MARIANO

NOCOM, G.R. No. 182984

Petitioner,

Present:

- versus - PUNO, C.J., Chairperson,

CARPIO,
CORONA,
AZCUNA, and
LEONARDO-DE CASTRO, JJ.
Respondents. Promulgated:
February 10, 2009

X ---------------------------------------------------------------------------------------- X

DECISION

AZCUNA, J.:

This is a petition for review on certiorari seeking to reverse and set aside the Decision dated February 14, 2008 of the Court
of Appeals (CA) which affirmed the Joint Order dated June 9, 2005 and Summary Judgment dated June 15, 2006 of the Regional Trial
Court (RTC) of Muntinlupa City, Branch 203 and dismissed petitioners appeal under Rule 41 of the Rules of Court for lack of
jurisdiction and its Resolution dated May 23, 2008 which denied petitioners motion for reconsideration.
The present case is an offshoot of the prior case, G.R. No. 161029, entitled Springsun Management Systems Corporation v.
Oscar Camerino, Efren Camerino, Cornelio Mantile, Nolasco Del Rosario, and Domingo Enriquez, which was promulgated on January
19, 2005 (449 SCRA 65) and became final and executory on May 4, 2005 as recorded in the Book of Entries of Judgment.

The factual antecedents are as follows:

G.R. No. 161029:

Respondent Oscar Camerino and respondents-intervenors Efren Camerino, Cornelio Mantile, the deceased Nolasco Del
Rosario, represented by Mildred Del Rosario, and Domingo Enriquez were the tenants who were tilling on the parcels of land planted
to rice and corn previously owned by Victoria Homes, Inc. covered by Transfer Certificate of Title (TCT) Nos. 289237, now S-6135
(109,451 square meters); S-72244 (73,849 square meters); and 289236, now S-35855 (109,452 square meters). On February 9, 1983,
without notifying the respondents, Victoria Homes, Inc. sold the said lots to Springsun Management Systems Corporation (SMSC)
for P9,790,612. The three deeds of sale were duly registered with the Registry of Deeds of Rizal and new titles were issued in the
name of SMSC.

Subsequently, SMSC mortgaged to Banco Filipino (BF) the said lots as collaterals for its loans amounting to P11,545,000. As SMSC
failed to pay the loans due, BF extrajudicially foreclosed the mortgage and, later, was adjudged the highest bidder. On May 10, 2000,
SMSC redeemed the lots from BF. Earlier, on March 7, 1995, respondents filed a complaint against SMSC and BF for
Prohibition/Certiorari, Reconveyance/Redemption, Damages, Injunction with Preliminary Injunction and Temporary Restraining Order,
docketed as Civil Case No. 95-020, with the RTC of Muntinlupa City, Branch 256.

On January 25, 2002, the RTC of Muntinlupa City, Branch 256, found respondents to be tenants who have been tilling on the
subject land planted to rice and corn since 1967 and, thus, authorized them to redeem the subject lots. The dispositive portion of the
decision states:

WHEREFORE, judgment is hereby as follows:

1. Declaring that plaintiffs are entitled (sic) to redeem, and ordering the defendant Springsun Management Systems
Corporation (now petitioner) to allow plaintiffs to redeem the landholdings in question within 180 days from finality of this
decision at the total price of P9,790,612.00; upon full payment of the redemption price, the defendant Springsun
Management Systems Corporation is ordered to deliver plaintiffs the titles and the corresponding Deed of Redemption so
that the titles to the properties in litigation can be transferred in the name of the plaintiffs;

2. Declaring plaintiffs entitled to possession, and ordering the defendant Springsun Management Systems
Corporation and all persons claiming under it to vacate the lands in question and to surrender the same to the
plaintiffs;

3. Dismissing the case against Banco Filipino Savings and Mortgage Bank;

4. Ordering the defendant Springsun Management Systems Corporation to pay plaintiffs the sum of P200,000.00 as attorneys
fees, plus costs.

SO ORDERED.[1]

On September 23, 2003, the CA, in CA-G.R. SP No. 72475, affirmed with modification the RTC by declaring the respondents to
be tenants or agricultural lessees on the disputed lots and, thus, entitled to exercise their right of redemption, but deleted the award
of P200,000 attorneys fees for lack of legal basis.

On January 19, 2005, this Court, in G.R. No. 161029, affirmed the CA and reiterated that being agricultural tenants of Victoria Homes,
Inc. that had sold the lots to SMSC without notifying them, respondents had the right to redeem the subject properties from SMSC.

This Court denied SMSCs motions for reconsideration and for leave to file a second motion for reconsideration and, on May 4, 2005,
an Entry of Judgment was made.

The present G.R. No. 182984:

On December 3, 2003, petitioner Mariano Nocom gave the respondents several Philtrust Bank Managers Checks amounting
to P500,000 each, which the latter encashed, representing the price of their inchoate and contingent rights over the subject lots which
they sold to him.

On December 18, 2003, respondents, with the marital consent of their wives, executed an Irrevocable Power of Attorney which was
notarized by their counsel Atty. Arturo S. Santos. Thus,
 IRREVOCABLE POWER OF
ATTORNEY[2]

KNOW ALL MEN BY THESE PRESENTS:

WE, OSCAR CAMERINO, of legal age, Filipino, married to Teresita L. Magbanua: EFREN CAMERINO, of legal age,
Filipino, married to Susana Camerino, CORNELIO MANTILE, of legal age, Filipino, married to Maria Fe Alon,
NOLASCO DEL ROSARIO, of legal age, Filipino, married to Mildred Joplo, and DOMINGO ENRIQUEZ, of legal age,
Filipino, married to Dionicia Enriquez whose residences are stated under our respective names, hereby APPOINT,
NAME, and CONSTITUTE MARIANO NOCOM, of legal age, Filipino, married to Anacoreta Nocom and with office at
No. 2315 Aurora Blvd, Pasay City, in an irrevocable manner, coupled with interest, for us and in our stead, to do all
or any of the following acts and deeds:

1. To sell, assign, transfer, dispose of, mortgage and alienate the properties described in TCT Nos. 120542,
120541 and 123872 of the Register of Deeds of Muntinlupa City, currently in the name of Springsun
Management Systems Corporation, consisting of 292,752 square meters subject matter of Civil Case No.
95-020 of the Regional Trial Court of Muntinlupa City, Branch 256. The said court, in its decision dated
January 25, 2002 which was affirmed with modification of the Court of Appeals in its decision dated
September 24, 2003 in CA-G.R. SP No. 72475, adjudged that we are legally entitled to redeem the lands
from Springsun Management Systems Corporation;

2. To comply with the said decision by paying the redemption price to Springsun Management Systems
Corporation and/or to the court, and upon such payment, to secure execution of the judgment so that the
titles can be issued in the name of our attorney-in-fact;

3. To accept and receive for his exclusive benefit all the proceeds which may be derived from the sale,
mortgage, transfer or deposition thereof;

4. To sign and execute all the necessary papers, deed and documents that may be necessary or the
accomplishment of purposes of the Deed of Assignment, and to issue receipts and proper discharges
therefor;

5. To negotiate, deal and transact with all the persons and entities involved in Civil Case No. 95-020, RTC,
Muntinlupa City, Branch 256, with full power and authority to compromise with them;

6. To procure all documents and papers in government agencies relative to the said properties and case in
court; and

7. To procure the necessary transfer certificate of titles in his name as the absolute owner of said
properties.

GIVING AND GRANTING full power and authority to our said attorney-in-fact to do all things requisite and
necessary with legal effects as if done by us when present.

IN WITNESS WHEREOF, We have hereunto affixed [our] signatures this 18 th day of December, 2003.

(Sgd.) OSCAR CAMERINO (Sgd.) EFREN CAMERINO

Principal Principal
Sparrow St., Diamond Park San Antonio, San Pedro
Victoria Homes, Tunasan Laguna
Muntinlupa City

(Sgd.) CORNELIO MANTILE (Sgd.) NOLASCO DEL ROSARIO

Principal Principal
Victoria Ave., Tunasan Esmido St., Diamond Park
 Muntinlupa City Victoria Homes, Muntinlupa City
(Sgd.) DOMINGO ENRIQUEZ
Principal
Tunasan Proper, Arandia
Tunasan, Muntinlupa City

WITH OUR MARITAL CONSENT:

(Sgd.) TERESITA MAGBANUA (Sgd.) SUSANA CAMERINO

Wife of Oscar Camerino Wife of Efren Camerino

(Sgd.) MARIA FE ALON ALON (Sgd.) MILDRED JOPLO

Wife of Cornelio Mantile Wife of Nolasco del Rosario

(Sgd.) DIONICIA ENRIQUEZ

Wife of Domingo Enriquez

CONFORME:

(Sgd.) MARIANO NOCOM

Attorney-in-Fact

Meanwhile, on July 21, 2005, the respondents, in Civil Case No. 95-020 of the RTC of Muntinlupa City, Branch 256, filed a Motion for
Execution with Prayer to Order the Register of Deeds of Muntinlupa City to divest SMSC of title to the subject lots and have the same
vested on them. As SMSC refused to accept the redemption amount of P9,790,612 plus P147,059.18 as commission given by the
petitioner, the respondents deposited, on August 4, 2005, the amounts of P9,790,612, P73,529.59, and P73,529.59, duly evidenced by
official receipts, with the RTC of Muntinlupa City, Branch 256. The RTC of Muntinlupa City, Branch 256 granted respondents motion for
execution and, consequently, TCT Nos. 120542, 120541 and 123872 in the name of SMSC were cancelled and TCT Nos. 15895, 15896
and 15897 were issued in the names of the respondents.It also ordered that the Irrevocable Power of Attorney, executed
on December 18, 2003 by respondents in favor of petitioner, be annotated in the memorandum of encumbrances of TCT Nos. 15895,
15896, and 15897.

On October 24, 2005, respondent Oscar Camerino filed a complaint against petitioner, captioned as Petition to Revoke Power
of Attorney, docketed as Civil Case No. 05-172, in the RTC of Muntinlupa City, Branch 203, seeking to annul the Irrevocable Power of
Attorney dated December 18, 2003, the turnover of the titles to the properties in his favor, and the payment of attorneys fees and
other legal fees.

Respondent Oscar Camerinos complaint alleged that he and co-respondents were asked by their counsel, Atty. Arturo S.
Santos, to sign a document with the representation that it was urgently needed in the legal proceedings against SMSC; that the
contents of the said document were not explained to him; that in the first week of September 2005, he learned that TCT Nos. 15895,
15896 and 15897 were issued in their favor by the Register of Deeds; that he discovered that the annotation of the Irrevocable Power
of Attorney on the said titles was pursuant to the Order of the RTC of Muntinlupa City, Branch 256 dated August 31, 2005; that the
Irrevocable Power of Attorney turned out to be the same document which Atty. Santos required him and the other respondents to
sign on December 18, 2003; that despite repeated demands, petitioner refused to surrender the owners duplicate copies of the said
titles; that petitioner had retained ownership over the subject lots; that he had no intention of naming, appointing, or constituting
anyone, including petitioner, to sell, assign, dispose, or encumber the subject parcels of land; and that he executed an Affidavit of
Adverse Claim which was annotated on the titles involving the subject lots.

In his Answer with Counterclaim, petitioner countered that on September 3, 2003, Atty. Santos informed him of the desire of
his clients, herein respondents, to sell and assign to him their inchoate and contingent rights and interests over the subject lots
because they were in dire need of money and could no longer wait until the termination of the proceedings as SMSC would probably
appeal the CAs Decision to this Court; that they did not have the amount of P9,790,612 needed to redeem the subject lots; that on
December 18, 2003, he decided to buy the contingent rights of the respondents and paid each of them P500,000 or a total
of P2,500,000 as evidenced by Philtrust Bank Managers Check Nos. MV 0002060 (for respondent Oscar Camerino), MV 0002061 (for
respondent Efren Camerino), MV 0002062 (for respondent Cornelio Mantile), MV 0002063 (for Nolasco Del Rosario), and MV 0002064
(for Domingo Enriquez) which they personally encashed on December 19, 2003; that on August 4, 2005, he also paid the amount
of P147,059.18 as commission; that simultaneous with the aforesaid payment, respondents and their spouses voluntarily signed the
Irrevocable Power of Attorney dated December 18, 2003; that being coupled with interest, the Irrevocable Power of Attorney cannot
be revoked or cancelled at will by any of the parties; and that having received just and reasonable compensation for their contingent
rights, respondents had no cause of action or legal right over the subject lots. Petitioner prayed for the dismissal of the complaint and
the payment of P1,000,000 moral damages, P500,000 exemplary damages, and P500,000 attorneys fees plus costs.

On January 17, 2006, petitioner filed a Motion for Preliminary Hearing on his special and/or affirmative defense that respondent
Oscar Camerino had no cause of action or legal right over the subject lots because the latter and his wife received the proceeds of the
Philtrust Bank Managers check in the sum of P500,000 which they personally encashed on December 19, 2003 and that being coupled
with interest, the Irrevocable Power of Attorney cannot be revoked or cancelled at will by any of the parties.

On January 26, 2006, respondents Efren Camerino, Cornelio Mantile and Mildred Del Rosario, in her capacity as legal heir and
representative of Nolasco Del Rosario, filed a Motion for Leave of Court to Admit the Complaint-in-Intervention with the attached
Complaint-in-Intervention, dated January 26, 2006, seeking the nullification of the Irrevocable Power of Attorney for being contrary to
law and public policy and the annotation of the Irrevocable Power of Attorney on the titles of the subject lots with prayer that
petitioner be ordered to deliver to them the copies of the owners duplicate certificate of TCT Nos. 15895, 15896, and 15897. Their
Complaint-in-Intervention alleged that they had a legal interest in the subject matter of the controversy and would either be directly
injured or benefited by the judgment in Civil Case No. 05-172; that they were co-signatories or co-grantors of respondent Oscar
Camerino in the Irrevocable Power of Attorney they executed in favor of the petitioner; that their consent was vitiated by fraud,
misrepresentation, machination, mistake and undue influence perpetrated by their own counsel, Atty. Santos, and petitioner; that
sometime in December 2003, Atty. Santos called for a meeting which was attended by petitioner and one Judge Alberto Lerma where
petitioner gave them checks in the amount of P500,000 each as Christmas gifts; and that the Irrevocable Power of Attorney was
void ab initio as the same was contrary to law and public policy and for being a champertous contract.

On January 30, 2006, respondent Oscar Camerino filed a Motion for Summary Judgment alleging that since the existence of the
Irrevocable Power of Attorney was admitted by petitioner, the only issue to be resolved was whether the said document was coupled
with interest and whether it was revocable in contemplation of law and jurisprudence; that Summary Judgment was proper because
petitioner did not raise any issue relevant to the contents of the Irrevocable Power of Attorney; and that in an Affidavit dated January
23, 2005, he admitted receipt of a check amounting to P500,000.00 which was given to him by petitioner as financial assistance.

On February 3, 2006, petitioner opposed respondent Oscar Camerinos motion on the ground that there were factual issues
that required the presentation of evidence.

On February 14, 2006, petitioner filed a Motion to Dismiss the complaint on the ground that the petition for the cancellation
of the Irrevocable Power of Attorney was actually an action to recover the titles and ownership over the properties; that since
respondent Oscar Camerino alleged in paragraph 29 of his Motion for Summary Judgment that the assessed value of the subject lots
amounted to P600,000,000, the case partook of the nature of a real action and, thus, the docket fees of P3,929 was insufficient; and
that due to insufficient docket fee, his complaint should be dismissed as the RTC was not vested with jurisdiction over the subject
matter of the complaint.

On February 22, 2006, respondent Oscar Camerino opposed petitioners motion for preliminary hearing of special and/or affirmative
defenses alleging that it was dilatory and that he had a cause of action.

On March 9, 2006, respondent Oscar Camerino filed his Reply to petitioners Opposition to the Motion for Summary Judgment
claiming that the determinative issue of whether or not the amount of P500,000 given to him by petitioner rendered the power of
attorney irrevocable can be determined from the allegations in the pleadings and affidavits on record without the need of
introduction of evidence.

On May 5, 2006, respondent Oscar Camerino filed an Opposition to petitioners Motion to Dismiss stating that the instant case was a
personal action for the revocation of the Irrevocable Power of Attorney and not for the recovery of real property and, thus, the
correct docket fees were paid.

On June 9, 2006, the RTC of Muntinlupa City, Branch 203 admitted the Complaint-in-Intervention because the movants-intervenors
([herein respondents] Efren Camerino, Cornelio Mantile, and Mildred Del Rosario as legal heir of Nolasco Del Rosario) have legal
interest in the subject properties in litigation and in the success of the petitioner [herein respondent Oscar Camerino], who was
precisely their co-plaintiff in Civil Case No. 95-020, entitled Oscar Camerino, et al. v. Springsun Management Systems Corporation et
al., where they are the prevailing parties against the defendant therein [SMSC], with respect to the same properties, subject of this
case, in a decision rendered by Branch 256 of this Court. The RTC, Branch 203, also granted the Motion for Summary Judgment
because a meticulous scrutiny of the material facts admitted in the pleadings of the parties reveals that there is really no genuine
issue of fact presented therein that needs to be tried to enable the court to arrive at a judicious resolution of a matter of law if the
issues presented by the pleadings are not genuine issues as to any material fact but are patently unsubstantial issues that do not
require a hearing on the merits. Thus,

The instant Motion to Dismiss by the respondent is therefore DENIED, PROVIDED, the petitioner should pay the
balance of the docket fees remaining unpaid, if any, pursuant to Rule 141, Section 7 of the Rules of Court, as
amended by A.M. No. 04-2-04-SC within the applicable prescriptive or reglementary period.
 The Motion for Intervention timely filed by intervenors Efren Camerino, Cornelio Mantile and Mildred Del Rosario, in
her capacity as legal heir of Nolasco Del Rosario, as opposed by the respondent, is hereby GRANTED.
xxx

Petitioners Motion for Summary Judgment is therefore GRANTED.

Consequently, respondents Motion for Preliminary Hearing on his Special and Affirmative Defenses is deemed moot
and academic.

SO ORDERED.[3]

On June 15, 2006, the RTC of Muntinlupa City, Branch 203 rendered a Summary Judgment annulling the Irrevocable Power of
Attorney for being contrary to law and public policy. The pertinent portions of the trial courts decision state that:

Irrespective of whether the Power of Attorney in question is coupled with interest, or not, the same can
be revoked or annulled, firstly, because it is contrary to law and secondly it is against public policy.

As aptly pointed out by the intervenors, the assailed Special Power of Attorney which under its ultimate
paragraph among others, authorizes the respondent (Nocom) to procure the necessary Transfer Certificate of
Title in his name, as the absolute owner of the said properties is a disguised conveyance or assignment of the
signatories statutory rights of redemption and therefore prohibited under the provisions of Republic Act No.
3844, Sec. 62 which provides:

Sec. 62. Limitation on Land Rights.

Except in case of heredity succession by one heir, landholdings acquired under this Code may not be
resold, mortgaged, encumbered, or transferred until after the lapse of ten years from the date of full payment
and acquisition and after such ten year period, any transfer, sale or disposition may be made only in favor of
persons qualified to acquire economic family-size farm units in accordance with the provisions of this Code xxx.
(underlining supplied)

The assailed power of attorney which was executed on December 18, 2003 is void ab initio for being contrary to
the express prohibition or spirit of the aforesaid law or the declared state and public policy on the qualification of
the beneficiaries of the agrarian reform program. It bears stressing that the redemption price of the subject lots
was paid only on August 4, 2005 or 1 year, 8 months and 14 days after the execution of the assailed power of
attorney.

If pursuant to the spirit of the Agrarian Reform Law, the tenant cannot even sell or dispose of his landholding
within ten (10) years after he already acquired the same or even thereafter to persons not qualified to acquire
economic size farm units in accordance with the provisions of the Agrarian Reform Code, with more reason
should the tenant not be allowed to alienate or sell his landholding before he actually acquires the same.

The right of redemption of the petitioner and his co-plaintiffs in Civil Case No. 95-020 as upheld by the Court of
Appeals and the Supreme Court is founded on a piece of social legislation known as Agrarian Reform Code.

Enunciated in the case of Association of Small Landowners in the Philippines, et al., vs. Hon. Secretary of Agrarian
Reform (G.R. No. 78742, July 14, 1989) is the policy of the State on agrarian reform legislation. Said State policy
emphasizes the Land for the Landless slogan that underscores the acute imbalance in the distribution of land
among the people.

Furthermore, the assailed Special Power of Attorney is a champertous contract and therefore void for being
against public policy. The pleadings of the parties show that the same special power of attorney was executed by
the petitioner, et al. through the intercession of Atty. Arturo Santos and at the behest of the respondent. In his
own answer to the instant petition which he is estopped to deny, the respondent alleges that the actual
agreement was for the respondent to pay the expenses of the proceedings to enforce the rights of the petitioner
and his co-plaintiffs in Civil Case No. 95-020 without any provision for reimbursement. In other words, the
respondents, through the intercession of Atty. Santos, petitioners attorney, had agreed to carry on with the
action for the petitioner et al. at his own expense in consideration of procuring for himself the title to the lots in
question as the absolute owner thereof, with the respondent paying the redemption price of said lots, as well as
separate amounts of Five Hundred Thousand (P500,000.00) to each of the five (5) co-plaintiffs in Civil Case No.
95-020, including herein petitioner, or a total sum of Two Million Five Hundred Thousand Pesos (P2,500,000.00).

Under the premises, the aforesaid contract brokered by Atty. Arturo Santos has all really the earmarks of a
champertous contract which is against public policy as it violates the fiduciary relations between the lawyer and
his client, whose weakness or disadvantage is being exploited by the former. In other words, the situation
created under the given premises is a clear circumvention of the prohibition against the execution of
champertous contracts between a lawyer and a client.

A champertous contract is defined as a contract between a stranger and a party to a lawsuit,

whereby the stranger pursues the partys claim in consideration of receiving part or any of the
proceeds recovered under the judgment; a bargain by a stranger with a party to a suit, by
which such third person undertakes to carry on the litigation at his own cost and risk, in
consideration of receiving, if successful, a part of the proceeds or subject sought to be
recovered. (Blacks Dictionary; Schnabel v. Taft Broadcasting Co., Inc. Mo.App. 525 S.W. 2d 819,
823). An Agreement whereby the attorney agrees to pay expenses of proceedings to enforce
the clients rights is champertous. [JBP Holding Corporation v. U.S. 166 F. Supp. 324
(1958)]. Such agreements are against public policy especially where as in this case, the attorney
has agreed to carry on the action at its own expense in consideration of some bargain to have
part of the thing in dispute. [See Sampliner v. Motion Pictures Patents Co., et al., 225 F. 242
(1918). The execution of these contracts violates the fiduciary relationship between the lawyer
and his client, for which the former must incur administrative sanction.

The intention of the law in prohibiting this kind of contract is to prevent a lawyer from acquiring an interest in the
subject of the litigation and to avoid a conflict of interest between him and his client.

In the instant case, it seems that Atty. Santos and the respondent colluded and conspired to circumvent these
prohibitions. Considering therefore that Atty. Santos, then petitioners counsel, brokered the alleged deal
between petitioners et al. and the respondent with respect to the lands subject of litigation in Civil Case No. 95-
020, the deal contracted is illegal for being a champertous agreement and therefore it cannot be enforced.

Be that as it may, granting the agency established in the assailed Power of Attorney is coupled with
interest, the petitioner and his co-plaintiffs in Civil Case No. 95-020, who are the present intervenors, are not
revoking the Power of Attorney at will but have precisely gone to court and filed the instant petition for its
cancellation or revocation. What is prohibited by law and jurisprudence is the arbitrary and whimsical revocation
of a power of attorney or agency coupled with interest, at will by a party, without court declaration.

WHEREFORE, judgment is hereby rendered as follows:

(1) Nullifying the Irrevocable Power of Attorney in question dated December 18, 2003, signed by the
petitioner [herein respondent Oscar Camerino] and his co-plaintiffs [herein respondents who were the movant-
intervenors] in Civil Case No. 95-020 in favor of the respondent [herein petitioner];

(2) Ordering the respondent to turnover the Certificates of Title Nos. 15895, 15896 and 15897 covering the
lots, the subject of this case, to the petitioner and the intervenors;

(3) Ordering the respondent to pay the petitioner attorneys fees and all other legal fees incurred by the
latter in connection with this case;

(4) Ordering the petitioner and the intervenors to return to the respondent the amount of P7,790,612 paid
by the latter as redemption price of the lots in question plus commission of P147,049.18; and
 (5) Ordering the petitioner Oscar Camerino and the intervenors Efren Camerino, Cornelio Mantile, Nolasco
Del Rosario or his heirs and Domingo Enriquez, who are petitioners co-plaintiffs in Civil Case No. 95-020, to return to
the respondent the total amount of P2,500,000.00 or P500,000.00 from each of them paid by the respondent to
them under Philtrust Bank Check Nos. MV 0002060, MV 0002061, MV 0002062, MV 0002063, and MV 0002064
which checks were encashed by them with the drawee bank.

SO ORDERED.[4]

On July 3, 2006 petitioner filed an Omnibus Motion for Reconsideration seeking to set aside the trial courts Joint Order dated June 9,
2005 and Summary Judgment dated June 15, 2006 which was opposed by the respondents.
On July 4, 2006, respondents filed a Motion for Execution Pending Final Decision/Appeal which was opposed by petitioner.

On August 14, 2006, the trial court issued an order denying petitioners Omnibus Motion for Reconsideration. Within the reglementary
period, petitioner filed a Notice of Appeal and paid the corresponding appeal docket fees.
On February 14, 2008, the CA affirmed the trial courts Joint Order dated June 9, 2006 and Summary Judgment dated June 15,
2006 and dismissed the petitioners appeal for lack of jurisdiction. The CA ruled that as the RTC rendered the assailed Summary
Judgment based on the pleadings and documents on record, without any trial or reception of evidence, the same did not involve
factual matters. The CA found the issues raised by the petitioner in his appeal to be questions of law, to wit: (a) whether Summary
Judgment was proper under the admitted facts and circumstances obtaining in the present case; (b) whether undue haste attended
the rendition of the Summary Judgment; (c) whether the Summary Judgment was valid for failure of the RTC to implead an
indispensable party; (d) whether the RTC erred in allowing the intervention of respondents Efren Camerino, Cornelio Mantile, and
Mildred Del Rosario; and (e) whether the RTC erred in taking cognizance of the case despite nonpayment of the required docket
fees. The CA concluded that since the issues involved questions of law, the proper mode of appeal should have been through a
petition for review on certiorari under Rule 45 of the Rules of Court directly to this Court and not through an ordinary appeal under
Rule 41 thereof and, thus, petitioners appeal to the CA should be dismissed outright pursuant to this Courts Circular No. 2-90, dated
March 9, 1990, mandating the dismissal of appeals involving pure questions of law erroneously brought to the CA.

In its Resolution of May 23, 2008, the CA denied petitioners Motion for Reconsideration dated February 26, 2008.

Hence, this present petition.

Petitioner raises the following issues:

WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED AN ERROR IN DISMISSING PETITIONERS
APPEAL.

II

WHETHER OR NOT THE COURT OF APPEALS ERRED IN UPHOLDING THE SUMMARY JUDGMENT OF THE TRIAL COURT
DESPITE THE GENUINE ISSUE OF FACT RAISED IN PETITIONERS ANSWER.

III
 WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN NOT VOIDING THE ASSAILED SUMMARY JUDGMENT FOR
FAILURE OF RESPONDENTS TO IMPLEAD AN INDISPENSABLE PARTY.

IV

WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT DISMISSING CIVIL CASE NO. 05-172 FOR NON-PAYMENT
OF THE CORRECT DOCKET FEES.

Petitioner contends that the CA erred in dismissing his appeal as the case involves questions of fact; that summary judgment
was not proper as there were genuine issues of fact raised in his Answer; that respondents failed to implead their lawyer, Atty. Arturo
S. Santos, as an indispensable party-defendant, who, according to them, allegedly connived with him in making them sign the
Irrevocable Power of Attorney in his favor; and that since the case partakes of the nature of an action to recover ownership and titles
to the properties, respondents complaint should be dismissed for failure to pay the correct docket fees.

Respondent Oscar Camerino argues that the sole issue to be resolved pertains to the legal issue of whether the Special
Power of Attorney (SPA) denominated as irrevocable may be revoked; that three material facts have been established, i.e., that the
SPA was executed, that Atty. Santos facilitated the signing and execution of the SPA, and that petitioner paid P500,000 to each of the
respondents in consideration for the signing of the SPA and, thus, summary judgment was proper; and that pure questions of law are
not proper in an ordinary appeal under Rule 41 of the Rules.

Respondents Efren Camerino, Cornelio Mantile, and Mildred Del Rosario, in her capacity as legal heir of Nolasco Del Rosario,
aver that petitioners petition is insufficient in form, i.e., due to defective verification as the word personal was not stated when
referring to personal knowledge, and in substance, i.e., there is no genuine issue to be resolved as the factual allegations of the
petitioner are unsubstantial and that Atty. Santos is not an indispensable party to the case.

The petition has merit.

In dismissing petitioners appeal, the CA erroneously relied on the rationale that the petitioners appeal raised questions of
law and, therefore, it had no recourse but to dismiss the same for lack of jurisdiction. The summary judgment rendered by the trial
court has the effect of an adjudication on the merits and, thus, the petitioner, being the aggrieved party, correctly appealed the
adverse decision of the RTC to the CA by filing a notice of appeal coupled with the appellants brief under Rule 41 of the Rules.

Contrary to the findings of the RTC and the CA, the present case involves certain factual issues which remove it from the
coverage of a summary judgment.

