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FERNANDO MARTIN O.

PENA,
Complainant,

A.C. No. 7298


[Formerly CBD Case No. 05-1565]
Present:

- versus -

QUISUMBING, J.,
Chairperson,

ATTY. LOLITO G. APARICIO,


Respondent.

CARPIO,
CARPIO MORALES,
TINGA, and
VELASCO, JR., JJ.
Promulgated:
June 25, 2007

In this administrative complaint, a lawyer is charged with violation of Rule 19.01 of Canon 19 of the Code
of Professional Responsibility for writing a demand letter the contents of which threatened complainant with the filing
of criminal cases for tax evasion and falsification of documents.
Atty. Lolito G. Aparicio (respondent) appeared as legal counsel for Grace C. Hufana in an illegal dismissal
case before the National Labor Relations Commission (NLRC). Sometime in August 2005, complainant Fernando
Martin O. Pena, as President of MOF Company, Inc. (Subic), received a notice from the Conciliation
and Mediation Center of the NLRC for a mediation/conciliation conference. In the conference, respondent, in behalf of
his client, submitted a claim for separation pay arising from her alleged illegal dismissal. Complainant rejected the
claim as being baseless. Complainant thereafter sent notices to Hufana for the latter to explain her absences and to
return to work. In reply to this return to work notice, respondent wrote a letter to complainant reiterating his clients
claim for separation pay. The letter also contained the following threat to the company:
BUT if these are not paid on August 10, 2005, we will be constrained to file and claim bigger
amounts including moral damages to the tune of millions under established precedence of
cases and laws. In addition to other multiple charges like:
1.
2.
3.
4.

Tax evasion by the millions of pesos of income not reported to the


government.
Criminal Charges for Tax Evasion
Criminal Charges for Falsification of Documents
Cancellation of business license to operate due to violations of laws.

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

The Report and Recommendation [7] of Investigating Commissioner Milagros V. San Juan found that
complainant, failed to file his position paper and to comply with Administrative Circular No. 04-94 requiring a certificate
against forum shopping and, accordingly, recommended the dismissal of the complaint against respondent. On 26
May 2006, the IBP Board of Governors adopted and approved the Report and Recommendation of the Investigating
Commissioner.[8] On 10 July 2006, the IBP Commission on Bar Discipline transmitted to the Supreme Court the notice
of said Resolution and the records of the case. [9] Thereafter, on 18 August 2006, respondent filed with the IBP a
Motion for Reconsideration (for Modification of Decision) [10] reiterating his claim of damages against complainant in the
amount of four hundred million pesos (P400,000,000.00), or its equivalent in dollars, for filing the false, malicious,
defamers [sic], fraudulent, illegal fabricators [sic], malevolent[,] oppressive, evasive filing [of] a groundless and false
suit.[11]
Complainant thereafter filed this Petition for Review (of the Resolution of the IBP Commission on Bar
Discipline)[12] alleging that he personally submitted and filed with the IBP his position paper, after serving a copy
thereof on respondent by registered mail. He further alleges that he was deprived of his right to due process when the
IBP dismissed his complaint without considering his position paper and without ruling on the merits thereof.
Complainant accordingly prays for the reversal and setting aside of the 26 May 2006 Resolution [13] of the
IBP Board of Governors and the remand of the case to the IBP Commission on Bar Discipline for proper adjudication
and disposition on the merits.
Based on the records, there is truth to complainants assertion that he filed his position paper on 21
December 2005, after serving a copy of the same to respondent. The IBP stamp on the front page of said document
shows that it was received by the IBP on 21 December 2005. The registry receipt attached to the same document also
shows that it was sent by registered mail to respondent on the same date. [14]
Complainant, however, omitted to offer any explanation in his petition before this Court for his failure to
attach a certification against forum shopping in his complaint against respondent.
The requirement of a certification against forum shopping was originally required by Circular No. 28-91,
dated 8 February 1994, issued by this Court for every petition filed with the Court or the Court of
Appeals. Administrative Circular No. 04-94, made effective on 1 April 1994, expanded the certification requirement to
include cases filed in courts and quasi-judicial agencies below this Court and the Court of Appeals. Ultimately, the
Court adopted paragraphs (1) and (2) of Administrative Circular No. 04-94 to become Section 5, Rule 7 of the
1997 Rules of Civil Procedure.[15] Said rule states that a violation thereof would constitute contempt of court and be
cause for the summary dismissal of both petitions without prejudice to the taking of appropriate action against the
counsel of the party concerned.[16]
The Investigating Commissioner and the IBP Board of Governors took against complainant his failure to
attach the certification against forum shopping to his complaint and consequently dismissed his complaint. This Court,
however, disagrees and, accordingly, grants the petition. However, a remand of the case to the IBP would unduly
prolong its adjudication.
The Courts determination is anchored on the sui generis nature of disbarment proceedings, the reasons
for the certification against forum shopping requirement, complainants subsequent compliance with the requirement,
and the merit of complainants complaint against respondent.
The Court, in the case of In re Almacen,[17] dwelt on the sui generis character of disciplinary proceedings
against lawyers, thus:

Believing that the contents of the letter deviated from accepted ethical standards, complainant filed an
administrative complaint[2] with the Commission on Bar Discipline of the Integrated Bar of the Philippines (IBP).
Respondent filed an Answer with Impleader (Motion to Dismiss and Counterclaims) [3] claiming that Atty. Emmanuel A.
Jocson, complainants legal counsel, also played an important part in imputing the malicious, defamatory, and
fabricated charges against him. Respondent also pointed out that the complaint had no certification against forum
shopping and was motivated only to confuse the issues then pending before the Labor Arbiter. By way of counterclaim,
respondent asked for damages and for the disbarment of Atty. Jocson. Respondent also asked the IBP to endorse the
prosecution of Atty. Jocson for Usurpation of Public Functions [4] and for violation of the Notarial Law.[5]
A mandatory conference was held on 6 December 2005 but respondent failed to appear.[6] Both parties
were thereafter required to submit their position papers.

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

profession of members who by their misconduct have proved themselves no longer


worthy to be entrusted with the duties and responsibilities pertaining to the office of an
attorney. In such posture, there can thus be no occasion to speak of a complainant or
a prosecutor.[18] [Emphasis supplied]
In view of the nature of disbarment proceedings, the certification against forum shopping to be attached to
the complaint, if one is required at all in such proceedings, must refer to another administrative case for disciplinary
proceedings against the same respondent, because such other proceedings or action is one that necessarily
involves the same issues as the one posed in the disbarment complaint to which the certification is supposedly to be
attached.
Further, the rationale for the requirement of a certification against forum shopping is to apprise the Court of
the pendency of another action or claim involving the same issues in another court, tribunal or quasi-judicial agency,
and thereby precisely avoid the forum shopping situation. Filing multiple petitions or complaints constitutes abuse of
court processes,[19] which tends to degrade the administration of justice, wreaks havoc upon orderly judicial procedure,
and adds to the congestion of the heavily burdened dockets of the courts. [20] Furthermore, the rule proscribing forum
shopping seeks to promote candor and transparency among lawyers and their clients in the pursuit of their cases
before the courts to promote the orderly administration of justice, prevent undue inconvenience upon the other party,
and save the precious time of the courts. It also aims to prevent the embarrassing situation of two or more courts or
agencies rendering conflicting resolutions or decisions upon the same issue. [21]
It is in this light that we take a further look at the necessity of attaching a certification against forum
shopping to a disbarment complaint. It would seem that the scenario sought to be avoided, i.e., the filing of multiple
suits and the possibility of conflicting decisions, rarely happens in disbarment complaints considering that said
proceedings are either taken by the Supreme Court motu proprio, or by the Integrated Bar of the Philippines (IBP)
upon the verified complaint of any person. [22] Thus, if the complainant in a disbarment case fails to attach a
certification against forum shopping, the pendency of another disciplinary action against the same respondent may still
be ascertained with ease. We have previously held that the rule requiring a certification of forum shopping to
accompany every initiatory pleading, should not be interpreted with such absolute literalness as to subvert
its
own ultimate and legitimate objective or the goal of all rules of procedurewhich is to achieve substantial
justice as expeditiously as possible.[23]
At any rate, complainants subsequent compliance with the requirement cured the supposed defect in the
original complaint. The records show that complainant submitted the required certification against forum shopping on 6
December 2006 when he filed his Comment/Opposition to respondents Motion to Dismiss the present petition.
Finally, the intrinsic merit of complainants case against respondent justifies the grant of the present
petition. Respondent does not deny authorship of the threatening letter to complainant, even spiritedly contesting the
charge that the letter is unethical.
Canon 19 of the Code of Professional Responsibility states that a lawyer shall represent his client with
zeal within the bounds of the law, reminding legal practitioners that a lawyers duty is not to his client but to the
administration of justice; to that end, his clients success is wholly subordinate; and his conduct ought to and must
always be scrupulously observant of law and ethics. [24] In particular, Rule 19.01 commands that a lawyer shall employ
only fair and honest means to attain the lawful objectives of his client and shall not present, participate in presenting or
threaten to present unfounded criminal charges to obtain an improper advantage in any case or proceeding. Under
this Rule, a lawyer should not file or threaten to file any unfounded or baseless criminal case or cases against the
adversaries of his client designed to secure a leverage to compel the adversaries to yield or withdraw their own cases
against the lawyers client.[25]

