G.R. No.

L-9231

January 6, 1915

UYCHICO, plaintiff-appellant,
vs.
THE UNION LIFE ASSURANCE
AL., defendants-appellees.

SOCIETY,

Beaumont
and
Tenney
for
Bruce, Lawrence, Ross and Block for appellees.

LIMITED,

ET

appellant.

TRENT, J.:
An appeal from a judgment dismissing the complaint upon the
merits, with costs.
The plaintiff seeks to recover the face value of two insurance
policies upon a stock of dry goods destroyed by fire. It appears that
the father of the plaintiff died in 1897, at which time he was
conducting a business under his own name, Uy Layco. The plaintiff
and his brother took over the business and continued it under the
same name, "Uy Layco." Sometime before the date of the fire, the
plaintiff purchased his brother's interest in the business and
continued to carry on the business under the father's name. At the
time of the fire "Uy Layco" was heavily indebted and subsequent
thereto the creditors of the estate of the plaintiff's father. During
the course of these proceedings, the plaintiff's attorney
surrendered the policies of insurance to the administrator of the
estate, who compromised with the insurance company for one-half
their face value, or P6,000. This money was paid into court and is
now being held by the sheriff. The plaintiff now brings this action,
maintaining that the policies and goods insured belonged to him
and not to the estate of his deceased father and alleges that he is
not bound by the compromise effected by the administrator of his
father's estate.
The defendant insurance company sought to show that the plaintiff
had agreed to compromise settlement of the policies, and for that
purpose introduced evidence showing that the plaintiff's attorney
had surrendered the policies to the administrator with the
understanding that such a compromise was to be effected. The
plaintiff was asked, while on the witness stand, if he had any
objection to his attorney's testifying concerning the surrender of
the policies, to which he replied in the negative. The attorney was

then called for that purpose. Whereupon, counsel for the plaintiff
formally withdrew the waiver previously given by the plaintiff and
objected to the testimony of the attorney on the ground that it was
privileged. Counsel, on this appeal, base their argument of the
proposition that a waiver of the client's privilege may be withdrawn
at any time before acted upon, and cite in support thereof Ross vs.
Great Northern Ry. Co., (101 Minn., 122; 111 N. W., 951). The case
of Natlee Draft Horse Co. vs. Cripe and Co. (142 Ky., 810), also
appears to sustain their contention. But a preliminary question
suggest itself, Was the testimony in question privileged?
Our practice Act provides: "A lawyer must strictly maintain inviolate
the confidence and preserve the secrets of his client. He shall not
be permitted in any court, without the consent of his client, given in
open court, to testify to any facts imparted to him by his client in
professional consultation, or for the purpose of obtaining advice
upon legal matters." (Sec. 31, Act No. 190.)
A similar provision is inserted in section 383, No. 4, of the same Act.
It will be noted that the evidence in question concerned the
dealings of the plaintiff's attorney with a third person. Of the very
essence of the veil of secrecy which surrounds communications
made between attorney and client, is that such communications
are not intended for the information of third persons or to be acted
upon by them, put of the purpose of advising the client as to his
rights. It is evident that a communication made by a client to his
attorney for the express purpose of its being communicated to a
third person is essentially inconsistent with the confidential
relation. When the attorney has faithfully carried out his
instructions be delivering the communication to the third person for
whom it was intended and the latter acts upon it, it cannot, by any
reasoning whatever, be classified in a legal sense as a privileged
communication between the attorney and his client. It is plain that
such a communication, after reaching the party for whom it was
intended at least, is a communication between the client and a
third person, and that the attorney simply occupies the role of
intermediary or agent. We quote from but one case among the
many which may be found upon the point:
The proposition advanced by the respondent and adopted
by the trial court, that one, after fully authorizing his
attorney, as his agent, to enter into contract with a third
party, and after such authority has been executed and relied
on, may effectively nullify his own and his duly authorized

agent's act by closing the attorney's mouth as to the giving

of such authority, is most startling. A perilous facility of
fraud and wrong, both upon the attorney and the third party,
would result. The attorney who, on his client's authority,
contracts in his behalf, pledges his reputation and integrity
that he binds his client. The third party may well rely on the
assurance of a reputable lawyer that he has authority in
fact, though such assurance be given only by implication
from the doing of the act itself. It is with gratification,
therefore, that we find overwhelming weight of authority,
against the position assumed by the court below, both in
states where the privilege protecting communications with
attorneys is still regulated by the common law and in those
where it is controlled by statute, as in Wisconsin. (Koeber vs.
Sommers, 108 Wis., 497; 52 L. R. A., 512.)
Other cases wherein the objection to such evidence on the ground
of privilege has been overruled are: Henderson vs. Terry (62 Tex.,
281); Shove vs. Martin (85 Minn., 29); In re Elliott (73 Kan., 151);
Collins vs. Hoffman (62 Wash., 278); Gerhardt vs. Tucker (187 Mo.,
46). These cases cover a variety of communications made by an
authority in behalf of his client to third persons. And cases wherein
evidence of the attorney as to compromises entered into by him on
behalf of his client were allowed to be proved by the attorney's
testimony are not wanting. (Williams vs. Blumenthal, 27 Wash., 24;
Koeber vs. Sommers, supra.)
It is manifest that the objection to the testimony of the plaintiff's
attorney as to his authority to compromise was properly overruled.
The testimony was to the effect that when the attorney delivered
the policies to the administrator, he understood that there was a
compromise to be effected, and that when he informed the plaintiff
of the surrender of the policies for that purpose the plaintiff made
no objection whatever. The evidence is sufficient to show that the
plaintiff acquiesced in the compromise settlement of the policies.
Having agreed to the compromise, he cannot now disavow it and
maintain an action for the recovery of their face value.
For the foregoing reasons the judgment appealed from is affirmed,
with costs. So ordered.

the defendant Isabelo Alburo, did maliciously and willfully

keep and deny that he had received said documents, for the
purpose of thwarting the complaint of Luciano Andrada
prepared by himself on said instruments, as he had
undertaken the defense of the defendant Isabelo Alburo.
3. The attorney L. Porter Hamilton, being such in various
affairs of Isabelo Alburo, betrayed his client by instigating
complaints against the latter, solely in order that his client
should entrust him with the defense of said complaints
instigated by him.

G.R. No. L-7725

4. The attorney L. Porter Hamilton, under date of April 8,

1911, proposed to S. L. Joseph of Cebu that he be employed
as attorney for the concern known as the S.L. Joseph Lumber
Yard, with a salary of P1,200 a year, under a threat to
compel the said Joseph to accept his proposition.

January 17, 1913

In the matter of the suspension of L. PORTER HAMILTON

from the practice of law.
L.
Porter
Hamilton,
in
his
own
Office of the Solicitor-General Harvey, for the Government.

behalf.

PER CURIAM:
These are disbarment proceedings, instituted against L. Porter
Hamilton, an attorney at law, who was practicing his profession in
the Court of First Instance of Cebu and in other courts of these
Islands, at the time the charges herein set forth were formulated.
The charges were filed by the fiscal upon the order of the
Honorable Adolph Wislizenus, judge of the Eleventh Judicial District,
and the formal accusation sets out four separate counts of
professional misconduct, as follows:
1. The attorney L. Porter Hamilton, being such for the
plaintiff Luciano Andrada, in civil cause No. 1344, defended
and counseled, without the latter's consent, the defendant
Isabelo Alburo in the same manner or business.
2. The attorney L. Porter Hamilton, having received from the
plaintiff Luciano Andrada, in the above-cited case, various
documents among which were vouchers or notes signed by
some municipal policemen of Cebu and counter-signed by

Therefore, the fiscal respectfully begs the court to proceed

in legal manner to suspend the attorney L. Porter Hamilton
from the practice of his profession and to recommend to the
Honorable Supreme Court his exclusion from the list of those
admitted to practice law in the courts of the Islands.
The defendant answered formally denying the charges, and the
cause came on for final hearing before Honorable Jose C. Abreu,
acting as a special judge for the trial of this case, on January 22,
1912, and upon the proofs adduced, an order or suspension from
the practice of law was entered against the defendant, and the
case is now before this court for review.
By agreement of counsel the case was submitted on briefs, and on
the record of the proceedings had in the court below. The only
matters which need to be inquired into at this time relate to the
conduct of the defendant in civil cause No. 1344 in the Court of
First Instance of Cebu, entitled Luciano Andrada vs. Isabelo Alburo,
and his conduct in addressing to S.L. Joseph the letter referred to
under the fourth count of the accusation and filed as Exhibit B for
the prosecution, as to both of which matters the court below found
the respondent guilty of unprofessional conduct of so grave a
character as to justify and require his suspension.
It appears from the record that the defendant advised and
counseled with one Luciano Andrada in regard to a claim which the
latter had against Isabelo Alburo, and that he prepared for Andrada

a formal petition which was filed in the office of the clerk of court of
the Court of First Instance of Cebu under the caption "Luciano
Andrada vs. Isabelo Alburo, civil case No. 1344;" and that he also
prepared for the plaintiff Andrada in that cause papers relating to
attachment proceedings against the property of the defendant,
Alburo. The petition as well as the other papers filed with the clerk
in this case were signed by the plaintiff, Andrada, who himself
delivered them to the clerk. Mr. Hamilton's name was not noted as
attorney of record for Andrada. It appears that there was some
formal defect in the papers relating to the attachment proceedings,
and on September 16, 1911, the defendant Hamilton addressed the
following communication to the clerk of court:
[L. Porter Hamilton, lawyer, Cebu, Cagayan, and Surigao, P.I.]
CEBU, CEBU, P.I., September 16, 1911.
CLERK
OF
THE
Cebu, Cebu, P.I.

COURT

OF

FIRST

INSTANCE,

SIR: I beg that you permit Mr. Luciano Andrada to get the
sworn statement in civil cause No. 1344, to be exchanged
for another true and correct sworn statement; and further I
desire to invite your attention to the rights this gentleman
has under section 34 of Act No. 190, the Code of Civil
Procedure.

Cebu, Cebu, P.I., October 2, 1911.

(Sgd.)
L.
Attorney for the defendant.

PORTER

On the 12th of October, defendant as attorney for Alburo entered

the following demurrer to the petition which had been prepared by
him for Andrada:
[United States of America, Philippine Islands.
Court of First Instance of the Province of Cebu.
Luciano Andrada, plaintiff, vs. Isabelo Alburo,
defendant. Civil cause No. 1344.]
DEMURRER.
The defendant in this cause through the undersigned
attorney demurs to the complaint in this case on the
following grounds:
1. That the facts alleged do not constitute sufficient cause
for action.
2. That the complaint is vague and ambiguous.

Respectfully,

Cebu, Cebu, P.I., October 12, 1911.

(Sgd.) L. PORTER HAMILTON.

(Sgd.)
L.
Attorney for the defendant.

On October 2 following, the defendant entered his appearance as

attorney of record for the defendant, Alburo, in civil case No. 1344
as shown by the following, which forms a part of the record in that
case:
[United States of America, Philippine Islands.
Court of First Instance of the Province of Cebu.
Luciano Andrada, plaintiff, vs. Isabelo Alburo,
defendant. Civil cause No. 1344.]
To the clerk:
The clerk will please record my appearance for the
defendant above-named, Mr. Isabelo Alburo.

HAMILTON,

PORTER

Received
today,
(Sgd.) L. ANDRADA.

October

HAMILTON,

12,

1911.

On the 13th of October an order was entered by the Court citing

the defendant to appear before the court on the following day, and
explain his action in appearing as the attorney for defendant in
case No. 1344. As a result of the investigation made by the court at
that time, the fiscal was instructed to file the formal accusation
which forms the basis of the present proceedings.
On the 14th of October the court made this additional order in the
case:

The court provisionally directs that Mr. Porter Hamilton

cease to act as attorney for the defendant in this cause and
the clerk of this court is prohibited from receiving any
document or paper presented in such character by Mr.
Porter Hamilton; and the court further directs that
immediately and without delay Mr. Hamilton deposit with
the clerk of this court all the documents and papers of any
nature which he has at any time received from Mr. Luciano
Andrada, plaintiff in this case.
Cebu, Cebu, October 14, 1911.
(Sgd.)
ADOLPH
Judge of the Eleventh Judicial District.

WISLIZENUS,

In compliance with the foregoing order the defendant remitted to

the court all the papers and documents in his possession relating to
case No. 1344, as evidenced by the following communication,
which forms a part of this record:
[L. Porter Hamilton, lawyer, Cebu, Cagayan, and Surigao, P.I.]
CEBU, CEBU, P.I., October 14, 1911.
COURT OF FIRST INSTANCE FOR THE PROVINCE OF CEBU, P.I.
SIR: In compliance with the order of this court of this date I
have the honor to transmit to your possession all the
papers, documents, etc., belonging to Sr. Luciano Andrada in
the case of Luciano Andrada, plaintiff, vs. Isabelo
Alburo, defendant, civil cause, No. 1344, and also of the
other papers of Sr. Andrada on all other matters which I
have found in my office.
Respectfully,
(Sgd.) L. PORTER HAMILTON.
Upon the hearing of the disbarment proceedings in the lower court
Luciano Andrada testified that the defendant had advised and
counseled with him in regard to his claim against Isabelo Alburo,
and that an understanding had been entered into touching the fees
to be charged for his services; that the latter was his attorney with
respect to this claim, and that as such he delivered to him

certain vales and papers relating to the claim, and that he was
surprised when defendant appeared as attorney for Alburo.
The defendant does not offer any satisfactory explanation of his
conduct in this matter. He admits that Andrada came to his office
and consulted with him regarding this claim against Alburo, and
that he prepared the petition and other papers in the case. He
insists, however, that he did this solely as a favor to Andrada and
that he told Andrada at the time that he could not act as his
attorney in the matter. In his brief the defendant states that he
refused to appear as the attorney of record for Andrada for two
reasons: First, because he failed to secure him his fee, and second,
because Seores Martinez and Vamenta were Andrada's regular
attorney at that time. The record clearly establishes, however, that
Andrada had no attorney of record in this matter. It is possible that
he had consulted other attorneys with reference to his claim
against Alburo, but so far as the record shows the defendant is the
only person who assumed the relationship of attorney to Andrada.
He accepted from him the papers relating to his claim, and to all
intents and purposes he was his attorney so far as such relationship
could be established by overt acts. He did all that was necessary to
establish between himself and Andrada the confidential relationship
of attorney and client. He accepted from Andrada such papers as
he had relating to the claim against Alburo, papers which, as
Andrada testified, disclosed both the strength and the weakness of
his claim. He counseled with him regarding the subject matter of
the suit and prepared all of the necessary papers for the institution
of the litigation, and in fact he rendered all the necessary services
of an attorney with reference to the whole matter up to the time of
his appearance as he had not done was to allow his name to be
affixed to the papers filed in the office of the clerk, and this act, far
from being to his credit, can only serve as cumulative evidence of
the fact that he was not acting in good faith with the man to whom
he was rendering professional services. Andrada claims that he was
working for a stipulated fee, but it is not necessary to determine
here whether or not he had been secured with his fee, or whether
he was acting as he claims as a matter of favor to Andrada. He
voluntarily assumed the relationship of attorney to Andrada and he
received from the latter every confidence that such a relation
implies; he assumed the obligation of preparing the petition and
other papers in the case and of expediting the same to the point
where an answer was forthcoming from the defendant to the suit;
and then without warning to Andrada he entered his appearance as
attorney for the defendant and filed a demurrer to the very petition
which he had prepared for the plaintiff. At the very time that he
appeared for the defendant he had in his possession papers

belonging to Andrada which pertained to the litigation and which

had been delivered to him as the attorney for the plaintiff, and
these were only delivered up at the order of the court.
What may have been his motive in this matter we are only left to
conjecture, but from every standpoint his conduct was
reprehensible in the highest degree. The record clearly establishes
the relationship of attorney and client between the defendant and
Andrada, and the conduct of defendant was a violation of the
confidence which naturally resulted from this relationship. It was a
violation of his oath as an attorney and officer of this court, in that
he did not offer his services in good faith to his client and failed to
served his client's interest as it was his sworn duty to do. If in
serving Andrada in the capacity that he did, he was acting in good
faith, and if there had been any reasonable grounds on which he
could have justified his transferring his services to the opposing
litigant, he should have, and, we take it, he would have, informed
Andrada of his intentions and delivered up to him such papers as
he had relating to his claim. But without seeking permission from
Andrada or the court, and without disclosing his intentions in the
matter, he suddenly and unexpectedly, to the surprise of his former
client, appeared in opposition to the very suit he had instituted. His
whole action in the premises reveals a distorted conception of the
ethics of his profession and an utter disregard for his duty and his
obligations to both his client and the court.
The second charge of professional misconduct against the
defendant relates to the following letter addressed by the
defendant to Mr. S.L. Joseph, viz:
[L. Porter Hamilton, lawyer, Cebu, Cagayan, and Surigao, P.I.]
CEBU, CEBU, P.I., April 8, 1911.

By the way, I have an offer of P500 to make a thorough

investigation into the reason why the Mpl., Prov., and Ins.
Govmts. buy so much lumber and so exclusively from the
S.L. Joseph Lumber Yard, and P500 more if the investigation
brings satisfactory results.
What do you know about that and what do you think of the
proposition?
Very respectfully,
(Sgd.) L. PORTER HAMILTON.
The lower court in passing upon this letter held that the second
paragraph was in the nature of a threat inserted in this letter solely
to influence Mr. Joseph in the employment of the defendant in the
matter referred to in the first paragraph, and that the defendant in
writing such a letter was guilty of such gross professional
misconduct as showed him to be unworthy of that esteem and
confidence which is necessary in one who aspires to discharge the
important functions of an attorney.
The defense interposed by the defendant to the charge of
professional misconduct relating to this letter was that he did not
use the language referred to as a threat in any sense, and that it
was never so understood by Mr. Joseph; that he had been Mr.
Joseph's attorney with reference to other matters and had advised
him with reference to the best interests of his business, and that
the information imparted in the second paragraph of the letter was
simply referred to in an incidental way. It is further contended that
the letter in question should have been considered as aprivileged
communication, it having been addressed by him as attorney to his
client. Respondent claims that for that reason it is not proper to
consider it as evidence in a proceeding of this nature.

Mr. S.L. JOSEPH, Cebu, Cebu, P.I.

DEAR SIR: It has been some time since we have had
anything to say relative to the proposition of keeping up
your collections and looking after your delinquent contract
men during your absence in the U.S. What is your opinion
relative to the proposition of P1,200 per year, or have you
dropped your original idea?

The letter is self-explanatory and needs but little comment from the
court. A careful examination of the language used by the defendant
in the second paragraph of this letter discloses that the defendant
does not say that he will not accept such employment, or that he
refused to accept such employment. The only reasonable
interpretation that the language conveys is that he has the matter
under advisement and that he is holding his final decision in
abeyance. It is further quite evident from the context of the first
paragraph of the letter that Mr. Joseph had apparently dropped the
question of employing defendant with reference to the matter

proposed, and that defendant was anxious that he take the matter
up for further consideration. No reasonable explanation was given
for the incorporation of the second paragraph in this particular
letter, nor does any reason suggest itself, unless it be that it was
inserted there as a threat. Following as it does immediately upon
the solicitation for employment, the reasonable and logical
interpretation which it bears is that it was used as a threat to
induce Mr. Joseph to give favorable consideration to the proposition
advanced in the first paragraph of the letter. This was the
conclusion of the trial court and it is also our conclusion.
The contention that this letter is a privileged communication is not
tenable. The general rule is well recognized that professional
communications are privileged, but that statements made by a
client to his attorney, or the statements of an attorney to his client
fall within this rule only when it is shown that the relation of
attorney and client existed with reference to the matter to which
the communication relates. (23 Am. & Eng. Ency. of Law, 58.)
Furthermore, in a proceeding of this nature, where the alleged
client himself is not insisting on the privilege, counsel can not be
permitted to shield himself behind the privilege.
The context of the whole letter in the present case shows
conclusively that no such relation existed with reference to the
subject matter of the letter. The defendant was soliciting
employment, and this very fact is evidence that the relation of
attorney and client did not exist. As to the second paragraph of the
letter we can not accept the contention that this information was
imparted as professional advice.
After a very careful examination of the whole record we have
regretfully reached the conclusion that the facts before us show a
flagrant and willful violation of the part of defendant of his
professional obligations, and a reckless disregard of the
fundamental ethics of his profession.
We have encountered some difficulty in determining whether the
name of the defendant in these proceedings should be permanently
stricken from the roll, or whether, under all the circumstances, an
order suspending him for a substantial period would sufficiently
subserve the interests of justice, and of the administration of
justice in these Islands.
Under the provisions of the Spanish Penal Code (art. 357) an
attorney found guilty of the unprofessional conduct of which, as

appears from the record in these proceedings, this defendant was

guilty is liable to suffer the penalty of temporary special
disqualification, that is to say, disqualification for a period of from
six years and one day to twelve years; and after some hesitation
we have concluded that the suspension of the defendant for a
period of six years will secure the ends for which these proceedings
were instituted. It is true, of course, that, as was said by Mr. Justice
Hooker, In re Shepard (109 Mich. 631).
This is not a proceeding by way of punishment, though the
deprivation of the privileges of an attorney may be a matter
of serious importance to a practitioner. It is a measure
necessary to the protection of the public, who have a right
to expect that courts will be vigilant in withholding, and, if
already given, withdrawing, their certificates of qualification
and character, upon which the public rely.
But in determining the question whether the defendant should be
suspended or permanently disbarred, it would seem proper to have
in mind the provisions of the statute fixing the penalty to be
imposed in the event that a criminal action had been instituted
against the defendant.
Let the proper orders be entered suspending the defendant in these
proceedings from the practice of law for a period of six years from
the date of his original suspension in the court below, with the costs
of these proceedings against him.

G.R. No. L-21237

March 22, 1924

JAMES
D.
BARTON, plaintiff-appellee,
vs.
LEYTE ASPHALT & MINERAL OIL CO., LTD., defendant-appellant.
Block, Johnston & Greenbaum and Ross, Lawrence & Selph for
appellant.
Frank B. Ingersoll for appellee.
STREET, J.:
This action was instituted in the Court of First Instance of the City of
Manila by James D. Barton, to recover of the Leyte Asphalt &
Mineral Oil Co., Ltd., as damages for breach of contract, the sum of
$318,563.30, United States currency, and further to secure a
judicial pronouncement to the effect that the plaintiff is entitled to
an extension of the terms of the sales agencies specified in the
contract Exhibit A. The defendant answered with a general denial,
and the cause was heard upon the proof, both documentary and
oral, after which the trial judge entered a judgment absolving the
defendant corporation from four of the six causes of action set forth
in the complaint and giving judgment for the plaintiff to recover of
said defendant, upon the first and fourth causes of action, the sum
of $202,500, United States currency, equivalent to $405,000,
Philippine currency, with legal interest from June 2, 1921, and with
costs. From this judgment the defendant company appealed.
The plaintiff is a citizen of the United States, resident in the City of
Manila, while the defendant is a corporation organized under the
law of the Philippine Islands with its principal office in the City of
Cebu, Province of Cebu, Philippine Islands. Said company appears

to be the owner by a valuable deposit of bituminous limestone and

other asphalt products, located on the Island of Leyte and known as
the Lucio mine. On April 21, 1920, one William Anderson, as
president and general manager of the defendant company,
addressed a letter Exhibit B, to the plaintiff Barton, authorizing the
latter to sell the products of the Lucio mine in the Commonwealth
of Australia and New Zealand upon a scale of prices indicated in
said letter.
In the third cause of action stated in the complaint the plaintiff
alleges that during the life of the agency indicated in Exhibit B, he
rendered services to the defendant company in the way of
advertising and demonstrating the products of the defendant and
expended large sums of money in visiting various parts of the world
for the purpose of carrying on said advertising and demonstrations,
in shipping to various parts of the world samples of the products of
the defendant, and in otherwise carrying on advertising work. For
these services and expenditures the plaintiff sought, in said third
cause of action, to recover the sum of $16,563.80, United States
currency. The court, however, absolved the defendant from all
liability on this cause of action and the plaintiff did not appeal, with
the result that we are not now concerned with this phase of the
case. Besides, the authority contained in said Exhibit B was
admittedly superseded by the authority expressed in a later letter,
Exhibit A, dated October 1, 1920. This document bears the approval
of the board of directors of the defendant company and was
formally accepted by the plaintiff. As it supplies the principal basis
of the action, it will be quoted in its entirety.
(Exhibit
CEBU,
October 1, 1920.
JAMES
Cebu City.

CEBU,

P.

D.

BARTON,

A)
I.

Esq.,

DEAR SIR: You are hereby given the sole and exclusive sales
agency for our bituminous limestone and other asphalt products of
the Leyte Asphalt and Mineral Oil Company, Ltd., May first, 1922, in
the following territory:
Australia

Saigon

Java

New Zealand

India

China

Tasmania

Sumatra

Hongkong

Siam and the Straits Settlements, also in the United States of

America until May 1, 1921.
As regard bituminous limestone mined from the Lucio property. No
orders for less than one thousand (1,000) tons will be accepted
except under special agreement with us. All orders for said
products are to be billed to you as follows:
Per ton
In 1,000 ton lots ...........................................
In 2,000 ton lots ...........................................
In 5,000 ton lots ...........................................
In 10,000 ton lots ..........................................