Under Section 1, Rule 35 of the Rules of Court, a party seeking to recover upon a claim, counterclaim, or cross-claim or to
obtain a declaratory relief may, at any time after the pleading in answer thereto has been served, move with supporting affidavits,
depositions or admissions for a summary judgment in his favor upon all or any part thereof.
Summary judgment is a procedural device resorted to in order to avoid long drawn out litigations and useless delays. When the
pleadings on file show that there are no genuine issues of fact to be tried, the Rules allow a party to obtain immediate relief by way of
summary judgment, that is, when the facts are not in dispute, the court is allowed to decide the case summarily by applying the law
to the material facts. Conversely, where the pleadings tender a genuine issue, summary judgment is not proper. A genuine issue is
such issue of fact which requires the presentation of evidence as distinguished from a sham, fictitious, contrived or false claim. Section
3 of the said rule provides two (2) requisites for summary judgment to be proper: (1) there must be no genuine issue as to any
material fact, except for the amount of damages; and (2) the party presenting the motion for summary judgment must be entitled to a
judgment as a matter of law.[5] A summary judgment is permitted only if there is no genuine issue as to any material fact and a moving
party is entitled to a judgment as a matter of law. A summary judgment is proper if, while the pleadings on their face appear to raise
issues, the affidavits, depositions, and admissions presented by the moving party show that such issues are not genuine. [6]

The present case should not be decided via a summary judgment. Summary judgment is not warranted when there are
genuine issues which call for a full blown trial. The party who moves for summary judgment has the burden of demonstrating clearly
the absence of any genuine issue of fact, or that the issue posed in the complaint is patently unsubstantial so as not to constitute a
genuine issue for trial. Trial courts have limited authority to render summary judgments and may do so only when there is clearly no
genuine issue as to any material fact. When the facts as pleaded by the parties are disputed or contested, proceedings for summary
judgment cannot take the place of trial.[7]

Summary judgment is generally based on the facts proven summarily by affidavits, depositions, pleadings, or admissions of
the parties. In this present case, while both parties acknowledge or admit the existence of the Irrevocable Power of Attorney, the
variance in the allegations in the pleadings of the petitioner vis--vis that of the respondents require the presentation of evidence on
the issue of the validity of the Irrevocable Power of Attorney to determine whether its execution was attended by the vices of consent
and whether the respondents and their spouses did not freely and voluntarily execute the same. In his Answer with Counterclaim,
petitioner denied the material allegations of respondent Oscar Camerinos complaint for being false and baseless as respondents were
informed that the document they signed was the Irrevocable Power of Attorney in his favor and that they had received the full
consideration of the transaction and, thus, had no legal right over the three parcels of land. Indeed, the presentation of evidence is
necessary to determine the validity and legality of the Irrevocable Power of Attorney, dated December 18, 2003, executed by the
respondents in favor of the petitioner. From said main factual issue, other relevant issues spring therefrom, to wit: whether the said
Irrevocable Power of Attorney was coupled with interest; whether it had been obtained through fraud, deceit, and misrepresentation
or other vices of consent; whether the five (5) Philtrust Bank Managers checks given by petitioner to the respondents amounting
to P500,000 each were in consideration of the inchoate and contingent rights of the respondents in favor of the petitioner; whether
Atty. Santos connived with petitioner in causing the preparation of the said document and, therefore, should be impleaded as party-
defendant together with the petitioner; whether respondents deposited the amount of P9,790,612.00 plus P147,059.18 with the RTC
of Muntinlupa City, Branch 256; and whether the sale of respondents inchoate and contingent rights amounted to a champertous
contract.

The incongruence and disparity in the material allegations of both parties have been evident. Respondent Oscar Camerino alleged in
his complaint that he and his co-respondents were required by their counsel, Atty. Santos, to sign a document on the representation
that it was urgently needed in the legal proceedings against SMSC which turned out to be the Irrevocable Power of Attorney; but
petitioner disproved the vitiated consent on the part of the respondents as they knew fully well that the document they signed,
voluntarily and intelligently, on December 18, 2003, was the said Irrevocable Power of Attorney. Respondent Oscar Camerino alleged
in his complaint that he has no intention of naming, appointing or constituting anyone, including the petitioner, to sell, assign, dispose
or encumber the lots in question; but petitioner maintained that respondent Oscar Camerino agreed to sell and assign to him his
inchoate and contingent rights and interests over the subject lot for and in consideration of the sum of P500,000, plus the redemption
price of P9,790,612. Respondents claimed that the amount they received was grossly disproportionate to the value of the subject
land; but petitioner countered that the respondents did not have the amount of P9,790,612 needed to redeem the subject lots, so he
decided to buy their contingent rights and paid each of them P500,000 or a total of P2,500,000 as evidenced by five (5) Philtrust Bank
Managers Check which they personally encashed on December 19, 2003, that he also paid the amount of P147,059.18 as commission
on August 4, 2005, that simultaneous with the aforesaid payment, respondents and their spouses voluntarily signed the Irrevocable
Power of Attorney dated December 18, 2003, and that being coupled with interest, the Irrevocable Power of Attorney cannot be
revoked at will by any of the parties.

Respondents maintain that they were deceived into executing the Irrevocable Power of Attorney in favor of the petitioner
which was done through the maneuverings of their own lawyer, Atty. Santos, who, according to them, had connived with petitioner in
order to effect the fraudulent transaction. In this regard, respondents should have impleaded Atty. Santos as an indispensable party-
defendant early on when the case was still with the RTC, but they failed to do so. However, their procedural lapse did not constitute a
sufficient ground for the dismissal of Civil Case No. 05-172.

In Domingo v. Scheer,[8] the Court explained that the non-joinder of an indispensable party is not a ground for the dismissal of
an action. Section 7, Rule 3 of the Rules, as amended, requires indispensable parties to be joined as plaintiffs or defendants. The
joinder of indispensable parties is mandatory. Without the presence of indispensable parties to the suit, the judgment of the court
cannot attain real finality. Strangers to a case are not bound by the judgment rendered by the court. The absence of an indispensable
party renders all subsequent actions of the court null and void. There is lack of authority to act not only of the absent party but also
as to those present. The responsibility of impleading all the indispensable parties rests on the petitioner or plaintiff. However, the
non-joinder of indispensable parties is not a ground for the dismissal of an action. Parties may be added by order of the court on
motion of the party or on its own initiative at any stage of the action and/or such times as are just. If the petitioner or plaintiff refuses
to implead an indispensable party despite the order of the court, the latter may dismiss the complaint or petition for the petitioner or
plaintiffs failure to comply therefor. The remedy is to implead the non-party claimed to be indispensable. In the present case, the RTC
and the CA did not require the respondents to implead Atty. Santos as party-defendant or respondent in the case. The operative act
that would lead to the dismissal of Civil Case No. 05-172 would be the refusal of respondents to comply with the directive of the court
for the joinder of an indispensable party to the case.
In his petition, petitioner prays for the reversal of the Decision dated February 14, 2008 of the CA which affirmed the Joint
Order dated June 9, 2005 and Summary Judgment dated June 15, 2006 of the RTC of Muntinlupa City, Branch 203 and dismissed
petitioners appeal under Rule 41 of the Rules for lack of jurisdiction and its Resolution dated May 23, 2008 which denied petitioners
motion for reconsideration; the annulment of the RTCs Summary Judgment rendered on June 15, 2006; and the dismissal of Civil Case
No. 05-172 filed with the RTC on the ground that respondents failed to pay the correct docket fees as the action actually sought the
recovery of ownership over the subject properties.
 The record shows that Civil Case No. 05-172 is a complaint filed by respondent Oscar Camerino against petitioner,
denominated as Petition to Revoke Power of Attorney, that seeks to nullify the Irrevocable Power of Attorney coupled with interest
dated December 18, 2003; that petitioner be ordered to turn over TCT No. 15898, 15896, and 15897 to him; and that petitioner be
ordered to pay the attorneys fees and other legal fees as a consequence of the suit. This case is therefore not an action to recover the
titles and ownership over the subject properties. For now, the nature of the suit remains that of personal action and not a real action
in contemplation of Rule 4 of the Rules. Hence, the docket fees paid by the respondents were in order. Should the complaint be
amended to seek recovery of ownership of the land, then the proper docket fees should be paid and collected.

While the RTC erred in rendering the summary judgment, Civil Case No. 05-172 should not perforce be dismissed. Instead,
this present case should be remanded to the RTC for further proceedings and proper disposition according to the rudiments of a
regular trial on the merits and not through an abbreviated termination of the case by summary judgment.
WHEREFORE, the petition is PARTLY GRANTED. The Decision of the Court of Appeals dated February 14, 2008 which affirmed
the Joint Order dated June 9, 2005 and Summary Judgment dated June 15, 2006 of the Regional Trial Court of Muntinlupa City, Branch
203 and dismissed petitioners appeal under Rule 41 of the Rules of Court on the ground of lack of jurisdiction and the Resolution of
the Court of Appeals dated May 23, 2008 which denied petitioners motion for reconsideration in CA-G.R. CV No. 87656 are REVERSED
and SET ASIDE. The case is REMANDED to the Regional Trial Court of Muntinlupa City, Branch 203, for further proceedings in
accordance with this Decision.

No costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 173188 January 15, 2014

THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE CADAVEDO AND BENITA ARCOY-CADAVEDO (both deceased), substituted
by their heirs, namely: HERMINA, PASTORA, Heirs of FRUCTUOSA, Heirs of RAQUEL, EVANGELINE, VICENTE, JR., and ARMANDO, all
surnamed CADAVEDO, Petitioners,
vs.
VICTORINO (VIC) T. LACAYA, married to Rosa Legados, Respondents.

DECISION

BRION, J.:

We solve in this Rule 45 petition for review on certiorari 1 the challenge to the October 11, 2005 decision 2 and the May 9, 2006
resolution3 of the Court of Appeals (CA) inPetitioners, CA-G.R. CV No. 56948. The CA reversed and set aside the September 17, 1996
decision4 of the Regional Trial Court (RTC), Branch 10, of Dipolog City in Civil Case No. 4038, granting in part the complaint for recovery
of possession of property filed by the petitioners, the Conjugal Partnership of the Spouses Vicente Cadavedo and Benita Arcoy-
Cadavedo against Atty. Victorino (Vic) T. Lacaya, married to Rosa Legados (collectively, the respondents).

The Factual Antecedents

The Spouses Vicente Cadavedo and Benita Arcoy-Cadavedo (collectively, the spouses Cadavedo) acquired a homestead grant over a
230,765-square meter parcel of land known as Lot 5415 (subject lot) located in Gumay, Piñan, Zamboanga del Norte. They were issued
Homestead Patent No. V-15414 on March 13, 1953andOriginal Certificate of Title No. P-376 on July 2, 1953.On April30, 1955, the
spouses Cadavedo sold the subject lot to the spouses Vicente Ames and Martha Fernandez (the spouses Ames) Transfer Certificate of
Title (TCT) No. T-4792 was subsequently issued in the name of the spouses Ames.

The present controversy arose when the spouses Cadavedo filed an action 5 before the RTC(then Court of First Instance) of Zamboanga
City against the spouses Ames for sum of money and/or voiding of contract of sale of homestead after the latter failed to pay the
balance of the purchase price. The spouses Cadavedo initially engaged the services of Atty. Rosendo Bandal who, for health reasons,
later withdrew from the case; he was substituted by Atty. Lacaya.

On February 24, 1969, Atty. Lacaya amended the complaint to assert the nullity of the sale and the issuance of TCT No. T-4792 in the
names of the spouses Ames as gross violation of the public land law. The amended complaint stated that the spouses Cadavedo hired
Atty. Lacaya on a contingency fee basis. The contingency fee stipulation specifically reads:

10. That due to the above circumstances, the plaintiffs were forced to hire a lawyer on contingent basis and if they become the
prevailing parties in the case at bar, they will pay the sum of ₱2,000.00 for attorney’s fees. 6

In a decision dated February 1, 1972, the RTC upheld the sale of the subject lot to the spouses Ames. The spouses Cadavedo, thru Atty.
Lacaya, appealed the case to the CA.

On September 18, 1975, and while the appeal before the CAin Civil Case No. 1721was pending, the spouses Ames sold the subject lot
to their children. The spouses Ames’ TCT No. T-4792 was subsequently cancelled and TCT No. T-25984was issued in their children’s
names. On October 11, 1976, the spouses Ames mortgaged the subject lot with the Development Bank of the Philippines (DBP) in the
names of their children.

On August 13, 1980, the CA issued itsdecision in Civil Case No. 1721,reversing the decision of the RTC and declaring the deed of sale,
transfer of rights, claims and interest to the spouses Ames null and void ab initio. It directed the spouses Cadavedo to return the initial
payment and ordered the Register of Deeds to cancel the spouses Ames’ TCT No. T-4792 and to reissue another title in the name of
the spouses Cadavedo. The case eventually reached this Court via the spouses Ames’ petition for review on certiorari which this Court
dismissed for lack of merit.

Meanwhile, the spouses Ames defaulted in their obligation with the DBP. Thus, the DBP caused the publication of a notice of
foreclosure sale of the subject lot as covered by TCT No. T-25984(under the name of the spouses Ames’ children). Atty. Lacaya
immediately informed the spouses Cadavedo of the foreclosure sale and filed an Affidavit of Third Party Claim with the Office of the
Provincial Sheriff on September 14, 1981.

With the finality of the judgment in Civil Case No. 1721,Atty. Lacaya filed on September 21, 1981 a motion for the issuance of a writ of
execution.

On September 23, 1981,and pending the RTC’s resolution of the motion for the issuance of a writ of execution, the spouses Ames filed
a complaint7 before the RTC against the spouses Cadavedo for Quieting of Title or Enforcement of Civil Rights due Planters in Good
Faith with prayer for Preliminary Injunction. The spouses Cadavedo, thru Atty. Lacaya, filed a motion to dismiss on the ground of res
judicata and to cancel TCT No. T-25984 (under the name of the spouses Ames’ children).

On October 16, 1981, the RTC granted the motion for the issuance of a writ of execution in Civil Case No. 1721,andthe spouses
Cadavedo were placed in possession of the subject lot on October 24, 1981. Atty. Lacaya asked for one-half of the subject lot as
attorney’s fees. He caused the subdivision of the subject lot into two equal portions, based on area, and selected the more valuable
and productive half for himself; and assigned the other half to the spouses Cadavedo.
Unsatisfied with the division, Vicente and his sons-in-law entered the portion assigned to the respondents and ejected them. The
latter responded by filing a counter-suit for forcible entry before the Municipal Trial Court (MTC); the ejectment case was docketed as
Civil Case No. 215. This incident occurred while Civil Case No. 3352was pending.

On May 13, 1982, Vicente andAtty. Lacaya entered into an amicable settlement (compromise agreement) 8 in Civil Case No. 215 (the
ejectment case), re-adjusting the area and portion obtained by each. Atty. Lacaya acquired 10.5383 hectares pursuant to the
agreement. The MTC approved the compromise agreementin a decision dated June 10, 1982.

Meanwhile, on May 21, 1982, the spouses Cadavedo filed before the RTC an action against the DBP for Injunction; it was docketed as
Civil Case No. 3443 (Cadavedo v. DBP).The RTC subsequently denied the petition, prompting the spouses Cadavedo to elevate the case
to the CAvia a petition for certiorari. The CA dismissed the petition in its decision of January 31, 1984.

The records do not clearly disclose the proceedings subsequent to the CA decision in Civil Case No. 3443. However, on August 18,
1988, TCT No. 41051was issued in the name of the spouses Cadavedo concerning the subject lot.

On August 9, 1988, the spouses Cadavedo filed before the RTC an action 9 against the respondents, assailing the MTC-approved
compromise agreement. The case was docketed as Civil Case No. 4038 and is the root of the present case. The spouses Cadavedo
prayed, among others, that the respondents be ejected from their one-half portion of the subject lot; that they be ordered to render
an accounting of the produce of this one-half portion from 1981;and that the RTC fix the attorney’s fees on a quantum meruit basis,
with due consideration of the expenses that Atty. Lacaya incurred while handling the civil cases.

During the pendency of Civil Case No. 4038, the spouses Cadavedo executed a Deed of Partition of Estate in favor of their eight
children. Consequently, TCT No. 41051 was cancelled and TCT No. 41690 was issued in the names of the latter. The records are not
clear on the proceedings and status of Civil Case No. 3352.

The Ruling of the RTC

In the September 17, 1996 decision10 in Civil Case No. 4038, the RTC declared the contingent fee of 10.5383 hectares as excessive and
unconscionable. The RTC reduced the land area to 5.2691 hectares and ordered the respondents to vacate and restore the remaining
5.2692hectares to the spouses Cadavedo.

The RTC noted that, as stated in the amended complaint filed by Atty. Lacaya, the agreed attorney’s fee on contingent basis was
₱2,000.00. Nevertheless, the RTC also pointed out that the parties novated this agreement when they executed the compromise
agreement in Civil Case No. 215 (ejectment case), thereby giving Atty. Lacaya one-half of the subject lot. The RTC added that Vicente’s
decision to give Atty. Lacaya one-half of the subject lot, sans approval of Benita, was a valid act of administration and binds the
conjugal partnership. The RTC reasoned out that the disposition redounded to the benefit of the conjugal partnership as it was done
precisely to remunerate Atty. Lacaya for his services to recover the property itself.

These considerations notwithstanding, the RTC considered the one-half portion of the subject lot, as Atty. Lacaya’s contingent
fee,excessive, unreasonable and unconscionable. The RTC was convinced that the issues involved in Civil Case No. 1721were not
sufficiently difficult and complicated to command such an excessive award; neither did it require Atty. Lacaya to devote much of his
time or skill, or to perform extensive research.

Finally, the RTC deemed the respondents’ possession, prior to the judgment, of the excess portion of their share in the subject lot to
be in good faith. The respondents were thus entitled to receive its fruits.

On the spouses Cadavedo’s motion for reconsideration, the RTC modified the decision in its resolution 11 dated December 27, 1996.
The RTC ordered the respondents to account for and deliver the produce and income, valued at ₱7,500.00 per annum, of the
5.2692hectares that the RTC ordered the spouses Amesto restore to the spouses Cadavedo, from October 10, 1988 until final
restoration of the premises.

The respondents appealed the case before the CA.

The Ruling of the CA

In its decision12 dated October 11, 2005, the CA reversed and set aside the RTC’s September 17, 1996 decision and maintained the
partition and distribution of the subject lot under the compromise agreement. In so ruling, the CA noted the following facts: (1) Atty.
Lacaya served as the spouses Cadavedo’s counsel from 1969 until 1988,when the latter filed the present case against Atty. Lacaya; (2)
during the nineteen (19) years of their attorney-client relationship, Atty. Lacaya represented the spouses Cadavedo in three civil cases
–Civil Case No. 1721, Civil Case No. 3352, and Civil Case No. 3443; (3) the first civil case lasted for twelve years and even reached this
Court, the second civil case lasted for seven years, while the third civil case lasted for six years and went all the way to the CA;(4) the
spouses Cadavedo and Atty. Lacaya entered into a compromise agreement concerning the division of the subject lot where Atty.
Lacaya ultimately agreed to acquire a smaller portion; (5) the MTC approved the compromise agreement; (6) Atty. Lacaya defrayed all
of the litigation expenses in Civil Case No. 1721; and (7) the spouses Cadavedo expressly recognized that Atty. Lacaya served them in
several cases.

Considering these established facts and consistent with Canon 20.01 of the Code of Professional Responsibility (enumerating the
factors that should guide the determination of the lawyer’s fees), the CA ruled that the time spent and the extent of the services Atty.
Lacaya rendered for the spouses Cadavedo in the three cases, the probability of him losing other employment resulting from his
engagement, the benefits resulting to the spouses Cadavedo, and the contingency of his fees justified the compromise agreement and
rendered the agreed fee under the compromise agreement reasonable.

The Petition

In the present petition, the petitioners essentially argue that the CA erred in: (1) granting the attorney’s fee consisting of one-half or
10.5383 hectares of the subject lot to Atty. Lacaya, instead of confirming the agreed contingent attorney’s fees of ₱2,000.00; (2) not
holding the respondents accountable for the produce, harvests and income of the 10.5383-hectare portion (that they obtained from
the spouses Cadavedo) from 1988 up to the present; and (3) upholding the validity of the purported oral contract between the
spouses Cadavedo and Atty. Lacaya when it was champertous and dealt with property then still subject of Civil Case No. 1721. 13

The petitioners argue that stipulations on a lawyer’s compensation for professional services, especially those contained in the
pleadings filed in courts, control the amount of the attorney’s fees to which the lawyer shall be entitled and should prevail over oral
agreements. In this case, the spouses Cadavedo and Atty. Lacaya agreed that the latter’s contingent attorney’s fee was ₱2,000.00 in
cash, not one-half of the subject lot. This agreement was clearly stipulated in the amended complaint filed in Civil Case No. 1721.
Thus, Atty. Lacaya is bound by the expressly stipulated fee and cannot insist on unilaterally changing its terms without violating their
contract.

The petitioners add that the one-half portion of the subject lot as Atty. Lacaya’s contingent attorney’s fee is excessive and
unreasonable. They highlight the RTC’s observations and argue that the issues involved in Civil Case No. 1721, pursuant to which the
alleged contingent fee of one-half of the subject lot was agreed by the parties, were not novel and did not involve difficult questions
of law; neither did the case require much of Atty. Lacaya’s time, skill and effort in research. They point out that the two subsequent
civil cases should not be considered in determining the reasonable contingent fee to which Atty. Lacaya should be entitled for his
services in Civil Case No. 1721,as those cases had not yet been instituted at that time. Thus, these cases should not be considered in
fixing the attorney’s fees. The petitioners also claim that the spouses Cadavedo concluded separate agreements on the expenses and
costs for each of these subsequent cases, and that Atty. Lacaya did not even record any attorney’s lien in the spouses Cadavedo’s TCT
covering the subject lot.

The petitioners further direct the Court’s attention to the fact that Atty. Lacaya,in taking over the case from Atty. Bandal, agreed to
defray all of the litigation expenses in exchange for one-half of the subject lot should they win the case. They insist that this
agreement is a champertous contract that is contrary to public policy, prohibited by law for violation of the fiduciary relationship
between a lawyer and a client.

Finally, the petitioners maintain that the compromise agreement in Civil Case No. 215 (ejectment case) did not novate their original
stipulated agreement on the attorney’s fees. They reason that Civil Case No. 215 did not decide the issue of attorney’s fees between
the spouses Cadavedo and Atty. Lacaya for the latter’s services in Civil Case No. 1721.

The Case for the Respondents

In their defense,14 the respondents counter that the attorney’s fee stipulated in the amended complaint was not the agreed fee of
Atty. Lacaya for his legal services. They argue that the questioned stipulation for attorney’s fees was in the nature of a penalty that, if
granted, would inure to the spouses Cadavedo and not to Atty. Lacaya.
The respondents point out that: (1) both Vicente and Atty. Lacaya caused the survey and subdivision of the subject lot immediately
after the spouses Cadavedo reacquired its possession with the RTC’s approval of their motion for execution of judgment in Civil Case
No. 1721; (2) Vicente expressly ratified and confirmed the agreement on the contingent attorney’s fee consisting of one-half of the
subject lot; (3) the MTC in Civil Case No. 215 (ejectment case) approved the compromise agreement; (4) Vicente is the legally
designated administrator of the conjugal partnership, hence the compromise agreement ratifying the transfer bound the partnership
and could not have been invalidated by the absence of Benita’s acquiescence; and (5) the compromise agreement merely inscribed
and ratified the earlier oral agreement between the spouses Cadavedo and Atty. Lacaya which is not contrary to law, morals, good
customs, public order and public policy.

While the case is pending before this Court, Atty. Lacaya died. 15 He was substituted by his wife -Rosa -and their children –Victoriano
D.L. Lacaya, Jr., Rosevic Lacaya-Ocampo, Reymar L. Lacaya, Marcelito L. Lacaya, Raymundito L. Lacaya, Laila Lacaya-Matabalan, Marivic
Lacaya-Barba, Rosalie L. Lacaya and Ma. Vic-Vic Lacaya-Camaongay. 16

The Court’s Ruling

We resolve to GRANT the petition.

The subject lot was the core of four successive and overlapping cases prior to the present controversy. In three of these cases, Atty.
Lacaya stood as the spouses Cadavedo’s counsel. For ease of discussion, we summarize these cases (including the dates and
proceedings pertinent to each) as follows:

Civil Case No. 1721 – Cadavedo v. Ames (Sum of money and/or voiding of contract of sale of homestead), filed on January 10, 1967.
The writ of execution was granted on October 16, 1981.

Civil Case No. 3352 – Ames v. Cadavedo (Quieting of Title and/or Enforcement of Civil Rights due Planters in Good Faith with
Application for Preliminary injunction), filed on September 23, 1981.

Civil Case No. 3443 – Cadavedo v. DBP (Action for Injunction with Preliminary Injunction), filed on May 21, 1982.

Civil Case No. 215 –Atty. Lacaya v. Vicente Cadavedo, et. al. (Ejectment Case), filed between the latter part of 1981 and early part of
1982. The parties executed the compromise agreement on May 13, 1982.

Civil Case No. 4038 –petitioners v. respondents (the present case).

The agreement on attorney’s fee

consisting of one-half of the subject
lot is void; the petitioners are entitled
to recover possession

The core issue for our resolution is whether the attorney’s fee consisting of one-half of the subject lot is valid and reasonable, and
binds the petitioners. We rule in the NEGATIVE for the reasons discussed below.

A. The written agreement providing for

a contingent fee of ₱2,000.00 should prevail
over the oral agreement providing for one-
half of the subject lot

The spouses Cadavedo and Atty. Lacaya agreed on a contingent fee of ₱2,000.00 and not, as asserted by the latter, one-half of the
subject lot. The stipulation contained in the amended complaint filed by Atty. Lacaya clearly stated that the spouses Cadavedo hired
the former on a contingency basis; the Spouses Cadavedo undertook to pay their lawyer ₱2,000.00 as attorney’s fees should the case
be decided in their favor.

Contrary to the respondents’ contention, this stipulation is not in the nature of a penalty that the court would award the winning
party, to be paid by the losing party. The stipulation is a representation to the court concerning the agreement between the spouses
Cadavedo and Atty. Lacaya, on the latter’s compensation for his services in the case; it is not the attorney’s fees in the nature of
damages which the former prays from the court as an incident to the main action.

At this point, we highlight that as observed by both the RTC and the CA and agreed as well by both parties, the alleged contingent fee
agreement consisting of one-half of the subject lot was not reduced to writing prior to or, at most, at the start of Atty. Lacaya’s
engagement as the spouses Cadavedo’s counsel in Civil Case No. 1721.An agreement between the lawyer and his client, providing for
the former’s compensation, is subject to the ordinary rules governing contracts in general. As the rules stand, controversies involving
written and oral agreements on attorney’s fees shall be resolved in favor of the former. 17 Hence, the contingency fee of ₱2,000.00
stipulated in the amended complaint prevails over the alleged oral contingency fee agreement of one-half of the subject lot.

B. The contingent fee agreement between

the spouses Cadavedo and Atty. Lacaya,
awarding the latter one-half of the subject
lot, is champertous

Granting arguendo that the spouses Cadavedo and Atty. Lacaya indeed entered into an oral contingent fee agreement securing to the
latter one-half of the subject lot, the agreement is nevertheless void.

In their account, the respondents insist that Atty. Lacaya agreed to represent the spouses Cadavedo in Civil Case No. 1721 and
assumed the litigation expenses, without providing for reimbursement, in exchange for a contingency fee consisting of one-half of the
subject lot. This agreement is champertous and is contrary to public policy. 18

Champerty, along with maintenance (of which champerty is an aggravated form), is a common law doctrine that traces its origin to the
medieval period.19 The doctrine of maintenance was directed "against wanton and in officious intermeddling in the disputes of others
in which the intermeddler has no interest whatever, and where the assistance rendered is without justification or
excuse."20 Champerty, on the other hand, is characterized by "the receipt of a share of the proceeds of the litigation by the
intermeddler."21 Some common law court decisions, however, add a second factor in determining champertous contracts, namely, that
the lawyer must also, "at his own expense maintain, and take all the risks of, the litigation." 22

The doctrines of champerty and maintenance were created in response "to medieval practice of assigning doubtful or fraudulent
claims to persons of wealth and influence in the expectation that such individuals would enjoy greater success in prosecuting those
claims in court, in exchange for which they would receive an entitlement to the spoils of the litigation." 23 "In order to safeguard the
administration of justice, instances of champerty and maintenance were made subject to criminal and tortuous liability and a common
law rule was developed, striking down champertous agreements and contracts of maintenance as being unenforceable on the
grounds of public policy."24

In this jurisdiction, we maintain the rules on champerty, as adopted from American decisions, for public policy considerations. 25 As
matters currently stand, any agreement by a lawyer to "conduct the litigation in his own account, to pay the expenses thereof or to
save his client therefrom and to receive as his fee a portion of the proceeds of the judgment is obnoxious to the law." 26 The rule of the
profession that forbids a lawyer from contracting with his client for part of the thing in litigation in exchange for conducting the case at
the lawyer’s expense is designed to prevent the lawyer from acquiring an interest between him and his client. To permit these
arrangements is to enable the lawyer to "acquire additional stake in the outcome of the action which might lead him to consider his
own recovery rather than that of his client or to accept a settlement which might take care of his interest in the verdict to the sacrifice
of that of his client in violation of his duty of undivided fidelity to his client’s cause." 27

In Bautista v. Atty. Gonzales,28 the Court struck down the contingent fee agreement between therein respondent Atty. Ramon A.
Gonzales and his client for being contrary to public policy. There, the Court held that an reimbursement of litigation expenses paid by
the former is against public policy, especially if the lawyer has agreed to carry on the action at his expense in consideration of some
bargain to have a part of the thing in dispute. It violates the fiduciary relationship between the lawyer and his client. 29

In addition to its champertous character, the contingent fee arrangement in this case expressly transgresses the Canons of
Professional Ethics and, impliedly, the Code of Professional Responsibility. 30 Under Rule 42 of the Canons of Professional Ethics, a
lawyer may not properly agree with a client that the lawyer shall pay or beat the expense of litigation. 31 The same reasons discussed
above underlie this rule.
C. The attorney’s fee consisting of
one-half of the subject lot is excessive
and unconscionable

We likewise strike down the questioned attorney’s fee and declare it void for being excessive and unconscionable.1âwphi1The
contingent fee of one-half of the subject lot was allegedly agreed to secure the services of Atty. Lacaya in Civil Case No. 1721.Plainly, it
was intended for only one action as the two other civil cases had not yet been instituted at that time. While Civil Case No. 1721 took
twelve years to be finally resolved, that period of time, as matters then stood, was not a sufficient reason to justify a large fee in the
absence of any showing that special skills and additional work had been involved. The issue involved in that case, as observed by the
RTC(and with which we agree), was simple and did not require of Atty. Lacaya extensive skill, effort and research. The issue simply
dealt with the prohibition against the sale of a homestead lot within five years from its acquisition.

That Atty. Lacaya also served as the spouses Cadavedo’s counsel in the two subsequent cases did not and could not otherwise justify
an attorney’s fee of one-half of the subject lot. As assertedby the petitioners, the spouses Cadavedo and Atty. Lacaya made separate
arrangements for the costs and expenses foreach of these two cases. Thus, the expenses for the two subsequent cases had been
considered and taken cared of Based on these considerations, we therefore find one-half of the subject lot as attorney’s fee excessive
and unreasonable.

