LEGAL ETHICS

CASE No. 201-208

201

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

 FACTS:
On November 8, 1972, petitioner filed a complaint 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.

ISSUE:
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.

HELD:
Yes, respondents acted with grave abuse of discretion. The judgment was rendered in
favor of the plaintiff and against the defendants ordering the defendant La Mallorca
Partnership to pay the plaintiff. From a joint venture/partnership theory which he
adopted and consistently pursued in his complaint. Respondents shall be excluded and
that only nominal attorney's fees shall be awarded. Petitioner embraced the innominate
contract theory. The defense agreed to submit the case for decision solely on the basis
of evidence adduced by plaintiff Mobil Oil but past interest in the amount of P150. An
inventory of the contributed property duly signed by the parties should be attached to
the public instrument. Being unsigned and referring to a partnership involving more than
P3. MOBIL OIL PHILIPPINES. the counsel of the defendant successfully bargained for
a compromise agreement.

202
CONSOLIDATED RURAL BANK (Cagayan Valley), INC., petitioner, 
vs.
NATIONAL LABOR RELATIONS COMMISSION and ANTONIA
SANCHEZ, respondents
 Private respondent Antonia L. Sanchez was Branch Manager of petitioner's Ilagan Branch, In
May 1992 a certain Rosalinda Rodriguez presented six (6) US Treasury Warrants (USTW) for deposit
with CONSOLBANK's Ilagan Branch with a total value of $13,966.74 or P335,201.76. As Branch
Manager, private respondent referred the checks to her superiors at CONSOLBANK's Head Office who
accepted and deposited the checks for clearing at PCI Bank, its depositary bank. On 21 July 1992 PCI
Bank informed CONSOLBANK that the checks were cleared, prompting it to withdraw the amount of the
checks. In the meantime, Rodriguez withdrew on different dates the total amount of P314,000.00 from her
account at CONSOLBANK Ilagan. Six (6) months after the USTWs were cleared CONSOLBANK was
informed by PCI Bank that the checks had been dishonored for having been altered and was
consequently requested to deposit the amount it had previously withdrawn to cover the cost of the altered
USTWs inclusive of interest charges amounting to P391,687.87.

Private respondent was charged for disobedience of company rules, regulations and
instructions, to wit: (a) acceptance of six (6) USTWs for deposit knowing fully well that
CONSOLBANK was not authorized to accept dollar checks; (b) allowing withdrawal by depositor
even before clearance of said checks; and, (c) denying that she was instructed by her superior,
Cocson to retain the USTWs.

Private respondent denied the charges against her. She was terminated on 7 August
1993.On 10 January 1994 private respondent sued CONSOLBANK for illegal dismissal with prayer
for reinstatement, back wages and other benefits as well as P500,000.00 in damages. In his
decision dated 22 July 1994 the Labor Arbiter ruled in favor of private respondent. CONSOLBANK
appealed to the NLRC which affirmed the conclusions of the Labor Arbiter that no valid cause
existed for private respondent’s dismissal and that she was denied due process. 

ISSUE

1. Whether or not there was a grave abuse of discretion in affirming the Labor Arbiter's decision
which was rendered with indecent haste without giving petitioner further opportunity to
present its evidence
2. Whether or not Antonia L. Sanchez was illegally dismissed.

HELD

1. NO. The fact that counsel for petitioner was not present during the clarificatory hearing on 19
July 1994, hence, unable to rebut the testimony given by private respondent could hardly be
attributed to anybody else's fault but its own. Counsel for petitioner simply chose not to appear on the
assumption that the hearing would be postponed on account of opposing counsel's absence thus
negligently and completely overlooking the assurance in the very same Manifestation that private
respondent would nevertheless appear on her own. Hence, the fact that the Labor Arbiter proceeded with
the hearing as scheduled could not be branded as an arbitrary act depriving petitioner of its right to
present evidence. Petitioner lost this additional opportunity entirely through its own fault and negligence.