P15
14
12
10

with the understanding, however that, should the sales in the

above territory equal or exceed ten thousand (10,000) tons in the
year ending October 1, 1921, then in that event the price of all
shipments made during the above period shall be ten pesos (P10)
per ton, and any sum charged to any of your customers or buyers
in the aforesaid territory in excess of ten pesos (P10) per ton, shall
be rebated to you. Said rebate to be due and payable when the
gross sales have equalled or exceeded ten thousand (10,000) tons
in the twelve months period as hereinbefore described. Rebates on
lesser sales to apply as per above price list.
You are to have full authority to sell said product of the Lucio mine
for any sum see fit in excess of the prices quoted above and such
excess in price shall be your extra and additional profit and
commission. Should we make any collection in excess of the prices
quoted, we agree to remit same to your within ten (10) days of the
date of such collections or payments.
All contracts taken with municipal governments will be subject to
inspector before shipping, by any authorized representative of such
governments at whatever price may be contracted for by you and
we agree to accept such contracts subject to draft attached to bill
of lading in full payment of such shipment.
It is understood that the purchasers of the products of
the Lucio mine are to pay freight from the mine carriers to
destination and are to be responsible for all freight, insurance and

other charges, providing said shipment has been accepted by their

inspectors.

(Sgd.)
President

All contracts taken with responsible firms are to be under the same
conditions as with municipal governments.

Accepted.
(Sgd.)
JAMES
Witness D. G. MCVEAN

All contracts will be subject to delays caused by the acts of God,

over which the parties hereto have no control.
It is understood and agreed that we agree to load all ships,
steamers, boats or other carriers prompty and without delay and
load not less than 1,000 tons each twenty-four hours after March 1,
1921, unless we so notify you specifically prior to that date we are
prepared to load at that rate, and it is also stipulated that we shall
not be required to ship orders of 5,000 tons except on 30 days
notice and 10,000 tons except on 60 days notice.
If your sales in the United States reach five thousand tons on or
before May 1, 1921, you are to have sole rights for this territory
also for one year additional and should your sales in the second
year reach or exceed ten thousand tons you are to have the option
to renew the agreement for this territory on the same terms for an
additional two years.
Should your sales equal exceed ten thousand (10,000) tons in the
year ending October 1, 1921, or twenty thousand (20,000) tons by
May 1, 1922, then this contract is to be continued automatically for
an additional three years ending April 30, 1925, under the same
terms and conditions as above stipulated.
The products of the other mines can be sold by you in the aforesaid
territories under the same terms and conditions as the products of
the Lucio mine; scale of prices to be mutually agreed upon between
us.
LEYTE
ASPHALT
By
(Sgd.)
President
(Sgd.)
Secretary
Approved
October

W.

by

&

MINERAL
WM.

OIL

C.

A.

PALMER

of

Directors,
1920.

Board
1,

CO.,
LTD.
ANDERSON

WM.

ANDERSON

D.

BARTON

Upon careful perusal of the fourth paragraph from the end of this
letter it is apparent that some negative word has been
inadvertently omitted before "prepared," so that the full expression
should be "unless we should notify you specifically prior to that
date that we are unprepared to load at that rate," or "not prepared
to load at that rate."
Very soon after the aforesaid contract became effective, the
plaintiff requested the defendant company to give him a similar
selling agency for Japan. To this request the defendant company,
through its president, Wm. Anderson, replied, under date of
November 27, 1920, as follows:
In re your request for Japanese agency, will say, that we are
willing to give you, the same commission on all sales made
by you in Japan, on the same basis as your Australian sales,
but we do not feel like giving you a regular agency for Japan
until you can make some large sized sales there, because
some other people have given us assurances that they can
handle our Japanese sales, therefore we have decided to
leave this agency open for a time.
Meanwhile the plaintiff had embarked for San Francisco and upon
arriving at that port he entered into an agreement with Ludvigsen &
McCurdy, of that city, whereby said firm was constituted a subagent
and given the sole selling rights for the bituminous limestone
products of the defendant company for the period of one year from
November 11, 1920, on terms stated in the letter Exhibit K. The
territory assigned to Ludvigsen & McCurdy included San Francisco
and all territory in California north of said city. Upon an earlier
voyage during the same year to Australia, the plaintiff had already
made an agreement with Frank B. Smith, of Sydney, whereby the
latter was to act as the plaintiff's sales agent for bituminous
limestone mined at the defendant's quarry in Leyte, until February
12, 1921. Later the same agreement was extended for the period of
one year from January 1, 1921. (Exhibit Q.)

On February 5, 1921, Ludvigsen & McCurdy, of San Francisco,

addressed a letter to the plaintiff, then in San Francisco, advising hi
that he might enter an order for six thousand tons of bituminous
limestone to be loaded at Leyte not later than May 5, 1921, upon
terms stated in the letter Exhibit G. Upon this letter the plaintiff
immediately indorsed his acceptance.

It will be noted in connection with this letter of the plaintiff, of

March 15, 1921, that no mention was made of the names of the
person, or firm, for whom the shipments were really intended. The
obvious explanation that occurs in connection with this is that the
plaintiff did not then care to reveal the fact that the two orders had
originated from his own subagents in San Francisco and Sydney.

The plaintiff then returned to Manila; and on March 2, 1921,

Anderson wrote to him from Cebu, to the effect that the company
was behind with construction and was not then able to handle big
contracts. (Exhibit FF.) On March 12, Anderson was in Manila and
the two had an interview in the Manila Hotel, in the course of which
the plaintiff informed Anderson of the San Francisco order.
Anderson thereupon said that, owing to lack of capital, adequate
facilities had not been provided by the company for filling large
orders and suggested that the plaintiff had better hold up in the
matter of taking orders. The plaintiff expressed surprise at this and
told Anderson that he had not only the San Francisco order (which
he says he exhibited to Anderson) but other orders for large
quantities of bituminous limestone to be shipped to Australia and
Shanghai. In another interview on the same Anderson definitely
informed the plaintiff that the contracts which be claimed to have
procured would not be filled.

To the plaintiff's letter of March 15, the assistant manager of the

defendant company replied on March, 25, 1921, acknowledging the
receipt of an order for five thousand tons of bituminous limestone
to be consigned to John Chapman Co., of San Francisco, and the
further amount of five thousand tons of the same material to be
consigned to Henry E. White, and it was stated that "no orders can
be entertained unless cash has been actually deposited with either
the International Banking Corporation or the Chartered Bank of
India, Australia and China, Cebu." (Exhibit Z.)

Three days later the plaintiff addressed a letter (Exhibit Y) to the

defendant company in Cebu, in which he notified the company to
be prepared to ship five thousand tons of bituminous limestone to
John Chapman Co., San Francisco, loading to commence on May 1,
and to proceed at the rate of one thousand tons per day of each
twenty-four hours, weather permitting.
On March 5, 1921, Frank B. Smith, of Sydney, had cabled the
plaintiff an order for five thousand tons of bituminous limestone;
and in his letter of March 15 to the defendant, the plaintiff advised
the defendant company to be prepared to ship another five
thousand tons of bituminous limestone, on or about May 6, 1921, in
addition to the intended consignment for San Francisco. The name
Henry E. White was indicated as the name of the person through
whom this contract had been made, and it was stated that the
consignee would be named later, no destination for the shipment
being given. The plaintiff explains that the name White, as used in
this letter, was based on an inference which he had erroneously
drawn from the cable sent by Frank B. Smith, and his intention was
to have the second shipment consigned to Australia in response to
Smith's order.

To this letter the plaintiff in turn replied from Manila, under date of
March, 1921, questioning the right of the defendant to insist upon a
cash deposit in Cebu prior to the filling of the orders. In conclusion
the plaintiff gave orders for shipment to Australia of five thousand
tons, or more, about May 22, 1921, and ten thousand tons, or more,
about June 1, 1921. In conclusion the plaintiff said "I have arranged
for deposits to be made on these additional shipments if you will
signify your ability to fulfill these orders on the dates mentioned."
No name was mentioned as the purchaser, or purchases, of these
intended Australian consignments.
Soon after writing the letter last above-mentioned, the plaintiff
embarked for China and Japan. With his activities in China we are
not here concerned, but we note that in Tokio, Japan, he came in
contact with one H. Hiwatari, who appears to have been a suitable
person for handling bituminous limestone for construction work in
Japan. In the letter Exhibit X, Hiwatari speaks of himself as if he had
been appointed exclusive sales agent for the plaintiff in Japan, but
no document expressly appointing him such is in evidence.
While the plaintiff was in Tokio he procured the letter Exhibit W,
addressed to himself, to be signed by Hiwatari. This letter, endited
by the plaintiff himself, contains an order for one thousand tons of
bituminous limestone from the quarries of the defendant company,
to be delivered as soon after July 1, 1921, as possible. In this letter
Hiwatari states, "on receipt of the cable from you, notifying me of
date you will be ready to ship, and also tonnage rate, I will agree to
transfer through the Bank of Taiwan, of Tokio, to the Asia Banking

Corporation, of Manila, P. I., the entire payment of $16,000 gold, to

be subject to our order on delivery of documents covering bill of
lading of shipments, the customs report of weight, and prepaid
export tax receipt. I will arrange in advance a confirmed or
irrevocable letter of credit for the above amounts so that payment
can be ordered by cable, in reply to your cable advising shipping
date."
In a letter, Exhibit X, of May 16, 1921, Hiwatari informs the plaintiff
that he had shown the contract, signed by himself, to the
submanager of the Taiwan Bank who had given it as his opinion
that he would be able to issue, upon request of Hiwatari, a credit
note for the contracted amount, but he added that the submanager
was not personally able to place his approval on the contract as
that was a matter beyond his authority. Accordingly Hiwatari
advised that he was intending to make further arrangements when
the manager of the bank should return from Formosa.
In the letter of May 5, 1921, containing Hiwatari's order for one
thousand tons of bituminous limestone, it was stated that if the
material should prove satisfactory after being thoroughly tested by
the Paving Department of the City of Tokio, he would contract with
the plaintiff for a minimum quantity of ten thousand additional
tons, to be used within a year from September 1, 1921, and that in
this event the contract was to be automatically extended for an
additional four years. The contents of the letter of May 5 seems to
have been conveyed, though imperfectly, by the plaintiff to his
attorney, Mr. Frank B. Ingersoll, of Manila; and on May 17, 1921,
Ingersoll addressed a note to the defendant company in Cebu in
which he stated that he had been requested by the plaintiff to
notify the defendant that the plaintiff had accepted an order from
Hiwatari, of Tokio, approved by the Bank of Taiwan, for a minimum
order of ten thousand tons of the stone annually for a period of five
years, the first shipment of one thousand tons to be made as early
after July 1 as possible. It will be noted that this communication did
not truly reflect the contents of Hiwatari's letter, which called
unconditionally for only one thousand tons, the taking of the
remainder being contingent upon future eventualities.
It will be noted that the only written communications between the
plaintiff and the defendant company in which the former gave
notice of having any orders for the sale of bituminous limestone are
the four letters Exhibit Y, AA, BB, and II. In the first of these letters,
dated March 15, 1921, the plaintiff advises the defendant company
to be prepared to ship five thousand tons of bituminous limestone,

to be consigned to John Chapman, Co., of San Francisco, to be

loaded by March 5, and a further consignment of five thousand
tons, through a contract with Henry E. White, consignees to be
named later. In the letter Exhibit BB dated May 17, 1921, the
plaintiff's attorney gives notice of the acceptance by plaintiff of an
order from Hiwatari, of Tokio, approved by the Bank of Taiwan, for a
minimum of ten thousand annually for a period of five years, first
shipment of a thousand tons to be as early after July 1 as possible.
In the letter Exhibit H the plaintiff gives notice of an "additional" (?)
order from H. E. White, Sydney, for two lots of bituminous limestone
of five thousand tons each, one for shipment not later than June 30,
1921, and the other by July 20, 1921. In the same letter thousand
tons from F. B. Smith, to be shipped to Brisbane, Australia, by June
30, and a similar amount within thirty days later.
After the suit was brought, the plaintiff filed an amendment to his
complaint in which he set out, in tabulated form, the orders which
he claims to have received and upon which his letters of
notification to the defendant company were based. In this amended
answer the name of Ludvigsen & McCurdy appears for the first
time; and the name of Frank B. Smith, of Sydney, is used for the
first time as the source of the intended consignments of the letters,
Exhibits G, L, M, and W, containing the orders from Ludvigen &
McCurdy, Frank B. Smith and H. Hiwatari were at no time submitted
for inspection to any officer of the defendant company, except
possibly the Exhibit G, which the plaintiff claims to have shown to
Anderson in Manila on March, 12, 1921.
The different items conspiring the award which the trial judge gave
in favor of the plaintiff are all based upon the orders given by
Ludvigsen & McCurdy (Exhibit G), by Frank B. Smith (Exhibit L and
M), and by Hiwatari in Exhibit W; and the appealed does not involve
an order which came from Shanghai, China. We therefore now
address ourselves to the question whether or not the orders
contained in Exhibit G, L, M, and W, in connection with the
subsequent notification thereof given by the plaintiff to the
defendant, are sufficient to support the judgment rendered by the
trial court.
The transaction indicated in the orders from Ludvigsen, & McCurdy
and from Frank B. Smith must, in our opinion, be at once excluded
from consideration as emanating from persons who had been
constituted mere agents of the plaintiff. The San Francisco order
and the Australian orders are the same in legal effect as if they
were orders signed by the plaintiff and drawn upon himself; and it

cannot be pretended that those orders represent sales to bona fide

purchasers found by the plaintiff. The original contract by which the
plaintiff was appointed sales agent for a limited period of time in
Australia and the United States contemplated that he should find
reliable and solvent buyers who should be prepared to obligate
themselves to take the quantity of bituminous limestone contracted
for upon terms consistent with the contract. These conditions were
not met by the taking of these orders from the plaintiff's own
subagents, which was as if the plaintiff had bought for himself the
commodity which he was authorized to sell to others. Article 267 of
the Code of Commerce declares that no agent shall purchase for
himself or for another that which he has been ordered to sell. The
law has placed its ban upon a broker's purchasing from his principal
unless the latter with full knowledge of all the facts and
circumstances acquiesces in such course; and even then the
broker's action must be characterized by the utmost good faith. A
sale made by a broker to himself without the consent of the
principal is ineffectual whether the broker has been guilty of
fraudulent conduct or not. (4 R. C. L., 276-277.) We think, therefore,
that the position of the defendant company is indubitably sound in
so far as it rest upon the contention that the plaintiff has not in fact
found any bona fide purchasers ready and able to take the
commodity contracted for upon terms compatible with the contract
which is the basis of the action.
It will be observed that the contract set out at the beginning of this
opinion contains provisions under which the period of the contract
might be extended. That privilege was probably considered a highly
important incident of the contract and it will be seen that the sale
of five thousand tons which the plaintiff reported for shipment to
San Francisco was precisely adjusted to the purpose of the
extension of the contract for the United States for the period of an
additional year; and the sales reported for shipment to Australia
were likewise adjusted to the requirements for the extention of the
contract in that territory. Given the circumstances surrounding
these contracts as they were reported to the defendant company
and the concealment by the plaintiff of the names of the authors of
the orders, -- who after all were merely the plaintiff's subagents,
the officers of the defendant company might justly have
entertained the suspicion that the real and only person behind
those contracts was the plaintiff himself. Such at least turns out to
have been the case.
Much energy has been expended in the briefs upon his appeal over
the contention whether the defendant was justified in laying down

the condition mentioned in the letter of March 26, 1921, to the

effect that no order would be entertained unless cash should be
deposited with either the International Banking Corporation of the
Chartered Bank of India, Australia and China, in Cebu. In this
connection the plaintiff points to the stipulation of the contract
which provides that contracts with responsible parties are to be
accepted "subject to draft attached to bill of lading in full payment
of such shipment." What passed between the parties upon this
point appears to have the character of mere diplomatic parrying, as
the plaintiff had no contract from any responsible purchaser other
than his own subagents and the defendant company could no
probably have filled the contracts even if they had been backed by
the Bank of England.
Upon inspection of the plaintiff's letters (Exhibit Y and AA), there
will be found ample assurance that deposits for the amount of each
shipment would be made with a bank in Manila provided the
defendant would indicated its ability to fill the orders; but these
assurance rested upon no other basis than the financial
responsibility of the plaintiff himself, and this circumstance
doubtless did not escape the discernment of the defendant's
officers.
With respect to the order from H. Hiwatari, we observe that while
he intimates that he had been promised the exclusive agency
under the plaintiff for Japan, nevertheless it does not affirmatively
appear that he had been in fact appointed to be such at the time
he signed to order Exhibit W at the request of the plaintiff. It may
be assumed, therefore, that he was at that time a stranger to the
contract of agency. It clearly appears, however, that he did not
expect to purchase the thousand tons of bituminous limestone
referred to in his order without banking assistance; and although
the submanager of the Bank of Taiwan had said something
encouraging in respect to the matter, nevertheless that official had
refrained from giving his approval to the order Exhibit W. It is
therefore not shown affirmatively that this order proceeds from a
responsible source.
The first assignment of error in the appellant's brief is directed to
the action of the trial judge in refusing to admit Exhibit 2, 7, 8, 9
and 10, offered by the defendant, and in admitting Exhibit E,
offered by the plaintiff. The Exhibit 2 is a letter dated June 25, 1921,
or more than three weeks after the action was instituted, in which
the defendant's assistant general manager undertakes to reply to
the plaintiff's letter of March 29 proceeding. It was evidently

intended as an argumentative presentation of the plaintiff's point of

view in the litigation then pending, and its probative value is so
slight, even if admissible at all, that there was no error on the part
of the trial court in excluding it.
Exhibit 7, 8, 9 and 10 comprise correspondence which passed
between the parties by mail or telegraph during the first part of the
year 1921. The subject-matter of this correspondence relates to
efforts that were being made by Anderson to dispose of the
controlling in the defendant corporation, and Exhibit 9 in particular
contains an offer from the plaintiff, representing certain associates,
to but out Anderson's interest for a fixed sum. While these exhibits
perhaps shed some light upon the relations of the parties during
the time this controversy was brewing, the bearing of the matter
upon the litigation before us is too remote to exert any definitive
influence on the case. The trial court was not in error in our opinion
in excluding these documents.
Exhibit E is a letter from Anderson to the plaintiff, dated April 21,
1920, in which information is given concerning the property of the
defendant company. It is stated in this letter that the output of
the Lucio (quarry) during the coming year would probably be at the
rate of about five tons for twenty-four hours, with the equipment
then on hand, but that with the installation of a model cableway
which was under contemplation, the company would be able to
handle two thousand tons in twenty-four hours. We see no
legitimate reason for rejecting this document, although of slight
probative value; and her error imputed to the court in admitting the
same was not committed.
Exhibit 14, which was offered in evidence by the defendant,
consists of a carbon copy of a letter dated June 13, 1921, written by
the plaintiff to his attorney, Frank B. Ingersoll, Esq., of Manila, and
in which plaintiff states, among other things, that his profit from the
San Francisco contract would have been at the rate of eigthy-five
cents (gold) per ton. The authenticity of this city document is
admitted, and when it was offered in evidence by the attorney for
the defendant the counsel for the plaintiff announced that he had
no objection to the introduction of this carbon copy in evidence if
counsel for the defendant would explain where this copy was
secured. Upon this the attorney for the defendant informed the
court that he received the letter from the former attorneys of the
defendant without explanation of the manner in which the
document had come into their possession. Upon this the attorney
for the plaintiff made this announcement: "We hereby give notice at

this time that unless such an explanation is made, explaining fully

how this carbon copy came into the possession of the defendant
company, or any one representing it, we propose to object to its
admission on the ground that it is a confidential communication
between client and lawyer." No further information was then given
by the attorney for the defendant as to the manner in which the
letter had come to his hands and the trial judge thereupon
excluded the document, on the ground that it was a privileged
communication between client and attorney.
We are of the opinion that this ruling was erroneous; for even
supposing that the letter was within the privilege which protects
communications between attorney and client, this privilege was lost
when the letter came to the hands of the adverse party. And it
makes no difference how the adversary acquired possession. The
law protects the client from the effect of disclosures made by him
to his attorney in the confidence of the legal relation, but when
such a document, containing admissions of the client, comes to the
hand of a third party, and reaches the adversary, it is admissible in
evidence. In this connection Mr. Wigmore says:
The law provides subjective freedom for the client by
assuring him of exemption from its processes of disclosure
against himself or the attorney or their agents of
communication. This much, but not a whit more, is
necessary for the maintenance of the privilege. Since the
means of preserving secrecy of communication are entirely
in the client's hands, and since the privilege is a derogation
from the general testimonial duty and should be strictly
construed, it would be improper to extend its prohibition to
third persons who obtain knowledge of the communications.
One who overhears the communication, whether with or
without the client's knowledge, is not within the protection
of the privilege. The same rule ought to apply to one who
surreptitiously reads or obtains possession of a document in
original or copy. (5 Wigmore on Evidence, 2d ed., sec. 2326.)
Although the precedents are somewhat confusing, the better
doctrine is to the effect that when papers are offered in evidence a
court will take no notice of how they were obtained, whether legally
or illegally, properly or improperly; nor will it form a collateral issue
to try that question. (10 R. C. L., 931; 1 Greenl. Evid., sec. 254a;
State vs. Mathers, 15 L. R. A., 268; Gross vs. State, 33 L. R. A., [N.
S.], 477, note.)

Our conclusion upon the entire record is that the judgment

appealed from must be reversed; and the defendant will be
absolved from the complaint. It is so ordered, without special
pronouncement as to costs of either instance.

vs.
POTENCIANO A. PALANCA, respondent.
RESOLUTION

Araullo, C.J., Johnson, Avancea, Ostrand, Johns and Romualdez, JJ.,

concur.
CASTRO, J.:
The respondent Atty. Potenciano A. Palanca was for sometime the
legal counsel of the complainant William C. Pfleider. According to
the complainant, he retained the legal services of Palanca from
January 1966, whereas the latter insists that the attorney-client
relationship between them began as early as in 1960.
At all events, the relations between the two must have attained
such a high level of mutual trust that on October 10, 1969, Pfleider
and his wife leased to Palanca a 1,328 hectare agricultural land in
Hinobaan, Negros Occidental, known as the Hacienda Asia, for a
period of ten years. In their contract, the parties agreed, among
others, that a specified portion of the lease rentals would be paid to
Pfleider, and the remainder would be delivered by Palanca to
Pfleider's listed creditors.
The arrangement worked smoothly until October 14, 1969 when the
rupture came with the filing by Pfleider of a civil suit (civil case
9187 of the CFI of Negros Occidental) against Palanca for rescission
of the contract of lease on the ground of alleged default in the
payment of rentals. In his answer to the complaint, Palanca averred
full satisfaction of his rental liabilities, and therefore contended that
the lease should continue. He also charged that he had already
been dispossessed of the hacienda by Pfleider and the latter's
goons at gunpoint and consequently had suffered tremendous
financial losses.
With this history in, perspective, we shall now consider the
administrative charges of gross misconduct in office brought by
Pfleider against Palanca. The indictment consists of four counts.
A.C. No. 927 September 28, 1970
IN THE MATTER OF THE COMPLAINT FOR DISBARMENT OF
ATTORNEY
POTENCIANO
A.
PALANCA.
WILLIAM
C.
PFLEIDER, complainant,

First count. In regard to a criminal case for estafa filed in December

1965 by one Gregorio Uy Matiao against Pfleider, the latter
instructed Palanca to offer in settlement the sum of P10,000,
payable in installments, to Uy Matiao for the dismissal of the case.
After sometime, Palanca reported to Pfleider that the offer has been

rejected. Finally in October 1969, Palanca supposedly informed

Pfleider that he had succeeded in negotiating the dismissal of
the estafa case by leaving the sum of P5,000 with the Dumaguete
City Court where the action was then pending. Sometime in
December 1969, however, Pfleider was the object of a warrant of
arrest in connection with the same estafa case. It turned out,
charged the complainant Pfleider, that Palanca had not deposited
the sum of P5,000 with the Dumaguete City Court, let alone
communicated to Uy Matiao his earlier offer of settlement.
We have closely examined all the pleadings filed by the parties in
this case and the annexes thereto, and it is our view that the first
charge is devoid of merit. In support of his claim of alleged
assurance made by Palanca that theestafa case had already been
terminated, Pfleinder relies on certain letters written to him by
Palanca. Our own reading of these letters, however, belies his
claim. They contain nothing which might reasonably induce the
complainant to believe that the criminal action against him had
been finally settled by his attorney. On the contrary, the letters
merely report a continuing attempt on the part of Palanca to secure
a fair bargain for Pfleider. The letter-report of October 10, 1969,
invoke by the complainant, states in no uncertain terms that "I am
bargaining this (referring to the estafa case) even for P8,000.00
and I think they will agree. I'll finalize this and pay Tingyan on
Tuesday. I have already left in Dumaguete P5,000.00 to show them
the color of our money and I will bring the balance when I go there
Tuesday."
Nothing in the above letter indicates that Palanca had deposited
the sum of P5,000 with the Dumaguete City Court. What he did
state is that he had left that sum in that City to enable their
adversaries to see "the color of our money." In this connection, the
veracity of the certification by Felicisimo T. Hilay, Dumaguete
branch manager of RCPI, that he (Hilay) had been holding the sum
of P5,000 during the early part of October in trust for Pfleider and
his lawyer, has not been assailed by Pfleider.
If Pfleider was the object of a warrant of arrest in December 1969,
no substantial blame can be laid at the door of the respondent
Palanca inasmuch as the latter's services were implicitly terminated
by Pfleider when the latter sued his lawyer in October of the same
year. While the object of the suit is the rescission of the contract of
lease between the parties, the conflict of interest which pits one
against the other became incompatible with that mutual confidence
and trust essential to every lawyer-client relation. Moreover,

Pfleider
Pfleider
several
counsel

fails to dispute Palanca's claim that on October 26, 1968,

refused to acknowledge receipt of a certain letter and
motions for withdrawal, including Palanca's withdrawal as
in the estafa case.