D. Atty. Lacaya’s acquisition of

the one-half portion contravenes
Article 1491 (5) of the Civil Code

Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase or assignment, the property that has been the subject of
litigation in which they have taken part by virtue of their profession. 32 The same proscription is provided under Rule 10 of the Canons
of Professional Ethics.33

A thing is in litigation if there is a contest or litigation over it in court or when it is subject of the judicial action. 34Following this
definition, we find that the subject lot was still in litigation when Atty. Lacaya acquired the disputed one-half portion. We note in this
regard the following established facts:(1)on September 21, 1981, Atty. Lacaya filed a motion for the issuance of a writ of execution in
Civil Case No. 1721; (2) on September 23, 1981, the spouses Ames filed Civil Case No. 3352 against the spouses Cadavedo; (3)on
October 16, 1981, the RTC granted the motion filed for the issuance of a writ of execution in Civil Case No. 1721 and the spouses
Cadavedo took possession of the subject lot on October 24, 1981; (4) soon after, the subject lot was surveyed and subdivided into two
equal portions, and Atty. Lacaya took possession of one of the subdivided portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya
executed the compromise agreement.

From these timelines, whether by virtue of the alleged oral contingent fee agreement or an agreement subsequently entered into,
Atty. Lacaya acquired the disputed one-half portion (which was after October 24, 1981) while Civil Case No. 3352 and the motion for
the issuance of a writ of execution in Civil Case No. 1721were already pending before the lower courts. Similarly, the compromise
agreement, including the subsequent judicial approval, was effected during the pendency of Civil Case No. 3352. In all of these, the
relationship of a lawyer and a client still existed between Atty. Lacaya and the spouses Cadavedo.

Thus, whether we consider these transactions –the transfer of the disputed one-half portion and the compromise agreement –
independently of each other or resulting from one another, we find them to be prohibited and void 35 by reason of public
policy.36 Under Article 1409 of the Civil Code, contracts which are contrary to public policy and those expressly prohibited or declared
void by law are considered in existent and void from the beginning. 37

What did not escape this Court’s attention is the CA’s failure to note that the transfer violated the provisions of Article 1491(5) of the
Civil Code, although it recognized the concurrence of the transfer and the execution of the compromise agreement with the pendency
of the two civil cases subsequent to Civil Case No. 1721. 38 In reversing the RTC ruling, the CA gave weight to the compromise
agreement and in so doing, found justification in the unproved oral contingent fee agreement.

While contingent fee agreements are indeed recognized in this jurisdiction as a valid exception to the prohibitions under Article
1491(5) of the Civil Code,39 contrary to the CA’s position, however, this recognition does not apply to the present case. A contingent
fee contract is an agreement in writing where the fee, often a fixed percentage of what may be recovered in the action, is made to
depend upon the success of the litigation.40 The payment of the contingent fee is not made during the pendency of the litigation
involving the client’s property but only after the judgment has been rendered in the case handled by the lawyer. 41
In the present case, we reiterate that the transfer or assignment of the disputed one-half portion to Atty. Lacaya took place while the
subject lot was still under litigation and the lawyer-client relationship still existed between him and the spouses Cadavedo. Thus, the
general prohibition provided under Article 1491 of the Civil Code, rather than the exception provided in jurisprudence, applies. The CA
seriously erred in upholding the compromise agreement on the basis of the unproved oral contingent fee agreement.

Notably, Atty. Lacaya, in undertaking the spouses Cadavedo’s cause pursuant to the terms of the alleged oral contingent fee
agreement, in effect, became a co-proprietor having an equal, if not more, stake as the spouses Cadavedo. Again, this is void by
reason of public policy; it undermines the fiduciary relationship between him and his clients. 42

E.The compromise agreement could not

validate the void oral contingent fee
agreement; neither did it supersede the
written contingent fee agreement

The compromise agreement entered into between Vicente and Atty. Lacaya in Civil Case No. 215 (ejectment case) was intended to
ratify and confirm Atty. Lacaya’s acquisition and possession of the disputed one-half portion which were made in violation of Article
1491 (5) of the Civil Code. As earlier discussed, such acquisition is void; the compromise agreement, which had for its object a void
transaction, should be void.

A contract whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy is in existent and void
from the beginning.43 It can never be ratified44 nor the action or defense for the declaration of the in existence of the contract
prescribe;45 and any contract directly resulting from such illegal contract is likewise void and in existent. 46

Consequently, the compromise agreement did not supersede the written contingent fee agreement providing for attorney’s fee of
₱2,000.00; neither did it preclude the petitioners from questioning its validity even though Vicente might have knowingly and
voluntarily acquiesced thereto and although the MTC approved it in its June 10, 1982 decision in the ejectment case. The MTC could
not have acquired jurisdiction over the subject matter of the void compromise agreement; its judgment in the ejectment case could
not have attained finality and can thus be attacked at any time. Moreover, an ejectment case concerns itself only with the issue of
possession de facto; it will not preclude the filing of a separate action for recovery of possession founded on ownership. Hence,
contrary to the CA’s position, the petitioners–in filing the present action and praying for, among others, the recovery of possession of
the disputed one-half portion and for judicial determination of the reasonable fees due Atty. Lacaya for his services –were not barred
by the compromise agreement.

Atty. Lacaya is entitled to receive attorney’s fees on a quantum meruit basis

In view of their respective assertions and defenses, the parties, in effect, impliedly set aside any express stipulation on the attorney’s
fees, and the petitioners, by express contention, submit the reasonableness of such fees to the court’s discretion. We thus have to fix
the attorney’s fees on a quantum meruit basis.

"Quantum meruit—meaning ‘as much as he deserves’—is used as basis for determining a lawyer’s professional fees in the absence of
a contract x x x taking into account certain factors in fixing the amount of legal fees." 47 "Its essential requisite is the acceptance of the
benefits by one sought to be charged for the services rendered under circumstances as reasonably to notify him that the lawyer
performing the task was expecting to be paid compensation" 48 for it. The doctrine of quantum meruit is a device to prevent undue
enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it. 49

Under Section 24, Rule 138 of the Rules of Court 50 and Canon 20 of the Code of Professional Responsibility, 51factors such as the
importance of the subject matter of the controversy, the time spent and the extent of the services rendered, the customary charges
for similar services, the amount involved in the controversy and the benefits resulting to the client from the service, to name a few,
are considered in determining the reasonableness of the fees to which a lawyer is entitled.

In the present case, the following considerations guide this Court in considering and setting Atty. Lacaya’s fees based on quantum
meruit: (1) the questions involved in these civil cases were not novel and did not require of Atty. Lacaya considerable effort in terms of
time, skill or the performance of extensive research; (2) Atty. Lacaya rendered legal services for the Spouses Cadavedo in three civil
cases beginning in 1969 until 1988 when the petitioners filed the instant case; (3) the first of these civil cases (Cadavedo v. Ames)
lasted for twelve years and reaching up to this Court; the second (Ames v. Cadavedo) lasted for seven years; and the third (Cadavedo
and Lacaya v. DBP) lasted for six years, reaching up to the CA; and (4) the property subject of these civil cases is of a considerable size
of 230,765 square meters or 23.0765 hectares.

All things considered, we hold as fair and equitable the RTC’s considerations in appreciating the character of the services that Atty.
Lacaya rendered in the three cases, subject to modification on valuation. We believe and so hold that the respondents are entitled to
two (2) hectares (or approximately one-tenth [1/10] of the subject lot), with the fruits previously received from the disputed one-half
portion, as attorney’s fees. They shall return to the petitioners the remainder of the disputed one-half portion.

The allotted portion of the subject lot properly recognizes that litigation should be for the benefit of the client, not the lawyer,
particularly in a legal situation when the law itself holds clear and express protection to the rights of the client to the disputed
property (a homestead lot). Premium consideration, in other words, is on the rights of the owner, not on the lawyer who only helped
the owner protect his rights. Matters cannot be the other way around; otherwise, the lawyer does indeed effectively acquire a
property right over the disputed property. If at all, due recognition of parity between a lawyer and a client should be on the fruits of
the disputed property, which in this case, the Court properly accords.

WHEREFORE, in view of these considerations, we hereby GRANT the petition. We AFFIRM the decision dated September 17, 1996 and
the resolution dated December 27, 1996of the Regional Trial Court of Dipolog City, Branch 10,in Civil Case No. 4038, with the
MODIFICATION that the respondents, the spouses Victorino (Vic) T. Lacaya and Rosa Legados, are entitled to two (2) hectares (or
approximately one-tenth [1/10] of the subject lot) as attorney’s fees. The fruits that the respondents previously received from the
disputed one-half portion shall also form part of the attorney’s fees. We hereby ORDER the respondents to return to the petitioners
the remainder of the 10.5383-hectare portion of the subject lot that Atty. Vicente Lacaya acquired pursuant to the compromise
agreement.

SO ORDERED.

QUANTUM MERIT

Republic of the Philippines

Supreme Court
Manila
FIRST DIVISION

NATIONAL POWER CORPORATION, G.R. No. 165828

Petitioner,
Present:

- versus - CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,
BERSAMIN,
HEIRS OF MACABANGKIT SANGKAY, namely: CEBU, DEL CASTILLO, and
BATOWA-AN, SAYANA, NASSER, MANTA, EDGAR, VILLARAMA, JR., JJ.
PUTRI , MONGKOY*, and AMIR, all surnamed
MACABANGKIT, Promulgated:
Respondents.

August 24, 2011

x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:
Private property shall not be taken for public use without just compensation.
Section 9, Article III, 1987 Constitution
The application of this provision of the Constitution is the focus of this appeal.

Petitioner National Power Corporation (NPC) seeks the review on certiorari of the decision promulgated on October 5, 2004,
[1]
whereby the Court of Appeals (CA) affirmed the decision dated August 13, 1999 and the supplemental decision dated August 18,
1999, ordering NPC to pay just compensation to the respondents, both rendered by the Regional Trial Court, Branch 1, in Iligan City
(RTC).

Antecedents

Pursuant to its legal mandate under Republic Act No. 6395 (An Act Revising the Charter of the National Power Corporation), NPC
undertook the Agus River Hydroelectric Power Plant Project in the 1970s to generate electricity for Mindanao. The project included
the construction of several underground tunnels to be used in diverting the water flow from the Agus River to the hydroelectric plants.
[2]

On November 21, 1997, the respondents, namely: Cebu, Bangowa-an, Sayana, Nasser, Manta, Edgar, Putri, Mongkoy and Amir, all
surnamed Macabangkit (Heirs of Macabangkit), as the owners of land with an area of 221,573 square meters situated in Ditucalan,
Iligan City, sued NPC in the RTC for the recovery of damages and of the property, with the alternative prayer for the payment of just
compensation.[3] They alleged that they had belatedly discovered that one of the underground tunnels of NPC that diverted the water
flow of the Agus River for the operation of the Hydroelectric Project in Agus V, Agus VI and Agus VII traversed their land; that their
discovery had occurred in 1995 after Atty. Saidali C. Gandamra, President of the Federation of Arabic Madaris School, had rejected
their offer to sell the land because of the danger the underground tunnel might pose to the proposed Arabic Language Training Center
and Muslims Skills Development Center; that such rejection had been followed by the withdrawal by Global Asia Management and
Resource Corporation from developing the land into a housing project for the same reason; that Al-Amanah Islamic Investment Bank
of the Philippines had also refused to accept their land as collateral because of the presence of the underground tunnel; that the
underground tunnel had been constructed without their knowledge and consent; that the presence of the tunnel deprived them of
the agricultural, commercial, industrial and residential value of their land; and that their land had also become an unsafe place for
habitation because of the loud sound of the water rushing through the tunnel and the constant shaking of the ground, forcing them
and their workers to relocate to safer grounds.

In its answer with counterclaim,[4] NPC countered that the Heirs of Macabangkit had no right to compensation under section 3(f) of
Republic Act No. 6395, under which a mere legal easement on their land was established; that their cause of action, should they be
entitled to compensation, already prescribed due to the tunnel having been constructed in 1979; and that by reason of the tunnel
being an apparent and continuous easement, any action arising from such easement prescribed in five years.

Ruling of the RTC

On July 23, 1998, an ocular inspection of the land that was conducted by RTC Judge Mamindiara P. Mangotara and the
representatives of the parties resulted in the following observations and findings:
 a. That a concrete post which is about two feet in length from the ground which according to the claimants is the
middle point of the tunnel.

b. That at least three fruit bearing durian trees were uprooted and as a result of the construction by the
defendant of the tunnel and about one hundred coconuts planted died.

c. That underground tunnel was constructed therein.[5]

After trial, the RTC ruled in favor of the plaintiffs (Heirs of Macabangkit), [6] decreeing:

WHEREFORE, premises considered:

1. The prayer for the removal or dismantling of defendants tunnel is denied. However, defendant is hereby
directed and ordered:

a)To pay plaintiffs land with a total area of 227,065 square meters, at the rate of FIVE HUNDRED
(P500.00) PESOS per square meter, or a total of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY
TWO THOUSAND AND FIVE HUNDRED (P113,532,500.00), PESOS, plus interest, as actual damages or just
compensation;

b) To pay plaintiff a monthly rental of their land in the amount of THIRTY THOUSAND (P30,000.00)
PESOS from 1979 up to July 1999 with 12% interest per annum;

c)To pay plaintiffs the sum of TWO HUNDRED THOUSAND (P200,000.00) PESOS, as moral damages;

d) To pay plaintiffs, the sum of TWO HUNDRED THOUSAND (P200,000.00) PESOS, as exemplary
damages;

e)To pay plaintiffs, the sum equivalent to 15% of the total amount awarded, as attorneys fees, and to pay
the cost.

SO ORDERED.

The RTC found that NPC had concealed the construction of the tunnel in 1979 from the Heirs of Macabangkit, and had since
continuously denied its existence; that NPC had acted in bad faith by taking possession of the subterranean portion of their land to
construct the tunnel without their knowledge and prior consent; that the existence of the tunnel had affected the entire expanse of
the land, and had restricted their right to excavate or to construct a motorized deep well; and that they, as owners, had lost the
agricultural, commercial, industrial and residential value of the land.

The RTC fixed the just compensation at P500.00/square meter based on the testimony of Dionisio Banawan, OIC-City Assessor of Iligan
City, to the effect that the appraised value of the adjoining properties ranged from P700.00 to P750.00, while the appraised value of
their affected land ranged from P400.00 to P500.00. The RTC also required NPC to pay rentals from 1979 due to its bad faith in
concealing the construction of the tunnel from the Heirs of Macabangkit.
On August 18, 1999, the RTC issued a supplemental decision, [7] viz:
 Upon a careful review of the original decision dated August 13, 1999, a sentence should be added to paragraph 1(a)
of the dispositive portion thereof, to bolster, harmonize, and conform to the findings of the Court, which is quoted
hereunder, to wit:

Consequently, plaintiffs land or properties are hereby condemned in favor of defendant National Power
Corporation, upon payment of the aforesaid sum.
Therefore, paragraph 1(a) of the dispositive portion of the original decision should read, as follows:

a) To pay plaintiffs land with a total area of 227,065 square meters, at the rate of FIVE HUNDRED (P500.00)
PESOS per square meter, or a total of ONE HUNDRED THIRTEEN MILLION FIVE HUNDRED THIRTY TWO
THOUSAND AND FIVE HUNDRED (P113,532,500.00) PESOS, plus interest, as actual damages or just
compensation; Consequently, plaintiffs land or properties are hereby condemned in favor of defendant
National Power Corporation, upon payment of the aforesaid sum;

This supplemental decision shall be considered as part of paragraph 1(a) of the dispositive portion of the original
decision.

Furnish copy of this supplemental decision to all parties immediately.

SO ORDERED.

On its part, NPC appealed to the CA on August 25, 1999. [8]

Earlier, on August 18, 1999, the Heirs of Macabangkit filed an urgent motion for execution of judgment pending appeal. [9] The
RTC granted the motion and issued a writ of execution, [10] prompting NPC to assail the writ by petition for certiorari in the CA. On
September 15, 1999, the CA issued a temporary restraining order (TRO) to enjoin the RTC from implementing its decision. The Heirs of
Macabangkit elevated the ruling of the CA (G.R. No. 141447), but the Court upheld the CA on May 4, 2006.[11]

Ruling of the CA
NPC raised only two errors in the CA, namely:

I
THE COURT A QUO SERIOUSLY ERRED IN RULING THAT NAPOCORS UNDERGROUND TUNNEL IN ITS AGUS RIVER
HYDRO-ELECTRIC PLANT PROJECT TRAVERSED AND/OR AFFECTED APPELLEES PROPERTY AS THERE IS NO CLEAR
EVIDENCE INDUBITABLY ESTABLISHING THE SAME

II
THE COURT A QUO SERIOUSLY ERRED IN GRANTING APPELLEES CLAIMS IN THEIR ENTIRETY FOR GRANTING
ARGUENDO THAT NAPOCORS UNDERGROUND TUNNEL INDEED TRAVERSED APPELLEES PROPERTY, THEIR CAUSE OF
ACTION HAD ALREADY BEEN BARRED BY PRESCRIPTION, ESTOPPEL AND LACHES
On October 5, 2004, the CA affirmed the decision of the RTC, holding that the testimonies of NPCs witness Gregorio Enterone and of
the respondents witness Engr. Pete Sacedon, the topographic survey map, the sketch map, and the ocular inspection report
sufficiently established the existence of the underground tunnel traversing the land of the Heirs of Macabangkit; that NPC did not
substantiate its defense that prescription already barred the claim of the Heirs of Macabangkit; and that Section 3(i) of R.A. No. 6395,
being silent about tunnels, did not apply, viz:

As regard Section 3(i) of R.A. No. 6395 (An Act Revising the Charter of the National Power Corporation), it is
submitted that the same provision is not applicable. There is nothing in Section 3(i) of said law governing claims
 involving tunnels. The same provision is applicable to those projects or facilities on the surface of the land, that can
easily be discovered, without any mention about the claims involving tunnels, particularly those surreptitiously
constructed beneath the surface of the land, as in the instant case.

Now, while it is true that Republic Act No. 6395 authorizes NAPOCOR to take water from any public stream, river,
creek, lake, spring or waterfall in the Philippines for the realization of the purposes specified therein for its creation;
to intercept and divert the flow of waters from lands of riparian owners (in this case, the Heirs), and from persons
owning or interested in water which are or may be necessary to said purposes, the same Act expressly mandates the
payment of just compensation.

WHEREFORE, premises considered, the instant appeal is hereby DENIED for lack of merit. Accordingly, the appealed
Decision dated August 13, 1999, and the supplemental Decision dated August 18, 1999, are hereby AFFIRMED in
toto.

SO ORDERED.[12]

Issue

NPC has come to the Court, assigning the lone error that:

THE APPELLATE COURT ERRED ON A QUESTION OF LAW WHEN IT AFFIRMED THE DECISION AND SUPPLEMENTAL
DECISION OF THE COURT A QUO DIRECTING AND ORDERING PETITIONER TO PAY JUST COMPENSATION TO
RESPONDENTS.

NPC reiterates that witnesses Enterone and Sacedon lacked personal knowledge about the construction and existence of the tunnel
and were for that reason not entitled to credence; and that the topographic and relocation maps prepared by Sacedon should not be
a basis to prove the existence and location of the tunnel due to being self-serving.
NPC contends that the CA should have applied Section 3(i) of Republic Act No. 6395, which provided a period of only five years from
the date of the construction within which the affected landowner could bring a claim against it; and that even if Republic Act No. 6395
should be inapplicable, the action of the Heirs of Macabangkit had already prescribed due to the underground tunnel being
susceptible to acquisitive prescription after the lapse of 10 years pursuant to Article 620 of the Civil Code due to its being a continuous
and apparent legal easement under Article 634 of the Civil Code.
The issues for resolution are, therefore, as follows:

(1) Whether the CA and the RTC erred in holding that there was an underground tunnel traversing the Heirs
of Macabangkits land constructed by NPC; and

(2) Whether the Heirs of Macabangkits right to claim just compensation had prescribed under section 3(i) of
Republic Act No. 6395, or, alternatively, under Article 620 and Article 646 of the Civil Code.
Ruling

We uphold the liability of NPC for payment of just compensation.

1.
Factual findings of the RTC,
when affirmed by the CA, are binding
The existence of the tunnel underneath the land of the Heirs of Macabangkit, being a factual matter, cannot now be properly
reviewed by the Court, for questions of fact are beyond the pale of a petition for review on certiorari. Moreover, the factual findings
and determinations by the RTC as the trial court are generally binding on the Court, particularly after the CA affirmed them. [13] Bearing
these doctrines in mind, the Court should rightly dismiss NPCs appeal.

NPC argues, however, that this appeal should not be dismissed because the Heirs of Macabangkit essentially failed to prove the
existence of the underground tunnel. It insists that the topographic survey map and the right-of-way map presented by the Heirs of
Macabangkit did not at all establish the presence of any underground tunnel.

NPC still fails to convince.

Even assuming, for now, that the Court may review the factual findings of the CA and the RTC, for NPC to insist that the evidence on
the existence of the tunnel was not adequate and incompetent remains futile. On the contrary, the evidence on the tunnel was
substantial, for the significance of the topographic survey map and the sketch map (as indicative of the extent and presence of the
tunnel construction) to the question on the existence of the tunnel was strong, as the CA correctly projected in its assailed
decision, viz:

Among the pieces of documentary evidence presented showing the existence of the said tunnel beneath the
subject property is the topographic survey map. The topographic survey map is one conducted to know about the
location and elevation of the land and all existing structures above and underneath it. Another is the Sketch Map
which shows the location and extent of the land traversed or affected by the said tunnel. These two (2) pieces of
documentary evidence readily point the extent and presence of the tunnel construction coming from the power
cavern near the small man-made lake which is the inlet and approach tunnel, or at a distance of about two (2)
kilometers away from the land of the plaintiffs-appellees, and then traversing the entire and the whole length of
the plaintiffs-appellees property, and the outlet channel of the tunnel is another small man-made lake. This is a
sub-terrain construction, and considering that both inlet and outlet are bodies of water, the tunnel can hardly be
noticed. All constructions done were beneath the surface of the plaintiffs-appellees property. This explains why they
could never obtain any knowledge of the existence of such tunnel during the period that the same was constructed
and installed beneath their property.[14]

The power cavern and the inlet and outlet channels established the presence of the underground tunnel, based on the declaration in
the RTC by Sacedon, a former employee of the NPC. [15] It is worthy to note that NPC did not deny the existence of the power cavern,
and of the inlet and outlet channels adverted to and as depicted in the topographic survey map and the sketch map. The CA cannot be
faulted for crediting the testimony of Sacedon despite the effort of NPC to discount his credit due to his not being an expert witness,
simply because Sacedon had personal knowledge based on his being NPCs principal engineer and supervisor tasked at one time to lay
out the tunnels and transmission lines specifically for the hydroelectric projects, [16] and to supervise the construction of the Agus 1
Hydroelectric Plant itself[17] from 1978 until his retirement from NPC.[18] Besides, he declared that he personally experienced the
vibrations caused by the rushing currents in the tunnel, particularly near the outlet channel. [19] Under any circumstances, Sacedon was
a credible and competent witness.

The ocular inspection actually confirmed the existence of the tunnel underneath the land of the Heirs of Macabangkit. Thus,
the CA observed:

More so, the Ocular inspection conducted on July 23, 1998 further bolstered such claim of the existence and extent
of such tunnel. This was conducted by a team composed of the Honorable Presiding Judge of the Regional Trial
 Court, Branch 01, Lanao del Norte, herself and the respective lawyers of both of the parties and found that, among
others, said underground tunnel was constructed beneath the subject property.[20]

It bears noting that NPC did not raise any issue against or tender any contrary comment on the ocular inspection report.

2.
Five-year prescriptive period under Section 3(i) of Republic Act No. 6395 does not apply to claims for just
compensation

The CA held that Section 3(i) of Republic Act No. 6395 had no application to this action because it covered facilities that could be
easily discovered, not tunnels that were inconspicuously constructed beneath the surface of the land. [21]

NPC disagrees, and argues that because Article 635 [22] of the Civil Code directs the application of special laws when an
easement, such as the underground tunnel, was intended for public use, the law applicable was Section 3(i) of Republic Act No. 6395,
as amended, which limits the action for recovery of compensation to five years from the date of construction. It posits that the five-
year prescriptive period already set in due to the construction of the underground tunnel having been completed in 1979 yet.
Without necessarily adopting the reasoning of the CA, we uphold its conclusion that prescription did not bar the present action to
recover just compensation.

Section 3 (i) of Republic Act No. 6395, the cited law, relevantly provides:

Section 3. Powers and General Functions of the Corporation. The powers, functions, rights and activities of the
Corporation shall be the following:

xxx
(i) To construct works across, or otherwise, any stream, watercourse, canal, ditch, flume, street, avenue,
highway or railway of private and public ownership, as the location of said works may require: Provided,
That said works be constructed in such a manner as not to endanger life or property; And provided,
further, That the stream, watercourse, canal ditch, flume, street, avenue, highway or railway so crossed
or intersected be restored as near as possible to their former state, or in a manner not to impair
unnecessarily their usefulness. Every person or entity whose right of way or property is lawfully crossed
or intersected by said works shall not obstruct any such crossings or intersection and shall grant the
Board or its representative, the proper authority for the execution of such work. The Corporation is
hereby given the right of way to locate, construct and maintain such works over and throughout the
lands owned by the Republic of the Philippines or any of its branches and political subdivisions. The
Corporation or its representative may also enter upon private property in the lawful performance or
prosecution of its business and purposes, including the construction of the transmission lines
thereon; Provided, that the owner of such property shall be indemnified for any actual damage caused
thereby;Provided, further, That said action for damages is filed within five years after the rights of way,
transmission lines, substations, plants or other facilities shall have been established; Provided, finally,
That after said period, no suit shall be brought to question the said rights of way, transmission lines,
substations, plants or other facilities;

A cursory reading shows that Section 3(i) covers the construction of works across, or otherwise, any stream, watercourse, canal, ditch,
flume, street, avenue, highway or railway of private and public ownership, as the location of said works may require. It is notable that
Section 3(i) includes no limitation except those enumerated after the term works. Accordingly, we consider the term works as
embracing all kinds of constructions, facilities, and other developments that can enable or help NPC to meet its objectives of
developing hydraulic power expressly provided under paragraph (g) of Section 3. [23] The CAs restrictive construal of Section 3(i) as
exclusive of tunnels was obviously unwarranted, for the provision applies not only to development works easily discoverable or on the
surface of the earth but also to subterranean works like tunnels. Such interpretation accords with the fundamental guideline in
statutory construction that when the law does not distinguish, so must we not. [24] Moreover, when the language of the statute is plain
and free from ambiguity, and expresses a single, definite, and sensible meaning, that meaning is conclusively presumed to be the
meaning that the Congress intended to convey.[25]
Even so, we still cannot side with NPC.

We rule that the prescriptive period provided under Section 3(i) of Republic Act No. 6395 is applicable only to an action for
damages, and does not extend to an action to recover just compensation like this case. Consequently, NPC cannot thereby bar the
right of the Heirs of Macabangkit to recover just compensation for their land.

The action to recover just compensation from the State or its expropriating agency differs from the action for damages. The
former, also known as inverse condemnation, has the objective to recover the value of property taken in fact by the governmental
defendant, even though no formal exercise of the power of eminent domain has been attempted by the taking agency. [26] Just
compensation is the full and fair equivalent of the property taken from its owner by the expropriator. The measure is not the takers
gain, but the owners loss. The word just is used to intensify the meaning of the word compensation in order to convey the idea that
the equivalent to be rendered for the property to be taken shall be real, substantial, full, and ample. [27] On the other hand, the latter
action seeks to vindicate a legal wrong through damages, which may be actual, moral, nominal, temperate, liquidated, or exemplary.
When a right is exercised in a manner not conformable with the norms enshrined in Article 19 [28] and like provisions on human
relations in the Civil Code, and the exercise results to the damage of another, a legal wrong is committed and the wrongdoer is held
responsible.[29]

The two actions are radically different in nature and purpose. The action to recover just compensation is based on the
Constitution[30] while the action for damages is predicated on statutory enactments. Indeed, the former arises from the exercise by the
State of its power of eminent domain against private property for public use, but the latter emanates from the transgression of a right.
The fact that the owner rather than the expropriator brings the former does not change the essential nature of the suit as an inverse
condemnation,[31] for the suit is not based on tort, but on the constitutional prohibition against the taking of property without just
compensation.[32] It would very well be contrary to the clear language of the Constitution to bar the recovery of just compensation for
private property taken for a public use solely on the basis of statutory prescription.

Due to the need to construct the underground tunnel, NPC should have first moved to acquire the land from the Heirs of Macabangkit
either by voluntary tender to purchase or through formal expropriation proceedings. In either case, NPC would have been liable to pay
to the owners the fair market value of the land, for Section 3(h) of Republic Act No. 6395 expressly requires NPC to pay the fair market
value of such property at the time of the taking, thusly:

(h) To acquire, promote, hold, transfer, sell, lease, rent, mortgage, encumber and otherwise dispose of property
incident to, or necessary, convenient or proper to carry out the purposes for which the Corporation was
created: Provided, That in case a right of way is necessary for its transmission lines, easement of right of way shall
 only be sought: Provided, however, That in case the property itself shall be acquired by purchase, the cost thereof
shall be the fair market value at the time of the taking of such property.