prevention of an injury, or the exercise of an influence. Not infrequently, it is extorted by threats, or by operating on the
fears or the credulity, or by promises to conceal or offers to expose the weaknesses, the follies, or the crime of the
victim.[26]
In Sps. Boyboy v. Atty. Yabut, Jr.,[27] we held that [a]n accusation for blackmail and extortion is a very
serious one which, if properly substantiated, would entail not only respondents disbarment from the practice of law,
but also a possible criminal prosecution. [28] While the respondent in Boyboy was exonerated for lack of evidence, the
same may not be said of respondent in the present case for he admits to writing the offensive letter.
In fact, respondent does not find anything wrong with what he wrote, dismissing the same as merely an act of
pointing out massive violations of the law by the other party, and, with boldness, asserting that a lawyer is under
obligation to tell the truth, to report to the government commission of offenses punishable by the State. [29] He further
asserts that the writing of demand letters is a standard practice and tradition and that our laws allow and encourage
the settlement of disputes.
Respondents assertions, however, are misleading, for it is quite obvious that respondents threat to file the
cases against complainant was designed to secure some leverage to compel the latter to give in to his clients
demands. It was not respondents intention to point out complainants violations of the law as he so gallantly claims.
Far from it, the letter even contains an implied promise to keep silent about the said violations if payment of the claim
is made on the date indicated.
Indeed, the writing of demand letters is a standard practice and tradition in this jurisdiction. It is usually
done by a lawyer pursuant to the principal-agent relationship that he has with his client, the principal. Thus, in the
performance of his role as agent, the lawyer may be tasked to enforce his clients claim and to take all the steps
necessary to collect it, such as writing a letter of demand requiring payment within a specified period. However, the
letter in this case contains more than just a simple demand to pay. It even contains a threat to file retaliatory charges
against complainant which have nothing to do with his clients claim for separation pay. The letter was obviously
designed to secure leverage to compel complainant to yield to their claims. Indeed, letters of this nature are definitely
proscribed by the Code of Professional Responsibility.
Respondent cannot claim the sanctuary provided by the privileged communication rule under which a
private communication executed in the performance of a legal duty is not actionable. The privileged nature of the letter
was removed when respondent used it to blackmail complainant and extort from the latter compliance with the
demands of his client.
However, while the writing of the letter went beyond ethical standards, we hold that disbarment is too
severe a penalty to be imposed on respondent, considering that he wrote the same out of his overzealousness to
protect his clients interests. Accordingly, the more appropriate penalty is reprimand.
WHEREFORE, premises considered, the petition is granted. The 26 May 2006Resolution of the IBP Board
of Governors is hereby REVERSED and SET ASIDE. Respondent Atty. Lolito G. Aparicio is hereby found liable for
violation of Rule 19.01 of Canon 19 of the Code of Professional Responsibility, and is accordingly meted out the
penalty of REPRIMAND, with the STERN WARNING that a repetition of the same or similar act will be dealt with more
severely.
SO ORDERED.

In the case at bar, respondent did exactly what Canon 19 and its Rule proscribe. Through his letter, he
threatened complainant that should the latter fail to pay the amounts they propose as settlement, he would file and
claim bigger amounts including moral damages, as well as multiple charges such as tax evasion, falsification of
documents, and cancellation of business license to operate due to violations of laws. The threats are not only
unethical for violating Canon 19, but they also amount to blackmail.
Blackmail is the extortion of money from a person by threats of accusation or exposure or opposition in
the public prints,obtaining of value from a person as a condition of refraining from making an accusation against
him, or disclosing some secret calculated to operate to his prejudice. In common parlance and in general acceptation,
it is equivalent to and synonymous with extortion, the exaction of money either for the performance of a duty, the

G.R. No. 40457 May 8, 1992

MOBIL OIL PHILIPPINES, INC., petitioner,


vs.
COURT OF FIRST INSTANCE OF RIZAL, BRANCH VI, GEMINIANO F. YABUT and AGUEDA ENRIQUEZ
YABUT, respondents.
This is a petition for review on certiorari filed by petitioner Mobil Oil Philippines, Inc. questioning (1) the Order of
respondent Court of First Instance, Branch VI, Pasig, Rizal, promulgated on November 20, 1974 declaring its earlier
Decision dated July 25, 1974 as null and void insofar as it concerned private respondents Geminiano F. Yabut and
Agueda Enriquez-Yabut, and (2) the Order promulgated on February 20, 1975 and denying petitioner's Motion for the
Issuance of a Writ of Execution and Appointment of Special Sheriff.
The facts of the case are as follows:
On November 8, 1972, petitioner filed a complaint 1 in the Court of First Instance of Rizal against the partnership La
Mallorca and its general partners, which included private respondents, for collection of a sum of money arising from
gasoline purchased on credit but not paid, for damages and attorney's fees.
On December 22, 1972, petitioner, with leave of court, filed an Amended Complaint 2 impleading the heirs of the
deceased partners as defendants. During the hearing held on April 1, 1974, after petitioner had presented its
evidence, the parties agreed to submit the case for decision on the basis of the evidence on record adduced by
petitioner but "to exclude past interest in the amount of P150,000.00 and to award nominal attorney's fees."
Consequently, on July 25, 1974, a Decision 3 was rendered in favor of the petitioner and against defendants. Private
respondents thereafter filed a Petition to Modify Decision and/or Petition for Reconsideration, 4 which was
opposed 5 by petitioner.
The Petition to Modify Decision and/or Reconsideration is predicated on the following grounds:
1. That there was no stipulation or agreement of the parties on the award of attorney's fees;
2. That Miguel Enriquez, not being a general partner, could not bind the partnership in the Sales Agreement he signed
with plaintiff; and
3. That defendant Geminiano Yabut already withdrew as partner and president of La Mallorca as of September 14,
1972.
On November 20, 1974, respondent court issued its disputed Order 6 declaring its decision null and void insofar as
private respondents were concerned on the ground that there was no evidence to show that the counsel for the
defendants had been duly authorized by their respective clients to enter into a stipulation or facts, a compromise
agreement or a confession judgment with petitioner, a ground never raised by the parties. Petitioner filed a Motion for
Reconsideration and Clarification, 7 seeking the reconsideration of said order or, if not reconsidered, clarification from
respondent court as to whether or not there will be further proceedings for reception of private respondents' evidence
in court. Respondent court denied the motion, as well as petitioner's Motion for the Issuance of a Writ of Execution and
Appointment of Special Sheriff, by way of the Order dated February 20, 1975. Hence, this petition.
The issue presented before Us is whether or not public respondent acted with grave abuse of discretion amounting to
lack of jurisdiction in declaring null and void its earlier decision of July 25, 1974.
We find merit in the instant petition.