Second count. Palanca had fraudulently charged the sum of P5,000

(which he supposedly had left with the City Court in Dumaguete) to
his rental account with Pfleider as part payment of the lease rentals
of the Hacienda Asia.Third count. In the same statement of
account, Palanca falsely represented having paid, for the account of
Pfleider, one Samuel Guintos the sum of P866.50 when the latter
would swear that he had received only the sum of P86.50.
These two charges are anchored upon the same "Statement of
Disbursements" submitted by Palanca to Pfleider. It is our view that
this statement is but a memorandum or report of the expenses
which Palanca considered as chargeable to the account of Pfleider.
By its very tentative nature, it is subject to the examination and
subsequent approval or disapproval of Pfleider, and any and every
error which it contains may be brought to the attention of Palanca
for rectification or adjustment. Viewed in relation to the contract of
lease between Pfleinder and Palanca, this "statement" is but one
aspect of the prestation required of Palanca by the contract.
Whatever breach he might have committed in regard to this
prestation would be but a civil or contractual wrong which does not
affect his office as a member of the Bar.
Final count. It is charged that the list of creditors which Pfleider had
"confidentially" supplied Palanca for the purpose of carrying out the
terms of payment contained in the lease contract was disclosed by
Palanca, in violation of their lawyer-client relation, to parties whose
interests are adverse to those of Pfleider.
As Pfleider himself, however, in the execution of the terms of the
aforesaid lease contract between the parties, complainant
furnished respondent with a confidential list of his creditors." This
should indicate that Pfleider delivered the list of his creditors to
Palanca not because of the professional relation then existing
between them, but on account of the lease agreement. A violation
therefore of the confidence that accompanied the delivery of that
list would partake more of a private and civil wrong than of a
breach of the fidelity owing from a lawyer to his client. Moreover,
Pfleider fails to controvert Palanca's claim that there is no such
thing as a "confidential" list of creditors and that the list of creditors
referred to by Pfleider is the same list which forms part of the

pleadings in civil case 9187 (the action for rescission of the lease
contract) now, pending between the complainant and the
respondent lawyer, and therefore is embraced within the category
of public records open to the perusal of persons properly interested
therein.
In sum, we are satisfied, and we so hold, that nothing in written
complaint for disbarment against Palanca and in his reply to
Palanca's answer supports a prima facie finding of such misconduct
in office by Palanca as would warrant further proceedings in this
case.
ACCORDINGLY, the complaint is hereby dismissed.

A.M. No. 1347 November 12, 1975

BETTINA
B.
YANGSON, complainant,
vs.
EDGARDO M. SALANDANAN, respondent.
RESOLUTION

AQUINO, J.:
This Court in its minute resolution of October 1, 1975 denied the
motion of respondent Edgardo M. Salandanan for the
reconsideration of its resolution of August 27, 1975 which directed
the Solicitor General to proceed with the investigation of Bettina B.
Yangson's complaint for disbarment against Atty. Salandanan.
In that October 1 resolution, it was observed that the pendency of
Civil Case No. B-1081 of the Court of First Instance of Laguna
entitled "Rolando J. Morales vs. Edgardo M. Salandanan" would not
be a ground for the suspension of the disbarment proceeding
against Atty. Salandanan because the parties and the issues in that
civil case and in the instant disbarment case are not the same and
whatever decision might be rendered in the civil case would not
ineluctably control the decision in this proceeding.
Respondent Salandanan in his aforementioned motion stated that
this Court's August 27 resolution was "a gross and serious
departure" from established precedents, "without reason or
justification, either factual or legal" (Page 4, par. 8).

In view of the derogatory implications of that observation, which

was couched in intemperate indecorous and vicious language and
which was baseless, since it was belied by the resolution itself that
stated the reason for requiring the Solicitor General to proceed with
the investigation of the disbarment case, the Court in that
aforementioned October 1 resolution required Attys. Salandanan
and Zosimo G. Linato who signed the motion under the firm name
of "E. M. Salandanan, Aguilar, Linato & Associates" to show cause
why they should not be adjudged in contempt of court.
Although the offensive and disrespectful observation appears to be
an act of direct contempt or contempt in facie curiae and could,
therefore, be summarily punished without hearing (Sec. 1, Rule 71,
Rules of Court; Salcedo vs. Hernandez, 61 Phil. 724; De Joya vs. CFI
of Rizal, 99 Phil. 907; Malolos vs. Reyes, 111 Phil. 1113; Sison vs.
Sandejas, 105 Phil. 1279), nevertheless, the Court afforded Attys.
Salandanan and Linato a chance to be heard.
Attys. Salandanan and Linato in their "manifestation-explanation"
argued their second motion for the reconsideration of the August
27 resolution, which second motion was filed without prior leave of
court and which cannot therefore be entertained, and also their
motion for the reconsideration of the October 1 resolution.
They apologized for the offensive statement already mentioned.
They indicated that it was not their intention to show disrespect to
the Court. They explained that they were "carried away" by their
anxiety or emotion in their efforts or desire to call the attention of
the Court to" what they believed was the more appropriate and
applicable ruling.
In view of that explanation and inasmuch as the power to punish for
contempt should be exercised on the preservative and not the
vindictive principle and on the corrective rather than the retaliatory
idea of punishment (People vs. Marcos, 70 Phil. 468, 480), the Court
resolved to admonish Attys. Salandanan and Linato to exercise
greater care and circumspection in the preparation of their
pleadings and to refrain from using abrasive and offensive
language.
Respondent Salandanan insists that the disbarment proceeding
should be suspended not only because of the pendency of Civil
Case No. B-1081 but also because of Criminal Case No. 19636, an
alleged perjury case against Atty. Rolando J. Morales who probably
will be a witness of the complainant in this disbarment case.

The Court has scrupulously refrained from prejudging the merits of

respondent Salandanan's defenses in this case so as not to
prejudice him. On the other hand, the complainant's side of the
case cannot be overlooked.
Her complaint on its face shows a prima facie case against the
respondent. It is alleged therein that some sort of deception was
practised by the respondent against the complainant. Whether that
deceit would justify disciplinary action against Atty. Salandanan can
only be determined by the presentation of evidence. That simple
issue is not inextricably intertwined with the complicated questions
raised in Civil Case No. B-1081 and in Criminal Case No. 19636.
A discussion of those questions in this disbarment case would only
becloud the uncomplicated issue herein which is whether Atty.
Salandanan's alleged false statement in the "Deed of Assignment",
that the Morsal Transportation "is the owner" of certain buses,
amounts to "deceit or gross misconduct" that warrants disciplinary
actions against him.
If, as underscored in his pleadings, he could show by means of his
evidence that there was no such deceit, then he should not evince
any reluctance to submit to the administrative investigation to be
conducted by the Office of the Solicitor General.
WHEREFORE, respondent's motion for the reconsideration of the
October 1 resolution is denied for lack of merit. The Solicitor
General is directed to proceed promptly with the investigation of
the complaint against the respondent. Let the admonition indicated
above be noted in the records of Attys. Linato and Salandanan in
the Bar Confidant's Office.
SO ORDERED.

G.R. No. L-36088 May 16, 1973

CORAZON
vs.
HON.
COURT
OF
APPEALS
PHILIPPINES, respondents.

ORTALIS, petitioner,
and

PEOPLE

OF

THE

Office of the Solicitor General Estelito P. Mendoza, Assistant

Solicitor General Rosario A. de Leon and Solicitor Leonardo I. Cruz
for respondents.
Ramon H. Garaygay for petitioner.

ESGUERRA, J.:
Petition to set aside the resolution of the Court of Appeals dated
February 15, 1972, in its CA-G.R. No. 11335-CR entitled "People of
the Philippines vs. Corazon Ortalis", dismissing the appeal of
petitioner Corazon Ortalis from the decision of the City Court of the
City of Silay, finding her guilty in Criminal Case No. 4586-C of the
crime of estafa and sentencing her to suffer four (4) months
of arresto mayor, as minimum, to one (1) Year, eight (8) months
and twenty-one (21) days of prision correcional as maximum, to

indemnify the offended party the sum of P6,500.00, and to suffer

subsidiary imprisonment case of insolvency. Basis of the dismissal
of petitioner's appeal is failure to file appellant's brief,
notwithstanding the notice her counsel requiring him to do so.
An examination of the record of CA-G.R. 11335-CR which this Court
caused to be brought before it shows that on January 28, 1971, the
Clerk of Court of the Court of Appeals sent registered mail to Atty.
Ramon H. Garaygay, counsel petitioner as appellant in the
abovementioned estafa case, the notice to file appellant's brief
within thirty (30) days for receipt thereof. The registered letter of
the Court of Appeals containing said-notice, was addressed as
follows:
Atty.
Express
Arroyo
Iloilo City.

Ramon
Bldg.,

H.

Garaygay
Communication
Lacson
St.

The said letter was never received by Atty. Ramon Garaygay and it
was returned unclaimed as his correct address is as follows:
Atty.
Ramon
Express
Arroyo
Lacson St., Bacolod City.

H.

Garaygay
Communication
Building

The herein petition to set aside the resolution of the Court Appeals
was referred to the Solicitor General for comment a
recommendation and to the City Court of the City of Silay
information as to the correct address of Atty. Ramon Garaygay
during the trial of the case and when the record was elevated to
the Court of Appeals pursuant to the appeal of the accused. This
was done in view of the vehement insistence of Atty. Ramon H.
Garaygay that his correct address is Bacolod City where he has his
law office, and not Iloilo City. The Clerk of Court of the City Court of
Silay informed this Court and the Solicitor General that the address
of record of Atty. Ramon Garaygay is "Express Communication,
Arroyo Building Lacson St., Bacolod City."
The Solicitor General, commenting on the petition, believes that
there was no reason at all to send the notice to file the brief to Atty.
Ramon H. Garaygay at Iloilo City which is not his address. He,
therefore, concurs with the petitioner in her plea that there is no
basis for the resolution of respondent Court of Appeals dated

February 15, 1972, dismissing petitioner's appeal in CA-G.R. 11335CR. We consider his comment as his answer to the petition and We
now proceed to decide this case.
We have thoroughly examined the record of CA-G.R. 11335-CR and
there is absolutely nothing therein to indicate that the address of
Atty. Ramon H. Garaygay is Iloilo City. This Court had to ask the
Judge of the City of Silay to inform us of the correct address of Atty.
Ramon H. Garaygay appearing in the record of Criminal Case No.
4586-C of the City Court of the City of Silay as the same had been
remanded by the Court of Appeals to said City Court after entry of
final judgment for execution of the trial court's decision.
The dismissal of the appellant's appeal was caused either by gross
negligence or deliberate and wanton error committed by someone
in the Office of the Clerk of Court of the Court of Appeals who sent
the notice to file appellant's brief to a wrong address. It is
unfortunate that the Court of Appeals refused to listen to the plea
of Atty. Ramon H. Garaygay that he does not have his law office in
Iloilo City as it is in Bacolod City. Without making any effort to verify
the correct address of Atty. Ramon H. Garaygay, the Court of
Appeals turned a deaf ear to his correct claim that the notice was
not received by him and persisted in its refusal to reconsider the
dismissal of the appeal. For this ineptitude and obstinacy, petitioner
had to come to this Court to relief and incur additional expense. An
undue delay in the administration of justice as well as unnecessary
expense in obtaining the same was thereby perpetrated. This
Court, therefore, finds the herein petition of Corazon Ortalis
meritorious.
FOR ALL THE FOREGOING, the petition is hereby granted. The
resolution of the Court of Appeals dated February 15, 1972,
dismissing petitioner's appeal, and the entry of its final judgment in
CA-11335-CR. are hereby set aside and the appeal reinstated. The
record of Criminal Case No. 4586 of the City Court of Silay City shall
be returned to the Court of Appeals so as to give due course to the
appeal of petitioner Corazon Ortalis.
The Presiding Justice of the Court of Appeals is here requested to
conduct an investigation into the gross negligence and inefficiency
of the personnel of the Clerk of Court of the Court of Appeals in
sending the notice to file appellant's brief to an address which does
not appear in the record of the case. A report of the investigation
shall be submitted to this Court with his comment and
recommendation.

The record of CA-G.R. 11335-CR is hereby returned to the Court of

Appeals. No costs.

Regional Trial Court, Branch 150 of Makati City dated September

25, 1995, reads:
In view of all the foregoing, judgment is hereby rendered ordering
the defendants, jointly and severally, to pay plaintiff the following:
1. The amount of P47,850.00 as actual damages;
2. The amount of P45,000.00 as compensatory damages for
unrealized income;
THERMOCHEM
INCORPORATED
and
JEROME
O.
CASTRO, petitioners, vs. LEONORA NAVAL and THE
COURT OF APPEALS,respondents.

3. The amount of P10,000.00 as exemplary damages;

4. The amount of P10,000.00 as and for attorney's fees; and

DECISION
5. Cost of suit.
YNARES-SANTIAGO, J.:
This damage suit arose from a collision of vehicles based on
the following facts:
"(O)n May 10, 1992, at around 12:00 o'clock midnight, Eduardo
Edem[1] was driving a "Luring Taxi" along Ortigas Avenue, near
Rosario, Pasig, going towards Cainta. Prior to the collision, the
taxicab was parked along the right side of Ortigas Avenue, not far
from the Rosario Bridge, to unload a passenger. Thereafter, the
driver executed a U-turn to traverse the same road, going to the
direction of EDSA. At this point, the Nissan Pathfinder traveling
along the same road going to the direction of Cainta collided with
the taxicab. The point of impact was so great that the taxicab was
hit in the middle portion and was pushed sideward, causing the
driver to lose control of the vehicle. The taxicab was then dragged
into the nearby Question Tailoring Shop, thus, causing damage to
the said tailoring shop, and its driver, Eduardo Eden, sustained
injuries as a result of the incident."[2]
Private respondent, as owner of the taxi, filed a damage suit
against petitioner, Thermochem Incorporated, as the owner of the
Nissan Pathfinder, and its driver, petitioner Jerome Castro. After
trial, the lower court adjudged petitioner Castro negligent and
ordered petitioners, jointly and severally, to pay private respondent
actual, compensatory and exemplary damages plus attorney's fees
and costs of suit. The dispositive portion of the Decision of the

SO ORDERED.[3]
On appeal, the Court of Appeals affirmed the judgment of the
court a quo.[4] Hence, this petition for review on certiorari. The
petition was denied on February 2, 1998 for failure to submit an
explanation why no personal service of copies of certain pleadings
was made as required by Rule 13, Section 11 of the 1997 Rules of
Civil Procedure.[5] Upon petitioners' motion for reconsideration, the
petition was reinstated and private respondent was required to file
her Comment in a Resolution dated June 22, 1998. [6] A copy of the
said Resolution was sent by registered mail to private respondent's
counsel but the same was returned to sender. [7] In a separate
Resolution issued on the same date, this Court ordered that a copy
of the June 22, 1998 Resolution be served personally on private
respondent's counsel.[8] As the said Resolution was also returned
unserved, "the Court Resolved to consider the said Resolution as
SERVED."[9] After more than a year, no Comment has been
filed.Considering that private respondent was given only ten (10)
days to file her Comment, that period had already lapsed ten days
after the June 23, 1999 Resolution which stated that the June 22,
1998 resolution as "served".
Service of notice or other pleadings which are required by the
rules to be furnished to the parties must be made on their last
address on record. If they are represented by counsel, such notices
shall be sent instead to the counsel's last given address on record
in the absence of a proper and adequate notice to the court of a

change of address,[10] unless service upon the party himself is

ordered by the court.[11] It is the party and his counsel's
responsibility to device a system for the receipt of mail intended for
them[12] just as it is the duty of counsel to inform the court of a
change in his address. In the case at bar, private respondent's
counsel never notified the Court of any change of his address or
whether he no longer holds office in his last address of
record. Neither was the Court informed if his ties with his client has
been severed. Insofar as the Court is concerned, the last address on
record is the place where all notices shall be served until the Court
is officially informed to the contrary.What is the effect of the failure
of a private respondent to comply with a court order to file
Comment?
Courts are given the option to dispense with the filing of the
Comment and consider the case as deemed submitted for
decision. Under Rule 46, Section 7 of the 1997 Rules of Civil
Procedure,[13] when the respondent in an original action filed with
the court fails to file its comment, the case may be decided on the
basis of the evidence on record without prejudice to disciplinary
action against the disobedient party. Concomitant thereto is the
rule that pursuant to Rule 51, Section 1(B)(1), [14] where no comment
is filed upon the expiration of the period to comment in an original
action or a petition for review, the case shall be deemed submitted
for decision. Both provisions are applicable to a petition for review
filed with the Supreme Court as provided in Rule 56, Section 2(a) of
the Rules.[15] Moreover, a lawyer who fails to submit the required
Comment manifests willful disobedience to a lawful order of the
Supreme Court, a clear violation of the Canon of Professional Ethics.
[16]
Counsel must remember that his actions and omissions are
binding on his client.[17] He should not neglect legal matters
entrusted to him as his negligence therefrom shall render him
liable.[18]
The petition lacks merit.
The issue of whether a party is negligent is a question of fact. It
is a time-honored precept that the Supreme Court is not a trier of
facts,[19] although it has authority to review and reverse factual
findings of lower courts if these do not conform to evidence. [20] It is
also settled that findings of fact of the trial court, particularly when
affirmed by the Court of Appeals, is binding on the Supreme
Court[21] and generally conclusive,[22] especially if it has not been
adequately shown that no significant facts and circumstances were

overlooked or disregarded which when considered would have

altered the outcome of the disposition.
The driver of the oncoming Nissan Pathfinder vehicle was liable
and the driver of the U-turning taxicab was contributorily
liable. Contrary to petitioners' contention, the fact that a party had
no opportunity to avoid the collision is of his own making and this
should not relieve him of liability.[23] From petitioner Castro's
testimonial admissions, it is established that he was driving at a
speed faster than 50 kilometers per hour because it was a downhill
slope coming from the Rosario bridge. But as he allegedly stepped
on the brake, it locked causing his Nissan Pathfinder to skid to the
left and consequently hit the taxicab. The sudden malfunction of
the vehicle's brake system is the usual excuse of drivers involved in
collisions which are the result of speedy driving, particularly when
the road is downhill.
Malfunction or loss of brake is not a fortuitous event. Between
the owner and his driver, on the one hand, and third parties such as
commuters, drivers and pedestrians, on the other, the former is
presumed to know about the conditions of his vehicle and is duty
bound to take care thereof with the diligence of a good father of the
family. A mechanically defective vehicle should avoid the
streets. As petitioner's vehicle was moving downhill, the driver
should have slowed down since a downhill drive would naturally
cause the vehicle to accelerate. Moreover, the record shows that
the Nissan Pathfinder was on the wrong lane when the collision
occurred. This was a disregard of traffic safety rules. The law
considers what would be reckless, blameworthy or negligent in a
man of ordinary diligence and prudence and determines liability by
that.[24] Even assuming arguendo that loss of brakes is an act of
God, by reason of their negligence, the fortuitous event became
humanized, rendering the Nissan driver liable for the ensuing
damages.[25]
As mentioned earlier, the driver of the taxi is contributorily
liable. U-turns are not generally advisable particularly on major
streets. The taxi was hit on its side which means that it had not yet
fully made a turn to the other lane. The driver of the taxi ought to
have known that vehicles coming from the Rosario bridge are on a
downhill slope. Obviously, there was lack of foresight on his part,
making him contributorily liable. Most public utility drivers
disregard signs and traffic rules especially during the night when
traffic enforcers manning the streets disappear with the light. In

driving vehicles, the primary concern should be the safety not only
of the driver or his passengers, but also his fellow motorists.
Considering the contributory negligence of the driver of private
respondent's taxi, the award of P47,850.00, for the repair of the
taxi, should be reduced in half. All other awards for damages are
deleted for lack of merit.
WHEREFORE, based on the foregoing, the assailed decision is
MODIFIED. Petitioners are ordered to pay, jointly and severally, to
private respondent the amount of P23,925.00 as actual
damages. All other awards are DELETED.

DONALD
DEE petitioner,
vs.
COURT OF APPEALS and AMELITO MUTUC, respondents.
Tanjuatco, Oreta & Tanjuatco for petitioner.
Amelito R. Mutuc for and in his own behalf

REGALADO, J.:
Petitioner assails the resolution of respondent court, dated February
12,1987, reinstating its decision promulgated on May 9, 1986 in ACG.R. CV No. 04242 wherein it affirmed the decision of the that court
holding that the services rendered by private respondent was on a
professional, and not on a gratis et amore basis and ordering
petitioner to pay private respondent the sum of P50,000.00 as the
balance of the latter's legal fee therefor.
The records show that sometime in January, 1981, petitioner and
his father went to the residence of private respondent,
accompanied by the latter's cousin, to seek his advice regarding
the problem of the alleged indebtedness of petitioner's brother,
Dewey Dee, to Caesar's Palace, a well-known gambling casino at
Las Vegas, Nevada, U.S.A. Petitioner's father was apprehensive over
the safety of his son, Dewey, having heard of a link between
the mafia and Caesar's Palace and the possibility that his son may
be harmed at the instance of the latter.1

G.R. No. 77439 August 24, 1989

Private respondent assured petitioner and his father that he would

inquire into the matter, after which his services were reportedly
contracted for P100,000. 00. From his residence, private
respondent called up Caesar's Palace and, thereafter, several long
distance telephone calls and two trips to Las Vegas by him elicited
the information that Dewey Dee's outstanding account was around
$1,000,000.00. Further investigations, however, revealed that said
account had actually been incurred by Ramon Sy, with Dewey Dee
merely signing for the chits. Private respondent communicated said
information to petitioner's a father and also assured him that
Caesar's Palace was not in any way linked to the mafia. 2
In June, 1981, private respondent personally talked with the
president of Caesar's Palace at Las Vegas, Nevada. He advised the

president that for the sake and in the interest of the casino it would
be better to make Ramon Sy answer for the indebtedness. The
president told him that if he could convince Ramon Sy to
acknowledge the obligation, Dewey Dee would be exculpated from
liability for the account. Upon private respondent's return to Manila,
he conferred with Ramon Sy and the latter was convinced to
acknowledge the indebtedness. In August, 1981, private
respondent brought to Caesar's Palace the letter of Ramon Sy
owning the debt and asking for a discount. Thereafter, the account
of Dewey Dee was cleared and the casino never bothered him. 3
Having thus settled the account of petitioner's brother, private
respondent sent several demand letters to petitioner demanding
the balance of P50,000.00 as attorney's fees. Petitioner, however,
ignored said letters. On October 4, 1982, private respondent filed a
complaint against petitioner in the Regional Trial Court of Makati,
Branch CXXXVI, for the collection of attorney's fees and refund of
transport fare and other expenses. 4
Private respondent claimed that petitioner formally engaged his
services for a fee of P100,000.00 and that the services he rendered
were professional services which a lawyer renders to a client.
Petitioner, however, denied the existence of any professional
relationship of attorney and client between him and private
respondent. He admits that he and his father visited private
respondent for advice on the matter of Dewey Dee's gambling
account. However, he insists that such visit was merely an informal
one and that private respondent had not been specifically
contracted to handle the problem. On the contrary, respondent
Mutuc had allegedly volunteered his services "as a friend of
defendant's family" to see what he could do about the situation. As
for the P50,000.00 inceptively given to private respondent,
petitioner claims that it was not in the nature of attomey's fees but
merely "pocket money" solicited by the former for his trips to Las
Vegas and the said amount of P50,000.00 was already sufficient
remuneration for his strictly voluntary services.
After trial, the court a quo rendered judgment ordering herein
petitioner to pay private respondent the sum of P50,000.00 with
interest thereon at the legal rate from the filing of the complaint on
October 4, 1982 and to pay the costs. All other claims therein of
private respondent and the counterclaim of petitioner were
dismissed. 5 On appeal, said judgment was affirmed by the then
Intermediate Appellate Court on May 9, 1986. 6

