THIRD DIVISION

AURORA FE B. CAMACHO, G.R. No. 127520

Petitioner,

Present:

YNARES-SANTIAGO, J.,

- versus - Chairperson,

AUSTRIA-MARTINEZ,

CALLEJO, SR., and

CHICO-NAZARIO, JJ.

COURT OF APPEALS and

ANGELINO BANZON,

Respondents.

Promulgated:

February 9, 2007

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DECISION

CALLEJO, SR., J.:

This is a Petition for Review on Certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 41268 affirming
with modification the Decision[2] of the Regional Trial Court (RTC) of Balanga, Bataan, Branch 1.

The Antecedents

Camacho was the owner of Lot 261, a 7.5-hectare parcel of land situated in Balanga, Bataan and covered by Transfer
Certificate of Title No. T-10,185.

On July 14, 1968, Camacho and respondent Atty. Angelino Banzon entered into a contract for legal services denominated
as a Contract of Attorneys Fee.[3] The agreement is worded as follows:

KNOW ALL MEN BY THESE PRESENTS:

That we, Aurora B. Camacho, widow, of legal age and resident of Balanga, Bataan, and Angelino M. Banzon, have agreed
on the following:

That I, Aurora B. Camacho is the registered owner of Lot No. 261 Balanga Cadastre, has secured the legal services of Atty.
Angelino M. Banzon to perform the following:

1. To negotiate with the Municipal Government of Balanga so that the above-mentioned lot shall be the site of the
proposed Balanga Public Market;

2. To sell 1200 sq. m. for the sum of TWENTY- FOUR THOUSAND PESOS (P24,000.00) right at the Market Site;

3. And to perform all the legal phase incidental to this work.

That for and in consideration of this undertaking, I bind myself to pay Atty. Angelino M. Banzon FIVE THOUSAND SQUARE
METERS (5000) of the said lot, for which in no case I shall not be responsible for payment of income taxes in relation hereto,
this area located also at market site.

That I, Angelino M. Banzon, is willing to undertake the above-enumerated undertaking.

WITNESS our hands this 14 of July, 1968, in Balanga, Bataan.

(Signed) (Signed)

ANGELINO M. BANZON AURORA B. CAMACHO

Pursuant to the agreement, Atty. Banzon, on even date, sent a letter-proposal[4] to the municipal council offering three
sites for the proposed public market which included Lot261. Still on the same date, Camacho executed a Special Power of
Attorney[5] giving Atty. Banzon the authority to execute and sign for her behalf a Deed of Donation transferring a
17,000-sq-m portion of Lot 261 to the municipal government of Balanga, Bataan. The Deed of Donation was executed,
which was later accepted by the local government unit in Municipal Resolution No. 127.[6]

Silvestre Tuazon had been an agricultural tenant in Lot 261 since World War II. On August 22, 1968, Tuazon and Camacho
entered into an Agreement with Voluntary Surrender[7] where Tuazon voluntarily surrendered his right as a tenant of the
landholding.Despite the agreement, however, Tuazon plowed a portion of the lot and planted palay without Camachos
consent. Since Tuazon refused to vacate the premises, Camacho and theMunicipality of Balanga, through then Acting
Mayor Victor Y. Baluyot, filed a complaint[8]for forcible entry on November 18, 1969 before the Municipal Trial Court (MTC)
of Balanga, Bataan. The complaint was docketed as Civil Case No. 424. The case was eventually decided in favor of the
plaintiffs and Tuazon was ordered to vacate the lot. On appeal to the RTC, trial de novo ensued, in view of the absence of
the transcript of stenographic notes of the proceedings before the MTC. The RTC issued a preliminary mandatory injunction
ordering Tuazon to discontinue entering the subject premises until further orders of the court.[9]

On September 1, 1973, the plaintiffs, through Atty. Banzon, and Tuazon entered into an Agreement to Stay Court Order.[10]
Under the agreement, Tuazon was allowed to cultivate specific portions of the property as indicated in a sketch plan which
the parties prepared, and to use the markets water supply to irrigate his plants within the lot subject to the markets
preferential rights. The parties also contracted that the agreement shall in no way affect the merits of Civil Case No. 3512
and CAR Case No. 520-B73; and that no part shall be construed as impliedly creating new tenancy relationship.

On December 6, 1973, Camacho filed a Manifestation[11] in Civil Case No. 3512 declaring that she had terminated the
services of Atty. Banzon and had retained the services of new counsel, Atty. Victor De La Serna.

On December 17, 1973, Atty. Banzon filed a Complaint-in-Intervention[12] in Civil Case No. 3512. He alleged that Camacho
had engaged his services as counsel in CAR Case No. 59 B65 (where a favorable decision was rendered) and in Civil Case
No. 3512. Under the Contract of Attorneys Fee which they had both signed, Camacho would compensate him with a 5,000-
sq-m portion of Lot 261 in case he succeeds in negotiating with the Municipality of Balanga in transferring the projected
new public market which had been set for construction at the Doa Francisca Subdivision, all legal requirements having
been approved by a municipal resolution, the Development Bank of the Philippines, and the National Urban Planning
Commission. Atty. Banzon further claimed that as a consequence of the seven cases filed by/against Camacho, she further
bound herself orally to give him a 1,000-sq-m portion of Lot261 as attorneys fee. He had also acquired from Camacho by
purchase an 80-sq-m portion of the subject lot as evidenced by a Provisional Deed of Sale[13] and from third parties an 800-
sq-m portion. He further declared that his requests for Camacho to deliver the portions of the subject lot remained
unheeded, and that of the seven cases[14] he had handled for Camacho, four had been decided in her favor while three
are pending. Atty. Banzon thus prayed for the following relief:

1. Ordering the ejectment of Defendant Silvestre Tuazon, in so far as (6880) square meters is concerned, INTERVENORS claim
over Lot 261;

2. The First Cause of Action, ordering the Plaintiff Aurora B. Camacho to deliver (5000) square meters as per Annex A; EIGHTY
square meters as per Annex C; EIGHT HUNDRED (800) square meters which the INTERVENOR purchased from third parties;

3. On the Second Cause of Action, ordering the Plaintiff Aurora B. Camacho to pay the sum of P8,820.00, corresponding to
the lease rental of (5880) square meters a month, counted from July, 1973, until the same is delivered to the INTERVENOR;

4. On the Third Cause of Action, ordering the Plaintiff Aurora B. Camacho to deliver (1000) square meters, as attorneys fee in
handling seven (7) cases;

5. Ordering the Plaintiff Aurora B. Camacho and Defendant Silvestre Tuazon to pay jointly and severally, the sum of
P5,000.00 for attorneys fee for legal services to the INTERVENOR; cost and litigation expenses of P1,000. until the case is
terminated.

6. To grant such relief, just and equitable in the premises.[15]

Camacho opposed[16] Atty. Banzons motion on the ground that the admission of the complaint-in-intervention would
merely serve to delay the case. She also claimed that his interest could be fully ventilated in a separate case for recovery of
property or for damages.

On April 5, 1974, the RTC granted[17] the motion and subsequently admitted the complaint-in-intervention.

On December 31, 1973, Atty. Banzon and Tuazon entered into the following amicable settlement:

1. That for and in consideration of the sum of TWO THOUSAND PESOS (P2,000.00), Philippine currency, which have been
received from the INTERVENOR and acknowledged to have been received by the Defendant Silvestre Tuazon, the latter
hereby acknowledges, waives his defenses against the claim of the INTERVENOR ANGELINO M. BANZON over a portion of
Lot No. 261, portion of the lot in question, to the extent of SIX THOUSAND EIGHT HUNDRED EIGHTY (6880) SQUARE METERS as
claimed and contained in the COMPLAINT IN INTERVENTION and to give effect to this AMICABLE SETTLEMENT hereby
surrenders the actual possession of the said portion, subject to the approval of this Hon. Court, in favor of the INTERVENOR;

2. That the herein parties to this AMICABLE SETTLEMENT waive and renounce whatever rights or claims, including future
claims that each may have against each other;

3. That the parties herein bind themselves to comply with the conditions of the foregoing settlement;

4. That the foregoing AMICABLE SETTLEMENT was realized and achieved between the herein parties, thru the prior
intercession of the Defendants counsel Atty. Narciso V. Cruz, Jr.
WHEREFORE, it is respectfully prayed that the foregoing AMICABLE SETTLEMENT be approved and made as the basis of this
Hon. Courts decision between the herein INTERVENOR and DEFENDANT Silvestre Tuazon.[18]

In Answer[19] to the complaint-in-intervention, Camacho denied that she solicited the services of Atty. Banzon to facilitate
the transfer of the site of the proposed public market; in fact, it was Atty. Banzon who approached and convinced her to
donate a portion of the lot to the municipality of Balanga. He assured her that the municipality of Balanga planned to
relocate the public market and was scouting for a new location. He also told her that her lot appeared to be the most ideal
location, and that he would take care of all the legal problems.

Camacho admitted, however, that she signed the Contract of Attorneys Fee but only upon the request of Atty. Banzon. He
told her that the document would be shown to the municipal councilors for formalitys sake to prove his authority to act for
and in behalf of Camacho. It was never intended to bind her to pay attorneys fees.[20] She further denied that she agreed
to give to Atty. Banzon 1,000 sq m for handling the seven cases; they never discussed attorneys fees. The cases stemmed
from his assurance that he would take care of any legal problem resulting from the donation of her property. She was not
even a party in some of the cases cited by Atty. Banzon.[21] Lastly, she denied that he had made demands to deliver the
mentioned portions of the property.[22]

In his Reply,[23] Atty. Banzon countered that the Balanga Municipal Council Resolution No. 128 transferring the market site
to Camachos property was enacted precisely because of his letter-proposal[24] to the municipal council.

On August 14, 1977, Camacho and Tuazon entered into a Compromise Agreement,[25]whereby Camacho agreed to
transfer a 1,000-sq-m portion of Lot 261-B in favor of Tuazon; for his part, Tuazon moved to dismiss Civil Case No. 3805 and to
remove all the improvements outside the portion of the property which Camacho had agreed to convey to him. Thus, the
RTC rendered a partial decision[26] approving the compromise agreement.

On September 12, 1978, Camacho filed a Motion to Dismiss[27] the Complaint-in-Intervention filed by Atty. Banzon on the
ground that the jurisdiction of the court to try the case ceased to exist because the principal action had been terminated.
The RTC denied the motion in its Order[28] dated March 16, 1979. It held that Atty. Banzon had an interest over the subject
property which he had to protect and that the compromise agreement between Camacho and Tuazon did not include
him. Moreover, the dismissal of the intervention would not achieve its purpose of avoiding multiplicity of suits. The propriety
of the denial of Camachos motion to dismiss was finally settled by this Court in Camacho v. Court of Appeals[29] where this
Court affirmed the denial of the motion.

After trial on the merits, the RTC rendered a Decision[30] on September 1, 1992 in favor of Atty. Banzon. The fallo reads:

ACCORDINGLY, judgment is hereby rendered:

1. Ordering plaintiff Aurora B. Camacho under the Contract of Attorneys Fees, [to deliver] 5000 square meters of the subject
landholding, Lot 261-B-1, covered by Transfer Certificate of Title No. T-76357, or any other derivative sublots of the original Lot
261-B;

2. Declaring the dismissal of said intervenor from the case at bar as unjustified;

3. Ordering said plaintiff to pay and deliver to said intervenor 1000 square meters of the property in question, Lot 261-B-1 or
any other derivative sublots of the original Lot 261-B in case of deficiency, for legal services rendered in seven (7) cases;

4. Directing said plaintiff to deliver to said intervenor, under a Provisional Deed of Sale, 80 square meters of the subject
property, Lot 261-B-1 or any other derivative sublots of the original Lot 261 in case of deficiency, after payment of the
balance of the purchase price;

5. Ordering said plaintiff to execute the corresponding Deed of Sale in favor of said intervenor for the aforesaid 80 square
meters;
6. Condemning said plaintiff to pay moral damages to said intervenor in the amount of P100,000.00; attorneys fees in the
sum of P30,000.00; and the costs of the suit.

SO ORDERED.[31]

According to the RTC, Camacho had indeed read the contract and freely affixed her signature thereon. Applying the
provisions of Section 7 (now section 9), Rule 130[32] of the Rules of Court, it concluded that the terms of the contract were
embodied in the document itself. Moreover, Camacho did not bother to pay for all the other cases being handled by Atty.
Banzon because she knew that she had agreed already to pay attorneys fees. The court likewise found that applying the
provisions of Sections 24[33] and 26,[34] Rule 138 of the Rules of Court, the area of the lot agreed upon as attorneys fees
appears to be a reasonable compensation for his services. Since Atty. Banzon handled other cases subsequent to the
execution of the contract of attorneys fees, the additional 1,000-sq-m lot which the parties had orally agreed upon is
proper. The RTC declared that Atty. Banzon was entitled to be compensated based on quantum meruit since his dismissal
from the present case was unjustified. It also held that Camacho was obliged to execute the necessary public instrument
covering the 80-sq-m portion of the lot which she had sold to Atty. Banzon. It went further and awarded moral damages to
Atty. Banzon on account of the mental anguish and besmirched reputation he had suffered.

On October 8, 1992, Atty. Banzon filed a Motion for Execution Pending Appeal.[35] Camacho, on the other hand, filed a
Notice of Appeal. Atty. Banzon filed a motion to dismiss on the ground that since the case originated from the municipal
court, it should be assailed via petition for review. On November 20, 1992, the court issued an Order[36] denying the motion
for execution pending appeal for failure to state good reasons therefor. It likewise granted the notice of appeal on the
ground that the complaint-in-intervention originated from the RTC and not from the MTC; under the factual backdrop of
the case, ordinary appeal is proper.

On appeal to the CA, Camacho raised the following errors:

I.

THE LOWER COURT ERRED IN ALLOWING JUDGE ABRAHAM VERA TO SIGN THE DECISION IN THE INSTANT CASE, CONSIDERING
THAT JUDGE VERA HAD LONG CEASED TO BE THE JUDGE OF THAT COURT AND WAS THE PRESIDING JUDGE OF BRANCH 90 OF
THE REGIONAL TRIAL COURT OF QUEZON CITY WHEN THE INSTANT DECISION WAS SIGNED ON SEPTEMBER 1, 1992.

II.

THE LOWER COURT ERRED IN UPHOLDING THE VALIDITY AND DUE EXECUTION OF CONTRACT EXH. C AND IN ORDERING
PLAINTIFF TO DELIVER TO INTERVENOR 5,000 SQUARE METERS OF LOT 261-B-1, T.C.T. T-76357, CONSIDERING THAT THIS LOT IS
NOT SPECIFIED IN EXH. C.

III.

THE LOWER COURT ERRED IN DECLARING THAT INTERVENORS DISCHARGE AS PLAINTIFFS COUNSEL IN THE CASE AT BAR WAS
UNJUSTIFIED, IN AWARDING INTERVENOR MORAL DAMAGES, AND IN DISMISSING PLAINTIFFS COUNTERCLAIMS.

IV.

THE LOWER COURT ERRED IN AWARDING INTERVENOR 1,000 SQUARE METERS OF PLAINTIFFS LAND FOR HIS HANDLING OF
ALLEGED SEVEN CASES.

V.

THE LOWER COURT ERRED IN ORDERING PLAINTIFF TO EXECUTE A FINAL DEED OF SALE FOR 80 SQUARE METERS OUT OF LOT
261-B-1, CONSIDERING THAT LOT 261-B-1 IS NOT SPECIFIED IN THE PROVISIONAL DEED OF SALE.[37]

On October 29, 1996, the CA rendered a decision[38] affirming with modification the RTC ruling. The fallo reads:
WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification requiring plaintiff
Camacho to DELIVER 5,000 sq.m. and 1,000 sq. m. of Lot261-B-1 to Intervenor as his attorneys fee and 80 sq. m. also from Lot
261 subject to the conditions embodied under no. 4 of the dispositive portion of the assailed decision all within thirty (30)
days from the finality of this decision.

SO ORDERED.[39]

The CA held that all the elements of a valid contract were present: Camacho (a dentistry graduate and an experienced
businesswoman conversant in English) cannot plead that she did not understand the undertaking she had entered into; the
object of the contract is certain since the genus of the object was expressed although there was no determination of the
individual specie; and the cause of the obligation to negotiate and offer a site where the public market will be constructed
is not unlawful and cannot be considered as influence peddling. As to the alleged violation of the terms of the special
power of attorney, the court held that Camacho was estopped from claiming damages by reason thereof.

