Ethics 7

FERNANDO MARTIN O. PENA, A.C. No. 7298 Complainant, [Formerly CBD Case No. 05-1565] Present: - versus - QUISUMBING, J.,

Chairperson, CARPIO, CARPIO MORALES, TINGA, and ATTY. LOLITO G. APARICIO, VELASCO, JR., JJ. Respondent. Promulgated: June 25, 2007

In this administrative complaint, a lawyer is charged with violation of Rule 19.01 of Canon 19 of the Code of Professional Responsibility for writing a demand letter the contents of which threatened complainant with the filing of criminal cases for tax evasion and falsification of documents.

Atty. Lolito G. Aparicio (respondent) appeared as legal counsel for Grace C. Hufana in an illegal dismissal

case before the National Labor Relations Commission (NLRC). Sometime in August 2005, complainant Fernando Martin O. Pena, as President of MOF Company, Inc. (Subic), received a notice from the Conciliation and Mediation Center of the NLRC for a mediation/conciliation conference. In the conference, respondent, in behalf of his client, submitted a claim for separation pay arising from her alleged illegal dismissal. Complainant rejected the claim as being baseless. Complainant thereafter sent notices to Hufana for the latter to explain her absences and to return to work. In reply to this return to work notice, respondent wrote a letter to complainant reiterating his client’s claim for separation pay. The letter also contained the following threat to the company:

BUT if these are not paid on August 10, 2005, we will be constrained to file and claim bigger amounts including moral damages to the tune of millions under established precedence of cases and laws. In addition to other multiple charges like:

1. Tax evasion by the millions of pesos of income not reported to the government.

2. Criminal Charges for Tax Evasion3. Criminal Charges for Falsification of Documents4. Cancellation of business license to operate due to violations of laws.

These are reserved for future actions in case of failure to pay the above amounts as settlements in the National Labor Relations Commission (NLRC).[1]

Believing that the contents of the letter deviated from accepted ethical standards, complainant filed an

administrative complaint[2] with the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP). Respondent filed an Answer with Impleader (Motion to Dismiss and Counterclaims)[3] claiming that Atty. Emmanuel A. Jocson, complainant’s legal counsel, also played an important part in imputing the malicious, defamatory, and fabricated charges against him. Respondent also pointed out that the complaint had no certification against forum shopping and was motivated only to confuse the issues then pending before the Labor Arbiter. By way of counterclaim, respondent asked for damages and for the disbarment of Atty. Jocson. Respondent also asked the IBP to endorse the prosecution of Atty. Jocson for Usurpation of Public Functions[4] and for violation of the Notarial Law.[5]

A mandatory conference was held on 6 December 2005 but respondent failed to appear.[6] Both parties

were thereafter required to submit their position papers.

The Report and Recommendation[7] of Investigating Commissioner Milagros V. San Juan found that complainant, failed to file his position paper and to comply with Administrative Circular No. 04-94 requiring a certificate against forum shopping and, accordingly, recommended the dismissal of the complaint against respondent. On 26 May 2006, the IBP Board of Governors adopted and approved the Report and Recommendation of the Investigating Commissioner.[8] On 10 July 2006, the IBP Commission on Bar Discipline transmitted to the Supreme Court the notice of said Resolution and the records of the case. [9] Thereafter, on 18 August 2006, respondent filed with the IBP a Motion for Reconsideration (for Modification of Decision) [10] reiterating his claim of damages against complainant in the amount of four hundred million pesos (P400,000,000.00), or its equivalent in dollars, for filing the “false, malicious, defamers [sic], fraudulent, illegal fabricators [sic], malevolent[,] oppressive, evasive filing [of] a groundless and false suit.”[11]

Complainant thereafter filed this Petition for Review (of the Resolution of the IBP Commission on Bar

Discipline)[12] alleging that he personally submitted and filed with the IBP his position paper, after serving a copy thereof on respondent by registered mail. He further alleges that he was deprived of his right to due process when the IBP dismissed his complaint without considering his position paper and without ruling on the merits thereof.

Complainant accordingly prays for the reversal and setting aside of the 26 May 2006 Resolution [13] of the

IBP Board of Governors and the remand of the case to the IBP Commission on Bar Discipline for proper adjudication and disposition on the merits.

Based on the records, there is truth to complainant’s assertion that he filed his position paper on 21

December 2005, after serving a copy of the same to respondent. The IBP stamp on the front page of said document shows that it was received by the IBP on 21 December 2005. The registry receipt attached to the same document also shows that it was sent by registered mail to respondent on the same date. [14]

Complainant, however, omitted to offer any explanation in his petition before this Court for his failure to

attach a certification against forum shopping in his complaint against respondent. The requirement of a certification against forum shopping was originally required by Circular No. 28-91,

dated 8 February 1994, issued by this Court for every petition filed with the Court or the Court of Appeals. Administrative Circular No. 04-94, made effective on 1 April 1994, expanded the certification requirement to include cases filed in courts and quasi-judicial agencies below this Court and the Court of Appeals. Ultimately, the Court adopted paragraphs (1) and (2) of Administrative Circular No. 04-94 to become Section 5, Rule 7 of the1997 Rules of Civil Procedure.[15] Said rule states that a violation thereof would constitute contempt of court and be cause for the summary dismissal of both petitions without prejudice to the taking of appropriate action against the counsel of the party concerned.[16]

The Investigating Commissioner and the IBP Board of Governors took against complainant his failure to

attach the certification against forum shopping to his complaint and consequently dismissed his complaint. This Court, however, disagrees and, accordingly, grants the petition. However, a remand of the case to the IBP would unduly prolong its adjudication.

The Court’s determination is anchored on the sui generis nature of disbarment proceedings, the reasons

for the certification against forum shopping requirement, complainant’s subsequent compliance with the requirement, and the merit of complainant’s complaint against respondent.

The Court, in the case of In re Almacen,[17] dwelt on the sui generis character of disciplinary proceedings

against lawyers, thus: Disciplinary proceedings against lawyers are sui generis. Neither purely civil nor purely criminal, they do not involve a trial of an action or a suit, but is rather an investigation by the Court into the conduct of one of its officers. Not being intended to inflict punishment, it is in no sense a criminal prosecution. Accordingly, there is neither a plaintiff nor a prosecutor therein. It may be initiated by the Court motu proprio. Public interest is its primary objective, and the real question for determination is whether or not the attorney is still a fit person to be allowed the privileges as such. Hence, in the exercise of its disciplinary powers, the Court merely calls upon a member of the Bar to account for his actuations as an officer of the Court with the end in view of preserving the purity of the legal profession and the proper and honest administration of justice by purging the

profession of members who by their misconduct have proved themselves no longer worthy to be entrusted with the duties and responsibilities pertaining to the office of an attorney. In such posture, there can thus be no occasion to speak of a complainant or a prosecutor.[18] [Emphasis supplied] In view of the nature of disbarment proceedings, the certification against forum shopping to be attached to

the complaint, if one is required at all in such proceedings, must refer to another administrative case for disciplinary proceedings against the same respondent, because such other proceedings or “action” is one that necessarily involves “the same issues” as the one posed in the disbarment complaint to which the certification is supposedly to be attached.

Further, the rationale for the requirement of a certification against forum shopping is to apprise the Court of

the pendency of another action or claim involving the same issues in another court, tribunal or quasi-judicial agency, and thereby precisely avoid the forum shopping situation. Filing multiple petitions or complaints constitutes abuse of court processes,[19] which tends to degrade the administration of justice, wreaks havoc upon orderly judicial procedure, and adds to the congestion of the heavily burdened dockets of the courts. [20] Furthermore, the rule proscribing forum shopping seeks to promote candor and transparency among lawyers and their clients in the pursuit of their cases before the courts to promote the orderly administration of justice, prevent undue inconvenience upon the other party, and save the precious time of the courts. It also aims to prevent the embarrassing situation of two or more courts or agencies rendering conflicting resolutions or decisions upon the same issue.[21]

It is in this light that we take a further look at the necessity of attaching a certification against forum

shopping to a disbarment complaint. It would seem that the scenario sought to be avoided, i.e., the filing of multiple suits and the possibility of conflicting decisions, rarely happens in disbarment complaints considering that said proceedings are either “taken by the Supreme Court motu proprio, or by the Integrated Bar of the Philippines (IBP) upon the verified complaint of any person.”[22] Thus, if the complainant in a disbarment case fails to attach a certification against forum shopping, the pendency of another disciplinary action against the same respondent may still be ascertained with ease. We have previously held that the rule requiring a certification of forum shopping to accompany every initiatory pleading, “should not be interpreted with such absolute literalness as to subvert its own ultimate and legitimate objective or the goal of all rules of procedure—which is to achieve substantial justice as expeditiously as possible.”[23]

At any rate, complainant’s subsequent compliance with the requirement cured the supposed defect in the

original complaint. The records show that complainant submitted the required certification against forum shopping on 6 December 2006 when he filed his Comment/Opposition to respondent’s Motion to Dismiss the present petition.

Finally, the intrinsic merit of complainant’s case against respondent justifies the grant of the present

petition. Respondent does not deny authorship of the threatening letter to complainant, even spiritedly contesting the charge that the letter is unethical.