Petitioner, in due time, filed a motion for reconsideration

contending that the Appellate Court overlooked two important and
decisive factors, to wit: (1) At the time private respondent was
ostensibly rendering services to petitioner and his father, he was
actually working "in the interest" and "to the advantage" of
Caesar's Palace of which he was an agent and a consultant, hence
the interests of the casino and private respondent were united in
their objective to collect from the debtor; and (2) Private
respondent is not justified in claiming that he rendered legal
services to petitioner and his father in view of the conflicting
interests involved.
In its resolution of July 31, 1986, respondent court reconsidered its
decision and held that the sum of P50,000.00 already paid by
petitioner to private respondent was commensurate to the services
he rendered, considering that at the time he was acting as counsel
for petitioner he was also acting as the collecting agent and
consultant of, and receiving compensation from, Caesar's
Palace. 7 However, upon a motion for reconsideration thereafter
filed by private respondent, the present respondent Court of
Appeals issued another resolution, dated February 12, 1987,
reinstating the aforesaid decision of May 9, 1986. 8
Petitioner is now before us seeking a writ of certiorari to overturn
the latter resolution.
It is necessary, however, to first clear the air of the questions
arising from the change of stand of the First Civil Cases Division of
the former Intermediate Appellate Court when, acting on the
representations in petitioner's undated motion for reconsideration
supposedly filed on May 28,1986, it promulgated its July 31, 1986
resolution reconsidering the decision it had rendered in AC-G.R. CV
No. 04242. Said resolution was, as earlier noted, set aside by the
Twelfth Division of the reorganized Court of Appeals which, at the
same time, reinstated the aforesaid decision.
Because of its clarificatory relevance to some issues belatedly
raised by
petitioner, which issues should have
been
disregarded 9 but were nevertheless auspiciously discussed therein,
at the risk of seeming prolixity we quote hereunder the salient
portions of the assailed resolution which demonstrate that it was
not conceived in error.
The reason for then IAC's action is that it deemed the
P50,000.00 plaintiff-appellee had previously received

from defendant-appellant as adequate compensation

for the services rendered by am for defendantappellant, considering that at the time plaintiffappellee was acting as counsel for defendantappellant, he was also acting as the collecting agent
and consultant of, and receiving compensation from
Caesar's Palace in Las Vegas, Nevada, the entity with
whom defendant-appellant was having a problem
and for which he had engaged the services of
plaintiff-appellee. The crux of the matter, therefore,
is whether or not the evidence on record justifies this
finding of the IAC.
Plaintiff-appellee maintains that his professional
services to defendant-appellant were rendered
between the months of July and September of 1981,
while his employment as collection agent and
consultant of Caesar's Palace covered the period
from December 1981 to October 1982. This positive
testimony of plaintiff-appellee, however, was
disregarded by the IAC for the following reasons:
1. In August l983, plaintiff-appellee testified that he
was a representative of Caesar's Palace in the
Philippines 'about two or three years ago.' From this
the IAC concluded that the period covers the time
plaintiff-appellee rendered professional services to
defendant-appellant.
We do not think that IAC's conclusion is necessarily
correct. When plaintiff-appellee gave the period
'about two or three years ago,' he was merely stating
an approximation. Considering that plaintiff-appellee
was testifying in August 1983, and his employment
with Caesar's Palace began in December 1981, the
stated difference of two years is relatively
correct. . . .
2. The plaintiff appellee had testified that he was
working for the sake,' 'in the interest,' and 'to the
advantage' of Caesar's Palace. x x x "We detect
nothing from the above which would support IAC's
conclusion that plaintiff-appellee was then in the
employ of Caesar's Palace. What is gathered is that
plaintiff-appellee was simply fulfilling a condition

which plaintiff-appellee had proposed to, and was

accepted by, Caesar's Palace, for the release of
Dewey Dee from his obligation to Caesar's Palace.
3. Caesar's Palace would not have listened to, and
acted upon, the advice of plaintiff-appellee if he were
no longer its consultant and alter ego.
Why not? We are witnesses to many successful
negotiations between contending parties whose
representing lawyers were not and were never in the
employ of the opposite party. The art of negotiation is
precisely one of the essential tools of a good
practitioner, and mastery of the art takes into
account the circumstance that one may be
negotiating, among others, with a person who may
not only be a complete stranger but antagonistic as
well. The fact that plaintiff-appellee was able to
secure a favorable concession from Caesar's Palace
for defendant-appellant does not justify the
conclusion that it could have been secured only
because
of
plaintiff-appellee's
professional
relationship with Caesar's Palace. It could have been
attributable more to plaintiff-appellee's stature as a
former ambassador of the Philippines to the United
States, his personality, and his negotiating
technique.
Assuming, however, that plaintiff-appellee was
employed by Caesar's Palace during the time that he
was rendering professional services for defendantappellant, this would not automatically mean the
denial of additional attorney's fees to plaintiff
appellee. The main reason why the IAC denied
plaintiff-appellee
additional
compensation
was
because the latter was allegedly receiving
compensation from Caesar's Palace, and, therefore,
the amount of P50,000.00 plaintiff-appellee had
previously received from defendant-appellant is
'reasonable and commensurate. This conclusion,
however, can only be justified if the fact and amount
of remuneration had been established. These were
not proven at all. No proof was presented as to the
nature of plaintiff-appellee's remuneration, and the
mode or manner in which it was paid.. . . 10

Both the lower court and the appellate court concur in their findings
that there was a lawyer-client relationship between petitioner and
private respondent Mutuc. We find no reason to interfere with this
factual finding. There may be instances when there is doubt as to
whether an attorney-client relationship has been created. The issue
may be raised in the trial court, but once the trial court and the
Court of Appeals have found that there was such a relationship the
Supreme Court cannot disturb such finding of fact, 11 absent cogent
reasons therefor.
The puerile claim is advanced that there was no attorney-client
relationship between petitioner and private respondent for lack of a
written contract to that effect. The absence of a written contract
will not preclude the finding that there was a professional
relationship which merits attorney's fees for professional services
rendered. Documentary formalism is not an essential element in
the employment of an attorney; the contract may be express or
implied. To establish the relation, it is sufficient that the advice and
assistance of an attorney is sought and received in any matter
pertinent to his profession. An acceptance of the relation is implied
on the part of the attorney from his acting on behalf of his client in
pursuance of a request from the latter. 12
There is no question that professional services were actually
rendered by private respondent to petitioner and his family.
Through his efforts, the account of petitioner's brother, Dewey Dee,
with Caesar's Palace was assumed by Ramon Sy and petitioner and
his family were further freed from the apprehension that Dewey
might be harmed or even killed by the so-called mafia. For such
services, respondent Mutuc is indubitably entitled to receive a
reasonable compensation and this right cannot be concluded by
petitioner's pretension that at the time private respondent rendered
such services to petitioner and his family, the former was also the
Philippine consultant of Caesar's Palace.
On the first aspect, the evidence of record shows that the services
of respondent Mutuc were engaged by the petitioner for the
purposes hereinbefore discussed. The previous partial payments
totalling P50,000.00 made by petitioner to respondent Mutuc and
the tenor of the demand letters sent by said private respondent to
petitioner, the receipt thereof being acknowledged by petitioner,
ineluctably prove three facts, viz: that petitioner hired the services
of private respondent Mutuc; that there was a prior agreement as
to the amount of attorney's fees to be given to the latter; and there
was still a balance due and payable on said fees. The duplicate

original copy of the initial receipt issued and signed in this

connection by private respondent reads:
RECEIVED from Mr. Donald Dee, for professional
services rendered, the sum of THIRTY THOUSAND
PESOS (P30,000.00) as partial payment, leaving a
balance of SEVENTY THOUSAND PESOS (P70,000.00),
payable on demand.
Makati, Metro Manila, July 25,1981. 13
Thereafter, several demand letters for payment of his fees, dated
August 6, 1981, December 2, 1981, January 29, 1982, March 7,
1982, and September 7, 1982 were sent by private respondent to
petitioner, 14 all to no avail.
On the second objection, aside from the facts stated in the
aforequoted resolution of respondent Court of Appeals, it is also not
completely accurate to judge private respondent's position by
petitioner's assumption that the interests of Caesar's Palace were
adverse to those of Dewey Dee. True, the casino was a creditor but
that fact was not contested or opposed by Dewey Dee, since the
latter, as verifications revealed, was not the debtor. Hence, private
respondent's representations in behalf of petitioner were not in
resistance to the casino's claim but were actually geared toward
proving that fact by establishing the liability of the true debtor,
Ramon Sy, from whom payment was ultimately and correctly
exacted. 15
Even assuming that the imputed conflict of interests obtained,
private respondent's role therein was not ethically or legally
indefensible. Generally, an attorney is prohibited from representing
parties with contending positions. However, at a certain stage of
the controversy before it reaches the court, a lawyer may represent
conflicting interests with the consent of the parties. 16 A common
representation may work to the advantage of said parties since a
mutual lawyer, with honest motivations and impartially cognizant of
the parties' disparate positions, may well be better situated to work
out an acceptable settlement of their differences, being free of
partisan inclinations and acting with the cooperation and
confidence of said parties.
Here, even indulging petitioner in his theory that private
respondent was during the period in question an agent of Caesar's
Palace, petitioner was not unaware thereof, hence he actually

consented to and cannot now decry the dual representation that he

postulates. This knowledge he admits, thus:
It is a fair question to ask why, of all the lawyers in
the land, it was the private respondent who was
singled out by the petitioner's father for consultation
in regard to an apparent problem, then pending in
Caesar's Palace. The testimony of Arthur Alejandrino,
cousin to private respondent, and the admission of
the private respondent himself supply the answer.
Alejandrino testified that private respondent was the
representative of Caesar's Palace in the Philippines
(p. 23, t.s.n., Nov. 29, 1983).lwph1.t Private
respondent testified that he was such representative
tasked by the casino to collect the gambling losses
incurred by Filipinos in Las Vegas. (p. 5, t.s.n., Sept.
21, 1983). 17
A lawyer is entitled to have and receive the just and reasonable
compensation for services rendered at the special instance and
request of his client and as long as he is honestly and in good faith
trying to serve and represent the interests of his client, the latter is
bound to pay his just fees. 18
WHEREFORE, the resolution of respondent Court of Appeals, dated
February 12,1987, reinstating its original decision of May 9, 1986 is
hereby AFFIRMED, with costs against l petitioner.
SO ORDERED.

G.R. No. L-40424 June 30, 1980

R.
MARINO
CORPUS, petitioner,
vs.
COURT OF APPEALS and JUAN T. DAVID, respondents

MAKASIAR, J.:
This is a petition for review on certiorari of the decision of the Court
of Appeals promulgated on February 14, 1975 in CA-G.R. No.
40583-R, affirming the decision of the court of Instance of Manila,
Branch V. dated september 4, 1967, in Civil Case no. 61802 entitled
"Juan T. David,plaintiff, versus R. Mariano Corpus, defendant', for
the recovery of attorneys fees for professional services rendered by
the plaintiff, private respondent herein, to defendant, petitioner
herein.
A
Having been close friends, aside from being membres Civil Liberties
Union, petitioner Corpus intimately calls respondent David by his
nickname "Juaning" and the latter addresses the former simply as
"Marino".
The factual setting of this case is stated in the decision of the lower
court, thus:
It appears that in March, 1958, the defendant was
charged administratively by several employee of the
Central Bank Export Department of which the
defendant is the director. The defendant was
represented by Atty. Rosauro Alvarez. Pending the
investigation and effective March 18, 1958, he
defendant was suspended from office. After the
investigating committee found the administrative
charges to be without merit, and subsequently
recommended the immediate reinstatement of the
defendant, the then Governor of Central Bank, Miguel
Cuaderno, Sr., recommended that the defendant be
considered resigned as on the ground that he had
lost confidence in him. The Monetary Board, by a
resolution of July 20, 1959, declared the defendant as
resigned as of the date of suspension.
On August 18, 1959, the defendant, thru Atty.
Alvarez, filed the Court of First Instance of Manila a
petition for certiorari, mandamus and quo warranto
with preliminary mandatory injuction and damages

against Miguel Cuaderno, Sr., the Central Bank and

Mario Marcos who was appointed to the position of
the defendant, said case having been docketed as
Civil Case No. 41226 and assigned to Branch VII
presided over by Judge Gregorio T. Lantin. On
September 7, 1959, the respondent filed a motion to
dismiss the petition, alleging among other grounds,
the failure of the defendant to exhaust, available
administrative remedies (Exh. X). On September 25,
1959, the defendant, thru Atty. Alvarez, filed his
opposition to the said motion. On March 17, 1960,
during the course of the presentation of the evidence
for the petition for a writ of preliminary mandatory
injunction, Atty. Alvarez manifested that the
defendant was abandoning his prayer for a writ of
preliminary mandatory injunction and asked for a
ruling on the motion to dismiss. On June 14, 1960,
Judge Lantin dismissed Civil Case No. 41226 for
failure to exhaust she administrative remedies
available to the herein defendant.
On June 24, 1960, Atty. Alverez received a copy of
the order of dismissal It was at this state that the
plaintiff entered into the case under circumstances
about which the parties herein have given divergent
versions.
According to the plaintiff, six or seven days prior to
the expiration of the period for appeal from the order
of dismissal, he chanced to meet the late Rafael
Corpus, father of the defendant, at the Taza de Oro
coffee shop. After they talked about the defendant's
having lost his case before Judge Lantin, and knowing
that the plaintiff and the defendant were both
members of the Civil Liberties Union, Rafael Corpus
requested the plaintiff to go over the case and
further said that he would send his son, the herein
defendant, to the plaintiff to find out what could be
done about the case. The defendant called up the
plaintiff the following morning for an appointment,
and the plaintiff agreed to am him in the latter's
office. At said conference, the defendant requested
the plaintiff to handle the case because Atty. Alvarez
had already been disenchanted and wanted to give
up the case. Although at first reluctant to handle the

case, the plaintiff finally agreed on condition that he

and Atty. Alverez would collaborate in the case.
The defendant's version of how the plaintiff came
into the case is as follows:
After the order of dismissal issued by Judge Lantin
was published in the newspapers, the plaintiff sought
a conference with the defendant at Taza de Oro, but
the defendant told him that he would rather meet the
plaintiff at the Swiss Inn. Even before the case was
dismissed the plaintiff had shown interest in the
same by being present during the hearings of said
case in the sala of Judge Lantin When the plaintiff
and the defendant met at the Swiss Inn, the plaintiff
handed the defendant a memorandum prepared by
him on how he can secure the reversal of the order of
dismissal by means of a formula stated in said
memorandum. During the said occasion the plaintiff
scribbled some notes on a paper napkin (Exhibit 19).
On June 28, 1960, the defendant wrote the plaintiff,
sending with it a copy of the order of Judge Lantin
dated June 14, 1960 (Exhibit S Inasmuch as said
letter, Exhibit S already mentions the 'memorandum'
of the plaintiff, the defendant contends that it was
not six or seven days prior to the expiration of the
period of appeal (which should be on or about July 2
or 3, 1960) but on a date even earlier than June 28,
1960 that the plaintiff and the defendant met
together to discuss the latter's case.
Laying aside for the moment the true circumstances
under which the plaintiff started rendering
professional services to the defendant, the
undisputed evidence shows that on July 7, 1960, the
plaintiff filed a motion for reconsideration of the
order of dismissal under the joint signatures of the
plaintiff and Atty. Alverez (Exhibit B). The plaintiff
argued the said motion during the hearing thereof On
August 8, 1960, he file a 13-page 'Memorandum of
Authorities in support of said motion for
reconsideration (Exhibit C). A 3-page supplemental
memorandum of authorities was filed by the plaintiff
on September 6, 1960 (Exhibit D)

On November 15, 1960, Judge Lantin denied the

motion for reconsideration. On November 19, 1960,
the plaintiff perfected the appeal from the order of
dismissal dated June 14, 1960. For purposes of said
appeal the plaintiff prepared a 232-page brief and
submitted the same before the Supreme Court in
Baguio City on April 20, 1961. The plaintiff was the
one who orally argued the case before the Supreme
Court. In connection with the trip to Baguio for the
said oral argument, the plaintiff used his car hich
broke down and necessitated extensive repairs paid
for by the plaintiff himself.
On March 30, 1962, the Supreme Court promulgated
its decision reversing the order of dismissal and
remanding the case for further proceedings. On April
18, 1962, after the promulgation of the decision of
the Supreme Court reversing the dismissal of the
case the defendant wrote the plaintiff the following
letter, Exhibit 'Q'. .
xxxxxxxxx
Dear Juaning
Will you please accept the attached check in the
amount of TWO THOUSAND P2,000.00) PESOS for
legal services in the handling of L-17860 recently
decided by the Court? I wish I could give more but as
yu know we were banking on a SC decision
reinstating me and reimburse my backstage I had
been wanting to offer some token of my appreciation
of your legal fight for and in my behalf, and it was
only last week that I received something on account
of a pending claim.
Looking forward to a continuation of the case in the
lower court, I remain
Sincerely yours, Illegible
xxxxxxxxx

In a reply letter dated April 25, 1962, the plaintiff

returned the check, explaining said act as follows:
April 25, 1962
My dear Marino:
Yesterday, I received your letter of April 18th with its
enclosure. I wished thank you for your kind thoughts,
however, please don't take offense if I have to return
the check. I will explain.
When I decided to render professional services in
your case, I was motivated by the value to me of the
very intimate relations which you and I have
enjoyed during the past many years. It was nor
primarily, for a professional fee.
Although we were not fortunate to have obtained a
decision in your case which should have put an end
to it. I feel that we have reason to be jubilant over
the outcome, because, the final favorable outcome
of the case seems certain irrespective of the length
of time required to terminate the same.
Your appreciation of the efforts I have invested in
your case is enough compensation therefor, however,
when you shall have obtained a decision which would
have finally resolved the case in your favor,
remembering me then will make me happy. In the
meantime, you will make me happier by just keeping
the check.
Sincerely yours,
JUANING
xxxxxxxxx
When the case was remanded for further
proceedings before Judge Lantin, the evidence for
the defendant was presented by Atty. 'Alvarez with
the plaintiff cooperating in the same-'On June 24,
1963, Judge Lantin rendered his decision in favor of

the defendant declaring illegal the resolution of the

Monetary Board of July 20, 1959, and ordering the
defendant's reinstatement and the payment of his
back salaries and allowances - The respondents in
said Civil Case No. 41226 filed a motion for
reconsideration which was opposed by the herein
plaintiff. The said decision was appealed by the
respondents, as well as by the herein defendant with
respect to the award of P5, 000. 00 attorney's feed
The plaintiff prepared two briefs for submission to
the Court of Appeals one as appellee (Exhibit H) and
the other as appellant (Exhibit H-1). The Court of
Appeal however, certified the case to the Supreme
Court in 1964.
On March 31, 1965, the Supreme Court rendered a
decision affirming the judgment of the Court of first
Instance of Manila.
On April 19, 1965 the plaintiffs law office made a
formal de command upon the defendant for
collection of 50% of the amount recovered by the
defendant as back salaries and other emoluments
from the Central Bank (Exhibit N). This letter was
written after the defendant failed to appear at an
appointment with the plaintiff so that they could go
together to the Central Bank to claim the possession
of the office to which the defendant was reinstated
and after a confrontation in the office of the plaintiff
wherein the plaintiff was remanding 50% of the back
salaries and other emoluments amounting to
P203,000.00 recoverable by the defendant. The
defendant demurred to this demand inasmuch as he
had plenty of outstanding obligations and that his
tax liability for said back salaries was around
P90,000.00, and that he expected to net only around
P10,000.00 after deducting all expenses and taxes.
On the same date, April 19,1965 the plaintiff wrote
the Governor for of Central Bank requesting that the
amount representing the sack salaries of the
defendant be made out in two one in favor of the
defendant
and
the
other
representing
the
professional fees equivalent to 50% of the said back
salaries being claimed by the plaintiff (Exhibit 8). F to

obtain the relief from the Governor of Central Bank,

the plaintiff instituted this action before this Court on
July 20, 1965 (Emphasis supplied).
As therein defendant, herein petitioner Marino Corpus filed in
August 5, 1965 an answer with counter-claim. On August 30, 1965,
private respondent Atty. Juan T. David, plaintiff therein, filed a reply
with answer to the counterclaim of petitioner.
After due trial, the lower court rendered judgment on September 4,
1967, the dispositive portion of which reads:

On February 14, 1975, respondent Court of Appeals promulgated its

decision affirming in toto the decision of the lower court, with costs
against petitioner Marino Corpus (Annex A, Petition for Certiorari, p.
25, rec.)
Hence, the instant petition for review on certiorari, petitioner
contending that the respondent Court of Appeals erred in finding
that petitioner accepted private respondent's services "with the
understanding of both that he (private respondent) was to be
compensated" in money; and that the fee of private respondent
was contingent (pp. 3 & 5, Petition for Certiorari, pp. 17 & 19, rec.).

WHEREFORE, judgment is hereby rendered, ordering

the defendant to pay plaintiff the sum of P30,000.00
in the concept of professional fees, and to pay the
costs (pp. 112-113, CA Record on Appeal p. 54, rec.)

On October 1, 1975, the case was deemed submitted for decision

(p. 177, rec.), after the parties filed their respective memoranda.

After receipt on September 7, 1967 of a copy of the aforequoted

judgment, petitioner Marino Corpus, defendant therein, filed on
October 7, 1967 a notice of appeal from said judgment to the Court
of Appeals. In his appeal, he alleged that the lower court erred:

On January 31, 1978, private respondent Atty. Juan T. David filed a

petition to remand the case to the court a quofor execution of the
latter's decision in Civil Case No. 61802, dated September 4, 1967,
alleging that said decision is already deemed affirmed pursuant to
Section 11(2), Article X of the New Constitution by reason of the
failure of this Tribunal to decide the case within 18 months. Then on
July 7, 1978, another petition to remand the case to the lower court
to execution was filed by herein private respondent.

1. In not holding that the plaintiff's professional

services were offered and rendered gratuitously;
2. Assuming that plaintiff is entitled to compensation
in holding that he was entitled to attorney's fees in
the amount of P30,000.00 when at most he would be
entitled to only P2,500.00;
3. In not dismissing plaintiff's complaint; and
4. In not awarding damages and attorney's fees to
the defendant (p. 2, CA Decision, p. 26, rec.)
Likewise, private respondent Atty. Juan T. David, plaintiff therein,
appealed to the Court of Appeals on October 9, 1967 assigning one
error, to wit:
The lower court erred in ordering the defendant to
pay the plaintiff only the sum of P30,000.00 in the
concept of attorney's fees (p. 1, CA Decision, p. 25,
rec.).

Subsequently, private respondent Atty. Juan T. David filed with The

court a quo a motion dated September 13, 1978 for the issuance of
a writ of execution of the lower court's decision in the aforesaid civil
case, also invoking Section 11 (2), Article X of the 1973
Constitution. In an order dated September 19, 1978, the lower
court, through Judge Jose H. Tecson, directed the issuance of a writ
of execution. The writ of execution was issued on October 2, 1978
and a notice of garnishment was also issued n October 13, 1978 to
garnish the bank deposits of herein petitioner Marino Corpus in the
Commercial Bank and Trust Company, Makati Branch.
It appears that on October 13, 1978, herein petitioner filed a
motion for reconsideration of the September 19, 1978 order. Private
respondent Atty. Juan T. David filed on October 19, 1978 an
opposition to said motion and herein petitioner filed a reply on
October 30, 1978. The lower court denied said motion for
reconsideration in its over dated November 7, 1978.

It appears also that in a letter dated October 18, 1978, herein

petitioner Marino Corpus requested this Court to inquire into what
appears to be an irregularity in the issuance of the aforesaid
garnishment notice to the Commercial Bank and Trust Company, by
virtue of which his bank deposits were garnished and he was
prevented from making withdrawals from his bank account.
In OUR resolution of November 3, 1978, WE required private
respondent Atty. Juan T. David and the Commercial Bank and Trust
Company to comment on petitioner's letter, and for the bank to
explain why it did not honor petitioner's withdrawals from his bank
deposits when no garnishment order has been issued by the
Supreme Court. This Court further inquired from the lower court
whether it has issued any garnishment order during the pendency
of the present case.
On November 27, 1978, the Commercial Bank and Trust Company
filed its comment which was noted in the Court's resolution of
December 4, 1978. In said resolution, the Court also required Judge
Jose H. Tecson to comply with the resolution of November 3, 1978,
inquiring as to whether he had issued any garnishment order, and
to explain why a writ of execution was issued despite the pendency
of the present case before the Supreme Court.
Further, WE required private respondent Atty. Juan T. David Lo
explain his failure to file his comment, and to file the same as
directed by the resolution of the Court dated November 3, 1978.
Private respondent's compliance came on December 13, 1978,
requesting to be excused from the filing of his comment because
herein petitioner's letter was unverified. Judge Tecson's compliance
was filed on December 15, 1978, to which herein petitioner replied
on January 11, 1979.
In OUR resolution dated January 3, 1979, WE set aside the order of
Judge Jose H. Tecson dated September 19, 1978, the writ of
execution as well as the notice of garnishment, and required
private respondent Atty. Juan T. David to show cause why he should
not be cited for contempt for his failure to file his comment as
directed by the resolution of the Court dated December 4, 1978,
and for filing a motion for execution knowing that the case is
pending appeal and review before this Court Likewise, the Court
required Judge Jose H. Tecson to show cause why he should not be
cited for contempt for issuing an order directing the issuance of a
writ of execution and for issuing such writ despite the pendency of
the present case in the Supreme Court.