In the Order of November 20, 1974, 8 respondent court declared the decision dated July 25, 1974 null and void for the
following reason:
There is no evidence on record to show that the attorneys of record for the defendants had
been duly authorized by their respective clients, including present movants, to enter into a
stipulation of facts or a compromise agreement of confession of judgment. Ant any settlement
or confession of judgment which an attorney may enter for his client without any written
authority cannot bind the client. To be sure, the stipulation of facts which amounts to or
approximates a compromise agreement, or waives a right or practically confesses judgment,
entered into by a lawyer without the consent and conformity of his clients, is an absolute nullity.
This precisely is what appears to be the stipulation of the movants, as well as the other
defendants as the records show. In view of the conclusion thus reached, it would appear that
there is no necessity to discuss the other grounds raised by the movants.
The records show that the petitioner had already adduced evidence and formally offered its evidence in court; that at
the hearing of April 1, 1974, for the presentation of defendants' evidence, the parties through their counsels, 9 mutually
agreed to the waiver of the presentation of defendants' evidence on one hand, and the waiver of past interest in the
amount of P150,000.00 on the part of the plaintiff and the payment of only nominal attorney's fees, thus the
respondent court issued the following Order:
Calling this case for hearing today, the parties pray the Court that they are submitting the case
for decision on the basis of the evidence thus presented but to exclude past interest in the
amount of about P150,000.00 and to award nominal attorney's fees.
Finding the said motion in order, let judgment be rendered in accordance with the evidence so
far presented. 10
The foregoing Order is not a stipulation of facts nor a confession of judgment. If at all, there has been a mutual waiver
by the parties of the right to present evidence in court on the part of the defendants on one hand, and waiver of
interest in the amount of P150,000.00 and the stipulated attorney's fees of 25% of the principal amount on the part of
the plaintiff, except a nominal one.
The counsels of the parties in this case had the implied authority to do all acts necessary or incidental to the
prosecution and management of the suit in behalf of their clients of their clients who were all present and never
objected to the disputed order of the respondent court. They have the exclusive management of the procedural
aspect of the litigation including the enforcement of the rights and remedies of their client. Thus, when the case was
submitted for decision on the evidence so far presented, the counsel for private respondents acted within the scope of
his authority as agent and lawyer in negotiating for favorable terms for his clients. It may be that in waiving the
presentation of defendants' evidence, counsel believed that petitioner's evidence was insufficient to prove its cause of
action or knowing the futility of resisting the claim, defendants opted to waive their right to present evidence in
exchange for the condonation of past interest in the amount of around P150,000.00 and the award of a nominal
attorney's fees instead of the 25% stipulated in the Sales Agreement and Invoices. In fact, when counsel secured a
waiver of the accumulated interest of P150,000.00 and the 25% stipulated attorney's fees, the defendants were
certainly benefited.
Parties are bound by the acts and mistakes of their counsel in procedural matters. Mistakes of counsel as to the
relevancy or irrelevancy of certain evidence or mistakes in the proper defense, in the introduction of certain evidence,
or in argumentation are, among others all mistakes of procedure, and they bind the clients, as in the instant case. 11
Having obtained what defendants bargained for and having wrongly appreciated the sufficiency or insufficiency of
petitioner's evidence, private respondents are now estopped from assailing the decision dated July 25, 1974.

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

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

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

WHEREFORE, the Orders of November 20, 1974 and February 20, 1975 is hereby REVERSED and SET ASIDE and
the Decision dated July 25, 1975 is reinstated and declaring the same valid and binding against private respondents
Geminiano Yabut and Agueda Enriquez-Yabut. With costs de officio.
[A.C. No. 4552. December 14, 2004]

The validity of a judgment or order of a court cannot be assailed collaterally unless the ground of attack is lack of
jurisdiction or irregularity in their entry apparent on the face of the record or because it is vitiated by fraud. If the
purported nullity of the judgment lies on the party's lack of consent to the compromise agreement, the remedy of the
aggrieved party is to have it reconsidered, and if denied, to appeal from such judgment, or if final to apply for relief
under rule 38. 14 It is well settled that a judgment on compromise is not appealable and is immediately executory
unless a motion is field to set aside the compromise on the ground of fraud, mistake or duress, in which case an
appeal may be taken from the order denying the motion. 15
Moreover, We do not find the grounds relied upon in private respondents' Petition to Modify Decision to be meritorious.
Mr. Miguel Enriquez automatically became a general partner of the partnership La Mallorca being one of the heirs of
the deceased partner Mariano Enriquez. Article IV of the uncontested Articles of Co-Partnership of La Mallorca
provides:
IV. Partners. The parties above-named, with their civil status, citizenship and residences set
forth after their respective names, shall be members comprising this partnership, all of whom
shall be general partners.
If during the existence of this co-partnership, any of the herein partners should die, the copartnership shall continue to exist amongst the surviving partners and the heir or heirs of the
deceased partner or partners;Provided, However, that if the heir or heirs of the deceased
partner or partners elect not to continue in the co-partnership, the surviving partners shall have
the right to acquire the interests of the deceased partner or partners at their book value based
upon the last balance sheet of the co-partnership, and in proportion to their respective capital
contributions; And, Provided Further, that should a partner or partners desire to withdraw from
the co-partnership and the remaining partners are not willing to acquire his or their shares or
interest in the co-partnership in accordance with the foregoing provisions, the co-partnership
shall not thereby be dissolved, but such retiring partner or partners shall only be entitled to his
or their shares in the assets of the co-partnership according to the latest balance sheet which
have been drawn prior to the date of his or their withdrawal. In such event, the co-partnership
shall continue amongst the remaining partners. 16
As to respondent Geminiano Yabut's claim that he cannot be liable as a partner, he having withdrawn as such, does
not convince Us. The debt was incurred long before his withdrawal as partner and his resignation as President of La
Mallorca on September 14, 1972. Respondent Geminiano Yabut could not just withdraw unilaterally from the
partnership to avoid his liability as a general partner to third persons like the petitioner in the instant case.
This is likewise true with regard to the alleged non-active participation of respondent Agueda Yabut in the partnership.
Active participation in a partnership is not a condition precedent for membership in a partnership so as to be entitled to
its profits nor be burdened with its liabilities.

JOSE A. ROLDAN, complainant, vs. ATTY. NATALIO PANGANIBAN and ATTY. JUANITO P. NOEL, respondents.
Before us is an administrative case for disbarment filed by complainant Jose A. Roldan against respondents
Atty. Natalio M. Panganiban and Atty. Juanito P. Noel. Complainant charges that respondent lawyers reneged in their
duties and obligations towards him as their client, especially in the complainants right to appeal to the higher court
after losing his case in the lower courts. The allegations in the complaint dated February 12, 1996 [1] in support of the
accusations are as follows:
1.
Na ako ang plaintiff sa Civil Case No. 144860-CV M.I.T. Branch 25 Jose A. Roldan vs. Ramon Montano &
Robert Montano, na ang Judge ay si Honorable Severino De Castro, Jr. na ang kaso ay Recovery of possession with
damages. Itoy iniapila ko sa RTC Branch 43 with Civil Case No. 95-73739 na ang Judge naman dito ay si Honorable
Manuel F. Lorenzo ng RTC. Si Atty. Panganiban at Atty. Noel ang abogado ko.
...
4.
Na noong February 6, 1995 bago kami pumasok sa court room ay nagtanong sa akin si Atty. Noel, ng ganito:
Mr. Roldan nasaan nga pala yung resibo na ibinigay ni Tessie sa iyo na nagbigay ka ng down payment na Ten
Thousand Pesos (P10,000.00) noong March 1, 1986. Agad akong sumagot at sinabi ko sa kaniya, Atty. Noel lahat
po ng original ay hiningi ninyo sa akin, lahat po ay binigay ko sa inyo kasama iyong resibo ni Tessie Dalusong, na
akoy magbigay ng Ten Thousand Pesos bilang downpayment sa ipinagbili niyang bahay sa akin. Agad siyang
sumagot Wala kang ibinibigay sa akin!
5.
Na kaya nga sinabi ko kay Atty. Noel na: Ibigay ninyo sa akin ang folder at ako ang hahanap ng resibo ni
Tessie Dalusong. Tumulong din si Atty. Noel, at nakita din namin. Sinabi ni Atty. Noel Sayang hindi na natin
maipasok ito, hindi na kasi pwedeng magpasok pa ng mga ibidensya. Di ko alam kung bakit hindi niya ipinasok noon
pa man. (Ang resibo na nagpapatunay na ako ang unang nakabili ng bahay sa 1723 Pedro Gil St., Paco, Maynila).
6.
Na noong nasa loob na kami ng court room ay handa na ako sa sinasabi ni Atty. Noel no Rebuttal pero
nagtaka ako kinumbinsi ako na diumano ay malinaw na ang aking deklarasyon at malinaw ang mga ebidensya kaya
hindi na raw dapat mag rebuttal i-waive na lang daw sa Memorandum kaya nga sinabi ng Judge na: Gumawa kayo
ng Memoranda within fifteen days submitted for decision. Noong March 8, 1995 ang memorandum ay submitted for
decision;
7.
Na noong Abril 7, 1995 sinabi ko kay Atty. Noel, Bakit may ibinigay na zerox copies ng decision si Robert
Montano na aking kalaban sumagot si Atty. Noel, at sinabi sa akin Tsekin mo sa court. Gayon nga ang aking
ginawa. At bumalik ako kay Atty. Noel, at sinabi ko: Totoo nga na may decision na. Sinabi ni Atty. Noel na: Ginapang
nila yun, sapalagay mo, magkano ang inilagay nila? Sa palagay ko ay hindi lang trenta mil (P30,000.00) pesos ang
magagastos nila sa kasong ito, yun ang isinagot ko;