Similarly, the decision of the Labor Arbiter not to schedule the case for another hearing could
not be considered as a grave abuse of discretion. First of all, it is well-settled that the holding of a
hearing is discretionary with the Labor Arbiter and is something which the parties cannot demand as
a matter of right.  It is entirely within the bounds of the Labor Arbiter's authority to decide a case based on
mere position papers and supporting documents without a formal trial or hearing as is sanctioned by the
New Rules Procedure of the National Labor Relations Commission.  Thus we have consistently held that
the requirements of due process are satisfied when the parties are given the opportunity to submit
position papers wherein they are supposed to attach all the documents that would prove their claim in
case it be decided that no hearing should be conducted or was necessary.  Secondly, we note that
petitioner and private respondent themselves agreed during the hearing of 3 March 1994 to forego with a
formal trial and opted instead to file only their respective replies to each other's position paper.  Given
these circumstances, petitioner certainly cannot now be heard to have been deprived of due process.

2. YES. Private respondent could not fairly be considered lacking in diligence or grossly negligent in
her actuations with respect to the six (6) USTWs. Petitioner itself does not deny that private respondent
merely referred the checks to the Head Office. That she may have been previously warned by the
Manager of Metrobank not to accept such checks as alleged by petitioner does not erase the fact that it
was still the Head Office which ultimately decided on accepting and depositing the USTWs for clearing.

On the charge of violating bank policies, while private respondent was accused of having
violated CONSOLBANK's alleged policy of not accepting dollar checks for deposit, it was
nonetheless established during the investigation that CONSOLBANK had in fact no such written
policy and accepting dollar checks was actually a tolerated practice among its branches. 

The other charges against private respondent, i.e., allowing Rosalinda Rodriguez to withdraw from
her dollar account before the USTWs were cleared and granting a commercial loan to Rodriguez
secured by the uncleared USTWs, were not substantiated, hence, they may not now be invoked to
justify private respondent's dismissal.

203
GR No. 95625, October 4, 1991

Hiyas Savings and Loan bank

vs
CA, Spouses Delfin Mendoza and Solita Santos and Spouses Felix Santos and
Demetria Pacheco

Facts:
RTC rendered decision and ordered that the plaintiff shall pay Hiyas Savings and
Loan Association the following sums:
1. P200,000 representing the principal amount of loan with 14% interest per
annum
2. Ten percent (10%) of the amount due as and by way of attorney’s fees; and
3. The costs of the suit.
June 7, 1989, private respondents deposited in court two treasury checks in the
amount of P428,600 in satisfaction of judgment favoring Hiyas Savings and Loan Bank
in a civil case. The amount of P40,735.35 was applied by the petitioner as attorney’s
fees. However, on August 18, 1989, petitioner filed an amended motion for execution.
Petitioner claimed that the total liability of the private respondents was P448,941.92.
Hence, there was still an unsatisfied balance which it claimed to be P20,250.38 as 10%
of attorney’s fee from the interest of principal obligation.
The motion was denied and dismissed by CA.
Issue:
Whether or not the attorney’s fee will only be based to 10% of the principal
amount due?

Held:
 There is no ambiguity as regards the amount of attorney’s fees awarded. It is
clear that the final and executory decision of the RTC awarded ten percent (10%) of the
amount due as attorney’s fees. Since there was no qualification that the ten percent
attorney’s fees shall be taken only is the total amount due on the loan obligation
(principal + interest). Had the decision really intended that the attorney’s fees shall be
ten percent (10%) of the principal only, it could have so provided.
Courts are cautioned to be careful in writing their decisions, to be clear and
precise in the use of words, especially in the dispositive portion.
The petition was granted declaring that the total amount of the judgment debt
unsatisfied in Civil Case is P20,250.38 plus 14% interest until full payment.

204
G.R. No. 104600, July 2, 1999
RILLORAZA, AFRICA, DE OCAMPO AND AFRICA
vs.
EASTERN TELECOMMUNICATIONS, PHILS., INC.
FACTS:
Eastern Telecommunications, Phils., Inc. (ETPI) represented by thelaw firm SAGA, filed with the
Regional Trial court a complaint for the recovery or revenue shares against PLDT. Atty. Rilloraza, a
partner of the firm, appeared for ETPI.
 