Canon 19 of the Code of Professional Responsibility states that “a lawyer shall represent his client with

zeal within the bounds of the law,” reminding legal practitioners that a lawyer’s duty is not to his client but to the administration of justice; to that end, his client’s success is wholly subordinate; and his conduct ought to and must always be scrupulously observant of law and ethics. [24] In particular, Rule 19.01 commands that a “lawyer shall employ only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting or threaten to present unfounded criminal charges to obtain an improper advantage in any case or proceeding.” Under this Rule, a lawyer should not file or threaten to file any unfounded or baseless criminal case or cases against the adversaries of his client designed to secure a leverage to compel the adversaries to yield or withdraw their own cases against the lawyer’s client.[25]

In the case at bar, respondent did exactly what Canon 19 and its Rule proscribe. Through his letter, he

threatened complainant that should the latter fail to pay the amounts they propose as settlement, he would file and claim bigger amounts including moral damages, as well as multiple charges such as tax evasion, falsification of documents, and cancellation of business license to operate due to violations of laws. The threats are not only unethical for violating Canon 19, but they also amount to blackmail.

Blackmail is “the extortion of money from a person by threats of accusation or exposure or opposition in

the public prints,…obtaining of value from a person as a condition of refraining from making an accusation against him, or disclosing some secret calculated to operate to his prejudice.” In common parlance and in general acceptation, it is equivalent to and synonymous with extortion, the exaction of money either for the performance of a duty, the

prevention of an injury, or the exercise of an influence. Not infrequently, it is extorted by threats, or by operating on the fears or the credulity, or by promises to conceal or offers to expose the weaknesses, the follies, or the crime of the victim.[26]

In Sps. Boyboy v. Atty. Yabut, Jr.,[27] we held that “[a]n accusation for blackmail and extortion is a very

serious one which, if properly substantiated, would entail not only respondent’s disbarment from the practice of law, but also a possible criminal prosecution.”[28] While the respondent in Boyboy was exonerated for lack of evidence, the same may not be said of respondent in the present case for he admits to writing the offensive letter. In fact, respondent does not find anything wrong with what he wrote, dismissing the same as merely an act of pointing out massive violations of the law by the other party, and, with boldness, asserting that “a lawyer is under obligation to tell the truth, to report to the government commission of offenses punishable by the State.” [29] He further asserts that the writing of demand letters is a standard practice and tradition and that our laws allow and encourage the settlement of disputes.

Respondent’s assertions, however, are misleading, for it is quite obvious that respondent’s threat to file the cases against complainant was designed to secure some leverage to compel the latter to give in to his client’s demands. It was not respondent’s intention to point out complainant’s violations of the law as he so gallantly claims. Far from it, the letter even contains an implied promise to “keep silent” about the said violations if payment of the claim is made on the date indicated.

Indeed, the writing of demand letters is a standard practice and tradition in this jurisdiction. It is usually

done by a lawyer pursuant to the principal-agent relationship that he has with his client, the principal. Thus, in the performance of his role as agent, the lawyer may be tasked to enforce his client’s claim and to take all the steps necessary to collect it, such as writing a letter of demand requiring payment within a specified period. However, the letter in this case contains more than just a simple demand to pay. It even contains a threat to file retaliatory charges against complainant which have nothing to do with his client’s claim for separation pay. The letter was obviously designed to secure leverage to compel complainant to yield to their claims. Indeed, letters of this nature are definitely proscribed by the Code of Professional Responsibility.

Respondent cannot claim the sanctuary provided by the privileged communication rule under which a

private communication executed in the performance of a legal duty is not actionable. The privileged nature of the letter was removed when respondent used it to blackmail complainant and extort from the latter compliance with the demands of his client.

However, while the writing of the letter went beyond ethical standards, we hold that disbarment is too severe a penalty to be imposed on respondent, considering that he wrote the same out of his overzealousness to protect his client’s interests. Accordingly, the more appropriate penalty is reprimand.

WHEREFORE, premises considered, the petition is granted. The 26 May 2006Resolution of the IBP Board

of Governors is hereby REVERSED and SET ASIDE. Respondent Atty. Lolito G. Aparicio is hereby found liable for violation of Rule 19.01 of Canon 19 of the Code of Professional Responsibility, and is accordingly meted out the penalty of REPRIMAND, with the STERN WARNING that a repetition of the same or similar act will be dealt with more severely.

SO ORDERED.

G.R. No. 40457 May 8, 1992

MOBIL OIL PHILIPPINES, INC., petitioner, vs.COURT OF FIRST INSTANCE OF RIZAL, BRANCH VI, GEMINIANO F. YABUT and AGUEDA ENRIQUEZ YABUT, respondents.

This is a petition for review on certiorari filed by petitioner Mobil Oil Philippines, Inc. questioning (1) the Order of respondent Court of First Instance, Branch VI, Pasig, Rizal, promulgated on November 20, 1974 declaring its earlier Decision dated July 25, 1974 as null and void insofar as it concerned private respondents Geminiano F. Yabut and Agueda Enriquez-Yabut, and (2) the Order promulgated on February 20, 1975 and denying petitioner's Motion for the Issuance of a Writ of Execution and Appointment of Special Sheriff.

The facts of the case are as follows:

On November 8, 1972, petitioner filed a complaint 1 in the Court of First Instance of Rizal against the partnership La Mallorca and its general partners, which included private respondents, for collection of a sum of money arising from gasoline purchased on credit but not paid, for damages and attorney's fees.

On December 22, 1972, petitioner, with leave of court, filed an Amended Complaint 2 impleading the heirs of the deceased partners as defendants. During the hearing held on April 1, 1974, after petitioner had presented its evidence, the parties agreed to submit the case for decision on the basis of the evidence on record adduced by petitioner but "to exclude past interest in the amount of P150,000.00 and to award nominal attorney's fees." Consequently, on July 25, 1974, a Decision 3 was rendered in favor of the petitioner and against defendants. Private respondents thereafter filed a Petition to Modify Decision and/or Petition for Reconsideration, 4 which was opposed 5 by petitioner.

The Petition to Modify Decision and/or Reconsideration is predicated on the following grounds:

1. That there was no stipulation or agreement of the parties on the award of attorney's fees;

2. That Miguel Enriquez, not being a general partner, could not bind the partnership in the Sales Agreement he signed with plaintiff; and

3. That defendant Geminiano Yabut already withdrew as partner and president of La Mallorca as of September 14, 1972.

On November 20, 1974, respondent court issued its disputed Order 6 declaring its decision null and void insofar as private respondents were concerned on the ground that there was no evidence to show that the counsel for the defendants had been duly authorized by their respective clients to enter into a stipulation or facts, a compromise agreement or a confession judgment with petitioner, a ground never raised by the parties. Petitioner filed a Motion for Reconsideration and Clarification, 7 seeking the reconsideration of said order or, if not reconsidered, clarification from respondent court as to whether or not there will be further proceedings for reception of private respondents' evidence in court. Respondent court denied the motion, as well as petitioner's Motion for the Issuance of a Writ of Execution and Appointment of Special Sheriff, by way of the Order dated February 20, 1975. Hence, this petition.

The issue presented before Us is whether or not public respondent acted with grave abuse of discretion amounting to lack of jurisdiction in declaring null and void its earlier decision of July 25, 1974.

We find merit in the instant petition.

In the Order of November 20, 1974, 8 respondent court declared the decision dated July 25, 1974 null and void for the following reason:

There is no evidence on record to show that the attorneys of record for the defendants had been duly authorized by their respective clients, including present movants, to enter into a stipulation of facts or a compromise agreement of confession of judgment. Ant any settlement or confession of judgment which an attorney may enter for his client without any written authority cannot bind the client. To be sure, the stipulation of facts which amounts to or approximates a compromise agreement, or waives a right or practically confesses judgment, entered into by a lawyer without the consent and conformity of his clients, is an absolute nullity. This precisely is what appears to be the stipulation of the movants, as well as the other defendants as the records show. In view of the conclusion thus reached, it would appear that there is no necessity to discuss the other grounds raised by the movants.

The records show that the petitioner had already adduced evidence and formally offered its evidence in court; that at the hearing of April 1, 1974, for the presentation of defendants' evidence, the parties through their counsels, 9 mutually agreed to the waiver of the presentation of defendants' evidence on one hand, and the waiver of past interest in the amount of P150,000.00 on the part of the plaintiff and the payment of only nominal attorney's fees, thus the respondent court issued the following Order:

Calling this case for hearing today, the parties pray the Court that they are submitting the case for decision on the basis of the evidence thus presented but to exclude past interest in the amount of about P150,000.00 and to award nominal attorney's fees.

Finding the said motion in order, let judgment be rendered in accordance with the evidence so far presented. 10

The foregoing Order is not a stipulation of facts nor a confession of judgment. If at all, there has been a mutual waiver by the parties of the right to present evidence in court on the part of the defendants on one hand, and waiver of interest in the amount of P150,000.00 and the stipulated attorney's fees of 25% of the principal amount on the part of the plaintiff, except a nominal one.

The counsels of the parties in this case had the implied authority to do all acts necessary or incidental to the prosecution and management of the suit in behalf of their clients of their clients who were all present and never objected to the disputed order of the respondent court. They have the exclusive management of the procedural aspect of the litigation including the enforcement of the rights and remedies of their client. Thus, when the case was submitted for decision on the evidence so far presented, the counsel for private respondents acted within the scope of his authority as agent and lawyer in negotiating for favorable terms for his clients. It may be that in waiving the presentation of defendants' evidence, counsel believed that petitioner's evidence was insufficient to prove its cause of action or knowing the futility of resisting the claim, defendants opted to waive their right to present evidence in exchange for the condonation of past interest in the amount of around P150,000.00 and the award of a nominal attorney's fees instead of the 25% stipulated in the Sales Agreement and Invoices. In fact, when counsel secured a waiver of the accumulated interest of P150,000.00 and the 25% stipulated attorney's fees, the defendants were certainly benefited.