This was what NPC was ordered to do in National Power Corporation v. Ibrahim, [33] where NPC had denied the right of the
owners to be paid just compensation despite their land being traversed by the underground tunnels for siphoning water from Lake
Lanao needed in the operation of Agus II, Agus III, Agus IV, Agus VI and Agus VII Hydroelectric Projects in Saguiran, Lanao del Sur, in
Nangca and Balo-I in Lanao del Norte and in Ditucalan and Fuentes in Iligan City. There, NPC similarly argued that the underground
tunnels constituted a mere easement that did not involve any loss of title or possession on the part of the property owners, but the
Court resolved against NPC, to wit:

Petitioner contends that the underground tunnels in this case constitute an easement upon the property of
the respondents which does not involve any loss of title or possession. The manner in which the easement was
created by petitioner, however, violates the due process rights of respondents as it was without notice and
indemnity to them and did not go through proper expropriation proceedings. Petitioner could have, at any time,
validly exercised the power of eminent domain to acquire the easement over respondents property as this power
encompasses not only the taking or appropriation of title to and possession of the expropriated property but
likewise covers even the imposition of a mere burden upon the owner of the condemned property. Significantly,
though, landowners cannot be deprived of their right over their land until expropriation proceedings are instituted
in court. The court must then see to it that the taking is for public use, that there is payment of just compensation
and that there is due process of law.[34]

3.
NPCs construction of the tunnel
constituted taking of the land, and
entitled owners to just compensation

The Court held in National Power Corporation v. Ibrahim that NPC was liable to pay not merely an easement fee but rather
the full compensation for land traversed by the underground tunnels, viz:

In disregarding this procedure and failing to recognize respondents ownership of the sub-terrain portion,
petitioner took a risk and exposed itself to greater liability with the passage of time. It must be emphasized that the
acquisition of the easement is not without expense. The underground tunnels impose limitations on respondents
use of the property for an indefinite period and deprive them of its ordinary use. Based upon the foregoing,
respondents are clearly entitled to the payment of just compensation. Notwithstanding the fact that petitioner only
occupies the sub-terrain portion, it is liable to pay not merely an easement fee but rather the full compensation
for land. This is so because in this case, the nature of the easement practically deprives the owners of its normal
beneficial use. Respondents, as the owner of the property thus expropriated, are entitled to a just compensation
which should be neither more nor less, whenever it is possible to make the assessment, than the money
equivalent of said property.[35]

Here, like in National Power Corporation v. Ibrahim, NPC constructed a tunnel underneath the land of the Heirs of Macabangkit
without going through formal expropriation proceedings and without procuring their consent or at least informing them beforehand
of the construction. NPCs construction adversely affected the owners rights and interests because the subterranean intervention by
NPC prevented them from introducing any developments on the surface, and from disposing of the land or any portion of it, either by
sale or mortgage.
Did such consequence constitute taking of the land as to entitle the owners to just compensation?

We agree with both the RTC and the CA that there was a full taking on the part of NPC, notwithstanding that the owners
were not completely and actually dispossessed. It is settled that the taking of private property for public use, to be compensable, need
not be an actual physical taking or appropriation. [36] Indeed, the expropriators action may be short of acquisition of title, physical
possession, or occupancy but may still amount to a taking. [37] Compensable taking includes destruction, restriction, diminution, or
interruption of the rights of ownership or of the common and necessary use and enjoyment of the property in a lawful manner,
lessening or destroying its value.[38] It is neither necessary that the owner be wholly deprived of the use of his property, [39] nor material
whether the property is removed from the possession of the owner, or in any respect changes hands. [40]

As a result, NPC should pay just compensation for the entire land. In that regard, the RTC pegged just compensation
at P500.00/square meter based on its finding on what the prevailing market value of the property was at the time of the filing of the
complaint, and the CA upheld the RTC.

We affirm the CA, considering that NPC did not assail the valuation in the CA and in this Court. NPCs silence was probably due to the
correctness of the RTCs valuation after careful consideration and weighing of the parties evidence, as follows:

The matter of what is just compensation for these parcels of land is a matter of evidence. These parcels of
land is (sic) located in the City of Iligan, the Industrial City of the South. Witness Dionisio Banawan, OIC- City
Assessors Office, testified, Within that area, that area is classified as industrial and residential. That plaintiffs land is
adjacent to many subdivisions and that is within the industrial classification. He testified and identified Exhibit AA
and AA-1, a Certification, dated April 4, 1997, showing that the appraised value of plaintiffs land ranges
from P400.00 to P500.00 per square meter (see, TSN, testimony of Dionisio Banawan, pp. 51, 57, and 71, February 9,
1999). Also, witness Banawan, testified and identified Two (2) Deeds of Sale, marked as Exhibit AA-2 and AA-3,[]
showing that the appraised value of the land adjoining or adjacent to plaintiff land ranges from P700.00 to P750.00
per square meter. As between the much lower price of the land as testified by defendants witness Gregorio
Enterone, and that of the City Assessor of Iligan City, the latter is more credible. Considering however, that the
appraised value of the land in the area as determined by the City Assessors Office is not uniform, this Court, is of the
opinion that the reasonable amount of just compensation of plaintiffs land should be fixed at FIVE HUNDRED
(500.00) PESOS, per square meter. xxx.[41]

The RTC based its fixing of just compensation ostensibly on the prevailing market value at the time of the filing of the complaint,
instead of reckoning from the time of the taking pursuant to Section 3(h) of Republic Act No. 6395. The CA did not dwell on the
reckoning time, possibly because NPC did not assign that as an error on the part of the RTC.

We rule that the reckoning value is the value at the time of the filing of the complaint, as the RTC provided in its decision.
Compensation that is reckoned on the market value prevailing at the time either when NPC entered or when it completed the tunnel,
as NPC submits, would not be just, for it would compound the gross unfairness already caused to the owners by NPCs entering
without the intention of formally expropriating the land, and without the prior knowledge and consent of the Heirs of Macabangkit.
NPCs entry denied elementary due process of law to the owners since then until the owners commenced the inverse condemnation
proceedings. The Court is more concerned with the necessity to prevent NPC from unjustly profiting from its deliberate acts of denying
due process of law to the owners. As a measure of simple justice and ordinary fairness to them, therefore, reckoning just
compensation on the value at the time the owners commenced these inverse condemnation proceedings is entirely warranted.
 In National Power Corporation v. Court of Appeals,[42] a case that involved the similar construction of an underground tunnel
by NPC without the prior consent and knowledge of the owners, and in which we held that the basis in fixing just compensation when
the initiation of the action preceded the entry into the property was the time of the filing of the complaint, not the time of taking,
[43]
we pointed out that there was no taking when the entry by NPC was made without intent to expropriate or was not made under
warrant or color of legal authority.
4.
Awards for rentals, moral damages, exemplary
damages, and attorneys fees are deleted
for insufficiency of factual and legal bases

The CA upheld the RTCs granting to the Heirs of Macabangkit of rentals of P 30,000.00/month from 1979 up to July 1999 with 12%
interest per annum by finding NPC guilty of bad faith in taking possession of the land to construct the tunnel without their knowledge
and consent.

Granting rentals is legally and factually bereft of justification, in light of the taking of the land being already justly
compensated. Conformably with the ruling in Manila International Airport Authority v. Rodriguez,[44] in which the award of interest
was held to render the grant of back rentals unwarranted, we delete the award of back rentals and in its place prescribe interest of
12% interest per annum from November 21, 1997, the date of the filing of the complaint, until the full liability is paid by NPC. The
imposition of interest of 12% interest per annum follows a long line of pertinent jurisprudence, [45] whereby the Court has fixed the rate
of interest on just compensation at 12% per annumwhenever the expropriator has not immediately paid just compensation.

The RTC did not state any factual and legal justifications for awarding to the Heirs of Macabangkit moral and exemplary damages each
in the amount of P200,000.00. The awards just appeared in the fallo of its decision. Neither did the CA proffer any justifications for
sustaining the RTC on the awards. We consider the omissions of the lower courts as pure legal error that we feel bound to correct
even if NPC did not submit that for our consideration. There was, to begin with, no factual and legal bases mentioned for the awards.
It is never trite to remind that moral and exemplary damages, not by any means liquidated or assessed as a matter of routine, always
require evidence that establish the circumstances under which the claimant is entitled to them. Moreover, the failure of both the RTC
and the CA to render the factual and legal justifications for the moral and exemplary damages in the body of their decisions
immediately demands the striking out of the awards for being in violation of the fundamental rule that the decision must clearly state
the facts and the law on which it is based. Without the factual and legal justifications, the awards are exposed as the product of
conjecture and speculation, which have no place in fair judicial adjudication.

We also reverse and set aside the decree of the RTC for NPC to pay to the Heirs of Macabangkit the sum equivalent to 15% of the total
amount awarded, as attorneys fees, and to pay the cost. The body of the decision did not state the factual and legal reasons why NPC
was liable for attorneys fees. The terse statement found at the end of the body of the RTCs decision, stating: xxx The contingent
attorneys fee is hereby reduced from 20% to only 15% of the total amount of the claim that may be awarded to plaintiffs, without
more, did not indicate or explain why and how the substantial liability of NPC for attorneys fees could have arisen
and been determined.
 In assessing attorneys fees against NPC and in favor of the respondents, the RTC casually disregarded
the fundamental distinction between the two concepts of attorneys fees the ordinary and the extraordinary. These concepts were
aptly distinguished in Traders Royal Bank Employees Union-Independent v. NLRC,[46] thuswise:

There are two commonly accepted concepts of attorneys fees, the so-called ordinary and extraordinary. In its
ordinary concept, an attorneys fee is the reasonable compensation paid to a lawyer by his client for the legal
services he has rendered to the latter. The basis of this compensation is the fact of his employment by and his
agreement with the client.

In its extraordinary concept, an attorneys fee is an indemnity for damages ordered by the court to be paid by
the losing party in a litigation. The basis of this is any of the cases provided by law where such award can be made,
such as those authorized in Article 2208, Civil Code, and is payable not to the lawyer but to the client, unless they
have agreed that the award shall pertain to the lawyer as additional compensation or as part thereof.

By referring to the award as contingency fees, and reducing the award from 20% to 15%, the RTC was really referring
to a supposed agreement on attorneys fees between the Heirs of Macabangkit and their counsel. As such, the concept of attorneys
fees involved was the ordinary. Yet, the inclusion of the attorneys fees in the judgment among the liabilities of NPC converted the fees
to extraordinary. We have to disagree with the RTC thereon, and we express our discomfort that the CA did not do anything to
excise the clearly erroneous and unfounded grant.

An award of attorneys fees has always been the exception rather than the rule. To start with, attorneys fees are not awarded
every time a party prevails in a suit. [47] Nor should an adverse decision ipso facto justify an award of attorneys fees to the winning
party.[48] The policy of the Court is that no premium should be placed on the right to litigate. [49] Too, such fees, as part of damages, are
assessed only in the instances specified in Art. 2208, Civil Code.[50] Indeed, attorneys fees are in the nature of actual damages. [51] But
even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, attorneys fees may still be
withheld where no sufficient showing of bad faith could be reflected in a partys persistence in a suit other than an erroneous
conviction of the righteousness of his cause. [52] And, lastly, the trial court must make express findings of fact and law that bring
the suit within the exception. What this demands is that the factual, legal or equitable justifications for the award must be set forth

not only in the fallo but also in the text of the decision, or else, the award should be thrown out for being speculative and conjectural.
[53]

Sound policy dictates that even if the NPC failed to raise the issue of attorneys fees, we are not precluded from correcting the
lower courts patently erroneous application of the law.[54] Indeed, the Court, in supervising the lower courts, possesses the
ample authority to review legal matters like this one even if not specifically raised or assigned as error by the parties.

5.
Attorneys fees under quantum meruit principle
are fixed at 10% of the judgment award
 Based on the pending motions of Atty. Macarupung Dibaratun and Atty. Manuel D. Ballelos to assert their respective rights to
attorneys fees, both contending that they represented the Heirs of Macabangkit in this case, a conflict would ensue from the finality
of the judgment against NPC.

A look at the history of the legal representation of the Heirs of Macabangkit herein provides a helpful predicate for resolving
the conflict.

Atty. Dibaratun was the original counsel of the Heirs of Macabangkit. When the appeal was submitted for decision in the CA, [55] Atty.
Ballelos filed his entry of appearance, [56]and a motion for early decision.[57] Atty. Ballelos subsequently filed also a manifestation,
[58]
supplemental manifestation,[59]

reply,[60] and ex parte motion reiterating the motion for early decision. [61] It appears that a copy of the CAs decision was furnished
solely to Atty. Ballelos. However, shortly before the rendition of the decision, Atty. Dibaratun filed in the CA a motion to register
attorneys lien,[62] alleging that he had not withdrawn his appearance and had not been aware of the entry of appearance by Atty.
Ballelos. A similar motion was also received by the Court from Atty. Dibaratun a few days after the petition for review was filed.
[63]
Thus, on February 14, 2005,[64] the Court directed Atty. Dibaratun to enter his appearance herein. He complied upon filing the
comment.[65]

Amir Macabangkit confirmed Atty. Dibaratuns representation through an ex parte manifestation that he filed in his own behalf and on
behalf of his siblings Mongkoy and Putri. [66] Amir reiterated his manifestation on March 6, 2006, [67] and further imputed malpractice to
Atty. Ballelos for having filed an entry of appearance bearing Amirs forged signature and for plagiarism, i.e., copying verbatim the
arguments contained in the pleadings previously filed by Atty. Dibaratun. [68]

On September 11, 2008, Atty. Ballelos submitted two motions, to wit: (a) a manifestation and motion authorizing a certain
Abdulmajeed Djamla to receive his attorneys fees equivalent of 15% of the judgment award, [69] and (b) a motion to register his
attorneys lien that he claimed was contingent.[70]

Both Atty. Dibaratun and Atty. Ballelos posited that their entitlement to attorneys fees was contingent. Yet, a contract for a contingent
fees is an agreement in writing by which the fees, usually a fixed percentage of what may be recovered in the action, are made to
depend upon the success in the effort to enforce or defend a supposed right. Contingent fees depend upon an express contract,
without which the attorney can only recover on the basis of quantum meruit.[71] With neither Atty. Dibaratun nor Atty. Ballelos
presenting a written agreement bearing upon their supposed contingent fees, the only way to determine their right to appropriate
attorneys fees is to apply the principle of quantum meruit.

Quantum meruit literally meaning as much as he deserves is used as basis for determining an attorneys professional fees in the
absence of an express agreement.[72] The recovery of attorneys fees on the basis of quantum meruit is a device that prevents an
unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and also avoids unjust
enrichment on the part of the attorney himself.[73] An attorney must show that he is entitled to reasonable compensation for the effort
in pursuing the clients cause, taking into account certain factors in fixing the amount of legal fees. [74]

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

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

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

b) The novelty and difficult of the questions involved;

c) The important of the subject matter;

d) The skill demanded;

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

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

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

h) The contingency or certainty of compensation;

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

j) The professional standing of the lawyer.

In the event of a dispute as to the amount of fees between the attorney and his client, and the intervention of the courts is
sought, the determination requires that there be evidence to prove the amount of fees and the extent and value of the services
rendered, taking into account the facts determinative thereof. [75] Ordinarily, therefore, the determination of the attorneys fees
on quantum meruit is remanded to the lower court for the purpose. However, it will be just and equitable to now assess and fix the
attorneys fees of both attorneys in order that the resolution of a comparatively simple controversy, as Justice Regalado put it
in Traders Royal Bank Employees Union-Independent v. NLRC, [76] would not be needlessly prolonged, by taking into due consideration
the accepted guidelines and so much of the pertinent data as are extant in the records.

Atty. Dibaratun and Atty. Ballelos each claimed attorneys fees equivalent to 15% of the principal award of P113,532,500.00, which was
the amount granted by the RTC in its decision. Considering that the attorneys fees will be defrayed by the Heirs of Macabangkit out of
their actual recovery from NPC, giving to each of the two attorneys 15% of the principal award as attorneys fees would be excessive
and unconscionable from the point of view of the clients. Thus, the Court, which holds and exercises the power to fix attorneys fees
on a quantum meruit basis in the absence of an express written agreement between the attorney and the client, now fixes attorneys
fees at 10% of the principal award of P113,532,500.00.
Whether it is Atty. Dibaratun or Atty. Ballelos, or both, who should receive attorneys fees from the Heirs of Macabangkit is a
question that the Court must next determine and settle by considering the amount and quality of the work each performed and the
results each obtained.
Atty. Dibaratun, the attorney from the outset, unquestionably carried the bulk of the legal demands of the case. He diligently prepared
and timely filed in behalf of the Heirs of Macabangkit every pleading and paper necessary in the full resolution of the dispute, starting
from the complaint until the very last motion filed in this Court. He consistently appeared during the trial, and examined and cross-
examined all the witnesses presented at that stage of the proceedings. The nature, character, and substance of each pleading and the
motions he prepared for the Heirs of Macabangkit indicated that he devoted substantial time and energy in researching and preparing
the case for the trial. He even advancedP250,000.00 out of his own pocket to defray expenses from the time of the filing of the
motion to execute pending appeal until the case reached the Court. [77] His representation of all the Heirs of Macabangkit was not
denied by any of them.

We note that Atty. Dibaratun possessed some standing in the legal profession and in his local community. He formerly served
as a member of the Board of Director of the Integrated Bar of the Philippines (IBP), Lanao del Norte-Iligan City Chapter, and was an IBP
national awardee as Best Legal Aid Committee Chairman. He taught at Mindanao State University College of Law Extension. He was
a Municipal Mayor of Matungao, Lanao del Norte, and was enthroned Sultan a Gaus.

In contrast, not much about the character and standing of Atty. Ballelos, as well as the nature and quality of the legal services he
rendered for the Heirs of Macabangkit are in the records. The motions he filed in the

Court and in the CA lacked enlightening research and were insignificant to the success of the clients cause. His legal service, if it can be
called that, manifested no depth or assiduousness, judging from the quality of the pleadings from him. His written submissions in the
case appeared either to have been lifted verbatim from the pleadings previously filed by Atty. Dibaratun, or to have been merely
quoted from the decisions and resolutions of the RTC and the CA. Of the Heirs of Macabangkit, only Cebu, Batowa-an, Sayana, Nasser,
Manta, Mongkoy[78] and Edgar gave their consent to Atty. Ballelos to appear in their behalf in the CA, which he did despite Atty.
Dibaratun not having yet filed any withdrawal of his appearance. The Court did not receive any notice of appearance for the Heirs of
Macabangkit from Atty. Ballelos, but that capacity has meanwhile become doubtful in the face of Amirs strong denial of having
retained him.

In fairness and justice, the Court accords full recognition to Atty. Dibaratun as the counsel de parte of the Heirs of
Macabangkit who discharged his responsibility in the prosecution of the clients cause to its successful end. It is he, not Atty. Ballelos,
who was entitled to the full amount of attorneys fees that the clients ought to pay to their attorney. Given the amount and quality of
his legal work, his diligence and the time he expended in ensuring the success of his prosecution of the clients cause, he deserves the
recognition, notwithstanding that some of the clients might appear to have retained Atty. Ballelos after the rendition of a favorable
judgment.[79]

Atty. Ballelos may claim only from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, the only parties who engaged him. The Court
considers his work in the case as very minimal. His compensation under the quantum meruit principle is fixed at P5,000.00, and only
the Heirs of Macabangkit earlier named are liable to him.
WHEREFORE, the Court AFFIRMS the decision promulgated on October 5, 2004 by the Court of Appeals, subject to the
following MODIFICATIONS, to wit:

(a) Interest at the rate of 12% per annum is IMPOSED on the principal amount of P113,532,500.00 as just
compensation, reckoned from the filing of the complaint on November 21, 1997 until the full liability is paid;

(b) The awards of P30,000.00 as rental fee, P200,000.00 as moral damages, and P200,000.00 as exemplary damages
are DELETED; and

(c) The award of 15% attorneys fees decreed to be paid by National Power Corporation to the Heirs of Macabangkit
is DELETED.
The Court PARTLY GRANTS the motion to register attorneys lien filed by Atty. Macarupung Dibaratun, and FIXES Atty. Dibaratuns
attorneys fees on the basis of quantummeruit at 10% of the principal award of P113,532,500.00.

The motion to register attorneys lien of Atty. Manuel D. Ballelos is PARTLY GRANTED, and Atty. Ballelos is DECLARED
ENTITLED TO RECOVER from Cebu, Batowa-an, Sayana, Nasser, Manta and Edgar, all surnamed Macabangkit, the amount of P5,000.00
as attorneys fees on the basis of quantum meruit.

Costs of suit to be paid by the petitioner.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 158361 April 10, 2013

INTERNATIONAL HOTEL CORPORATION, Petitioner,

vs.
FRANCISCO B. JOAQUIN, JR. and RAFAEL SUAREZ, Respondents.

DECISION

BERSAMIN, J.:
To avoid unjust enrichment to a party from resulting out of a substantially performed contract, the principle of quantum meruit may
be used to determine his compensation in the absence of a written agreement for that purpose. The principle of quantum meruit
justifies the payment of the reasonable value of the services rendered by him.

The Case

Under review is the decision the Court of Appeals (CA) promulgated on November 8, 2002, 1 disposing:

WHEREFORE, premises considered, the decision dated August 26, 1993 of the Regional Trial Court, Branch 13, Manila in Civil Case No.
R-82-2434 is AFFIRMED with Modification as to the amounts awarded as follows: defendant-appellant IHC is ordered to pay plaintiff-
appellant Joaquin ₱700,000.00 and plaintiff-appellant Suarez ₱200,000.00, both to be paid in cash.

SO ORDERED.

Antecedents

On February 1, 1969, respondent Francisco B. Joaquin, Jr. submitted a proposal to the Board of Directors of the International Hotel
Corporation (IHC) for him to render technical assistance in securing a foreign loan for the construction of a hotel, to be guaranteed by
the Development Bank of the Philippines (DBP).2 The proposal encompassed nine phases, namely: (1) the preparation of a new project
study; (2) the settlement of the unregistered mortgage prior to the submission of the application for guaranty for processing by DBP;
(3) the preparation of papers necessary to the application for guaranty; (4) the securing of a foreign financier for the project; (5) the
securing of the approval of the DBP Board of Governors; (6) the actual follow up of the application with DBP 3; (7) the overall
coordination in implementing the projections of the project study; (8) the preparation of the staff for actual hotel operations; and (9)
the actual hotel operations.4

The IHC Board of Directors approved phase one to phase six of the proposal during the special board meeting on February 11, 1969,
and earmarked ₱2,000,000.00 for the project.5 Anent the financing, IHC applied with DBP for a foreign loan guaranty. DBP processed
the application,6 and approved it on October 24, 1969 subject to several conditions. 7

On July 11, 1969, shortly after submitting the application to DBP, Joaquin wrote to IHC to request the payment of his fees in the
amount of ₱500,000.00 for the services that he had provided and would be providing to IHC in relation to the hotel project that were
outside the scope of the technical proposal. Joaquin intimated his amenability to receive shares of stock instead of cash in view of
IHC’s financial situation.8

On July 11, 1969, the stockholders of IHC met and granted Joaquin’s request, allowing the payment for both Joaquin and Rafael Suarez
for their services in implementing the proposal.9

On June 20, 1970, Joaquin presented to the IHC Board of Directors the results of his negotiations with potential foreign financiers. He
narrowed the financiers to Roger Dunn & Company and Materials Handling Corporation. He recommended that the Board of Directors
consider Materials Handling Corporation based on the more beneficial terms it had offered. His recommendation was accepted. 10

Negotiations with Materials Handling Corporation and, later on, with its principal, Barnes International (Barnes), ensued. While the
negotiations with Barnes were ongoing, Joaquin and Jose Valero, the Executive Director of IHC, met with another financier, the
Weston International Corporation (Weston), to explore possible financing. 11 When Barnes failed to deliver the needed loan, IHC
informed DBP that it would submit Weston for DBP’s consideration. 12As a result, DBP cancelled its previous guaranty through a letter
dated December 6, 1971.13

On December 13, 1971, IHC entered into an agreement with Weston, and communicated this development to DBP on June 26, 1972.
However, DBP denied the application for guaranty for failure to comply with the conditions contained in its November 12, 1971
letter.14

Due to Joaquin’s failure to secure the needed loan, IHC, through its President Bautista, canceled the 17,000 shares of stock previously
issued to Joaquin and Suarez as payment for their services. The latter requested a reconsideration of the cancellation, but their
request was rejected.
Consequently, Joaquin and Suarez commenced this action for specific performance, annulment, damages and injunction by a
complaint dated December 6, 1973 in the Regional Trial Court in Manila (RTC), impleading IHC and the members of its Board of
Directors, namely, Felix Angelo Bautista, Sergio O. Rustia, Ephraim G. Gochangco, Mario B. Julian, Benjamin J. Bautista, Basilio L. Lirag,
Danilo R. Lacerna and Hermenegildo R. Reyes.15 The complaint alleged that the cancellation of the shares had been illegal, and had
deprived them of their right to participate in the meetings and elections held by IHC; that Barnes had been recommended by IHC
President Bautista, not by Joaquin; that they had failed to meet their obligation because President Bautista and his son had intervened
and negotiated with Barnes instead of Weston; that DBP had canceled the guaranty because Barnes had failed to release the loan; and
that IHC had agreed to compensate their services with 17,000 shares of the common stock plus cash of ₱1,000,000.00. 16

IHC, together with Felix Angelo Bautista, Sergio O. Rustia, Mario B. Julian and Benjamin J. Bautista, filed an answer claiming that the
shares issued to Joaquin and Suarez as compensation for their "past and future services" had been issued in violation of Section 16 of
the Corporation Code; that Joaquin and Suarez had not provided a foreign financier acceptable to DBP; and that they had already
received ₱96,350.00 as payment for their services.17

On their part, Lirag and Lacerna denied any knowledge of or participation in the cancellation of the shares. 18

Similarly, Gochangco and Reyes denied any knowledge of or participation in the cancellation of the shares, and clarified that they were
not directors of IHC.19 In the course of the proceedings, Reyes died and was substituted by Consorcia P. Reyes, the administratrix of his
estate.20

Ruling of the RTC

Under its decision rendered on August 26, 1993, the RTC held IHC liable pursuant to the second paragraph of Article 1284 of the Civil
Code, disposing thusly:

WHEREFORE, in the light of the above facts, law and jurisprudence, the Court hereby orders the defendant International Hotel
Corporation to pay plaintiff Francisco B. Joaquin, the amount of Two Hundred Thousand Pesos (₱200,000.00) and to pay plaintiff
Rafael Suarez the amount of Fifty Thousand Pesos (₱50,000.00); that the said defendant IHC likewise pay the co-plaintiffs, attorney’s
fees of ₱20,000.00, and costs of suit.

IT IS SO ORDERED.21

The RTC found that Joaquin and Suarez had failed to meet their obligations when IHC had chosen to negotiate with Barnes rather than
with Weston, the financier that Joaquin had recommended; and that the cancellation of the shares of stock had been proper under
Section 68 of the Corporation Code, which allowed such transfer of shares to compensate only past services, not future ones.

Ruling of the CA

Both parties appealed.22

Joaquin and Suarez assigned the following errors, to wit:

DESPITE HAVING CORRECTLY ACKNOWLEDGED THAT PLAINTIFFS-APPELLANTS FULLY PERFORMED ALL THAT WAS INCUMBENT UPON
THEM, THE HONORABLE JUDGE ERRED IN NOT ORDERING THAT:

A. DEFENDANTS WERE UNJUSTIFIED IN CANCELLING THE SHARES OF STOCK PREVIOUSLY ISSUED TO PLAINTIFFS-
APPELLANTS; AND

B. DEFENDANTS PAY PLAINTIFFS-APPELLANTS TWO MILLION SEVEN HUNDRED PESOS (sic) (₱2,700,000.00),
INCLUDING INTEREST THEREON FROM 1973, REPRESENTING THE TOTAL OBLIGATION DUE PLAINTIFFS-
APPELLANTS.23

On the other hand, IHC attributed errors to the RTC, as follows:

I.
THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFFS-APPELLANTS HAVE NOTBEEN COMPLETELY PAID FOR THEIR SERVICES, AND
IN ORDERING THE DEFENDANT-APPELLANT TO PAY TWO HUNDRED THOUSAND PESOS (₱200,000.00) AND FIFTY THOUSAND PESOS
(₱50,000.00) TO PLAINTIFFS-APPELLANTS FRANCISCO B. JOAQUIN AND RAFAEL SUAREZ, RESPECTIVELY.

II.

THE LOWER COURT ERRED IN AWARDING PLAINTIFFS-APPELLANTS ATTORNEY’S FEES AND COSTS OF SUIT. 24

In its questioned decision promulgated on November 8, 2002, the CA concurred with the RTC, upholding IHC’s liability under Article
1186 of the Civil Code. It ruled that in the context of Article 1234 of the Civil Code, Joaquin had substantially performed his obligations
and had become entitled to be paid for his services; and that the issuance of the shares of stock was ultra vires for having been issued
as consideration for future services.

Anent how much was due to Joaquin and Suarez, the CA explained thusly:

This Court does not subscribe to plaintiffs-appellants’ view that defendant-appellant IHC agreed to pay them ₱2,000,000.00. Plaintiff-
appellant Joaquin’s letter to defendant-appellee F.A. Bautista, quoting defendant-appellant IHC’s board resolutions which supposedly
authorized the payment of such amount cannot be sustained. The resolutions are quite clear and when taken together show that said
amount was only the "estimated maximum expenses" which defendant-appellant IHC expected to incur in accomplishing phases 1 to
6, not exclusively to plaintiffs-appellants’ compensation.This conclusion finds support in an unnumbered board resolution of
defendant-appellant IHC dated July 11, 1969:

"Incidentally, it was also taken up the necessity of giving the Technical Group a portion of the compensation that was authorized by
this corporation in its Resolution of February 11, 1969 considering that the assistance so far given the corporation by said Technical
Group in continuing our project with the DBP and its request for guaranty for a foreign loan is 70% completed leaving only some
details which are now being processed. It is estimated that ₱400,000.00 worth of Common Stock would be reasonable for the present
accomplishments and to this effect, the President is authorized to issue the same in the name of the Technical Group, as follows:

₱200,000.00 in common stock to Rafael Suarez, as associate in the Technical Group, and ₱200,000.00 in common stock to Francisco G.
Joaquin, Jr., also a member of the Technical Group.

It is apparent that not all of the ₱2,000,000.00 was allocated exclusively to compensate plaintiffs-appellants. Rather, it was intended to
fund the whole undertaking including their compensation. On the same date, defendant-appellant IHC also authorized its president to
pay-appellant Joaquin ₱500,000.00 either in cash or in stock or both.

The amount awarded by the lower court was therefore less than what defendant-appellant IHC agreed to pay plaintiffs-appellants.
While this Court cannot decree that the cancelled shares be restored, for they are without a doubt null and void, still and all,
defendant-appellant IHC cannot now put up its own ultra vires act as an excuse to escape obligation to plaintiffs-appellants. Instead of
shares of stock, defendant-appellant IHC is ordered to pay plaintiff-appellant Joaquin a total of ₱700,000.00 and plaintiff-appellant
Suarez ₱200,000.00, both to be paid in cash.