On January 12, 1979, Judge Jose H. Tecson filed his compliance

explanation as directed by the aforesaid resolution of January 3,
1979, while private respondent Atty. Juan T. David filed on January
30, 19 79 his compliance and motion for reconsideration after the
Court has granted him an extension of time to file his compliance.
Private respondent Atty. Juan T. David filed on February 28, 1979, a
petition praying that the merits of his compliance be resolved by
the Court en banc. Subsequently, on March 26, 1979, another
petition was filed by herein private respondent asking the Chief
Justice and the members of the First Division to inhibit themselves
from participating in the determination of the merits of his
compliance and for its merits to be resolved by the Court en banc.
C
The main thrust of this petition for review is whether or not private
respondent Atty. Juan T. David is entitled to attorney's fees.
Petitioner Marino Corpus contends that respondent David is not
entitled to attorney's fees because there was no contract to that
effect. On the other hand, respondent David contends that the
absence of a formal contract for the payment of the attorney's fees
will not negate the payment thereof because the contract may be
express or implied, and there was an implied understanding
between the petitioner and private respondent that the former will
pay the latter attorney's fees when a final decision shall have been
rendered in favor of the petitioner reinstating him to -his former
position in the Central Bank and paying his back salaries.
I
WE find respondent David's position meritorious. While there was
express agreement between petitioner Corpus and respondent
David as regards attorney's fees, the facts of the case support the
position of respondent David that there was at least an implied
agreement for the payment of attorney's fees.
Petitioner's act of giving the check for P2,000.00 through his
aforestated April 18, 1962 letter to respondent David indicates
petitioner's commitment to pay the former attorney's fees, which is
stressed by expressing that "I wish I could give more but as you
know we were banking on a SC decision reinstating me and

reimbursing my back salaries This last sentiment constitutes a

promise to pay more upon his reinstatement and payment of his
back salaries. Petitioner ended his letter that he was "looking
forward to a continuation of the case in the lower court, ... to which
the certiorari-mandamus-quo warranto case was remanded by the
Supreme Court for further proceedings.
Moreover, respondent David's letter-reply of April 25, 1962 confirms
the promise of petitioner Corpus to pay attorney's fees upon his
reinstatement and payment of back salaries. Said reply states that
respondent David decided to be his counsel in the case because of
the value to him of their intimate relationship over the years and
"not, primarily, for a professional fee." It is patent then, that
respondent David agreed to render professional services to
petitioner Corpus secondarily for a professional fee. This is stressed
by the last paragraph of said reply which states that "however,
when you shall have obtained a decision which would have finally
resolved the case in your favor, remembering me then will make
me happy. In the meantime, you will make me happier by just
keeping the check." Thereafter, respondent David continued to
render legal services to petitioner Corpus, in collaboration with Atty.
Alverez until he and Atty. Alvarez secured the decision directing
petitioner's reinstatement with back salaries, which legal services
were undisputedly accepted by, and benefited petitioner.
Moreover, there is no reason to doubt respondent David's assertion
that Don Rafael Corpus, the late father of petitioner Corpus,
requested respondent to help his son, whose suit for reinstatement
was dismissed by the lower court; that pursuant to such request,
respondent conferred in his office with petitioner, who requested
respondent to handle the case as his lawyer, Atty. Alvarez, was
already disenchanted and wanted to give up the case; and that
respondent agreed on the case. It would have been unethical for
respondent to even offer his services when petitioner had a
competent counsel in the person of Atty. Alvarez, who has been
teaching political, constitutional and administrative law for over
twenty years.
Likewise, it appears that after the Supreme Court affirmed on March
31, 1965 the order of the lower court reinstating petitioner Corpus
with back salaries and awarding attorney's fees of P5,000.00,
respondent David made a written demand on April 19, 1965 upon
petitioner Corpus for the payment of his attorney's fees in an
amount equivalent to 50% of what was paid as back salaries (Exh.
N p. 75, Folder of Exhibits, Civil Case No. 61802). Petitioner Corpus,

in his reply dated May 7, 1965 to the aforesaid written demand,

while disagreeing as to the amount of attorney's fees demanded,
did not categorically deny the right of respondent David to
attorney's fees but on the contrary gave the latter the amount of
P2,500.00, which is one-half () of the court-awarded attorney's
fees of P5,000.00, thus impliedly admitting the right of respondent
David to attorney's fees (Exh. K, p. 57, Folder of Exhibits, Civil Case
No. 61802).
It is further shown by the records that in the motion filed on March
5, 1975 by petitioner Corpus before the Court of Appeals for the
reconsideration of its decision the order of the lower court granting
P30,000.00 attorney's fee's to respondent David, he admitted that
he was the first to acknowledge that respondent David was entitled
to tion for legal services rendered when he sent the chock for
P2,000.00 in his letter of April 18, 1962, and he is still to
compensate the respondent but only to the extent of P10,000.00
(p. 44, rec.). This admission serves only to further emphasize the
fact that petitioner Corpus was aware all the time that he was liable
to pay attorney's fees to respondent David which is therefore
inconsistent with his position that the services of respondent David
were gratuitous, which did not entitle said respondent to
compensation.
It may be advanced that respondent David may be faulted for not
reducing the agreement for attorney's fees with petitioner Corpus
in writing. However, this should be viewed from their special
relationship. It appears that both have been friends for several
years and were co-members of the Civil Liberties Union. In addition,
respondent David and petitioner's father, the late Rafael Corpus,
were also close friends. Thus, the absence of an express contract
for attorney's fees between respondent David and petitioner Corpus
is no argument against the payment of attorney's fees, considering
their close relationship which signifies mutual trust and confidence
between them.
II
Moreover, the payment of attorney's fees to respondent David may
also be justified by virtue of the innominate contract of facio ut
des (I do and you give which is based on the principle that "no one
shall unjustly enrich himself at the expense of another." innominate
contracts have been elevated to a codal provision in the New Civil
Code by providing under Article 1307 that such contracts shall be
regulated by the stipulations of the parties, by the general

provisions or principles of obligations and contracts, by the rules

governing the most analogous nominate contracts, and by the
customs of the people. The rationale of this article was stated in the
1903 case of Perez vs. Pomar (2 Phil. 982). In that case, the Court
sustained the claim of plaintiff Perez for payment of services
rendered against defendant Pomar despite the absence of an
express contract to that effect, thus:
It does not appear that any written contract was
entered into between the parties for the employment
of the plaintiff as interpreter, or that any other
innominate
contract
was
entered
into
but
whethertheplaintiffsservicesweresolicitedorwhetherth
eywereoffered to the defendant 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. This gives rise to the obligation upon the
person benefited by the services to make
compensation therefor, since the bilateral obligation
to render service as interpreter, on the one hand,
and on the other to pay for the service rendered, is
thereby incurred. (Arts. 1088, 1089, and 1262 of the
Civil Code).
xxxxxxxxx
... Whether the service was solicited or offered, the
fact remains that Perez rendered to Pomar services
as interpreter. As it does not appear that he did this
gratuitously, the duty is imposed upon the
defendant, he having accepted the benefit of the
service, to pay a just compensation therefor, by
virtue of the innominate contract of facio ut des
implicitly established.
xxxxxxxxx
... because it is a well-known principle of law that no
one should permitted to enrich himself to the
damage of another" (emphasis supplied; see also
Tolentino, Civil Code of the Philippines, p. 388, Vol. IV
119621, citing Estate of Reguera vs. Tandra 81 Phil.
404 [1948]; Arroyo vs. Azur 76 Phil. 493119461; and
Perez vs. Pomar. 2 Phil. 682 [1903]).

WE reiterated this rule in Pacific Merchandising Corp. vs.

Consolacion Insurance & Surety Co., Inc. (73 SCRA 564 [1976])
citing the case of Perez v. Pomar, supra thus:
Where one has rendered services to another, and
these services are accepted by the latter, in the
absence of proof that the service was rendered
gratuitously, it is but just that he should pay a
reasonable remuneration therefor because 'it is a
well-known principle of law, that no one should be
permitted to enrich himself to the damage of another
(emphasis supplied).
Likewise, under American law, the same rule obtains (7 CJS 1079;
FL Still & Co. v. Powell, 114 So 375).
III
There was no contract for contingent fee between Corpus and
respondent David. Contingent fees depend on an express contract
therefor. Thus, "an attorney is not entitled to a percentage of the
amount recovered by his client in the absence of an express
contract to that effect" (7 C.J.S. 1063 citing Thurston v. Travelers
Ins. Co., 258 N.W. 66, 128 Neb. 141).
Where services were rendered without any
agreement whatever as to the amount or terms of
compensation, the attorney is not acting under a
contract for a contingent fee, and a letter by the
attorney to the client stating that a certain sum
would be a reasonable amount to charge for his
services and adding that a rate of not less than five
percent nor more than ten would be reasonable and
customary does not convert the original agreement
into a contract for a contingent fee (7 C.J.S. 1063
citing Fleming v. Phinizy 134 S.E. 814).
While there was no express contract between the parties for the
payment of attorney's fees, the fact remains that respondent David
rendered legal services to petitioner Corpus and therefore as
aforestated, is entitled to compensation under the innominate
contract of facio lit des And such being the case, respondent David
is entitled to a reasonable compensation.

IV
In determining a reasonable fee to be paid to respondent David as
compensation for his services, on a quantum meruit basis, it is
proper to consider all the facts and circumstances obtaining in this
case particularly the following:
The extent of the services rendered by respondent David should be
considered together with the extent of the services of Petitioner's
other counsel, Atty. Rosauro Alvarez, It is undisputed that Atty.
Rosauro Alvarez had rendered legal services as principal counsel for
more shall six (6) years while respondent David has rendered legal
services as collaborating counsel for almost four (4) years. It
appears that Atty. Alvarez started to render legal services after the
administrative case was filed on March 7, 1958 against petitioner
Corpus. He represented petitioner Corpus in the hearing of said
case which was conducted from May 5, 1958 to October 8, 1958,
involving 56 sessions, and this resulted in the complete exoneration
by the Investigating Committee of all the charges against the
petitioner. It appears further that after the Monetary Board, in its
resolution of July 20, 1959, declared petitioner Corpus as being
considered resigned from the service, Atty. Alvarez instituted on
August 18, 1958 Civil Case No. 41126 in the Court of First Instance
of Manila for the setting aside of the aforestated resolution and for
the reinstatement of petitioner Corpus. Atty. Alvarez actively
participated in the proceedings.
On the other hand, respondent David entered his appearance as
counsel for petitioner Corpus sometime after the dismissal on June
14, 1960 of the aforesaid civil case. From the time he entered his
appearance, both he and Atty. Alvarez rendered legal services to
petitioner Corpus in connection with the appeals of the
aforementioned civil case to the Court of Appeals and to the
Supreme Court. The records disclose that in connection with the
appeal from the June 14, 1960 order of dismissal, respondent David
prepared and signed pleadings although the same were made for
and on behalf of Atty. Alvarez and himself And it is not far-fetched
to conclude that all appearances were made by both counsels
considering that Atty. Alverez was the principal counsel and
respondent David was the collaborating counsel. Thus, when the
case was called for oral argument on April 20, 1961 before the
Supreme Court, respondent David and Atty. Alverez appeared for
petitioner Corpus although it was David who orally argued the case.

When the Supreme Court, in its decision of March 30, 1962,

remanded the case to the lower court for further it was Atty. Alverez
who conducted the presentation of evidence while respondent
David assisted him The records also review that respondent David
prepared and signed for Atty. Alverez and himself. certain
pleadings, including a memorandum. Moreover, after the lower
court rendered judgment on June 2 4, 1963 ordering the
reinstatement and payment of back salaries to petitioner Corpus
and awarding him P5,000.00 by way of attorney's fees, both
petitioner Corpus and the respondents in said case appealed the
judgment. At that stage, respondent David again prepared and
signed for Atty. Alvarez and himself, the necessary pleadings,
including two appeal briefs. And in addition, he made oral
arguments in the hearings of motions filed in the lower court before
the records of the case were forwarded to the appellate court.
Furthermore, while it appears that it was Atty. Alvarez who laid
down the basic theory and foundation of the case of petitioner
Corpus in the administrative case and later in the civil case,
respondent David also advanced legal propositions. Petitioner
Corpus contends that said legal propositions were invariably
rejected by the courts. This is, however, of no moment because the
fact remains that respondent David faithfully rendered legal
services for the success of petitioner's case.
The benefits secured for petitioner Corpus may also be considered
in ascertaining what should be the compensation of respondent
David. It cannot be denied that both Atty. Alvarez and respondent
David were instrumental in obtaining substantial benefits for
petitioner Corpus which consisted primarily of his reinstatement,
recovery of back salaries and the vindication of his honor and
reputation. But, note should also be taken of the fact that
respondent David came at the crucial stage when the case of
petitioner Corpus was dismissed by the lower court.
Atty. Rosauro Alvarez admittedly was paid by petitioner Corpus the
sum of P20,000.00 or at most P22,500.00 (T.s.n., Jan. 11, 1967, pp.
34-35; T.s.n., Feb. 10, 1967, pp. 48-49). On the other hand,
petitioner Corpus, after WE suggested on August 15, 1975 that they
settle the case amicably has, in his September 15, 1975 pleading
filed before this Court (p. 166, rec.), manifested his willingness to
pay P10,000.00 for the services of respondent David. However,
respondent David has not manifested his intention to accept the
offer.

In his complaint in the instant case, he asked for P75,000.00 as his

attorney's fees. The records reveal that petitioner Corpus actually
received only P150,158.50 as back salaries and emoluments after
deducting taxes as well as retirement and life insurance premiums
due to the GSIS. The amount thus claimed by respondent David
represents 50% of the amount actually received by petitioner
Corpus. The lower court, however, awarded only P30,000.00 and it
was affirmed by the Court of Appeals.
Considering the aforestated circumstances, WE are of the opinion
that the reasonable compensation of respondent David should be
P20,000.00.
V
WE find private respondent Juan T. David and Judge Jose H. Tecson,
Presiding Judge of the Court of First Instance of Manila, Branch V,
guilty of contempt of court.
Respondent David filed on or about September 13, 1978 a motion
with the court a quo for the issuance of a writ of execution to
enforce its decision in Civil Case No 61802, subject of the present
petition, knowing fully well that it was then still pending appeal
before this Court. In addition, no certification that the aforesaid
decision is already deemed affirmed had as yet been issued by the
Chief Justice pursuant to Section 11, paragraph 2, Article X of the
New Constitution; because respondent David's petitions filed with
the Supreme Court on January 31, 1978 and on July 7, 1978 to
remand the case to the trial court for execution and for the
issuance of such certification had not yet been acted upon as the
same were still pending consideration by this Court. In fact, this
Court has not as of this time made any pronouncement on the
aforesaid provision of the New Constitution.
This act of respondent David constitutes disrespect to, as well as
disregard of, the authority of this Court as the final arbiter of all
cases duly appealed to it, especially constitutional questions. It
must be emphasized that as a member of the Philippine Bar he is
required "to observe and maintain the respect due to the court of
justice and judicial officers" (Section 20 (b), 138 of the Revised
Rules of Court). Likewise, Canon 1 of. the Canons of Professional
Ethic expressly provide that: "It is the duty of the lawyer to
maintain towards the Courts a respectful attitude, not for the sake
of the temporary incumbent of the judgement office, but for the
maintenance of its supreme importance." And this Court had

stressed that "the duty of an attorney to the courts 'can only be

maintained by rendering no service involving any disrespect to the
judicial office which he is bound to uphold'" (Rheem of the
Philippines v. Ferrer, 20 SCRA 441, 444 [1967] citing the case of
Lualhati v. Albert, 67 Phil. 86, 92 [1932]).
Moreover, this Court takes judicial notice of the fact that herein
respondent David, in the previous case of Integrated Construction
Services, Inc. and Engineering Construction, Inc. v. Relova (65 SCRA
638 [1975]), had sent letters addressed to the then Chief Justice
Querube C. Makalintal and later to the late Chief Justice Fred Ruiz
Castro, requesting for the issuance of certification on the basis of
the aforementioned provision of the New Constitution which were
not given due consideration. And knowing this, respondent David
should have been more prudent and cautious in g with the court a
quo any motion for execution.
Furthermore, there was even a taint of arrogance and defiance on
the part of respondent David in not filing his comment to the lettercomplaint dated October 18, 1978 of petitioner Corpus, as required
by this Court in its November 3, 1978 and December 4,1978
resolutions which were duly received by him, and instead, he sent
on December 13, 1978 a letter requesting to be excused from the
filing of his comment on the lame excuse that petitioner's lettercomplaint was not verified.
On the part of Judge Jose H. Tecson, his presumptuous and
precipitate act of granting the motion for execution of dent David
likewise constitutes disrespect to, as well as of, the authority of this
Court because he know for a that the case was still pending apply
as the had not yet been remanded to it and that no certification has
been issued by this Court. As a judicial officer, Judge Tecson is
charged with the knowledge of the fact that this Court has yet to
make a definite pronouncement on Section 11, paragraph 2, Article
X of the New Constitution. Judge Tecson should know that only the
Supreme Court can authoritatively interpret Section 11 (2) of Article
X of the 1973 Constitution. Yet, Judge Tecson assumed the role of
the Highest Court of the Land. He should be reminded of what
Justice Laurel speaking for the Court, has said in People v. Vera (65
Phil 56, 82 [1937]):
A becoming modesty of inferior courts demands
conscious realization of the position that they occupy
in the interrelation and operation of the integrated
judged system of the nation.

It may also be added that the improvident act of respondent David

in firing the motion for execution and the precipitate act of Judge
Tecson in issuing the writ of execution are intriguing as they invite
suspicion that there was connivance between the two. Respondent
David would seem to imply that his claim for attorney's fees should
be given preference over the other cams now pending in this Court.
Certainly, such should not be the case because there are cases
which by their nature require immediate or preferential attention by
this Tribunal like habeas corpus cases, labor cases and c cases
involving death sentence, let alone cases involving properties and
property rights of poor litigants pending decision or resolution long
before the New Constitution of 1973. Nobility and exempt
forbearance were expected of Atty. David, who is old and
experienced in the practice of the legal profession, from which he
has derived a great measure. of economic well-being and
independence
Consequently, the filing of the motion for immediate tion and the
issuance of the writ of execution constitute a defiance and
usurpation of the jurisdiction of the Supreme Court. As a
disciplinary measure for the preservation and vindication of the
dignity of this Supreme Tribunal respondent Atty. Juan T. David
should be REPRIMANDED for his precipitate action of filing a motion
for execution as well as Judge Jose H. Tecson for his improvident
issuance of a writ of execution while the case is pending appeal
before the Supreme Court, and a repetition of said acts would be
dealt with more severely.
WHEREFORE, PETITIONER R. MARINO CORPUS IS HEREBY DIRECTED
TO PAY RESPONDENT ATTY. JUAN T. DAVID THE SUM OF TWENTY
THOUSAND (P20,000.00) PESOS AS ATTORNEY'S FEES.
RESPONDENT ATTY. JUAN T. DAVID AND JUDGE JOSE H. TECSON OF
THE COURT OF FIRST INSTANCE OF MANILA, BRANCH V, ARE
HEREBY DECLARED GUILTY OF CONTEMPT AND ARE HEREBY
REPRIMANDED, WITH A WARNING THAT REPETITION TION OF THE
SAME OR SIMILAR ACTS WILL BE DEALT WITH MORE SEVERELY.
COSTS AGAINST PETITIONER.
SO ORDERED.

nine(2,869) square meters, more or less, which was covered by Tax

Declaration ARP No. (TD) 0141.

G.R. No. 204029

June 4, 2014

AVELINA ABARIENTOS REBUSQUILLO [substituted by her

heirs, except Emelinda R. Gualvez] and SALVADOR A.
OROSCO, Petitioners,
vs.
SPS. DOMINGO and EMELINDA REBUSQUILLO GUALVEZ and
the CITY ASSESSOR OF LEGAZPI CITY,Respondents.
DECISION
VELASCO, JR., J.:
Before Us is a Petition for Review on Certiorari under Rule 45
assailing the Decision1 and Resolution2 dated March 30, 2012 and
September 25, 2012, respectively, of the Court of Appeals (CA) in
CA-G.R. CV No. 93035, which reversed and set aside the Decision
dated January 20, 2009 of the Regional Trial Court (RTC), Branch 4
in Legazpi City, in Civil Case No. 10407.
The antecedent facts may be summarized as follows:
On October 26, 2004, petitioners Avelina Abarientos Rebusquillo
(Avelina) and Salvador Orosco (Salvador) filed a Complaint for
annulment and revocation of an Affidavit of Self-Adjudication dated
December 4, 2001 and a Deed of Absolute Sale dated February 6,
2002 before the court a quo. In it, petitioners alleged that Avelina
was one of the children of Eulalio Abarientos (Eulalio) and Victoria
Villareal (Victoria). Eulalio died intestate on July 3, 1964, survived
by his wife Victoria, six legitimate children, and one illegitimate
child, namely: (1) Avelina Abarientos-Rebusquillo, petitioner in this
case; (2) Fortunata Abarientos-Orosco, the mother of petitioner
Salvador; (3) Rosalino Abarientos; (4) Juan Abarientos; (5) Feliciano
Abarientos; (6) Abraham Abarientos; and (7) Carlos Abarientos. His
wife Victoria eventually died intestate on June 30, 1983.
On his death, Eulalio left behind an untitled parcel of land in
Legazpi City consisting of two thousand eight hundred sixty-

In 2001, Avelina was supposedly made to sign two (2) documents

by her daughter Emelinda Rebusquillo-Gualvez (Emelinda) and her
son-in-law Domingo Gualvez (Domingo), respondents in this case,
on the pretext that the documents were needed to facilitate the
titling of the lot. It was only in 2003, so petitioners claim, that
Avelina realized that what she signed was an Affidavit of SelfAdjudication and a Deed of Absolute Sale in favor of respondents.
As respondents purportedly ignored her when she tried to talk to
them, Avelina sought the intervention of the RTC to declare null and
void the two (2) documents in order to reinstate TD0141 and so
correct the injustice done to the other heirs of Eulalio.
In their answer, respondents admitted that the execution of the
Affidavit of Self-Adjudication and the Deed of Sale was intended to
facilitate the titling of the subject property. Paragraph 9 of their
Answer reads:
Sometime in the year 2001, [petitioner] Avelina together with the
other heirs of Eulalio Abarientos brought out the idea to
[respondent] Emelinda Rebusquillo-Gualvez to have the property
described in paragraph 8 of the complaint registered under the
Torrens System of Registration. To facilitate the titling of the
property, so that the same could be attractive to prospective
buyers, it was agreed that the propertys tax declaration could be
transferred to [respondents] Spouses [Emelinda] R. Gualvez and
Domingo Gualvez who will spend all the cost of titling subject to
reimbursement by all other heirs in case the property is sold; That
it was agreed that all the heirs will be given their corresponding
shares on the property; That pursuant to said purpose Avelina
Abarientos-Rebusquillo with the knowledge and consent of the
other heirs signed and executed an Affidavit of Self-Adjudication
and a Deed of Absolute Sale in favor of [respondents] Gualvez. In
fact, [petitioner] Avelina Rebusquillo was given an advance sum of
FIFTY THOUSAND PESOS (P50,000.00) by [respondent] spouses and
all the delinquent taxes paid by [respondents]. 3
After trial, the RTC rendered its Decision dated January 20, 2009
annulling the Affidavit of Self-Adjudication and the Deed of Absolute
Sale executed by Avelina on the grounds that (1) with regard to the
Affidavit of Self-Adjudication, she was not the sole heir of her
parents and was not therefore solely entitled to their estate; and (2)

in the case of the Deed of Absolute Sale, Avelina did not really
intend to sell her share in the property as it was only executed to
facilitate the titling of such property. The dispositive portion of the
RTC Decision reads:
WHEREFORE, premises considered, judgment is hereby rendered,
as follows:
1. The subject Affidavit of Self-Adjudication of the Estate of
the Deceased Spouses Eulalio Abarientos and Victoria
Villareal, dated December 4, 2001 as well as the subject
Deed of Absolute Sale, notarized on February 6, 2002,
covering the property described in par. 8 of the Amended
Complaint are hereby ordered ANNULLED;
2. That defendant City Assessors Officer of Legazpi City is
hereby ordered to CANCEL the Tax Declaration in the name
of private [respondents] spouses Gualvez under ARP No.
4143 and to REINSTATE the Tax Declaration under ARP No.
0141 in the name of Eulalio Abarientos;
3. By way of restitution, [petitioner] Avelina Abarientos
Rebusquillo is hereby ordered to return or refund to
[respondents] spouses Domingo Gualvez and Emelinda
Gualvez, the P50,000.00 given by the latter spouses to the
former.4
Assailing the trial courts decision, respondents interposed an
appeal with the CA arguing that the Deed of Sale cannot be
annulled being a public document that has for its object the
creation and transmission of real rights over the immovable subject
property. The fact that Avelinas testimony was not offered in
evidence, so respondents argued, the signature on the adverted
deed remains as concrete proof of her agreement to its terms.
Lastly, respondents contended that the Complaint filed by
petitioners Avelina and Salvador before the RTC is not the proper
remedy provided by law for those compulsory heirs unlawfully
deprived of their inheritance.
Pending the resolution of respondents appeal, Avelina died
intestate on September 1, 2009 leaving behind several living
heirs5 including respondent Emelinda.