The CA likewise found the award of moral damages to be in order; that the discharge of Atty. Banzon as counsel for
Camacho was not justified and his discharge does not in any way deprive him of his right to attorneys fees. Lastly, the CA
held that the RTC erred in requiring Camacho to deliver Lot 261-B-1, since Atty. Banzon cannot demand a portion of
superior quality in the same way that appellant cannot transfer an inferior quality.

On December 3, 1996, the CA issued a Resolution[40] instituting petitioner Aurora Fe Camacho as substitute for the
deceased Aurora B. Camacho.

Atty. Banzon filed a Motion for Partial Reconsideration of the CA Decision, as well as a Motion to Declare Decision Final
insofar as Camacho was concerned. On the other hand, Camacho moved to cancel the notice of lis pendens. In the
meantime, petitioner had filed the petition before this Court. Thus, the CA no longer acted on the motions on the ground
that it had already lost jurisdiction over the case.[41]

In the present petition, petitioner raises the following issues:

1. WHETHER OR NOT INTERVENOR CAN BE AWARDED A FAVORABLE JUDGMENT DESPITE ABSENCE OF ANY FINDINGS OF FACT
IN THE DECISION WHICH SHOW THAT HE WAS ABLE TO PROVE THE (SIC) HIS MATERIAL ALLEGATIONS UPON WHICH HE BASIS
(SIC) HIS CLAIM UNDER CONTRACT OF ATTORNEYS FEE, EXH. C, ESPECIALLY PAR. 7 OF THE COMPLAINT-IN-INTERVENTION.

CAN THE BURDEN OF PROVING THE AND (SIC) DUE EXECUTION OF CONTRACT EXH. C BE SHIFTED TO PLAINTIFF CAMACHO
WITHOUT VIOLATING SECT. 1, RULE 131, OF THE RULES OF COURT?

2. DID THE COURT OF APPEALS CORRECTLY APPLY THE PROVISION OF ART. 1246 OF THE CIVIL CODE TO THE INSTANT CASE IN
RULING THAT CONTRACT EXH. C IS VALID AS TO OBJECT?

WILL THE DECISION REQUIRING THE DELIVERY OF 5,000 SQUARE METERS OF LOT 261 BASED ON THE SAID ART. 1246, IN WHICH
INTERVENOR CANNOT DEMAND A THING OF SUPERIOR QUALITY AND NEITHER CAN PLAINTIFF CAMACHO DELIVER A THING OF
INFERIOR QUALITY, BE SUSCEPTIBLE OF IMPLEMENTATION WITHOUT NEED OF A NEW CONTRACT OR AGREEMENT BETWEEN THE
PARTIES?

IF SO, WILL THAT NOT ALL THE MORE PROVE THAT TE OBJECT OF CONTRACT EXH. C IS INDETERMINATE PURSUANT [TO] ART.
1349 OF THE CIVIL CODE?

3. WHETHER OR NOT THE COURT OF APPEALS WAS IN A POSITION TO PROCLAIM THE LEGALITY OR ILLEGALITY OF THE ALLEGED
CONTRACT WITHOUT FIRST REVEALING OR SETTING FORTH THE REAL NATURE OF THIS OR THESE UNDERTAKINGS BASED ON THE
ALLEGATIONS AND TESTIMONIES OF INTERVENOR. HENCE, WHETHER OR NOT THE TWO UNDERTAKINGS IN CONTRACT EXH. C
ARE LAWFUL.
4. WHETHER OR NOT THE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION BY TREATING LIKE A MATTER OUT OF
RECORD THE ALLEGED REASONS OF PLAINTIFF CAMACHO FOR DISMISSING INTERVENOR AS HER COUNSEL IN THE CASE AT
BAR, WHICH WERE ENUMERATED AND DISCUSSED ON PAGES 42-60 OF HER APPELLANTS BRIEF, ANNEX B, AND WHICH WERE
PRINCIPALLY AND SPECIFICALLY COVERED IN HER THIRD ASSIGNMENT OF ERRORS AND CONSIDERING THAT ONE OF THESE
ALLEGED REASONS ALSO CONSTITUTE PLAINTIFF CAMACHOS COUNTERCLAIM FOR WHICH SHE IS SEEKING MORAL DAMAGES
OF P100,000.

DID NOT THE COURT OF APPEALS COMMIT GRAVE ABUSE OF DISCRETION IN REPRESENTING PLAINTIFF CAMACHOS THIRD
ASSIGNED ERROR AS REFERRING MERELY TO THE ISSUE OF WHETHER OR NOT THE AWARD OF MORAL DAMAGES TO
INTERVENOR IS JUSTIFIED.

WAS NOT PLAINTIFF CAMACHO THEREBY DEPRIVED OF HER CONSTITUTIONAL RIGHT TO DUE PROCESS OF LAW?

5. WHETHER OR NOT THE AWARD OF 1,000 SQ. M. OF LOT 261 ATTORNEYS FEE FOR ALLEGED HANDLING OF SEVEN CASES HAS
ANY LEGAL BASIS CONSIDERING THAT THERE IS NO SHOWING IN THE DECISION THAT THE ORAL CONTRACT ALLEGED BY
INTERVENOR TO BE THE BASIS OF THE SAID ATTORNEYS FEE WAS DULY POROVEN (SIC).[42]

Petitioner argues that the findings of facts in the assailed decision are mere conclusions, without citation of evidence to
support them. She likewise avers that consent was not clearly proven; the conclusion of the CA was based on the
presumption that the document was read prior to being signed. Petitioner insists that there is no object certain to speak of
since the exact location of the subject property cannot be determined; in short, the issue is not the quality of the property
but its identity. Petitioner further asserts that the cause of the contract pirating of the municipalitys market project and
ejecting the tenant to convert the property into a commercial establishment is illegal. She further insists that respondent
failed to accomplish the twin objective of ejecting Silvestre Tuazon and converting the remaining land into a commercial
area; thus, he is not entitled to the 5,000-sq-m lot. She further contends that the CA erred in awarding moral damages
because respondent did not ask for it in his complaint-in-intervention. Lastly, she asserts that the CA erred in affirming the
award of the 1,000-sq-m lot pursuant to a verbal contract between Camacho and respondent, especially considering the
prevailing jurisprudence against a lawyers acquisition of a clients lot in litigation without the latters consent.

In his Comment,[43] respondent counters that the elements of a valid contract are present: Camachos consent to the
contract is evidenced by her signature which was in fact admitted by the latter; that while it is true that the identity of the
5,000-sq-m portion of Lot 261 has not been specified due to the absence of the necessary technical descriptions, it is
capable of being made determinate without the need of a new agreement between the parties; as to the validity of the
cause of the contract, the general principle of estoppel applies.

The Ruling of the Court

Article 1305 of the New Civil Code defines a contract as a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service. Contracts shall be obligatory in whatever
form they may have been entered into, provided all the essential requisites for their validity are present.[44]

In general, there are three (3) essential requisites for a valid contract: (1) consent of the contracting parties; (2) an object
certain which is the subject of the contract; and (3) the causeof the obligation which is established.[45]

The first element

Consent of the contracting parties

Is shown by their signatures on the

Contract

Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the agreement.[46] In this case, Camacho admitted the existence of the contract as well as the genuineness of
her signature. However, she claimed that she signed only upon the request of Atty. Banzon, who told her that the document
would only be shown to the municipal councilors (for formalitys sake) to prove his authority in her behalf. It was never
intended to bind her to pay him attorneys fees;[47] in short, petitioner insists that Camacho had not given her consent to
the contract.

We, however, do not agree. The contract between Camacho and respondent is evidenced by a written document signed
by both parties denominated as Contract of Attorneys Fee. It is an established rule that written evidence is so much more
certain and accurate than that which rests in fleeting memory only; that it would be unsafe, when parties have expressed
the terms of their contract in writing, to admit weaker evidence to control and vary the stronger, and to show that the
parties intended a different contract from that expressed in the writing signed by them.[48] Moreover, the moment a party
affixes her signature thereon, he or she is bound by all the terms stipulated therein and is open to all the legal obligations
that may arise from their breach.[49]

In the instant case, Camacho voluntarily signed the document evidencing the contract.Camachos claim that the
document was intended only to show respondents authority to represent her with respect to the transaction is flimsy, since a
special power of attorney could just as easily have accomplished that purpose. In fact, Camacho did execute a Special
Power of Attorney[50] after the Contract of Attorneys Fee was executed, and if Camacho were to be believed, the
Contract of Attorneys Fee should have been immediately canceled thereafter since it was no longer needed. As correctly
held by the CA, Camacho was an experienced businesswoman, a dentistry graduate and is conversant in the English
language. We note that the words and phrases used in the Contract of Attorneys Fee are very simple and clear; thus, she
cannot plead that she did not understand the undertaking she had entered into.[51] Considering that her undertaking was
to part with a 5,000-sq-m portion of her property, she should have been more vigilant in protecting her rights.

Even assuming that the contract did not reflect the true intention of the parties as to their respective obligations, it is
nevertheless binding. The existence of the written contract, coupled with Camachos admission that the signature
appearing thereon was hers, constitute ineluctable evidence of her consent to the agreement. It cannot be overcome by
mere denial and allegations that they did not intend to be bound thereby. We also note that Camacho did not avail of the
remedy of reformation of the instrument in order to reflect what, according to her, was the true agreement.

Camachos consent to the contract was further manifested in the following events that transpired after the contract was
executed: the execution of the agreement with voluntary surrender signed by Tuazon; the execution of the Deed of
Donation where Atty. Banzon was authorized to sign the same on behalf of Camacho; and the sale of 1200 sq. m. portion of
the property right at the market site. In all these transactions, Atty. Banzon represented Camacho pursuant to the Contract
of Attorneys Fee.

The object of the contract

Is still certain despite the parties

Failure to indicate the specific

Portion of the property to be

Given as compensation for services

Articles 1349 and 1460 of the Civil Code provide the guidelines in determining whether or not the object of the contract is
certain:

Article 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of
a new contract between the parties.

xxxx

Article 1460. A thing is determinate when it is particularly designated and/or physically segregated from all others of the
same class.

The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of being
made determinate without the necessity of a new or further agreement between the parties.

In this case, the object of the contract is the 5,000-sq-m portion of Lot 261, Balanga Cadastre.The failure of the parties to
state its exact location in the contract is of no moment; this is a mere error occasioned by the parties failure to describe with
particularity the subject property, which does not indicate the absence of the principal object as to render the contract
void.[52] Since Camacho bound herself to deliver a portion of Lot 261 to Atty. Banzon, the description of the property
subject of the contract is sufficient to validate the same.
The Cause or Consideration

Of the contract is not illegal

In general, the cause is the why of the contract or the essential reason which moves the contracting parties to enter into
the contract.[53] For the cause to be valid, it must be lawful such that it is not contrary to law, morals, good customs, public
order or public policy.[54]Petitioner insists that the cause of the subject contract is illegal. However, under the terms of the
contract, Atty. Banzon was obliged to negotiate with the municipal government of Balanga for the transfer of the proposed
new public market to Camachos property (Lot 261); to sell 1,200 square meters right at the market site; and to take charge
of the legal phases incidental to the transaction which include the ejectment of persons unlawfully occupying the property
(whether through amicable settlement or court action), and the execution of the Deed of Donation and other papers
necessary to consummate the transaction. There was thus nothing wrong with the services which respondent undertook to
perform under the contract. They are not contrary to law, morals, good customs, public order or public policy.

Petitioner argues that the cause of the contract is the pirating of the municipalitys market project and ejecting the tenant
to convert the property into a commercial establishment. This is premised on the fact that the construction of the new
public market at Doa Francisca Subdivision had originally been approved by the municipal council of Balanga, the
Development Bank of the Philippines, and the National Urban Planning Commission; and at the time the contract was
executed, Tuazon occupied the property. The records show, however, that the municipal council was scouting for a new
location because it had reservations regarding the site of the proposed project. And while Lot 261 was considered to be the
most ideal (because it stands on higher ground and is not susceptible to flooding) it does not follow that respondent no
longer negotiated for and in Camachos behalf. There were other terms to be negotiated, such as the mode of transfer
(whether sale or donation); the titling of the property in the name of the municipality; the terms of payment, if any; and
such other legalities necessary to consummate the transaction.

It must be stressed that Camacho was not deprived of any property right. The portions of her property which she parted
with (the 17,000-sq-m portion donated to the municipality; the 5,000-sq-m portion given to respondent as attorneys fees;
and the 1,200-sq-m portion which was sold) were either in exchange for services rendered or for monetary consideration. In
fact, all these transactions resulted in the increase in the economic value of her remaining properties.

Thus, the defense of the illegality of respondents undertaking is baseless. The municipal council had the authority to choose
the best site for its project. We also note that the market site was transferred with the active participation of Camacho, who
agreed to donate the 17,000-sq-m portion of her property; the new public market was constructed and became
operational; and the sale of the 1,200-sq-m lot was consummated when Camacho executed the deeds herself. Thus,
petitioner cannot be allowed to evade the payment of Camachos liabilities under the contract with respondent; a contrary
conclusion would negate the rule of estoppel and unjust enrichment.

As to the additional 1,000-sq-m-portion of Lot 261, however, we find and so hold that respondent is not entitled thereto.

Indeed, it was sufficiently established that an attorney-client relationship existed between Camacho and respondent and
that the latter handled several other cases for his client. The records show that the parties had agreed upon specific sums of
money as attorneys fees for the other cases:

Civil Case No. C-1773 P10,000.00[55]

Civil Case No. 424 P1,000.00[56]

CAR Case No. 278-B70 P2,000.00[57]

CAR Case No. 520-B73 P5,000.00[58]

Civil Case No. 3281 P5,000.00[59]

This clearly negates respondents claim of an additional 1,000-sq-m share as compensation for services rendered. Likewise,
there being no evidence on respondents right over the 800-sq-m allegedly purchased from third persons, he is likewise not
entitled to this portion of the property.

On the other hand, Camacho admitted in her Answer[60] to the Complaint-in-Intervention that respondent had purchased
from her an 80-sq-m portion of the property. Since she had merely executed a Provisional Deed of Sale,[61] we agree with
the RTC that respondent has the right to require the execution of a public instrument evidencing the sale.

It must be understood that a retainer contract is the law that governs the relationship between a client and a lawyer.[62]
Unless expressly stipulated, rendition of professional services by a lawyer is for a fee or compensation and is not
gratuitous.[63] Whether the lawyers services were solicited or they were offered to the client for his assistance, inasmuch as
these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent
as to the rendition of the services, and thus gives
rise to the obligation upon the person benefited by the services to make compensation therefor.[64] Lawyers are thus as
much entitled to judicial protection against injustice on the part of their clients as the clients are against abuses on the part
of the counsel. The duty of the court is not only to see that lawyers act in a proper and lawful manner, but also to see that
lawyers are paid their just and lawful fees.[65] If lawyers are entitled to fees even if there is no written contract, with more
reason that they are entitled thereto if their relationship is governed by a written contract of attorneys fee.

In her fourth assigned error, petitioner claims that the CA failed to rule on the propriety of the dismissal of respondent as
Camachos counsel.

We do not agree. We uphold the following pronouncement of the CA on the matter:

In this case, the grounds relied upon by plaintiff Camacho as justifications for the discharge of Intervenor are not sufficient
to deprive the latter of his attorneys fees.

Intervenor may see the case in an angle different from that seen by plaintiff Camacho.The procedures adopted by
Intervenor may not be what plaintiff Camacho believes to be the best. But these do not in any way prove that Intervenor
was working to the prejudice of plaintiff Camacho.

Failure of plaintiff Camacho to prove that Intervenor intended to damage her, We consider the charges of plaintiff
Camacho as mere honest difference of opinions.

As to the charge that Intervenor failed to account the money he collected in behalf of plaintiff Camacho, the same is not
supported by any evidence. Suffice it to say that mere allegations cannot prove a claim.[66]

The ruling of the CA on the award of moral damages is likewise in accordance with the facts and established jurisprudence:

The act of plaintiff Camacho is a clear case of breach of contract. Worst, when Intervenor demanded payment, plaintiff
Camacho adopted all sorts of strategies to delay payment.This case dragged on for twenty (20) years. And until this time,
plaintiff Camacho continues to unjustifiably refuse the payment of the attorneys fees due to intervenor.