Although the lower court failed to explain why it was granting the attorney’s fees, this Court nonetheless finds its award proper given
defendant-appellant IHC’s actions.25

Issues

In this appeal, the IHC raises as issues for our consideration and resolution the following:

WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN AWARDING COMPENSATION AND EVEN MODIFYING THE PAYMENT TO
HEREIN RESPONDENTS DESPITE NON-FULFILLMENT OF THEIR OBLIGATION TO HEREIN PETITIONER

II
WHETHER OR NOT THE COURT OF APPEALS IS CORRECT IN AWARDING ATTORNEY’S FEES TO RESPONDENTS 26

IHC maintains that Article 1186 of the Civil Code was erroneously applied; that it had no intention of preventing Joaquin from
complying with his obligations when it adopted his recommendation to negotiate with Barnes; that Article 1234 of the Civil Code
applied only if there was a merely slight deviation from the obligation, and the omission or defect was technical and unimportant; that
substantial compliance was unacceptable because the foreign loan was material and was, in fact, the ultimate goal of its contract with
Joaquin and Suarez; that because the obligation was indivisible and subject to a suspensive condition, Article 1181 of the Civil
Code27 applied, under which a partial performance was equivalent to non-performance; and that the award of attorney’s fees should
be deleted for lack of legal and factual bases.

On the part of respondents, only Joaquin filed a comment, 28 arguing that the petition was fatally defective for raising questions of fact;
that the obligation was divisible and capable of partial performance; and that the suspensive condition was deemed fulfilled through
IHC’s own actions.29

Ruling

We deny the petition for review on certiorari subject to the ensuing disquisitions.

1.

IHC raises questions of law

We first consider and resolve whether IHC’s petition improperly raised questions of fact.

A question of law exists when there is doubt as to what the law is on a certain state of facts, but, in contrast, a question of fact exists
when the doubt arises as to the truth or falsity of the facts alleged. A question of law does not involve an examination of the probative
value of the evidence presented by the litigants or by any of them; the resolution of the issue must rest solely on what the law
provides on the given set of circumstances.30 When there is no dispute as to the facts, the question of whether or not the conclusion
drawn from the facts is correct is a question of law.31

Considering that what IHC seeks to review is the CA’s application of the law on the facts presented therein, there is no doubt that IHC
raises questions of law. The basic issue posed here is whether the conclusions drawn by the CA were correct under the pertinent laws.

2.

Article 1186 and Article 1234 of the Civil Code cannot be the source of IHC’s obligation to pay respondents IHC argues that it should
not be held liable because: (a) it was Joaquin who had recommended Barnes; and (b) IHC’s negotiation with Barnes had been neither
intentional nor willfully intended to prevent Joaquin from complying with his obligations.

IHC’s argument is meritorious.

Article 1186 of the Civil Code reads:

Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.

This provision refers to the constructive fulfillment of a suspensive condition, 32 whose application calls for two requisites, namely: (a)
the intent of the obligor to prevent the fulfillment of the condition, and (b) the actual prevention of the fulfillment. Mere intention of
the debtor to prevent the happening of the condition, or to place ineffective obstacles to its compliance, without actually preventing
the fulfillment, is insufficient.33

The error lies in the CA’s failure to determine IHC’s intent to pre-empt Joaquin from meeting his obligations. The June 20, 1970
minutes of IHC’s special board meeting discloses that Joaquin impressed upon the members of the Board that Materials Handling was
offering more favorable terms for IHC, to wit:

xxxx
At the meeting all the members of the Board of Directors of the International Hotel Corporation were present with the exception of
Directors Benjamin J. Bautista and Sergio O. Rustia who asked to be excused because of previous engagements. In that meeting, the
President called on Mr. Francisco G. Joaquin, Jr. to explain the different negotiations he had conducted relative to obtaining the
needed financing for the hotel project in keeping with the authority given to him in a resolution approved by the Board of Directors.

Mr. Joaquin presently explained that he contacted several local and foreign financiers through different brokers and after examining
the different offers he narrowed down his choice to two (2), to wit: the foreign financier recommended by George Wright of the Roger
Dunn & Company and the offer made by the Materials Handling Corporation.

After explaining the advantages and disadvantages to our corporation of the two (2) offers specifically with regard to the terms and
repayment of the loan and the rate of interest requested by them, he concluded that the offer made by the Materials Handling
Corporation is much more advantageous because the terms and conditions of payment as well as the rate of interest are much more
reasonable and would be much less onerous to our corporation. However, he explained that the corporation accepted, in principle,
the offer of Roger Dunn, per the corporation’s telegrams to Mr. Rudolph Meir of the Private Bank of Zurich, Switzerland, and until such
time as the corporation’s negotiations with Roger Dunn is terminated, we are committed, on one way or the other, to their financing.

It was decided by the Directors that, should the negotiations with Roger Dunn materialize, at the same time as the offer of Materials
Handling Corporation, that the funds committed by Roger Dunn may be diverted to other borrowers of the Development Bank of the
Philippines. With this condition, Director Joaquin showed the advantages of the offer of Materials Handling Corporation. Mr. Joaquin
also informed the corporation that, as of this date, the bank confirmation of Roger Dunn & Company has not been received. In view of
the fact that the corporation is racing against time in securing its financing, he recommended that the corporation entertain other
offers.

After a brief exchange of views on the part of the Directors present and after hearing the clarification and explanation made by Mr. C.
M. Javier who was present and who represented the Materials Handling Corporation, the Directors present approved unanimously the
recommendation of Mr. Joaquin to entertain the offer of Materials Handling Corporation. 34

Evidently, IHC only relied on the opinion of its consultant in deciding to transact with Materials Handling and, later on, with Barnes. In
negotiating with Barnes, IHC had no intention, willful or otherwise, to prevent Joaquin and Suarez from meeting their undertaking.
Such absence of any intention negated the basis for the CA’s reliance on Article 1186 of the Civil Code.

Nor do we agree with the CA’s upholding of IHC’s liability by virtue of Joaquin and Suarez’s substantial performance. In so ruling, the
CA applied Article 1234 of the Civil Code, which states:

Article 1234. If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a
strict and complete fulfillment, less damages suffered by the obligee.

It is well to note that Article 1234 applies only when an obligor admits breaching the contract 35 after honestly and faithfully
performing all the material elements thereof except for some technical aspects that cause no serious harm to the obligee. 36 IHC
correctly submits that the provision refers to an omission or deviation that is slight, or technical and unimportant, and does not affect
the real purpose of the contract.

Tolentino explains the character of the obligor’s breach under Article 1234 in the following manner, to wit:

In order that there may be substantial performance of an obligation, there must have been an attempt in good faith to perform,
without any willful or intentional departure therefrom. The deviation from the obligation must be slight, and the omission or defect
must be technical and unimportant, and must not pervade the whole or be so material that the object which the parties intended to
accomplish in a particular manner is not attained. The non-performance of a material part of a contract will prevent the performance
from amounting to a substantial compliance.

The party claiming substantial performance must show that he has attempted in good faith to perform his contract, but has through
oversight, misunderstanding or any excusable neglect failed to completely perform in certain negligible respects, for which the other
party may be adequately indemnified by an allowance and deduction from the contract price or by an award of damages. But a party
who knowingly and wilfully fails to perform his contract in any respect, or omits to perform a material part of it, cannot be permitted,
under the protection of this rule, to compel the other party, and the trend of the more recent decisions is to hold that the percentage
of omitted or irregular performance may in and of itself be sufficient to show that there had not been a substantial performance. 37
By reason of the inconsequential nature of the breach or omission, the law deems the performance as substantial, making it the
obligee’s duty to pay.38 The compulsion of payment is predicated on the substantial benefit derived by the obligee from the partial
performance. Although compelled to pay, the obligee is nonetheless entitled to an allowance for the sum required to remedy
omissions or defects and to complete the work agreed upon.39

Conversely, the principle of substantial performance is inappropriate when the incomplete performance constitutes a material breach
of the contract. A contractual breach is material if it will adversely affect the nature of the obligation that the obligor promised to
deliver, the benefits that the obligee expects to receive after full compliance, and the extent that the non-performance defeated the
purposes of the contract.40 Accordingly, for the principle embodied in Article 1234 to apply, the failure of Joaquin and Suarez to
comply with their commitment should not defeat the ultimate purpose of the contract.

The primary objective of the parties in entering into the services agreement was to obtain a foreign loan to finance the construction of
IHC’s hotel project. This objective could be inferred from IHC’s approval of phase 1 to phase 6 of the proposal. Phase 1 and phase 2,
respectively the preparation of a new project study and the settlement of the unregistered mortgage, would pave the way for Joaquin
and Suarez to render assistance to IHC in applying for the DBP guaranty and thereafter to look for an able and willing foreign financial
institution acceptable to DBP. All the steps that Joaquin and Suarez undertook to accomplish had a single objective – to secure a loan
to fund the construction and eventual operations of the hotel of IHC. In that regard, Joaquin himself admitted that his assistance was
specifically sought to seek financing for IHC’s hotel project. 41

Needless to say, finding the foreign financier that DBP would guarantee was the essence of the parties’ contract, so that the failure to
completely satisfy such obligation could not be characterized as slight and unimportant as to have resulted in Joaquin and Suarez’s
substantial performance that consequentially benefitted IHC. Whatever benefits IHC gained from their services could only be minimal,
and were even probably outweighed by whatever losses IHC suffered from the delayed construction of its hotel. Consequently, Article
1234 did not apply.

3.

IHC is nonetheless liable to pay under the rule on constructive fulfillment of a mixed conditional obligation

Notwithstanding the inapplicability of Article 1186 and Article 1234 of the Civil Code, IHC was liable based on the nature of the
obligation.

Considering that the agreement between the parties was not circumscribed by a definite period, its termination was subject to a
condition – the happening of a future and uncertain event. 42 The prevailing rule in conditional obligations is that the acquisition of
rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event that constitutes
the condition.43

To recall, both the RTC and the CA held that Joaquin and Suarez’s obligation was subject to the suspensive condition of successfully
securing a foreign loan guaranteed by DBP. IHC agrees with both lower courts, and even argues that the obligation with a suspensive
condition did not arise when the event or occurrence did not happen. In that instance, partial performance of the contract subject to
the suspensive condition was tantamount to no performance at all. As such, the respondents were not entitled to any compensation.

We have to disagree with IHC’s argument.

To secure a DBP-guaranteed foreign loan did not solely depend on the diligence or the sole will of the respondents because it required
the action and discretion of third persons – an able and willing foreign financial institution to provide the needed funds, and the DBP
Board of Governors to guarantee the loan. Such third persons could not be legally compelled to act in a manner favorable to IHC.
There is no question that when the fulfillment of a condition is dependent partly on the will of one of the contracting parties, 44 or of
the obligor, and partly on chance, hazard or the will of a third person, the obligation is mixed. 45 The existing rule in a mixed conditional
obligation is that when the condition was not fulfilled but the obligor did all in his power to comply with the obligation, the condition
should be deemed satisfied.46

Considering that the respondents were able to secure an agreement with Weston, and subsequently tried to reverse the prior
cancellation of the guaranty by DBP, we rule that they thereby constructively fulfilled their obligation.

4.
Quantum meruit should apply in the absence of an express agreement on the fees

The next issue to resolve is the amount of the fees that IHC should pay to Joaquin and Suarez.

Joaquin claimed that aside from the approved ₱2,000,000.00 fee to implement phase 1 to phase 6, the IHC Board of Directors had
approved an additional ₱500,000.00 as payment for his services. The RTC declared that he and Suarez were entitled to ₱200,000.00
each, but the CA revised the amounts to ₱700,000.00 for Joaquin and ₱200,000.00 for Suarez.

Anent the ₱2,000,000.00, the CA rightly concluded that the full amount of ₱2,000,000.00 could not be awarded to respondents
because such amount was not allocated exclusively to compensate respondents, but was intended to be the estimated maximum to
fund the expenses in undertaking phase 6 of the scope of services. Its conclusion was unquestionably borne out by the minutes of the
February 11, 1969 meeting, viz:

xxxx

II

The preparation of the necessary papers for the DBP including the preparation of the application, the presentation of the mechanics
of financing, the actual follow up with the different departments of the DBP which includes the explanation of the feasibility studies
up to the approval of the loan, conditioned on the DBP’s acceptance of the project as feasible. The estimated expenses for this
particular phase would be contingent, i.e. upon DBP’s approval of the plan now being studied and prepared, is somewhere around
₱2,000,000.00.

After a brief discussion on the matter, the Board on motion duly made and seconded, unanimously adopted a resolution of the
following tenor:

RESOLUTION NO. ______

(Series of 1969)

"RESOLVED, as it is hereby RESOLVED, that if the Reparations allocation and the plan being negotiated with the DBP is realized the
estimated maximum expenses of ₱2,000,000.00 for this phase is hereby authorized subject to the sound discretion of the committee
composed of Justice Felix Angelo Bautista, Jose N. Valero and Ephraim G. Gochangco." 47 (Emphasis supplied)

Joaquin’s claim for the additional sum of ₱500,000.00 was similarly without factual and legal bases. He had requested the payment of
that amount to cover services rendered and still to be rendered to IHC separately from those covered by the first six phases of the
scope of work. However, there is no reason to hold IHC liable for that amount due to his failure to present sufficient proof of the
services rendered towards that end. Furthermore, his July 11, 1969 letter revealed that the additional services that he had supposedly
rendered were identical to those enumerated in the technical proposal, thus:

The Board of Directors

International Hotel Corporation

Thru: Justice Felix Angelo Bautista

President & Chairman of the Board

Gentlemen:

I have the honor to request this Body for its deliberation and action on the fees for my services rendered and to be rendered to the
hotel project and to the corporation. These fees are separate from the fees you have approved in your previous Board Resolution,
since my fees are separate. I realize the position of the corporation at present, in that it is not in a financial position to pay my services
in cash, therefore, I am requesting this Body to consider payment of my fees even in the form of shares of stock, as you have done to
the other technical men and for other services rendered to the corporation by other people.
Inasmuch as my fees are contingent on the successful implementation of this project, I request that my fees be based on a percentage
of the total project cost. The fees which I consider reasonable for the services that I have rendered to the project up to the completion
of its construction is ₱500,000.00. I believe said amount is reasonable since this is approximately only ¾ of 1% of the total project cost.

So far, I have accomplished Phases 1-5 of my report dated February 1, 1969 and which you authorized us to do under Board
Resolution of February 11, 1969. It is only Phase 6 which now remains to be implemented. For my appointment as Consultant dated
May 12, 1969 and the Board Resolution dated June 23, 1969 wherein I was appointed to the Technical Committee, it now follows that
I have been also authorized to implement part of Phases 7 & 8.

A brief summary of my accomplished work has been as follows:

1. I have revised and made the new Project Study of your hotel project, making it bankable and feasible.

2. I have reduced the total cost of your project by approximately ₱24,735,000.00.

3. I have seen to it that a registered mortgage with the Reparations Commission did not affect the application with
the IBP for approval to processing.

4. I have prepared the application papers acceptable to the DBP by means of an advance analysis and the
presentation of the financial mechanics, which was accepted by the DBP.

5. I have presented the financial mechanics of the loan wherein the requirement of the DBP for an additional
₱19,000,000.00 in equity from the corporation became unnecessary.

6. The explanation of the financial mechanics and the justification of this project was instrumental in changing the
original recommendation of the Investment Banking Department of the DBP, which recommended disapproval of
this application, to the present recommendation of the Real Estate Department which is for the approval of this
project for proceeding.

7. I have submitted to you several offers already of foreign financiers which are in your files. We are presently
arranging the said financiers to confirm their funds to the DBP for our project,

8. We have secured the approval of the DBP to process the loan application of this corporation as per its letter July 2,
1969.

9. We have performed other services for the corporation which led to the cooperation and understanding of the
different factions of this corporation.

I have rendered services to your corporation for the past 6 months with no clear understanding as to the compensation of my
services. All I have drawn from the corporation is the amount of ₱500.00 dated May 12, 1969 and personal payment advanced by
Justice Felix Angelo Bautista in the amount of ₱1,000.00.

I am, therefore, requesting this Body for their approval of my fees. I have shown my good faith and willingness to render services to
your corporation which is evidenced by my continued services in the past 6 months as well as the accomplishments above mentioned.
I believe that the final completion of this hotel, at least for the processing of the DBP up to the completion of the construction, will
take approximately another 2 ½ years. In view of the above, I again reiterate my request for your approval of my fees. When the
corporation is in a better financial position, I will request for a withdrawal of a monthly allowance, said amount to be determined by
this Body.

Very truly yours,

(Sgd.)
Francisco G., Joaquin, Jr.48
(Emphasis supplied)
Joaquin could not even rest his claim on the approval by IHC’s Board of Directors. The approval apparently arose from the confusion
between the supposedly separate services that Joaquin had rendered and those to be done under the technical proposal. The minutes
of the July 11, 1969 board meeting (when the Board of Directors allowed the payment for Joaquin’s past services and for the 70%
project completion by the technical group) showed as follows:

III

The Third order of business is the compensation of Mr. Francisco G. Joaquin, Jr. for his services in the corporation.

After a brief discussion that ensued, upon motion duly made and seconded, the stockholders unanimously approved a resolution of
the following tenor:

RESOLUTION NO. ___

(Series of 1969)

"RESOLVED that Mr. Francisco G. Joaquin, Jr. be granted a compensation in the amount of Five Hundred Thousand (₱500,000.00) Pesos
for his past services and services still to be rendered in the future to the corporation up to the completion of the Project.1âwphi1 The
President is given full discretion to discuss with Mr. Joaquin the manner of payment of said compensation, authorizing him to pay part
in stock and part in cash."

Incidentally, it was also taken up the necessity of giving the Technical Group a portion of the compensation that was authorized by this
corporation in its Resolution of February 11, 1969 considering that the assistance so far given the corporation by said Technical Group
in continuing our project with the DBP and its request for guaranty for a foreign loan is 70% completed leaving only some details
which are now being processed. It is estimated that ₱400,000.00 worth of Common Stock would be reasonable for the present
accomplishments and to this effect, the President is authorized to issue the same in the name of the Technical Group, as follows:

₱200,000.00 in Common Stock to Rafael Suarez, an associate in the Technical Group, and ₱200,000.00 in Common stock to Francisco
G. Joaquin, Jr., also a member of the Technical Group. 49

Lastly, the amount purportedly included services still to be rendered that supposedly extended until the completion of the
construction of the hotel. It is basic, however, that in obligations to do, there can be no payment unless the obligation has been
completely rendered.50

It is notable that the confusion on the amounts of compensation arose from the parties’ inability to agree on the fees that
respondents should receive. Considering the absence of an agreement, and in view of respondents’ constructive fulfillment of their
obligation, the Court has to apply the principle of quantum meruit in determining how much was still due and owing to respondents.
Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value of the services rendered despite the
lack of a written contract.51 The measure of recovery under the principle should relate to the reasonable value of the services
performed.52 The principle prevents undue enrichment based on the equitable postulate that it is unjust for a person to retain any
benefit without paying for it. Being predicated on equity, the principle should only be applied if no express contract was entered into,
and no specific statutory provision was applicable. 53

Under the established circumstances, we deem the total amount of ₱200,000.00 to be reasonable compensation for respondents’
services under the principle of quantum meruit.

Finally, we sustain IHC’s position that the grant of attorney’s fees lacked factual or legal basis. Attorney’s fees are not awarded every
time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. There should be factual
or legal support in the records before the award of such fees is sustained. It is not enough justification for the award simply because
respondents were compelled to protect their rights.54

ACCORDINGLY, the Court DENIES the petition for review on certiorari; and AFFIRMS the decision of the Court of Appeals promulgated
on November 8, 2002 in C.A.-G.R. No. 47094 subject to the MODIFICATIONS that: (a) International Hotel Corporation is ordered to. pay
Francisco G. Joaquin, Jr. and Rafael Suarez ₱100,000.00 each as compensation for their services, and (b) the award of ₱20,000.00 as
attorney's fees is deleted.
No costs of suit.

SO ORDERED.

LUCAS P. BERSMAIN
Associate Justice

WE CONCUR:

GO TO FULL LIST OF DECISIONS and RESOLUTIONS

THIRD DIVISION

F. F. MAÑACOP CONSTRUCTION CO., INC.,

Petitioner,
G. R. No. 122196

January 15, 1997

-versus-

COURT OF APPEALS and THE MANILA

INTERNATIONAL AIRPORT AUTHORITY,
Respondents.

DECISION
FRANCISCO, J.:

The undisputed facts are as follows:

Sometime in September, 1995, petitioner started with the construction of a perimeter fence along the MIA road from
Asia Overseas, Inc. up to Airscope Development Corporation for and in consideration of the quoted price of
P307,440.00. Because of the urgency of building the said fence which was to prevent would be squatters from entering
the area, petitioner proceeded with the fence construction even if the Notice to Proceed was not yet signed by the
general manager [1] of private respondent [2] but already initialed by its Assistant Project Manager. [3] After the
February, 1986 revolution, however, the new general manager [4] of private respondent stopped the construction of
the said fence. By that time, 95% was finished which was worth P282,068.00 as computed by petitioner. Petitioner
made repeated demands for the payment of what it has completed but private respondent ignored said demands. After
two years of making demands for payment which, as aforesaid, were simply ignored by private respondent, petitioner
decided to bring the matter to court and thus incurred attorney's fees in the process.
In court, the issues were limited to whether or not petitioner had done works for the private respondent and whether
or not the same was authorized. In order to prove that petitioner rendered services to private respondent, petitioner
presented Engr. Angelito Gonzales who testified that indeed fence was constructed for private respondent in
accordance with plans therefor [Exh. "C"] and pictures had been taken of the fence [Exhs. "N" to "N-3"] and the
certification of the supplier as to the materials used by petitioner in constructing the fence and the price thereof.

Private respondent presented no evidence whatever (sic) despite the chances[5] given to it by the trial court, one of
which evidence would have consisted of a testimony from the COA [6] on what should be the expenses involved in the
construction of said fence.
After the repeated failure of private respondent to present its evidence, the trial court rendered a decision wherein it is
found that for the services rendered by the petitioner it should be paid P238,501.48 based upon a quantum meruit
since there is an absence of a written contract between the parties. Said amount is the latest evaluation of the work
done which evaluation was made by private respondent itself. Likewise, the trial court ordered private respondent to
pay petitioner attorney's fees since there is reason to believe that private respondent acted in bad faith in refusing to
comply with the repeated demands of petitioner for payment for two long years.
On appeal to the respondent court, the private respondent assigned the error that the trial court should have referred
the computation of what should be paid to petitioner to the COA pursuant to what was done in the case of Eslao v.
Commission on Audit, 195 SCRA 730. The petitioner refuted this assigned error by pointing out that it is not one of the
issues raised before the trial court.
In its decision dated September 8, 1995, the Court of Appeals agreed that petitioner rendered services to private
respondent for which it should be paid but set aside the entire decision of the trial court directing the latter to refer the
computation of what should be paid to petitioner to the COA as done in the case of Eslao v. Commission on Audit.
A motion for reconsideration of the aforesaid decision proved futile. [7]

Petitioner comes to this Court via petition for review under Rule 45 arguing that the Court of Appeals (CA) erred in
taking cognizance of the issue of referring the matter to the COA to determine the amount due to petitioner by relying
on Eslao v. COA and Royal Trust Co. vs. COA [8] , which issue was raised for the first time on appeal. The Court gave due
course to the petition and required the parties to submit their respective memoranda. Petitioner complied while private
respondent adopted its comment as memorandum.
Well-recognized jurisprudence precludes raising an issue only for the first time on appeal, [9] as it would be offensive to
the basic rules of fair play and justice to allow private respondent to raise a question not ventilated before the court a
guo. [10] There is no dispute that the issue of whether the matter should be referred to the COA was not raised in the
lower court. Thus, technically, respondent court should not have taken cognizance of the same. However, considering
that the issue of reference is a matter closely related to the determination of the question on how much is exactly due
to petitioner, the court may consider the former issue for a just and complete resolution of the case. [11] Besides, the
present case involves the disposition of public funds and calls for the performance of a constitutional duty of the COA
which should not be defeated by mere technicalities of procedure.cralaw
Proceeding to the merits, it is not disputed that petitioner is entitled to payment for the construction it made, which
arose from a quasi-contractual relation created between the former and private respondent. But should petitioner be
paid based on quantum meruit?
The issue was answered in the affirmative in the case of Eslao. We find no reason to depart from such ruling due to the
following reasons: First, the instant quasi-contract is neither fraudulent nor mala in se. Second, the project was already
covered by a specific appropriation. [12] Third, as in private contracts, the facts show that an implied obligation to pay
would be imposed upon the government. Fourth, the property or benefit is not ultra vires, i.e. they can be the proper
subject of an express contract and are within the contractual powers of the public body. Fifth, the case falls within the
exemption from the mandatory procedure of public bidding which is dispensed with on the ground of public
necessity, [13] or when time is of the essence, [14] and considering that the subject project was contiguous to an on
going project [15] performed by petitioner and there is no proof of any unsatisfactory performance or negative
slippage. [16] Sixth, the contractor substantially complied [95% complete] in good faith with its obligation and no
intentional departure from the specifications were alleged. Seventh, petitioner's claim is clearly supported by equity.
Private respondent is reaping benefits from the scallop fence and wire placed by petitioner. Eighth, there is no proof of
any collusion among the parties involved. Finally, the payment is limited to the actual cost chargeable against funds
authorized and certified for the purpose. All these circumstances, taken together, negate fraud and collusion. [17]
Citing the cases of Eslao and Royal Trust, the Solicitor General, on behalf of private respondent, argues that the matter
should be referred to the COA. Such argument is without merit. Quantum meruit allows recovery of the reasonable
value regardless of any agreement as to value. It entitles the party to "as much as he, reasonably deserves," [18] as
distinguished from quantum valebant or to "as much as what is reasonably worth."
Unliquidated claims present a justiciable question ripe for judicial determination which is beyond the powers of the
COA to adjudicate. [19] Recovery based on quantum meruit is in the nature of such claim because its settlement
requires the application of judgment and discretion and cannot be adjusted by simple arithmetical processes. In the
cases of Eslao and Royal Trust, the Court found it necessary to refer to the COA the task of determining the total
compensation due to the claimants considering that the matter on the exact amount was not at issue [20] and the
determination thereof involves a review of the factual findings and evidence in support thereof. On the other hand, the
lower court in this case, had already made a factual finding on the amount reasonably due to petitioner and scrutinized
the evidence to sustain the claim. Besides, there is nothing in the cited cases which would imply that only the COA can
determine the specific amount due to a contractor guided by the equitable principle of quantum meruit. As our courts
are both courts of law and equity, they are not powerless to determine a factual matter in accordance with both
standards.cralaw
With respect to the award of attorney's fees, the same is premised on the uncontroverted factual finding of the lower
court, as affirmed by respondent appellate court, that private respondent acted in bad faith in refusing payment to
petitioner. Such factual findings are not only accorded great weight, but finality as well, since they are supported by
substantial evidence. [21] No reason appears in this case that would justify departure from the above doctrine.cralaw
WHEREFORE, the decision of the Court of Appeals is SET ASIDE and the decision of the Regional Trial Court dated May 4,
1992 is REINSTATED.cralaw
SO ORDERED.cralaw
Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.cralaw

____________________________
Endnotes
[1] Luis Tabuena, [Rollo, p. 70].
[2] Renamed as the Ninoy Aquino International Airport [NAIA], (Rollo , p. 8).
[3] Elpidio L. Mendoza, [Rollo, p. 70].
[4] Luis Tabuena was replaced by Romeo Santos who was in turn replaced by Reli German, [Rollo, p. 9].
[5] The RTC gave private respondent at least (4) opportunities to present their evidence but the latter still failed to avail
of such opportunities for undisclosed reasons.
[6] Commission on Audit.
[7] Rollo, pp. 127-129.
[8] G.R. No. 84202, November 23, 1988 (Resolution of the Court en banc, cited in Eslao vs. COA, 195 SCRA 730 [1991]).
[9] Manila Bay Club vs. CA, [resolution] 249 SCRA 303 (1995); Republic vs. NLRC, 314 Phil. 507 [1995].
[10] See Lopez Realty, Inc. vs. Fontecha, 247 SCRA 183 [1995]; Manila Bay Club vs. CA, [Decision] 315 Phil. 805 (1995); C.
Alcantara & Sons, Inc. vs. NLRC, 229 SCRA 109 [1994]; Ravelo vs. CA, 207 SCRA 254 (1992); Anchuelo vs. IAC, 147 SCRA
434 [1987].
[11] Garrido v. CA, 236 SCRA 450 [1994].
[12] An amount of P313,325.28 was appropriated for the reinforcement of the fence. [Rollo, p. 45].
[13] Section 9, B. P. 132 [Public Works Appropriations Act] provides:chanroblesvirtuallawlibrary
"Negotiated contracts Pursuant to the general policy of undertaking projects by contract after public bidding, no
project covered by appropriations in this act shall be prosecuted by negotiated contract except: xxx; (b) in case of urgent
necessity or emergency or danger to life and property; xxx Provided, that no negative slippage exceeding ten per
centum (10%) is incurred by the contractor in any of his on-going projects: Provided, further, That the additional work is
within his contracting capabilities." [Emphasis supplied].
[14] Section 4, P.D. 1594 as amended provides:chanroblesvirtuallawlibrary
"Bidding. Construction projects shall generally be undertaken by contract after competitive public bidding. Projects may
be undertaken by administration or force account or by negotiated contract only in exceptional cases where time is of
the essence, or where there is lack of qualified bidders or contractors, or where there is a conclusive evidence that
greater economy and efficiency would be achieve through this arrangement, and in accordance with provisions of laws
and acts on the matter, subject to the approval of the Minister of Public Works, Transportation and Communications,
the Minister of Public Highways, or the Minister of Energy, as the case may be, if the project cost is less than P1 million,
and the President of the Philippines, upon recommendation of the Minister, if the project cost is P1 million or more."
[15] Petitioner was under contract with private respondent and was actually fencing the MIAA Engineering compound
at the time the latter asked the former to perform the project subject of this case. [Rollo, p. 44].
[16] IB 10.4.2, Implementing Rules and Regulations of P. D. 1594, as amended provides:chanroblesvirtuallawlibrary
"1. Negotiated contract may be entered into only where any of the following conditions exist and the implementing
office/agency/corporation is not capable of undertaking the project by administration:chanroblesvirtuallawlibrary
"xxx xxx xxx
"c. Where the subject project is adjacent or contiguous to an ongoing project and it could be economically prosecuted
by the same contractor, in which case, direct negotiation may be undertaken with the said contractor at the same unit
prices and contract conditions, less mobilization cost, provided that he has no negative slippage and has demonstrated
a satisfactory performance. [Emphasis ours]. "xxx xxx xxx"
[17] Rivera v. Municipality of Malolos, 102 Phil. 285, 291 [1957].
[18] Caughlan v. International Longshoremen's and Warehousemen's Union, 78 A.L.R. 2d 313; Jackson v. City of
Gastonia, 100 S.E. 2d 241, 243; Lockard v. City of Salem, 43 S.E. 2d 239 244, 130 W. Va. 287; Mead v. Ringling, 64 N. W.
2d 222, 225; American-Hawaiian Engineering and Construction Co. v. Butler, 165 Cal. App. 497 cited in 17 Am Jur 26
Contracts, Sec. 583.
[19] See Phil. Operations, Inc. v. Auditor-General, 94 Phil. 868 [1954].
[20] The issue in the cited cases is whether the contractors were entitled to any payment.
[21] See Far East Bank v. CA, G.R. No. 123569, April 1, 1996; Acevedo Optical v. CA, 250 SCRA 409 [1995]; Salvador v. CA,
supra.; Alforte v. Santos, 313 Phil. 384 [1995]; Chua v. CA, 312 Phil. 857 [1995]; Tay v. CA, 312 Phil. 1128 [1995];
Meneses v. CA, 246 SCRA 162.
Back to Top - Back to Main Index - Back to Table of Contents -1997 SC Decisions - Back to Home

Republic of the Philippines

SUPREME COURT
Manila
 SECOND DIVISION

G.R. No. 100113 September 3, 1991

RENATO CAYETANO, petitioner,

vs.
CHRISTIAN MONSOD, HON. JOVITO R. SALONGA, COMMISSION ON APPOINTMENT, and HON. GUILLERMO CARAGUE, in his
capacity as Secretary of Budget and Management, respondents.