In its Decision dated March 30, 2012, the appellate court granted
the appeal and reversed and set aside the Decision of the RTC. The
CA held that the RTC erred in annulling the Affidavit of SelfAdjudication simply on petitioners allegation of the existence of
the heirs of Eulalio, considering that issues on heirship must be
made in administration or intestate proceedings, not in an ordinary
civil action. Further, the appellate court observed that the Deed of
Absolute Sale cannot be nullified as it is a notarized document that
has in its favor the presumption of regularity and is entitled to full
faith and credit upon its face.
Aggrieved by the CAs Decision, petitioner Avelina, as substituted
by her heirs except respondent Emelinda, and petitioner Salvador
are now before this Court ascribing reversible error on the part of
the appellate court.
We find merit in the instant petition.
It has indeed been ruled that the declaration of heirship must be
made in a special proceeding, not in an independent civil action.
However, this Court had likewise held that recourse to
administration proceedings to determine who heirs are is
sanctioned only if there is a good and compelling reason for such
recourse.6 Hence, the Court had allowed exceptions to the rule
requiring administration proceedings as when the parties in the civil
case already presented their evidence regarding the issue of
heirship, and the RTC had consequently rendered judgment upon
the issues it defined during the pre-trial. 7 In Portugal v. PortugalBeltran,8 this Court held:
In the case at bar, respondent, believing rightly or wrongly that she
was the sole heir to Portugals estate, executed on February 15,
1988 the questioned Affidavit of Adjudication under the second
sentence of Rule 74, Section 1 of the Revised Rules of Court. Said
rule is an exception to the general rule that when a person dies
leaving a property, it should be judicially administered and the
competent court should appoint a qualified administrator, in the
order established in Sec. 6, Rule 78 in case the deceased left no
will, or in case he did, he failed to name an executor therein.
Petitioners claim, however, to be the exclusive heirs of Portugal. A
probate or intestate court, no doubt, has jurisdiction to declare who
are the heirs of a deceased.

It appearing, however, that in the present case the only property of

the intestate estate of Portugal is the Caloocan parcel of land to still
subject it, under the circumstances of the case, to a special
proceeding which could be long, hence, not expeditious, just to
establish the status of petitioners as heirs is not only impractical; it
is burdensome to the estate with the costs and expenses of an
administration proceeding. And it is superfluous in light of the fact
that the parties to the civil case - subject of the present case, could
and had already in fact presented evidence before the trial court
which assumed jurisdiction over the case upon the issues it defined
during pre-trial.
In fine, under the circumstances of the present case, there being no
compelling reason to still subject Portugals estate to administration
proceedings since a determination of petitioners status as heirs
could be achieved in the civil case filed by petitioners, the trial
court should proceed to evaluate the evidence presented by the
parties during the trial and render a decision thereon upon the
issues it defined during pre-trial x x x. (emphasis supplied)
Similar to Portugal, in the present case, there appears to be only
one parcel of land being claimed by the contending parties as the
inheritance from Eulalio. It would be more practical, as Portugal
teaches, to dispense with a separate special proceeding for the
determination of the status of petitioner Avelina as sole heir of
Eulalio, especially in light of the fact that respondents spouses
Gualvez admitted in court that they knew for a fact that petitioner
Avelina was not the sole heir of Eulalio and that petitioner Salvador
was one of the other living heirs with rights over the subject land.
As confirmed by the RTC in its Decision, respondents have
stipulated and have thereby admitted the veracity of the following
facts during the pre-trial:
IV UNCONTROVERTED FACTS: (Based on the stipulation of facts in
the Pre-Trial Order)
A. x x x
B. [Petitioners] and private
admitted the following facts:
1. Identity of the parties;

[respondents]

spouses

Gualvez

2. Capacity of the [petitioners] and private [respondents] to

sue and be sued;
3. [Petitioner] Avelina Abarientos-Rebusquilllo is not the only
surviving heir of deceased spouses Eulalio and Victoria
Abarientos;
4. Petitioner Salvador Orosco is a co-owner/possessor of a
portion of the subject property;
5. Fortunata Abarientos-Orosco is the sister of Avelina
Abarientos;
6. [Respondent] Emelinda Rebusquillo-Gualves is a daughter
of [petitioner] Avelina A. Rebusquillo;
7. [Petitioner] Avelina Rebusquillo was born on Nov. 10,
1923;
8. The existence of Affidavit of Self-Adjudication of Estate of
the Deceased and Deed of Absolute Sale executed by
[petitioner] Avelina A. Rebusquillo on the subject
property.9 (emphasis supplied)
In light of the admission of respondents spouses Gualvez, it is with
more reason that a resort to special proceeding will be but an
unnecessary superfluity. Accordingly, the court a quo had properly
rendered judgment on the validity of the Affidavit of SelfAdjudication executed by Avelina. As pointed out by the trial court,
an Affidavit of Self-Adjudication is only proper when the affiant is
the sole heir of the decedent. The second sentence of Section 1,
Rule 74 of the Rules of Court is patently clear that self-adjudication
is only warranted when there is only one heir:
Section 1. Extrajudicial settlement by agreement between heirs.
x x x If there is only one heir, he may adjudicate to himself the
entire estate by means of an affidavit filed in the office of the
register of deeds. x x x (emphasis supplied)
As admitted by respondents, Avelina was not the sole heir of
Eulalio. In fact, as admitted by respondents, petitioner Salvador is
one of the co-heirs by right of representation of his mother. Without
a doubt, Avelina had perjured herself when she declared in the
affidavit that she is "the only daughter and sole heir of spouses

EULALIO ABARIENTOS AND VICTORIA VILLAREAL."10 The falsity of

this claim renders her act of adjudicating to herself the inheritance
left by her father invalid. The RTC did not, therefore, err in granting
Avelinas prayer to declare the affidavit null and void and so correct
the wrong she has committed.

and the parties are still bound by their real agreement. Hence,
where the essential requisites of a contract are present and the
simulation refers only to the content or terms of the contract, the
agreement is absolutely binding and enforceable between the
parties and their successors in interest. (emphasis supplied)

In like manner, the Deed of Absolute Sale executed by Avelina in

favor of respondents was correctly nullified and voided by the RTC.
Avelina was not in the right position to sell and transfer the
absolute ownership of the subject property to respondents. As she
was not the sole heir of Eulalio and her Affidavit of Self-Adjudication
is void, the subject property is still subject to partition. Avelina, in
fine, did not have the absolute ownership of the subject property
but only an aliquot portion. What she could have transferred to
respondents was only the ownership of such aliquot portion. It is
apparent from the admissions of respondents and the records of
this case that Avelina had no intention to transfer the ownership, of
whatever extent, over the property to respondents. Hence, the
Deed of Absolute Sale is nothing more than a simulated contract.

In the present case, the true intention of the parties in the

execution of the Deed of Absolute Sale is immediately apparent
from respondents very own Answer to petitioners Complaint. As
respondents themselves acknowledge, the purpose of the Deed of
Absolute Sale was simply to "facilitate the titling of the [subject]
property," not to transfer the ownership of the lot to them.
Furthermore, respondents concede that petitioner Salvador remains
in possession of the property and that there is no indication that
respondents ever took possession of the subject property after its
supposed purchase. Such failure to take exclusive possession of the
subject property or, in the alternative, to collect rentals from its
possessor, is contrary to the principle of ownership and is a clear
badge of simulation that renders the whole transaction void.12

The Civil Code provides:

Contrary to the appellate courts opinion, the fact that the

questioned Deed of Absolute Sale was reduced to writing and
notarized does not accord it the quality of incontrovertibility
otherwise provided by the parole evidence rule. The form of a
contract does not make an otherwise simulated and invalid act
valid. The rule on parole evidence is not, as it were, ironclad. Sec.
9, Rule 130 of the Rules of Court provides the exceptions:

Art. 1345. Simulation of a contract may be absolute or relative. The

former takes place when the parties do not intend to be bound at
all; the latter, when the parties conceal their true agreement.
(emphasis supplied)
Art. 1346. An absolutely simulated or fictitious contract is void. A
relative simulation, when it does not prejudice a third person and is
not intended for any purpose contrary to law, morals, good
customs, public order or public policy binds the parties to their real
agreement.

Section 9. Evidence of written agreements. x x x

However, a party may present evidence to modify, explain or add
to the terms of written agreement if he puts in issue in his pleading:

In Heirs of Policronio Ureta Sr. v. Heirs of Liberato Ureta, 11 this Court

explained the concept of the simulation of contracts:

(a) An intrinsic ambiguity, mistake or imperfection in the

written agreement;

In absolute simulation, there is a colorable contract but it has no

substance as the parties have no intention to be bound by it. The
main characteristic of an absolute simulation is that the apparent
contract is not really desired or intended to produce legal effect or
in any way alter the juridical situation of the parties. As a result, an
absolutely simulated or fictitious contract is void, and the parties
may recover from each other what they may have given under the
contract. However, if the parties state a false cause in the contract
to conceal their real agreement, the contract is relatively simulated

(b) The failure of the written agreement to express the true

intent and agreement of the parties thereto;
(c) The validity of the written agreement; or
(d) The existence of other terms agreed to by the parties or
their successors in interest after the execution of the written
agreement.

The term "agreement" includes wills. (emphasis supplied)

The failure of the Deed of Absolute Sale to express the true intent
and agreement of the contracting parties was clearly put in issue in
the present case. Again, respondents themselves admit in their
Answer that the Affidavit of Self-Adjudication and the Deed of
Absolute Sale were only executed to facilitate the titling of the
property. The RTC is, therefore, justified to apply the exceptions
provided in the second paragraph of Sec. 9, Rule 130 to ascertain
the true intent of the parties, which shall prevail over the letter of
the document. That said, considering that the Deed of Absolute
Sale has been shown to be void for being absolutely simulated,
petitioners are not precluded from presenting evidence to modify,
explain or add to the terms of the written agreement. 13
WHEREFORE, the instant petition is GRANTED. The Decision dated
March 30, 2012 and the Resolution dated September 25, 2012 of
the Court of Appeals in CA-G.R. CV No. 93035 are hereby
REVERSED and SET ASIDE. The Decision dated January 20, 2009 in
Civil Case No. 10407 of the Regional Trial Court (RTC),Branch 4 in
Legazpi City is REINSTATED.

G.R. No. L-27396 September 30, 1974

JESUS V. OCCEA and SAMUEL C. OCCEA, petitioners,
vs.
HON. PAULINO S. MARQUEZ, District Judge, Court of First
Instance of Bohol, Branch I, respondent. I.V. BINAMIRA, CoExecutor, Estate of W.C. Ogan, Sp. Proc. No. 423, CFI of
Bohol, Intervenor.
Jesus V. Occea and Samuel C. Occea in their own behalf.
Hon. Paulino S. Marquez for and in his own behalf.
I.V. Binamira for and in his own behalf as intervenor.

SO ORDERED.
ANTONIO, J.:p
In this petition for certiorari with mandamus, petitioners seek (1) to
nullify the order of respondent Judge Paulino S. Marquez of the
Court of First Instance of Bohol, Branch I, in Sp. Proc. No. 423
entitled "In the Matter of the Testate Estate of William C. Ogan," in
relation to petitioners' claim for partial payment of attorney's fees
in the amount of P30,000.00, dated November 2, 1966, fixing at
P20,000.00 petitioners' attorney's fees, "which would cover the
period March 1963 to December 1965," and directing its immediate
payment minus the amount of P4,000.00 previously received by
petitioners, and his second order, dated January 12, 1967, denying
petitioners' motion for reconsideration and modifying the
November 2, 1966 order by deleting therefrom the above-quoted
phrase; (2) to direct the said court to approve the release to them
as attorney's fees the amount of P30,000.00 minus the amount of
P4,000.00 already advanced to them by the executrix; and (3) to
allow petitioners to submit evidence to establish the total
attorney's fees to which they are entitled, in case no agreement
thereon is reached between them and the instituted heirs.

The gross value of the estate of the late William C. Ogan subject
matter of the probate proceeding in Sp. Proc. No. 423 is more than
P2 million. Petitioners, Atty. Jesus V. Occea and Atty. Samuel C.
Occea, are the lawyers for the estate executrix, Mrs. Necitas Ogan
Occea, and they had been representing the said executrix since
1963, defending the estate against claims and protecting the
interests of the estate. In order to expedite the settlement of their
deceased father's estate, the seven instituted heirs decided to
enter into compromise with the claimants, as a result of which the
total amount of P220,000.00 in cash was awarded to the claimants,
including co-executor Atty. Isabelo V. Binamira, his lawyers and his
wife. A partial distribution of the corpus and income of the estate
was made to the heirs in the total amount of P450,000.00. On
November 18, 1966, the estate and inheritance taxes were
completely settled by the executrix and the requisite tax clearance
and discharge from liability was issued by the Commissioner of
Internal Revenue.
Petitioners filed a Motion for Partial Payment of Attorneys' Fees,
dated November 18, 1965, asking the court to approve payment to
them of P30,000.00, as part payment of their fees for their services
as counsel for the executrix since 1963, and to authorize the
executrix to withdraw the amount from the deposits of the estate
and pay petitioners. Three of the heirs, Lily Ogan Peralta, William
Ogan, Jr. and Ruth Ogan, moved to defer consideration of the
motion until after the total amounts for the executrix's fees and the
attorney's fees of her counsel shall have been agreed upon by all
the heirs. In July, 1966, five of the seven instituted heirs, namely,
Lily Ogan Peralta, Necitas Ogan Occena, Federico M. Ogan, Liboria
Ogan Garcia and Nancy Ogan Gibson, filed with the court a
Manifestation stating that they had no objection to the release of
P30,000.00 to petitioners as partial payment of attorney's fees and
recommending approval of petitioners' motion.
Their first motion dated November 18, 1965 being still unresolved,
petitioners filed a second Motion for Payment of Partial Attorneys'
Fees, dated July 5, 1966, praying for the release to them of the
amount of P30,000.00 previously prayed for by them. Action on the
matter was, however, deferred in an order dated August 6, 1966,
upon the request of the Quijano and Arroyo Law Offices in behalf of
heirs William Ogan, Jr. and Ruth Ogan for deferment until after all
the instituted heirs shall have agreed in writing on the total
attorney's fees. Petitioners filed a Motion for Reconsideration under
date of September 12, 1966, asking the court to reconsider its
deferment order and praying that payment to them of P30,000.00

be approved on the understanding that whatever amounts were

paid to them would be chargeable against the fees which they and
the instituted heirs might agree to be petitioners' total fees.
On November 2, 1966, respondent Judge issued an order fixing the
total fees of petitioners for the period March, 1963 to December,
1965 at P20,000.00. Petitioners moved to reconsider that order. On
January 12, 1967, respondent issued an order not only denying
petitioners' Motion for Reconsideration but also modifying the
original order by fixing petitioners' fees for the entire testate
proceedings at P20,000.00.
Petitioners contend that respondent Judge acted with grave abuse
of discretion or in excess of jurisdiction in fixing the entire
attorney's fees to which they are entitled as counsel for the
executrix, and in fixing the said fees in the amount of P20,000.00.
The reasons given by petitioners in support of their contention are:
(1) the motion submitted by petitioners for the court's resolution
was only for partied payment of their attorney's fees, without
prejudice to any agreement that might later be reached between
them and the instituted heirs on the question of total attorney's
fees, yet respondent Judge resolved the question of total attorney's
fees; (2) considering that the only question raised by petitioners for
the court's determination was that of partial attorney's fees, they
never expected the court to make a ruling on the question of total
attorney's fees; consequently, petitioners did not have the
opportunity to prove to total fees to which they were entitled, and,
hence, they were denied due process of law; (3) of the seven heirs
to the estate, five had agreed to petitioners' motion for partial
payment to them of attorney's fees in the amount of P30,000.00,
while the remaining two did not oppose the motion; (4) in his order,
respondent Judge stated that he based the amount of P20,000.00
on the records of the case, but the amount of attorney's fees to
which a lawyer is entitled cannot be determined on the sole basis of
the records for there are other circumstances that should be taken
into consideration; and (5) contrary to respondent Judge's opinion,
the mere fact that one of the attorneys for the executrix is the
husband of said executrix, is not a ground for denying the said
attorneys the right to the fees to which they are otherwise entitled.
Only Judge Paulino S. Marquez is named respondent in the present
petition, for, according to petitioners, "no proper party is interested
in sustaining the questioned proceedings in the Lower Court."

In his Answer to the petition, respondent Judge alleged that (a)

petitioners' proper remedy is appeal and not a special civil action,
considering that there is already a final order on the motion for
payment of fees; (b) petitioner Atty. Samuel Occea is the husband
of executrix Necitas Ogan Occea, hence, Samuel Occea's
pecuniary interest now goes against the pecuniary interest of the
four heirs he is representing in the special proceeding; (c) one
reason why respondent Judge ordered the deletion of the phrase
containing the period March, 1963 to December, 1965 from his
November 2, 1966 order is that there are miscellaneous payments
appearing in the compromise agreement and in the executrix's
accounting which cover expenses incurred by petitioners for the
estate; (d) co-executor I. V. Binamira should be included as party
respondent to comply with Section 5, Rule 65 of the Revised Rules
of Court; and (e) it is the duty of respondent Judge not to be very
liberal to the attorney representing the executrix, who is at the
same time the wife of said counsel and is herself an heir to a
sizable portion of the estate, for respondent Judge's duty is to see
to it that the estate is administered "frugally," "as economically as
possible," and to avoid "that a considerable portion of the estate is
absorbed in the process of such division," in order that there may
be a worthy residue for the heirs. As special defenses, respondent
Judge alleged that the seven instituted heirs are indispensable
parties in this case; that mandamus cannot control the actuations
of the trial court because they involved matters of discretion; and
that no abuse of discretion can be imputed to respondent Judge for
trying his best to administer the estate frugally.

On August 25, 1967, intervenor filed a Reply to Executrix's

Opposition and Opposition to Exicutrix's Motion for Reconsideration.
On September 18, 1967, intervenor filed Intervenor's Comments on
Petitioners' Motion for Reconsideration of the Resolution dated
August 9, 1961. On September 21, 1967, petitioners filed against
intervenor a Petition for Contempt asking this Court to hold
intervenor in contempt of court. We required intervenor to
comment thereon. On October 9, 1967, petitioners filed a
Supplemental Petition for Contempt. Invervenor filed on October
20, 1967, Intervenor's Comments and Counter Petition, asking this
Court to dismiss petitioners' motion for indirect contempt and
instead to hold petitioners guilty of indirect contempt for gross
breach of legal ethics. We deferred action on the contempt motion
until the case is considered on the merits. On January 15, 1968.
Intervenor I. V. Binamira filed an Answer to Supplemental Petition.
This was followed on February 12, 1968, by another Petition for
Contempt, this time against one Generoso L. Pacquiao for allegedly
executing a perjured affidavit dated December 20, 1967, to aid
intervenor I. V. Binamira to escape liability for his deliberate
falsehoods, which affidavit intervenor attached to his Answer to
Supplemental Petition. On the same date, February 12, 1968,
petitioners filed against intervenor a Second Supplemental Petition
for Contempt. On February 19, 1968, petitioners filed Petitioners'
Manifestation Re Documentary Evidence Supporting Charges.

On the arguments that he had opposed in the lower court

petitioners' motion for payment of partial attorney's fees in the
amount of P30,000.00, and that since petitioners Samuel C. Occea
and Jesus V. Occea are the husband and father-in-law,
respectively, of executrix Necitas Ogan Occea, the latter cannot
be expected to oppose petitioners' claims for attorney's fees, thus
leaving the co-executor as the lone party to represent and defend
the interests of the estate, Atty. I. V. Binamira, who claims to be coexecutor of the Ogan estate, filed with this Court on July, 1967, a
Motion for Leave to Intervene, which was granted in a resolution of
August 9, 1967. Petitioners filed a Motion for Reconsideration of
Resolution of August 9, 1967 and an Opposition to "Motion for
Leave to Intervene," contending that Atty. Binamira ceased to be a
co-executor upon his resignation effective October 29, 1965. On
August 15, 1967, Atty. Binamira filed Intervenor's Opposition to
Petition (answer in intervention) traversing the material averments
of the petition.

We shall now consider the merits of the basic petition and the
petitions for contempt.

The rule is that when a lawyer has rendered legal services to the
executor or administrator to assist him in the execution of his trust,
his attorney's fees may be allowed as expenses of administration.
The estate is, however, not directly liable for his fees, the liability
for payment resting primarily on the executor or administrator. If
the administrator had paid the fees, he would be entitled to
reimbursement from the estate. The procedure to be followed by
counsel in order to collect his fees is to request the administrator to
make payment, and should the latter fail to pay, either to (a) file an
action against him in his personal capacity, and not as
administrator, 1 or (b) file a petition in the testate or intestate
proceedings asking the court, after notice to all the heirs and
interested parties, to direct the payment of his fees as expenses of
administration. 2 Whichever course is adopted, the heirs and other
persons interested in the estate will have the right to inquire into

the value, of the services of the lawyer and on the necessity of his
employment. In the case at bar, petitioner filed his petition directly
with the probate court.
There is no question that the probate court acts as a trustee of the
estate, and as such trustee it should jealously guard the estate
under administration and see to it that it is wisely and economically
administered and not dissipated. 3 This rule, however, does not
authorize the court, in the discharge of its function as trustee of the
estate, to act in a whimsical and capricious manner or to fix the
amount of fees which a lawyer is entitled to without according to
the latter opportunity to prove the legitimate value of his services.
Opportunity of a party to be heard is admittedly the essence of
procedural due process.
What petitioners filed with the lower court was a motion
for partial payment of attorney's fees in the amount of P30,000.00
as lawyers for the executrix for the period February, 1963, up to the
date of filing of the motion on or about November 18, 1965. Five of
the seven heirs had manifested conformity to petitioners' motion,
while the remaining two merely requested deferment of the
resolution of the motion "until the total amount for Executrix's fees
and attorney's fees of her counsel is agreed upon by all the heirs."
The court, however, in spite of such conformity, and without
affording petitioners the opportunity to establish how much
attorney's fees they are entitled to for their entire legal services to
the
executrix,
issued
an
order
fixing
at
P20,000.00
the entire attorney's fees of petitioners.
In his Order of January 12, 1967, respondent Judge explained:
The records of this case are before the Court and the
work rendered by Atty. Samuel Occea, within each
given period, is easily visible from them; his work as
revealed by those records is the factual basis for this
Court's orders as to attorney's fees.

Whatever attorney's fees may have been approved

by the Court on October 28, 1965 were as a result of
compromise and were with the written consent of all
the heirs and of all the signatories of the compromise
agreement of October 27, 1965. That is not so with
respect to Atty. Occea's thirty-thousand peso claim
for fees; and so, this Court, after a view of the record,
had to fix it at P20,000.00. The record can reflect
what an attorney of record has done.
In fixing petitioners' attorney's fees solely on the basis of the
records of the case, without allowing petitioners to adduce
evidence to prove what is the proper amount of attorney's fees to
which they are entitled for their entire legal services to the estate,
respondent Judge committed a grave abuse of discretion
correctable by certiorari. Evidently, such fees could not be
adequately fixed on the basis of the record alone considering that
there are other factors necessary in assessing the fee of a lawyer,
such as: (1) the amount and character of the service rendered; (2)
the labor, time and trouble involved; (3) the nature and importance
of the litigation or business in which the services were rendered; (4)
the responsibility imposed; (5) the amount of money or the value of
the property affected by the controversy or involved in the
employment; (6) the skill and experience called for in the
performance of the services; (7) the professional character and
social standing of the attorney; and (8) the results secured, it being
a recognized rule that an attorney may properly charge a much
larger fee when it is contingent than when it is not. 4
It should be noted that some of the reasons submitted by
petitioners in support of their fees do not appear in the records of
the case. For instance, they claim that in connection with their legal
services to the executrix and to the estate, petitioner Samuel C.
Occea had been travelling from Davao to Tagbilaran from 1965 to
March, 1967, and from Davao to Cebu and Manila from 1963 to
March, 1967, and that in fact he and his family had to stay for
almost a year in Dumaguete City. These claims apparently bear
strongly on the labor, time and trouble involved in petitioners' legal
undertaking, and, consequently, should have been subject to a
formal judicial inquiry. Considering, furthermore, that two of the
heirs have not given their conformity to petitioners' motion, the
need for a hearing becomes doubly necessary. This is also the
reason why at this stage it would be premature to grant petitioners'
prayer for the release to them of the amount of P30,000.00 as
partial payment of their fees.

II
As stated above, petitioners have filed petitions for indirect
contempt of court against intervenor I. V. Binamira charging the
latter of having made false averments in this Court.
We have carefully considered these charges and the answers of
intervenor, and, on the basis of the evidence, We conclude that
intervenor I. V. Binamira has deliberately made false allegations
before this Court which tend to impede or obstruct the
administration of justice, to wit:
1. To bolster his claim that the executrix, without approval of the
court, loaned P100,000.00 to the Bohol Land Transportation
Company, Inc., intervenor submitted as Annex 5 of his Answer to
Supplemental Petition a so-called "Real Estate Mortgage" which he
made to appear was signed by Atty. Vicente de la Serna and the
executrix. The certification of the Deputy Clerk of Court (Annex AContempt) shows that what intervenor claims to be a duly executed
mortgage is in reality only a proposed mortgage not even signed by
the parties.
2. Intervenor, in his Intervenor's Opposition to Petition, also stated
that in December, 1965, the executrix, without the court's approval
or of the co-executor's consent, but with petitioners' consent,
loaned P100,000.00 to the Bohol Land Transportation Company,
Inc. out of the estate's funds. The record shows that only
P50,000.00 was loaned to the company to protect the investment
of the estate therein, and that the same was granted pursuant to a
joint motion signed among others, by intervenor, and approved by
the court.