For these, one can readily imagine the worries and anxiety gone through by Intervenor.Award of moral damages is but
proper.

Moral damages may be granted if the party had proven that he suffered mental anguish, serious anxiety and moral shock
as a consequence of the act of the other party. Moral damages can be awarded when a party acted in bad faith as in this
case by Camacho.[67]

IN LIGHT OF ALL THE FOREGOING, the appealed decision is AFFIRMED with the MODIFICATION that the award of a 1,000-
square-meter portion of Lot 261 to respondent Atty. Angelito Banzon as attorneys fees is DELETED.

SO ORDERED.

----

G.R. No. 191247, July 10, 2013

FRANCISCO L. ROSARIO, JR., Petitioner, v. LELLANI DE GUZMAN, ARLEEN DE GUZMAN, PHILIP RYAN DE GUZMAN, AND ROSELLA
DE GUZMAN BAUTISTA, Respondents.

DECISION

MENDOZA, J.:

This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the November 23, 2009 1 and the
February 11, 20102 Orders of the Regional Trial Court, Branch 7, Manila (RTC), in Civil Case No. 89-50138, entitled "Loreta A.
Chong v. Sps. Pedro and Rosita de Guzman," denying the Motion to Determine Attorney's Fees filed by the petitioner.

The Facts

Sometime in August 1990, Spouses Pedro and Rosita de Guzman (Spouses de Guzman) engaged the legal services of Atty.
Francisco L. Rosario, Jr. (petitioner) as defense counsel in the complaint filed against them by one Loreta A. Chong (Chong)
for annulment of contract and recovery of possession with damages involving a parcel of land in Parañaque City, covered
by Transfer Certificate of Title (TCT) No. 1292, with an area of 266 square meters, more or less. Petitioner’s legal services
commenced from the RTC and ended up in this Court.3 Spouses de Guzman, represented by petitioner, won their case at
all levels. While the case was pending before this Court, Spouses de Guzman died in a vehicular accident. Thereafter, they
were substituted by their children, namely: Rosella de Guzman-Bautista, Lellani de Guzman, Arleen de Guzman, and Philip
Ryan de Guzman (respondents).4

On September 8, 2009, petitioner filed the Motion to Determine Attorney’s Fees 5 before the RTC. He alleged, among others,
that he had a verbal agreement with the deceased Spouses de Guzman that he would get 25% of the market value of the
subject land if the complaint filed against them by Chong would be dismissed. Despite the fact that he had successfully
represented them, respondents refused his written demand for payment of the contracted attorney’s fees. Petitioner
insisted that he was entitled to an amount equivalent to 25% percent of the value of the subject land on the basis of
quantum meruit.

On November 23, 2009, the RTC rendered the assailed order denying petitioner’s motion on the ground that it was filed out
of time. The RTC stated that the said motion was filed after the judgment rendered in the subject case, as affirmed by this
Court, had long become final and executory on October 31, 2007. The RTC wrote that considering that the motion was filed
too late, it had already lost jurisdiction over the case because a final decision could not be amended or corrected except
for clerical errors or mistakes. There would be a variance of the judgment rendered if his claim for attorney’s fees would still
be included.

Petitioner filed a motion for reconsideration, but it was denied by the RTC for lack of merit. Hence, this petition.

The Issues

This petition is anchored on the following grounds:cralavvonlinelawlibrary

THE TRIAL COURT COMMITTED A REVERSIBLE ERROR IN DENYING THE MOTION TO DETERMINE ATTORNEY’S FEES ON THE
GROUND THAT IT LOST JURISDICTION OVER THE CASE SINCE THE JUDGMENT IN THE CASE HAS BECOME FINAL AND
EXECUTORY;chanroblesvirtualawlibrary

II

THE TRIAL COURT SERIOUSLY ERRED IN DECLARING THAT PETITIONER’S CLAIM FOR ATTORNEY’S FEES WOULD RESULT IN A
VARIANCE OF THE JUDGMENT THAT HAS LONG BECOME FINAL AND EXECUTORY;chanroblesvirtualawlibrary

III

THE TRIAL COURT ERRED IN NOT DECLARING THAT THE FINALITY OF THE DECISION DID NOT BAR PETITIONER FROM FILING THE
MOTION TO RECOVER HIS ATTORNEY’S FEES.6nadcralavvonlinelawlibrary

Petitioner claims that Spouses de Guzman engaged his legal services and orally agreed to pay him 25% of the market value
of the subject land. He argues that a motion to recover attorney’s fees can be filed and entertained by the court before
and after the judgment becomes final. Moreover, his oral contract with the deceased spouses can be considered a quasi-
contract upon which an action can be commenced within six (6) years, pursuant to Article 1145 of the Civil Code. Because
his motion was filed on September 8, 2009, he insists that it was not yet barred by prescription.7

For their part, respondents counter that the motion was belatedly filed and, as such, it could no longer be granted. In
addition, the RTC had already resolved the issue when it awarded the amount of ?10,000.00 as attorney’s fees.
Respondents further assert that the law, specifically Article 2208 of the Civil Code, allows the recovery of attorney’s fees
under a written agreement. The alleged understanding between their deceased parents and petitioner, however, was
never put in writing. They also aver that they did not have any knowledge or information about the existence of an oral
contract, contrary to petitioner’s claims. At any rate, the respondents believe that the amount of 25% of the market value of
the lot is excessive and unconscionable.8

The Court’s Ruling

Preliminarily, the Court notes that the petitioner filed this petition for review on certiorari under Rule 45 of the Rules of Court
because of the denial of his motion to determine attorney’s fees by the RTC. Apparently, the petitioner pursued the wrong
remedy. Instead of a petition for review under Rule 45, he should have filed a petition for certiorari under Rule 65 because
this case involves an error of jurisdiction or grave abuse of discretion on the part of the trial court.

Moreover, petitioner violated the doctrine of hierarchy of courts which prohibits direct resort to this Court unless the
appropriate remedy cannot be obtained in the lower tribunals.9 In this case, petitioner should have first elevated the case
to the Court of Appeals (CA) which has concurrent jurisdiction, together with this Court, over special civil actions for
certiorari.10 Even so, this principle is not absolute and admits of certain exceptions, such as in this case, when it is demanded
by the broader interest of justice.11

Indeed, on several occasions, this Court has allowed a petition to prosper despite the utilization of an improper remedy with
the reasoning that the inflexibility or rigidity of the application of the rules of procedure must give way to serve the higher
ends of justice. The strict application of procedural technicalities should not hinder the speedy disposition of the case on the
merits.12 Thus, this Court deems it expedient to consider this petition as having been filed under Rule 65.

With respect to the merits of the case, the Court finds in favor of petitioner.

In order to resolve the issues in this case, it is necessary to discuss the two concepts of attorney’s fees – ordinary and
extraordinary. In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal services
rendered. In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as
indemnity for damages.13 Although both concepts are similar in some respects, they differ from each other, as further
explained below:cralavvonlinelawlibrary

The attorney’s fee which a court may, in proper cases, award to a winning litigant is, strictly speaking, an item of damages.
It differs from that which a client pays his counsel for the latter’s professional services. However, the two concepts have
many things in common that a treatment of the subject is necessary. The award that the court may grant to a successful
party by way of attorney’s fee is an indemnity for damages sustained by him in prosecuting or defending, through counsel,
his cause in court. It may be decreed in favor of the party, not his lawyer, in any of the instances authorized by law. On the
other hand, the attorney’s fee which a client pays his counsel refers to the compensation for the latter’s services. The losing
party against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his liability dependent
upon, the fee arrangement of the prevailing party with his lawyer. The amount stipulated in such fee arrangement may,
however, be taken into account by the court in fixing the amount of counsel fees as an element of damages.

The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries
against the losing party. The client and his lawyer may, however, agree that whatever attorney’s fee as an element of
damages the court may award shall pertain to the lawyer as his compensation or as part thereof. In such a case, the court
upon proper motion may require the losing party to pay such fee directly to the lawyer of the prevailing party.

The two concepts of attorney’s fees are similar in other respects. They both require, as a prerequisite to their grant, the
intervention of or the rendition of professional services by a lawyer. As a client may not be held liable for counsel fees in
favor of his lawyer who never rendered services, so too may a party be not held liable for attorney’s fees as damages in
favor of the winning party who enforced his rights without the assistance of counsel. Moreover, both fees are subject to
judicial control and modification. And the rules governing the determination of their reasonable amount are applicable in
one as in the other.14 [Emphases and underscoring supplied]

In the case at bench, the attorney’s fees being claimed by the petitioner refers to the compensation for professional
services rendered, and not as indemnity for damages. He is demanding payment from respondents for having successfully
handled the civil case filed by Chong against Spouses de Guzman. The award of attorney’s fees by the RTC in the amount
of P10,000.00 in favor of Spouses de Guzman, which was subsequently affirmed by the CA and this Court, is of no moment.
The said award, made in its extraordinary concept as indemnity for damages, forms part of the judgment recoverable
against the losing party and is to be paid directly to Spouses de Guzman (substituted by respondents) and not to petitioner.
Thus, to grant petitioner’s motion to determine attorney’s fees would not result in a double award of attorney’s fees. And,
contrary to the RTC ruling, there would be no amendment of a final and executory decision or variance in judgment.

The Court now addresses two (2) important questions: (1) How can attorney’s fees for professional services be recovered?
(2) When can an action for attorney’s fees for professional services be filed? The case of Traders Royal Bank Employees
Union-Independent v. NLRC15 is instructive:cralavvonlinelawlibrary

As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private
respondent’s present claim for attorney’s fees may be filed before the NLRC even though or, better stated, especially after
its earlier decision had been reviewed and partially affirmed. It is well settled that a claim for attorney’s fees may be
asserted either in the very action in which the services of a lawyer had been rendered or in a separate action.

With respect to the first situation, the remedy for recovering attorney’s fees as an incident of the main action may be
availed of only when something is due to the client. Attorney’s fees cannot be determined until after the main litigation has
been decided and the subject of the recovery is at the disposition of the court. The issue over attorney’s fees only arises
when something has been recovered from which the fee is to be paid.

While a claim for attorney’s fees may be filed before the judgment is rendered, the determination as to the propriety of the
fees or as to the amount thereof will have to be held in abeyance until the main case from which the lawyer’s claim for
attorney’s fees may arise has become final. Otherwise, the determination to be made by the courts will be premature. Of
course, a petition for attorney’s fees may be filed before the judgment in favor of the client is satisfied or the proceeds
thereof delivered to the client.

It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees.
Hence, private respondent was well within his rights when he made his claim and waited for the finality of the judgment for
holiday pay differential, instead of filing it ahead of the award’s complete resolution. To declare that a lawyer may file a
claim for fees in the same action only before the judgment is reviewed by a higher tribunal would deprive him of his
aforestated options and render ineffective the foregoing pronouncements of this Court. [Emphases and underscoring
supplied]

In this case, petitioner opted to file his claim as an incident in the main action, which is permitted by the rules. As to the
timeliness of the filing, this Court holds that the questioned motion to determine attorney’s fees was seasonably filed.

The records show that the August 8, 1994 RTC decision became final and executory on October 31, 2007. There is no dispute
that petitioner filed his Motion to Determine Attorney’s Fees on September 8, 2009, which was only about one (1) year and
eleven (11) months from the finality of the RTC decision. Because petitioner claims to have had an oral contract of
attorney’s fees with the deceased spouses, Article 1145 of the Civil Code 16 allows him a period of six (6) years within which
to file an action to recover professional fees for services rendered. Respondents never asserted or provided any evidence
that Spouses de Guzman refused petitioner’s legal representation. For this reason, petitioner’s cause of action began to run
only from the time the respondents refused to pay him his attorney’s fees, as similarly held in the case of Anido v. Negado:17

In the case at bar, private respondent’s allegation in the complaint that petitioners refused to sign the contract for legal
services in October 1978, and his filing of the complaint only on November 23, 1987 or more than nine years after his cause
of action arising from the breach of the oral contract between him and petitioners point to the conclusion that the six-year
prescriptive period within which to file an action based on such oral contract under Article 1145 of the Civil Code had
already lapsed.

As a lawyer, private respondent should have known that he only had six years from the time petitioners refused to sign the
contract for legal services and to acknowledge that they had engaged his services for the settlement of their parents’ estate
within which to file his complaint for collection of legal fees for the services which he rendered in their favor. [Emphases
supplied]

At this juncture, having established that petitioner is entitled to attorney’s fees and that he filed his claim well within the
prescribed period, the proper remedy is to remand the case to the RTC for the determination of the correct amount of
attorney’s fees. Such a procedural route, however, would only contribute to the delay of the final disposition of the
controversy as any ruling by the trial court on the matter would still be open for questioning before the CA and this Court. In
the interest of justice, this Court deems it prudent to suspend the rules and simply resolve the matter at this level. The Court
has previously exercised its discretion in the same way in National Power Corporation v. Heirs of Macabangkit Sangkay:18

In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention of the courts is
sought, the determination requires that there be evidence to prove the amount of fees and the extent and value of the
services rendered, taking into account the facts determinative thereof. Ordinarily, therefore, the determination of the
attorney’s fees on quantum meruit is remanded to the lower court for the purpose. However, it will be just and equitable to
now assess and fix the attorney’s fees of both attorneys in order that the resolution of “a comparatively simple controversy,”
as Justice Regalado put it in Traders Royal Bank Employees Union-Independent v. NLRC, would not be needlessly
prolonged, by taking into due consideration the accepted guidelines and so much of the pertinent data as are extant in
the records.19 [Emphasis supplied]

With respect to petitioner’s entitlement to the claimed attorney’s fees, it is the Court’s considered view that he is deserving
of it and that the amount should be based on quantum meruit.

Quantum meruit – literally meaning as much as he deserves – is used as basis for determining an attorney’s professional fees
in the absence of an express agreement. The recovery of attorney’s fees on the basis of quantum meruit is a device that
prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and
also avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to reasonable
compensation for the effort in pursuing the client’s cause, taking into account certain factors in fixing the amount of legal
fees.20

Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of attorney fees,
to wit:cralavvonlinelawlibrary

Rule 20.1 – A lawyer shall be guided by the following factors in determining his fees:cralavvonlinelawlibrary

a) The time spent and the extent of the services rendered or required;chanroblesvirtualawlibrary

b) The novelty and difficulty of the questions involved;chanroblesvirtualawlibrary

c) The importance of the subject matter;chanroblesvirtualawlibrary

d) The skill demanded;chanroblesvirtualawlibrary

e) The probability of losing other employment as a result of acceptance of the proffered case;chanroblesvirtualawlibrary

f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he
belongs;chanroblesvirtualawlibrary

g) The amount involved in the controversy and the benefits resulting to the client from the service;chanroblesvirtualawlibrary

h) The contingency or certainty of compensation;chanroblesvirtualawlibrary

i) The character of the employment, whether occasional or established; and

j) The professional standing of the lawyer.

Petitioner unquestionably rendered legal services for respondents’ deceased parents in the civil case for annulment of
contract and recovery of possession with damages. He successfully represented Spouses de Guzman from the trial court
level in 1990 up to this Court in 2007, for a lengthy period of 17 years. After their tragic death in 2003, petitioner filed a notice
of death and a motion for substitution of parties with entry of appearance and motion to resolve the case before this
Court.21 As a consequence of his efforts, the respondents were substituted in the place of their parents and were benefited
by the favorable outcome of the case.

As earlier mentioned, petitioner served as defense counsel for deceased Spouses de Guzman and respondents for almost
seventeen (17) years. The Court is certain that it was not an easy task for petitioner to defend his clients’ cause for such a
long period of time, considering the heavy and demanding legal workload of petitioner which included the research and
preparation of pleadings, the gathering of documentary proof, the court appearances, and the various legal work
necessary to the defense of Spouses de Guzman. It cannot be denied that petitioner devoted much time and energy in
handling the case for respondents. Given the considerable amount of time spent, the diligent effort exerted by petitioner,
and the quality of work shown by him in ensuring the successful defense of his clients, petitioner clearly deserves to be
awarded reasonable attorney’s fees for services rendered. Justice and equity dictate that petitioner be paid his
professional fee based on quantum meruit.