Parties are bound by the acts and mistakes of their counsel in procedural matters. Mistakes of counsel as to the relevancy or irrelevancy of certain evidence or mistakes in the proper defense, in the introduction of certain evidence, or in argumentation are, among others all mistakes of procedure, and they bind the clients, as in the instant case. 11

Having obtained what defendants bargained for and having wrongly appreciated the sufficiency or insufficiency of petitioner's evidence, private respondents are now estopped from assailing the decision dated July 25, 1974.

Records would show that private respondents have not submitted any evidence or pleading to contest the authority of their counsel to waive as he did waive presentation of their evidence in exchange for and in consideration of petitioner's waiver of past interest and the stipulated 25% of attorney' fees.

Even if We construe the Order of April 1, 1974 to be based on an oral compromise agreement, the same is valid for as held in the case of Cadano vs. Cadano 12 an oral compromise may be the basis of a judgment although written evidence thereof is not signed. It has been said that the elements necessary to a valid agreement of compromise are the reality of the claim made and the bona fides of the compromise. 13

The validity of a judgment or order of a court cannot be assailed collaterally unless the ground of attack is lack of jurisdiction or irregularity in their entry apparent on the face of the record or because it is vitiated by fraud. If the purported nullity of the judgment lies on the party's lack of consent to the compromise agreement, the remedy of the aggrieved party is to have it reconsidered, and if denied, to appeal from such judgment, or if final to apply for relief under rule 38. 14 It is well settled that a judgment on compromise is not appealable and is immediately executory unless a motion is field to set aside the compromise on the ground of fraud, mistake or duress, in which case an appeal may be taken from the order denying the motion. 15

Moreover, We do not find the grounds relied upon in private respondents' Petition to Modify Decision to be meritorious.

Mr. Miguel Enriquez automatically became a general partner of the partnership La Mallorca being one of the heirs of the deceased partner Mariano Enriquez. Article IV of the uncontested Articles of Co-Partnership of La Mallorca provides:

IV. Partners. –– The parties above-named, with their civil status, citizenship and residences set forth after their respective names, shall be members comprising this partnership, all of whom shall be general partners.

If during the existence of this co-partnership, any of the herein partners should die, the co-partnership shall continue to exist amongst the surviving partners and the heir or heirs of the deceased partner or partners;Provided, However, that if the heir or heirs of the deceased partner or partners elect not to continue in the co-partnership, the surviving partners shall have the right to acquire the interests of the deceased partner or partners at their book value based upon the last balance sheet of the co-partnership, and in proportion to their respective capital contributions; And, Provided Further, that should a partner or partners desire to withdraw from the co-partnership and the remaining partners are not willing to acquire his or their shares or interest in the co-partnership in accordance with the foregoing provisions, the co-partnership shall not thereby be dissolved, but such retiring partner or partners shall only be entitled to his or their shares in the assets of the co-partnership according to the latest balance sheet which have been drawn prior to the date of his or their withdrawal. In such event, the co-partnership shall continue amongst the remaining partners. 16

As to respondent Geminiano Yabut's claim that he cannot be liable as a partner, he having withdrawn as such, does not convince Us. The debt was incurred long before his withdrawal as partner and his resignation as President of La Mallorca on September 14, 1972. Respondent Geminiano Yabut could not just withdraw unilaterally from the partnership to avoid his liability as a general partner to third persons like the petitioner in the instant case.

This is likewise true with regard to the alleged non-active participation of respondent Agueda Yabut in the partnership. Active participation in a partnership is not a condition precedent for membership in a partnership so as to be entitled to its profits nor be burdened with its liabilities.

From the foregoing, it is evident that the court a quo erred in issuing the Orders of November 20, 1974 and February 20, 1975 nullifying the decision dated July 25, 1974 and dismissing the complaint against private respondents Geminiano Yabut and Agueda Enriquez Yabut.

WHEREFORE, the Orders of November 20, 1974 and February 20, 1975 is hereby REVERSED and SET ASIDE and the Decision dated July 25, 1975 is reinstated and declaring the same valid and binding against private respondents Geminiano Yabut and Agueda Enriquez-Yabut. With costs de officio.

[A.C. No. 4552. December 14, 2004]

JOSE A. ROLDAN, complainant, vs. ATTY. NATALIO PANGANIBAN and ATTY. JUANITO P. NOEL, respondents.

Before us is an administrative case for disbarment filed by complainant Jose A. Roldan against respondents Atty. Natalio M. Panganiban and Atty. Juanito P. Noel. Complainant charges that respondent lawyers reneged in their duties and obligations towards him as their client, especially in the complainant’s right to appeal to the higher court after losing his case in the lower courts. The allegations in the complaint dated February 12, 1996[1] in support of the accusations are as follows:

1. Na ako ang plaintiff sa Civil Case No. 144860-CV M.I.T. Branch 25 “Jose A. Roldan vs. Ramon Montano & Robert Montano,” na ang Judge ay si Honorable Severino De Castro, Jr. na ang kaso ay “Recovery of possession with damages.” Ito’y iniapila ko sa RTC Branch 43 with Civil Case No. 95-73739 na ang Judge naman dito ay si Honorable Manuel F. Lorenzo ng RTC. Si Atty. Panganiban at Atty. Noel ang abogado ko.

. . .

4. Na noong February 6, 1995 bago kami pumasok sa court room ay nagtanong sa akin si Atty. Noel, ng ganito: “Mr. Roldan nasaan nga pala yung resibo na ibinigay ni Tessie sa iyo na nagbigay ka ng down payment na Ten Thousand Pesos (P10,000.00) noong March 1, 1986.” Agad akong sumagot at sinabi ko sa kaniya, “Atty. Noel lahat po ng original ay hiningi ninyo sa akin, lahat po ay binigay ko sa inyo kasama iyong resibo ni Tessie Dalusong, na ako’y magbigay ng Ten Thousand Pesos bilang downpayment sa ipinagbili niyang bahay sa akin. Agad siyang sumagot “Wala kang ibinibigay sa akin!”

5. Na kaya nga sinabi ko kay Atty. Noel na: “Ibigay ninyo sa akin ang folder at ako ang hahanap ng resibo ni Tessie Dalusong.” Tumulong din si Atty. Noel, at nakita din namin. Sinabi ni Atty. Noel “Sayang hindi na natin maipasok ito, hindi na kasi pwedeng magpasok pa ng mga ibidensya.” Di ko alam kung bakit hindi niya ipinasok noon pa man. (Ang resibo na nagpapatunay na ako ang unang nakabili ng bahay sa 1723 Pedro Gil St., Paco, Maynila).

6. Na noong nasa loob na kami ng court room ay handa na ako sa sinasabi ni Atty. Noel no “Rebuttal” pero nagtaka ako kinumbinsi ako na diumano ay malinaw na ang aking deklarasyon at malinaw ang mga ebidensya kaya hindi na raw dapat mag “rebuttal” i-waive na lang daw sa Memorandum kaya nga sinabi ng Judge na: “Gumawa kayo ng Memoranda within fifteen days submitted for decision.” Noong March 8, 1995 ang memorandum ay submitted for decision;

7. Na noong Abril 7, 1995 sinabi ko kay Atty. Noel, “Bakit may ibinigay na zerox copies ng decision si Robert Montano na aking kalaban “sumagot si Atty. Noel, at sinabi sa akin “Tsekin mo sa court.” Gayon nga ang aking ginawa. At bumalik ako kay Atty. Noel, at sinabi ko: Totoo nga na may decision na. Sinabi ni Atty. Noel na: “Ginapang nila yun, sapalagay mo, magkano ang inilagay nila?” Sa palagay ko ay hindi lang trenta mil (P30,000.00) pesos ang magagastos nila sa kasong ito, yun ang isinagot ko;

8. Na iminungkahi ko kay Atty. Noel na magpayl ng “motion for reconsideration, sinagat ako ni Atty. Noel na: ‘Ginapang na nila yun kaya dapat umapila na lang tayo.’ Sinabi ko kay Atty. Noel na: Kung matalo pa rin ako dito, ay dalhin natin sa Supreme Court” para parehas ang laban; Na bilang bahagi nito inilakip ko dito ang decision ng MTC; at ang apilasyon sa RTC, at ang petsa ng decision ng RTC na tinaggap ni Atty. Noel.

9. Na noong Abril 24, 1995 umapila ako sa “Court of Appeal” makaraan ang ilang buwan ay dumating sa office ni Atty. Noel at Atty. Panganiban, noong November 13, 1995 ang decision subalit tinawagan ako ng sekretarya nila Atty.

http://sc.judiciary.gov.ph/jurisprudence/2004/dec2004/ac_4552.htm#_ftn1

Noel at Atty. Panganiban noon lang November 24, 1995. Tinanong ko ang sekretarya ni Atty. Panganiban kung nasaan si Atty. Noel, ang sagot ng sekretarya ay “Nasa probinsiya maraming inaasikaso doon.” Agad kong sinabi: “Hindi ba fifteen days lang para maka-apila sa Supreme Court.” Sumagot si Zeny at sinabi “Isang buwan daw yun para sagutin.”

10. Na madalas kong tawagan si Zeny (ang sekretarya ni Atty. Panganiban) na sinasabi kong nakahanda na ang pangbayad gawin na ninyo ang apilasyon sa “Supreme Court,” ito’y madalas kong sabihin sa sekretarya (si Zeny) kaya’t ibinigay niya ang bagong office ni Atty. Noel sa Gedisco Centre Rm. 134, 1564 Mabini St., Ermita, Manila.