3. To discredit petitioner Samuel C. Occea and his wife, the

executrix, intervenor stated in his Intervenor's Opposition to
Petition that less than a month after the loan of P100,000.00 had
been granted to the transportation company, petitioner Samuel C.
Occea was elected president by directors of his own choosing in
the Bohol Land Transportation Company, Inc., insinuating that in
effect the executrix loaned to her husband the said sum of money.
The certification of the corporate secretary of the Bohol Land
Transportation Company, Inc. (Annex D-Contempt) states that
petitioner Samuel C. Occea was not the president of the company
at the time, nor did he act as president or treasurer thereof, and
that the president was Atty. Vicente de la Serna. This last fact is
also shown in intervenor's own Annex 5 of his Answer to
Supplemental Petition.
4. In intervenor's Opposition to this petition for certiorari, he stated
that contrary to the executrix's statement in the 1965 income tax
return of the estate that an estate "income of P90,770.05 was
distributed among the heirs in 1965, there was in fact no such
distribution of income. The executrix's project of partition (Annex EContempt) shows that there was a distribution of the 1965 income
of the estate.
5. To discredit petitioner and the executrix, intervenor alleged in his
Intervenor's Opposition to Petition that petitioners caused to be
filed with the court the executrix's verified inventory which failed to
include as assets of the estate certain loans granted to petitioner
Samuel C. Occea in the sum of P4,000.00 and to the executrix
various sums totalling P6,000.00. The letters written by the late W.
C. Ogan to his daughter, the executrix (Annexes F, G. and HContempt), show that the said sums totalling P10,000.00 were in
reality partly given to her as a gift and partly for the payment of
certain furniture and equipment.
6. Intervenor, in Order to further discredit petitioners and the
executrix, stated in his Reply to Executrix's and Opposition to
Executrix's Motion for Reconsideration that the executrix and
petitioners refused to pay and deliver to him all that he was entitled
to under the compromise agreement. The receipt dated October 29,
1965, signed by intervenor himself (Annex I-Contempt), shows that
he acknowledged receipt from petitioner Samuel C. Occea, lawyer
for the executrix, the sum of P141,000.00 "in full payment of all
claims and fees against the Estate, pursuant to the Agreement
dated October 27, 1965."

7. In his Reply to Executrix's Opposition and Opposition to

Executrix's Motion for Reconsideration, intervenor alleged that he
signed Atty. Occea's prepared receipt without receiving payment,
trusting that Atty. Occea would pay the amount in full, but later
Atty. Occea withheld Chartered Bank Check No. 55384 for
P8,000.00 drawn in favor of intervenor and P15,000.00 in cash. A
receipt signed by intervenor I. V. Binamira (Annex K-Contempt)
shows that he acknowledged receipt of the check in question in the
amount of P8,000-00 "intended for Mrs. Lila Ogan Castillo ... ."
Anent the sum of P15,000.00 in cash, Annex J-Contempt (Reply to
the Opposition for Authority to Annotate Interest, etc. filed by
intervenor with the probate court) shows that intervenor, as
movant, himself had alleged that "no check was issued to movant,
but withdrawn amount of P15,000.00 was included in purchasing
Manager's check No. 55398 for the Clerk of Court (deposit) for
P75,000.00," for the said amount was voluntarily extended by
intervenor as a favor and gesture of goodwill to form part of the
total cash bond of P75,000.00 deposited with the Clerk of Court, as
shown by a receipt signed by Atty. Samuel C. Occea (Annex K-11Contempt) which forms part of the record in the court below.

The foregoing are only some of the twenty-one instances cited by

petitioners which clearly show that intervenor had deliberately
made false allegations in his pleadings.

8. In his intervenor's Comments and Counter-Petition, intervenor

denied the truth of petitioners' claim that intervenor had voluntarily
and willingly extended the sum of P15,000.00 as a favor and
gesture of goodwill to form part of the P75,000.00-deposit. In the
Opposition to Motion of Executrix for Reconsideration of Order of
February 19, 1966, dated April 16, 1966 (Annex K-2-Contempt),
intervenor had, however, admitted that "out of the goodness of his
heart ... in the nature of help," he had "willingly extended as a favor
and gesture of goodwill" the said sum of P15,000.00.

The charges contained in the counter-petition for indirect contempt

of intervenor I. V. Binamira against petitioners have not been
substantiated by evidence, and they must, therefore, be dismissed.

9. To impugn the claim of petitioner Samuel C. Occea that he

stayed in Dumaguete City for almost one year to attend to the
affairs of the estate, intervenor, in his intervenor's Opposition to
Petition, alleged that said petitioner's stay in Dumaguete City was
not to attend to the affairs of the estate, but to enable him to teach
in Silliman University. The certification of the Director of the
personnel office of Silliman University, dated December 4, 1967
(Annex V-Contempt) is, however, to the effect that their "records do
not show that Atty. Samuel C. Occea was teaching at Silliman
University or employed in any other capacity in 1963, or at any
time before or after 1963."

We find no rule of law or of ethics which would justify the conduct

of a lawyer in any case, whether civil or criminal, in endeavoring by
dishonest means to mislead the court, even if to do so might work
to the advantage of his client. The conduct of the lawyer before the
court and with other lawyers should be characterized by candor
and fairness. It is neither candid nor fair for a lawyer to knowingly
make false allegations in a judicial pleading or to misquote the
contents of a document, the testimony of a witness, the argument
of opposing counsel or the contents of a decision. Before his
admission to the practice of law, he took the solemn oath that he
will do no falsehood nor consent to the doing of any in court, nor
wittingly or willingly promote or sue any false, groundless or
unlawful suit, and conduct himself as a lawyer with all good fidelity
to courts as well as to his clients. We find that Atty. Binamira, in
having deliberately made these false allegations in his pleadings,
has been recreant to his oath.

We note that no further action was taken on the petition for

contempt filed by petitioners against Generoso L. Pacquiao, who
executed the affidavit attached to intervenor's Answer to
Supplemental Petition, the contents of which petitioners claim to be
deliberate falsehoods. The said respondent Pacquiao not having
been afforded an opportunity to defend himself against the
contempt charge, the charge must be dismissed.
WHEREFORE, (1) the petition for certiorari is granted, and the
court a quo is directed to hold a hearing to determine how much
the total attorney's fees petitioners are entitled to, and (2) Atty.
Isabelo V. Binamira, who appeared as intervenor in this case, is
hereby declared guilty of contempt and sentenced to pay to this
Court within ten (10) days from notice hereof a fine in the sum of
Five Hundred Pesos (P500.00). Costs against intervenor

G.R. Nos. L-20117-20130, 20261-20314 December 20, 1923

LIBERATO
ULANDAY, Plaintiff-Appellee,
RAILROAD CO., Defendant-Appellant.

vs. THE

MANILA

Jose
C.
Abreu
for
appellant.
E.G. Turner, C.W. Rheberg, and Teofilo Sison for appellee.
Antonio de las Alas for appellee.
MALCOLM, J.:
While the appeals in sixty-eight cases brought by more than two
hundred plaintiffs to recover and damages from the Manila Railroad
Company, defendant and appellant, hereafter called the Binday
cases, were in process of development for submission to the court,
Attorney Antonio de las Alas attempted to substitute Attorney E.G.
Turner and associate counsel as the legal representatives of the
plaintiffs. On resistance of Attorney Turner to the attempted
substitution, the issue came down to a determination of whether or
not the alleged power of attorney in favor of Ambrosio Erfe-Mejia
pursuant to which Attorney De las Alas was assuming to act, is valid
and controlling as claimed by Attorney De las Alas, or fraudulent,
null,
and
void
as
claimed
by
Attorney
Turner.chanroblesvirtualawlibrar
To get the issue into its immediate background, a little further
explanation is advisable.chanroblesvirtualawlibrar
Attorney E.G. Turner, along with Attorneys C.W. Rheberg and Teofilo
Sison, were looked upon as counsel for all of the plaintiffs in the
Binday cases until July 17, 1923, when Attorney Antonio de las Alas,
signing himself as attorney for the plaintiffs, entered his
appearance. On the same date, Attorney De las Alas for plaintiffsappellees and Attorney Abreu for the defendant-appellant, stated to
the court by motion that "they had terminated, adjusted, and
settled each and everyone of these cases amicably. Wherefore, it is
moved that all these cases be dismissed without costs." The court
accepting the motion for dismissal at its face value, granted the
same two days later. That very day also, Attorneys Turner, Rheberg,
and Sison, gave notice of a lien upon the judgments, which has
been noted by the court.chanroblesvirtuala

If the cases had stopped here, they would have terminated

themselves, but on July 24, 1923, it having been brought to the
attention of the court that the motion for dismissal in the Binday
cases was pursuant to an appearance by Attorney De las Alas
which did not conform to the rules expressly laid down in the case
of United States vs. Borromeo ([1911], 20 Phil., 189), it was ordered
that the resolution of the court of July 19, 1923, granting the
motion for dismissal be set aside. Incidental thereto, Attorney
Turner asked for a restraining order against the Manila Railroad
Company, its manager and attorney, and others who may represent
said defendant, from paying to Ambrosio Erfe-Mejia the amount of
P20,000 still in the possession of the company until further orders
in the premises, which motion the court granted. About the same
time also, Attorney Antonio de las Alas complied with the Rules of
the Court in a motion for substitution which relied on a power of
attorney in favor of Ambrosio Erfe-Mejia of June 21, 1923,
acknowledged before the justice of the peace of San Fabian,
Pangasinan, on June 22, 1923. But as was intimated in the
beginning of the decision, Attorney Turner contending that the
supposed power of attorney which Ambrosio Erfe-Mejia has, is
fraudulent and obtained through deceit and misrepresentation, and
Attorney De las Alas claiming the exact contrary, the court framed
the issue for the parties and gave them full opportunity to
demonstrate the correctness of their divergent theories. Both
parties have taken full advantage of this permission and have
overwhelmed the court with memoranda and argument, supported
by affidavits and other documents.chanroblesvirtualawlibra
To fit the issue into its proper setting, a more extended elucidation
will now be begun.chanroblesvirtualawlibra
In 1907 the Manila Railroad Company constructed a branch line
from San Fabian, Pangasinan, to Camp One. This branch line skirted
along the north side of the Bued River in the barrio Binday, San
Fabian, and was built over the Binday irrigation system, which had
been in operation for a long time. On September 17, 1911, on
account of an unusually heavy rainfall, the Bued River rose,
overflowing the dam and began to undermine the buttresses of the
bridge of the railroad company. To prevent the water from
destroying the bridge, the company cut the dam with resulting
damage
to
the
surrounding
property
owners.chanroblesvirtualawlibra
To secure damages from the Manila Railroad Company for the value
of the crops destroyed, the property owners first bethought

themselves to transfer all their claims to Attorney E.G. Turner in

order that their claims might be litigated in a single action. In the
lower court, however, a demurrer was interposed for the railroad
company alleging that it is not permissible for an attorney to
accumulate distinct causes of action in himself, and to sue in his
own name for the benefit of the clients directly interested. This
demurrer was sustained by the trial judge and the order was
affirmed on appeal to the Supreme Court. (Turner vs. Manila
Railroad Co., R.G. No. 10165.) 1
On notification of the last cited decision of the Supreme Court,
seventy one separate actions were instituted against the Manila
Railroad Company. The first of the separate actions to be tried was
that of Ambrosio Erfe vs. Manila Railroad Company wherein the
decision of the trial court was in favor of the defendant railroad
company. Upon appeal, the Supreme Court affirmed the decision of
the court below. (Erfe vs. Manila Railroad Co., R.G. No. 11500.) 2
The next case to be called was that of Demetrio Maxion vs. Manila
Railroad Company. The trial judge in this case found on the issues
of the controversy favorably to the plaintiff and awarded to him the
sum of P1,250 as damages. On appeal, this judgment was affirmed.
(Maxion vs. Manila Railroad Co., 44 Phil., 597.)
Of the remaining sixty-nine cases, one was dismissed because of
failure of the plaintiff to appear and the remaining sixty-eight were
tried with favorable results to the plaintiffs. The aggregate
judgment against the Manila Railroad Company were approximately
P118,000 with interest and costs. These are the sixty-eight cases
now affected by the controversy between Attorney De las Alas on
the one side, and Attorney Turner, on the other. ( Seestatement of
Attorney Rheberg and memorandum of Attorney Turner.)
To return again to the incidents relating to the development of the
present issues, from Exhibit U presented by Attorney De las Alas, it
appears that on May 26, 1913, the Binday property owners entered
into an agreement with Ambrosio Erfe-Mejia which, in effect,
authorized Erfe to secure lawyers to prosecute the claims and to
pay them fifty per cent of the proceeds, Erfe to retain twenty per
cent for his services. This document prepared in the dialect and
signed by a large number of individuals but not ratified before a
notary, reads as follows:
CONTRATO

Sicamin manfirmad lecsab to nia patuaen mi onguendan:

Ta pasimbaloen mi sipan mi ed contrato ya fecha 13 de Junio, 1912,
nipaacar ed:
( a) Impangiter mi poder ed Sr. Ambrosio Erfe ed pananap toy
Abogados ya mangicolcol ed incaderal na tanaman ed dalin ya
cadanum
ed
Payas
na
Binday
nen
taon
a
1911.chanroblesvirtualawlibr
( b) Patuaen mi ta nayarian ton isipan ed saray Abogados so
cincuenta por ciento ed bili nasingil a bayar na aderal a intanem.ch
( c) Patuaen mi ta iter mi ed Sr. Ambrosio Erfe so veinte por ciento
na bayar a nabetangan mi. (Veinte por ciento na queran ibayar ed
saray Abogados.)
( d) Tan angapoy bayaran min bengat lan gastos ed panacar na
sayan colcol.chanroblesvirt
San Fabian, Pangasinan, Mayo 26, 1913.
According to Exhibit A-3 presented by Attorney Turner, the
agreement of May 26, 1913, was partially confirmed by the
property owners in June, 1923. This document reads as follows:
We the undersigned do hereby state:
That we are plaintiffs in a case against the M.R.R. Co., for damages
caused to our properties.c
That we ratify in all its parts the agreement executed on May 26,
1913, whereby Mr. Ambrosio Erfe-Mejia was given power to conduct
negotiations and engage an attorney to be selected by him for the
purpose of suing the M.R.R. Co.chan

We hereby authorize Ambrosio Erfe, in conjunction with our

attorney, Mr. Turner, to accept a compromise of the case upon
previous instructions from the latter, but only in the manner to be
indicated by said attorney, Mr. Turner; so that he should act only
according to instructions and indication of Mr. Turner. That we give
Mr. Ambrosio Erfe power to recover on our behalf such amount as
may be awarded to us in the aforesaid case, and distribute the
same among us according to the instructions he may receive from
our attorney, Mr. E.G. Turner.ch
That we authorize Mr. Ambrosio Erfe to retain twenty per cent of
the net amount that may be awarded to us, the same to be spent in
the dealings and transactions to be later specified by us in a
resolution (registration of lands of property owners, donation, etc.,
etc.).
NOTE. - I have spoken with them for the registration and survey of
their lands, and they gave me authority to engage your services in
this case, but we have no surveyor.
Presumably, in conformity with Exhibit U, the services of Attorney
Ritchey were first secured to represent the Binday property owners.
After Mr. Ritchey left the Philippines, Attorney Turner became the
legal representative of the claimants and he associated with
himself Attorneys Rheberg and Sison.chanroblesvirt
The Maxion case being decided favorably to the plaintiffs and being
in nature a test case, it was naturally for the benefit of the Manila
Railroad Company to conclude a compromise agreement with the
plaintiffs. Negotiations were entered into by Attorney Turner, on
behalf of the plaintiffs, and Attorney Abreu and later by President
Paez of the railroad, on behalf of the railroad. The effort of Mr.
Turner apparently was to secure at least P100,000 for his clients
and himself. At least such an offer by Mr. Turner limited until July 16,
1923, was finally made. (Exhibit H.) President Paez on the other
hand would only agree to pay P80,000 in settlement of the Binday
cases. There the matter rested until Mr. Erfe and Attorney De las
Alas produced the power of attorney in favor of Mr. Erfe-Mejia of
June 21, 1923, when a settlement was speedily arrived at in the
sum of P90,000. After the execution of the document of settlement,
the sum of P70,000 was delivered to Erfe and the sum of P20,000
was retained by the Manila Railroad Company. ( See affidavits,
Exhibits, A and A, of Jose Paez and E.G. Turner.)

The contested power of attorney omitting the signatures of about

two hundred persons at the end, which it is not feasible to try to
decipher, as handed to President Paez, reads as follows:

5. To engage, and pay for the professional services of an attorney

or various attorneys for the purpose of protecting our rights and
interests:

SPECIAL POWER OF ATTORNEY

( a) In the execution or making of the compromise;

We, who have signed below or placed our finger marks in the
middle of our names, all of age, and residents of the municipality of
San Fabian, Province of Pangasinan, and plaintiffs in Civil Cases
Nos. 1884 to 1993; 1938 to 1954; 1979, 1980 and 1841 of the
Court of First Instance of Pangasinan, Philippine Islands, against the
Manila Railroad Company, for damages caused by said company to
our properties situated in the barrio of Binday, municipality of San
Fabian, Province of Pangasinan, which cases are now pending in the
Supreme Court upon an appeal taken by said defendant, except
one of them, that numbered 1931, which is already definitely
terminated;

( b) In the prosecution in the Supreme Court of our aforesaid cases

in the event that no compromise is made;

We do hereby voluntarily, freely and spontaneously declare and

state that we give and grant Mr. Ambrosio Erfe-Mejia, of age,
married, and resident of San Fabian, Province of Pangasinan, P.I.,
special power;
1. To withdraw from the hands of Attorney E.G. Turner, resident of
Lingayen, Pangasinan, our aforesaid cases in such a manner so as
to sever all connection with said attorney from the date said Mr.
E.G. Turner is notified of this power of attorney by Mr. Ambrosio
Erfe-Mejia;
2. To annul any such power as we may have granted, or any such
agreement as we may have executed prior to this date with any
person or persons to compromise the aforesaid cases;
3. To compromise on our behalf and in our place and stead directly
with the defendant Manila Railroad Company the aforesaid cases
for such sum and in such a manner as he may deem to be to our
best interests;
4. To recover on our behalf and in our place and stead from the
Manila Railroad Company all such amount as may be awarded to us
and paid by said company by virtue of such a compromise, should
any be made;

( c) In any such action as any person may bring against us upon

this special power of attorney;
(6) To pay Attorney E.G. Turner such fees as said Mr. Ambrosio ErfeMejia may deem just and reasonable or equitable, taking into
account the professional services rendered by him up to this date in
connection with said cases;
7. To invest not more than twenty-five thousand pesos of the
amount that may be recovered from the aforesaid company, that is,
the M.R.R. Co., in the purchase of an agricultural land with Torrens
title in any municipality of the Province of Pangasinan;
8. To deduct from the total amount to be paid by the defendant
company (the M.R.R. Co.) twenty per cent thereof as compensation
for his labor, work, services, expenses and troubles in the
institution, prosecution and termination of said cases;
9. Also to deduct 10 per cent (ten per cent) of the total sum to be
paid by the aforementioned M.R.R. Company, the same to
constitute a fund available for any purpose in case of emergency or
any event that may affect our interests or cases;
10. To distribute the money among all of us, giving each such
portion as may be allowed in the judgments of the Court of First
Instance of Pangasinan or in the Supreme Court (that is to say, in
the Supreme Court) in the awarding of the damages claimed, after
deducting all the amounts mentioned in the preceding
paragraphs.chanroblesvirtualawlibrary
We also do hereby ratify and approve and accept whatever Mr.
Ambrosio Erfe-Mejia may do, perform or carry out pursuant to the
terms of this special power of attorney, and the same shall be
considered by all and each of us for all legal purposes as if it were

done, performed or carried out

individually.chanroblesvirtualawlibrary

by

us

collectively

or

In testimony whereof, we have hereunto set our hands in San

Fabian, Pangasinan, this 21st day of June, nineteen hundred twentythree.
Having given more than enough attention to the past and present
incidents connected with these sixty-eight cases, we are now in a
position to approach more directly the issue and decide as best we
may if the power of attorney in question is valid or
invalid.chanroblesvirtualawlibrary
Attorney Turner in opposing the substitution of Attorney De las Alas
complains of various fraudulent acts on the part of Erfe, De las
Alas, and others. Attorney Turner claims that the power of attorney
has been dressed up, added to, and changed in many ways since
June 22, 1923 (Exhibit C). He claims that it contains a number of
signatures of persons who are not legally qualified to sign a
document of this class. He claims that of those who did sign the
document many did so not understanding its contents, and under
force and duress. (Exhibits in A-6V.) Attorney Turner says that "Erfe
has not only availed himself of undue influence, misrepresentation,
falsehood and deceit, but has also used force, intimidation and
coercion in order to impose his acts and will upon the ignorant
plaintiffs." Therefore, in view of the fraud practiced by Erfe, De las
Alas, Lamberto Siguion Reyna, and Paez, Attorney Turner argues
that the fraudulent contract should be set aside and declared null
and void.chan
Attorney De las Alas defends the power of attorney in favor of
Ambrosio Erfe-Mejia as truly and legally executed by the plaintiffs.
He endeavors to show how the power was executed, and how it
was examined by the president and attorney of the Manila Railroad
Company who satisfied themselves of the genuineness of the
document. Attorney De las Alas naturally takes the position that the
plaintiffs signed the power of attorney with full knowledge of its
contents, and that since then they have confirmed their action not
only once but many times. In turn, Attorney De las Alas makes
counter charges against Attorney Turner, Representative Camacho,
and others. Attorney De las Alas argues that as the power of
attorney is valid, he should be recognized as the counsel for the
plaintiffs with power to enter into a settlement with the Manila
Railroad Company.ch

The leading actors on either side are painted in the blackest of

colors by their opponents. But as none of these alleged crimes and
misdemeanors are properly before us, without even mentioning
them, we are glad to pass immediately to matters of present
interest. We only dip our fingers into the cauldron to pick out such
facts as will illuminate the instant issue.c
Getting at last to the facts, we must confess that the court is nearly
helpless in the face of actuality. This situation results not because
of lack of incentive on the part of opposing counsel or because of
the paucity of the affidavits, but arises from the nature of the proof
presented. The poor plaintiffs have been induced to sign affidavits
of exactly contrary effect; have been told one thing by one party
and another thing by another party, and finally, at the instance of
the special investigator of the Governor-General, have been
corralled to secure their statements. Probably, the plaintiffs are only
too glad to sign any affidavit placed before them. Probably also
they are not especially interested in whether Attorney Turner or
Attorney De las Alas represents them. They align themselves with
Attorney Turner because he promises them a larger return. They
align themselves with Attorney De las Alas because he promises
them a more prompt payment. What they have wanted is the
money due them from the Manila Railroad Company.chan
To demonstrate the value of the affidavits. As illustrations, let us
look into the affidavits presented by the plaintiffs Luis Sion
(Repudiated Exhibits A and G, confirmed Exhibits A-5, A-6, G, H):
Marciano Zarate (Repudiated Exhibits D, Z, confirmed Exhibit BB);
Esteban Manoot (Repudiated Exhibit XX, confirmed Exhibit A-1);
Venancio Amansec (Repudiated Exhibit Y, confirmed Exhibit A-10);
Inocencio Calicdan (Repudiated QQ, confirmed Exhibit A-11);
Antonio Tabito (Repudiated Exhibit UUU, confirmed Exhibit A-12);
Filomena Generalao (Repudiated Exhibits GG, VVV, confirmed
Exhibit A-13); Bernardo Mayugba (Repudiated Exhibit EE, confirmed
Exhibit A-14); Carlos de Nieva (Repudiated Exhibits F, JJJ, and
BBBBB, confirmed before investigator.) Other plaintiffs have been
as easily duped if we had the patience to hunt out their respective
cases. To please Attorney Turner, they have repudiated their act in
signing the power of attorney. To Erfe and Attorney De las Alas, they
have
ratified
their
act
in
signing
the
power
of
attorney.chanroblesvirtualawlibrary chanrobles virtual law library
Some cold facts can be fixed upon to give assistance. The number
of plaintiffs is something over two hundred. The power of attorney
now contains two hundred and six signatures, although it is claimed

that originally it had only one hundred and seventy-two signatures.

