G.R. No.

110398 November 7, 1997

NEGROS NAVIGATION CO., INC., petitioner,

vs.

THE COURT OF APPEALS, RAMON MIRANDA, SPS. RICARDO and VIRGINIA DE LA VICTORIA, respondents.

Facts:

Private respondent Ramon Miranda purchased from the Negros Navigation Co., Inc. four special cabin
tickets. The tickets were for Voyage No. 457-A of the M/V Don Juan, leaving Manila and going to Bacolod.

Subsequently, the Don Juan collided off the Tablas Strait in Mindoro, with the M/T Tacloban City, an oil
tanker owned by the Philippine National Oil Company (PNOC) and the PNOC Shipping and Transport
Corporation (PNOC/STC). As a result, the M/V Don Juan sank. Several of her passengers perished in the
sea tragedy. The bodies of some of the victims were found and brought to shore, but the four members
of private respondents’ families were never found.

Private respondents filed a complaint against the Negros Navigation, the Philippine National Oil Company
(PNOC), and the PNOC Shipping and Transport Corporation (PNOC/STC), seeking damages for the death.
Petitioner, however, denied that the four relatives of private respondents actually boarded the vessel as
shown by the fact that their bodies were never recovered. Petitioner further averred that the Don Juan
was seaworthy and manned by a full and competent crew, and that the collision was entirely due to the
fault of the crew of the M/T Tacloban City.

In finding petitioner guilty of negligence and in failing to exercise the extraordinary diligence required of
it in the carriage of passengers, both the trial court and the appellate court relied on the findings of this
Court in Mecenas v. Intermediate Appellate Court, which case was brought for the death of other
passengers. In Mecenas, SC found petitioner guilty of negligence in (1) allowing or tolerating the ship
captain and crew members in playing mahjong during the voyage, (2) in failing to maintain the vessel
seaworthy and (3) in allowing the ship to carry more passengers than it was allowed to carry. Petitioner
is, therefore, clearly liable for damages to the full extent.

Petitioner criticizes the lower court’s reliance on the Mecenas case, arguing that, although this case arose
out of the same incident as that involved in Mecenas, the parties are different and trial was conducted
separately. Petitioner contends that the decision in this case should be based on the allegations and
defenses pleaded and evidence adduced in it or, in short, on the record of this case

Issues:

1. Whether the ruling in Mecenas v. Court of Appeals, finding the crew members of petitioner to be grossly
negligent in the performance of their duties, is binding in this case;

2. Whether the award for damages in Mecenas v. Court of Appeals is applicable in this case.

Held:

1. No. The contention is without merit.

Adherence to the Mecenas case is dictated by this Court’s policy of maintaining stability in jurisprudence.
Where, as in this case, the same questions relating to the same event have been put forward by parties
similarly situated as in a previous case litigated and decided by a competent court, the rule of stare decisis
is a bar to any attempt to relitigate the same issue.

2. No, it is not applicable.

Petitioner contends that, assuming that the Mecenas case applies, private respondents should be allowed
to claim only P43,857.14 each as moral damages because in the Mecenascase, the amount of P307,500.00
was awarded to the seven children of the Mecenas couple. Here is where the principle of stare decisis
does not apply in view of differences in the personal circumstances of the victims. For that matter,
differentiation would be justified even if private respondents had joined the private respondents in the
Mecenas case.

The doctrine of stare decisis works as a bar only against issues litigated in a previous case. Where the issue
involved was not raised nor presented to the court and not passed upon by the court in the previous case,
the decision in the previous case is not stare decisis of the question presently presented.

The Mecenas case cannot be made the basis for determining the award for attorney’s fees. The award
would naturally vary or differ in each case.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with modification and petitioner is
ORDERED to pay private respondents damages.
Erectors, Inc., v. NLRC

Facts:

In September 1979, Erectors recruited Florencio Burgos to work as Service Contract Driver in Saudi Arabia
for 12 months with a salary of $165 and an allowance of $165 per month. Burgos will also be entitled a
bonus of $1ooo if after the 12-month period, he renews/extends his contract without availing his vacation
or home leave His contract was approved by the Ministry of Labor and Employment.