11. Na madalas akong magpunta sa bagong office ni Atty. Noel gaya noong Dec. 1, 1995, Dec. 4, 1995, Dec. 5, 1995, Dec. 7, 1995, Dec. 8, 1995 at noon pang huling linggo ng November ay sisimulan ko ng sabihin sa dalawang sekretarya (si Zeny at Marie Cris) na gawin na ang aking apilasyon sabihin kay Atty. Noel sa “Supreme Court.”

12. Na noong December 12, 1995 maaga pa ay nagpunta ako sa office ni Atty. Noel sa Gedisco 3rd Flr. Mabini St., Ermita, Manila. Tinanong ko ang kaniyang sekretarya kung nakausap si Atty. Noel, sinagot ako ng sekretarya at sinabing ‘Tinanong ko si Atty. Noel kung yari na yung apilasyong ipinagagawa ninyo (Jose Roldan) hindi po niya ako sinasagot.’

13. Na kaya agad akong magpunta sa RTC Branch 43 upang alamin ang katotohanan nabatid ko noon lang, na ako’y natalo ng walang kalaban-laban, pagkat nag-laps na o lampas na ang panahong ibinibigay ng batas para makapag-payl ng apilasyon sa Supreme Court.

14. Na dahil dito sa mga panloloko, at pagwawalang bahala sa aking kaso ni Atty. Noel, at Atty. Panganiban ay idinidimanda ko sila ng Damages na halagang one hundred fifty thousand (P150,000.00) pesos at dapat silang alisan ng karapatan na makapag-practice sa kanilang propesyon.

In his Comment dated August 8, 1996, Atty. Panganiban avers that he was neither aware nor did he participate in the prosecution of “Civil Case No. 144860-CV M.I.T. Branch 25 “Jose A. Roldan vs. Ramon Montano & Robert Montano” and in the appeal of said case to the Regional Trial Court (RTC), Branch 43; they do not have a lawyer-client relationship because he is on leave in the practice of law since October 18, 1993 when he was designated Acting Mayor of Laurel, Batangas, and during his incumbency as such, and up to the filing of this administrative complaint in 1996, he is still on leave as law practitioner because he was elected Mayor of Laurel, Batangas in the last 1995 election; probably, complainant included him as respondent because he thought that he is practicing law and is still an associate of Atty. Juanito P. Noel, due to the fact that on some occasions complainant might have seen him or they might have talked casually in the law office from which he was on leave in his practice of law because he drops there from time to time to meet visitors from Laurel who are living and who have problems in Metro Manila; and he has not received any single centavo from the complainant.

In his Comment, dated August 29, 1996, Atty. Noel alleges: Sometime in 1994, he agreed to represent complainant in recovering a one-half portion of the ground floor of a house located at 1723 Pedro Gil St., Paco, Manila which complainant bought from one Simplicia Villanueva represented by her daughter Teresita Dalusong on November 28, 1986. A civil complaint for recovery of ownership and possession was filed on February 8, 1994 with the RTC but upon the effectivity of the law expanding the jurisdiction of the Metropolitan Trial Court (MTC) the case was transferred to the MTC. From the evidence of the defendant, he honestly saw no need to present a rebuttal evidence. The MTC rendered a decision dismissing the case on the alleged ground that the identity of the subject matter of the action was not clearly established. He filed an appeal in due time to the RTC of Manila (Branch 43) and not with the Court of Appeals as stated in paragraph 9 of the complaint. On November 13, 1995, he received a copy of the RTC decision dated October 10, 1995, affirming the decision of the MTC. Through the telephone, he informed the complainant about the decision of the RTC. Complainant instructed him to prepare an appeal to the higher court which actually refers to the Court of Appeals and not with the Supreme Court as complainant claims. He advised the complainant that he could find no error in the said decision and a further appeal would be frivolous and without merit and requested the complainant to come over so that he could discuss the matter with him. Whenever the complainant went to the law office, he failed to see him because the latter was still attending court hearings. The complainant asked for the records of the case which was given by his secretary. Complainant never returned the case folder to him, neither did he call up by phone, or see him personally. He then assumed that the complainant had hired another

lawyer to handle the appeal. He was surprised when he received on July 18, 1996 a copy of the resolution of this Honorable Court dated June 19, 1996, requiring them to file their comment on the complaint of Jose A. Roldan.

We referred the matter to the Integrated Bar of the Philippines (IBP) for investigation. After hearing, IBP Investigating Commissioner Manuel A. Quiambao submitted his Report and Recommendation dismissing the complaint against Atty. Panganiban and imposing censure to Atty. Noel. In a Resolution dated February 27, 2004, the IBP adopted and approved the said Report and Recommendation.

We shall first resolve the issue of the existence or non-existence of lawyer-client relationship between Atty. Panganiban and the complainant.

From a careful reading of the records of this case, it appears that Atty. Panganiban and Atty. Noel used to be law associates. However, Atty. Panganiban went on leave from the practice of law since October 18, 1993 when he was designated as acting mayor of Laurel, Batangas[2] due to the indefinite leave of absence filed by the mayor and by reason of his election as mayor of the said municipality in 1995. The complainant claims that he secured the services of Atty. Panganiban on January 6, 1994.[3] It is thus clear that Atty. Panganiban was not an active associate of the law firm, since at that time, he was already on leave from the practice of law. Moreover, the complaint filed in 1996 before the RTC for Recovery of Possession and Ownership with Damages was prepared and signed by Atty. Noel alone and not in any representation of any law firm. In fact from the filing of the said civil case in the RTC, it was Atty. Noel who represented the complainant. Not once did Atty. Panganiban appear for the complainant nor did he sign any document pertaining with the aforesaid case. Necessarily, the complaint against Atty. Panganiban must be dismissed.

As to the complaint against Atty. Noel.

The main issues to be resolved are: (1) whether there was a deliberate attempt to suppress evidence on the part of Atty. Noel, to the prejudice of complainant and (2) whether it was correct for Atty. Noel to refuse to file a further appeal of the case to the Court of Appeals by way of petition for review despite the manifest desire of the complainant to do so.

Anent the first issue.

Complainant insists that Atty. Noel’s failure to present in evidence the receipt dated March 1, 1986 was fatal to his cause. The receipt shows that complainant made a partial payment ofP10,000.00 of the P40,000.00 price of the subject property. Complainant claims that this piece of document proves that complainant bought the subject property ahead of the defendants who bought it only on July 30, 1986. Thus, to the mind of the complainant, the non-presentation of the subject receipt is suppression of evidence.

Atty. Noel denied receiving the subject receipt and asserts that the same was mere fabrication of the complainant. He insists that said receipt did not exist during the preparation and filing of the complaint and even during the presentation of evidence. Otherwise, he argues that such fact should have been alleged in the complaint to show that complainant bought the subject property ahead of the other buyer. Atty. Noel also claims that assuming that the receipt was given to him, the same cannot be used as evidence because the receipt shows that it was signed by one Romeo Dalusong who is not a party to the sale; neither does it appear in the receipt that Romeo was acting in a representative capacity.

A short historical backdrop is necessary for a clearer insight of this issue.

It appears that the subject property was subjected to a double sale by the same seller. The Deed of Sale of the complainant is dated November 28, 1986 while that of the other buyer is dated July 30, 1986. But complainant claims that actually the sale as to him took place on March 1, 1986 as evidenced by the subject receipt. Complainant however failed to take possession of the subject property as the same is already in the possession of the other buyer. Complainant filed an ejectment case[4] against the tenant of the other buyer but the same was dismissed for the reason that “complainant failed to show that he had proprietary right over the property in question.” Unable to take possession of the subject property, complainant filed a case against the seller for the annulment of the contract of sale, the Deed of Sale dated November 28, 1986. Complainant won and the court awarded him damages of P80,000.00.

Subsequently, the seller and the complainant entered into a Compromise Agreement. [5] The seller, agreed to sell one-half of her duplex house which is the same property that was previously sold to complainant on November 28, 1986, including all her proprietary rights over the land, in the amount of P80,000.00. Since the Court awarded damages to the complainant in the same amount, this was set-off against the price of the property. Pursuant to the





said compromise agreement, a Deed of Absolute Sale and Transfer of Right [6] in favor of the complainant was executed on December 22, 1990 by the seller over the said property.

Even with the sale on December 22, 1990 over the subject property as a result of the compromise agreement, complainant still failed to take possession of the subject property, hence he filed a complaint for Recovery of Possession and Ownership with Damages against the other buyer. It is in this case that complainant claims that Atty. Noel failed to present the subject receipt. The MTC dismissed the complaint and the RTC on appeal, dismissed it again. Upon failure of Atty. Noel to file a petition for review with the Court of Appeals, complainant filed the present administrative complaint against him.

We find credence to the allegation of Atty. Noel that the subject receipt was not in existence at the time he prepared the complaint or even at the time of presentation of evidence. The complaint was verified by the complainant stating the fact that he caused its preparation, that he read the same and attested that the contents thereof are true and correct. If complainant’s allegation that he gave the receipt to Atty. Noel at that time, and considering the importance of the subject receipt to his case, he should have called the attention of Atty. Noel that there was no allegation of the existence of the subject receipt.

We thus hold that Atty. Noel is not guilty of suppressing evidence.

As to the second issue, that is, the issue of propriety of Atty. Noel’s refusal or failure to file a petition for review before the Court of Appeals.