The justice of the peace and notary and the two attesting witnesses
affirm that the document was read in the dialect and signed in their
presence by all of the principals (Exhibits A-21, 2-6.) Doubt being
cast upon the authenticity of the plaintiff's act, ratification is
disclosed in Exhibit H with something like two hundred and fifty
names; in exhibit I with something like two hundred names, and in
Exhibits 1, G, and K in the local dialect with more than one hundred
names. A comparison discloses that most of the persons, who
signed the affidavits presented by Attorney turner, have also
ratified their action in taking part in the execution of the power of
attorney, as is disclosed by the affidavits presented by Attorney De
las Alas. The power of attorney is now available in the local dialect
and known to the plaintiffs. Probably all of them have received
money on account of their claims from Erfe. (See, for instance,
Exhibits EE, JJ.) The hacienda Binday has been transferred to the
plaintiffs by Rafael Corpus. (Exhibit J.)
On suggestion of the parties, the Governor-General was led to send
an attorney of the Bureau of Justice to San Fabian, Pangasinan, to
investigate the irregularities alleged to have taken place in the
transactions between the landowners of that municipality and the
Manila Railroad Company. While we entertain grave doubt as to the
probative value of this report and of our right to look into the
evidence before the investigator, inasmuch as both parties rely on
the investigation and as no objection is made, we will make at least
incidental mention of certain facts appearing in the report of
Assistant Attorney Sabino Padilla, the representative of the
Department of Justice and the Governor-General. It may be said
parenthetically that on account of the agreement of the parties, the
witnesses were heard before Attorney Padilla without either
Attorney Turner of Attorney De las Alas being present.chan
The classification of the testimony of the plaintiffs as made by
Attorney Padilla discloses the following: One hundred twenty-five
plaintiffs accept the compromise with the Manila Railroad Company
and agree that the signature of the power of attorney was their
free, spontaneous, and voluntarily action. Thirty-nine witnesses
declare that they signed the document voluntarily on behalf of
deceased and absent plaintiffs. One plaintiff testifies that he did not
sign the power of attorney but that he had no complaint relative to
the settlement. Eighteen persons whose names appear in the
power of attorney did not testify. Four persons admitted that they
signed the power of attorney in question and had no complaint
against Erfe, but that they did not understand the terms of the

document. Thirteen plaintiffs or their representatives testified that

they signed without understanding the terms of the power of
attorney in question and did not agree with the settlement or
compromise concluded by Erfe. In other words, practically all of the
plaintiffs, with the exception of thirteen against whom, however,
some contrary testimony exists, agree with the compromise and
admit that they signed the power of attorney voluntarily (Exhibits
2-6).
It at once comes to mind, as an easy resolution of the problem, to
select those persons who have repented of the action taken on
their behalf by Erfe and permit their appeals to go on, while
recognizing the compromise agreement as to all the other plaintiffs.
The trouble with this suggestion is that it is impossible to know
exactly which plaintiffs affirm the compromise and which plaintiffs
disaffirm it. It is also evident that the plaintiffs have not been
proceeding individually against the Manila Railroad Company, but
that it was a community affair. They first made Erfe their
representative. They next assigned all of their interests to Attorney
Turner. They next proceeded with their individual cases under the
guidance of Attorney Turner. They next signed the power of
attorney in favor of Erfe. They have held meetings in San Fabian
and have proceeded on the theory of joint action. The only recourse
then is either to hold the power of attorney good as to all of the
plaintiffs or hold it bad as to all of them.chanroblesvirtuala
This brings us to look into the actual financial status of the plaintiffs
in these cases. The Maxion case was the first decided. The
judgment was for P1,250 with interest and costs. According to the
affidavit of Maxion, the total judgment reached P1,518.68;
expenses, P460; balance, P1,058.68; attorney's fees, P529.34;
amount received by Maxion, P529.34. This settlement does not take
into consideration the possible twenty per cent due Erfe. In other
words, Attorney De las Alas claims that through the machinations of
Attorney Turner, Maxion obtained only about thirty-four per cent of
the total adjudicated. (Exhibit DD.)
As to the plaintiffs in the remaining sixty-eight cases, Erfe has
made a report which includes the following data: Amount
adjudicated by the various judgments, P118,000; amount obtained
through the compromise, P90,000; expenses, amount left with the
Railroad Company to pay Attorney Turner and his companions,
P20,000; honorarium of Attorney De las Alas P3,000; emergency
expenses, P1,000; consultation of Attorneys Enage and Sison,
P1,000; compensation of the agent and expenses, P18,000; paid in

cash to the plaintiffs, P26,000; paid for the hacienda Binday for the
plaintiffs, P21,000. Total expenses, forty-eight per cent; total
received by the property owners, fifty-two percent.chanroble
Up to this point, we have exerted ourselves to search out the facts.
Before announcing our conclusions, a few words should be added
relative to the applicable law.chanro
The power of attorney created the relation of principal and agent. It
was a contract which should be enforced unless vitiated by fraud or
found to be an agreement contrary to the public policy. It
attempted, among other things, to dismiss the lawyer and
substitute another, which may be done at any time by the client
with or without cause (Code of Civil Procedure, sec. 32). The power
of Attorney further attempted to compromise pending cases, and in
this connection, it is well to recall that, as provided by section 27 of
the Code of Civil Procedure, lawyers "cannot, without special
authority, compromise their client's litigation, or receive anything in
discharge of the client's claim but the full amount in cash."
A contingent fee was originally provided for the attorney.
Contingent fees are not prohibited in the Philippines, and since
impliedly sanctioned by law "should be under the supervision of the
court in order that clients may be protected from unjust charges."
(Canons of Professional Ethics, No. 13.) Where it is shown that the
contract for a contingent fee was obtained by any undue influence
of the attorney over the client, or by any fraud or imposition, or
that the compensation is so clearly excessive as to amount to
extortion, the court will in a proper case protect the aggrieved part.
(Taylor vs. Bemiss [1883]; 110 U.S., 42.)
In this court, the liens of Attorney Turner are placed at thirty per
cent of the judgments in one document and at P40,000 in another
document. Considering the long and difficult litigation and the
annoyance and trouble in connection with the trial of the cases,
these charges for the lawyer's services are not unreasonable. We
treat the liens as attaching to the proceeds of the settlement and
propose to protect the right of the attorney to his liens. The fraud
will be considered as still in the hands of the defendant company
and subject to court order. ( See 2 R.C.L., 1076 et seq,; Greenleaf
vs. Minneapolis, etc. Railway Co. [1915], 30 N.D., 112.)
As to the power of attorney, part of it invite suspicion. P26,000 in
cash for the plaintiffs out of a total of P90,000 is little enough under
any view of the cases. On the supposition that the compromise

reached P100,000, as will be explained in a moment, and on the

further supposition that the terms of the power of attorney are
given effect, Attorney Turner and associate counsel would receive
P30,000, Erfe about P20,000, all expenses to be paid by the
lawyers and the agent, and the litigants about P50,000. The
plaintiffs do in fact obtain nearly P50,000, if we take into account
the hacienda Binday as belonging to them, which we do with
hesitancy, for if they wish to enter into this community purchase, it
of course is no affair of ours.cha
We conclude this distasteful and arduous task by making the
findings which follow. We find that the power of attorney of June 21,
1923, in connection with the prior authorization in favor of
Ambrosio Erfe-Mejia and subsequent ratification, is valid and
controlling. We find further that as the power of attorney is valid
and controlling, there has been a proper substitution of attorneys in
this court, and that Attorney Antonio de las Alas must be
recognized as counsel for the plaintiffs. We find further that
Attorney E.G. Turner and associate counsel have liens on the
judgments for professional services the reasonable value of which
we fix at P30,000. Inasmuch as there only remains a balance of
P20,000 available for the purpose of paying Attorney Turner and
associate counsel, inasmuch as this happened through no fault of
Attorney Turner, and inasmuch as to make him look to the plaintiffs
for further payment would be unfair, the compromise agreement is
modified and approved as of the amount of P100,000.cha
Subject generally to the conditions above stated, and subject
specifically to proof by the Manila Railroad Company that Attorneys
Turner, Rheberg, and Sison have been paid P30,000 in satisfaction
of their liens, the motion to dismiss the appeals in these sixty-eight
cases, is approved. So ordered.chanroblesvirtual

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. Q15490;

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,

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;
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;

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.

6. Committing acts of treachery and

disloyalty to complainant who was his
client;

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.

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;

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:

8. Deliberately misleading the Court of

First Instance and the Fiscal's Office by
making false assertion of facts in his
pleadings;

a. transferring to himself one-half of the properties of

his clients during the pendency of the case where the
properties were involved;

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

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 139B, 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.

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].

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.

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.

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

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].

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:

Complainant also charges respondent with submitting to the court

falsified documents purporting to be true copies of an addendum to
the land development agreement.

We the [Fortunados] agree on the 50% contingent

fee, provided, you [respondent Ramon Gonzales]
defray all expenses, for the suit, including court fees.
[Annex A to the Complaint, Record, p. 4].

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. Bautistawere made to appear as having signed the

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. L-47914

April 30, 1941

JUAN
S.
vs.
QUIRICO ABETO, ET AL., respondents.

RUSTIA, petitioner,

Juan
S.
Rustia
for
Ramon Diokno and Sisenando Villaluz for respondents.

petitioner.

LAUREL, J.:
This is a petition filed by Attorney Juan S. Rustia for a writ
of certiorari and mandamus to declare null and void certain orders
of the Court of First Instance of Manila issued in civil case No.
55128, entitled "Intestate Estate of Antonio de la Riva," and to
compel the respondents to return to the petitioner transfer
certificate of title No. 21335, covering property of the intestate, as
well as to recognize the retaining lien of the petitioner over the
documents, papers, funds and properties of the deceased in the
aforesaid intestate proceedings in the possession of the petitioner,
especially over the sum of P16, 990, which are the proceeds of the
sale of the land covered by trasfer certificate of title No. 21335, in
favor of the Standard Vacuum Oil Company.
It appears that the petitioner rendered professional services as
attorney of the respondent, Milagros Schmid, administratrix of the
intestate estate of Antonio de la Riva in civil case No. 55138 of the
Court of First Instance of Manila, before and after the latter's
appointment as such administratrix, as well as of seven of the
children of the deceased who are now in the Philippines. When the
petitioner was relieved as attorney for the administratrix and the
heirs of the deceased, he presented a bill for professional services
rendered in the sum of P32,330 on September 30, 1940, which
claim was submitted for resolution of the lower court on October
26, 1940. The petitioner claimed not only the immediate payment
of his honorarium, but also a retaining lien over all funds,
documents and papers in his possession until he has been fully
paid. Among the papers delivered by the respondent administratrix
to the petitioner for the purpose of preparing and filing an amended
inventory of the properties left by the deceased was transfer

certificate of title No. 21335 of the register of deeds of the City of

Manila, relating to a parcel of land alleged to be the conjugal
property of the deceased and the respondent administratrix.
Authority of the lower court having been previously secured for the
sale fo the land covered by said certificate of title, the land was
sold to the Standard Vacuum Oil Company, in the total sum of
P16,990. Upon showing of the respondent administratrix that the
title certificate was in the possession of the petitioner, the
respondent judge of the Court of First Instance of Manila issued an
order on November 2, 1940, requring the petitioner to deliver said
certificate of title to the probate clerk of the Court of First Instance
of Manila within three days from receipt of copy of said order. On
November 5, 1940, the petitioner filed a motion for the
reconsideration and amendment of the aforesaid order of
November 2, 1940, based on the following grounds: (1) That he has
a retaining lien over transfer certificate of title No. 21335 by virtue
of his claim for professional fees which has a preferential right to
payment as a lawful expense of administration superior to other
posterior claims against the estate; (2) that in accordance with the
order of the court, the proceeds of the sale, less P2,810 which the
administratrix was authorized to retain for the purpose of ejecitng
the tenants and paying the broker's commission, are to be
deposited with the Philippine National Bank without any
pronouncement as to the attorney's lien thereof, to the prejudice of
the petitioner's rights; and (3) that the petitioner is willing to
surrender the title certificate in question provided his lien is
annotated on the transfer of certificate of title to be issued in favor
of the Standard Vacuum Oil Company and the total amount of the
proceeds of the sale are deposited in the Philippine National Bank,
subject to his lien for professional services in preference to all
posterior expenses of the estate. The respondent judge denied the
motion for reconsideration and issued on November 12, 1940,
another peremptory order to the petitioner to deliver the title
certificate in question to the probate clerk within twenty-four (24)
hours after receipt of notice thereof, under pain of being held in
contempt of court. In compliance with the foregoing order, the
petitioner delivered the certificate of title in question to the clerk of
court on November 16, 1941, reserving in writing whatever right or
recourse he might have in the premises.
Thereafter, on November 19, 1940, the petitioner instituted the
present proceedings before this court, stressing the fact that on
November 12, 1940, the respondent administratrix had filed
another motion with the respondent judge, praying among others,
for the surrender of other documents and papers in his possession.
Subsequently, on January 6, 1941, the petitioner filed a petition for

the issuance of a writ of preliminary injunction, to restrain the

respondent judge from enforcing his order of December 3, 1940,
requiring the petitioner to deposit with the clerk of the Court of First
Instance of Manila within forty-eight (48) hours after receipt of said
order all the certificates of title, shares of stock, documents, books,
papers, funds and other effects of the intestate estate in his
possession, so that the latter may, in turn, deliver them to the
respondent administratrix; as well as to enjoin the respondent
judge from enforcing his order of January 3, 1941, denying
petitioner's motion for the reconsideration of said order of
December 3, 1940, and requiring the petitioner to comply with the
aforesaid order within three days after notice thereof. This Court
granted the preliminary writ of injunction on January 7, 1941. A
motion to dissolve this preliminary injunction is pending.
That the petitioner rendered professional services in behalf of the
respondent administratrix and other heirs of the deceased, Antonio
de la Riva, is not disputed. We are not concerned with the
disagreement between the petitioner and the respondent
administratrix as to the value of the said professional services, nor
with the alleged preferential right of the petitioner to the payment
of his fees, as they are not at issue in the instant proceedings.
Suffice it to state here that the petitioner has already interposed an
appeal from the orders of December 3, 1940, and January 3, 1941,
which orders, among other things, reduce the professional fees
claimed by the petitioner from P32,330 to P2,000. Moreover, such
dispute do not, and cannot, affect the general or retaining lien
conceded to the petitioner by the first sentence of section 33 of No.
127 of the Rules of the Court, which provides that "An attorney
shall have a lien upon the funds, documents and papers of his
client which have lawfully come into his possession, and may retain
the same until his lawful fees and disbursements have been paid,
and may apply such funds to the satisfaction thereof." The general,
possessory, or retaining lien of an attorney attaches to all property,
papers, books, documents, or securities of the client that come to
the attorney professionally or in the course of his professional
employment, such as a bond, a municipal warrant, a promissory
note or other negotiable papers, an account, a voucher, a bank
book, a letter or writing, a contract, insurance policy, or lease, a
deed , or a mortgage. (5 Am. Jur., Attorneys-at-Law, sec. 210, pp.
388-389.)
It is to be observed that the petitioner is not only counsel of the
respondent administratrix personally, but also in the latter's
capacity as personal representative of the estate. Hence, the

petitioner may excercise a retaining lien not only over the

administratrix's personal papers but also ove all the papers of the
estate delivered by the administratrix to the petitioner in
connection with the administration of the estate. As held in the
Matter of Knapp, 85 N. Y. 284, an attorney may claim a lien on
property belonging to an estate, placed in his hands by the
representative of that estate in his representative capacity, for
services rendered him in such capacity. (7 C. J. S., Attorneys-at-Law,
sec. 227, p. 1169.)
The general or retaining lien of an attorney is dependent upon the
possession and does not attach to anything not in the attorney's
hands. It should be distinguished from the special or charging lien
provided for in the last part of section 33 o fNo. 127 of the Rules of
Court which was created to "save the attorney's rights where he
had been unable to get possession." The retaining lien, therefore,
exists only so long as the attorney retains possession of the subject
matter and expires when the possession ends. The retaining lien, is
only a passive right and cannot be actively enforced. It amounts to
a mere right to retain the papers as against the client, until the
attorney is fully paid. (Note, 51 Am. St. Rep. pp. 251, 255; 7 C. J. S.,
Attorneys-at-Laws, sec. 217, p. 1161; sec. 233, p. 1199.) And the
courts, in the exercise of their exclusive and supervisory authority
over attorneys as officers of the court, are bound to respect and
proctect the attorney's lien (Ulanday vs. Manila Railroad Co., 45
Phil., 540) which, in the words of Chief Justice Marshall, "is
necessary to preserve the decorum and respectability of the
profession." So, it has been held that if the papers are improperly
taken awy from the custody of an attorney, his lien is not lost
thereby (Dicas v. Sockley, 7 Car. & P. 587; Note, 31 Am. Dec. 759);
and an attorney from whom papers, which he has a right to hold to
secure payment for his serivces, have been takenby an order and
decree of the court, thereby swelling the funds for the payment of
creditors of the client, is entitled to be paid, out of the funds
realized form the sale of the client's property, the debts for which
the papers were held. (McDonald v. Railroad, 93 Tenn. 281, 294;
Note, 51 Am. St. Rep. 251-252.)
We are aware of the inconvenience that may accrue to the client
because of the retention of important papers by an attorney
claiming fees for services rendered, but this is the reason and
essence of the lien. Withal, the courts may require the attorney to
deliver up the papers in his possession which may serve to
embarrass his client, provided the client files proper security for the
attorney's compensation. This proceeds from the power of the

courts to control its own officers and to compel attorneys to act

equitably and fairly towards their clients. (Chitton v. Pardon, Turner
& Russel's Reports, 301; Richards v. Platel, Craig & Philipp's Report,
79; Matter of Jewitt, 34 Beav. 22; Matter of Galland, 31 Chancery
Division, 296; Robinson v. Rogers, 237 N. Y. 467, 472-473.)
It follows that unless and until the value of professional services
rendered by the petitioner has been finally fixed and fully paid, the
petitioner is entitled to be respected in the exercises of his general
or retaining lien over all the papers, funds and documents delivered
to him by the respondent administratrix in connection with the
administration of the intestate estate of Antonio de la Riva in civil
case No. 55128 of the Court of First Instance of Manila. As against
the orders of the respondent judge dated November 2, November
12 and December 3, 1940, and January 3, 1941, it is clear that the
petitioner has no other plain, speedy and adequate remedy in the
ordinary course of law than that ofcertiorari and mandamus.
Petitioner's exception and notice of appeal from the aforesaid
orders of the respondent judge do not afford speedy and adequate
protection to the petitioner, for the reason that the order directing
him to surrender all the funds, documents and papers to the clerk
of court for delivery to the respondent administratrix is peremptory.
We find that the respondent judge has abused his discretion,
insofar as he has ordered the surrender of said papers by the
petitioner without requiring the respondent administratrix to file
sufficient security to protect petitioner's lien for his professional
services. Certiorari lies to correct abuse of discretion. (Chua Ke, et
al. vs. Abeto, et al., 63 Phil., 539.) Mandamus will also lie to restore
possession of documents of which the petitioner has been
unlawfully deprived. (Alvarez vs. The Court of First Instance of
Tayabas and the Anti-Usury Board, G. R. No. 45357, January 29,
1937.)
The writ of certiorari is, therefore, granted and the orders of the
respondent judge dated November 2, November 12 and December
3, 1940, and January 3, 1941, are hereby annulled insofar as they
require the petitioner to surrender to the clerk of the Court of First
Instance of Manila for delivery to the respondent administratrix all
the funds, documents and papers which have lawfully come into
the possession of the petitioner as counsel for the respondent
administratrix in Civil Case No. 55128 of the Court of First Instance
of Manila. The writ of mandamus is also granted and the
respondents are hereby ordered to return to the petitioner Transfer
Certificate of Title No. 21335 of the Register of Deeds of the City of
Manila. The writ of preliminary injunction issued by this Court on

January 7, 1941, is hereby made permanent, unless respondent

administratrix files sufficient security for the payment of
petitioner's professional fees under such terms and conditions as
the lower court may deem reasonable and just. Costs are hereby
taxed against the respondent administratix. So ordered.

Ceferino de los Santos, Sr. and Ceferino de los Santos, Jr. for
petitioner.
Rafael Dinglasan in his own behalf.
PARAS, C.J.:

G.R. Nos. L-6334 and L-6346

February 25, 1954

SEBASTIAN
C.
PALANCA, petitioner,
vs.
POTENCIANO PECSON, ETC., ET AL., respondents.

In Special Proceedings No. 12126 of the Court of First Instance of

Manila, Rafael Dinglasan was the attorney of Sebastian Palanca,
one of the heirs and an oppositor to the probate of the will of his
deceased father Carlos Palanca y Tanguinlay. Due to differences of
opinion, Sebastian Palanca did away with the services of Atty.
Dinglasan who in fact withdrew as Palanca's counsel after the
appeal from the decision of the Court of First Instance of Manila
probating the will had been elevated to the Supreme Court. On July
7, 1952, Atty. Dinglasan filed in the testate proceedings a notice of
attorney's lien, alleging that he was counsel of Sebastian Palanca
from September 1950 until March 1952; that the reasonable value
of his services is at least P20,000; that Palanca had paid upon
account only the sum of P3,083, leaving an unpaid balance of
P16,917; and praying that the statement be entered upon the
records to be henceforth a lien on the property or money that may
be adjudged to Sebastian Palanca, or that may be ordered paid to
him by the court. On August 16, 1952, Judge Potenciano Pecson
ordered that the notice of attorney's lien be attached to the record
for all legal intents and purposes. On July 9, 1952, Atty. Dinglasan
filed in the same testate proceedings a petition, praying the Court
of First Instance of Manila to fix and declare his attorney's fees at
not less than P20,000 and to enforce the unpaid balance of P16,917
as a lien upon the property or money that may be adjudged in favor
of Sebastian Palanca or upon any sum that may be ordered paid to
the latter. Sebastian Palanca moved to dismiss the foregoing
petition, but the motion was denied on August 30, 1952. Palanca's
subsequent motion for reconsideration was also denied for lack of
merit. The action of Judge Pecson in ordering that Atty. Dinglasan's
notice of attorney's lien be attached to the record and in taking
cognizance of the petition to determine his fees in Special
Proceedings No. 12126, is assailed by Sebastian Palanca in a
petition forcertiorari filed with this Court against Judge Potenciano
Pecson and Rafael Dinglasan (G.R. No. L-6334).
On July 10, 1952, Sebastian Palanca filed in the intestate
proceedings a petition for an advance inheritance in the sum of
P2,000. On October 21, 1952 Judge Pecson issued an order
suspending action on Palanca's petition until Atty. Dinglasan's
petition to determine the amount of his attorney's lien shall have

been finally disposed of. His motion for reconsideration having been
denied on November 7, 1952, Sebastian Palanca instituted in this
Court a petition for mandamus against Judge Pecson and Atty.
Dinglasan (G.R. No. L-6346), to compel the respondent Judge to act
upon Palanca's petition for advance inheritance.
We are not here concerned with the nature and extent of the
contract between Palanca and Atty. Dinglasan as to the latter's
professional fees, and the principal issues arising from the
pleadings are (1) whether the notice of attorney's lien may be
allowed at the stage when it was filed, namely, before final
judgment in favor of Palanca was secured by respondent attorney,
and (2) whether the respondent Judge acted properly in
entertaining the petition to determine Atty. Dinglasan's fees and in
holding in abeyance Palanca's petition for advance inheritance.
It is contended for petitioner Palanca that Atty. Dinglasan not
having yet secured any decision or judgment in favor of the former,
the notice of attorney's lien could not be allowed under section 33,
Rule 127, of the Rules of Court which does not authorize a lien upon
a cause of action.
Section 33 provides that an attorney "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." Under this
provision we are of the opinion that the attorney may cause a
statement of his lien to be registered even before the rendition of
any judgment, the purpose being merely to establish his right to
the lien. The recording is distinct from the enforcement of the lien,
which may take place only after judgment is secured in favor of the
client. We believe also that the provision permits the registration of
an attorney's lien, although the lawyer concerned does not finish
the case successfully in favor of his client, because an attorney who
quits or is dismissed before the conclusion of his assigned task is as
much entitled to the protection of the rule. Otherwise, a client may
easily frustrate its purpose. Indeed, this construction is impliedly
warranted by section 24 of Rule 127, which as amended by

Republic Act No. 636 provides as follows: "A client may at anytime
dismiss his attorney or substitute another in his place, but if the
contract between client and attorney has been reduced to writing
and the dismissal of the attorney was without justifiable cause, he
shall be entitled to recover from the client the full compensation
stipulated in the contract. For the payment of such compensation
the attorney shall have a lien upon all judgments, for the payment
of money and executions issued in pursuance of such judgment
rendered in the cases wherein his services had been retained by
the client." The petitioner, however, argues that this provision
cannot be availed of by respondent Dinglasan because there is
neither a written contract for attorney's fees nor a showing that his
dismissal was unjustified. This argument is without merit, inasmuch
as if there was a written contract and the dismissal was unjustified,
Atty. Dinglasan would be entitled to the entirety of the stipulated
compensation, even if the case was not yet finished when he was
dismissed. In situations like that of respondent Dinglasan the
lawyer may claim compensation only up to the date of his
dismissal. For the payment of such compensation he shall
nevertheless have a lien "upon all judgments, for the payment of
money and executions issued in pursuance of such judgments
rendered in the cases wherein his services have been retained by
the client." Section 24 does not state that the judgment must be
secured by the attorney claiming the lien.
The petitioner's further contention that respondent Dinglasan's
remedy is to file a separate action for damages or for
compensation, is untenable. In the case of Dahlke vs. Via, 51 Phil.,
707, it was already pointed out that the filing of a lien for
reasonable value of legal services does not by itself legally
ascertain and determine its amount especially when contested;
that it devolves upon the attorney to both allege and prove that the
amount claimed is unpaid and that it is reasonable and just, the
client having the legal right to be heard thereupon; and that the
application to fix the attorney's fees is usually made before the
court which renders the judgment or may be enforced in an
independent and separate action. We see no valid reason why a
probate court cannot pass upon a proper petition to determine
attorney's fees, if the rule against multiplicity of suits is to be
activated and if we are to concede that, as in the case before us,
said court is to a certain degree already familiar with the nature
and extent of the lawyer's services.
In view of what has been said, it is obvious that the respondent
Judge neither acted without jurisdiction nor abused his discretion in

the matters herein complained of. The petition for certiorari in G.R.
No. L-6334 and the petition formandamus in G.R. No.
L-6346 are hereby dismissed with costs against the petitioner. So
ordered.