However, the contract was not implemented. In December 1979, Erectors notified Burgos that the
position of Service Driver was no longer available. On December 14, 1979, they executed another contract
changing his position from driver to laborer with a salary of $105 and an allowance of $105 per month.
This contract was not submitted to the MLE.

On December 1979, Burgos left the country and worked at Erectors Buraidah Sports Complex project in
Saudi Arabia as a laborer. He received a monthly salary and allowance of $210. Burgos renewed his
contract after one year and his salary and allowance were increased to $231.

Burgos returned to Philippines on August 1981. He then invoked his first employment contract. He
demanded the difference between his salary and allowance in teh said contract and the amount paid to
him.

On March 1982, Burgos filed wiht the Labor Arbiter a complaint for underpayment of wages and non-
payment of overtime pay and bonus.

While his case was still in conciliation stage, EO 797 creating POEA was established Sec 4(a) of E) 797
vested the POEA with "original and exclusive jurisdiction over all cases including money claims, involving
employer-employee relationship arising out of or by virtue of any law or contract involving Filipino
workers for overseas employment."

Despite EO 797, Labor Arbiter proceeded to try the case and rendered judgement in favor of Burgos. In
view of EO 797, Erectors questioned the jurisdiction of the LA in NLRC. NLRC dismissed the petitioner's
appeal and upheld the LA's jurisdiction.

Issue:

Whether or not EO 797 applies retroactively to affect pending cases, including the complaint filed by
Burgos.

Held:

No. The rule is that jurisdiction over the subject matter is determined by the law in force at the time of
the commencement of the action. On March 31, 1982, at the time private respondent filed his complaint
against the petitioner, the prevailing laws were Presidential Decree No. 1691 and Presidential Decree No.
1391 which vested the Regional Offices of the Ministry of Labor and the Labor Arbiters with "original and
exclusive jurisdiction over all cases involving employer-employee relations including money claims arising
out of any law or contracts involving Filipino workers for overseas employment." At the time of the filing
of the complaint, the Labor Arbiter had clear jurisdiction over the same.
Santiago v Fojas

FACTS:

An expulsion case was faced by the complainants contending that they have illegally removed from the
union (FEUFA) membership Mr. Paulino Salvador. The lower court resolved in favor of Salvador and
ordered the complainants to pay, jointly and severally, Mr. Salvador. The case was then elevated to the
Court of Appeals. The complainants lost in their petition at the Court of Appeals due to abandonment,
failure to act accordingly, or serious neglect of their counsel, Atty. Fojas to answer the civil complaint on
an expulsion case. Atty. Fojas assured them that everything was in order and he had already answered
the complaint. However, the appellants soon discovered that he never answered it after all because,
according to him, he was a very busy man. Atty. Fojas admitted his “mistake” in failing to file an answer
for the expulsion case, but he alleges that it was cured by his filing of a motion for reconsideration.
However, such motion for reconsideration was denied. Atty. Fojas defended his negligence with the
reason that the case was a losing cause after all. Atty. Fojas also asserts that he was about to appeal the
said decision to this Court, but his services as counsel for the complainants and for the union were illegally
and unilaterally terminated by complainant. Complainants then filed for a disbarment case.

ISSUE:

Whether the respondent committed culpable negligence, as would warrant disciplinary action, in failing
to file for the complainants an answer

HELD:

Yes. The Supreme Court upheld Canon 14 of the Code of Professional Responsibility. Once he agrees to
take up the cause of a client, the lawyer owes fidelity to such cause and must always be mindful of the
trust and confidence reposed in him. This means that his client is entitled to the benefit of any and every
remedy and defense that is authorized by the law of the land and he may expect his lawyer to assert every
such remedy or defense. In his motion for reconsideration of the default order, the respondent explained
his non-filing of the required answer by impliedly invoking forgetfulness occasioned by a large volume and
pressure of legal work, while in his Comment in this case he attributes it to honest mistake and excusable
neglect due to his overzealousness to question the denial order of the trial court. Whether it be the first
or the second ground, the fact remains that the respondent did not comply with his duty to file an answer.