The fact that the practice of law is not a business and the attorney plays a vital role in the administration of justice
underscores the need to secure him his honorarium lawfully earned as a means to preserve the decorum and respectability
of the legal profession. A layer is as much entitled to judicial protection against injustice, imposition or fraud on the part of
his client as the client against abuse on the part of his counsel. The duty of the court is not alone to see that a lawyer acts in
a proper and lawful manner; it is also its duty to see that a lawyer is paid his just fees. With his capital consisting of his brains
and with his skill acquired at tremendous cost not only in money but in expenditure of time and energy, he is entitled to the
protection of any judicial tribunal against any attempt on the part of his client to escape payment of his just compensation.
It would be ironic if after putting forth the best in him to secure justice for his client he himself would not get his due. 22

The Court, however, is resistant in granting petitioner's prayer for an award of 25% attorney's fees based on the value of the
property subject of litigation because petitioner failed to clearly substantiate the details of his oral agreement with Spouses
de Guzman. A fair and reasonable amount of attorney's fees should be 15% of the market value of the property.

WHEREFORE, the petition is GRANTED. Accordingly, the Court grants the Motion to Determine Attorney's Fees filed by
petitioner Atty. Francisco L. Rosario, Jr. Based on quantum meruit, the amount of attorney's fees is at the rate of 15% of the
market value of the parcel of land, covered by Transfer Certificate of Title No. 1292, at the time of payment.

SO ORDERED.

Velasco, Jr., (Chairperson), Peralta, Abad, and Leonen, JJ., concur.

July 26, 2013

D. M. CONSUNJI, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), and ALEXANDER
AGRAVIADOR, JOVENCIO MENDREZ, FELIPE BARCELONA, CONCORCIOLASPUA and ROGELIO DIAZ, respondents.

DECISION

KAPUNAN, J.:

In this special civil action of certiorari, petitioner prays that the decision of public respondent National Labor Relations
Commission be set aside since it acted with grave abuse of discretion amounting to lack of jurisdiction when it directed the
reinstatement of private respondents to their former positions with full backwages.

This case arose from the complaint for illegal dismissal with prayer for reinstatement and payment of full wages filed by the
private respondents. Private respondents were hired by petitioner as project employees to work on its Cebu Super Block
Project in Cebu City. Their separate but identical contracts state among others:

You are hired/appointed as project employee as ___________ for an estimated period of employment for
_____________________ in the company's construction project at Cebu Superblock.

THE TERMS AND CONDITIONS OF YOUR EMPLOYMENT ARE AS FOLLOWS:

The period of employment is for an estimated period of one month that is for ___________________ to _____________________
provided that it shall not extend beyond the duration of the project, or a particular phase thereof, for which you are hired;
subject to the further condition that your services may be sooner terminated should the particular phase of work for which
you are hired be completed earlier or should supervisor find your services unsatisfactory or for any other justifiable cause.
Should there be other construction projects of the company at the time of your layoff for completion of phase of work, you
may request for employment in such other project, subject to the availability of job vacancy in such other project suited to
your skills.1[1]

Their contracts also provide for the following terms and conditions:2[2]

Name Date of Hiring Date of Termination Position Salary

Alexander Agraviador Feb. 9, 1993 March 9, 1993 Carpenter 13.625/hr.

Jovencio Mendrez Feb. 8, 1993 March 8, 1993 Laborer 13.125/hr.

Felipe Barcelona Nov. 21, 1992 Dec. 21, 1992 Carpenter 13.625/hr.

Consorcio Laspuna Feb. 17, 1993 March 2, 1993 Laborer 13.125/hr.

Rogelio Diaz Dec. 01, 1992 Jan. 01, 1993 Laborer 13.125/hr.

On March 2, 1993, private respondents services were terminated allegedly without regard to the date of termination as
specified in their contracts of employment. Petitioner reported the termination of their services to the nearest Regional
Office of the Department of Labor alleging that the term of the contracts of employment had expired.

The private respondents then filed their respective complaints for illegal dismissal. On July 9, 1993, the Labor Arbiter rendered
a decision finding the dismissal of the private respondents without just cause and ordering petitioner to reinstate them to
their former positions without loss of benefits and seniority rights and to pay them as their backwages, to wit:

1. Alexander Agraviador P5,460.00

2. Jovencio Mendrez 5,460.00

3. Felipe Barcelona 5,460.00

4. Consorcio Laspua 5,460.00

5. Rogelio Diaz 5,460.00

GRAND TOTAL P27,300.003[3]

In ruling that the dismissals were illegal, the Labor Arbiter explained that while the private respondents voluntarily signed the
employment contract which fixed the term of their employment, their dismissal was not actually based on the expiration of
the term of their employment because some of them were dismissed before the end of the contract and there were those
dismissed even long after its expiration. The Labor Arbiter, thus, concluded that the contracts of employment of the private
respondents should not be honored because they were made more for breach rather than for observance.4[4]

The NLRC affirmed the decision of the Labor Arbiter. It ruled that the employment period need not reach six months in order
that the private respondents attain the status of regular employees citing Article 280 of the Labor Code.5[5] It agreed with
the Labor Arbiter that the private respondents could not be considered contract workers because they worked even after
the expiration of their contracts of employment.6[6]

Dissatisfied with the decision of the respondent NLRC, petitioner appealed to this Court by way of a special civil action of
certiorari under Rule 65 of the Rules of Court, raising the following issues:

6
1. ARE THE PRIVATE RESPONDENTS ENTITLED TO REINSTATEMENT WITH FULL BACKWAGES THE FACT (sic) THAT THEY WERE HIRED
STRICTLY ON PROJECT TO PROJECT BASIS?

2. DID THE RESPONDENT NATIONAL LABOR RELATIONS COMMISSION ACT WITH GRAVE ABUSE OF DISCRETION WHICH
AMOUNTED TO LACK OF JURISDICTION WHEN IT DIRECTED THE REINSTATEMENT OF THE PRIVATE RESPONDENTS TO THEIR
PREVIOUS POSITION (sic) DESPITE THEIR BEING PROJECT EMPLOYEES? 7[7]

In resolving these issues, we shall discuss whether or not the private respondents were project employees; and if in the
affirmative, whether or not the termination of their employment was illegal.

Petitioner maintains that the private respondents were project employees since they were hired on a project-to-project
basis.8[8] Moreover, private respondents cannot be regular employees because they were all employed for less than six (6)
months such that even assuming that they were not project employees, they have not attained that status of regular
employment.9[9]

On the other hand, private respondents claim that they were dismissed from their employment on March 2, 1993 even
though the construction project was not yet completed. They also allege that after their services were terminated,
petitioner hired new workers.10[10] They argue that their dismissal was effected without just cause and without due process
of law.11[11]

The Office of the Solicitor General in its Memorandum recommended that the decision of the NLRC be reversed and the
complaints filed by private respondents dismissed as they were project employees whose employment periods were pre-
determined at the moment they were hired. As project employees, private respondents are not entitled to reinstatement
and full backwages.12[12]

The petition is impressed with merit.

Project employee is one whose employment has been fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of the engagement of the employee or where the work or services
to be performed is seasonal in nature and the employment is for the duration of the season. 13[13] This Court has held that
the length of service of a project employee is not the controlling test of employment tenure but whether or not the
employment has been fixed for a specific project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee.14[14]

We hold that the private respondents are project employees. Their contracts of employment readily show that the private
respondents were employed with respect to a specific project. The private respondents in this case were workers in a
construction project of the petitioner. While employed with respect to a specific project, the contracts of employment
between the private respondents and the petitioner provide that the former were employed for a term of one (1) month
which was the estimated period for the project to be finished. The private respondents do not even claim to be regular
employees but merely that, as employees at the Cebu Super Block, they were terminated before the completion of the
project without just cause and due process. As project employees, there is no showing that they were part of the work pool
of the petitioner construction company. Hence, in their memorandum, private respondents admit that they are not
unaware that as project employees their employment can be terminated upon the completion of the project. 15[15]

Examining the standard contracts signed by the private respondents, there are three ways by which their employment may
be terminated: one, the expiration of the one month period, which was the estimated period for the completion of the
project; two, the completion of the project or phase of the project for which they were engaged prior to the expiration of
the one month period; and three, upon the finding of unsatisfactory services or other just cause. The private respondents
admitted before the labor arbiter that they signed their employment contract voluntarily.16[16] By this admission, the private
respondents necessarily bound themselves to be employed for a fixed duration knowingly and voluntarily without any force,
duress or improper pressure. There is no showing that the term fixed was used to preclude acquisition of tenurial security
since private respondents were admittedly employed with respect to a specific project, the Cebu Super Block. Inescapably,
being a valid contract between the private respondents and the petitioner, the provisions thereof, specifically with respect
to the one (1) month period of employment, has the force of law between the parties.

10

11

12

13

14

15

16
At the time of the termination of the private respondents employment on March 2, 1993, the respective periods or terms of
employment of private respondents Felipe Barcelona, Consorcio Laspuna and Rogelio Diaz had already expired. The fact
that they were allowed to work for weeks after the expiration of their contracts would not necessarily show that petitioner
had dishonored the contracts. Indeed, some phases of the project may not have been completed after the estimated one
month period and that their services were still necessary.

On the other hand, the one month period under the contracts of Alexander Agraviador and Jovencio Mendrez had not yet
expired when their services were terminated on March 2, 1993 considering that the duration of their contracts was from
February 9 to March 9, 1993 with respect to Agraviador, and from February 8 to March 8, 1993 with respect to Mendrez.
Petitioner merely claims that all the private respondents were terminated because of the expiration of the period of the
contract.17[17] Petitioner has not alleged, much less established, that the premature termination of the services of private
respondents Agraviador and Mendrez was due to the earlier completion of the project or any phase or phases thereof to
which they were assigned. Neither has it been shown that the services of Agraviador and Mendrez were unsatisfactory. In
termination cases, the burden of proving that an employee has been lawfully dismissed lies with the employer. 18[18] It is in
the interest of justice to require employers to state the reason for their project employees dismissal and prove this ground
once its veracity is challenged. Employers who hire project employees are mandated to prove the actual basis of the
latters dismissal.19[19] The inescapable conclusion is that Agraviador and Mendrez were terminated prior to the expiration of
the period of their employment without just cause, hence, their termination was illegal. However, private respondents can
not be reinstated since the project they were assigned to was already completely finished.20[20] What they are entitled to is
the payment of their salaries corresponding to the unexpired portions of their employment. 21[21] Specifically, private
respondents Agraviador and Mendrez are entitled to the payment of their salaries equivalent to their salary from the time of
termination until the expiration of their employment period of one (1) month, the estimated period the project was to be
completed.

WHEREFORE, the instant petition is granted. The decision of the National Labor Relations Commission dated June 28, 1994 is
hereby REVERSED and SET ASIDE. Petitioner is ordered to pay private respondent Alexander Agraviador and Jovencio
Mendrez the unexpired portion of their contract.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.

A.M. No. 1625 February 12, 1990

ANGEL L. BAUTISTA, complainant,

vs.
ATTY. RAMON A. GONZALES, respondent.

RESOLUTION

PER CURIAM:

In a verified complaint filed by Angel L. Bautista on May 19, 1976, respondent Ramon A. Gonzales was charged with
malpractice, deceit, gross misconduct and violation of lawyer's oath. Required by this Court to answer the charges against
him, respondent filed on June 19, 1976 a motion for a bill of particulars asking this Court to order complainant to amend his
complaint by making his charges more definite. In a resolution dated June 28, 1976, the Court granted respondent's motion
and required complainant to file an amended complaint. On July 15, 1976, complainant submitted an amended complaint
for disbarment, alleging that respondent committed the following acts:

1. Accepting a case wherein he agreed with his clients, namely, Alfaro Fortunado, Nestor
Fortunado and Editha Fortunado [hereinafter referred to as the Fortunados] to pay all
expenses, including court fees, for a contingent fee of fifty percent (50%) of the value of
the property in litigation.

2. Acting as counsel for the Fortunados in Civil Case No. Q-15143, wherein Eusebio Lopez,
Jr. is one of the defendants and, without said case being terminated, acting as counsel for
Eusebio Lopez, Jr. in Civil Case No. Q-15490;

3. Transferring to himself one-half of the properties of the Fortunados, which properties are
the subject of the litigation in Civil Case No. Q-15143, while the case was still pending;

17

18

19

20

21
 4. Inducing complainant, who was his former client, to enter into a contract with him on
August 30, 1971 for the development into a residential subdivision of the land involved in
Civil Case No. Q-15143, covered by TCT No. T-1929, claiming that he acquired fifty percent
(50%) interest thereof as attorney's fees from the Fortunados, while knowing fully well that
the said property was already sold at a public auction on June 30, 1971, by the Provincial
Sheriff of Lanao del Norte and registered with the Register of Deeds of Iligan City;

5. Submitting to the Court of First Instance of Quezon City falsified documents purporting to
be true copies of "Addendum to the Land Development Agreement dated August 30,
1971" and submitting the same document to the Fiscal's Office of Quezon City, in
connection with the complaint for estafa filed by respondent against complainant
designated as I.S. No. 7512936;

6. Committing acts of treachery and disloyalty to complainant who was his client;

7. Harassing the complainant by filing several complaints without legal basis before the
Court of First Instance and the Fiscal's Office of Quezon City;

8. Deliberately misleading the Court of First Instance and the Fiscal's Office by making false
assertion of facts in his pleadings;

9. Filing petitions "cleverly prepared (so) that while he does not intentionally tell a he, he
does not tell the truth either."

Respondent filed an answer on September 29, 1976 and an amended answer on November 18, 1976, denying the
accusations against him. Complainant filed a reply to respondent's answer on December 29, 1976 and on March 24, 1977
respondent filed a rejoinder.

In a resolution dated March 16, 1983, the Court referred the case to the Office of the Solicitor General for investigation,
report and recommendation. In the investigation conducted by the Solicitor General, complainant presented himself as a
witness and submitted Exhibits "A" to "PP", while respondent appeared both as witness and counsel and submitted Exhibits
"1" to "11". The parties were required to submit their respective memoranda.

On May 16, 1988 respondent filed a motion to dismiss the complaint against him, claiming that the long delay in the
resolution of the complaint against him constitutes a violation of his constitutional right to due process and speedy
disposition of cases. Upon order of the Court, the Solicitor General filed a comment to the motion to dismiss on August 8,
1988, explaining that the delay in the investigation of the case was due to the numerous requests for postponement of
scheduled hearings filed by both parties and the motions for extension of time to file their respective memoranda."
[Comment of the Solicitor General, p. 2; Record, p. 365]. Respondent filed a reply to the Solicitor General's comment on
October 26, 1988. In a resolution dated January 16, 1989 the Court required the Solicitor General to submit his report and
recommendation within thirty (30) days from notice.

On April 11, 1989, the Solicitor General submitted his report with the recommendation that Atty. Ramon A. Gonzales be
suspended for six (6) months. The Solicitor General found that respondent committed the following acts of misconduct:

a. transferring to himself one-half of the properties of his clients during the pendency of the case where the
properties were involved;

b. concealing from complainant the fact that the property subject of their land development agreement
had already been sold at a public auction prior to the execution of said agreement; and

c. misleading the court by submitting alleged true copies of a document where two signatories who had
not signed the original (or even the xerox copy) were made to appear as having fixed their signatures
[Report and Recommendation of the Solicitor General, pp. 17-18; Rollo, pp. 403-404].

Respondent then filed on April 14, 1989 a motion to refer the case to the Integrated Bar of the Philippines (IBP) for
investigation and disposition pursuant to Rule 139-B of the Revised Rules of Court. Respondent manifested that he intends to
submit more evidence before the IBP. Finally, on November 27, 1989, respondent filed a supplemental motion to refer this
case to the IBP, containing additional arguments to bolster his contentions in his previous pleadings.

I.