8.
Na iminungkahi ko kay Atty. Noel na magpayl ng motion for reconsideration, sinagat ako ni Atty. Noel na:
Ginapang na nila yun kaya dapat umapila na lang tayo. Sinabi ko kay Atty. Noel na: Kung matalo pa rin ako dito, ay
dalhin natin sa Supreme Court para parehas ang laban; Na bilang bahagi nito inilakip ko dito ang decision ng MTC;
at ang apilasyon sa RTC, at ang petsa ng decision ng RTC na tinaggap ni Atty. Noel.
9.
Na noong Abril 24, 1995 umapila ako sa Court of Appeal makaraan ang ilang buwan ay dumating sa office ni
Atty. Noel at Atty. Panganiban, noong November 13, 1995 ang decision subalit tinawagan ako ng sekretarya nila Atty.
Noel at Atty. Panganiban noon lang November 24, 1995. Tinanong ko ang sekretarya ni Atty. Panganiban kung
nasaan si Atty. Noel, ang sagot ng sekretarya ay Nasa probinsiya maraming inaasikaso doon. Agad kong sinabi:
Hindi ba fifteen days lang para maka-apila sa Supreme Court. Sumagot si Zeny at sinabi Isang buwan daw yun
para sagutin.
10. Na madalas kong tawagan si Zeny (ang sekretarya ni Atty. Panganiban) na sinasabi kong nakahanda na ang
pangbayad gawin na ninyo ang apilasyon sa Supreme Court, itoy madalas kong sabihin sa sekretarya (si Zeny)
kayat ibinigay niya ang bagong office ni Atty. Noel sa Gedisco Centre Rm. 134, 1564 Mabini St., Ermita, Manila.
11. Na madalas akong magpunta sa bagong office ni Atty. Noel gaya noong Dec. 1, 1995, Dec. 4, 1995, Dec. 5,
1995, Dec. 7, 1995, Dec. 8, 1995 at noon pang huling linggo ng November ay sisimulan ko ng sabihin sa dalawang
sekretarya (si Zeny at Marie Cris) na gawin na ang aking apilasyon sabihin kay Atty. Noel sa Supreme Court.
12. Na noong December 12, 1995 maaga pa ay nagpunta ako sa office ni Atty. Noel sa Gedisco 3 rd Flr. Mabini St.,
Ermita, Manila. Tinanong ko ang kaniyang sekretarya kung nakausap si Atty. Noel, sinagot ako ng sekretarya at
sinabing Tinanong ko si Atty. Noel kung yari na yung apilasyong ipinagagawa ninyo (Jose Roldan) hindi po niya ako
sinasagot.
13. Na kaya agad akong magpunta sa RTC Branch 43 upang alamin ang katotohanan nabatid ko noon lang, na
akoy natalo ng walang kalaban-laban, pagkat nag-laps na o lampas na ang panahong ibinibigay ng batas para
makapag-payl ng apilasyon sa Supreme Court.
14. Na dahil dito sa mga panloloko, at pagwawalang bahala sa aking kaso ni Atty. Noel, at Atty. Panganiban ay
idinidimanda ko sila ng Damages na halagang one hundred fifty thousand (P150,000.00) pesos at dapat silang
alisan ng karapatan na makapag-practice sa kanilang propesyon.
In his Comment dated August 8, 1996, Atty. Panganiban avers that he was neither aware nor did he participate
in the prosecution of Civil Case No. 144860-CV M.I.T. Branch 25 Jose A. Roldan vs. Ramon Montano & Robert
Montano and in the appeal of said case to the Regional Trial Court (RTC), Branch 43; they do not have a lawyer-client
relationship because he is on leave in the practice of law since October 18, 1993 when he was designated Acting
Mayor of Laurel, Batangas, and during his incumbency as such, and up to the filing of this administrative complaint in
1996, he is still on leave as law practitioner because he was elected Mayor of Laurel, Batangas in the last 1995
election; probably, complainant included him as respondent because he thought that he is practicing law and is still an
associate of Atty. Juanito P. Noel, due to the fact that on some occasions complainant might have seen him or they
might have talked casually in the law office from which he was on leave in his practice of law because he drops there
from time to time to meet visitors from Laurel who are living and who have problems in Metro Manila; and he has not
received any single centavo from the complainant.
In his Comment, dated August 29, 1996, Atty. Noel alleges: Sometime in 1994, he agreed to represent
complainant in recovering a one-half portion of the ground floor of a house located at 1723 Pedro Gil St., Paco, Manila
which complainant bought from one Simplicia Villanueva represented by her daughter Teresita Dalusong on November
28, 1986. A civil complaint for recovery of ownership and possession was filed on February 8, 1994 with the RTC but
upon the effectivity of the law expanding the jurisdiction of the Metropolitan Trial Court (MTC) the case was transferred
to the MTC. From the evidence of the defendant, he honestly saw no need to present a rebuttal evidence. The MTC

rendered a decision dismissing the case on the alleged ground that the identity of the subject matter of the action was
not clearly established. He filed an appeal in due time to the RTC of Manila (Branch 43) and not with the Court of
Appeals as stated in paragraph 9 of the complaint. On November 13, 1995, he received a copy of the RTC decision
dated October 10, 1995, affirming the decision of the MTC. Through the telephone, he informed the complainant
about the decision of the RTC. Complainant instructed him to prepare an appeal to the higher court which actually
refers to the Court of Appeals and not with the Supreme Court as complainant claims. He advised the complainant
that he could find no error in the said decision and a further appeal would be frivolous and without merit and requested
the complainant to come over so that he could discuss the matter with him. Whenever the complainant went to the
law office, he failed to see him because the latter was still attending court hearings. The complainant asked for the
records of the case which was given by his secretary. Complainant never returned the case folder to him, neither did
he call up by phone, or see him personally. He then assumed that the complainant had hired another lawyer to handle
the appeal. He was surprised when he received on July 18, 1996 a copy of the resolution of this Honorable Court
dated June 19, 1996, requiring them to file their comment on the complaint of Jose A. Roldan.
We referred the matter to the Integrated Bar of the Philippines (IBP) for investigation. After hearing, IBP
Investigating Commissioner Manuel A. Quiambao submitted his Report and Recommendation dismissing the
complaint against Atty. Panganiban and imposing censure to Atty. Noel. In a Resolution dated February 27, 2004, the
IBP adopted and approved the said Report and Recommendation.
We shall first resolve the issue of the existence or non-existence of lawyer-client relationship between Atty.
Panganiban and the complainant.
From a careful reading of the records of this case, it appears that Atty. Panganiban and Atty. Noel used to be
law associates. However, Atty. Panganiban went on leave from the practice of law since October 18, 1993 when he
was designated as acting mayor of Laurel, Batangas [2] due to the indefinite leave of absence filed by the mayor and by
reason of his election as mayor of the said municipality in 1995. The complainant claims that he secured the services
of Atty. Panganiban on January 6, 1994.[3] It is thus clear that Atty. Panganiban was not an active associate of the law
firm, since at that time, he was already on leave from the practice of law. Moreover, the complaint filed in 1996 before
the RTC for Recovery of Possession and Ownership with Damages was prepared and signed by Atty. Noel alone and
not in any representation of any law firm. In fact from the filing of the said civil case in the RTC, it was Atty. Noel who
represented the complainant. Not once did Atty. Panganiban appear for the complainant nor did he sign any
document pertaining with the aforesaid case. Necessarily, the complaint against Atty. Panganiban must be dismissed.
As to the complaint against Atty. Noel.
The main issues to be resolved are: (1) whether there was a deliberate attempt to suppress evidence on the
part of Atty. Noel, to the prejudice of complainant and (2) whether it was correct for Atty. Noel to refuse to file a further
appeal of the case to the Court of Appeals by way of petition for review despite the manifest desire of the complainant
to do so.
Anent the first issue.
Complainant insists that Atty. Noels failure to present in evidence the receipt dated March 1, 1986 was fatal to
his cause. The receipt shows that complainant made a partial payment ofP10,000.00 of the P40,000.00 price of the
subject property. Complainant claims that this piece of document proves that complainant bought the subject property
ahead of the defendants who bought it only on July 30, 1986. Thus, to the mind of the complainant, the nonpresentation of the subject receipt is suppression of evidence.
Atty. Noel denied receiving the subject receipt and asserts that the same was mere fabrication of the
complainant. He insists that said receipt did not exist during the preparation and filing of the complaint and even
during the presentation of evidence. Otherwise, he argues that such fact should have been alleged in the complaint to