Pressure and large volume of legal work provide no excuse for the respondent’s inability to exercise due
diligence in the performance of his duty to file an answer. Every case a lawyer accepts deserves his full
attention, diligence, skill, and competence, regardless of its importance and whether he accepts it for a
fee or for free. Furthermore, a breach of Canon 18 of the Code of Professional Responsibility which
requires him to serve his clients, the complainants herein, with diligence and, more specifically, Rule 18.03
thereof which provides: “A lawyer shall not neglect a legal matter entrusted to him, and his negligence in
connection therewith shall render him liable.”

Atty. Fojas’s negligence is not excused by his claim that Civil Case No. 3526-V-91 was in fact a “losing
cause”. The Supreme Court held that he should have seasonably informed the complainants thereof. Rule
15.05, Canon 15 of the Code of Professional Responsibility expressly provides: A lawyer, when advising his
client, shall give a candid and honest opinion on the merits and probable results of the client’s case,
neither overstating nor understanding the prospects of the case. REPRIMANDED AND ADMONISHED
ENDAYA V. OCA

FACTS:

A complaint for unlawful detainer was filed against Artemio Endaya and his wife. An answer was prepared
by a Mr. Ramirez for the spouses. At the beginning of the preliminary conference, spouses appeared
without counsel. Endaya sought the services of the Public Attorney’s Office. Atty. Oca was assigned to
handle the case. At the continuation of the prelim conference, Oca filed motion for amendment of answer.
Motion was denied. The judge then ordered all parties to submit their affidavits and position papers. The
court also said that 30 days after the submission of the last paper or upon expiration of the period for
filing, judgment shall be rendered on the case. Oca failed to submit any affidavit or position paper.
Nonetheless, the complaint for unlawful detainer was dismissed because those who filed the case were
not really parties-in-interest. The case was appealed to RTC. Oca failed to submit anything again. RTC
reversed the MTC decision. Spouses were ordered to vacate the property and pay a certain amount for
rentals. Endaya confronted Oca about the decision. Oca feigned that he did not receive anything. Upon
checking with the clerk of court, Oca did indeed receive a copy of the decision. Hence this administrative
complaint.

ISSUE:

W/N Oca committed professional misconduct

HELD:

Yes. Suspended for 2 months from practice of law.

In his comment, Oca put up the defense that he did not file any paper in the MCTC because it would just
be a repetition of the answer. Endaya filed his reply which just reiterated what he put in his complaint. SC
ordered Oca to file a rejoinder. Guess what, Oca once again failed to file anything. Oca explained that he
failed to file a rejoinder because he believed in good faith that it was no longer necessary. In the IBP
investigation, Oca once again failed to submit anything.

Oca only appeared once in the MCTC and practically abandoned the spouses thereafter. The facts show
that Oca failed to employ every legal and honorable means to advance the cause of his client. For
intentionally failing to submit the pleadings required by the court, respondent practically closed the door
to the possibility of putting up a fair fight for his client. Oca cannot just appear only once for the spouses.
A lawyer continues to be a counsel of record until the lawyer-client relationship is terminated. Oca’s story
shows his appalling indifference to his clients’ cause, deplorable lack of respect for the courts and a brazen
disregard of his duties as a lawyer.

However Endaya misrepresented that the original answer was prepared by a non-lawyer when in fact it
was prepared by a lawyer. He also assured Oca that he had strong evidence to support their case. Endaya
never gave anything to Oca to support their claim.The PAO is burdened with a heavy caseload. Given these
circumstances the professional conduct of Oca does not warrant disbarment.
JARDIN V. VILLAR

FACTS

Complainant is plaintiff in a civil case in MTC. A building contractor, he engaged the services of respondent
to represent him in the case which is a collection for the sum of 105, 744.80. The case went its usual
course, but despite several extensions given by the trial court, respondent failed to file his formal offer of
exhibits.

