction's counterclaim. This decision was appealed and eventually set aside by the Supreme Court, which remanded the case to the RTC for further reception of evidence to determine the actual percentage of work completed by Titan-Ikeda Construction and the number of units sold to third parties. The RTC, in its subsequent decision, found that Titan-Ikeda Construction completed only 48.71% of the work and ordered the return of P66,677,000.00 or 60 condominium units. Titan-Ikeda Construction's appeal was dismissed for failure to pay the appeal fee, rendering the RTC's decision final and executory. Dimayuga Law Offices, as counsel for Primetown Property, filed a motion to record and enforce its attorney's lien on ten of the condominium units ordered to be returned. Subsequently, Primetown Property and Titan-Ikeda Construction entered into a compromise agreement, which the RTC approved. Titan-Ikeda Construction then filed a motion to cancel the attorney's lien and adverse claim, which the RTC granted, reasoning that the lien could not be satisfied from properties not belonging to its client. Dimayuga Law Offices' petition for certiorari with the Court of Appeals (CA) was dismissed, first for failure to attach required documents, and then on the merits, with the CA holding that the lien could not be satisfied from properties not belonging to Primetown Property. The Petition: Dimayuga Law Offices filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the CA's Resolutions that denied its petition for certiorari. The petitioner argues that the RTC lacked jurisdiction to cancel the adverse claim via a mere motion and assails the validity of the compromise agreement between Primetown Property and Titan-Ikeda Construction. Dimayuga Law Offices contends that while its attorney's lien was not mentioned in the compromise agreement due to inadvertence, it should not be deprived of its compensation, especially since the ten condominium units were already sold to it by Primetown Property as payment for its services. The core of the petition is that the compromise agreement, by providing for the cancellation of the attorney's lien without Dimayuga Law Offices' participation, unjustly prejudiced its rights and that the lien, having been properly annotated, should follow the property.
Issue(s)
Whether the RTC had jurisdiction to cancel the attorney's lien and adverse claim via a motion. Whether the compromise agreement between Primetown Property and Titan-Ikeda Construction can validly cause the cancellation of the attorney's lien and adverse claim annotated by Dimayuga Law Offices. Whether the 10 condominium units, already sold by Primetown Property to Dimayuga Law Offices as payment for attorney's fees, could be included in the compromise agreement between Primetown Property and Titan-Ikeda Construction.
Ruling
The petition is granted. The Order dated June 4, 2018 of the Regional Trial Court of Makati, Branch 58, is set aside.
Ratio Decidendi
On the jurisdiction to cancel the attorney's lien and adverse claim: The Court found that the RTC's order to cancel the attorney's lien and adverse claim was improper. While a petition is generally required for the cancellation of an adverse claim, the core issue here was the effect of the compromise agreement on the lien. The Court focused on whether the compromise agreement could validly extinguish the attorney's lien, rather than the procedural mode of cancellation. On the validity of the compromise agreement's effect on the attorney's lien: The Supreme Court held that the compromise agreement between Primetown Property and Titan-Ikeda Construction could not prejudice the rights of Dimayuga Law Offices, a third party who was not a party to the agreement. The Court reiterated that a compromise agreement is binding only between the parties and their successors-in-interest, and cannot affect the rights of third persons. The lawyer's right to compensation, secured by a charging lien, is a right that cannot be unilaterally extinguished by the client's compromise agreement without the lawyer's participation and conformity. The Court noted that the compromise agreement failed to mention how Dimayuga Law Offices' attorney's fees would be paid and, worse, provided for the cancellation of the already annotated lien. On the inclusion of the 10 condominium units in the compromise agreement: The Court ruled that the 10 condominium units should not have been included in the compromise agreement because they had already been sold by Primetown Property to Dimayuga Law Offices as payment for attorney's fees. Therefore, these units were already owned by Dimayuga Law Offices prior to the execution of the compromise agreement. Primetown Property's own manifestation acknowledged its intention to respect Dimayuga Law Offices' lien, attributing the omission in the compromise agreement to inadvertence. The Court emphasized that equity dictates that Dimayuga Law Offices must be awarded its just compensation, and courts are bound to protect attorney's liens as a means to preserve the integrity of the legal profession.
Main Doctrine
A compromise agreement entered into by a client and a third party cannot prejudice the rights of a lawyer who is not a party to the agreement, especially concerning the cancellation of a validly annotated attorney's lien or adverse claim, as the lawyer is entitled to just compensation for services rendered.