show that complainant bought the subject property ahead of the other buyer. Atty. Noel also claims that assuming that
the receipt was given to him, the same cannot be used as evidence because the receipt shows that it was signed by
one Romeo Dalusong who is not a party to the sale; neither does it appear in the receipt that Romeo was acting in a
representative capacity.
A short historical backdrop is necessary for a clearer insight of this issue.
It appears that the subject property was subjected to a double sale by the same seller. The Deed of Sale of the
complainant is dated November 28, 1986 while that of the other buyer is dated July 30, 1986. But complainant claims
that actually the sale as to him took place on March 1, 1986 as evidenced by the subject receipt. Complainant
however failed to take possession of the subject property as the same is already in the possession of the other buyer.
Complainant filed an ejectment case[4] against the tenant of the other buyer but the same was dismissed for the reason
that complainant failed to show that he had proprietary right over the property in question. Unable to take
possession of the subject property, complainant filed a case against the seller for the annulment of the contract of sale,
the Deed of Sale dated November 28, 1986. Complainant won and the court awarded him damages of P80,000.00.
Subsequently, the seller and the complainant entered into a Compromise Agreement. [5] The seller, agreed to
sell one-half of her duplex house which is the same property that was previously sold to complainant on November 28,
1986, including all her proprietary rights over the land, in the amount of P80,000.00. Since the Court awarded
damages to the complainant in the same amount, this was set-off against the price of the property. Pursuant to the
said compromise agreement, a Deed of Absolute Sale and Transfer of Right [6] in favor of the complainant was
executed on December 22, 1990 by the seller over the said property.
Even with the sale on December 22, 1990 over the subject property as a result of the compromise agreement,
complainant still failed to take possession of the subject property, hence he filed a complaint for Recovery of
Possession and Ownership with Damages against the other buyer. It is in this case that complainant claims that Atty.
Noel failed to present the subject receipt. The MTC dismissed the complaint and the RTC on appeal, dismissed it
again. Upon failure of Atty. Noel to file a petition for review with the Court of Appeals, complainant filed the present
administrative complaint against him.
We find credence to the allegation of Atty. Noel that the subject receipt was not in existence at the time he
prepared the complaint or even at the time of presentation of evidence. The complaint was verified by the
complainant stating the fact that he caused its preparation, that he read the same and attested that the contents
thereof are true and correct. If complainants allegation that he gave the receipt to Atty. Noel at that time, and
considering the importance of the subject receipt to his case, he should have called the attention of Atty. Noel that
there was no allegation of the existence of the subject receipt.
We thus hold that Atty. Noel is not guilty of suppressing evidence.
As to the second issue, that is, the issue of propriety of Atty. Noels refusal or failure to file a petition for review
before the Court of Appeals.
It is the contention of the complainant that he lost the right to file a further appeal because he was not informed
immediately of the result of the appeal to the RTC. Complainant insists that Atty. Noel, through his secretary, called
the complainant only on November 24, 1995 or 11 days after the receipt of the adverse RTC decision and was given
the impression that he has still one month within which to file an appeal. The complainant also said that he paid the
respondents visits on December 1, 4, 5, 7 and 8, 1995, to follow up the filing of the appeal to the higher court but that
he was not able to talk to Atty. Noel; that it was only when he went to the RTC that he learned that he lost the case
because the period of the appeal has lapsed.

Atty. Noel contends that he received the RTC decision on November 13, 1995 and on the following day, he
instructed his secretary to contact the complainant to inform him of the adverse RTC decision with the directive for the
complainant to call up Atty. Noel; that when complainant called, he was instructed by the complainant to prepare an
appeal to the higher court; that he told the complainant that there is no need to appeal the case because, first, the
decision of the court is correct, and second, he is obligated by the code of professional responsibilities to refrain from
filing a frivolous and unmeritorious appeal; that thereafter, complainant went to his office twice, the last of this instance
was when complainant took all the records of the case and never came back which led him to believe that complainant
will not appeal the adverse RTC decision. Atty. Noel further states that, in any event, his relationship with the
complainant ended upon the issuance of the decision and that the complainant should not expect that he would still
appeal the case.
We find for the complainant.
It is noted that the complainant has been very diligent in following up the status of the case. From the time,
complainant filed the case with the MTC up to the time he appealed with the RTC, complainant was vigilant with his
rights constantly in contact with Atty. Noel. We find it strange therefore that upon receipt of the adverse RTC decision,
it would seem, if Atty. Noels version is to be given credence, the complainant had lost his zeal and just allowed the
time to appeal to lapse. As correctly observed by the Investigating Commissioner in his Report:
Here was a complainant who went through several litigations over the same subject matter, including a case of
ejectment, a case of annulment of contract of sale with damages, a case of action for recovery of ownership and
possession, an appeal to the Regional Trial Court, and he did not seem perturb that he lost it (the appeal) and did not
find it essential to discuss the matter with his lawyer for possible remedial action? That is, as claimed by his lawyer?
...
As opposed to the general denial given by the respondent about the claim that the complainant followed up his case
several times with his office (outside of the two occasions that he conceded the complainant did so), the complainant
was precise in detailing the circumstances which described how he tried his best to seek the presence of Atty. Noel to
no avail. There were dates, detailed circumstances, and specific places. Given the character which had characterized
the effort of the complainant to seek appropriate legal remedies for his complaints, the assertions would be consistent,
that is, that he made great efforts to find Atty. Noel.
We note that the complainant was informed about the adverse RTC decision within the 15-day prescriptive
period to appeal. As stated elsewhere, Atty. Noel received the adverse RTC decision on November 13, 1995 and the
complainant was informed about the adverse RTC decision on November 24, 1995. Hence, complainant has still four
days to file an appeal. However, Atty. Noel failed to ensure that the client was advised appropriately. Atty. Noel
entrusted entirely with his secretary the duty to inform the complainant about the adverse decision. And the secretary
informed the complainant rather late and worse with the wrong information that the complainant has still a month
within which to file an appeal. This resulted to the lapse of the prescriptive period to appeal without complainant
having availed of the said remedy.
A lawyer shall not neglect a legal matter entrusted to him and his negligence in connection therewith shall
render him liable.[7] If only Atty. Noels position of not filing an appeal because it would only be frivolous has been
properly communicated to the complainant at the earliest possible time so that the complainant would be able to seek
the services of another lawyer for help, it would have been commendable. A lawyers duty is not to his client but to the
administration of justice; to that end, his clients success is wholly subordinate; and his conduct ought to and must
always be scrupulously observant of law and ethics. [8] But as it was, Atty. Noels negligence as afore-discussed
robbed the complainant of the opportunity to at least look for another lawyer for professional help and file an appeal,
after all, it is the client who finally decides whether to appeal or not an adverse decision.

We cannot also accept the reasoning of Atty. Noel that he should not be expected to file an appeal for the
complainant because their lawyer-client relationship ended with the RTC decision. First, a lawyer continues to be a
counsel of record until the lawyer-client relationship is terminated either by the act of his client or his own act, with
permission of the court. Until such time, the lawyer is expected to do his best for the interest of his client. [9] Second,
Atty. Noel admitted that complainant instructed him to file an appeal with the higher court. Even assuming that their
contract does not include filing of an appeal with the higher courts, it is still the duty of Atty. Noel to protect the interest
of the complainant by informing and discussing with the complainant of the said decision and his assessment of the
same. A lawyer shall represent his client with zeal within the bounds of the law. [10] It is the obligation of counsel to
comply with his clients lawful request. Counsel should exert all effort to protect the interest of his client.
The determination of the appropriate penalty to be imposed on an errant lawyer involves the exercise of sound
judicial discretion based on the facts of the case. [11] In cases of similar nature, the penalty imposed by the Court
consisted of reprimand,[12] fine of five hundred pesos with warning, [13] suspension of three months,[14] six months[15] and
even disbarment[16] in aggravated case.
The facts of the case show that Atty. Noel failed to live up to his duties as a lawyer pursuant to the Code of
Professional Responsibility. We conclude that a suspension from the practice of law for one month is just penalty
under the circumstances.
Complainants claim for damages cannot be entertained in the present disbarment case as it is not the proper
forum. It is not an ordinary civil case where damages could be awarded. [17] A disbarment case is a proceeding that is
intended to protect the Court and the public from the misconduct of its officers; to protect the administration of justice
by requiring that those who exercise this important function shall be competent, honorable and reliable, men in whom
courts and clients may repose confidence. [18] It has been emphasized in a number of cases that disbarment
proceedings belong to a class of their own, distinct from that of a civil or a criminal action. [19]
Wherefore, the complaint against Atty. Natalio M. Panganiban is DISMISSED. Atty. Juanito P. Noel is
SUSPENDED for one month with a warning that a repetition of the same would be meted a more severe penalty. Let
a copy of this decision be attached to respondents personal record in the Office of the Bar Confidant and copies be
furnished to all chapters of the Integrated Bar of the Philippines and to all courts of the land.
SO ORDERED.

