Atty. Paterno Canlas v.

CA and Francisco Herrera

G.R. No. L-77691;

August 8, 1988; Sarmiento, J.

Facts:
Respondent Herrera was the registered owner of 8 parcels of land in QC. He obtained several loans from
the L&R Corp. (financing institution) equal to P420,000. As security, he executed deeds of mortgage in
favor of the corp. over the parcels of land. Upon failure to pay, L&R extrajudicially foreclosed the
mortgage, causing the parcels of land to be sold at public auction, with L&R as highest bidder. Pending
redemption, the respondent through petitioner counsel filed a complaint for injunction against L & R, to
enjoin consolidation of title in its name, in which he succeeded in obtaining preliminary injunctive relief.
2 years later, parties entered into a compromise agreement whereby respondent was allowed another
year to redeem the property and that Atty. Canlas shall be entitled to P100,000 as attorney’s fees. The
court approved the compromise. Respondent remained in financial straits, failing to acquire the funds to
repay the loans and the attorney’s fees. Petitioner moved for execution as to his fees, which was
granted but not collected. Petitioner and respondent came to an agreement that Atty. Canlas would
redeem the property in favor of the latter, executing a “Deed of Sale and Transfer of Rights of
Redemption and /or to redeem,” which enabled petitioner to redeem and register the same in his name.
Respondent alleged that the deed was falsified and filed an action for reconveyance and reformation of
document, disbarment proceedings, and various criminal complaints, but the court ruled otherwise,
stating that it did not change the meaning of the contract. He then filed a suit for Annulment of
Judgment in the CA. Petitioner argues that the petition for annulment was actually a petition for
certiorari and should be dismissed.

Issue:
1. W/N respondent’s action is a petition for certiorari.

2. W/N petitioner validly imposed and executed the amount of his attorney’s fees.

3. W/N redemption and sale of respondent’s properties by petitioner was valid.

Held:
1. No. A lawyer should not exploit his mastery of procedural law to score a “technical knockout” over his
own client. Procedural rules, after all, have for their object assistance unto parties “in obtaining just,
speedy, and inexpensive determination of every action and proceeding.”

2. No. The attorney’s fees should be commensurate to the extent of services rendered. In the case at
bar, petitioner’s claim for attorney’s fees in the sum of P100,000 is unreasonable. The case itself
moreover did not involve complex questions of fact or law that would have required substantial effort as
to research or leg work for the petitioner to warrant his demands. The fact that the properties subject
thereof commanded quite handsome prices in the market should not be a measure of the importance or
nonimportance of the case. Lawyering is not a moneymaking venture and lawyers are not merchants.
Respondent’s bankruptcy should have tempered petitioner’s demand for his fees. He placed his
interests over and above those of his client, in opposition to his oath “to conduct himself as a lawyer
with all good fidelity to his clients.”

3. Yes. The Court observed that the “Deed of Sale and Transfer of Rights of Equity of Redemption and/or
to Redeem” was executed following the finality of the decision approving the compromise agreement. It
is actually a new contract—not one in pursuance of what had been agreed upon on compromise—in
which, as we said, the petitioner purportedly assumed redemption rights over the disputed properties
(but in reality, acquired absolute ownership thereof). By virtue of such a subsequent agreement, the
lands had ceased to be properties, which are “the object of any litigation.” It is futile to invoke the rule
granting attorneys a lien upon the things won in litigation similar to that vested upon redemptioners. To
begin with, the rule refers to realty sold as a result of execution in satisfaction of judgment. In this case,
however, redemption was decreed by agreement (on compromise) between the mortgagor and
mortgagee. It did not give the petitioner any right to the properties themselves, much less the right of
redemption, although provisions for his compensation were purportedly provided. At any rate, the
transfer, so we hold, is not subject to the injunction of Article 1491 of the Civil Code. But like all voidable
contracts, it is open to annulment on the ground of mistake, fraud, or undue influence, which is in turn
subject to the right of innocent purchasers for value .For this reason we invalidate the transfer in
question specifically for undue influence as earlier detailed. While the respondent Herrera has not
specifically prayed for invalidation, this is the clear tenor of his petition for annulment in the Appellate
Court. It appearing, however, that the properties have been conveyed to third persons whom we
presume to be innocent purchasers for value, the petitioner, Atty. Paterno Canlas, must be held liable,
by way of actual damages, for such a loss of properties. To hold Atty. Canlas alone liable for damages is
to enrich said respondent at the expense of his lawyer. The parties must then set off their obligations
against the other. To obviate debate as the actual amounts owing by one to the other, we hold
Francisco Herrera, the private respondent, liable to Atty. Paterno Canlas, the petitioner, in the sum of
P654,000.00 representing the redemption price of the properties, in addition to the sum of P20,000.00
as and for attorney’s fees. We order Atty. Canlas, in turn, to pay the respondent Herrera the amount of
P1,000,000.00, the sum he earned from the resale thereof, such that he shall, after proper adjustments,
be indebted to his client in the sum of P326,000.00 as and for damages.