Preliminarily, the Court will dispose of the procedural issue raised by respondent. It is respondent's contention that the
preliminary investigation conducted by the Solicitor General was limited to the determination of whether or not there is
sufficient ground to proceed with the case and that under Rule 139 the Solicitor General still has to file an administrative
complaint against him. Respondent claims that the case should be referred to the IBP since Section 20 of Rule 139-B
provides that:

This Rule shall take effect on June 1, 1988 and shall supersede the present Rule 139 entitled DISBARMENT OR
SUSPENSION OF ATTORNEYS. All cases pending investigation by the Office of the Solicitor General shall be
transferred to the Integrated Bar of the Philippines Board of Governors for investigation and disposition as
provided in this Rule except those cases where the investigation has been substantially completed.
The above contention of respondent is untenable. In the first place, contrary to respondent's claim, reference to the IBP of
complaints against lawyers is not mandatory upon the Court [Zaldivar v. Sandiganbayan, G.R. Nos. 79690-707; Zaldivar v.
Gonzales, G.R. No. 80578, October 7, 1988]. Reference of complaints to the IBP is not an exclusive procedure under the
terms of Rule 139-B of the Revised Rules of Court [Ibid]. Under Sections 13 and 14 of Rule 139-B, the Supreme Court may
conduct disciplinary proceedings without the intervention of the IBP by referring cases for investigation to the Solicitor
General or to any officer of the Supreme Court or judge of a lower court. In such a case, the report and recommendation
of the investigating official shall be reviewed directly by the Supreme Court. The Court shall base its final action on the case
on the report and recommendation submitted by the investigating official and the evidence presented by the parties
during the investigation.

Secondly, there is no need to refer the case to the IBP since at the time of the effectivity of Rule 139-B [June 1, 1988] the
investigation conducted by the Office of the Solicitor General had been substantially completed. Section 20 of Rule 139-B
provides that only pending cases, the investigation of which has not been substantially completed by the Office of the
Solicitor General, shall be transferred to the IBP. In this case the investigation by the Solicitor General was terminated even
before the effectivity of Rule 139-B. Respondent himself admitted in his motion to dismiss that the Solicitor General
terminated the investigation on November 26, 1986, the date when respondent submitted his reply memorandum [Motion
to Dismiss, p. 1; Record, p. 353].

Thirdly, there is no need for further investigation since the Office of the Solicitor General already made a thorough and
comprehensive investigation of the case. To refer the case to the IBP, as prayed for by the respondent, will result not only in
duplication of the proceedings conducted by the Solicitor General but also to further delay in the disposition of the present
case which has lasted for more than thirteen (13) years.

Respondent's assertion that he still has some evidence to present does not warrant the referral of the case to the IBP.
Considering that in the investigation conducted by the Solicitor General respondent was given ample opportunity to
present evidence, his failure to adduce additional evidence is entirely his own fault. There was therefore no denial of
procedural due process. The record shows that respondent appeared as witness for himself and presented no less than
eleven (11) documents to support his contentions. He was also allowed to cross-examine the complainant who appeared
as a witness against him.

II.

The Court will now address the substantive issue of whether or not respondent committed the acts of misconduct alleged
by complainant Bautista.

After a careful review of the record of the case and the report and recommendation of the Solicitor General, the Court
finds that respondent committed acts of misconduct which warrant the exercise by this Court of its disciplinary power.

The record shows that respondent prepared a document entitled "Transfer of Rights" which was signed by the Fortunados
on August 31, 1971. The document assigned to respondent one-half (1/2) of the properties of the Fortunados covered by
TCT No. T-1929, with an area of 239.650 sq. mm., and TCT No. T-3041, with an area of 72.907 sq. m., for and in consideration
of his legal services to the latter. At the time the document was executed, respondent knew that the abovementioned
properties were the subject of a civil case [Civil Case No. Q-15143] pending before the Court of First Instance of Quezon
City since he was acting as counsel for the Fortunados in said case [See Annex "B" of Original Complaint, p. 12; Rollo, p. 16].
In executing the document transferring one-half (1/2) of the subject properties to himself, respondent violated the law
expressly prohibiting a lawyer from acquiring his client's property or interest involved in any litigation in which he may take
part by virtue of his profession [Article 1491, New Civil Code]. This Court has held that the purchase by a lawyer of his client's
property or interest in litigation is a breach of professional ethics and constitutes malpractice [Hernandez v. Villanueva, 40
Phil. 774 (1920); Go Beltran v. Fernandez, 70 Phil. 248 (1940)].

However, respondent notes that Canon 10 of the old Canons of Professional Ethics, which states that "[t]he lawyer should
not purchase any interests in the subject matter of the litigation which he is conducting," does not appear anymore in the
new Code of Professional Responsibility. He therefore concludes that while a purchase by a lawyer of property in litigation is
void under Art. 1491 of the Civil Code, such purchase is no longer a ground for disciplinary action under the new Code of
Professional Responsibility.

This contention is without merit. The very first Canon of the new Code states that "a lawyer shall uphold the Constitution,
obey the laws of the land and promote respect for law and legal process" (Emphasis supplied), Moreover, Rule 138, Sec. 3
of the Revised Rules of Court requires every lawyer to take an oath to 44 obey the laws [of the Republic of the Philippines]
as well as the legal orders of the duly constituted authorities therein." And for any violation of this oath, a lawyer may be
suspended or disbarred by the Supreme Court [Rule 138, Sec. 27, Revised Rules of Court]. All of these underscore the role of
the lawyer as the vanguard of our legal system. The transgression of any provision of law by a lawyer is a repulsive and
reprehensible act which the Court will not countenance. In the instant case, respondent, having violated Art. 1491 of the
Civil Code, must be held accountable both to his client and to society.

Parenthetically, it should be noted that the persons mentioned in Art. 1491 of the Civil Code are prohibited from purchasing
the property mentioned therein because of their existing trust relationship with the latter. A lawyer is disqualified from
acquiring by purchase the property and rights in litigation because of his fiduciary relationship with such property and rights,
as well as with the client. And it cannot be claimed that the new Code of Professional Responsibility has failed to emphasize
the nature and consequences of such relationship. Canon 17 states that "a lawyer owes fidelity to the cause of his client
and he shall be mindful of the trust and confidence reposed in him." On the other hand, Canon 16 provides that "a lawyer
shall hold in trust all moneys and properties of his client that may come into his possession." Hence, notwithstanding the
absence of a specific provision on the matter in the new Code, the Court, considering the abovequoted provisions of the
new Code in relation to Art. 1491 of the Civil Code, as well as the prevailing jurisprudence, holds that the purchase by a
lawyer of his client's property in litigation constitutes a breach of professional ethics for which a disciplinary action may be
brought against him.

Respondent's next contention that the transfer of the properties was not really implemented, because the land
development agreement on which the transfer depended was later rescinded, is untenable. Nowhere is it provided in the
Transfer of Rights that the assignment of the properties of the Fortunados to respondent was subject to the implementation
of the land development agreement. The last paragraph of the Transfer of Rights provides that:

... for and in consideration of the legal services of ATTY. RAMON A. GONZALES, Filipino, married to Lilia
Yusay, and a resident of 23 Sunrise Hill, New Manila, Quezon City, rendered to our entire satisfaction, we
hereby, by these presents, do transfer and convey to the said ATTY. RAMON A. GONZALES, his heirs,
successor, and assigns, one-half (1/2) of our rights and interests in the abovedescribed property, together
with all the improvements found therein [Annex D of the Complaint, Record, p. 28; Emphasis supplied].

It is clear from the foregoing that the parties intended the transfer of the properties to respondent to be absolute and
unconditional, and irrespective of whether or not the land development agreement was implemented.

Another misconduct committed by respondent was his failure to disclose to complainant, at the time the land
development agreement was entered into, that the land covered by TCT No. T-1929 had already been sold at a public
auction. The land development agreement was executed on August 31, 1977 while the public auction was held on June 30,
1971.

Respondent denies that complainant was his former client, claiming that his appearance for the complainant in an anti-
graft case filed by the latter against a certain Gilbert Teodoro was upon the request of complainant and was understood to
be only provisional. Respondent claims that since complainant was not his client, he had no duty to warn complainant of
the fact that the land involved in their land development agreement had been sold at a public auction. Moreover, the sale
was duly annotated at the back of TCT No. T-1929 and this, respondent argues, serves as constructive notice to
complainant so that there was no concealment on his part.

The above contentions are unmeritorious. Even assuming that the certificate of sale was annotated at the back of TCT No.
T-1929, the fact remains that respondent failed to inform the complainant of the sale of the land to Samauna during the
negotiations for the land development agreement. In so doing, respondent failed to live up to the rigorous standards of
ethics of the law profession which place a premium on honesty and condemn duplicitous conduct. The fact that
complainant was not a former client of respondent does not exempt respondent from his duty to inform complainant of an
important fact pertaining to the land which is subject of their negotiation. Since he was a party to the land development
agreement, respondent should have warned the complainant of the sale of the land at a public auction so that the latter
could make a proper assessment of the viability of the project they were jointly undertaking. This Court has held that a
lawyer should observe honesty and fairness even in his private dealings and failure to do so is a ground for disciplinary
action against him [Custodio v. Esto, Adm. Case No. 1113, February 22, 1978, 81 SCRA 517].

Complainant also charges respondent with submitting to the court falsified documents purporting to be true copies of an
addendum to the land development agreement.

Based on evidence submitted by the parties, the Solicitor General found that in the document filed by respondent with the
Court of First Instance of Quezon City, the signatories to the addendum to the land development agreement namely,
Ramon A. Gonzales, Alfaro T. Fortunado, Editha T. Fortunado, Nestor T. Fortunado, and Angel L. Bautista—were made to
appear as having signed the original document on December 9, 1972, as indicated by the letters (SGD.) before each of
their names. However, it was only respondent Alfaro Fortunado and complainant who signed the original and duplicate
original (Exh. 2) and the two other parties, Edith Fortunado and Nestor Fortunado, never did. Even respondent himself
admitted that Edith and Nestor Fortunado only signed the xerox copy (Exh. 2-A) after respondent wrote them on May 24,
1973, asking them to sign the said xerox copy attached to the letter and to send it back to him after signing [Rejoinder to
Complainant's Reply, pp. 4-6; Rollo, pp. 327-329]. Moreover, respondent acknowledged that Edith and Nestor Fortunado
had merely agreed by phone to sign, but had not actually signed, the alleged true copy of the addendum as of May 23,
1973 [Respondent's Supplemental Motion to Refer this Case to the Integrated Bar of the Philippines, p. 16]. Thus, when
respondent submitted the alleged true copy of the addendum on May 23, 1973 as Annex "A" of his Manifestation filed with
the Court of First Instance of Quezon City, he knowingly misled the Court into believing that the original addendum was
signed by Edith Fortunado and Nestor Fortunado. Such conduct constitutes willful disregard of his solemn duty as a lawyer to
act at all times in a manner consistent with the truth. A lawyer should never seek to mislead the court by an artifice or false
statement of fact or law [Section 20 (d), Rule 138, Revised Rules of Court; Canon 22, Canons of Professional Ethics; Canon
10, Rule 10.01, Code of Professional Responsibility].

Anent the first charge of complainant, the Solicitor General found that no impropriety was committed by respondent in
entering into a contingent fee contract with the Fortunados [Report and Recommendation, p. 8; Record, p. 394]. The Court,
however, finds that the agreement between the respondent and the Fortunados, which provides in part that:

We the [Fortunados] agree on the 50% contingent fee, provided, you [respondent Ramon Gonzales]
defray all expenses, for the suit, including court fees.

Alfaro T. Fortunado
[signed]
Editha T. Fortunado
[signed]
Nestor T. Fortunado
[signed]
 CONFO
RME

Ramon A. Gonzales
[signed]

[Annex A to the Complaint, Record, p. 4].

is contrary to Canon 42 of the Canons of Professional Ethics which provides that a lawyer may not properly agree with a
client to pay or bear the expenses of litigation. [See also Rule 16.04, Code of Professional Responsibility]. Although a lawyer
may in good faith, advance the expenses of litigation, the same should be subject to reimbursement. The agreement
between respondent and the Fortunados, however, does not provide for reimbursement to respondent of litigation
expenses paid by him. An agreement whereby an attorney agrees to pay expenses of proceedings to enforce the client's
rights is champertous [JBP Holding Corp. v. U.S. 166 F. Supp. 324 (1958)]. Such agreements are against public policy
especially where, as in this case, the attorney has agreed to carry on the action at his own expense in consideration of
some bargain to have part of the thing in dispute [See Sampliner v. Motion Pictures Patents Co., et al., 255 F. 242 (1918)]. The
execution of these contracts violates the fiduciary relationship between the lawyer and his client, for which the former must
incur administrative sanctions.

The Solicitor General next concludes that respondent cannot be held liable for acting as counsel for Eusebio Lopez, Jr. in
Civil Case No. Q-15490 while acting as counsel for the Fortunados against the same Eusebio Lopez, Jr. in Civil Case No. Q-
15143. The Court, after considering the record, agrees with the Solicitor General's findings on the matter. The evidence
presented by respondent shows that his acceptance of Civil Case No. Q-15490 was with the knowledge and consent of the
Fortunados. The affidavit executed by the Fortunados on June 23, 1976 clearly states that they gave their consent when
respondent accepted the case of Eusebio Lopez, Jr. [Affidavit of Fortunados, dated June 23, 1976; Rollo, p. 198]. One of the
recognized exceptions to the rule against representation of conflicting interests is where the clients knowingly consent to the
dual representation after full disclosure of the facts by counsel [Canon 6, Canons of Professional Ethics; Canon 15, Rule
15.03, Code of Professional Responsibility].

Complainant also claims that respondent filed several complaints against him before the Court of First Instance and the
Fiscal's Office of Quezon City for the sole purpose of harassing him.

The record shows that at the time of the Solicitor General's investigation of this case, Civil Case No. Q-18060 was still pending
before the Court of First Instance of Quezon City, while the complaints for libel (I.S. No. 76-5912) and perjury (I.S. No. 5913)
were already dismissed by the City Fiscal for insufficiency of evidence and lack of interest, respectively [Report and
Recommendation, pp. 16-17; Rollo, pp. 402-403]. The Solicitor General found no basis for holding that the complaints for libel
and perjury were used by respondent to harass complainant. As to Civil Case No. Q-18060, considering that it was still
pending resolution, the Solicitor General made no finding on complainants claim that it was a mere ploy by respondent to
harass him. The determination of the validity of the complaint in Civil Case No. Q-18060 was left to the Court of First Instance
of Quezon City where the case was pending resolution.

The Court agrees with the above findings of the Solicitor General, and accordingly holds that there is no basis for holding
that the respondent's sole purpose in filing the aforementioned cases was to harass complainant.

Grounds 6, 8 and 9 alleged in the complaint need not be discussed separately since the above discussion on the other
grounds sufficiently cover these remaining grounds.

The Court finds clearly established in this case that on four counts the respondent violated the law and the rules governing
the conduct of a member of the legal profession. Sworn to assist in the administration of justice and to uphold the rule of
law, he has "miserably failed to live up to the standards expected of a member of the Bar." [Artiaga v. Villanueva, Adm.
Matter No. 1892, July 29, 1988, 163 SCRA 638, 647]. The Court agrees with the Solicitor General that, considering the nature
of the offenses committed by respondent and the facts and circumstances of the case, respondent lawyer should be
suspended from the practice of law for a period of six (6) months.

WHEREFORE, finding that respondent Attorney Ramon A. Gonzales committed serious misconduct, the Court Resolved to
SUSPEND respondent from the practice of law for SIX (6) months effective from the date of his receipt of this Resolution. Let
copies of this Resolution be circulated to all courts of the country for their information and guidance, and spread in the
personal record of Atty. Gonzales.

SO ORDERED.

G.R. No. 86250 February 26, 1990

ALBERTO F. LACSON, EDITHA F. LACSON, ROMEO F. LACSON and ZENA F. VELASCO, petitioners,
vs.
HON. LUIS R. REYES, in his capacity as presiding judge of Branch 22 of the Regional Trial Court of Cavite, Branch 22, and/or
Multiple Sala, Imus, Cavite, and EPHRAIM J. SERQUINA, respondents.

Victor H. Volfango for petitioners.

Ephraim J. Serquina for and his own behalf as respondent.

SARMIENTO, J.:

On August 26, 1987, the private respondent, Ephraim Serquina, petitioned the respondent court for the probate of the last
will and testament of Carmelita Farlin. His petition was docketed as Sp. Proc. No. 127-87 of the respondent court, entitled "In
Re Testate Estate of Carmelita S. Farlin, Ephraim J. Serquina, Petitioner." He also petitioned the court in his capacity as
counsel for the heirs, the herein petitioners, and as executor under the will.