10% of the amount, paid by Fieldmen's Insurance Co., Inc. to the plaintiff-appellee. With costs against the defendantsappellants.
As gathered from the records, the antecedent facts of this case are as follows:
Plaintiff Reparations Commission (Repacom, for short) is a government entity created by virtue of Republic Act No.
1789, with offices at the 5th Floor, Development Bank of the Philippines Building No. 2, Port Area, Manila while the
defendants, Visayan Packing Corporation (Vispac, for short) and the Fieldmen's Insurance Co., Inc. (FICI, for short)
are corporations duly organized and registered under the laws of the Philippines, with offices in Bacolod City,
Philippines and Singson Bldg., Plaza Moraga, Manila, respectively.
On May 19, 1960, plaintiff Repacom adopted Resolution No. 262 awarding to the defendant Vispac by way of a
contract of conditional purchase and sale subsequently executed on November 15, 1960 (Exhibit "A") the following
reparations goods with a total F.O.B. value of P1,242,424.67 (Exhibit "A-2"): one (1) Cannery Plant, divested from M/S
"Estancia"; two (2) Fishing Boats M/S "SONIA" and M/S "ANA LARES", 75 G.T. and one (1) Fishing Boat M/S
"SALVADOR "B"", 100 G.T.; including all its corresponding accessories and appurtenances. These reparations goods
were delivered to the defendant Vispac, on May 30, 1960 (Exhibit "A-2").
Attached with said contract and forming part thereof is the questioned Schedule of Installment Payments, herein
reproduced, as follows:
SCHEDULE OF INSTALLMENT PAYMENTS
NAME OF USER VISAYAN PACKING CORPORATION
ADDRESS Bacolod City
NATURE OF CAPITAL GOODS/SERVICES One (1) Cannery Plant and appurtenances; Two
(2) Fishing Vessels, 75 G.T. M/S "SONIA" and M/S "ANA LARES" and one (1) fishing vessel
"M/S SALVADOR B", 100 G.T., together with all equipment and appurtenances.
DATE OF COMPLETE DELIVERY May 30,1960
TOTAL F.O.B. COST P1,24 2,424.67

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

AMOUNT OF FIRST INSTALLMENT (10% of FOB COST

THE REPARATIONS COMMISSION, plaintiff-appellee,


vs.
THE VISAYAN PACKING CORPORATION and THE FIELDMENS INSURANCE CO., INC., defendants-appellants.

P1,24,242.47)

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

DUE DATE OF 1ST INSTALLMENT May 30,1962


TERM: Ten (10) EQUAL YEARLY INSTALLMENTS
RATE OF INTEREST: THREE PERCENT (3%) PER ANNUM
NO. OF DATE DUE AMOUNT

INSTALLMENTS
1 May 30, 1963 P131,085.07
2 " " 1964 P131,085.07
3 " " 1965 P131,085.07

In its answer dated November 8, 1962, Vispac claimed that the Schedule of Payments (Exhibit "A") is vague and
ambiguous with respect to the date when the first installment falls due and that by reason thereof, the ambiguity
should be construed against Repacom, the party which drafted the contract.
Thus, while Repacom maintains that the 1st installment is due on May 30, 1962, Vispac, on the other hand, argues
that it is due on May 30, 1963.

4 " " 1966 P131,085.07

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

5 " " 1967 P131,085.07

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

6 " " 1968 P131,085.07

paragraph 1

7 " " 1969 P131,085.07

10 " " 1972 P131,085.07

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

MANILA, PHILIPPINES 1960

paragraph 2

VISAYAN PACKING CORPORATION REPARATIONS


END-USER COMMISSION

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

BY: BY:

paragraph 3

HERNAN DE LA RAMA RODOLFO MASLOG

That Civil Case No. 51712 refers to reparations goods, denominated, one (1) cannery plant,
two (2) fishing boats, M/S "Sonia" and M/S "Ana Lares", 100 G.T. including all its corresponding
accessories and appurtenances, which is the subject matter of a Contract of Conditional
Purchase and Sale dated November 15, 1960 entered into by and between the plaintiff
Reparations Commission as Conditional Vendor and the defendant, The Visayan Packing
Corporation as Conditional Vendee, the legality and due execution of which is not disputed by
the herein parties, a copy of which contract together with its annex "B" were introduced in
evidence by plaintiffs as Exhibits "A" and "A-1" respectively and were admitted by the Court
without objection on the part of the defendants. That, likewise, there were introduced in
evidence and admitted by the Court without objection on the part of the defendants as
additional exhibits, Exh. "A-2" (Date of complete delivery as it appears in Annex "B" [May 30,
1960]; Exh. "A-1"; Exh. "A-2", amount due in the sum of P124,242.47; Exh. "A-4", date of first
installment as it appears in Annex "B" (Exh. "A-1") and as Exh. "B", FICI Bond No. 4122.

8 " " 1970 P131,085.07


9 " " 1971 P131,085.07

President & General Manager Chairman


(Ibid., Exhibit "A-1", p. 11)
Defendant-appellant FICI is impleaded as bondsman for the principal defendant Vispac, under Surety Bond No. 4122
(Exhibit "B") issued by the former on May 30, 1960, to guarantee "faithful observance and compliance by the principal
of all its obligations" recited in the Contract of Conditional Purchase and Sale of Reparations Goods (Exhibit "A") and
in the annexed Schedule of Payments (Exhibit "A-1 ").
On September 27, 1962, Repacom filed a complaint for specific performance with the court a quo against Vispac
seeking collection of the amount of P124,242.47 allegedly due on May 30, 1962 as payment of the 1st installment of
the reparations goods and impleaded the FICI as defendant.

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

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

Schedule of Payments specifically states the date when the reparations goods in question were delivered which was
on May 30, 1960. This particular date was not denied by Vispac as per their Stipulation of Facts. Consequently, as
reflected in the Schedule of Payments, Exhibit "A-1 ", the 1st installment without interest in the amount of P124,242.47
representing 10% of the F.O.B. cost of reparations goods, became due and demandable on May 30, 1962, or exactly
24 months from the date of the complete delivery of the reparations goods to Vispac.

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

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

From said decision, Vispac and FICI filed on July 24, 1964 and July 27, 1964, respectively, a motion for
reconsideration of the said decision. On August 8, 1 964, the court a quo issued its order denying the said motion.
Feeling aggrieved, Vispac and FICI appealed the case to the Court of Appeals, docketed therein as CA-G.R. No.
34552-R.
After the parties have submitted their respective briefs, Repacom on April 28, 1965; Vispac on January 2, 1965; and
FICI on January 15, 1965, the case was submitted for decision on September 6, 1965. In a resolution promulgated
June 14, 1969, the Court of Appeals ** certified the instant case to this Court for proper disposition for being pure
question of law.
While Vispac and FICI raised several issues, the focal issue involved in the instant case, as correctly stated by the trial
court and the Court of Appeals, is the interpretation of the Schedule of Payments (Exhibit "A-1 ").
It is the contention of the Repacom that under the abovequoted Schedule of Payments, the amount of P124,242.47
representing the 1st installment without interest, which is equivalent to 10% of the entire F.O.B. costs, has already
become due and demandable on May 30, 1962. However, Vispac and FICI argue that as there are two dates given for
the first installment in the said Schedule of Payment, the lst installment should be on May 30, 1963 considering that it
was Repacom which prepared the contract and therefore such ambiguity should be taken against the latter which
caused the ambiguity.
The petition is devoid of merit.
Section 12, Republic Act 1789, reads as follows:

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


No. of Date Due Amount
Installments
1 May 30, 1963 P131,086.07

2 " " 1964 P131,086.07 3 " " 1965 P131,086.07

4 " " 1966 P131,086.07

5 " " 1967 P131,086.07

6 " " 1968 P131,086.07

7 " " 1969 P131,086.07

8 " " 1970 P131,086.07

9 " " 1971 P131,086.07

10 " " 1972 P131,086.07


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

Section 12 Terms of Sale


Capital goods and complimentary services disposed to private parties as provided for in subsection (1) of Section 2 hereof, shall be sold on a cash or credit basis under the rules and
regulations as maybe determined by the Commission. Sales on credit basis shall be paid in
installments. Provided that the lst installment shall be paid within 24 months after complete
delivery of the capital goods and the balance within a period not exceeding 10 years.
(Emphasis supplied)
As indicated in the Schedule of Payments, Exhibit "A-1", the amount of P124,242.47, now being claimed by the
Repacom from Vispac, represents the 1st installment or initial payment without interest as said amount is equivalent to
10% of the total F.O.B. cost of the reparation goods received by Vispac which is P1,242,424.67. Exhibit "A-2" of the