It is the contention of the complainant that he lost the right to file a further appeal because he was not informed immediately of the result of the appeal to the RTC. Complainant insists that Atty. Noel, through his secretary, called the complainant only on November 24, 1995 or 11 days after the receipt of the adverse RTC decision and was given the impression that he has still one month within which to file an appeal. The complainant also said that he paid the respondents visits on December 1, 4, 5, 7 and 8, 1995, to follow up the filing of the appeal to the higher court but that he was not able to talk to Atty. Noel; that it was only when he went to the RTC that he learned that he lost the case because the period of the appeal has lapsed.

Atty. Noel contends that he received the RTC decision on November 13, 1995 and on the following day, he instructed his secretary to contact the complainant to inform him of the adverse RTC decision with the directive for the complainant to call up Atty. Noel; that when complainant called, he was instructed by the complainant to prepare an appeal to the higher court; that he told the complainant that there is no need to appeal the case because, first, the decision of the court is “correct,” and second, he is obligated by the code of professional responsibilities to refrain from filing a frivolous and unmeritorious appeal; that thereafter, complainant went to his office twice, the last of this instance was when complainant took all the records of the case and never came back which led him to believe that complainant will not appeal the adverse RTC decision. Atty. Noel further states that, in any event, his relationship with the complainant ended upon the issuance of the decision and that the complainant should not expect that he would still appeal the case.

We find for the complainant.

It is noted that the complainant has been very diligent in following up the status of the case. From the time, complainant filed the case with the MTC up to the time he appealed with the RTC, complainant was vigilant with his rights constantly in contact with Atty. Noel. We find it strange therefore that upon receipt of the adverse RTC decision, it would seem, if Atty. Noel’s version is to be given credence, the complainant had lost his zeal and just allowed the time to appeal to lapse. As correctly observed by the Investigating Commissioner in his Report:

Here was a complainant who went through several litigations over the same subject matter, including a case of ejectment, a case of annulment of contract of sale with damages, a case of action for recovery of ownership and possession, an appeal to the Regional Trial Court, and he did not seem perturb that he lost it (the appeal) and did not find it essential to discuss the matter with his lawyer for possible remedial action? That is, as claimed by his lawyer?

. . .

As opposed to the general denial given by the respondent about the claim that the complainant followed up his case several times with his office (outside of the two occasions that he conceded the complainant did so), the complainant was precise in detailing the circumstances which described how he tried his best to seek the presence of Atty. Noel to

no avail. There were dates, detailed circumstances, and specific places. Given the character which had characterized the effort of the complainant to seek appropriate legal remedies for his complaints, the assertions would be consistent, that is, that he made great efforts to find Atty. Noel.

We note that the complainant was informed about the adverse RTC decision within the 15-day prescriptive period to appeal. As stated elsewhere, Atty. Noel received the adverse RTC decision on November 13, 1995 and the complainant was informed about the adverse RTC decision on November 24, 1995. Hence, complainant has still four days to file an appeal. However, Atty. Noel failed to ensure that the client was advised appropriately. Atty. Noel entrusted entirely with his secretary the duty to inform the complainant about the adverse decision. And the secretary informed the complainant rather late and worse with the wrong information that the complainant has still a month within which to file an appeal. This resulted to the lapse of the prescriptive period to appeal without complainant having availed of the said remedy.

A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall render him liable.[7] If only Atty. Noel’s position of not filing an appeal because it would only be frivolous has been properly communicated to the complainant at the earliest possible time so that the complainant would be able to seek the services of another lawyer for help, it would have been commendable. A lawyer’s duty is not to his client but to the administration of justice; to that end, his client’s success is wholly subordinate; and his conduct ought to and must always be scrupulously observant of law and ethics.”[8] But as it was, Atty. Noel’s negligence as afore-discussed robbed the complainant of the opportunity to at least look for another lawyer for professional help and file an appeal, after all, it is the client who finally decides whether to appeal or not an adverse decision.

We cannot also accept the reasoning of Atty. Noel that he should not be expected to file an appeal for the complainant because their lawyer-client relationship ended with the RTC decision. First, a lawyer continues to be a counsel of record until the lawyer-client relationship is terminated either by the act of his client or his own act, with permission of the court. Until such time, the lawyer is expected to do his best for the interest of his client.[9] Second, Atty. Noel admitted that complainant instructed him to file an appeal with the higher court. Even assuming that their contract does not include filing of an appeal with the higher courts, it is still the duty of Atty. Noel to protect the interest of the complainant by informing and discussing with the complainant of the said decision and his assessment of the same. A lawyer shall represent his client with zeal within the bounds of the law. [10] It is the obligation of counsel to comply with his client’s lawful request. Counsel should exert all effort to protect the interest of his client.

The determination of the appropriate penalty to be imposed on an errant lawyer involves the exercise of sound judicial discretion based on the facts of the case. [11] In cases of similar nature, the penalty imposed by the Court consisted of reprimand,[12] fine of five hundred pesos with warning, [13] suspension of three months,[14] six months[15] and even disbarment[16] in aggravated case.

The facts of the case show that Atty. Noel failed to live up to his duties as a lawyer pursuant to the Code of Professional Responsibility. We conclude that a suspension from the practice of law for one month is just penalty under the circumstances.

Complainant’s claim for damages cannot be entertained in the present disbarment case as it is not the proper forum. It is not an ordinary civil case where damages could be awarded.[17] A disbarment case is a proceeding that is intended to protect the Court and the public from the misconduct of its officers; to protect the administration of justice by requiring that those who exercise this important function shall be competent, honorable and reliable, men in whom courts and clients may repose confidence.[18] It has been emphasized in a number of cases that disbarment proceedings belong to a class of their own, distinct from that of a civil or a criminal action.[19]

Wherefore, the complaint against Atty. Natalio M. Panganiban is DISMISSED. Atty. Juanito P. Noel is SUSPENDED for one month with a warning that a repetition of the same would be meted a more severe penalty. Let a copy of this decision be attached to respondent’s personal record in the Office of the Bar Confidant and copies be furnished to all chapters of the Integrated Bar of the Philippines and to all courts of the land.

SO ORDERED.















G.R. No. L-30712 February 6, 1991

THE REPARATIONS COMMISSION, plaintiff-appellee, vs.THE VISAYAN PACKING CORPORATION and THE FIELDMENS INSURANCE CO., INC., defendants-appellants.

This is an appeal originally filed with the Court of Appeals but certified to this Court for disposition since it involves purely questions of law, from the decision of the then Court of First Instance of Manila, * Branch IX, dated June 23, 1964, in Civil Case No. 51712, ordering the defendants-appellants herein to pay, jointly and severally, to the plaintiff-appellee the sum of P124,242.47, with interest at the legal rate from the date of the filing of the complaint until fully paid and denying plaintiff s prayer for attorney's fees. With respect to the cross-claim of Fieldmen's Insurance Co., Inc., the said court ordered Visayan Packing Corporation to pay Fieldmen's Insurance Co., Inc. such amount which the latter may pay to the plaintiff-appellee with interest at 12% per annum until fully paid, and attorney's fees equivalent to 10% of the amount, paid by Fieldmen's Insurance Co., Inc. to the plaintiff-appellee. With costs against the defendants-appellants.

As gathered from the records, the antecedent facts of this case are as follows:

Plaintiff Reparations Commission (Repacom, for short) is a government entity created by virtue of Republic Act No. 1789, with offices at the 5th Floor, Development Bank of the Philippines Building No. 2, Port Area, Manila while the defendants, Visayan Packing Corporation (Vispac, for short) and the Fieldmen's Insurance Co., Inc. (FICI, for short) are corporations duly organized and registered under the laws of the Philippines, with offices in Bacolod City, Philippines and Singson Bldg., Plaza Moraga, Manila, respectively.

On May 19, 1960, plaintiff Repacom adopted Resolution No. 262 awarding to the defendant Vispac by way of a contract of conditional purchase and sale subsequently executed on November 15, 1960 (Exhibit "A") the following reparations goods with a total F.O.B. value of P1,242,424.67 (Exhibit "A-2"): one (1) Cannery Plant, divested from M/S "Estancia"; two (2) Fishing Boats M/S "SONIA" and M/S "ANA LARES", 75 G.T. and one (1) Fishing Boat M/S "SALVADOR "B"", 100 G.T.; including all its corresponding accessories and appurtenances. These reparations goods were delivered to the defendant Vispac, on May 30, 1960 (Exhibit "A-2").

Attached with said contract and forming part thereof is the questioned Schedule of Installment Payments, herein reproduced, as follows:

SCHEDULE OF INSTALLMENT PAYMENTS

NAME OF USER VISAYAN PACKING CORPORATION

ADDRESS Bacolod City

NATURE OF CAPITAL GOODS/SERVICES One (1) Cannery Plant and appurtenances; Two (2) Fishing Vessels, 75 G.T. M/S "SONIA" and M/S "ANA LARES" and one (1) fishing vessel "M/S SALVADOR B", 100 G.T., together with all equipment and appurtenances.