After ETPI rested its case, it paid SAGA the billed amount. The latter wasdissolved and
the junior partners formed RADA, which took over as counsel in the casefor ETPI. ETPI
signed a retainer agreement with counsel wherein it was stated that incases of
collection or judicial action, “our attorney’s fees shall be 15% of the amountscollected or
the value of the property acquired or liability saved.” The retainer agreementwas
terminated in 1988. the next day, RADA filed a notice of attorney’s lien. In its notice,RADA informed
the court that there were negotiations toward a compromise betweenETPI and PLDT.In
1990, the parties arrived at an amicable settlement and the same wasentered as a
judgment. The petitioner (RADA) filed a motion for the enforcement
of attorney’s lien.

ISSUE:
Is RADA entitled to the awards of attorney’s fees they are claiming?

HELD:
RADA is entitled to attorney’s fees but the Supreme Court remanded thecase to the court
of origin for the determination of the amount of attorney’s fees to whichthe petitioner is entitled.Atty.
Rilloraza handled the case from its inception until ETPI terminated thelaw firm’s
services in 1988. Petitioner’s claim for attorney’s fees hinges on two grounds:first, the
fact that Atty. Rilloraza personally handled the case when he was working for SAGA, and
second, the retainer agreement.Whether there is an agreement or not, the courts
shall fix a reasonablecompensation which lawyers may receive for their professional
services.” “A lawyer has
the right to be paid for the legal services he has extended to
h i s   c l i e n t ,   w h i c h compensation must be reasonable.” A lawyer would be entitled to receive
what he meritsfor his services. Otherwise stated, the amount must be determined on a
quantum meruit basis.

205

JOSE V. DEL ROSARIO, petitioner, 

vs.
HON. COURT OF APPEALS and DE DIOS MARIKINA TRANSPORTATION CO.,
INC., respondents.

Petitioner suffered physical injuries, requiring two (2) major operations, when he fell from, and then was
dragged along the asphalted road by, a passenger bus operated by private respondent transportation
company. The incident occurred when the bus driver bolted forward at high speed while petitioner was
still clinging on the bus door's handle bar that caused the latter to lose his grip and balance. The refusal of
private respondent to settled petitioner's claim for damages constrained petitioner to file, on 26 June
1985, a complaint for damages against private respondent.

The trial court rendered a decision dismissing defendant De Dios Marikina Transportation Co.,
Inc.'s counterclaim for lack of merit and ordering said defendant to pay plaintiff Jose V. Del Rosario
dismissing defendant De Dios Marikina Transportation Co., Inc.'s counterclaim for lack of merit and
ordering said defendant to pay plaintiff Jose V. Del Rosario, among others, the sum of P33,641.50, as
attorney's fees. On appeal to it, the Court of Appeals affirmed in toto the findings of fact of the trial court
but it reduced the award for attorney's fees from P33,641.50 to P5,000.00.

ISSUE:

Whether or not the reduction of attorney's fees is valid.

HELD:

There is no question that a court may, whenever it deems it just and equitable, allow the recovery by the
prevailing party of attorneys fees.  In determining the reasonableness of such fees, this Court in a number
of cases  has provided various criteria which, for convenient guidance, we might collate thusly:

a) the quantity and character of the services rendered;