Renato L. Cayetano for and in his own behalf.

Sabina E. Acut, Jr. and Mylene Garcia-Albano co-counsel for petitioner.

PARAS, J.:

We are faced here with a controversy of far-reaching proportions. While ostensibly only legal issues are involved, the Court's decision
in this case would indubitably have a profound effect on the political aspect of our national existence.

The 1987 Constitution provides in Section 1 (1), Article IX-C:

There shall be a Commission on Elections composed of a Chairman and six Commissioners who shall be natural-born citizens
of the Philippines and, at the time of their appointment, at least thirty-five years of age, holders of a college degree, and
must not have been candidates for any elective position in the immediately preceding -elections. However, a majority
thereof, including the Chairman, shall be members of the Philippine Bar who have been engaged in the practice of law for at
least ten years. (Emphasis supplied)

The aforequoted provision is patterned after Section l(l), Article XII-C of the 1973 Constitution which similarly provides:

There shall be an independent Commission on Elections composed of a Chairman and eight Commissioners who shall be natural-born
citizens of the Philippines and, at the time of their appointment, at least thirty-five years of age and holders of a college degree.
However, a majority thereof, including the Chairman, shall be members of the Philippine Bar who have been engaged in the practice
of law for at least ten years.' (Emphasis supplied)

Regrettably, however, there seems to be no jurisprudence as to what constitutes practice of law as a legal qualification to an
appointive office.

Black defines "practice of law" as:

The rendition of services requiring the knowledge and the application of legal principles and technique to serve the interest
of another with his consent. It is not limited to appearing in court, or advising and assisting in the conduct of litigation, but
embraces the preparation of pleadings, and other papers incident to actions and special proceedings, conveyancing, the
preparation of legal instruments of all kinds, and the giving of all legal advice to clients. It embraces all advice to clients and
all actions taken for them in matters connected with the law. An attorney engages in the practice of law by maintaining an
office where he is held out to be-an attorney, using a letterhead describing himself as an attorney, counseling clients in legal
matters, negotiating with opposing counsel about pending litigation, and fixing and collecting fees for services rendered by
his associate. (Black's Law Dictionary, 3rd ed.)

The practice of law is not limited to the conduct of cases in court. (Land Title Abstract and Trust Co. v. Dworken, 129 Ohio St. 23, 193
N.E. 650) A person is also considered to be in the practice of law when he:

... for valuable consideration engages in the business of advising person, firms, associations or corporations as to their rights
under the law, or appears in a representative capacity as an advocate in proceedings pending or prospective, before any
 court, commissioner, referee, board, body, committee, or commission constituted by law or authorized to settle controversies
and there, in such representative capacity performs any act or acts for the purpose of obtaining or defending the rights of
their clients under the law. Otherwise stated, one who, in a representative capacity, engages in the business of advising
clients as to their rights under the law, or while so engaged performs any act or acts either in court or outside of court for
that purpose, is engaged in the practice of law. (State ex. rel. Mckittrick v..C.S. Dudley and Co., 102 S.W. 2d 895, 340 Mo. 852)

This Court in the case of Philippine Lawyers Association v.Agrava, (105 Phil. 173,176-177) stated:

The practice of law is not limited to the conduct of cases or litigation in court; it embraces the preparation of pleadings and
other papers incident to actions and special proceedings, the management of such actions and proceedings on behalf of
clients before judges and courts, and in addition, conveying. In general, all advice to clients, and all action taken for them in
matters connected with the law incorporation services, assessment and condemnation services contemplating an appearance
before a judicial body, the foreclosure of a mortgage, enforcement of a creditor's claim in bankruptcy and insolvency
proceedings, and conducting proceedings in attachment, and in matters of estate and guardianship have been held to
constitute law practice, as do the preparation and drafting of legal instruments, where the work done involves the
determination by the trained legal mind of the legal effect of facts and conditions. (5 Am. Jr. p. 262, 263). (Emphasis supplied)

Practice of law under modem conditions consists in no small part of work performed outside of any court and having no
immediate relation to proceedings in court. It embraces conveyancing, the giving of legal advice on a large variety of subjects,
and the preparation and execution of legal instruments covering an extensive field of business and trust relations and other
affairs. Although these transactions may have no direct connection with court proceedings, they are always subject to
become involved in litigation. They require in many aspects a high degree of legal skill, a wide experience with men and
affairs, and great capacity for adaptation to difficult and complex situations. These customary functions of an attorney or
counselor at law bear an intimate relation to the administration of justice by the courts. No valid distinction, so far as
concerns the question set forth in the order, can be drawn between that part of the work of the lawyer which involves
appearance in court and that part which involves advice and drafting of instruments in his office. It is of importance to the
welfare of the public that these manifold customary functions be performed by persons possessed of adequate learning and
skill, of sound moral character, and acting at all times under the heavy trust obligations to clients which rests upon all
attorneys. (Moran, Comments on the Rules of Court, Vol. 3 [1953 ed.] , p. 665-666, citing In re Opinion of the Justices [Mass.],
194 N.E. 313, quoted in Rhode Is. Bar Assoc. v. Automobile Service Assoc. [R.I.] 179 A. 139,144). (Emphasis ours)

The University of the Philippines Law Center in conducting orientation briefing for new lawyers (1974-1975) listed the dimensions of
the practice of law in even broader terms as advocacy, counselling and public service.

One may be a practicing attorney in following any line of employment in the profession. If what he does exacts knowledge of
the law and is of a kind usual for attorneys engaging in the active practice of their profession, and he follows some one or
more lines of employment such as this he is a practicing attorney at law within the meaning of the statute. (Barr v. Cardell,
155 NW 312)

Practice of law means any activity, in or out of court, which requires the application of law, legal procedure, knowledge, training and
experience. "To engage in the practice of law is to perform those acts which are characteristics of the profession. Generally, to practice
law is to give notice or render any kind of service, which device or service requires the use in any degree of legal knowledge or skill."
(111 ALR 23)

The following records of the 1986 Constitutional Commission show that it has adopted a liberal interpretation of the term "practice of
law."

MR. FOZ. Before we suspend the session, may I make a manifestation which I forgot to do during our review of the provisions
on the Commission on Audit. May I be allowed to make a very brief statement?

THE PRESIDING OFFICER (Mr. Jamir).

The Commissioner will please proceed.

 MR. FOZ. This has to do with the qualifications of the members of the Commission on Audit. Among others, the qualifications
provided for by Section I is that "They must be Members of the Philippine Bar" — I am quoting from the provision — "who
have been engaged in the practice of law for at least ten years".

To avoid any misunderstanding which would result in excluding members of the Bar who are now employed in the COA or Commission
on Audit, we would like to make the clarification that this provision on qualifications regarding members of the Bar does not
necessarily refer or involve actual practice of law outside the COA We have to interpret this to mean that as long as the lawyers who
are employed in the COA are using their legal knowledge or legal talent in their respective work within COA, then they are qualified to
be considered for appointment as members or commissioners, even chairman, of the Commission on Audit.

This has been discussed by the Committee on Constitutional Commissions and Agencies and we deem it important to take it up on the
floor so that this interpretation may be made available whenever this provision on the qualifications as regards members of the
Philippine Bar engaging in the practice of law for at least ten years is taken up.

MR. OPLE. Will Commissioner Foz yield to just one question.

MR. FOZ. Yes, Mr. Presiding Officer.

MR. OPLE. Is he, in effect, saying that service in the COA by a lawyer is equivalent to the requirement of a law practice that is
set forth in the Article on the Commission on Audit?

MR. FOZ. We must consider the fact that the work of COA, although it is auditing, will necessarily involve legal work; it will
involve legal work. And, therefore, lawyers who are employed in COA now would have the necessary qualifications in
accordance with the Provision on qualifications under our provisions on the Commission on Audit. And, therefore, the answer
is yes.

MR. OPLE. Yes. So that the construction given to this is that this is equivalent to the practice of law.

MR. FOZ. Yes, Mr. Presiding Officer.

MR. OPLE. Thank you.

... ( Emphasis supplied)

Section 1(1), Article IX-D of the 1987 Constitution, provides, among others, that the Chairman and two Commissioners of the
Commission on Audit (COA) should either be certified public accountants with not less than ten years of auditing practice, or members
of the Philippine Bar who have been engaged in the practice of law for at least ten years. (emphasis supplied)

Corollary to this is the term "private practitioner" and which is in many ways synonymous with the word "lawyer." Today, although
many lawyers do not engage in private practice, it is still a fact that the majority of lawyers are private practitioners. (Gary
Munneke, Opportunities in Law Careers [VGM Career Horizons: Illinois], [1986], p. 15).

At this point, it might be helpful to define private practice. The term, as commonly understood, means "an individual or organization
engaged in the business of delivering legal services." (Ibid.). Lawyers who practice alone are often called "sole practitioners." Groups
of lawyers are called "firms." The firm is usually a partnership and members of the firm are the partners. Some firms may be organized
as professional corporations and the members called shareholders. In either case, the members of the firm are the experienced
attorneys. In most firms, there are younger or more inexperienced salaried attorneyscalled "associates." (Ibid.).

The test that defines law practice by looking to traditional areas of law practice is essentially tautologous, unhelpful defining the
practice of law as that which lawyers do. (Charles W. Wolfram, Modern Legal Ethics [West Publishing Co.: Minnesota, 1986], p. 593).
The practice of law is defined as the performance of any acts . . . in or out of court, commonly understood to be the practice of law.
(State Bar Ass'n v. Connecticut Bank & Trust Co., 145 Conn. 222, 140 A.2d 863, 870 [1958] [quoting Grievance Comm. v. Payne, 128
Conn. 325, 22 A.2d 623, 626 [1941]). Because lawyers perform almost every function known in the commercial and governmental
realm, such a definition would obviously be too global to be workable.(Wolfram, op. cit.).
The appearance of a lawyer in litigation in behalf of a client is at once the most publicly familiar role for lawyers as well as an
uncommon role for the average lawyer. Most lawyers spend little time in courtrooms, and a large percentage spend their entire
practice without litigating a case. (Ibid., p. 593). Nonetheless, many lawyers do continue to litigate and the litigating lawyer's role
colors much of both the public image and the self perception of the legal profession. (Ibid.).

In this regard thus, the dominance of litigation in the public mind reflects history, not reality. (Ibid.). Why is this so? Recall that the late
Alexander SyCip, a corporate lawyer, once articulated on the importance of a lawyer as a business counselor in this wise: "Even today,
there are still uninformed laymen whose concept of an attorney is one who principally tries cases before the courts. The members of
the bench and bar and the informed laymen such as businessmen, know that in most developed societies today, substantially more
legal work is transacted in law offices than in the courtrooms. General practitioners of law who do both litigation and non-litigation
work also know that in most cases they find themselves spending more time doing what [is] loosely desccribe[d] as business
counseling than in trying cases. The business lawyer has been described as the planner, the diagnostician and the trial lawyer, the
surgeon. I[t] need not [be] stress[ed] that in law, as in medicine, surgery should be avoided where internal medicine can be effective."
(Business Star, "Corporate Finance Law," Jan. 11, 1989, p. 4).

In the course of a working day the average general practitioner wig engage in a number of legal tasks, each involving different legal
doctrines, legal skills, legal processes, legal institutions, clients, and other interested parties. Even the increasing numbers of lawyers in
specialized practice wig usually perform at least some legal services outside their specialty. And even within a narrow specialty such as
tax practice, a lawyer will shift from one legal task or role such as advice-giving to an importantly different one such as representing a
client before an administrative agency. (Wolfram, supra, p. 687).

By no means will most of this work involve litigation, unless the lawyer is one of the relatively rare types — a litigator who specializes
in this work to the exclusion of much else. Instead, the work will require the lawyer to have mastered the full range of traditional
lawyer skills of client counselling, advice-giving, document drafting, and negotiation. And increasingly lawyers find that the new skills
of evaluation and mediation are both effective for many clients and a source of employment. (Ibid.).

Most lawyers will engage in non-litigation legal work or in litigation work that is constrained in very important ways, at least
theoretically, so as to remove from it some of the salient features of adversarial litigation. Of these special roles, the most prominent
is that of prosecutor. In some lawyers' work the constraints are imposed both by the nature of the client and by the way in which the
lawyer is organized into a social unit to perform that work. The most common of these roles are those of corporate practice and
government legal service. (Ibid.).

In several issues of the Business Star, a business daily, herein below quoted are emerging trends in corporate law practice, a departure
from the traditional concept of practice of law.

We are experiencing today what truly may be called a revolutionary transformation in corporate law practice. Lawyers and
other professional groups, in particular those members participating in various legal-policy decisional contexts, are finding
that understanding the major emerging trends in corporation law is indispensable to intelligent decision-making.

Constructive adjustment to major corporate problems of today requires an accurate understanding of the nature and
implications of the corporate law research function accompanied by an accelerating rate of information accumulation. The
recognition of the need for such improved corporate legal policy formulation, particularly "model-making" and "contingency
planning," has impressed upon us the inadequacy of traditional procedures in many decisional contexts.

In a complex legal problem the mass of information to be processed, the sorting and weighing of significant conditional
factors, the appraisal of major trends, the necessity of estimating the consequences of given courses of action, and the need
for fast decision and response in situations of acute danger have prompted the use of sophisticated concepts of information
flow theory, operational analysis, automatic data processing, and electronic computing equipment. Understandably, an
improved decisional structure must stress the predictive component of the policy-making process, wherein a "model", of the
decisional context or a segment thereof is developed to test projected alternative courses of action in terms of futuristic
effects flowing therefrom.

Although members of the legal profession are regularly engaged in predicting and projecting the trends of the law, the
subject of corporate finance law has received relatively little organized and formalized attention in the philosophy of
advancing corporate legal education. Nonetheless, a cross-disciplinary approach to legal research has become a vital
necessity.
Certainly, the general orientation for productive contributions by those trained primarily in the law can be improved through
an early introduction to multi-variable decisional context and the various approaches for handling such problems. Lawyers,
particularly with either a master's or doctorate degree in business administration or management, functioning at the legal
policy level of decision-making now have some appreciation for the concepts and analytical techniques of other professions
which are currently engaged in similar types of complex decision-making.

Truth to tell, many situations involving corporate finance problems would require the services of an astute attorney because
of the complex legal implications that arise from each and every necessary step in securing and maintaining the business
issue raised. (Business Star, "Corporate Finance Law," Jan. 11, 1989, p. 4).

In our litigation-prone country, a corporate lawyer is assiduously referred to as the "abogado de campanilla." He is the "big-
time" lawyer, earning big money and with a clientele composed of the tycoons and magnates of business and industry.

Despite the growing number of corporate lawyers, many people could not explain what it is that a corporate lawyer does. For
one, the number of attorneys employed by a single corporation will vary with the size and type of the corporation. Many
smaller and some large corporations farm out all their legal problems to private law firms. Many others have in-house
counsel only for certain matters. Other corporation have a staff large enough to handle most legal problems in-house.

A corporate lawyer, for all intents and purposes, is a lawyer who handles the legal affairs of a corporation. His areas of
concern or jurisdiction may include, inter alia: corporate legal research, tax laws research, acting out as corporate secretary
(in board meetings), appearances in both courts and other adjudicatory agencies (including the Securities and Exchange
Commission), and in other capacities which require an ability to deal with the law.

At any rate, a corporate lawyer may assume responsibilities other than the legal affairs of the business of the corporation he
is representing. These include such matters as determining policy and becoming involved in management. ( Emphasis
supplied.)

In a big company, for example, one may have a feeling of being isolated from the action, or not understanding how one's
work actually fits into the work of the orgarnization. This can be frustrating to someone who needs to see the results of his
work first hand. In short, a corporate lawyer is sometimes offered this fortune to be more closely involved in the running of
the business.

Moreover, a corporate lawyer's services may sometimes be engaged by a multinational corporation (MNC). Some large MNCs
provide one of the few opportunities available to corporate lawyers to enter the international law field. After all,
international law is practiced in a relatively small number of companies and law firms. Because working in a foreign country is
perceived by many as glamorous, tills is an area coveted by corporate lawyers. In most cases, however, the overseas jobs go
to experienced attorneys while the younger attorneys do their "international practice" in law libraries. (Business Star,
"Corporate Law Practice," May 25,1990, p. 4).

This brings us to the inevitable, i.e., the role of the lawyer in the realm of finance. To borrow the lines of Harvard-educated
lawyer Bruce Wassertein, to wit: "A bad lawyer is one who fails to spot problems, a good lawyer is one who perceives the
difficulties, and the excellent lawyer is one who surmounts them." (Business Star, "Corporate Finance Law," Jan. 11, 1989, p.
4).

Today, the study of corporate law practice direly needs a "shot in the arm," so to speak. No longer are we talking of the
traditional law teaching method of confining the subject study to the Corporation Code and the Securities Code but an
incursion as well into the intertwining modern management issues.

Such corporate legal management issues deal primarily with three (3) types of learning: (1) acquisition of insights into current
advances which are of particular significance to the corporate counsel; (2) an introduction to usable disciplinary skins
applicable to a corporate counsel's management responsibilities; and (3) a devotion to the organization and management of
the legal function itself.

These three subject areas may be thought of as intersecting circles, with a shared area linking them. Otherwise known as
"intersecting managerial jurisprudence," it forms a unifying theme for the corporate counsel's total learning.
Some current advances in behavior and policy sciences affect the counsel's role. For that matter, the corporate lawyer
reviews the globalization process, including the resulting strategic repositioning that the firms he provides counsel for are
required to make, and the need to think about a corporation's; strategy at multiple levels. The salience of the nation-state is
being reduced as firms deal both with global multinational entities and simultaneously with sub-national governmental units.
Firms increasingly collaborate not only with public entities but with each other — often with those who are competitors in
other arenas.

Also, the nature of the lawyer's participation in decision-making within the corporation is rapidly changing. The modem
corporate lawyer has gained a new role as a stakeholder — in some cases participating in the organization and operations of
governance through participation on boards and other decision-making roles. Often these new patterns develop alongside
existing legal institutions and laws are perceived as barriers. These trends are complicated as corporations organize for global
operations. ( Emphasis supplied)

The practising lawyer of today is familiar as well with governmental policies toward the promotion and management of
technology. New collaborative arrangements for promoting specific technologies or competitiveness more generally require
approaches from industry that differ from older, more adversarial relationships and traditional forms of seeking to influence
governmental policies. And there are lessons to be learned from other countries. In Europe, Esprit, Eureka and Race are
examples of collaborative efforts between governmental and business Japan's MITI is world famous. (Emphasis supplied)

Following the concept of boundary spanning, the office of the Corporate Counsel comprises a distinct group within the
managerial structure of all kinds of organizations. Effectiveness of both long-term and temporary groups within organizations
has been found to be related to indentifiable factors in the group-context interaction such as the groups actively revising their
knowledge of the environment coordinating work with outsiders, promoting team achievements within the organization. In
general, such external activities are better predictors of team performance than internal group processes.

In a crisis situation, the legal managerial capabilities of the corporate lawyer vis-a-vis the managerial mettle of corporations
are challenged. Current research is seeking ways both to anticipate effective managerial procedures and to understand
relationships of financial liability and insurance considerations. (Emphasis supplied)

Regarding the skills to apply by the corporate counsel, three factors are apropos:

First System Dynamics. The field of systems dynamics has been found an effective tool for new managerial thinking regarding
both planning and pressing immediate problems. An understanding of the role of feedback loops, inventory levels, and rates
of flow, enable users to simulate all sorts of systematic problems — physical, economic, managerial, social, and
psychological. New programming techniques now make the system dynamics principles more accessible to managers —
including corporate counsels. (Emphasis supplied)

Second Decision Analysis. This enables users to make better decisions involving complexity and uncertainty. In the context of a
law department, it can be used to appraise the settlement value of litigation, aid in negotiation settlement, and minimize the
cost and risk involved in managing a portfolio of cases. (Emphasis supplied)

Third Modeling for Negotiation Management. Computer-based models can be used directly by parties and mediators in all
lands of negotiations. All integrated set of such tools provide coherent and effective negotiation support, including hands-on
on instruction in these techniques. A simulation case of an international joint venture may be used to illustrate the point.

[Be this as it may,] the organization and management of the legal function, concern three pointed areas of consideration,
thus:

Preventive Lawyering. Planning by lawyers requires special skills that comprise a major part of the general counsel's
responsibilities. They differ from those of remedial law. Preventive lawyering is concerned with minimizing the risks of legal
trouble and maximizing legal rights for such legal entities at that time when transactional or similar facts are being
considered and made.

Managerial Jurisprudence. This is the framework within which are undertaken those activities of the firm to which legal
consequences attach. It needs to be directly supportive of this nation's evolving economic and organizational fabric as firms
 change to stay competitive in a global, interdependent environment. The practice and theory of "law" is not adequate today
to facilitate the relationships needed in trying to make a global economy work.

Organization and Functioning of the Corporate Counsel's Office. The general counsel has emerged in the last decade as one of
the most vibrant subsets of the legal profession. The corporate counsel hear responsibility for key aspects of the firm's
strategic issues, including structuring its global operations, managing improved relationships with an increasingly diversified
body of employees, managing expanded liability exposure, creating new and varied interactions with public decision-makers,
coping internally with more complex make or by decisions.

This whole exercise drives home the thesis that knowing corporate law is not enough to make one a good general corporate
counsel nor to give him a full sense of how the legal system shapes corporate activities. And even if the corporate lawyer's
aim is not the understand all of the law's effects on corporate activities, he must, at the very least, also gain a working
knowledge of the management issues if only to be able to grasp not only the basic legal "constitution' or makeup of the
modem corporation. "Business Star", "The Corporate Counsel," April 10, 1991, p. 4).

The challenge for lawyers (both of the bar and the bench) is to have more than a passing knowledge of financial law affecting
each aspect of their work. Yet, many would admit to ignorance of vast tracts of the financial law territory. What transpires
next is a dilemma of professional security: Will the lawyer admit ignorance and risk opprobrium?; or will he feign
understanding and risk exposure? (Business Star, "Corporate Finance law," Jan. 11, 1989, p. 4).

Respondent Christian Monsod was nominated by President Corazon C. Aquino to the position of Chairman of the COMELEC in a letter
received by the Secretariat of the Commission on Appointments on April 25, 1991. Petitioner opposed the nomination because
allegedly Monsod does not possess the required qualification of having been engaged in the practice of law for at least ten years.

On June 5, 1991, the Commission on Appointments confirmed the nomination of Monsod as Chairman of the COMELEC. On June 18,
1991, he took his oath of office. On the same day, he assumed office as Chairman of the COMELEC.

Challenging the validity of the confirmation by the Commission on Appointments of Monsod's nomination, petitioner as a citizen and
taxpayer, filed the instant petition for certiorari and Prohibition praying that said confirmation and the consequent appointment of
Monsod as Chairman of the Commission on Elections be declared null and void.

Atty. Christian Monsod is a member of the Philippine Bar, having passed the bar examinations of 1960 with a grade of 86-55%. He has
been a dues paying member of the Integrated Bar of the Philippines since its inception in 1972-73. He has also been paying his
professional license fees as lawyer for more than ten years. (p. 124, Rollo)

After graduating from the College of Law (U.P.) and having hurdled the bar, Atty. Monsod worked in the law office of his father. During
his stint in the World Bank Group (1963-1970), Monsod worked as an operations officer for about two years in Costa Rica and
Panama, which involved getting acquainted with the laws of member-countries negotiating loans and coordinating legal, economic,
and project work of the Bank. Upon returning to the Philippines in 1970, he worked with the Meralco Group, served as chief executive
officer of an investment bank and subsequently of a business conglomerate, and since 1986, has rendered services to various
companies as a legal and economic consultant or chief executive officer. As former Secretary-General (1986) and National Chairman
(1987) of NAMFREL. Monsod's work involved being knowledgeable in election law. He appeared for NAMFREL in its accreditation
hearings before the Comelec. In the field of advocacy, Monsod, in his personal capacity and as former Co-Chairman of the Bishops
Businessmen's Conference for Human Development, has worked with the under privileged sectors, such as the farmer and urban poor
groups, in initiating, lobbying for and engaging in affirmative action for the agrarian reform law and lately the urban land reform bill.
Monsod also made use of his legal knowledge as a member of the Davide Commission, a quast judicial body, which conducted
numerous hearings (1990) and as a member of the Constitutional Commission (1986-1987), and Chairman of its Committee on
Accountability of Public Officers, for which he was cited by the President of the Commission, Justice Cecilia Muñoz-Palma for
"innumerable amendments to reconcile government functions with individual freedoms and public accountability and the party-list
system for the House of Representative. (pp. 128-129 Rollo) ( Emphasis supplied)

Just a word about the work of a negotiating team of which Atty. Monsod used to be a member.

In a loan agreement, for instance, a negotiating panel acts as a team, and which is adequately constituted to meet the various
contingencies that arise during a negotiation. Besides top officials of the Borrower concerned, there are the legal officer (such
as the legal counsel), the finance manager, and an operations officer (such as an official involved in negotiating the contracts)
 who comprise the members of the team. (Guillermo V. Soliven, "Loan Negotiating Strategies for Developing Country
Borrowers," Staff Paper No. 2, Central Bank of the Philippines, Manila, 1982, p. 11). (Emphasis supplied)

After a fashion, the loan agreement is like a country's Constitution; it lays down the law as far as the loan transaction is
concerned. Thus, the meat of any Loan Agreement can be compartmentalized into five (5) fundamental parts: (1) business
terms; (2) borrower's representation; (3) conditions of closing; (4) covenants; and (5) events of default. (Ibid., p. 13).

In the same vein, lawyers play an important role in any debt restructuring program. For aside from performing the tasks of
legislative drafting and legal advising, they score national development policies as key factors in maintaining their countries'
sovereignty. (Condensed from the work paper, entitled "Wanted: Development Lawyers for Developing Nations," submitted
by L. Michael Hager, regional legal adviser of the United States Agency for International Development, during the Session on
Law for the Development of Nations at the Abidjan World Conference in Ivory Coast, sponsored by the World Peace Through
Law Center on August 26-31, 1973). ( Emphasis supplied)

Loan concessions and compromises, perhaps even more so than purely renegotiation policies, demand expertise in the law of
contracts, in legislation and agreement drafting and in renegotiation. Necessarily, a sovereign lawyer may work with an
international business specialist or an economist in the formulation of a model loan agreement. Debt restructuring contract
agreements contain such a mixture of technical language that they should be carefully drafted and signed only with the
advise of competent counsel in conjunction with the guidance of adequate technical support personnel. (See International
Law Aspects of the Philippine External Debts, an unpublished dissertation, U.S.T. Graduate School of Law, 1987, p. 321).
( Emphasis supplied)

A critical aspect of sovereign debt restructuring/contract construction is the set of terms and conditions which determines
the contractual remedies for a failure to perform one or more elements of the contract. A good agreement must not only
define the responsibilities of both parties, but must also state the recourse open to either party when the other fails to
discharge an obligation. For a compleat debt restructuring represents a devotion to that principle which in the ultimate
analysis is sine qua non for foreign loan agreements-an adherence to the rule of law in domestic and international affairs of
whose kind U.S. Supreme Court Justice Oliver Wendell Holmes, Jr. once said: "They carry no banners, they beat no drums; but
where they are, men learn that bustle and bush are not the equal of quiet genius and serene mastery." (See Ricardo J.
Romulo, "The Role of Lawyers in Foreign Investments," Integrated Bar of the Philippine Journal, Vol. 15, Nos. 3 and 4, Third
and Fourth Quarters, 1977, p. 265).

Interpreted in the light of the various definitions of the term Practice of law". particularly the modern concept of law practice, and
taking into consideration the liberal construction intended by the framers of the Constitution, Atty. Monsod's past work experiences as
a lawyer-economist, a lawyer-manager, a lawyer-entrepreneur of industry, a lawyer-negotiator of contracts, and a lawyer-legislator of
both the rich and the poor — verily more than satisfy the constitutional requirement — that he has been engaged in the practice of
law for at least ten years.

Besides in the leading case of Luego v. Civil Service Commission, 143 SCRA 327, the Court said:

Appointment is an essentially discretionary power and must be performed by the officer in which it is vested according to his
best lights, the only condition being that the appointee should possess the qualifications required by law. If he does, then the
appointment cannot be faulted on the ground that there are others better qualified who should have been preferred. This is
a political question involving considerations of wisdom which only the appointing authority can decide. (emphasis supplied)

No less emphatic was the Court in the case of (Central Bank v. Civil Service Commission, 171 SCRA 744) where it stated:

It is well-settled that when the appointee is qualified, as in this case, and all the other legal requirements are satisfied, the
Commission has no alternative but to attest to the appointment in accordance with the Civil Service Law. The Commission
has no authority to revoke an appointment on the ground that another person is more qualified for a particular position. It
also has no authority to direct the appointment of a substitute of its choice. To do so would be an encroachment on the
discretion vested upon the appointing authority. An appointment is essentially within the discretionary power of whomsoever
it is vested, subject to the only condition that the appointee should possess the qualifications required by law. ( Emphasis
supplied)
The appointing process in a regular appointment as in the case at bar, consists of four (4) stages: (1) nomination; (2) confirmation by
the Commission on Appointments; (3) issuance of a commission (in the Philippines, upon submission by the Commission on
Appointments of its certificate of confirmation, the President issues the permanent appointment; and (4) acceptance e.g., oath-
taking, posting of bond, etc. . . . (Lacson v. Romero, No. L-3081, October 14, 1949; Gonzales, Law on Public Officers, p. 200)

The power of the Commission on Appointments to give its consent to the nomination of Monsod as Chairman of the Commission on
Elections is mandated by Section 1(2) Sub-Article C, Article IX of the Constitution which provides:

The Chairman and the Commisioners shall be appointed by the President with the consent of the Commission on
Appointments for a term of seven years without reappointment. Of those first appointed, three Members shall hold office for
seven years, two Members for five years, and the last Members for three years, without reappointment. Appointment to any
vacancy shall be only for the unexpired term of the predecessor. In no case shall any Member be appointed or designated in a
temporary or acting capacity.