DATE OF COMPLETE DELIVERY May 30,1960

TOTAL F.O.B. COST P1,24 2,424.67

AMOUNT OF FIRST INSTALLMENT (10% of FOB COST

P1,24,242.47)

DUE DATE OF 1ST INSTALLMENT May 30,1962

TERM: Ten (10) EQUAL YEARLY INSTALLMENTS

RATE OF INTEREST: THREE PERCENT (3%) PER ANNUM

NO. OF DATE DUE AMOUNT

INSTALLMENTS

1 May 30, 1963 P131,085.07

2 " " 1964 P131,085.07

3 " " 1965 P131,085.07

4 " " 1966 P131,085.07

5 " " 1967 P131,085.07

6 " " 1968 P131,085.07

7 " " 1969 P131,085.07

8 " " 1970 P131,085.07

9 " " 1971 P131,085.07

10 " " 1972 P131,085.07

MANILA, PHILIPPINES 1960

VISAYAN PACKING CORPORATION REPARATIONS

END-USER COMMISSION

BY: BY:

HERNAN DE LA RAMA RODOLFO MASLOG

President & General Manager Chairman

(Ibid., Exhibit "A-1", p. 11)

Defendant-appellant FICI is impleaded as bondsman for the principal defendant Vispac, under Surety Bond No. 4122 (Exhibit "B") issued by the former on May 30, 1960, to guarantee "faithful observance and compliance by the principal of all its obligations" recited in the Contract of Conditional Purchase and Sale of Reparations Goods (Exhibit "A") and in the annexed Schedule of Payments (Exhibit "A-1 ").

On September 27, 1962, Repacom filed a complaint for specific performance with the court a quo against Vispac seeking collection of the amount of P124,242.47 allegedly due on May 30, 1962 as payment of the 1st installment of the reparations goods and impleaded the FICI as defendant.

In its answer dated November 8, 1962, Vispac claimed that the Schedule of Payments (Exhibit "A") is vague and ambiguous with respect to the date when the first installment falls due and that by reason thereof, the ambiguity should be construed against Repacom, the party which drafted the contract.

Thus, while Repacom maintains that the 1st installment is due on May 30, 1962, Vispac, on the other hand, argues that it is due on May 30, 1963.

On January 13, 1964, Repacom and Vispac submitted a "Stipulation of Facts" and both prayed that this case be submitted for decision after their respective memoranda have been filed. FICI joined with this move and request of the principal parties.

Pertinent provisions of said Stipulation of Facts are quoted as follows:

paragraph 1 ––

That in order to abbreviate proceeding they have agreed that the transcript of notes taken in Civil Case No. 51713, The Reparations Commission vs. Fieldmen's Insurance Co., Inc., Branch III, CFI, Manila, be submitted as evidence in the above entitled case. This agreement stemmed from the fact that both Civil Case 51712, the case now being litigated and Civil Case No. 51713 mentioned earlier in this paragraph are both collection cases instituted by the Reparations Commission against the defendant, The Visayan Packing Corporation and the Fieldmen's Insurance Co., Inc., based on similar Contracts of Conditional Purchase and Sale, drafted in the usual standard form and containing practically the same standard provisions and stipulations.

paragraph 2 ––

That Civil Case No. 51713 has already been decided on March 27, 1963 granting relief for the plaintiff, The Reparations Commission as prayed for, a copy of said decision is hereto attached and marked Annex "A" for purposes of identification and is hereby made an integral part of this Stipulation of Facts.

paragraph 3 ––

That Civil Case No. 51712 refers to reparations goods, denominated, one (1) cannery plant, two (2) fishing boats, M/S "Sonia" and M/S "Ana Lares", 100 G.T. including all its corresponding accessories and appurtenances, which is the subject matter of a Contract of Conditional Purchase and Sale dated November 15, 1960 entered into by and between the plaintiff Reparations Commission as Conditional Vendor and the defendant, The Visayan Packing Corporation as Conditional Vendee, the legality and due execution of which is not

disputed by the herein parties, a copy of which contract together with its annex "B" were introduced in evidence by plaintiffs as Exhibits "A" and "A-1" respectively and were admitted by the Court without objection on the part of the defendants. That, likewise, there were introduced in evidence and admitted by the Court without objection on the part of the defendants as additional exhibits, Exh. "A-2" (Date of complete delivery as it appears in Annex "B" [May 30, 1960]; Exh. "A-1"; Exh. "A-2", amount due in the sum of P124,242.47; Exh. "A-4", date of first installment as it appears in Annex "B" (Exh. "A-1") and as Exh. "B", FICI Bond No. 4122.

On the basis of the said Stipulations of Facts and the pleadings submitted by the parties, the court a quorendered judgment, the dispositive portion of which reads as follows:

IN VIEW OF THE FOREGOING, the Court hereby renders judgment ordering the defendant to pay, jointly and severally, to the plaintiff the sum of P124,242.47 with interest at the legal rate from the date of filing of the complaint until fully paid. The plaintiffs prayer for attorney's fees is denied, inasmuch as there is no showing that the defendants were motivated with bad faith in failing to pay plaintiffs claim.

With respect to the cross-claim of defendant Fieldmen's Insurance Co., Inc., the Court hereby orders defendant Visayan Packing Corporation to pay defendant Fieldmen's Insurance Co., Inc., such amount which the latter may pay to the plaintiff by reason of this judgment, with interest at 12% per annum until fully paid, and attorney's fees equivalent to 10% of the amount paid by Fieldmen's Insurance Co., Inc., to the plaintiff. With costs against the defendants.

From said decision, Vispac and FICI filed on July 24, 1964 and July 27, 1964, respectively, a motion for reconsideration of the said decision. On August 8, 1 964, the court a quo issued its order denying the said motion.

Feeling aggrieved, Vispac and FICI appealed the case to the Court of Appeals, docketed therein as CA-G.R. No. 34552-R.

After the parties have submitted their respective briefs, Repacom on April 28, 1965; Vispac on January 2, 1965; and FICI on January 15, 1965, the case was submitted for decision on September 6, 1965. In a resolution promulgated June 14, 1969, the Court of Appeals ** certified the instant case to this Court for proper disposition for being pure question of law.

While Vispac and FICI raised several issues, the focal issue involved in the instant case, as correctly stated by the trial court and the Court of Appeals, is the interpretation of the Schedule of Payments (Exhibit "A-1 ").

It is the contention of the Repacom that under the abovequoted Schedule of Payments, the amount of P124,242.47 representing the 1st installment without interest, which is equivalent to 10% of the entire F.O.B. costs, has already become due and demandable on May 30, 1962. However, Vispac and FICI argue that as there are two dates given for the first installment in the said Schedule of Payment, the lst installment should be on May 30, 1963 considering that it was Repacom which prepared the contract and therefore such ambiguity should be taken against the latter which caused the ambiguity.

The petition is devoid of merit.

Section 12, Republic Act 1789, reads as follows:

Section 12 –– Terms of Sale ––

Capital goods and complimentary services disposed to private parties as provided for in sub-section (1) of Section 2 hereof, shall be sold on a cash or credit basis under the rules and regulations as maybe determined by the Commission. Sales on credit basis shall be paid in installments. Provided that the lst installment shall be paid within 24 months after complete delivery of the capital goods and the balance within a period not exceeding 10 years. (Emphasis supplied)

As indicated in the Schedule of Payments, Exhibit "A-1", the amount of P124,242.47, now being claimed by the Repacom from Vispac, represents the 1st installment or initial payment without interest as said amount is equivalent to 10% of the total F.O.B. cost of the reparation goods received by Vispac which is P1,242,424.67. Exhibit "A-2" of the Schedule of Payments specifically states the date when the reparations goods in question were delivered which was on May 30, 1960. This particular date was not denied by Vispac as per their Stipulation of Facts. Consequently, as reflected in the Schedule of Payments, Exhibit "A-1 ", the 1st installment without interest in the amount of P124,242.47 representing 10% of the F.O.B. cost of reparations goods, became due and demandable on May 30, 1962, or exactly 24 months from the date of the complete delivery of the reparations goods to Vispac.

The rest of the schedule clearly refers to the payment of the balance of the sales on credit which in accordance with law (Section 12, Rep. Act 1789) must be paid within a period not exceeding ten (10) years, and chargeable with interest at 3% per annum. Said schedule of payment for the balance i.e., after payment of the first installment is, in turn, payable in ten (10) equal yearly installments, as follows:

Term: Ten (10) equal yearly installments

Rate of Interest: Three per cent (3%) per annum

No. of Date Due Amount

Installments

1 May 30, 1963 P131,086.07 2 " " 1964 P131,086.07 3 " " 1965 P131,086.07

4 " " 1966 P131,086.07 5 " " 1967 P131,086.07 6 " " 1968 P131,086.07

7 " " 1969 P131,086.07 8 " " 1970 P131,086.07 9 " " 1971 P131,086.07

10 " " 1972 P131,086.07

While it is a statutory and decisional rule in this jurisdiction that the contract is the law between the contracting parties (Art. 1306, Civil Code; Phoenix Assurance Co., Ltd. vs. United States Lines, 22 SCRA 674 [1968]; Phil. American General Insurance v. Mutuc, 61 SCRA 22 [1974]; Herrera v. Petrophil Corporation, 146 SCRA 360 [1986]; Syjuco v. CA, 172 SCRA 111 [1989]), there is a proviso that nothing therein must be contrary to law, morals, good customs public policy, or public order (Art. 1306, Civil Code; Lagunsad v. Soto, 92 SCRA 476 [1979]). To sustain the contention of Vispac and FICI that the 1st installment should be due on May 30, 1963, instead of May 30, 1962. would render the said installment payment unenforceable as it would run counter to the provision of the said law (Section 12, R.A. 1789) which specifically provides that "the 1st installment shall be paid within 24 months after complete delivery of the capital goods", or on May 30, 1962, the complete delivery thereof having been made on May 30, 1960.

Finally, it is basic that a contract is what the law defines it to be, and not what it is called by the contracting parties Novesteras v. CA, 149 SCRA 48 [1987]).

