Philippine National Bank v. Pardo Y Robles Hermanos
REITERATIONFacts
The Antecedents: The Philippine National Bank (PNB), as the highest bidder, acquired mortgaged properties at a public sale after they were placed in the hands of a receiver. PNB moved for the receiver to yield possession and present a final accounting. Procedural History: The defendants objected to the delivery of the properties, but agreed to the closure of the receivership provided their attorney, J. Exequiel Espinas, be paid the balance of his attorney's fees amounting to P1,700 out of P2,000. Attorney Espinas filed a motion seeking payment of P1,700 from funds in the receiver's possession. The trial court, in its order of August 20, 1936, denied the attorney's petition, stating that the fees were not fixed by judicial order or agreement and that the plaintiff (PNB) was not obligated to pay them, without prejudice to the attorney seeking to have the amount fixed and paid by the plaintiff. The plaintiff appealed this order. The Petition: The plaintiff-appellant contended that the trial court erred in holding that it was empowered to fix the attorney's fees of the defendants' counsel and to order the plaintiff to pay them as receiver.
Issue(s)
Whether the trial court erred in holding that it was empowered to fix the amount of attorney's fees for the defendants' counsel and to order the plaintiff to pay the same. Whether attorney's fees for services rendered to a defendant in a receivership proceeding can be paid from funds in the hands of the receiver.
Ruling
The appealed order is reversed. The cost of both instances to the defendants.
Ratio Decidendi
On the issue of the trial court's power to fix attorney's fees and order payment by the plaintiff: The Supreme Court held that as a general rule, attorney's fees should be paid by the party to whom the services were rendered, as stipulated in Section 29 of the Code of Civil Procedure. Therefore, the defendants were bound to pay their attorney's fees. The Court found no basis for the trial court's order compelling the plaintiff to pay these fees. The plaintiff's prior conformity to the payment of P300 on account of attorney's fees did not constitute conformity to the obligation to pay the remaining balance of P1,700. The Court emphasized that the plaintiff's consent to prior payments did not establish a precedent or obligation for future, larger sums, especially when the basis for such payment was contested. On the issue of paying attorney's fees from receivership funds: The Supreme Court ruled that attorney's fees for services rendered to a defendant in a receivership proceeding cannot ordinarily be paid from funds in the hands of the receiver. This is because such services are typically for the sole benefit of the defendant and do not necessarily redound to the benefit of the receivership itself or the plaintiff who sought the appointment of the receiver. The Court cited several foreign cases to support this principle, underscoring that funds in receivership are generally for the benefit of the plaintiff and other claimants against the defendant. Without evidence that the attorney's services directly benefited the receivership or increased/protected the properties in the receiver's custody, the general principle of each party bearing its own attorney's fees must prevail.
Main Doctrine
As a general rule, attorney's fees should be paid by the party to whom the services were rendered, and such fees cannot be paid from funds in the hands of a receiver unless the services benefited the receivership or the party requesting the receiver.