Anent Justice Teodoro Padilla's separate opinion, suffice it to say that his definition of the practice of law is the traditional or
stereotyped notion of law practice, as distinguished from the modern concept of the practice of law, which modern
connotation is exactly what was intended by the eminent framers of the 1987 Constitution. Moreover, Justice Padilla's
definition would require generally a habitual law practice, perhaps practised two or three times a week and would
outlaw say, law practice once or twice a year for ten consecutive years. Clearly, this is far from the constitutional intent.

Upon the other hand, the separate opinion of Justice Isagani Cruz states that in my written opinion, I made use of a definition of law
practice which really means nothing because the definition says that law practice " . . . is what people ordinarily mean by the practice
of law." True I cited the definition but only by way of sarcasm as evident from my statement that the definition of law practice by
"traditional areas of law practice is essentially tautologous" or defining a phrase by means of the phrase itself that is being defined.

Justice Cruz goes on to say in substance that since the law covers almost all situations, most individuals, in making use of the law, or in
advising others on what the law means, are actually practicing law. In that sense, perhaps, but we should not lose sight of the fact that
Mr. Monsod is a lawyer, a member of the Philippine Bar, who has been practising law for over ten years. This is different from the acts
of persons practising law, without first becoming lawyers.

Justice Cruz also says that the Supreme Court can even disqualify an elected President of the Philippines, say, on the ground that he
lacks one or more qualifications. This matter, I greatly doubt. For one thing, how can an action or petition be brought against the
President? And even assuming that he is indeed disqualified, how can the action be entertained since he is the incumbent President?

We now proceed:

The Commission on the basis of evidence submitted doling the public hearings on Monsod's confirmation, implicitly determined that
he possessed the necessary qualifications as required by law. The judgment rendered by the Commission in the exercise of such an
acknowledged power is beyond judicial interference except only upon a clear showing of a grave abuse of discretion amounting to lack
or excess of jurisdiction. (Art. VIII, Sec. 1 Constitution). Thus, only where such grave abuse of discretion is clearly shown shall the Court
interfere with the Commission's judgment. In the instant case, there is no occasion for the exercise of the Court's corrective power,
since no abuse, much less a grave abuse of discretion, that would amount to lack or excess of jurisdiction and would warrant the
issuance of the writs prayed, for has been clearly shown.

Additionally, consider the following:

(1) If the Commission on Appointments rejects a nominee by the President, may the Supreme Court reverse the Commission,
and thus in effect confirm the appointment? Clearly, the answer is in the negative.

(2) In the same vein, may the Court reject the nominee, whom the Commission has confirmed? The answer is likewise clear.

(3) If the United States Senate (which is the confirming body in the U.S. Congress) decides to confirm a Presidential nominee,
it would be incredible that the U.S. Supreme Court would still reverse the U.S. Senate.

Finally, one significant legal maxim is:

 We must interpret not by the letter that killeth, but by the spirit that giveth life.

Take this hypothetical case of Samson and Delilah. Once, the procurator of Judea asked Delilah (who was Samson's beloved) for help
in capturing Samson. Delilah agreed on condition that —

No blade shall touch his skin;

No blood shall flow from his veins.

When Samson (his long hair cut by Delilah) was captured, the procurator placed an iron rod burning white-hot two or three inches
away from in front of Samson's eyes. This blinded the man. Upon hearing of what had happened to her beloved, Delilah was beside
herself with anger, and fuming with righteous fury, accused the procurator of reneging on his word. The procurator calmly replied:
"Did any blade touch his skin? Did any blood flow from his veins?" The procurator was clearly relying on the letter, not the spirit of the
agreement.

In view of the foregoing, this petition is hereby DISMISSED.

SO ORDERED.

Fernan, C.J., Griño-Aquino and Medialdea, JJ., concur.

Feliciano, J., I certify that he voted to dismiss the petition. (Fernan, C.J.)

Sarmiento, J., is on leave.

Regalado, and Davide, Jr., J., took no part.

Separate Opinions

NARVASA, J., concurring:

I concur with the decision of the majority written by Mr. Justice Paras, albeit only in the result; it does not appear to me that there has
been an adequate showing that the challenged determination by the Commission on Appointments-that the appointment of
respondent Monsod as Chairman of the Commission on Elections should, on the basis of his stated qualifications and after due
assessment thereof, be confirmed-was attended by error so gross as to amount to grave abuse of discretion and consequently merits
nullification by this Court in accordance with the second paragraph of Section 1, Article VIII of the Constitution. I therefore vote to
DENY the petition.

PADILLA, J., dissenting:

The records of this case will show that when the Court first deliberated on the Petition at bar, I voted not only to require the
respondents to comment on the Petition, but I was the sole vote for the issuance of a temporary restraining order to enjoin
respondent Monsod from assuming the position of COMELEC Chairman, while the Court deliberated on his constitutional qualification
for the office. My purpose in voting for a TRO was to prevent the inconvenience and even embarrassment to all parties concerned
were the Court to finally decide for respondent Monsod's disqualification. Moreover, a reading of the Petition then in relation to
established jurisprudence already showed prima facie that respondent Monsod did not possess the needed qualification, that is, he
had not engaged in the practice of law for at least ten (10) years prior to his appointment as COMELEC Chairman.

After considering carefully respondent Monsod's comment, I am even more convinced that the constitutional requirement of
"practice of law for at least ten (10) years" has not been met.

The procedural barriers interposed by respondents deserve scant consideration because, ultimately, the core issue to be resolved in
this petition is the proper construal of the constitutional provision requiring a majority of the membership of COMELEC, including the
Chairman thereof to "have been engaged in the practice of law for at least ten (10) years." (Art. IX(C), Section 1(1), 1987 Constitution).
Questions involving the construction of constitutional provisions are best left to judicial resolution. As declared in Angara v. Electoral
Commission, (63 Phil. 139) "upon the judicial department is thrown the solemn and inescapable obligation of interpreting the
Constitution and defining constitutional boundaries."

The Constitution has imposed clear and specific standards for a COMELEC Chairman. Among these are that he must have been
"engaged in the practice of law for at least ten (10) years." It is the bounden duty of this Court to ensure that such standard is met and
complied with.

What constitutes practice of law? As commonly understood, "practice" refers to the actual performance or application of knowledge
as distinguished from mere possession of knowledge; it connotes an active, habitual, repeated or customary action.1 To "practice" law,
or any profession for that matter, means, to exercise or pursue an employment or profession actively, habitually,
repeatedly or customarily.

Therefore, a doctor of medicine who is employed and is habitually performing the tasks of a nursing aide, cannot be said to be in the
"practice of medicine." A certified public accountant who works as a clerk, cannot be said to practice his profession as an accountant.
In the same way, a lawyer who is employed as a business executive or a corporate manager, other than as head or attorney of a Legal
Department of a corporation or a governmental agency, cannot be said to be in the practice of law.

As aptly held by this Court in the case of People vs. Villanueva:2

Practice is more than an isolated appearance for it consists in frequent or customary actions, a succession of acts of the same
kind. In other words, it is frequent habitual exercise (State vs- Cotner, 127, p. 1, 87 Kan. 864, 42 LRA, M.S. 768). Practice of
law to fall within the prohibition of statute has been interpreted as customarily or habitually holding one's self out to the
public as a lawyer and demanding payment for such services (State vs. Bryan, 4 S.E. 522, 98 N.C. 644,647.) ... (emphasis
supplied).

It is worth mentioning that the respondent Commission on Appointments in a Memorandum it prepared, enumerated several factors
determinative of whether a particular activity constitutes "practice of law." It states:

1. Habituality. The term "practice of law" implies customarily or habitually holding one's self out to the public as a lawyer
(People vs. Villanueva, 14 SCRA 109 citing State v. Boyen, 4 S.E. 522, 98 N.C. 644) such as when one sends a circular
announcing the establishment of a law office for the general practice of law (U.S. v. Ney Bosque, 8 Phil. 146), or when one
takes the oath of office as a lawyer before a notary public, and files a manifestation with the Supreme Court informing it of
his intention to practice law in all courts in the country (People v. De Luna, 102 Phil. 968).

Practice is more than an isolated appearance for it consists in frequent or customary action, a succession of acts of the same
kind. In other words, it is a habitual exercise (People v. Villanueva, 14 SCRA 109 citing State v. Cotner, 127, p. 1, 87 Kan, 864).

2. Compensation. Practice of law implies that one must have presented himself to be in the active and continued practice of
the legal profession and that his professional services are available to the public for compensation, as a service of his
livelihood or in consideration of his said services. (People v. Villanueva, supra). Hence, charging for services such as
preparation of documents involving the use of legal knowledge and skill is within the term "practice of law" (Ernani Paño, Bar
Reviewer in Legal and Judicial Ethics, 1988 ed., p. 8 citing People v. People's Stockyards State Bank, 176 N.B. 901) and, one
who renders an opinion as to the proper interpretation of a statute, and receives pay for it, is to that extent, practicing law
(Martin, supra, p. 806 citing Mendelaun v. Gilbert and Barket Mfg. Co., 290 N.Y.S. 462) If compensation is expected, all advice
to clients and all action taken for them in matters connected with the law; are practicing law. (Elwood Fitchette et al., v.
Arthur C. Taylor, 94A-L.R. 356-359)
 3. Application of law legal principle practice or procedure which calls for legal knowledge, training and experience is within
the term "practice of law". (Martin supra)

4. Attorney-client relationship. Engaging in the practice of law presupposes the existence of lawyer-client relationship. Hence,
where a lawyer undertakes an activity which requires knowledge of law but involves no attorney-client relationship, such as
teaching law or writing law books or articles, he cannot be said to be engaged in the practice of his profession or a lawyer
(Agpalo, Legal Ethics, 1989 ed., p. 30). 3

The above-enumerated factors would, I believe, be useful aids in determining whether or not respondent Monsod meets the
constitutional qualification of practice of law for at least ten (10) years at the time of his appointment as COMELEC Chairman.

The following relevant questions may be asked:

1. Did respondent Monsod perform any of the tasks which are peculiar to the practice of law?

2. Did respondent perform such tasks customarily or habitually?

3. Assuming that he performed any of such tasks habitually, did he do so HABITUALLY FOR AT LEAST TEN (10) YEARS prior to his
appointment as COMELEC Chairman?

Given the employment or job history of respondent Monsod as appears from the records, I am persuaded that if ever he did perform
any of the tasks which constitute the practice of law, he did not do so HABITUALLY for at least ten (10) years prior to his appointment
as COMELEC Chairman.

While it may be granted that he performed tasks and activities which could be latitudinarianly considered activities peculiar to the
practice of law, like the drafting of legal documents and the rendering of legal opinion or advice, such were isolated transactions or
activities which do not qualify his past endeavors as "practice of law." To become engaged in the practice of law, there must be
a continuity, or a succession of acts. As observed by the Solicitor General in People vs. Villanueva:4

Essentially, the word private practice of law implies that one must have presented himself to be in the activeand continued
practice of the legal profession and that his professional services are available to the public for a compensation, as a source of
his livelihood or in consideration of his said services.

ACCORDINGLY, my vote is to GRANT the petition and to declare respondent Monsod as not qualified for the position of COMELEC
Chairman for not having engaged in the practice of law for at least ten (10) years prior to his appointment to such position.

CRUZ, J., dissenting:

I am sincerely impressed by the ponencia of my brother Paras but find I must dissent just the same. There are certain points on which I
must differ with him while of course respecting hisviewpoint.

To begin with, I do not think we are inhibited from examining the qualifications of the respondent simply because his nomination has
been confirmed by the Commission on Appointments. In my view, this is not a political question that we are barred from resolving.
Determination of the appointee's credentials is made on the basis of the established facts, not the discretion of that body. Even if it
were, the exercise of that discretion would still be subject to our review.

In Luego, which is cited in the ponencia, what was involved was the discretion of the appointing authority to choosebetween two
claimants to the same office who both possessed the required qualifications. It was that kind of discretion that we said could not be
reviewed.

If a person elected by no less than the sovereign people may be ousted by this Court for lack of the required qualifications, I see no
reason why we cannot disqualified an appointee simply because he has passed the Commission on Appointments.
Even the President of the Philippines may be declared ineligible by this Court in an appropriate proceeding notwithstanding that he
has been found acceptable by no less than the enfranchised citizenry. The reason is that what we would be examining is not
the wisdom of his election but whether or not he was qualified to be elected in the first place.

Coming now to the qualifications of the private respondent, I fear that the ponencia may have been too sweeping in its definition of
the phrase "practice of law" as to render the qualification practically toothless. From the numerous activities accepted as embraced in
the term, I have the uncomfortable feeling that one does not even have to be a lawyer to be engaged in the practice of law as long as
his activities involve the application of some law, however peripherally. The stock broker and the insurance adjuster and the realtor
could come under the definition as they deal with or give advice on matters that are likely "to become involved in litigation."

The lawyer is considered engaged in the practice of law even if his main occupation is another business and he interprets and applies
some law only as an incident of such business. That covers every company organized under the Corporation Code and regulated by the
SEC under P.D. 902-A. Considering the ramifications of the modern society, there is hardly any activity that is not affected by some law
or government regulation the businessman must know about and observe. In fact, again going by the definition, a lawyer does not
even have to be part of a business concern to be considered a practitioner. He can be so deemed when, on his own, he rents a house
or buys a car or consults a doctor as these acts involve his knowledge and application of the laws regulating such transactions. If he
operates a public utility vehicle as his main source of livelihood, he would still be deemed engaged in the practice of law because he
must obey the Public Service Act and the rules and regulations of the Energy Regulatory Board.

The ponencia quotes an American decision defining the practice of law as the "performance of any acts ... in or out of court,
commonly understood to be the practice of law," which tells us absolutely nothing. The decision goes on to say that "because lawyers
perform almost every function known in the commercial and governmental realm, such a definition would obviously be too global to
be workable."

The effect of the definition given in the ponencia is to consider virtually every lawyer to be engaged in the practice of law even if he
does not earn his living, or at least part of it, as a lawyer. It is enough that his activities are incidentally (even if only remotely)
connected with some law, ordinance, or regulation. The possible exception is the lawyer whose income is derived from teaching
ballroom dancing or escorting wrinkled ladies with pubescent pretensions.

The respondent's credentials are impressive, to be sure, but they do not persuade me that he has been engaged in the practice of law
for ten years as required by the Constitution. It is conceded that he has been engaged in business and finance, in which areas he has
distinguished himself, but as an executive and economist and not as a practicing lawyer. The plain fact is that he has occupied the
various positions listed in his resume by virtue of his experience and prestige as a businessman and not as an attorney-at-law whose
principal attention is focused on the law. Even if it be argued that he was acting as a lawyer when he lobbied in Congress for agrarian
and urban reform, served in the NAMFREL and the Constitutional Commission (together with non-lawyers like farmers and priests)
and was a member of the Davide Commission, he has not proved that his activities in these capacities extended over the prescribed
10-year period of actual practice of the law. He is doubtless eminently qualified for many other positions worthy of his abundant
talents but not as Chairman of the Commission on Elections.

I have much admiration for respondent Monsod, no less than for Mr. Justice Paras, but I must regretfully vote to grant the petition.

GUTIERREZ, JR., J., dissenting:

When this petition was filed, there was hope that engaging in the practice of law as a qualification for public office would be settled
one way or another in fairly definitive terms. Unfortunately, this was not the result.

Of the fourteen (14) member Court, 5 are of the view that Mr. Christian Monsod engaged in the practice of law (with one of these 5
leaving his vote behind while on official leave but not expressing his clear stand on the matter); 4 categorically stating that he did not
practice law; 2 voting in the result because there was no error so gross as to amount to grave abuse of discretion; one of official leave
with no instructions left behind on how he viewed the issue; and 2 not taking part in the deliberations and the decision.

There are two key factors that make our task difficult. First is our reviewing the work of a constitutional Commission on Appointments
whose duty is precisely to look into the qualifications of persons appointed to high office. Even if the Commission errs, we have no
power to set aside error. We can look only into grave abuse of discretion or whimsically and arbitrariness. Second is our belief that Mr.
Monsod possesses superior qualifications in terms of executive ability, proficiency in management, educational background,
experience in international banking and finance, and instant recognition by the public. His integrity and competence are not
questioned by the petitioner. What is before us is compliance with a specific requirement written into the Constitution.

Inspite of my high regard for Mr. Monsod, I cannot shirk my constitutional duty. He has never engaged in the practice of law for even
one year. He is a member of the bar but to say that he has practiced law is stretching the term beyond rational limits.

A person may have passed the bar examinations. But if he has not dedicated his life to the law, if he has not engaged in an activity
where membership in the bar is a requirement I fail to see how he can claim to have been engaged in the practice of law.

Engaging in the practice of law is a qualification not only for COMELEC chairman but also for appointment to the Supreme Court and
all lower courts. What kind of Judges or Justices will we have if there main occupation is selling real estate, managing a business
corporation, serving in fact-finding committee, working in media, or operating a farm with no active involvement in the law, whether
in Government or private practice, except that in one joyful moment in the distant past, they happened to pass the bar examinations?

The Constitution uses the phrase "engaged in the practice of law for at least ten years." The deliberate choice of words shows that the
practice envisioned is active and regular, not isolated, occasional, accidental, intermittent, incidental, seasonal, or extemporaneous. To
be "engaged" in an activity for ten years requires committed participation in something which is the result of one's decisive choice. It
means that one is occupied and involved in the enterprise; one is obliged or pledged to carry it out with intent and attention during
the ten-year period.

I agree with the petitioner that based on the bio-data submitted by respondent Monsod to the Commission on Appointments, the
latter has not been engaged in the practice of law for at least ten years. In fact, if appears that Mr. Monsod has never practiced law
except for an alleged one year period after passing the bar examinations when he worked in his father's law firm. Even then his law
practice must have been extremely limited because he was also working for M.A. and Ph. D. degrees in Economics at the University of
Pennsylvania during that period. How could he practice law in the United States while not a member of the Bar there?

The professional life of the respondent follows:

1.15.1. Respondent Monsod's activities since his passing the Bar examinations in 1961 consist of the following:

1. 1961-1963: M.A. in Economics (Ph. D. candidate), University of Pennsylvania

2. 1963-1970: World Bank Group — Economist, Industry Department; Operations, Latin American Department; Division Chief,
South Asia and Middle East, International Finance Corporation

3. 1970-1973: Meralco Group — Executive of various companies, i.e., Meralco Securities Corporation, Philippine Petroleum
Corporation, Philippine Electric Corporation

4. 1973-1976: Yujuico Group — President, Fil-Capital Development Corporation and affiliated companies

5. 1976-1978: Finaciera Manila — Chief Executive Officer

6. 1978-1986: Guevent Group of Companies — Chief Executive Officer

7. 1986-1987: Philippine Constitutional Commission — Member

8. 1989-1991: The Fact-Finding Commission on the December 1989 Coup Attempt — Member

9. Presently: Chairman of the Board and Chief Executive Officer of the following companies:

a. ACE Container Philippines, Inc.

b. Dataprep, Philippines

c. Philippine SUNsystems Products, Inc.

 d. Semirara Coal Corporation

e. CBL Timber Corporation

Member of the Board of the Following:

a. Engineering Construction Corporation of the Philippines

b. First Philippine Energy Corporation

c. First Philippine Holdings Corporation

d. First Philippine Industrial Corporation

e. Graphic Atelier

f. Manila Electric Company

g. Philippine Commercial Capital, Inc.

h. Philippine Electric Corporation

i. Tarlac Reforestation and Environment Enterprises

j. Tolong Aquaculture Corporation

k. Visayan Aquaculture Corporation

l. Guimaras Aquaculture Corporation (Rollo, pp. 21-22)

There is nothing in the above bio-data which even remotely indicates that respondent Monsod has given the lawenough attention or a
certain degree of commitment and participation as would support in all sincerity and candor the claim of having engaged in its
practice for at least ten years. Instead of working as a lawyer, he has lawyers working for him. Instead of giving receiving that legal
advice of legal services, he was the oneadvice and those services as an executive but not as a lawyer.

The deliberations before the Commission on Appointments show an effort to equate "engaged in the practice of law" with the use of
legal knowledge in various fields of endeavor such as commerce, industry, civic work, blue ribbon investigations, agrarian reform, etc.
where such knowledge would be helpful.

I regret that I cannot join in playing fast and loose with a term, which even an ordinary layman accepts as having a familiar and
customary well-defined meaning. Every resident of this country who has reached the age of discernment has to know, follow, or apply
the law at various times in his life. Legal knowledge is useful if not necessary for the business executive, legislator, mayor, barangay
captain, teacher, policeman, farmer, fisherman, market vendor, and student to name only a few. And yet, can these people honestly
assert that as such, they are engaged in the practice of law?

The Constitution requires having been "engaged in the practice of law for at least ten years." It is not satisfied with having been "a
member of the Philippine bar for at least ten years."

Some American courts have defined the practice of law, as follows:

The practice of law involves not only appearance in court in connection with litigation but also services rendered out of court,
and it includes the giving of advice or the rendering of any services requiring the use of legal skill or knowledge, such as
preparing a will, contract or other instrument, the legal effect of which, under the facts and conditions involved, must be
 carefully determined. People ex rel. Chicago Bar Ass'n v. Tinkoff, 399 Ill. 282, 77 N.E.2d 693; People ex rel. Illinois State Bar
Ass'n v. People's Stock Yards State Bank, 344 Ill. 462,176 N.E. 901, and cases cited.

It would be difficult, if not impossible to lay down a formula or definition of what constitutes the practice of law. "Practicing
law" has been defined as "Practicing as an attorney or counselor at law according to the laws and customs of our courts, is
the giving of advice or rendition of any sort of service by any person, firm or corporation when the giving of such advice or
rendition of such service requires the use of any degree of legal knowledge or skill." Without adopting that definition, we
referred to it as being substantially correct in People ex rel. Illinois State Bar Ass'n v. People's Stock Yards State Bank, 344 Ill.
462,176 N.E. 901. (People v. Schafer, 87 N.E. 2d 773, 776)

For one's actions to come within the purview of practice of law they should not only be activities peculiar to the work of a lawyer, they
should also be performed, habitually, frequently or customarily, to wit:

xxx xxx xxx

Respondent's answers to questions propounded to him were rather evasive. He was asked whether or not he ever prepared
contracts for the parties in real-estate transactions where he was not the procuring agent. He answered: "Very seldom." In
answer to the question as to how many times he had prepared contracts for the parties during the twenty-one years of his
business, he said: "I have no Idea." When asked if it would be more than half a dozen times his answer was I suppose. Asked
if he did not recall making the statement to several parties that he had prepared contracts in a large number of instances, he
answered: "I don't recall exactly what was said." When asked if he did not remember saying that he had made a practice of
preparing deeds, mortgages and contracts and charging a fee to the parties therefor in instances where he was not the
broker in the deal, he answered: "Well, I don't believe so, that is not a practice." Pressed further for an answer as to his
practice in preparing contracts and deeds for parties where he was not the broker, he finally answered: "I have done about
everything that is on the books as far as real estate is concerned."

xxx xxx xxx

Respondent takes the position that because he is a real-estate broker he has a lawful right to do any legal work in connection
with real-estate transactions, especially in drawing of real-estate contracts, deeds, mortgages, notes and the like. There is no
doubt but that he has engaged in these practices over the years and has charged for his services in that connection. ...
(People v. Schafer, 87 N.E. 2d 773)

xxx xxx xxx

... An attorney, in the most general sense, is a person designated or employed by another to act in his stead; an agent; more
especially, one of a class of persons authorized to appear and act for suitors or defendants in legal proceedings. Strictly, these
professional persons are attorneys at law, and non-professional agents are properly styled "attorney's in fact;" but the single
word is much used as meaning an attorney at law. A person may be an attorney in facto for another, without being an
attorney at law. Abb. Law Dict. "Attorney." A public attorney, or attorney at law, says Webster, is an officer of a court of law,
legally qualified to prosecute and defend actions in such court on the retainer of clients. "The principal duties of an attorney
are (1) to be true to the court and to his client; (2) to manage the business of his client with care, skill, and integrity; (3) to
keep his client informed as to the state of his business; (4) to keep his secrets confided to him as such. ... His rights are to be
justly compensated for his services." Bouv. Law Dict. tit. "Attorney." The transitive verb "practice," as defined by Webster,
means 'to do or perform frequently, customarily, or habitually; to perform by a succession of acts, as, to practice gaming, ... to
carry on in practice, or repeated action; to apply, as a theory, to real life; to exercise, as a profession, trade, art. etc.; as, to
practice law or medicine,' etc...." (State v. Bryan, S.E. 522, 523; Emphasis supplied)

In this jurisdiction, we have ruled that the practice of law denotes frequency or a succession of acts. Thus, we stated in the case of
People v. Villanueva (14 SCRA 109 [1965]):

xxx xxx xxx

... Practice is more than an isolated appearance, for it consists in frequent or customary actions, a succession of acts of the same kind.
In other words, it is frequent habitual exercise (State v. Cotner, 127, p. 1, 87 Kan. 864, 42 LRA, M.S. 768). Practice of law to fall within
the prohibition of statute has been interpreted as customarily or habitually holding one's self out to the public, as a lawyer and
demanding payment for such services. ... . (at p. 112)

It is to be noted that the Commission on Appointment itself recognizes habituality as a required component of the meaning of
practice of law in a Memorandum prepared and issued by it, to wit:

l. Habituality. The term 'practice of law' implies customarilyor habitually holding one's self out to the public as a lawyer
(People v. Villanueva, 14 SCRA 109 citing State v. Bryan, 4 S.E. 522, 98 N.C. 644) such as when one sends a circular announcing
the establishment of a law office for the general practice of law (U.S. v. Noy Bosque, 8 Phil. 146), or when one takes the oath
of office as a lawyer before a notary public, and files a manifestation with the Supreme Court informing it of his intention to
practice law in all courts in the country (People v. De Luna, 102 Phil. 968).

Practice is more than an isolated appearance, for it consists in frequent or customary action, a succession of acts of the same
kind. In other words, it is a habitual exercise (People v. Villanueva, 14 SCRA 1 09 citing State v. Cotner, 1 27, p. 1, 87 Kan,
864)." (Rollo, p. 115)

xxx xxx xxx

While the career as a businessman of respondent Monsod may have profited from his legal knowledge, the use of such legal
knowledge is incidental and consists of isolated activities which do not fall under the denomination of practice of law. Admission to
the practice of law was not required for membership in the Constitutional Commission or in the Fact-Finding Commission on the 1989
Coup Attempt. Any specific legal activities which may have been assigned to Mr. Monsod while a member may be likened to isolated
transactions of foreign corporations in the Philippines which do not categorize the foreign corporations as doing business in the
Philippines. As in the practice of law, doing business also should be active and continuous. Isolated business transactions or
occasional, incidental and casual transactions are not within the context of doing business. This was our ruling in the case of Antam
Consolidated, Inc. v. Court of appeals, 143 SCRA 288 [1986]).

Respondent Monsod, corporate executive, civic leader, and member of the Constitutional Commission may possess the background,
competence, integrity, and dedication, to qualify for such high offices as President, Vice-President, Senator, Congressman or Governor
but the Constitution in prescribing the specific qualification of having engaged in the practice of law for at least ten (10) years for the
position of COMELEC Chairman has ordered that he may not be confirmed for that office. The Constitution charges the public
respondents no less than this Court to obey its mandate.

I, therefore, believe that the Commission on Appointments committed grave abuse of discretion in confirming the nomination of
respondent Monsod as Chairman of the COMELEC.

I vote to GRANT the petition.

Bidin, J., dissent

Separate Opinions

NARVASA, J., concurring:

I concur with the decision of the majority written by Mr. Justice Paras, albeit only in the result; it does not appear to me that there has
been an adequate showing that the challenged determination by the Commission on Appointments-that the appointment of
respondent Monsod as Chairman of the Commission on Elections should, on the basis of his stated qualifications and after due
assessment thereof, be confirmed-was attended by error so gross as to amount to grave abuse of discretion and consequently merits
nullification by this Court in accordance with the second paragraph of Section 1, Article VIII of the Constitution. I therefore vote to
DENY the petition.

Melencio-Herrera, J., concur.

PADILLA, J., dissenting:

The records of this case will show that when the Court first deliberated on the Petition at bar, I voted not only to require the
respondents to comment on the Petition, but I was the sole vote for the issuance of a temporary restraining order to enjoin
respondent Monsod from assuming the position of COMELEC Chairman, while the Court deliberated on his constitutional qualification
for the office. My purpose in voting for a TRO was to prevent the inconvenience and even embarrassment to all parties concerned
were the Court to finally decide for respondent Monsod's disqualification. Moreover, a reading of the Petition then in relation to
established jurisprudence already showed prima facie that respondent Monsod did not possess the needed qualification, that is, he
had not engaged in the practice of law for at least ten (10) years prior to his appointment as COMELEC Chairman.

After considering carefully respondent Monsod's comment, I am even more convinced that the constitutional requirement of
"practice of law for at least ten (10) years" has not been met.

The procedural barriers interposed by respondents deserve scant consideration because, ultimately, the core issue to be resolved in
this petition is the proper construal of the constitutional provision requiring a majority of the membership of COMELEC, including the
Chairman thereof to "have been engaged in the practice of law for at least ten (10) years." (Art. IX(C), Section 1(1), 1987 Constitution).
Questions involving the construction of constitutional provisions are best left to judicial resolution. As declared in Angara v. Electoral
Commission, (63 Phil. 139) "upon the judicial department is thrown the solemn and inescapable obligation of interpreting the
Constitution and defining constitutional boundaries."

The Constitution has imposed clear and specific standards for a COMELEC Chairman. Among these are that he must have been
"engaged in the practice of law for at least ten (10) years." It is the bounden duty of this Court to ensure that such standard is met and
complied with.