Having disposed of the main case, discussion of other ancillary issues raised by the appellant Vispac becomes unnecessary.

As to the issue of FICI's liability arising from its issuance of Surety Bond No. 4122 dated May 30, 1960, it will be noted that FICI interposed for the first time, on appeal, the defense that Surety Bond No. 4122 has already expired. FICI did not allege any defense to the effect that Surety Bond No. 4122 has already expired either in its answer to the complaint dated October 26, 1962 nor in the entire proceedings below. In fact, it adopted as its own whatever defenses its co-defendant-appellant Vispac may interpose (Rollo, Record on Appeal, FICI, p. 25; p. 44). It is settled jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in the court below cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due process Dihiansan v. CA, 153 SCRA 713 [1987]; Anchuelo v. IAC, 147 SCRA 434 [1987]; Dulos Realty & Development Corp. v. CA, 157 SCRA 425 [1988]; Ramos v. IAC, 175 SCRA 70 [1989]; Gevero v. IAC, G.R. 77029, August 30, 1990).

Anent the contention of FICI that the trial court erred in ordering Vispac to pay to FICI attorney's fees equivalent to only 10% of the amount due despite the fact that Vispac bound itself to pay to FICI attorney's fees equivalent to 20% of the total amount due but in no case less than P200.00 as per their Indemnity Agreement (Exhibit "1-FICI"), it has been held that a stipulation regarding the payment of attorney's fees is neither illegal nor immoral and is enforceable as the law between the parties (Santiago v. Dimayuga, 3 SCRA 919 [1961]), as long as such stipulation does not contravene law, good morals, good customs, public order or public policy (Polytrade Corp. v. Blanco, 30 SCRA 187 [1969]; Social Security Commission v. Almeda, 168 SCRA 474 [1988]).

Considering, therefore, that the 20% attorney's fees provided under the parties' Indemnity Agreement (Exhibit "1-FICI") is not contrary to the existing jurisprudence on the matter *** and is not considered excessive nor unconscionable, the same should be awarded to FICI.

WHEREFORE, the decision appealed from is Affirmed with the modification that the amount of the attorney's fees due from Vispac to FICI should be 20% of the amount due as per Indemnity Agreement. SO ORDERED.

VINSON B. PINEDA, G.R. No. 155224 Petitioner, Present: PUNO, J., Chairperson, SANDOVAL-GUTIERREZ, - v e r s u s - CORONA, AZCUNA and

GARCIA, JJ.

ATTY. CLODUALDO C. DE JESUS, ATTY. CARLOS AMBROSIO andATTY. EMMANUEL MARIANO, Respondents. Promulgated: August 23, 2006

The subject of this petition for review is the April 30, 2002 decision [1] of the Court of Appeals in CA-G.R. CV No. 68080 which modified the order[2] of the Regional Trial Court (RTC) of Pasig City, Branch 151, in JDRC Case No. 2568 entitled Ma. Aurora D. Pineda v. Vinson B. Pineda. The facts follow.

On April 6, 1993, Aurora Pineda filed an action for declaration of nullity of marriage against petitioner Vinson Pineda in the RTC of Pasig City, Branch 151, docketed as JDRC Case No. 2568. Petitioner was represented by respondents Attys. Clodualdo de Jesus, CarlosAmbrosio and Emmanuel Mariano.

During the pendency of the case, Aurora proposed a settlement to petitioner regarding her visitation rights over their minor child and the separation of their properties. The proposal was accepted by petitioner and both parties subsequently filed a motion for approval of their agreement. This was approved by the trial court. On November 25, 1998, the marriage between petitioner and Aurora Pineda was declared null and void. Throughout the proceedings, respondent counsels were well-compensated.[3] They, including their relatives and friends, even availed of free products and treatments from petitioner’s dermatology clinic. This notwithstanding, they billed petitioner additional legal fees amounting to P16.5 million[4] which the latter, however, refused to pay. Instead, petitioner issued them several checks totaling P1.12 million[5] as “full payment for settlement.”[6]

Still not satisfied, respondents filed in the same trial court[7] a motionfor payment of lawyers’ fees for P50 million.[8]

On April 14, 2000, the trial court ordered petitioner to pay P5 million to Atty. de Jesus, P2 million to

Atty. Ambrosio and P2 million to Atty. Mariano. On appeal, the Court of Appeals reduced the amount as follows: P1 million to Atty. de Jesus, P500,000 to

Atty. Ambrosio and P500,000 to Atty. Mariano. The motion for reconsideration was denied. Hence, this recourse. The issues raised in this petition are:

(1) whether the Pasig RTC, Branch 151 had jurisdiction over the claim for additional legal fees and

(2) whether respondents were entitled to additional legal fees. First, a lawyer may enforce his right to his fees by filing the necessary petition as an incident of the main

action in which his services were rendered or in an independent suit against his client. The former is preferable to avoid multiplicity of suits.[9]

The Pasig RTC, Branch 151, where the case for the declaration of nullity of marriage was filed, had

jurisdiction over the motion for the payment of legal fees. Respondents sought to collect P50 million which was equivalent to 10% of the value of the properties awarded to petitioner in that case. Clearly, what respondents were demanding was additional payment for legal services rendered in the same case.

Second, the professional engagement between petitioner and respondents was governed by the principle

of quantum meruit which means “as much as the lawyer deserves.”[10] The recovery of attorney’s fees on this basis is permitted, as in this case, where there is no express agreement for the payment of attorney’s fees. Basically, it is a legal mechanism which prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it. In the same vein, it avoids unjust enrichment on the part of the lawyer himself.

Further, Rule 20.4 of the Code of Professional Responsibility advises lawyers to avoid controversies with

clients concerning their compensation and to resort to judicial action only to prevent imposition, injustice or fraud. Suits to collect fees should be avoided and should be filed only when circumstances force lawyers to resort to it.[11]

In the case at bar, respondents’ motion for payment of their lawyers’ fees was not meant to collect what

was justly due them; the fact was, they had already been adequately paid. Demanding P50 million on top of the generous sums and perks already given to them was an act of

unconscionable greed which is shocking to this Court. As lawyers, respondents should be reminded that they are members of an honorable profession, the

primary vision of which is justice. It is respondents’ despicable behavior which gives lawyering a bad name in the minds of some people. The vernacular has a word for it: nagsasamantala. The practice of law is a decent profession and not a money-making trade. Compensation should be but a mere incident.[12]

Respondents’ claim for additional legal fees was not justified. They could not charge petitioner a fee based on percentage, absent an express agreement to that effect. The payments to them in cash, checks, free products and services from petitioner’s business — all of which were not denied by respondents — more than sufficed for the work they did. The “full payment for settlement”[13] should have discharged petitioner’s obligation to them.

The power of this Court to reduce or even delete the award of attorneys’ fees cannot be denied. Lawyers

are officers of the Court and they participate in the fundamental function of administering justice. [14] When they took their oath, they submitted themselves to the authority of the Court and subjected their professional fees to judicial control. [15]

WHEREFORE, the petition is hereby PARTIALLY GRANTED. The decision of the Court of Appeals dated

April 30, 2002 in CA–G.R. CV No. 68080 is herebyMODIFIED. The award of additional attorney’s fees in favor of respondents is herebyDELETED.

G.R. No. 84751 June 6, 1990

SPOUSES EDUARDO and ANN AGUSTIN, petitioners, vs.HON. COURT OF APPEALS and LABRADOR DEVELOPMENT CORPORATION, respondents.

This petition for review on certiorari impugns the decision of the Court of Appeals, dated March 28, 1988, with the following decretal portion:

WHEREFORE, the present appeal is accordingly resolved deleting the adjudicated award of P20,000.00 as exemplary damages, and otherwise by AFFIRMING the Decision dated October 10, 1985 in Civil Case No. Q-42390 entitled "Labrador Development Corporation vs. Sps. Eduardo Agustin, et al." in all other respects.

Without pronouncement as to costs. 1

Said judgment of respondent court is based on the findings of fact set out in its decision thus:

Plaintiff-appellee, being a subdivision developer, owned Lot 14, Block 1 of the San Pedro Compound IV at Tandang Sora, Quezon City, under Transfer Certificate of Title No. 277209. On November 7, 1981, plaintiff-appellee agreed to sell said parcel of land to defendants-appellants on a package deal together with a residential house per House Plan Model B-203 to be constructed thereon for the sum of P202,980.00 (Exh. 'B'). As therein stipulated, the defendants-appellants were to pay P42,980.00 as equity-P30,133.00 as down payment and the balance of P12,847.00 upon completion and de very of the property, the other P160,000.00 to have been funded through a Pag-Ibig Fund loan to be applied for by defendants-appellants. Central to the above was a stipulation that in the event the housing loan be insufficient to pay the full contract price owing, they shall pay the same in cash on or before occupancy and acceptance of the housing unit (ref. Exh. 'B', para. [e]). The agreement further provided —

(f) Failure of the Vendee to comply with any or all of the above stipulations shall ipso facto cancel this contract to sell; and thereupon, this contract to sell or any other contract executed in connection thereof, shall be of no further force and effect; and the title to the property, if already transferred in the name of the Vendee, shall automatically revert to the Vendor.

The foregoing stipulation encompassed the necessity of transferring title to the lot to defendants-appellants as an accommodation to enable their application for a housing loan in their names.