The petition was not opposed and hence, on November 17, 1987, the respondent court issued a "certificate of allowance,"
1 the dispositive part of which reads as follows:

WHEREFORE, upon the foregoing, the Court hereby renders certification that subject will and testament is
accordingly allowed in accordance with Sec. 13 of Rule 76 of the Rules of Court.

SO ORDERED. 2

On March 14, 1988, Atty. Ephraim Serquina filed a "motion for attorney's fees" 3 against the petitioners, alleging that the heirs
had agreed to pay, as and for his legal services rendered, the sum of P68,000.00.

Thereafter summonses were served upon the heirs "as if it were a complaint against said heirs" 4 directing them to answer
the motion.

Thereafter, the heirs filed their answer and denied the claim for P68,000.00 alleging that the sum agreed upon was only
P7,000.00, a sum they had allegedly already paid.

After pre-trial, the respondent court rendered judgment and disposed as follows:

In the light of the foregoing, considering the extent of the legal services rendered to the clients, the value
of the properties gained by the clients out of said services, the petition for attorney's fees is granted.
Judgment is hereby rendered directing the respondent heirs to pay their lawyer the sum of P65,000.00 as
true and reasonable attorney's fees which shall be a lien on the subject properties. Cost against the
respondent.

SO ORDERED. 5

On October 21, 1988, eleven days after the heirs received a copy of the decision, 6 the latter filed a notice of appeal.

On November 7, 1988, the respondent court issued an order directing the heirs to amend their notice of appeal. 7

On October 27, 1988, the respondent court issued an order "noting" the notice on appeal "appellants [the heirs] having
failed to correct or complete the same within the reglementary period to effect an appeal." 8

On November 24, 1988, the respondent court issued yet another order denying the notice of appeal for failure of the heirs
to file a record on appeal. 9

Thereafter, Atty. Serquina moved for execution.

On December 5, 1988, the respondent court issued an order granting execution. 10

The petitioners submit that the decision, dated October 26, 1988, and the orders, dated October 27, 1988, November 24,
1988, and December 5, 1988, respectively, are nun and void for the following reasons: (1) the respondent court never
acquired jurisdiction over the "motion for attorney's fees" for failure on the part of the movant, Ephraim Serquina, to pay
docket fees; (2) the respondent court gravely abused its discretion in denying the heirs' notice of appeal for their failure to
file a record on appeal; and (3) the respondent court also gravely abused its discretion in awarding attorney's fees contrary
to the provisions of Section 7, of Rule 85, of the Rules of Court.

Atty. Serquina now defends the challenged acts of the respondent court: (1) his motion was a mere incident to the main
proceedings; (2) the respondent court rightly denied the notice of appeal in question for failure of the heirs to submit a
record on appeal; and (3) in collecting attorney's fees, he was not acting as executor of Carmelita Farlin's last will and
testament because no letters testamentary had in fact been issued.

We take these up seriatim.

I.

Anent docket fees, it has been held 11 that the court acquires jurisdiction over any case only upon payment of the
prescribed docket fee.

Although the rule has since been tempered, 12 that is, there must be a clear showing that the party had intended to evade
payment and to cheat the courts, it does not excuse him from paying docket fees as soon as it becomes apparent that
docket fees are indeed payable.
In the case at bar, the "motion for attorney's fees" was clearly in the nature of an action commenced by a lawyer against
his clients for attorney's fees. The very decision of the court states:

This case is an out-growth from Sp. Proc. No. 127-87 of same Court which was long decided (sic). It resulted
from the filing of a petition for attorney's fees by the lawyer of the petitioner's heirs in the case against the
latter.

Upon the filing of the petition for attorney's fees, the heir- respondents (sic) were accordingly summoned to
answer the petition as if it were a complaint against said heirs who retained the petitioner as their lawyer in
the said case.13

In that event, the parties should have known, the respondent court in particular, that docket fees should have been priorly
paid before the court could lawfully act on the case, and decide it.

It may be true that the claim for attorney's fees was but an incident in the main case, still, it is not an escape valve from the
payment of docket fees because as in all actions, whether separate or as an offshoot of a pending proceeding, the
payment of docket fees is mandatory.

Assuming, therefore, ex gratia argumenti, that Atty. Serquina's demand for attorney's fees in the sum of P68,000.00 is valid,
he, Atty. Serquina, should have paid the fees in question before the respondent court could validly try his "motion".

II.

With respect to the second issue, it has been held that in appeals arising from an incident in a special proceeding, a record
on appeal is necessary, otherwise, the appeal faces a dismissal. 14 It has likewise been held, however, that in the interest of
justice, an appeal, brought without a record on appeal, may be reinstated under exceptional circumstances. Thus:

xxx xxx xxx

It is noted, however, that the question presented in this case is one of first impression; that the petitioner
acted in honest, if mistaken, interpretation of the applicable law; that the probate court itself believed that
the record on appeal was unnecessary; and that the private respondent herself apparently thought so,
too, for she did not move to dismiss the appeal and instead impliedly recognized its validity by filing the
appellee's brief.

In view of these circumstances, and in the interest of justice, the Court feels that the petitioner should be
given an opportunity to comply with the above-discussed rules by submitting the required record on
appeal as a condition for the revival of the appeal. The issue raised in his appeal may then be fully
discussed and, in the light of the briefs already filed by the parties, resolved on the merits by the respondent
court. 15

In the instant case, the Court notes the apparent impression by the parties at the outset, that a record on appeal was
unnecessary, as evidenced by: (1) the very holding of the respondent court that "[i]t is now easy to appeal as there is no
more need for a record on appeal . . . [b]y merely filing a notice of appeal, the appellant can already institute his appeal . .
. ;" 16 (2) in its order to amend notice of appeal, it did not require the appellants to submit a record on appeal; and (3) Atty.
Serquina interposed no objection to the appeal on that ground.

In any event, since we are annulling the decision appealed from, the matter is a dead issue.

III.

As we have indicated, we are granting certiorari and are annulling the decision appealed from, but there seems to be no
reason why we can not dispose of the heirs' appeal in a single proceeding.

It is pointed out that an attorney who is concurrently an executor of a will is barred from recovering attorney's fees from the
estate. The Rule is specifically as follows:

SEC. 7. What expenses and fees allowed executor or administrator. Not to charge for services as attorney.
Compensation provided by will controls unless renounced. — An executor or administrator shall be allowed
the necessary expenses in the care, management and settlement of the estate, and for his services, four
pesos per day for the time actually and necessarily employed, or a commission upon the value of so much
of the estate as comes into his possession and is finally disposed of by him in the payment of debts,
expenses, legacies, or distributive shares, or by delivery to heirs or devisees, of two per centum of the first
five thousand pesos of such value, one per centum of so much of such value as exceeds five thousand
pesos and does not exceed thirty thousand pesos, one-half per centum of so much of such value as
exceeds thirty thousand pesos and does not exceed one hundred thousand pesos, and one-quarter per
centum of so much of such value as exceeds one hundred thousand pesos. But in any special case, where
the estate is large, and the settlement has been attended with great difficulty, and has required a high
degree of capacity on the part of the executor or administrator, a greater sum may be allowed. If
objection to the fees allowed be taken, the allowance may be reexamined on appeal.

If there are two or more executors or administrators, the compensation shall be apportioned among them
by the court according to the services actually rendered by them respectively.
 When the executor or administrator is an attorney, he shall not charge against the estate any professional
fees for legal services rendered by him.

When the deceased by will makes some other provision for the compensation of his executor, that
provision shall be a full satisfaction for his services unless by a written instrument filed in the court he
renounces all claim to the compensation provided by the will. 17

The rule is therefore clear that an administrator or executor may be allowed fees for the necessary expenses he has incurred
as such, but he may not recover attorney's fees from the estate. His compensation is fixed by the rule but such a
compensation is in the nature of executor's or administrator's commissions, and never as attorney's fees. In one case, 18 we
held that "a greater sum [other than that established by the rule] may be allowed 'in any special case, where the estate is
large, and the settlement has been attended with great difficulty, and has required a high degree of capacity on the part
of the executor or administrator.'" 19 It is also left to the sound discretion of the court. 20 With respect to attorney's fees, the
rule, as we have seen, disallows them. Accordingly, to the extent that the trial court set aside the sum of P65,000.00 as and
for Mr. Serquina's attorney's fees, to operate as a "lien on the subject properties," 21 the trial judge must be said to have
gravely abused its discretion (apart from the fact that it never acquired jurisdiction, in the first place, to act on said Mr.
Serquina's "motion for attorney's fees").

The next question is quite obvious: Who shoulders attorney's fees? We have held that a lawyer of an administrator or
executor may not charge the estate for his fees, but rather, his client. 22 Mutatis mutandis, where the administrator is himself
the counsel for the heirs, it is the latter who must pay therefor.

In that connection, attorney's fees are in the nature of actual damages, which must be duly proved. 23 They are also
subject to certain standards, to wit: (1) they must be reasonable, that is to say, they must have a bearing on the importance
of the subject matter in controversy; (2) the extent of the services rendered; and (3) the professional standing of the lawyer.
24 In all cases, they must be addressed in a full-blown trial and not on the bare word of the parties. 25 And always, they are
subject to the moderating hand of the courts.

The records show that Atty. Ephraim Serquina, as counsel for the heirs, performed the following:

xxx xxx xxx

5. That after the order of allowance for probate of the will, the undersigned counsel assisted the heirs to
transfer immediately the above-mentioned real estate in their respective names, from (sic) the payment of
estate taxes in the Bureau of Internal Revenue to the issuance by the Registry of Deeds of the titles, in order
for the heirs to sell the foregoing real estate of 10,683 sq. cm (which was also the subject of sale prior to the
death of the testator) to settle testator's obligations and day-to-day subsistence being (sic) that the heirs,
except Zena F. Velasco, are not employed neither doing any business; 26

The Court is not persuaded from the facts above that Atty. Serquina is entitled to the sum claimed by him (P68,000.00) or
that awarded by the lower court (P65,000.00). The Court observes that these are acts performed routinely since they form
part of what any lawyer worth his salt is expected to do. The will was furthermore not contested. They are not, so Justice
Pedro Tuason wrote, "a case [where] the administrator was able to stop what appeared to be an improvident disbursement
of a substantial amount without having to employ outside legal help at an additional expense to the estate," 27 to entitle
him to a bigger compensation. He did not exactly achieve anything out of the ordinary.

The records also reveal that Atty. Serquina has already been paid the sum of P6,000.00. 28 It is our considered opinion that
he should be entitled to P15,000.00 for his efforts on a quantum meruit basis. Hence, we hold the heirs liable for P9,000.00
more.

WHEREFORE, premises considered, judgment is hereby rendered: (1) GRANTING the petition and making the temporary
restraining order issued on January 16, 1989 PERMANENT; and (2) ORDERING the petitioners to PAY the private respondent,
Atty. Ephraim Serquina, attorney's fees in the sum of P9,000.00. The said fees shall not be recovered from the estate of
Carmelita Farlin.

No costs.

SO ORDERED.

G.R. No. 86100-03 January 23, 1990

METROPOLITAN BANK AND TRUST COMPANY, petitioner,

vs.
THE HONORABLE COURT OF APPEALS and ARTURO ALAFRIZ and ASSOCIATES, respondents.

Bautista, Picazo, Buyco, Tan & Fider for petitioner.

Arturo A. Alafriz & Associates for and in their own behalf.

REGALADO, J.:
This petition for review on certiorari impugns the decision of the Court of Appeals in CA-G.R. Nos. 08265-08268 1 affirming the
order of Branch 168, Regional Trial Court, National Capital Judicial Region, in Civil Cases Nos. 19123-28, 19136 and 19144,
fixing attorney's fees and directing herein petitioner Metropolitan Bank and Trust Company (Metrobank, for brevity), as
defendant in said civil cases, to pay its attorneys, herein private respondent Arturo Alafriz and Associates, movant therein,
the amount of P936,000.00 as attorney's fees on a quantum meruit basis.

The records show that from March, 1974 to September, 1983, private respondent handled the above-mentioned civil cases
before the then Court of First Instance of Pasig (Branches I, II, VI, X, XIII, XIX, XX AND XXIV) in behalf of petitioner. 2 The civil
cases were all for the declaration of nullity of certain deeds of sale, with damages.

The antecedental facts 3 which spawned the filing of said actions are undisputed and are hereinunder set forth as found by
the trial court and adopted substantially in the decision of respondent court. A certain Celedonio Javier bought seven (7)
parcels of land owned by Eustaquio Alejandro, et al., with a total area of about ten (10) hectares. These properties were
thereafter mortgaged by Javier with the petitioner to secure a loan obligation of one Felix Angelo Bautista and/or
International Hotel Corporation. The obligors having defaulted, petitioner foreclosed the mortgages after which certificates
of sale were issued by the provincial sheriff in its favor as purchaser thereof Subsequently, Alejandro, alleging deceit, fraud
and misrepresentation committed against him by Javier in the sale of the parcels of land, brought suits against Javier et al.,
and included petitioner as defendant therein.

It was during the pendency of these suits that these parcels of land were sold by petitioner to its sister corporation, Service
Leasing Corporation on March 23, 1983 for the purported price of P600,000.00. On the same day, the properties were resold
by the latter to Herby Commercial and Construction Corporation for the purported price of P2,500,000.00. Three months
later, or on June 7, 1983, Herby mortgaged the same properties with Banco de Oro for P9,200,000.00. The lower court found
that private respondent, did not have knowledge of these transfers and transactions.

As a consequence of the transfer of said parcels of land to Service Leasing Corporation, petitioner filed an urgent motion
for substitution of party on July 28, 1983. Private respondent, on its part, filed on August 16, 1983 a verified motion to enter in
the records of the aforesaid civil cases its charging lien, pursuant to Section 37, Rule 138 of the Rules of Court, equivalent to
twenty-five percent (25%) of the actual and current market values of the litigated properties as its attorney's fees. Despite
due notice, petitioner failed to appear and oppose said motion, as a result of which the lower court granted the same and
ordered the, Register of Deeds of Rizal to annotate the attorney's liens on the certificates of title of the parcels of land.

Meanwhile, the plaintiffs Alejandro, et al. in the aforesaid civil cases, which had been consolidated and were pending
before the Regional Trial Court of Pasig, filed a motion to dismiss their complaints therein, which motion the lower court
granted with prejudice in its order dated September 5, 1983. On December 29, 1983, the same court ordered the Register of
Deeds to annotate the attorney's liens of private respondent on the derivative titles which cancelled Transfer Certificates of
Title Nos. 453093 to 453099 of the original seven (7) parcels of land hereinbefore adverted to.

On May 28,1984, private respondent filed a motion to fix its attorney's fees, based on quantum meruit, which motion
precipitated an exchange of arguments between the parties. On May 30, 1984, petitioner manifested that it had fully paid
private respondent; the latter, in turn, countered that the amount of P50,000.00 given by petitioner could not be considered
as full payment but merely a cash advance, including the amount of P14,000.00 paid to it on December 15, 1980. It further
appears that private respondent attempted to arrange a compromise with petitioner in order to avoid suit, offering a
compromise amount of P600,000.00 but the negotiations were unsuccessful.

Finally, on October 15,1984, the court a quo issued the order assailed on appeal before respondent court, granting
payment of attorney's fees to private respondent, under the following dispositive portion:

PREMISES CONSIDERED, the motion is hereby granted and the Metropolitan Bank and Trust Company (METROBANK)
and Herby Commercial and Construction Corporation 4 are hereby ordered to pay the movant Arturo Alafriz and
Associates the amount of P936,000.00 as its proper, just and reasonable attorney's fees in these cases. 5

On appeal, respondent court affirmed the order of the trial court in its decision promulgated on February 11, 1988. A motion
for reconsideration, dated March 3, 1988, was filed by petitioner but the same was denied in a resolution promulgated on
November 19, 1988, hence the present recourse.

The issues raised and submitted for determination in the present petition may be formulated thus: (1) whether or not private
respondent is entitled to the enforcement of its charging lien for payment of its attorney's fees; (2) whether or not a
separate civil suit is necessary for the enforcement of such lien and (3) whether or not private respondent is entitled to
twenty-five (25%) of the actual and current market values of the litigated properties on a quantum meruit basis.