What constitutes practice of law? As commonly understood, "practice" refers to the actual performance or application of knowledge
as distinguished from mere possession of knowledge; it connotes an active, habitual, repeated or customary action.1 To "practice" law,
or any profession for that matter, means, to exercise or pursue an employment or profession actively, habitually,
repeatedly or customarily.

Therefore, a doctor of medicine who is employed and is habitually performing the tasks of a nursing aide, cannot be said to be in the
"practice of medicine." A certified public accountant who works as a clerk, cannot be said to practice his profession as an accountant.
In the same way, a lawyer who is employed as a business executive or a corporate manager, other than as head or attorney of a Legal
Department of a corporation or a governmental agency, cannot be said to be in the practice of law.

As aptly held by this Court in the case of People vs. Villanueva:2

Practice is more than an isolated appearance for it consists in frequent or customary actions, a succession of acts of the same
kind. In other words, it is frequent habitual exercise (State vs- Cotner, 127, p. 1, 87 Kan. 864, 42 LRA, M.S. 768). Practice of
law to fall within the prohibition of statute has been interpreted as customarily or habitually holding one's self out to the
public as a lawyer and demanding payment for such services (State vs. Bryan, 4 S.E. 522, 98 N.C. 644,647.) ... (emphasis
supplied).

It is worth mentioning that the respondent Commission on Appointments in a Memorandum it prepared, enumerated several factors
determinative of whether a particular activity constitutes "practice of law." It states:

1. Habituality. The term "practice of law" implies customarily or habitually holding one's self out to the public as a lawyer
(People vs. Villanueva, 14 SCRA 109 citing State v. Boyen, 4 S.E. 522, 98 N.C. 644) such as when one sends a circular
announcing the establishment of a law office for the general practice of law (U.S. v. Ney Bosque, 8 Phil. 146), or when one
takes the oath of office as a lawyer before a notary public, and files a manifestation with the Supreme Court informing it of
his intention to practice law in all courts in the country (People v. De Luna, 102 Phil. 968).

Practice is more than an isolated appearance for it consists in frequent or customary action, a succession of acts of the same
kind. In other words, it is a habitual exercise (People v. Villanueva, 14 SCRA 109 citing State v. Cotner, 127, p. 1, 87 Kan, 864).

2. Compensation. Practice of law implies that one must have presented himself to be in the active and continued practice of
the legal profession and that his professional services are available to the public for compensation, as a service of his
 livelihood or in consideration of his said services. (People v. Villanueva, supra). Hence, charging for services such as
preparation of documents involving the use of legal knowledge and skill is within the term "practice of law" (Ernani Paño, Bar
Reviewer in Legal and Judicial Ethics, 1988 ed., p. 8 citing People v. People's Stockyards State Bank, 176 N.B. 901) and, one
who renders an opinion as to the proper interpretation of a statute, and receives pay for it, is to that extent, practicing law
(Martin, supra, p. 806 citing Mendelaun v. Gilbert and Barket Mfg. Co., 290 N.Y.S. 462) If compensation is expected, all advice
to clients and all action taken for them in matters connected with the law; are practicing law. (Elwood Fitchette et al., v.
Arthur C. Taylor, 94A-L.R. 356-359)

3. Application of law legal principle practice or procedure which calls for legal knowledge, training and experience is within
the term "practice of law". (Martin supra)

4. Attorney-client relationship. Engaging in the practice of law presupposes the existence of lawyer-client relationship. Hence,
where a lawyer undertakes an activity which requires knowledge of law but involves no attorney-client relationship, such as
teaching law or writing law books or articles, he cannot be said to be engaged in the practice of his profession or a lawyer
(Agpalo, Legal Ethics, 1989 ed., p. 30). 3

The above-enumerated factors would, I believe, be useful aids in determining whether or not respondent Monsod meets the
constitutional qualification of practice of law for at least ten (10) years at the time of his appointment as COMELEC Chairman.

The following relevant questions may be asked:

1. Did respondent Monsod perform any of the tasks which are peculiar to the practice of law?

2. Did respondent perform such tasks customarily or habitually?

3. Assuming that he performed any of such tasks habitually, did he do so HABITUALLY FOR AT LEAST TEN (10) YEARS prior to his
appointment as COMELEC Chairman?

Given the employment or job history of respondent Monsod as appears from the records, I am persuaded that if ever he did perform
any of the tasks which constitute the practice of law, he did not do so HABITUALLY for at least ten (10) years prior to his appointment
as COMELEC Chairman.

While it may be granted that he performed tasks and activities which could be latitudinarianly considered activities peculiar to the
practice of law, like the drafting of legal documents and the rendering of legal opinion or advice, such were isolated transactions or
activities which do not qualify his past endeavors as "practice of law." To become engaged in the practice of law, there must be
a continuity, or a succession of acts. As observed by the Solicitor General in People vs. Villanueva:4

Essentially, the word private practice of law implies that one must have presented himself to be in the activeand continued
practice of the legal profession and that his professional services are available to the public for a compensation, as a source of
his livelihood or in consideration of his said services.

ACCORDINGLY, my vote is to GRANT the petition and to declare respondent Monsod as not qualified for the position of COMELEC
Chairman for not having engaged in the practice of law for at least ten (10) years prior to his appointment to such position.

CRUZ, J., dissenting:

I am sincerely impressed by the ponencia of my brother Paras but find I must dissent just the same. There are certain points on which I
must differ with him while of course respecting hisviewpoint.

To begin with, I do not think we are inhibited from examining the qualifications of the respondent simply because his nomination has
been confirmed by the Commission on Appointments. In my view, this is not a political question that we are barred from resolving.
Determination of the appointee's credentials is made on the basis of the established facts, not the discretion of that body. Even if it
were, the exercise of that discretion would still be subject to our review.
In Luego, which is cited in the ponencia, what was involved was the discretion of the appointing authority to choosebetween two
claimants to the same office who both possessed the required qualifications. It was that kind of discretion that we said could not be
reviewed.

If a person elected by no less than the sovereign people may be ousted by this Court for lack of the required qualifications, I see no
reason why we cannot disqualified an appointee simply because he has passed the Commission on Appointments.

Even the President of the Philippines may be declared ineligible by this Court in an appropriate proceeding notwithstanding that he
has been found acceptable by no less than the enfranchised citizenry. The reason is that what we would be examining is not
the wisdom of his election but whether or not he was qualified to be elected in the first place.

Coming now to the qualifications of the private respondent, I fear that the ponencia may have been too sweeping in its definition of
the phrase "practice of law" as to render the qualification practically toothless. From the numerous activities accepted as embraced in
the term, I have the uncomfortable feeling that one does not even have to be a lawyer to be engaged in the practice of law as long as
his activities involve the application of some law, however peripherally. The stock broker and the insurance adjuster and the realtor
could come under the definition as they deal with or give advice on matters that are likely "to become involved in litigation."

The lawyer is considered engaged in the practice of law even if his main occupation is another business and he interprets and applies
some law only as an incident of such business. That covers every company organized under the Corporation Code and regulated by the
SEC under P.D. 902-A. Considering the ramifications of the modern society, there is hardly any activity that is not affected by some law
or government regulation the businessman must know about and observe. In fact, again going by the definition, a lawyer does not
even have to be part of a business concern to be considered a practitioner. He can be so deemed when, on his own, he rents a house
or buys a car or consults a doctor as these acts involve his knowledge and application of the laws regulating such transactions. If he
operates a public utility vehicle as his main source of livelihood, he would still be deemed engaged in the practice of law because he
must obey the Public Service Act and the rules and regulations of the Energy Regulatory Board.

The ponencia quotes an American decision defining the practice of law as the "performance of any acts . . . in or out of court,
commonly understood to be the practice of law," which tells us absolutely nothing. The decision goes on to say that "because lawyers
perform almost every function known in the commercial and governmental realm, such a definition would obviously be too global to
be workable."

The effect of the definition given in the ponencia is to consider virtually every lawyer to be engaged in the practice of law even if he
does not earn his living, or at least part of it, as a lawyer. It is enough that his activities are incidentally (even if only remotely)
connected with some law, ordinance, or regulation. The possible exception is the lawyer whose income is derived from teaching
ballroom dancing or escorting wrinkled ladies with pubescent pretensions.

The respondent's credentials are impressive, to be sure, but they do not persuade me that he has been engaged in the practice of law
for ten years as required by the Constitution. It is conceded that he has been engaged in business and finance, in which areas he has
distinguished himself, but as an executive and economist and not as a practicing lawyer. The plain fact is that he has occupied the
various positions listed in his resume by virtue of his experience and prestige as a businessman and not as an attorney-at-law whose
principal attention is focused on the law. Even if it be argued that he was acting as a lawyer when he lobbied in Congress for agrarian
and urban reform, served in the NAMFREL and the Constitutional Commission (together with non-lawyers like farmers and priests)
and was a member of the Davide Commission, he has not proved that his activities in these capacities extended over the prescribed
10-year period of actual practice of the law. He is doubtless eminently qualified for many other positions worthy of his abundant
talents but not as Chairman of the Commission on Elections.

I have much admiration for respondent Monsod, no less than for Mr. Justice Paras, but I must regretfully vote to grant the petition.

GUTIERREZ, JR., J., dissenting:

When this petition was filed, there was hope that engaging in the practice of law as a qualification for public office would be settled
one way or another in fairly definitive terms. Unfortunately, this was not the result.

Of the fourteen (14) member Court, 5 are of the view that Mr. Christian Monsod engaged in the practice of law (with one of these 5
leaving his vote behind while on official leave but not expressing his clear stand on the matter); 4 categorically stating that he did not
practice law; 2 voting in the result because there was no error so gross as to amount to grave abuse of discretion; one of official leave
with no instructions left behind on how he viewed the issue; and 2 not taking part in the deliberations and the decision.

There are two key factors that make our task difficult. First is our reviewing the work of a constitutional Commission on Appointments
whose duty is precisely to look into the qualifications of persons appointed to high office. Even if the Commission errs, we have no
power to set aside error. We can look only into grave abuse of discretion or whimsically and arbitrariness. Second is our belief that Mr.
Monsod possesses superior qualifications in terms of executive ability, proficiency in management, educational background,
experience in international banking and finance, and instant recognition by the public. His integrity and competence are not
questioned by the petitioner. What is before us is compliance with a specific requirement written into the Constitution.

Inspite of my high regard for Mr. Monsod, I cannot shirk my constitutional duty. He has never engaged in the practice of law for even
one year. He is a member of the bar but to say that he has practiced law is stretching the term beyond rational limits.

A person may have passed the bar examinations. But if he has not dedicated his life to the law, if he has not engaged in an activity
where membership in the bar is a requirement I fail to see how he can claim to have been engaged in the practice of law.

Engaging in the practice of law is a qualification not only for COMELEC chairman but also for appointment to the Supreme Court and
all lower courts. What kind of Judges or Justices will we have if there main occupation is selling real estate, managing a business
corporation, serving in fact-finding committee, working in media, or operating a farm with no active involvement in the law, whether
in Government or private practice, except that in one joyful moment in the distant past, they happened to pass the bar examinations?

The Constitution uses the phrase "engaged in the practice of law for at least ten years." The deliberate choice of words shows that the
practice envisioned is active and regular, not isolated, occasional, accidental, intermittent, incidental, seasonal, or extemporaneous. To
be "engaged" in an activity for ten years requires committed participation in something which is the result of one's decisive choice. It
means that one is occupied and involved in the enterprise; one is obliged or pledged to carry it out with intent and attention during
the ten-year period.

I agree with the petitioner that based on the bio-data submitted by respondent Monsod to the Commission on Appointments, the
latter has not been engaged in the practice of law for at least ten years. In fact, if appears that Mr. Monsod has never practiced law
except for an alleged one year period after passing the bar examinations when he worked in his father's law firm. Even then his law
practice must have been extremely limited because he was also working for M.A. and Ph. D. degrees in Economics at the University of
Pennsylvania during that period. How could he practice law in the United States while not a member of the Bar there?

The professional life of the respondent follows:

1.15.1. Respondent Monsod's activities since his passing the Bar examinations in 1961 consist of the following:

1. 1961-1963: M.A. in Economics (Ph. D. candidate), University of Pennsylvania

2. 1963-1970: World Bank Group — Economist, Industry Department; Operations, Latin American Department; Division Chief,
South Asia and Middle East, International Finance Corporation

3. 1970-1973: Meralco Group — Executive of various companies, i.e., Meralco Securities Corporation, Philippine Petroleum
Corporation, Philippine Electric Corporation

4. 1973-1976: Yujuico Group — President, Fil-Capital Development Corporation and affiliated companies

5. 1976-1978: Finaciera Manila — Chief Executive Officer

6. 1978-1986: Guevent Group of Companies — Chief Executive Officer

7. 1986-1987: Philippine Constitutional Commission — Member

8. 1989-1991: The Fact-Finding Commission on the December 1989 Coup Attempt — Member
 9. Presently: Chairman of the Board and Chief Executive Officer of the following companies:

a. ACE Container Philippines, Inc.

b. Dataprep, Philippines

c. Philippine SUNsystems Products, Inc.

d. Semirara Coal Corporation

e. CBL Timber Corporation

Member of the Board of the Following:

a. Engineering Construction Corporation of the Philippines

b. First Philippine Energy Corporation

c. First Philippine Holdings Corporation

d. First Philippine Industrial Corporation

e. Graphic Atelier

f. Manila Electric Company

g. Philippine Commercial Capital, Inc.

h. Philippine Electric Corporation

i. Tarlac Reforestation and Environment Enterprises

j. Tolong Aquaculture Corporation

k. Visayan Aquaculture Corporation

l. Guimaras Aquaculture Corporation (Rollo, pp. 21-22)

There is nothing in the above bio-data which even remotely indicates that respondent Monsod has given the lawenough attention or a
certain degree of commitment and participation as would support in all sincerity and candor the claim of having engaged in its
practice for at least ten years. Instead of working as a lawyer, he has lawyers working for him. Instead of giving receiving that legal
advice of legal services, he was the oneadvice and those services as an executive but not as a lawyer.

The deliberations before the Commission on Appointments show an effort to equate "engaged in the practice of law" with the use of
legal knowledge in various fields of endeavor such as commerce, industry, civic work, blue ribbon investigations, agrarian reform, etc.
where such knowledge would be helpful.

I regret that I cannot join in playing fast and loose with a term, which even an ordinary layman accepts as having a familiar and
customary well-defined meaning. Every resident of this country who has reached the age of discernment has to know, follow, or apply
the law at various times in his life. Legal knowledge is useful if not necessary for the business executive, legislator, mayor, barangay
captain, teacher, policeman, farmer, fisherman, market vendor, and student to name only a few. And yet, can these people honestly
assert that as such, they are engaged in the practice of law?
The Constitution requires having been "engaged in the practice of law for at least ten years." It is not satisfied with having been "a
member of the Philippine bar for at least ten years."

Some American courts have defined the practice of law, as follows:

The practice of law involves not only appearance in court in connection with litigation but also services rendered out of court,
and it includes the giving of advice or the rendering of any services requiring the use of legal skill or knowledge, such as
preparing a will, contract or other instrument, the legal effect of which, under the facts and conditions involved, must be
carefully determined. People ex rel. Chicago Bar Ass'n v. Tinkoff, 399 Ill. 282, 77 N.E.2d 693; People ex rel. Illinois State Bar
Ass'n v. People's Stock Yards State Bank, 344 Ill. 462,176 N.E. 901, and cases cited.

It would be difficult, if not impossible to lay down a formula or definition of what constitutes the practice of law. "Practicing
law" has been defined as "Practicing as an attorney or counselor at law according to the laws and customs of our courts, is
the giving of advice or rendition of any sort of service by any person, firm or corporation when the giving of such advice or
rendition of such service requires the use of any degree of legal knowledge or skill." Without adopting that definition, we
referred to it as being substantially correct in People ex rel. Illinois State Bar Ass'n v. People's Stock Yards State Bank, 344 Ill.
462,176 N.E. 901. (People v. Schafer, 87 N.E. 2d 773, 776)

For one's actions to come within the purview of practice of law they should not only be activities peculiar to the work of a lawyer, they
should also be performed, habitually, frequently or customarily, to wit:

xxx xxx xxx

Respondent's answers to questions propounded to him were rather evasive. He was asked whether or not he ever prepared
contracts for the parties in real-estate transactions where he was not the procuring agent. He answered: "Very seldom." In
answer to the question as to how many times he had prepared contracts for the parties during the twenty-one years of his
business, he said: "I have no Idea." When asked if it would be more than half a dozen times his answer was I suppose. Asked
if he did not recall making the statement to several parties that he had prepared contracts in a large number of instances, he
answered: "I don't recall exactly what was said." When asked if he did not remember saying that he had made a practice of
preparing deeds, mortgages and contracts and charging a fee to the parties therefor in instances where he was not the
broker in the deal, he answered: "Well, I don't believe so, that is not a practice." Pressed further for an answer as to his
practice in preparing contracts and deeds for parties where he was not the broker, he finally answered: "I have done about
everything that is on the books as far as real estate is concerned."

xxx xxx xxx

Respondent takes the position that because he is a real-estate broker he has a lawful right to do any legal work in connection
with real-estate transactions, especially in drawing of real-estate contracts, deeds, mortgages, notes and the like. There is no
doubt but that he has engaged in these practices over the years and has charged for his services in that connection. ...
(People v. Schafer, 87 N.E. 2d 773)

xxx xxx xxx

... An attorney, in the most general sense, is a person designated or employed by another to act in his stead; an agent; more
especially, one of a class of persons authorized to appear and act for suitors or defendants in legal proceedings. Strictly, these
professional persons are attorneys at law, and non-professional agents are properly styled "attorney's in fact;" but the single
word is much used as meaning an attorney at law. A person may be an attorney in facto for another, without being an
attorney at law. Abb. Law Dict. "Attorney." A public attorney, or attorney at law, says Webster, is an officer of a court of law,
legally qualified to prosecute and defend actions in such court on the retainer of clients. "The principal duties of an attorney
are (1) to be true to the court and to his client; (2) to manage the business of his client with care, skill, and integrity; (3) to
keep his client informed as to the state of his business; (4) to keep his secrets confided to him as such. ... His rights are to be
justly compensated for his services." Bouv. Law Dict. tit. "Attorney." The transitive verb "practice," as defined by Webster,
means 'to do or perform frequently, customarily, or habitually; to perform by a succession of acts, as, to practice gaming, ... to
carry on in practice, or repeated action; to apply, as a theory, to real life; to exercise, as a profession, trade, art. etc.; as, to
practice law or medicine,' etc...." (State v. Bryan, S.E. 522, 523; Emphasis supplied)
In this jurisdiction, we have ruled that the practice of law denotes frequency or a succession of acts. Thus, we stated in the case of
People v. Villanueva (14 SCRA 109 [1965]):

xxx xxx xxx

... Practice is more than an isolated appearance, for it consists in frequent or customary actions, a succession of acts of the same kind.
In other words, it is frequent habitual exercise (State v. Cotner, 127, p. 1, 87 Kan. 864, 42 LRA, M.S. 768). Practice of law to fall within
the prohibition of statute has been interpreted as customarily or habitually holding one's self out to the public, as a lawyer and
demanding payment for such services. ... . (at p. 112)

It is to be noted that the Commission on Appointment itself recognizes habituality as a required component of the meaning of
practice of law in a Memorandum prepared and issued by it, to wit:

l. Habituality. The term 'practice of law' implies customarilyor habitually holding one's self out to the public as a lawyer
(People v. Villanueva, 14 SCRA 109 citing State v. Bryan, 4 S.E. 522, 98 N.C. 644) such as when one sends a circular announcing
the establishment of a law office for the general practice of law (U.S. v. Noy Bosque, 8 Phil. 146), or when one takes the oath
of office as a lawyer before a notary public, and files a manifestation with the Supreme Court informing it of his intention to
practice law in all courts in the country (People v. De Luna, 102 Phil. 968).

Practice is more than an isolated appearance, for it consists in frequent or customary action, a succession of acts of the same
kind. In other words, it is a habitual exercise (People v. Villanueva, 14 SCRA 1 09 citing State v. Cotner, 1 27, p. 1, 87 Kan,
864)." (Rollo, p. 115)

xxx xxx xxx

While the career as a businessman of respondent Monsod may have profited from his legal knowledge, the use of such legal
knowledge is incidental and consists of isolated activities which do not fall under the denomination of practice of law. Admission to
the practice of law was not required for membership in the Constitutional Commission or in the Fact-Finding Commission on the 1989
Coup Attempt. Any specific legal activities which may have been assigned to Mr. Monsod while a member may be likened to isolated
transactions of foreign corporations in the Philippines which do not categorize the foreign corporations as doing business in the
Philippines. As in the practice of law, doing business also should be active and continuous. Isolated business transactions or
occasional, incidental and casual transactions are not within the context of doing business. This was our ruling in the case of Antam
Consolidated, Inc. v. Court of appeals, 143 SCRA 288 [1986]).

Respondent Monsod, corporate executive, civic leader, and member of the Constitutional Commission may possess the background,
competence, integrity, and dedication, to qualify for such high offices as President, Vice-President, Senator, Congressman or Governor
but the Constitution in prescribing the specific qualification of having engaged in the practice of law for at least ten (10) years for the
position of COMELEC Chairman has ordered that he may not be confirmed for that office. The Constitution charges the public
respondents no less than this Court to obey its mandate.

I, therefore, believe that the Commission on Appointments committed grave abuse of discretion in confirming the nomination of
respondent Monsod as Chairman of the COMELEC.

I vote to GRANT the petition.

Bidin, J., dissent

Cayetano v. MonsodG.R. No. 100113, September 3, 1991Facts:

Respondent Christian Monsod was nominated by President Corazon C. Aquino to the position of Chairman of the COMELEC in a letter
received by the Secretariat of the Commission on Appointments on April 25, 1991. Petitioner opposed the nomination because
allegedly Monsod does not possess the required qualification of having been engagedin the practice of law for at least ten years.On
June 5, 1991, the Commission on Appointments confirmed the nomination of Monsod as Chairman of the COMELEC.On June 18,
1991, he took his oath of office. On the same day, he assumed office as Chairman of the COMELEC.Challenging the validity of the
 confirmation by the Commission on Appointments of Monsod's nomination, petitioner as acitizen and taxpayer, filed the instant
petition for certiorari and Prohibition praying that said confirmation and theconsequent appointment of Monsod as Chairman of the
Commission on Elections be declared null and void.

Issue:

Whether the appointment of Chairman Monsod of Comelec violates Section 1 (1), Article IX-C of the 1987 Constitution?

Held:

The 1987 Constitution provides in Section 1 (1), Article IX-C, that there shall be a Commission on Elections composed of a Chairman
and six Commissioners who shall be natural-born citizens of the Philippines and, at the time of their appointment, at least thirty-five
years of age, holders of a college degree, and must not have been candidates for anyelective position in the immediately preceding
elections. However, a majority thereof, including the Chairman, shall bemembers of the Philippine Bar who have been engaged in the
practice of law for at least ten years.Atty. Christian Monsod is a member of the Philippine Bar, having passed the bar examinations of
1960 with a grade of 86-55%. He has been dues paying member of the Integrated Bar of the Philippines since its inception in 1972-73.
He hasalso been paying his professional license fees as lawyer for more than ten years.At this point, it might be helpful to define
private practice. The term, as commonly understood, means "an individual or organization engaged in the business of delivering legal
services." (Ibid.). Lawyers who practice alone are often called"sole practitioners." Groups of lawyers are called "firms." The firm is
usually a partnership and members of the firm are thepartners. Some firms may be organized as professional corporations and the
members called shareholders. In either case, the members of the firm are the experienced attorneys. In most firms, there are younger
or more inexperiencedsalaried attorneys called "associates."Hence, the Commission on the basis of evidence submitted doling the
public hearings on Monsod's confirmation, implicitlydetermined that he possessed the necessary qualifications as required by law.
The judgment rendered by theCommission in the exercise of such an acknowledged power is beyond judicial interference except only
upon a clear showing of a grave abuse of discretion amounting to lack or excess of jurisdiction. (Art. VIII, Sec. 1 Constitution).
Thus,only where such grave abuse of discretion is clearly shown shall the Court interfere with the Commission's judgment. Inthe
instant case, there is no occasion for the exercise of the Court's corrective power, since no abuse, much less a graveabuse of
discretion, that would amount to lack or excess of jurisdiction and would warrant the issuance of the writsprayed, for has been clearly
shown.Besides in the leading case of Luego v. Civil Service Commission, he Court said that, Appointment is an essentiallydiscretionary
power and must be performed by the officer in which it is vested according to his best lights, the onlycondition being that the
appointee should possess the qualifications required by law. If he does, then the appointmentcannot be faulted on the ground that
there are others better qualified who should have been preferred. This is a politicalquestion involving considerations of wisdom which
only the appointing authority can decide.

Renato Cayetano vs Christian Monsod

Legal Ethics – Practice of Law
In 1991, Christian Monsod was appointed as the Chairman of the Commission on Elections. His appointment was affirmed by the
Commission on Appointments. Monsod’s appointment was opposed by Renato Cayetano on the ground that he does not qualify for
he failed to meet the Constitutional requirement which provides that the chairman of the COMELEC should have been engaged in the
practice law for at least ten years.
Monsod’s track record as a lawyer:

1. Passed the bar in 1960 with a rating of 86.55%.

2. Immediately after passing, worked in his father’s law firm for one year.

3. Thereafter, until 1970, he went abroad where he had a degree in economics and held various positions in various foreign
corporations.

4. In 1970, he returned to the Philippines and held executive jobs for various local corporations until 1986.

5. In 1986, he became a member of the Constitutional Commission.

ISSUE: Whether or not Monsod qualifies as chairman of the COMELEC. What constitutes practice of law?
HELD: Yes. Atty. Monsod’s past work experiences as a lawyer-economist, a lawyer-manager, a lawyer-entrepreneur of industry, a
lawyer-negotiator of contracts, and a lawyer-legislator of both the rich and the poor — verily more than satisfy the constitutional
requirement — that he has been engaged in the practice of law for at least ten years.
As noted by various authorities, the practice of law is not limited to court appearances. The members of the bench and bar and the
informed laymen such as businessmen, know that in most developed societies today, substantially more legal work is transacted in law
offices than in the courtrooms. General practitioners of law who do both litigation and non-litigation work also know that in most
cases they find themselves spending more time doing what is loosely described as business counseling than in trying cases. In the
course of a working day the average general practitioner wig engage in a number of legal tasks, each involving different legal
doctrines, legal skills, legal processes, legal institutions, clients, and other interested parties. Even the increasing numbers of lawyers in
specialized practice wig usually perform at least some legal services outside their specialty. By no means will most of this work involve
litigation, unless the lawyer is one of the relatively rare types — a litigator who specializes in this work to the exclusion of much else.
Instead, the work will require the lawyer to have mastered the full range of traditional lawyer skills of client counseling, advice-giving,
document drafting, and negotiation.

Read full text

Justice Padilla dissenting:
Monsod did not practice law. Justice Padilla emphasized the following criteria in determining what constitutes practice of law:
1. Habituality. The term “practice of law” implies customarily or habitually holding one’s self out to the public as a lawyer (People vs.
Villanueva, 14 SCRA 109 citing State v. Boyen, 4 S.E. 522, 98 N.C. 644) such as when one sends a circular announcing the establishment
of a law office for the general practice of law (U.S. v. Ney Bosque, 8 Phil. 146), or when one takes the oath of office as a lawyer before
a notary public, and files a manifestation with the Supreme Court informing it of his intention to practice law in all courts in the
country (People v. De Luna, 102 Phil. 968).
Practice is more than an isolated appearance for it consists in frequent or customary action, a succession of acts of the same kind. In
other words, it is a habitual exercise (People v. Villanueva, 14 SCRA 109 citing State v. Cotner, 127, p. 1, 87 Kan, 864).
2. Compensation. Practice of law implies that one must have presented himself to be in the active and continued practice of the legal
profession and that his professional services are available to the public for compensation, as a service of his livelihood or in
consideration of his said services. (People v. Villanueva, supra). Hence, charging for services such as preparation of documents
involving the use of legal knowledge and skill is within the term “practice of law” (Ernani Paño, Bar Reviewer in Legal and Judicial
Ethics, 1988 ed., p. 8 citing People v. People’s Stockyards State Bank, 176 N.B. 901) and, one who renders an opinion as to the proper
interpretation of a statute, and receives pay for it, is to that extent, practicing law (Martin, supra, p. 806 citing Mendelaun v. Gilbert
and Barket Mfg. Co., 290 N.Y.S. 462) If compensation is expected, all advice to clients and all action taken for them in matters
connected with the law; are practicing law. (Elwood Fitchette et al., v. Arthur C. Taylor, 94A-L.R. 356-359)
3. Application of law, legal principle, practice or procedure which calls for legal knowledge, training and experience is within the term
“practice of law”. (Martin supra)
4. Attorney-client relationship. Engaging in the practice of law presupposes the existence of lawyer-client relationship. Hence, where a
lawyer undertakes an activity which requires knowledge of law but involves no attorney-client relationship, such as teaching law or
writing law books or articles, he cannot be said to be engaged in the practice of his profession or a lawyer (Agpalo, Legal Ethics, 1989
ed., p. 30).
Monsod did not habitually practice law. It may be granted that he performed activities which are related to the practice of law like
drafting legal documents and giving legal advice, but he only did so as isolated incidents.

Read full text

Justice Gutierrez dissenting:

Monsod did not practice law save for the one year he spent in his father’s law office. The Chairman of the COMELEC should have
engaged in the practice of law for at least ten years. The deliberate choice of words shows that the practice envisioned is active and
regular, not isolated, occasional, accidental, intermittent, incidental, seasonal, or extemporaneous. To be “engaged” in an activity for
ten years requires committed participation in something which is the result of one’s decisive choice. It means that one is occupied and
involved in the enterprise; one is obliged or pledged to carry it out with intent and attention during the ten-year period.
What kind of Judges or Justices will we have if their main occupation is selling real estate, managing a business corporation, serving in
fact-finding committee, working in media, or operating a farm with no active involvement in the law, whether in Government or
private practice, except that in one joyful moment in the distant past, they happened to pass the bar examinations?
There is nothing in Monsod’s track record which will show that he Monsod has given the law enough attention or a certain degree of
commitment and participation as would support in all sincerity and candor the claim of having engaged in its practice for at least ten
years. Instead of working as a lawyer, he has lawyers working for him. Instead of giving receiving that legal advice of legal services, he
was the one adviced and those services as an executive but not as a lawyer.