ISSUE

WN respondent is liable for negligence?

HELD:

The failure to file formal offer of evidence is in pari materia with failure to file brief, which as this court
held in Perla Compania v. Saquilabon, constitutes inexcusable negligence.

Respondent has been languid in the performance of his duties as counsel for the complainant. He has not
met the extensions of time set by the trial court.
MARTINEZ V. BANOGON

FACTS:
Petitioner was the Counsel of the Respondents in a case in which the estate of the respondents’
relative is involved. That during the pendency of the said case, the petitioner and respondent entered into
a contact in which it was agreed that the petitioner would be paid 800 pesos at the termination of the
case, in which the parties expected the case to be terminated early. For some reason or another the case
was not terminated as expected and drag on for years.
During the pendency of the case petitioner filed a claim stating that the fees paid to him was not
reasonable. Petitioner is claiming that the reasonable amount should be 6000 pesos. Furthermore
petitioner admits the existence of the contract but said the same cannot be binding, since the
compensation is unreasonable.
On the other hand respondent claims that petitioner has already been paid the full amount of 800
pesos and an additional 520 pesos for all other incidental services the petitioner might have provided. The
lower court in deciding the case ruled for the respondent stating that as a general rule a written contract
for professional services controls the amount to pay therefore unless found by the court to be
unconscionable.
ISSUES:
Whether or not the professional fees paid to Martinez are unconscionable or inadequate for the
services he rendered.
RULING:
According to the Court, they did not find anything wrong in the decision rendered by the lower
court. The court states that whether the fees as provided in the contract was unconscionable or not will
have to be determined in accordance to some guiding principles stated by the Court in previous cases. In
which the Court states that the circumstances to be considered in determining the compensation of the
attorney are as follow:
1. The amount and character of services rendered
2. Labor, time, and trouble involved
3. The nature and importance of the litigation or business in which the services were rendered
4. The responsibility imposed
5. The amount of money involved
6. The skill and experience called for in the performance of the service
7. The professional character and social standing of the lawyer
8. The results secured.
Furthermore the Court added that the lawyer being a seasoned practitioner is presumed to have sized
up the entire situation before entering into the contract.
Lastly the Court states that the amount of time employed alone is not an appropriate basis for fixing fees.
CANLAS V. CA