b) the labor, time and trouble involved;
c) the nature and importance of the litigation;
d) the amount of money or the value of the property affected by the controversy;
e) the novelty and difficulty of questions involved;
f) the responsibility imposed on counsel;
g) the skill and experience called for in the performance of the service;
h) the professional character and social standing of the lawyer;
i) the customary charges of the bar for similar services;
j) the character of employment, whether casual or for establishment client;
k) whether the fee is absolute or contingent (it being the rule that an attorney may
properly charge a higher fee when it is contingent than when it is absolute); and
l) the results secured.
In this instance, the complaint for damages was instituted by petitioner in June 1985, following the refusal
of private respondent to settle petitioner's claim, and the decision thereon was promulgated by the court a
quo only in December 1989 or about four years and six months later. Several pleadings were filed and no
less than twenty appearances were made by petitioner's counsel, not counting the various other
pleadings ultimately filed with the Court of Appeals and now before this Court. Given the nature of the
case, the amount of damages involved, and the evident effort exerted by petitioner's counsel, the trial
court's award of attorney's fees for P33,641.50 would appear to us to be just and reasonable.

WHEREFORE, the instant petition is hereby GRANTED, and the decision of the Court of Appeals is
MODIFIED by REINSTATING the trial court's award of attorney's fees.

206

G.R. No. 97255 August 12, 1994

SOLID HOMES, INC., petitioner, 

vs.
HON. COURT OF APPEALS, INVESTCO, INC., ANGELA PEREZ STALEY, and
ANTONIO PEREZ, respondents.

FACTS: 
Investco Inc., Perez and Staley, private respondents contended that, on September of
1976, they entered into a contract with Solid Homes, selling six (6) parcels of land in
Quezon City and Marikina for P10,211,075.00. Private respondents furthered that Solid
Homes violated the terms of the agreement by refusing to pay the balance of
P4,800,282.91 and by failing to negotiate a settlement with the tenants and squatters of
the property despite its receipt from Investco of P350,000.00 for that specific purpose.
Private respondents filed collection of sums of money, damages and attorney’s fees
with trial court. The trial court rendered judgment ordering Solid Homes to pay
remaining amount with P250,000 attorney’s fees. Upon appeal to the Court of Appeals,
it modified the lower court’s judgment by lowering the attorney’s fees to P50,000. In the
instant petition for review, petitioner Solid Homes argues (a) that the Court of Appeals
should not have awarded attorney’s fees, there being an absence of any special finding
of fact to justify such award. The Supreme Court  required private respondents to
comment. Atty. Alejandro Barin withdrew as counsel for respondents Investco, Inc.,
Staley and Perez. They required private respondents to submit the name and address
of their new counsel but no compliance has been made. Pending the judgment of the
trial court for the collection of sums of money, Investco sold the same parcels of land
involved to Armed Forces of the Philippines Mutual Benefit Association. Solid Homes
filed two civil cases against AFPMBA and private respondents for nullification of second
deed of sale. Trial court of Quezon City ruled in favor of Solid Homes in the first case.
Upon appeal with the Court of Appeals, the decision was reversed. The case was
elevated to the Supreme Court. For the second case, the trial court of Pasig City ruled
in favor of Solid Homes which was then affirmed by Court of Appeals upon appeal. The
Court has yet to hear from private respondents.

ISSUES:
1. Was there enough bases to support court’s award for attorney’s fees?
2. Whether or not the payment schedule should be adjusted

HELD: 
1. No. Article 2208 of the Civil Code allows attorney’s fees to be awarded by a court
when its claimant is compelled to litigate with third persons or to incur expenses to
protect his interest by reason of an unjustified act or omission of the party from whom it
is sought. While judicial discretion is here extant, an award thereof demands,
nevertheless, a factual, legal or equitable justification. The Supreme Court held that the
records do not show enough basis for sustaining the award for attorney’s fees and to
adjudge its payment by petitioner. On the contrary, the appellate court itself has found
that petitioner’s act of withholding payment could not be said to be all that unjustified.

2. Yes. It is undisputed that appellant Solid Homes had made a total payment of
P6,126,645.00 leaving a balance of P4,800,282.91, which refers to the 6th to the 10th
installments. . Of the 5th installment due on July 22, 1980, the following payments were
made by appellant:

Oct. 30, 1980 to Nov. 10, 1980 P150,000.00

Nov. 18, 1980 to Dec. 10, 1980 270,000.00
Dec. 18, 1980 to Jan. 14, 1981 101,853.12
Jan. 20 to Feb. 12, 1981 95,000.00
Feb. 16 to Feb. 19, 1981 115,000.00
—————
P731,853.12

Thereafter, no further payment was made by appellant contending that under the
provisions of paragraph 1(b) of the contract, the payment schedule should be adjusted. 
Should Investco obtain titles to the properties after July 22, 1977, the due dates of the
down payment and the subsequent payments on the balance shall be adjusted
accordingly.