Finally, it is basic that a contract is what the law defines it to be, and not what it is called by the contracting parties
Novesteras v. CA, 149 SCRA 48 [1987]).
Having disposed of the main case, discussion of other ancillary issues raised by the appellant Vispac becomes
unnecessary.
As to the issue of FICI's liability arising from its issuance of Surety Bond No. 4122 dated May 30, 1960, it will be noted
that FICI interposed for the first time, on appeal, the defense that Surety Bond No. 4122 has already expired. FICI did
not allege any defense to the effect that Surety Bond No. 4122 has already expired either in its answer to the
complaint dated October 26, 1962 nor in the entire proceedings below. In fact, it adopted as its own whatever
defenses its co-defendant-appellant Vispac may interpose (Rollo, Record on Appeal, FICI, p. 25; p. 44). It is settled

jurisprudence that an issue which was neither averred in the complaint nor raised during the trial in the court below
cannot be raised for the first time on appeal as it would be offensive to the basic rules of fair play, justice and due
process Dihiansan v. CA, 153 SCRA 713 [1987]; Anchuelo v. IAC, 147 SCRA 434 [1987]; Dulos Realty & Development
Corp. v. CA, 157 SCRA 425 [1988]; Ramos v. IAC, 175 SCRA 70 [1989]; Gevero v. IAC, G.R. 77029, August 30,
1990).
Anent the contention of FICI that the trial court erred in ordering Vispac to pay to FICI attorney's fees equivalent to only
10% of the amount due despite the fact that Vispac bound itself to pay to FICI attorney's fees equivalent to 20% of the
total amount due but in no case less than P200.00 as per their Indemnity Agreement (Exhibit "1-FICI"), it has been
held that a stipulation regarding the payment of attorney's fees is neither illegal nor immoral and is enforceable as the
law between the parties (Santiago v. Dimayuga, 3 SCRA 919 [1961]), as long as such stipulation does not contravene
law, good morals, good customs, public order or public policy (Polytrade Corp. v. Blanco, 30 SCRA 187 [1969]; Social
Security Commission v. Almeda, 168 SCRA 474 [1988]).
Considering, therefore, that the 20% attorney's fees provided under the parties' Indemnity Agreement (Exhibit "1-FICI")
is not contrary to the existing jurisprudence on the matter *** and is not considered excessive nor unconscionable, the
same should be awarded to FICI.

billed petitioner additional legal fees amounting to P16.5 million[4] which the latter, however, refused to pay. Instead,
petitioner issued them several checks totaling P1.12 million[5] as full payment for settlement.[6]

Still not satisfied, respondents filed in the same trial court [7] a motion
for payment of lawyers fees for P50 million.[8]
On April 14, 2000, the trial court ordered petitioner to pay P5 million to Atty. de Jesus, P2 million to
Atty. Ambrosio and P2 million to Atty. Mariano.
On appeal, the Court of Appeals reduced the amount as follows: P1 million to Atty. de Jesus, P500,000 to
Atty. Ambrosio and P500,000 to Atty. Mariano. The motion for reconsideration was denied. Hence, this recourse.
The issues raised in this petition are:
(1)

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

(2)

whether respondents were entitled to additional legal fees.

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

First, a lawyer may enforce his right to his fees by filing the necessary petition as an incident of the main
action in which his services were rendered or in an independent suit against his client. The former is preferable to
avoid multiplicity of suits.[9]

VINSON B. PINEDA,
Petitioner,

The Pasig RTC, Branch 151, where the case for the declaration of nullity of marriage was filed, had
jurisdiction over the motion for the payment of legal fees. Respondents sought to collect P50 million which was
equivalent to 10% of the value of the properties awarded to petitioner in that case. Clearly, what respondents were
demanding was additional payment for legal services rendered in the same case.

G.R. No. 155224


Present:

- versus -

PUNO, J., Chairperson,


SANDOVAL-GUTIERREZ,
CORONA,
AZCUNA and
GARCIA, JJ.

ATTY. CLODUALDO C. DE JESUS,


ATTY. CARLOS AMBROSIO and
ATTY. EMMANUEL MARIANO,
Respondents.

Second, the professional engagement between petitioner and respondents was governed by the principle
of quantum meruit which means as much as the lawyer deserves. [10] The recovery of attorneys fees on this basis is
permitted, as in this case, where there is no express agreement for the payment of attorneys fees. Basically, it is a
legal mechanism which prevents an unscrupulous client from running away with the fruits of the legal services of
counsel without paying for it. In the same vein, it avoids unjust enrichment on the part of the lawyer himself.
Further, Rule 20.4 of the Code of Professional Responsibility advises lawyers to avoid controversies with
clients concerning their compensation and to resort to judicial action only to prevent imposition, injustice or
fraud. Suits to collect fees should be avoided and should be filed only when circumstances force lawyers to resort to
it.[11]

Promulgated:

In the case at bar, respondents motion for payment of their lawyers fees was not meant to collect what
was justly due them; the fact was, they had already been adequately paid.

August 23, 2006


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

The facts follow.


On April 6, 1993, Aurora Pineda filed an action for declaration of nullity of marriage against petitioner
Vinson Pineda in the RTC of Pasig City, Branch 151, docketed as JDRC Case No. 2568. Petitioner was represented
by respondents Attys. Clodualdo de Jesus, CarlosAmbrosio and Emmanuel Mariano.
During the pendency of the case, Aurora proposed a settlement to petitioner regarding her visitation rights over
their minor child and the separation of their properties. The proposal was accepted by petitioner and both parties
subsequently filed a motion for approval of their agreement. This was approved by the trial court. On November 25,
1998, the marriage between petitioner and Aurora Pineda was declared null and void.
Throughout the proceedings, respondent counsels were well-compensated. [3] They, including their relatives and
friends, even availed of free products and treatments from petitioners dermatology clinic. This notwithstanding, they

Demanding P50 million on top of the generous sums and perks already given to them was an act of
unconscionable greed which is shocking to this Court.
As lawyers, respondents should be reminded that they are members of an honorable profession, the
primary vision of which is justice. It is respondents despicable behavior which gives lawyering a bad name in the
minds of some people. The vernacular has a word for it: nagsasamantala. The practice of law is a decent profession
and not a money-making trade. Compensation should be but a mere incident. [12]
Respondents claim for additional legal fees was not justified. They could not charge petitioner a fee based
on percentage, absent an express agreement to that effect. The payments to them in cash, checks, free products and
services from petitioners business all of which were not denied by respondents more than sufficed for the work
they did. The full payment for settlement [13] should have discharged petitioners obligation to them.
The power of this Court to reduce or even delete the award of attorneys fees cannot be denied. Lawyers
are officers of the Court and they participate in the fundamental function of administering justice. [14] When they took

their oath, they submitted themselves to the authority of the Court and subjected their professional fees to judicial
control. [15]
WHEREFORE, the petition is hereby PARTIALLY GRANTED. The decision of the Court of Appeals dated
April 30, 2002 in CAG.R. CV No. 68080 is herebyMODIFIED. The award of additional attorneys fees in favor of
respondents is herebyDELETED.
G.R. No. 84751 June 6, 1990
SPOUSES EDUARDO and ANN AGUSTIN, petitioners,
vs.
HON. COURT OF APPEALS and LABRADOR DEVELOPMENT CORPORATION, respondents.
This petition for review on certiorari impugns the decision of the Court of Appeals, dated March 28, 1988, with the
following decretal portion:
WHEREFORE, the present appeal is accordingly resolved deleting the adjudicated award of
P20,000.00 as exemplary damages, and otherwise by AFFIRMING the Decision dated October
10, 1985 in Civil Case No. Q-42390 entitled "Labrador Development Corporation vs. Sps.
Eduardo Agustin, et al." in all other respects.
Without pronouncement as to costs.

Said judgment of respondent court is based on the findings of fact set out in its decision thus:
Plaintiff-appellee, being a subdivision developer, owned Lot 14, Block 1 of the San Pedro
Compound IV at Tandang Sora, Quezon City, under Transfer Certificate of Title No. 277209. On
November 7, 1981, plaintiff-appellee agreed to sell said parcel of land to defendants-appellants
on a package deal together with a residential house per House Plan Model B-203 to be
constructed thereon for the sum of P202,980.00 (Exh. 'B'). As therein stipulated, the
defendants-appellants were to pay P42,980.00 as equity-P30,133.00 as down payment and the
balance of P12,847.00 upon completion and de very of the property, the other P160,000.00 to
have been funded through a Pag-Ibig Fund loan to be applied for by defendants-appellants.
Central to the above was a stipulation that in the event the housing loan be insufficient to pay
the full contract price owing, they shall pay the same in cash on or before occupancy and
acceptance of the housing unit (ref. Exh. 'B', para. [e]). The agreement further provided
(f) Failure of the Vendee to comply with any or all of the above stipulations shall ipso facto
cancel this contract to sell; and thereupon, this contract to sell or any other contract executed in
connection thereof, shall be of no further force and effect; and the title to the property, if already
transferred in the name of the Vendee, shall automatically revert to the Vendor.
The foregoing stipulation encompassed the necessity of transferring title to the lot to
defendants-appellants as an accommodation to enable their application for a housing loan in
their names.
Hence, plaintiff-appellee executed a deed of sale over the lot (Exh. 'C') in favor of defendantsappellants, without additional consideration beyond the P30,133.00 down payment adverted to,
and the issuance to said defendants-appellants of Transfer Certificate of title No. 29435 * (Exh.
'D'). Thusly accommodated, defendants-appellants applied for a P160,000.00 housing loan
with the First Summa Savings and Mortgage Bank as an accredited financing institution.