Hence, plaintiff-appellee executed a deed of sale over the lot (Exh. 'C') in favor of defendants-appellants, without additional consideration beyond the P30,133.00 down payment adverted to, and the issuance to said defendants-appellants of Transfer Certificate of title No. 29435 * (Exh. 'D'). Thusly accommodated, defendants-appellants applied for a P160,000.00 housing loan with the First Summa Savings and Mortgage Bank as an accredited financing institution.

After initial approval in the amount applied for, the Pag-ibig housing loan was downgraded to P128,000.00 after reassessment. Under date of December 18, 1982, plaintiff-appellee apprised defendants-appellants of said development (Exh. 'F') enclosing the formal bank December 16, 1982 letter (Exh. 'E') requiring a co-borrower related within the fourth degree of consanguinity should the defendants-appellants desire approval of an increased loan amount.

Defendants-appellants appear to have disdained a reply to plaintiff-appellee's said letter. Thus, under date of December 28, 1982, plaintiff-appellee again wrote a follow- up letter to defendants-appellants (Exh. 'G') affording the latter time to decide on their options, on pain of enforcement of the terms of the contract to sell.

Failing reaction from defendants-appellants thereto, plaintiff-appellee resorted to enforcement of the contractual stipulations under date of March 1, 1983 (Exh. 'H') and remitted an enclosed check for P30,133.00 (Exh. 'I') representing the equity paid in by defendants-appellants. The latter accepted said check and deposited same into their account.

Instead of reconveyance of title to the lot, defendants-appellants however sought time to buy the property; plaintiff-appellee agreed provided that payment be effected in cash. Defendants-appellants failed to make such payment in cash, despite the lapse of a second 30-day period afforded therefor. Thereupon, plaintiff-appellee demanded anew for reconveyance in a July 27, 1984 letter (Exh. 'J').

On August 8, 1984, plaintiff-appellee filed Civil Case No. Q42390 for reconveyance and damage. In answer, defendants-appellants maintained inter alia that approval of a P160,000.00 housing loan had been assured upon completion of the house with proof of its delivery and acceptance, but that acceptance could not be reasonably given by them in that certain specifications for the housing unit had not been complied with. 2

After trial on the merits, the lower court rendered judgment in favor of private respondent, the dispositive part whereof reads:

WHEREFORE, judgment is hereby rendered ordering defendants, jointly and severally:

a) to reconvey to plaintiff the parcel of land covered by Transfer Certificate of Title No. 284735 ** of the Register of Deeds, Quezon City;

b) to pay plaintiff the sum of P20,000.00 as exemplary damages;

c) to pay plaintiff the sum of P5,000.00 as attorney's fees, plus costs of the suit. 3

which judgment, as earlier stated, was affirmed by respondent court but with the deletion of the award of exemplary damages.

On August 22, 1988, respondent court denied petitioners' motion for reconsideration, hence this present petition raising the following issues:

I

The 'Contract to Sell' dated November 7, 1981 creates a reciprocal obligation between Labrador Development Corporation, as seller, and spouses Eduardo and Ann Agustin, as buyer, of the questioned house and lot.

II

The failure of Labrador Development Corporation (LADECO) to complete construction of the housing unit pursuant to the 'Contract to Sell' constitutes a substantial and serious breach thereof as would bar LADECO from executing the option of cancellation (rescission) of the 'Contract to Sell' under Article 1191 of the Civil Code.

III

The justifiable refusal of Spouses Agustin to sign the 'House Acceptance Form' certifying that they accept the house as 100% complete constitutes merely a slight or casual breach of the 'Contract to Sell' which does not warrant the unilateral cancellation (rescission,) of the contract under par. 4 (f) thereof and Article 1191 of the Civil Code.

IV

The remedy of reconveyance of title of the property in question cannot be availed of by LADECO as there was no valid, binding and effective cancellation (rescission) of the 'Contract to Sell'.

V

Private respondent LADECO is not entitled to attorney's fees of P5,000.00 under the facts and circumstances of the case. 4

We agree with the Court of Appeals that reconveyance is proper in this case. Herein petitioners are already barred from questioning the validity of the cancellation of the contract to sell by their acquiescence thereto. Their acceptance and encashment of the checks representing the total amount paid by them to private respondent as equity, coupled by their failure to object or file an action, despite due notice, to question the validity of the extrajudicial cancellation of said contract and to ask for specific performance for more than one year, clearly show that they assented to the same.

Furthermore, after receiving the check refunding their equity payment incident to the reconveyance desired by private respondents, petitioners, disregarding the original agreement of the parties, offered to purchase anew the property in question to which private respondent agreed. This novatory agreement, however, was not consummated as petitioners again failed to raise and pay the purchase price despite two 30-day extensions. They never at that juncture questioned the propriety of the rescission and reconveyance desired by private respondent. Obviously, extrajudicial rescission produces legal effects where the other party does not oppose it. 5

Moreover, even assuming that there was no implied assent to the cancellation of the contract to sell, reconveyance is still proper. The non-fulfillment by petitioners of their obligation to pay, which is a suspensive condition to the obligation of private respondent to sell and deliver the house and lot, rendered the contract to sell and the subsequent contract executed pursuant thereto ineffective and without force and effect.

The contract between petitioners and private respondent is not an absolute sale but a conditional sale or contract to sell, whereby ownership is retained by the vender until full payment of the purchase price. Without such full payment, there is no obligation to sell and deliver. The subsequent execution of the deed of absolute sale and the transfer and registration of the title of the lot in the name of petitioners is of no moment, considering that the same, by mutual agreement of the parties, was made without consideration and solely for the purpose of facilitating the approval and release of the PAG-IBIG loan and not for the purpose of actually transferring ownership.

Under the contract to sell, the obligation of petitioners to completely pay the purchase price is a condition precedent to the obligation of private respondent to sell and deliver the house as provided in the contract to sell, which specifically states:

5. Upon complete payment of the VENDEE/S of the purchase price herein above stated, and faithful compliance with all his obligations stipulated therein, the VENDOR, agrees to execute a valid deed of sale in favor of the VENDEE/S and cause the issuance of the Certificate of Title in the name of the latter, free from all liens and encumbrances except those provided for in the Land Registration Act and other laws, Presidential Decrees, General Orders, Letters of Instruction, Zoning Ordinances, and the attached Deed of Restrictions, which form part of this Contract; ... 6

The repeated failure and refusal of petitioners, despite due notice, to look for a co- borrower related to them within the fourth degree of consanguinity as required by the bank in order to prevent the downgrading of the loan, nor to communicate to private respondent the arrangement they intended to make regarding the difference between the approved loan of P128,000.00 and the unpaid amount of P160,000.00, clearly indicate their intention not to perform their obligations under the contract. This constituted not only a substantial or serious breach, but prevented the happening of the condition precedent which would give rise to the obligation of private respondent to sell and transfer ownership of the house and lot to petitioners.

We have repeatedly ruled that:

In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment of the price, such payment, as we said is a positive suspensive condition, the failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force, in accordance with Article 1117 of the Old Civil Code. To argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where non-payment is a resolutory condition, which is not the case.

... appellant overlooks that its contract with appellee Myers is not the ordinary sale envisaged by Article 1592, transferring ownership simultaneously with the delivery of the real property sold, but one in which the vendor retained ownership of the immovable object of the sale, merely undertaking to convey it provided the buyer strictly complied with the terms of the contract (see paragraph [d], ante, page 5). In suing to recover possession of the building from Maritime, appellee Myers is not after the resolution or setting aside of the contract and the restoration of the parties to the status quo ante, as contemplated by Article 1592, but precisely enforcing the provisions of the agreement that it is no longer obligated to part with the ownership or possession of the property because Maritime failed to comply with the specific condition precedent, which is to pay the installment as they fell due.

The distinction between contracts of sale and contracts to sell with reserved title has been recognized by this Court in repeated decisions upholding the power of promissors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for, as in the case at bar. 7

We repeat, the obligation of petitioners to fully comply with their undertakings was necessarily determinative of the obligation of private respondent to complete the construction of the house. Where one of the parties to a contract did not perform the undertaking which he was bound by the terms of the agreement to perform, he is not entitled to insist upon the performance of the other party. 8 For failure of one party to assume and perform the obligation imposed on him, the other patty does not incur in delay. 9

Correspondingly, we reject the argument of petitioners that the failure of private respondent to complete the construction of the house constitutes a substantial breach as would bar the latter from cancelling the contract. Instead, the facts of this case persuade us to hold that petitioners were merely posturing when, after being required to reconvey the premises, they came up with belated complaints about the imperfections or incompleteness of the house involved, in the same manner that they also pretended to be interested in purchasing the property but failed to do so after importuning private respondents to grant them extensions of time for that purpose.

With the foregoing circumstances, reconveyance is proper and exigible pursuant to Paragraph 4 (f) of the contract to sell quoted in the decision of respondent court, supra, and on the basic principle that when an obligation has been extinguished or resolved, it is the duty of the court to require the parties to surrender whatever they may have received from the other, and the parties must be restored, as far as practicable, to their original situation. 10

The award to private respondent of attorney's fees, however, must be disallowed considering that the award of exemplary damages was eliminated by respondent court and the text of the decision of the trial court, which was aimed by the Court of Appeals, is bereft of any findings of fact and law to justify such award. The accepted rule is that the reason for the award of attorney's fees must be stated in the text of the court's decision; otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. The award of attorney's fees being an exception rather than the general rule, it is necessary for the court to make findings of facts and law that would bring the case within the exception and justify the grant of such award. 11

WHEREFORE, except for the award of attorney's fees which is hereby deleted, the decision of respondent Court of Appeals is hereby AFFIRMED.

SO ORDERED.

Ethics 7

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