Court of Appeals decision AFFIRMED. Attorney’s Fees DELETED. 

207

A.M. No. 258          December 21, 1963

RUFINA BAUTISTA, complainant-petitioner, 
vs.
ATTY. BENJAMIN O. BARRIOS, defendant-respondent.

BENGZON, C.J.:

Bautista approached Atty. Barrios to help her and two other parties to draft a Deed of
Partition involving the intestate property of one other sibling who died in 1952. Barrios
assisted Bautista. However, one of the parties to the Deed, Federico Rovero refused to
comply and so Bautista was forced to sue Rovero. She asked Barrios to represent her.
Barrios drafted the petition for Bautista but he refused to file the same because he said
he is reluctant to take up a “lost cause”. So Bautista engaged the services of another
lawyer but to her surprise she found out that Barrios is representing Rovero in court.
ISSUE: Whether or not Atty. Barrios should be disciplined.
HELD: Yes. Barrios represented conflicting interests in contravention to his Lawyer’s
Oath. He cannot in fact represent any of the parties as against each other. Particularly,
he cannot represent Rovero in questioning the terms of the very Deed he helped
prepared and then assail the validity of the terms of said Deed. His inconsistent position
in the case militates against Barrios’ good faith. Barrios was suspended from practice
for two years.

208

A.C. No. 927 September 28, 1970

IN THE MATTER OF THE COMPLAINT FOR DISBARMENT OF ATTORNEY

POTENCIANO A. PALANCA. WILLIAM C. PFLEIDER, complainant, 
vs.
POTENCIANO A. PALANCA, respondent.

FACTS:
 
The respondent Atty. Potenciano A. Palanca was for sometime the legal counsel
of the complainant William C. Pfleider. According to the complainant, he retained the
legal services of Palanca and insists that an attorney-client relationship between them
began. At all events, the relations between the two must have attained such a high level
of mutual trust that Pfleider and his wife leased to Palanca agricultural land known as
the Hacienda Asia in Negros Occidental for a period of ten years.
It is stipulated in the lease agreement that a specified portion of the lease rentals
would be paid to Pfleider and the remainder would be delivered by Palanca to the listed
creditors of Pfleider.
Pfleider filed a suit for the rescission of the lease agreement on the ground of
alleged default in the payment of rentals of Palanca. Pfleider also filed for
the disbarment of Palanca on the grounds of: (a) Palanca did not follow the instructions
of Pfleider to settle his estafa case against Matiao in 1965 and the latter also failed to
deposit the sum of P5,000with the court, (b) Palanca has fraudulently charged the
P5,000 as part of the lease rental of the Hacienda Asia, (c) Palanca also falsely
represented having paid one Guintos the sum of P866 for the account of Pfleider when
in truth and in fact, Guintos only received P86, (d)the list of creditors which Pfleider has
confidentially supplied Palanca was disclosed by Palanca in violation of their attorney-
client relationship

ISSUE:
W/N Palanca committed a breach of fidelity owing form a lawyer to his client
HELD:
 
NO. There is no substantial blame against Palanca inasmuch as the latter‘s
services were implicitly terminated by Pfleider when he sued his lawyer. While the
object of the suit is the rescission of the lease contract, the conflict of interest
became incompatible with the mutual confidence and trust essential to every lawyer-
client relationship.Also, Pfleider delivered the list of creditors to Palanca not because of
the professional relation then existing between them, but on account of the lease
agreement. A violation thereof would partake more of a private and civil wrong than of a
breach of fidelity owing from a lawyer to his client.