After initial approval in the amount applied for, the Pag-ibig housing loan was downgraded to
P128,000.00 after reassessment. Under date of December 18, 1982, plaintiff-appellee apprised
defendants-appellants of said development (Exh. 'F') enclosing the formal bank December 16,
1982 letter (Exh. 'E') requiring a co-borrower related within the fourth degree of consanguinity
should the defendants-appellants desire approval of an increased loan amount.
Defendants-appellants appear to have disdained a reply to plaintiff-appellee's said letter. Thus,
under date of December 28, 1982, plaintiff-appellee again wrote a follow- up letter to
defendants-appellants (Exh. 'G') affording the latter time to decide on their options, on pain of
enforcement of the terms of the contract to sell.
Failing reaction from defendants-appellants thereto, plaintiff-appellee resorted to enforcement
of the contractual stipulations under date of March 1, 1983 (Exh. 'H') and remitted an enclosed
check for P30,133.00 (Exh. 'I') representing the equity paid in by defendants-appellants. The
latter accepted said check and deposited same into their account.
Instead of reconveyance of title to the lot, defendants-appellants however sought time to buy
the property; plaintiff-appellee agreed provided that payment be effected in cash. Defendantsappellants failed to make such payment in cash, despite the lapse of a second 30-day period
afforded therefor. Thereupon, plaintiff-appellee demanded anew for reconveyance in a July 27,
1984 letter (Exh. 'J').
On August 8, 1984, plaintiff-appellee filed Civil Case No. Q42390 for reconveyance and
damage. In answer, defendants-appellants maintained inter alia that approval of a P160,000.00
housing loan had been assured upon completion of the house with proof of its delivery and
acceptance, but that acceptance could not be reasonably given by them in that certain
specifications for the housing unit had not been complied with. 2
After trial on the merits, the lower court rendered judgment in favor of private respondent, the dispositive part whereof
reads:
WHEREFORE, judgment is hereby rendered ordering defendants, jointly and severally:
a) to reconvey to plaintiff the parcel of land covered by Transfer Certificate of Title No.
284735 ** of the Register of Deeds, Quezon City;
b) to pay plaintiff the sum of P20,000.00 as exemplary damages;
c) to pay plaintiff the sum of P5,000.00 as attorney's fees, plus costs of the suit.

which judgment, as earlier stated, was affirmed by respondent court but with the deletion of the award of exemplary
damages.
On August 22, 1988, respondent court denied petitioners' motion for reconsideration, hence this present petition
raising the following issues:
I

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

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

II
The failure of Labrador Development Corporation (LADECO) to complete construction of the housing unit
pursuant to the 'Contract to Sell' constitutes a substantial and serious breach thereof as would bar LADECO
from executing the option of cancellation (rescission) of the 'Contract to Sell' under Article 1191 of the Civil
Code.
III
The justifiable refusal of Spouses Agustin to sign the 'House Acceptance Form' certifying that they accept the
house as 100% complete constitutes merely a slight or casual breach of the 'Contract to Sell' which does not
warrant the unilateral cancellation (rescission,) of the contract under par. 4 (f) thereof and Article 1191 of the
Civil Code.
IV
The remedy of reconveyance of title of the property in question cannot be availed of by LADECO as there was
no valid, binding and effective cancellation (rescission) of the 'Contract to Sell'.
V
Private respondent LADECO is not entitled to attorney's fees of P5,000.00 under the facts and circumstances
of the case. 4

We agree with the Court of Appeals that reconveyance is proper in this case. Herein petitioners are already barred
from questioning the validity of the cancellation of the contract to sell by their acquiescence thereto. Their acceptance
and encashment of the checks representing the total amount paid by them to private respondent as equity, coupled by
their failure to object or file an action, despite due notice, to question the validity of the extrajudicial cancellation of said
contract and to ask for specific performance for more than one year, clearly show that they assented to the same.
Furthermore, after receiving the check refunding their equity payment incident to the reconveyance desired by private
respondents, petitioners, disregarding the original agreement of the parties, offered to purchase anew the property in
question to which private respondent agreed. This novatory agreement, however, was not consummated as petitioners
again failed to raise and pay the purchase price despite two 30-day extensions. They never at that juncture questioned
the propriety of the rescission and reconveyance desired by private respondent. Obviously, extrajudicial rescission
produces legal effects where the other party does not oppose it. 5
Moreover, even assuming that there was no implied assent to the cancellation of the contract to sell, reconveyance is
still proper. The non-fulfillment by petitioners of their obligation to pay, which is a suspensive condition to the obligation
of private respondent to sell and deliver the house and lot, rendered the contract to sell and the subsequent contract
executed pursuant thereto ineffective and without force and effect.
The contract between petitioners and private respondent is not an absolute sale but a conditional sale or contract to
sell, whereby ownership is retained by the vender until full payment of the purchase price. Without such full payment,
there is no obligation to sell and deliver. The subsequent execution of the deed of absolute sale and the transfer and
registration of the title of the lot in the name of petitioners is of no moment, considering that the same, by mutual
agreement of the parties, was made without consideration and solely for the purpose of facilitating the approval and
release of the PAG-IBIG loan and not for the purpose of actually transferring ownership.

5. Upon complete payment of the VENDEE/S of the purchase price herein above stated, and
faithful compliance with all his obligations stipulated therein, the VENDOR, agrees to execute a
valid deed of sale in favor of the VENDEE/S and cause the issuance of the Certificate of Title in
the name of the latter, free from all liens and encumbrances except those provided for in the
Land Registration Act and other laws, Presidential Decrees, General Orders, Letters of
Instruction, Zoning Ordinances, and the attached Deed of Restrictions, which form part of this
Contract; ... 6
The repeated failure and refusal of petitioners, despite due notice, to look for a co- borrower related to them within the
fourth degree of consanguinity as required by the bank in order to prevent the downgrading of the loan, nor to
communicate to private respondent the arrangement they intended to make regarding the difference between the
approved loan of P128,000.00 and the unpaid amount of P160,000.00, clearly indicate their intention not to perform
their obligations under the contract. This constituted not only a substantial or serious breach, but prevented the
happening of the condition precedent which would give rise to the obligation of private respondent to sell and transfer
ownership of the house and lot to petitioners.
We have repeatedly ruled that:
In contracts to sell, where ownership is retained by the seller and is not to pass until the full
payment of the price, such payment, as we said is a positive suspensive condition, the failure
of which is not a breach, casual or serious, but simply an event that prevented the obligation of
the vendor to convey title from acquiring binding force, in accordance with Article 1117 of the
Old Civil Code. To argue that there was only a casual breach is to proceed from the
assumption that the contract is one of absolute sale, where non-payment is a resolutory
condition, which is not the case.
... appellant overlooks that its contract with appellee Myers is not the ordinary sale envisaged
by Article 1592, transferring ownership simultaneously with the delivery of the real property
sold, but one in which the vendor retained ownership of the immovable object of the sale,
merely undertaking to convey it provided the buyer strictly complied with the terms of the
contract (see paragraph [d], ante, page 5). In suing to recover possession of the building from
Maritime, appellee Myers is not after the resolution or setting aside of the contract and the
restoration of the parties to the status quo ante, as contemplated by Article 1592, but precisely
enforcing the provisions of the agreement that it is no longer obligated to part with the
ownership or possession of the property because Maritime failed to comply with the specific
condition precedent, which is to pay the installment as they fell due.
The distinction between contracts of sale and contracts to sell with reserved title has been
recognized by this Court in repeated decisions upholding the power of promissors under
contracts to sell in case of failure of the other party to complete payment, to extrajudicially
terminate the operation of the contract, refuse conveyance and retain the sums or installments
already received, where such rights are expressly provided for, as in the case at bar. 7
We repeat, the obligation of petitioners to fully comply with their undertakings was necessarily determinative of the
obligation of private respondent to complete the construction of the house. Where one of the parties to a contract did
not perform the undertaking which he was bound by the terms of the agreement to perform, he is not entitled to insist
upon the performance of the other party. 8 For failure of one party to assume and perform the obligation imposed on
him, the other patty does not incur in delay. 9

Correspondingly, we reject the argument of petitioners that the failure of private respondent to complete the
construction of the house constitutes a substantial breach as would bar the latter from cancelling the contract. Instead,
the facts of this case persuade us to hold that petitioners were merely posturing when, after being required to
reconvey the premises, they came up with belated complaints about the imperfections or incompleteness of the house
involved, in the same manner that they also pretended to be interested in purchasing the property but failed to do so
after importuning private respondents to grant them extensions of time for that purpose.
With the foregoing circumstances, reconveyance is proper and exigible pursuant to Paragraph 4 (f) of the contract to
sell quoted in the decision of respondent court, supra, and on the basic principle that when an obligation has been
extinguished or resolved, it is the duty of the court to require the parties to surrender whatever they may have received
from the other, and the parties must be restored, as far as practicable, to their original situation. 10
The award to private respondent of attorney's fees, however, must be disallowed considering that the award of
exemplary damages was eliminated by respondent court and the text of the decision of the trial court, which was

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

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