On the first issue, petitioner avers that private respondent has no enforceable attorney's charging lien in the civil cases
before the court below because the dismissal of the complaints therein were not, in the words of Section 37, Rule 138,
judgments for the payment of money or executions issued in pursuance of such judgments. 6

We agree with petitioner.

On the matter of attorney's liens Section 37, Rule 138 provides:

. . . He shall also have a lien to the same extent upon all judgments for the payment of money, and executions
issued in pursuance of such judgments, which he has secured in a litigation of his client, from and after the time
when he shall have caused a statement of his claim of such lien to be entered upon the records of the court
rendering such judgment, or issuing such execution, and shall have caused written notice thereof to be delivered
 to his client and to the adverse party; and he shall have the same right and power over such judgments and
executions as his client would have to enforce his lien and secure the payment of his just fees and disbursements.

Consequent to such provision, a charging lien, to be enforceable as security for the payment of attorney's fees, requires as
a condition sine qua non a judgment for money and execution in pursuance of such judgment secured in the main action
by the attorney in favor of his client. A lawyer may enforce his right to fees by filing the necessary petition as an incident in
the main action in which his services were rendered when something is due his client in the action from which the fee is to
be paid. 7

In the case at bar, the civil cases below were dismissed upon the initiative of the plaintiffs "in view of the frill satisfaction of
their claims." 8 The dismissal order neither provided for any money judgment nor made any monetary award to any litigant,
much less in favor of petitioner who was a defendant therein. This being so, private respondent's supposed charging lien is,
under our rule, without any legal basis. It is flawed by the fact that there is nothing to generate it and to which it can attach
in the same manner as an ordinary lien arises and attaches to real or personal property.

In point is Morente vs. Firmalino, 9 cited by petitioner in support of its position. In that case, movant-appellant attorney
sought the payment of his fees from his client who was the defendant in a complaint for injunction which was dismissed by
the trial court after the approval of an agreement entered into by the litigants. This Court held:

. . . The defendant having suffered no actual damage by virtue of the issuance of a preliminary injunction, it follows
that no sum can be awarded the defendant for damages. It becomes apparent, too, that no amount having
been awarded the defendant, herein appellant's lien could not be enforced. The appellant, could, by appropriate
action, collect his fees as attorney.

Private respondent would nevertheless insist that the lien attaches to the "proceeds of a judgment of whatever nature," 10
relying on the case of Bacolod-Murcia Milling Co. Inc. vs. Henares 11 and some American cases holding that the lien
attaches to the judgment recovered by an attorney and the proceeds in whatever form they may be. 12

The contention is without merit just as its reliance is misplaced. It is true that there are some American cases holding that the
lien attaches even to properties in litigation. However, the statutory rules on which they are based and the factual situations
involved therein are neither explained nor may it be said that they are of continuing validity as to be applicable in this
jurisdiction. It cannot be gainsaid that legal concepts of foreign origin undergo a number of variegations or nuances upon
adoption by other jurisdictions, especially those with variant legal systems.

In fact, the same source from which private respondent culled the American cases it cited expressly declares that "in the
absence of a statute or of a special agreement providing otherwise, the general rule is that an attorney has no lien on the
land of his client, notwithstanding such attorney has, with respect to the land in question, successfully prosecuted a suit to
establish the title of his client thereto, recovered title or possession in a suit prosecuted by such client, or defended
successfully such client's right and title against an unjust claim or an unwarranted attack," 13 as is the situation in the case at
bar. This is an inescapable recognition that a contrary rule obtains in other jurisdictions thereby resulting in doctrinal rulings of
converse or modulated import.

To repeat, since in our jurisdiction the applicable rule provides that a charging lien attaches only to judgments for money
and executions in pursuance of such judgment, then it must be taken in haec verba. The language of the law is clear and
unequivocal and, therefore, it must be taken to mean exactly what it says, barring any necessity for elaborate
interpretation. 14

Notably, the interpretation, literal as it may appear to be, is not without support in Philippine case law despite the dearth of
cases on all fours with the present case. In Caina et al. vs. Victoriano, et al., 15 the Court had the occasion to rule that "the
lien of respondent is not of a nature which attaches to the property in litigation but is at most a personal claim enforceable
by a writ of execution." In Ampil vs. Juliano-Agrava, et al., 16 the Court once again declared that a charging lien
"presupposes that the attorney has secured a favorable money judgment for his client . . ." Further, in Director of Lands vs.
Ababa, et al., 17 we held that "(a) charging lien under Section 37, Rule 138 of the Revised Rules of Court is limited only to
money judgments and not to judgments for the annulment of a contract or for delivery of real property as in the instant
case."

Even in the Bacolod-Murcia Milling case, which we previously noted as cited by private respondent, there was an express
declaration that "in this jurisdiction, the lien does not attach to the property in litigation."

Indeed, an attorney may acquire a lien for his compensation upon money due his client from the adverse party in any
action or proceeding in which the attorney is employed, but such lien does not extend to land which is the subject matter
of the litigation. 18 More specifically, an attorney merely defeating recovery against his client as a defendant is not entitled
to a lien on the property involved in litigation for fees and the court has no power to fix the fee of an attorney defending the
client's title to property already in the client's
possession. 19

While a client cannot defeat an attorney's right to his charging lien by dismissing the case, terminating the services of his
counsel, waiving his cause or interest in favor of the adverse party or compromising his action, 20 this rule cannot find
application here as the termination of the cases below was not at the instance of private respondent's client but of the
opposing party.

The resolution of the second issue is accordingly subsumed in the preceding discussion which amply demonstrates that
private respondent is not entitled to the enforcement of its charging lien.
Nonetheless, it bears mention at this juncture that an enforceable charging lien, duly recorded, is within the jurisdiction of
the court trying the main case and this jurisdiction subsists until the lien is settled. 21 There is certainly no valid reason why the
trial court cannot pass upon a petition to determine attorney's fees if the rule against multiplicity of suits is to be activated.
22 These decisional rules, however, apply only where the charging lien is valid and enforceable under the rules.

On the last issue, the Court refrains from resolving the same so as not to preempt or interfere with the authority and
adjudicative facility of the proper court to hear and decide the controversy in a proper proceeding which may be brought
by private respondent.

A petition for recovery of attorney's fees, either as a separate civil suit or as an incident in the main action, has to be
prosecuted and the allegations therein established as any other money claim. The persons who are entitled to or who must
pay attorney's fees have the right to be heard upon the question of their propriety or amount. 23 Hence, the obvious
necessity of a hearing is beyond cavil.

Besides, in fixing a reasonable compensation for the services rendered by a lawyer on the basis of quantum meruit, the
elements to be considered are generally (1) the importance of the subject matter in controversy, (2) the extent of the
services rendered, and (3) the professional standing of the lawyer. 24 These are aside from the several other considerations
laid down by this Court in a number of decisions as pointed out by respondent court. 25 A determination of all these factors
would indispensably require nothing less than a full-blown trial where private respondent can adduce evidence to establish
its right to lawful attorney's fees and for petitioner to oppose or refute the same.

Nothing in this decision should, however, be misconstrued as imposing an unnecessary burden on private respondent in
collecting the fees to which it may rightfully be entitled. But, as in the exercise of any other right conferred by law, the
proper legal remedy should be availed of and the procedural rules duly observed to forestall and obviate the possibility of
abuse or prejudice, or what may be misunderstood to be such, often to the undeserved discredit of the legal profession.

Law advocacy, it has been stressed, is not capital that yields profits. The returns it births are simple rewards for a job done or
service rendered. It is a calling that, unlike mercantile pursuits which enjoy a greater deal of freedom from government
interference, is impressed with public interest, for which it is subject to State regulation. 26

ACCORDINGLY, the instant petition for review is hereby GRANTED and the decision of respondent Court of Appeals of
February 11, 1988 affirming the order of the trial court is hereby REVERSED and SET ASIDE, without prejudice to such
appropriate proceedings as may be brought by private respondent to establish its right to attorney's fees and the amount
thereof.

SO ORDERED.

G.R. No. 87182 February 17, 1992

PACIFIC MILLS, INC. and GEORGE U. LIM, petitioners,

vs.
THE HON. COURT OF APPEALS and PHILIPPINE COTTON CORPORATION, respondents.

Andres B. Soriano for petitioners.

The Government Corporate Counsel for private respondent.

FELICIANO, J.:

On various dates during the period from April 1980 to October 1982; petitioner Pacific Mills, Inc. ("Pacific") purchased on
credit from respondent Philippine Cotton Corporation ("Philcotton") varying quantities of cottonlint. The parties had agreed
that Pacific would issue promissory notes in favor of Philcotton should the former fail to pay the purchase price of the
cottonlint within sixty (60) days after delivery thereof. Hence, when Pacific was unable to pay the price of various purchases
of cottonlint within the stipulated sixty (60)-day period, Pacific and George U. Lim, Executive Vice-President of Pacific,
executed jointly and severally four (4) promissory notes in favor of Philcotton. Two (2) promissory notes were dated 1 April
1982 and 1 October 1982, respectively; the two (2) other promissory notes were both dated 1 December 1982. The
promissory notes, which had a total stated value of P16,598,725.84, had identical terms and conditions, save for the amount
payable under each:

For value received, we, jointly and severally, promise to pay the Philippine Cotton Corporation or order at
its office at 31 Shaw Blvd., Pasig, Metro Manila, the sum of . . . with interest rate of twenty one per centum
(21%) per annum. We hereby bind ourselves to make payments, per attached Schedule which forms part
of this Promissory Note, which shall cover amortizations on the principal and interest at the above-
mentioned rate.

We further bind ourselves to pay additional interest and penalty charges on account amortizations or
portions thereof in arrears as follows:

a. If in arrears for thirty days or less:

 i. additional interest at the basic account interest rate per annum computed on the total
amortizations past due irrespective of age.

ii. no penalty charge.

b. If in arrears for more than thirty days:

i. Additional interest as provided above, Plus

ii. Penalty charge of 8% per annum computed on amortizations in arrears for more than
thirty days.

In addition to the above, we also bind ourselves to pay for PhilCotton's advances for insurance premiums,
taxes, litigation and acquired assets expenses and other out-of-pocket expenses not covered by inspection
and processing fees as follows:

a. One time service charge of 2% of amount advanced, same to be included in the receivable account;

b. Interest at basic account interest rate; and

c. Penalty charge from date of advance at 8% per annum.

PHILCOTTON further reserves the right to increase, with notice to the borrower, the rate of interest on the
account as well as all other fees and charges on account and advances pursuant to such policy as it may
adopt from time to time during the period of the account; provided, that the rate of interest on the
account shall be reduced in the event that the applicable maximum rate of interest is reduced by law:
Provided further that the adjustment in the rate of interest shall take effect on or after the effectivity of the
increase or decrease in the maximum rate interest.

In case of non-payment of the amount or any portion of it on demand, when due, or any other amount or
amounts due on account the entire obligation shall become due and demandable, and if, for the
enforcement of the payment thereof, PhilCotton is constrained to entrust the case to its Attorneys, we
jointly and severally bind ourselves to pay for attorney's fees, in addition to the legal fees and other
incidental expenses,

PACIFIC MILLS, INC.

GEORGE U. LIM (Sgd.)

EVP & General Manager
1

On 23 June 1983, Philcotton filed a suit against petitioners for collection of sums of money totalling P7,940,229.39 due under
the promissory notes dated 1 April 1982 and 1 October 1982, plus interest, attorney's fees and cost of the suit. A writ of
preliminary attachment was prayed for.

On 11 January 1984, Philcotton filed another complaint also against petitioners for collection of sums of money aggregating
P8,658,496.45, covered by the other two (2) promissory notes both dated 1 December 1982, plus interest, attorney's fees and
expenses for litigation. A second writ of preliminary attachment was sought.

The two (2) actions were consolidated and writs of preliminary attachment were issued. Petitioners sought discharge of
those writs, without success. Petitioners went on certiorari before the then Intermediate Appellate Court, contending that
the trial court had acted with grave abuse of discretion amounting to lack of jurisdiction in issuing the writs. The appellate
court, however, dismissed the petition and affirmed the trial court's orders granting the writs of preliminary attachment.

Subsequently, the parties-litigant submitted to the trial court three (3) joint manifestations and motions to discharge certain
properties of petitioners from attachment. In the first joint manifestation and motion executed on 7 January 1985, the parties
stated that the total principal obligation of petitioners was P16,598,725.84, excluding interest, charges, penalties and
attorney's fees, and that petitioners would deliver to Philcotton postdated checks with a face value of P1,800,000.00 to be
applied to the principal of petitioners' obligation. Under the second and the third joint manifestations, petitioners undertook
to issue postdated checks with face amounts of P600,000.00 and P200,000,00, respectively. The joint manifestations and
motions were approved by the trial court. and petitioners delivered postdated checks to Philcotton with a total face value
of P2,600,000.00 which, upon encashment, would reduce petitioners' principal obligation to P13,998.725.84.

On 27 December 1985, after trial, the trial court rendered a decision, the dispositive portion of which read as follows:

WHEREFORE, judgment is hereby rendered in favor of plaintiff Philippine Cotton Corporation and against
defendants Pacific Mills, Inc. and George U. Lim who are ordered to pay plaintiff jointly and severally the
following:

1. The amount of P13,998,725.84 plus 21% regular interest per annum as indicated in the promissory notes
and 21% additional interest per annum on the total principal and regular interest, also computed from the
due date until fully paid;
 2. An amount equivalent to 8% of the total principal amount and regular interest representing penalty
charges, computed 30 days after the due dates until fully paid;

3. An amount equivalent to 25% of the total amount due as attorney's fees; and

4. The costs of the suit

SO ORDERED. 2

On appeal, the Court of Appeals affirmed with modifications the decision of the trial court and ordered petitioners to pay
jointly and severally Philcotton:

(a) the principal amount of P13,998,725.84 with twenty-one percent (21%) regular interest per annum to be
computed starting on 7 January 1985 (the date of the first joint manifestation and motion) until fully paid;

(b) [an] amount equivalent to fourteen percent (14%) per annum of the principal amount and regular
interest, representing penalty charges to be computed thirty (30) days after 7 January 1985 until fully paid;
and

(c) [an] amount equivalent to ten percent (10%) of the principal amount recoverable, by way of attorney's
fees.

In the petition at bar, the principal claims of petitioners are that, firstly, the Court of Appeals erred in not holding that
Philcotton, a government-owned or -controlled corporation, is not entitled to an award of attorney's fees; and, secondly,
that the Court of Appeals erred in not reducing further the penalty charges to a rate lower than fourteen percent (14%) of
the principal amount due plus regular interest thereon.

In their first claim, petitioners contend that the award of attorney's fees (reduced from twenty-five percent [25%] to ten
percent [10%] by the Court of Appeals) was unwarranted and contrary to law, considering that Philcotton is a government-
owned and -controlled corporation which was represented by the Office of the Government Corporate Counsel in this and
other litigations. Petitioner argues that for an award of attorney's fees to be proper, one or more of the special
circumstances mentioned in Article 2208 of the Civil Code must exist and that Philcotton must have availed itself lawfully of
the services of private counsel.

The Court is not persuaded. R.A. No. 6000, which was enacted on 4 August 1969, and which further amended R.A. No. 2327
creating the Office of the Government Corporate Counsel, expressly contemplates awards of attorney's fees to
government-owned or -controlled corporations in judicial proceedings handled for such corporations by the Office of the
Government Corporate Counsel:

Sec. 4. The expenses for the maintenance of the Office of the Government Corporate Counsel, shall be
paid from assessments which the President of the Philippines shall determine and make upon government-
owned or controlled corporations, or corporations the majority stock of which is owned or controlled by the
Government, and instrumentalities of the Government performing proprietary functions, and which
assessments shall be paid by said entries to the General Fund within the first quarter of every fiscal year.
Provided, that the General Fund shall advance such sums as may be necessary for said maintenance,
which is hereby appropriated.

