In Maria L. Anido, Jose E. Larraga and Salud E. Larraga vs. Filomeno Negado and the Honorable Court of Appeals, the Supreme Court held that an action to collect attorney’s fees based on an oral contract must be filed within six years from the time the cause of action accrues. Because the lawyer waited more than nine years to file his claim, it was already barred by prescription, meaning his claim was too late. This ruling highlights the importance of lawyers acting promptly to secure their fees, ensuring they do not lose their right to compensation due to delays.

Unsigned Agreement, Unpaid Dues: Can a Lawyer Recover Fees After Years of Silence?

The case revolves around Filomeno Negado, a lawyer, who claimed that he had an oral agreement with Maria, Jose, and Salud Larraga to provide legal services for the settlement of their parents’ estate. He prepared documents, including an “Extrajudicial Settlement of Estate Among Heirs” and a “Project of Partition.” Negado also drafted a “Contract for Attorney’s Service and Fee,” which stipulated that he would receive four percent of the proceeds from the sale of the inherited properties, net of taxes. The Larragas allegedly refused to sign the contract but used the documents Negado prepared to settle their parents’ estate. Negado then filed a complaint to collect his attorney’s fees, claiming fifteen percent of the gross sales of the real estate properties, plus interest, litigation expenses, and costs.

The Larragas countered that they never retained Negado’s services, as they had already hired other lawyers. They argued that Negado volunteered to draft the documents for free due to his friendship with their deceased parents. They also claimed that Negado’s action was barred by laches (unreasonable delay) and prescription, as the complaint was filed more than ten years after he prepared the documents, exceeding the six-year prescriptive period for actions based on oral contracts under Article 1145 of the Civil Code. The trial court ruled in favor of Negado, awarding him attorney’s fees. The Court of Appeals affirmed the existence of an oral contract but reduced the amount of fees and eliminated the award of interest and litigation expenses. However, the appellate court initially declined to rule on the prescription issue, stating it was not included during pre-trial.

The Supreme Court disagreed with the Court of Appeals’ stance on prescription. The Court emphasized that the Larragas had indeed raised the defense of prescription at the trial court level. More importantly, the Supreme Court cited precedents establishing that the failure to plead prescription does not constitute a waiver if the plaintiff’s own allegations reveal that the action has already prescribed. In Negado’s complaint, he stated that the Larragas refused to sign the contract in October 1978, yet he only filed the complaint on November 23, 1987—more than nine years later. This delay exceeded the six-year prescriptive period for actions based on oral contracts under Article 1145 of the Civil Code. As a lawyer, Negado should have been aware of this limitation.

The Court then cited Rule 9, Section 1 of the 1997 Rules of Civil Procedure, which mandates the dismissal of an action barred by prescription, even if the defense was not properly pleaded, provided it is evident from the record. This rule underscores the court’s duty to dismiss actions that are clearly time-barred to ensure fairness and prevent the revival of stale claims.

Defenses and objections not pleaded. — Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the same. (Emphasis supplied.)

The Supreme Court highlighted the importance of adhering to prescriptive periods. These periods are designed to promote stability and prevent injustice by ensuring that claims are pursued within a reasonable time frame. Allowing claims beyond the prescribed period could lead to unreliable evidence and the potential for unfair outcomes. By strictly enforcing these rules, the legal system protects against the assertion of stale claims and upholds the principles of fairness and justice.

The ruling reinforces the principle that lawyers, like all professionals, must be diligent in pursuing their claims for compensation. Failure to act within the prescribed period can result in the loss of their right to be paid for the services they rendered. The decision also serves as a reminder to the courts to actively consider prescription issues when they are apparent on the record, even if not explicitly raised by the parties. This proactive approach ensures that the legal system functions efficiently and fairly, preventing the enforcement of claims that have become stale due to the claimant’s own delay.

FAQs

What was the key issue in this case?	The key issue was whether the private respondent’s claim for attorney’s fees had prescribed, given that he filed the complaint more than six years after the cause of action accrued.
What is the prescriptive period for actions based on oral contracts in the Philippines?	Under Article 1145 of the Civil Code, the prescriptive period for actions based on oral contracts is six years from the time the cause of action accrues.
When did the private respondent’s cause of action accrue?	The private respondent’s cause of action accrued in October 1978 when the petitioners refused to sign the contract for legal services, effectively breaching the alleged oral agreement.
Why did the Supreme Court reverse the Court of Appeals’ decision?	The Supreme Court reversed the Court of Appeals’ decision because the private respondent’s claim had prescribed, as the complaint was filed more than six years after the cause of action accrued.
What is the significance of Rule 9, Section 1 of the 1997 Rules of Civil Procedure in this case?	Rule 9, Section 1 mandates that a court shall dismiss an action barred by the statute of limitations when it appears from the record, even if the defense of prescription was not properly pleaded.
Did the petitioners raise the defense of prescription in their answer?	Yes, the petitioners raised the defense of prescription as a special and affirmative defense in their answer, arguing that the action was based on an oral contract and had prescribed under Article 1145 of the Civil Code.
What was the initial ruling of the Regional Trial Court?	The Regional Trial Court initially ruled in favor of the private respondent, ordering the petitioners to pay attorney’s fees, interest, litigation expenses, and costs.
How did the Court of Appeals modify the Regional Trial Court’s decision?	The Court of Appeals affirmed the existence of an oral contract but reduced the amount of attorney’s fees and eliminated the award of interest and litigation expenses for insufficiency of evidence.

This case illustrates the critical importance of understanding and adhering to statutory deadlines in legal claims. The Supreme Court’s decision serves as a clear reminder that failure to file a claim within the prescribed period can result in the irreversible loss of legal rights, regardless of the merits of the underlying claim.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Maria L. Anido, Jose E. Larraga and Salud E. Larraga, vs. Filomeno Negado and the Honorable Court of Appeals, G.R. No. 143990, October 17, 2001