In addition to said assessments, whenever a government-owned and controlled corporation, or

corporation the majority stock of which is owned or controlled by the Government, or an instrumentality of
the Government performing proprietary functions, is awarded attorney's fees in a judicial proceeding
handled by the Office of the Government Corporate Counsel, one-half of said attorney's fees shall be paid
directly to the General Fund. (Emphasis supplied)

We note that the second paragraph of Section 4 of R.A. No. 6000 has not been repeated in Section 4 of P.D. No. 1415,
dated 9 June 1978 which reads as follows:

Sec. 4. The funds necessary for the operation and maintenance of the Office of the Government
Corporate Counsel shall be assessed on its client corporations. The assessments to be determined annually
by the Government Corporate Counsel and approved by the Office of the President, upon the
recommendation by the Secretary of Justice shall be remitted by said corporations within the first quarter or
every calendar year, provided that such sums as may be necessary and required hereunder shall be
advanced from the General Fund.

The Government Corporate Counsel is hereby authorized to make special assessment upon government-
owned or controlled corporations serviced by his office, to meet contingencies, obligations and
undertakings, necessary to maintain and promote the efficiency and interests of the service.

We do not believe, however, that the second paragraph of Section 4 of R.A No 6000 was repealed or deleted by P.D. No.
1415, considering that there appears no necessary and irreconcilable conflict between the two (2) statutes, nor between
regular and special assessments by the Office of the Government Corporate Counsel upon the government-owned or -
controlled corporations serviced by that Office and the lawfulness and propriety of awarding attorney's fees to government
corporations in litigations for them by the Office of the Government Corporation Counsel and his staff. This view is
strengthened by consideration of the provisions of Section 10, Chapter III of the 1987 Revised Administrative Code which
reads as follows:

The OGCC is authorized to receive the attorney's fees adjudged in favor of their government-owned or
controlled corporations, their subsidiaries, other corporate offsprings and government acquired asset
corporations. These attorney's fees shall accrue to a Special Fund of the OGCC, and shall be deposited in
an authorized government depository as a trust liability and shall be made available for expenditure
without the need for a Cash Disbursement Ceiling, for purposes of upgrading facilities and equipment,
granting of employees' incentive pay and other benefits, and defraying such other incentive expenses not
provided for in the General Appropriations Act as may be determined by the Government Corporate
Counsel. (Emphasis supplied)

Quite apart from the specific statutory provisions quoted above, the Court considers that there is, as a matter of principle,
no reason why a government-owned or -controlled corporation, or any other government agency or entity for that matter,
which is compelled to bring suit against a private person or entity in order to protect its rights and interests, should not be
granted an award of attorney's fees, where such an award would be proper if the suit had been brought by a private
entity. While such a corporation, agency or entity may be represented by government lawyers, clearly, costs are incurred
either by the plaintiff-corporation or entity directly or by the general tax-paying public indirectly, by reason of the default or
other breach of contract or violation of law committed by the defendant. Under Article 2209 of the Civil Code, an award of
attorney's fees is proper either because of a contractual stipulation for the payment of attorney's fees or because of the
existence of one or more of the circumstances listed in Article 2208. In the instant case, the promissory notes on which
Philcotton sued contained, as already noted, a stipulation for payment of attorney's fees in case judicial enforcement
thereof became necessary. There can be no dispute that the petitioners' failure to comply with their obligations under the
promissory notes compelled Philcotton to resort to enforcement of its rights under those notes through the judicial process.
Finally, the reduction by the Court of Appeals of the attorney's fees stipulated under the relevant promissory notes from
twenty-five percent (25%) to ten percent (10%) of the principal amount recoverable, appears to the Court to be more than
reasonable.

We turn to the second principal claim of petitioners. Petitioners contend that the Court of Appeals should have reduced
further the penalty charges stipulated under the promissory notes because there had been partial compliance by
petitioners and because of "equitable considerations" such as good faith on the part of petitioners. Petitioners also suggest
that further reduction of the stipulated penalty charge was justified because the loans extended by Philcotton to petitioners
came from the Development Bank of the Philippines and were intended to aid or promote the cotton industry.

Once more, the Court is not persuaded, Article 2209 of the Civil Code specifies the appropriate measure of damages
where the obligation breached consisted of the payment of sum of money:

Art. 2209. If the obligation consists an the payment of a sum of money, and the debtor incurs in delay, the
indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest
agreed upon, and in the absence of stipulation, the legal interest, which is six percent (6%) per annum.

Article 2209 was, in measure, elaborated upon by the Court in State Investment House, Inc. v. Court of Appeals, et al.: 3

[T]he appropriate measure for damages in case of delay in discharging an obligation consisting of the
payment of a sum of money, is the payment of penalty interest at the rate agreed upon; and in the
absence of a stipulation of a particular rate of penalty interest, then the payment of additional interest at a
rate equal to the regular monetary interest; and if no regular interest had been agreed upon, then
payment of legal interest or six percent (6%) per annum.

In the instant case, the promissory notes, as earlier pointed out, stipulated both for regular or "monetary interest" of twenty-
one percent (21%) per annum, and penalty or "compensatory interest" 4 consisting of (a) additional interest also at the rate
of twenty-one percent (21%) per annum; and (b) a penalty charge of eight percent (8%) per annum computed on
amortizations in arrears for more than thirty (30) days. The Court of Appeals correctly held that the "additional interest" at the
rate of twenty-one percent (21%) per annum was effectively part of the penalty clause of the promissory notes activated by
default on the part of the makers of those notes.

The Court of Appeals reduced the penalty charges or compensatory interest from twenty-nine percent (29%) — twenty-one
percent (21%) additional interest plus eight percent (8%) penalty charges — per annum to fourteen percent (14%) of the
principal amount and the regular interest thereon, holding in the process that the aggregate penalty or compensatory
interest was "iniquitous and unconscionable" and because there had been partial performance on the part of petitioners
Pacific and Lim.

Insofar as the partial performance is concerned, it may be noted that petitioners paid only after suit had commenced and
in order to lift preliminary attachment writs on their property P2.6M out of their total obligation of P16,598,725.64 (excluding
interest and penalty charges). In determining whether a penalty clause is "iniquitous and unconscionable," a court may very
well take into account the actual damages sustained by a creditor who has been compelled to sue the defaulting debtor,
which actual damages would include the interest and penalties which the creditor may have had to pay on its own loan
from its funding source. In the instant case it is worth noting that the funds which Philcotton loaned to Pacific had originated
from the Development Bank of the Philippines ("DBP") and that Philcotton was obligated to repay those loans to the DBP on
the same terms and conditions as those extended by Philcotton to Pacific upon relending them to the latter. 5 Presumably
because Philcotton's counsel had failed to allege or prove the full level of actual damages which Philcotton had sustained,
Philcotton has not questioned before this Court the depth of the reduction of the penalty clause effected by the Court of
Appeals. At the same time, we do not believe that petitioners' claim for an even deeper reduction of the penalty clause
merits serious consideration. Petitioners have not been able to point to any special "equitable consideration" that might
justify such further reduction of the stipulated penalty charge.
While we find no merit in the contentions of the petitioners, we must note that the Court of Appeals had fallen into reversible
error in holding that the regular interest of twenty-one percent (21%) of the unpaid principal obligation of P13,998,725.84
plus penalty charges of fourteen percent (14%) on that principal amount shall be computed only from 7 January 1985, the
date when the parties entered into a joint manifestation. That joint manifestation read as follows:

COME NOW the parties in the above-entitled case assisted by their respective counsel and unto this
Honorable Court respectfully manifest that;

1. Defendants are indebted to the plaintiff in the aggregate amount of Sixteen Million Five Hundred Ninety
Eight Thousand Seven Hundred Twenty Five & 84/100 (P16,598,725.84) Pesos, excluding interest, charges
penalties and attorney's fees;

2. Defendant offer and agree to pay plaintiff the amount of One Million Eight Hundred Thousand
(P1,800,000.00) Pesos, in the following manner:

a. the amount of P500,000.00 to be paid by a 30-day postdated check;

b. the amount of P1,300,000.00 to be paid by a 60-day postdated check;

Said amount shall be applied to the principal of said obligations of the defendants.

3. Plaintiff is willing to release and/or discharge the following properties/merchandise subject of a writ of
attachment issued by this Honorable Court, to wit:

a. 219 boxes = 11,870.02 kgs. of 20 s/2 stretch yarn;

b. 40 boxes = 2,600 kgs. of 45/1 PR;

c. 70 boxes = 4,550 kgs. of 36/1 PR;

d. 69 bales at 200 kgs./bale of polyester;

e. 50 bales at 200 kgs./bale of Rayon.

WHEREFORE, it is respectfully prayed that the foregoing agreement of the parties be approved and that an
order be issued by this Honorable Court releasing and discharging from attachment the
properties/merchandise mentioned in Paragraph 3 hereof. 6

In the first place, while the parties to the joint manifestation agreed upon or confirmed the aggregate principal amount of
P16,598,725.84 (excluding interest, charges, penalties and attorney's fees) as due from petitioners, there was no agreement
of any kind in respect of the date(s) from which monetary interest and penalty charges are to be computed on the
principal amount due. The applicable rule is that novation or change of the object, cause or principal terms and conditions
of an obligation is never presumed; that novation must be clearly proven. 7 And even if novation were sufficiently shown,
the presumptive rule is that conditions attached to the old obligation also attach to the new obligation. 8

In the second place, insofar as the principal amount of the obligation of petitioners is concerned, the joint manifestation
partook of the nature merely of a stipulation of facts. There is no basis for supposing that Philcotton intended to waive
interest and penalty charges already accrued under the terms of the several promissory notes on 7 January 1985, and the
rule is well-settled that an intent to waive valuable rights cannot be casually presumed. 9

In the third place, assuming (arguendo merely) that the Court of Appeals had impliedly considered the joint manifestation
and motion dated 7 January 1985 as having the effect of liquidating Philcotton's claims for payment of sums of money, that
assumed view is clearly erroneous. Article 2213 of the Civil Code provides that "interest cannot be recovered upon
unliquidated claims or damages, except when the demand can be established with reasonable certainty." Philcotton's
claims, however, were not unliquidated; they were, on the contrary, known and easily determined or determinable by
inspection of the terms and conditions of the relevant promissory notes and related documentation. In Bareng v. Court of
Appeals, et al., 10 much the same argument was made by the petitioner. In rejecting this argument, the Court, through Mr.
Justice J.B.L. Reyes, said:

Petitioner also argues that his indebtedness to respondent Alegria was unliquidated until its amount was
determined by the Court of Appeals at P3,600.00, and that consequently, he cannot be made answerable
for interests on the amount due before judgment in the Court of Appeals. The argument is completely
untenable. The price of the equipment in question under petitioner and Alegria's contract of sale was
determined and known, hence, liquidated; and the obligation to pay any unpaid balance thereof did not
cease to be liquidated and determined simply because vendor and vendee, in the suit for collection,
disagreed as to its amount. If petitioner had wanted to free himself from any responsibility for interest on the
amount he had always acknowledged he still owed his vendor, he should have deposited the same in
Court at the very start of the action. 11 (Emphasis supplied)

We, therefore, believe and so hold that the interest and penalty charges here due from petitioners under the Decision of
the Court of Appeals must be computed from the date or dates specified in the schedules attached to the respective
promissory notes, and not from 7 January 1985.
We are aware that the above error into which the Court of Appeals had fallen was not brought out by Philcotton. It is well-
settled, however, that the Supreme Court is vested with plenary authority to review matters and resolve issues not assigned
as errors in an appeal, if it finds that consideration and resolution thereof are indispensable for arriving at a just decision in a
particular case.12 That the funds involved here are public funds can only serve to reinforce the applicability of this doctrine
in the instant case.

WHEREFORE, the Decision of the Court of Appeals in C.A.-G.R. No. CV 15085, dated 24 November 1988, is hereby MODIFIED.
Petitioners Pacific and George U. Lim are hereby ORDERED to pay, jointly and severally, private respondent Philcotton the
principal amount of P13,998,725.84 with twenty-one percent (21%) regular interest per annum to be computed thereon from
the due dates specified in the relevant promissory notes until fully paid; an amount equivalent to fourteen percent (14%) per
annum of the principal amount due and regular interest thereon, representing penalty charges to be computed starting
thirty (30) days after the respective due dates under the relevant promissory notes, until fully paid; and an amount
equivalent to ten percent (10%) of the principal amount recoverable, as attorney's fees. Costs against petitioners. This
Decision is immediately executory.

SO ORDERED.

Bidin, Davide, Jr. and Romero, JJ. concur.

Separate Opinions

GUTIERREZ, JR., J., concurring:

I concur in the decision but would like to add a few observations which might help clarify matters. I agree that the interests
and penalties should be computed from the dates they fell due as provided in the various promissory notes. However, some
problems arise in the computations that will follow.

We give the total value of the four promissory notes as P16,598,725.84. If we look at the decision in CC No. 49881, however,
we see that it is P3,887,409.09 plus P3,884,800.71 or P7,772,209.80. The two notes in CC No. 50553 total P8,658,496.45. There is
already a discrepancy between the total face value of P16,420,706.25 and the P16,598,725.84 earlier stated.

It also seems that there was a payment of P1,124,109.06 on the first note before the cases were filed. There was another
P2,600,000.00 paid to Philippine Cotton to lift the writ of attachment. The effect of these payments on the computation of
interests and penalties is not reflected in the P16,598,725.84.

We cannot, of course, go into mathematical details in this Court. However when this case is remanded to the trial court, it
might be best to avoid subsequent recourse to higher courts if that court looks into — the effect of the first installment
payment on the first promissory note together with the twenty-one (21%) percent interest insofar as the computation of
regular interests and penalties are concerned. I believe our decision restored the trial court ruling that the P2,600,000.00
payment should be applied to the first promissory note and should, therefore, affect the computation of interests and
penalties. It is also possible that from the time the trial court rendered a decision up to the time we decided this case, some
payments were made. This cannot be ignored.

While the penalties in this case appear to be well deserved under the circumstances, I have always been wary of interests
and penalties which tremendously increase and sometimes multiply several times the principal amount due over the years
that a case is pending in court. It is most unfortunate that many cases cannot be decided expeditiously but this is not the
fault of a losing party. The effect of interests and penalties, specially for litigants who, while believing all the time they have
a winning case, lose that case in the end, is quite disastrous.

Finally, I wish to point out that nothing in our decision precludes the application of the condonation by the Development
Bank of the Philippines of additional interests and charges as stated in the letter of Philippine Cotton Pacific Mills.

Separate Opinions

GUTIERREZ, JR., J., concurring:

I concur in the decision but would like to add a few observations which might help clarify matters. I agree that the interests
and penalties should be computed from the dates they fell due as provided in the various promissory notes. However, some
problems arise in the computations that will follow.
We give the total value of the four promissory notes as P16,598,725.84. If we look at the decision in CC No. 49881, however,
we see that it is P3,887,409.09 plus P3,884,800.71 or P7,772,209.80. The two notes in CC No. 50553 total P8,658,496.45. There is
already a discrepancy between the total face value of P16,420,706.25 and the P16,598,725.84 earlier stated.

It also seems that there was a payment of P1,124,109.06 on the first note before the cases were filed. There was another
P2,600,000.00 paid to Philippine Cotton to lift the writ of attachment. The effect of these payments on the computation of
interests and penalties is not reflected in the P16,598,725.84.

We cannot, of course, go into mathematical details in this Court. However when this case is remanded to the trial court, it
might be best to avoid subsequent recourse to higher courts if that court looks into — the effect of the first installment
payment on the first promissory note together with the twenty-one (21%) percent interest insofar as the computation of
regular interests and penalties are concerned. I believe our decision restored the trial court ruling that the P2,600,000.00
payment should be applied to the first promissory note and should, therefore, affect the computation of interests and
penalties. It is also possible that from the time the trial court rendered a decision up to the time we decided this case, some
payments were made. This cannot be ignored.

While the penalties in this case appear to be well deserved under the circumstances, I have always been wary of interests
and penalties which tremendously increase and sometimes multiply several times the principal amount due over the years
that a case is pending in court. It is most unfortunate that many cases cannot be decided expeditiously but this is not the
fault of a losing party. The effect of interests and penalties, specially for litigants who, while believing all the time they have
a winning case, lose that case in the end, is quite disastrous.

Finally, I wish to point out that nothing in our decision precludes the application of the condonation by the Development
Bank of the Philippines of additional interests and charges as stated in the letter of Philippine Cotton Pacific Mills.