FACTS:
Francisco Herrera executed a mortgage over his 8 parcels of land in favor of L&R Corporation as a security
for the several loans which he obtained from the financing institution. Upon his failure to pay, L&R
extrajudicially foreclosed the said lots. The lands were disposed of in a public auction and L&R was the
highest bidder.
Pending redemption, with Atty. Canlas as his counsel, Herrera was able to obtain a preliminary injunction
against L&R to prevent it from consolidating the title in the corporation’s name.
Two years later, the parties entered into a compromise agreement where L&R gave Herrera another year
to redeem the foreclosed properties subject to payment of P600,000. They also stipulated that Canlas
shall be entitled to attorney’s fees of 100k. The court approved the compromise.
However, Herrera, due to his financial difficulties, was still unable to pay neither the several loans nor the
attorney’s fees which he owed to Canlas. Canlas moved for execution insofar as his fees were concerned
which the court granted although he was not really able to collect the fees.
Subsequently, Canlas and Herrera met to discuss the relief for Herrera with respect to his liability to L&R
on the one hand, and his obligation to Canlas on the other. Canlas contends that Herrera earnestly begged
him to redeem the properties. However, Herrera maintains that it was Canlas who offered to advance the
money provided that they executed a transfer of mortgage over the properties in Canlas’ favor. (SC
believes Herrera’s contention more)
They executed a Deed of Sale and Transfer of Rights of Redemption and/or to Redeem, a document that
enabled Canlas to redeem the parcels of land and to register the same in his name. Herrera only
discovered that the said lawyer registered the lots under his name when he was about to secure a loan
from a bank to finance a wet market project. Herrera contends that the said document was falsified. The
original document only transferred the rights of Herrera to redeem the property whereas the falsified
document stated that he was transferring all of his rights of the real properties.
Herrera filed for an action for reconveyance of the said lots and a petition to reform the said document
to reflect the true agreement between him and Canlas.
TC ruled in favor of Canlas. CA reversed.
ISSUE:
W/n Herrera should have filed a petition for certiorari rather than a pleading for annulment of judgment
W/n the attorney’s fees that Canlas charged Herrera was reasonable
HELD:
Yes.
Judgments can only be annulled if there was a showing that there is extrinsic fraud. In the case at bar,
extrinsic fraud was not proved. (Herrera contends that The judge in the trial court colluded with Canlas in
order for him to sell his land to Canlas.)
However, the Court was still unable to find merit in his petition/ The court cannot overlook the unseemlier
side of the proceeding in which a member of the bar would exploit his mastery of procedural law to score
a technical knowckout over his client, of all people.
No.
Even Canlas himself admitted that his client lacks paying capacity and no financing entity wanted to extend
him a loan. This circumstance should have tempered his demand for his fees.
Lawyering is not a money-making venture and lawyers are not merchants. Canlas’ claim of attorney’s fees
in the sum of P100,000 was unreasonable. The extent of the services he rendered in the case is not
impressive to justify payment of such amount. The case itself did not involve complex question fact or law
that would have required substantial effort as to research or leg work for the Canalas to support his
demand. The fatc that the properties subject thereof commanded quite handsome prices in the market
should not be a measure of the importance or non-importance of the case. The petitioner’s stature does
not support such claim. The Court reduced the petitioner’s fees on a quantum merit basis, to P20,000.00
***the contract is not void for it is not covered by the ban (remember sales?) but it is voidable because
Canlas exerted undue influence over Herrera (moral ascendancy of the attorney.)
***however, the property was already in the possession of an IPFV so Canlas was only held liable for
actual damages. BUT…Herrera should still pay for the redemption price that Canlas paid plus attorney’s
fees so this will be set-off against the damages that Canlas has to pay.
TAGANAS V. NLRC

FACTS:
Taganas is a lawyer for several janitors under the employ of Ultra Clean Services and Philippine
Tuberculosis Society, Inc. There was a labor dispute between the said janitors and their employers.
Taganas defended the janitors in the civil case for reinstatement, full back wages, thirteenth month pay
and emergency cost of living allowance. Taganas and his clients won the case and so Taganas sought to
enforce his attorney’s charging lien which amounted to 50% of the amount awarded to his clients. The 10
out of the 14 clients were aggrieved for receiving a reduced award due to the attorney’s charging lien and
contested the validity of the contingent fee. The four others agreed to the original amount.

ISSUE:
W/N Taganas’ contingent fee of 50% of the award to his clients is excessive.
RULING:
A contingent fee arrangement is an agreement between the lawyer and his client in which the lawyer’s
professional fee, usually a fixed percentage of what may be recovered in the action is made to depend
upon the success of the litigation. It should be noted however that Section 13 of the Canons of
Professional Ethics states that “a contract for a contingent fee where sanctioned by law, should be
reasonable under all circumstances of the case including the risk and uncertainty of the compensation,
but should always be the subject to the supervision of the court, as to its reasonableness.” The reduction
of unreasonable attorney’s fees is within the regulatory powers of the courts. 50% of the judgment award
as attorney’s fees is excessive and unreasonable considering the financial capacity and economic status
of Taganas’s clients. Also, petitioner’s contingent fee falls within Article 111 of the Labor Code which puts
a maximum 10% contingent fee for attorney’s in labor cases. The decision of the NLRC to disallow the 50%
contingent fee is upheld, only 10% should be paid to Tagarnas.
TRADERS ROYAL BANK EMPLOYEES UNION V. NLRC

NB: Please refer to p. 743-745 of the SCRA for the retainer agreement since it would be a waste of space
to put it here. Also, this is a long case so please bear with the proportional length of the digest.

Facts:
Traders Royal Bank Employees Union-Independent (UNION) and Atty. Emmanuel Noel A. Cruz (ATTY.
CRUZ) entered into a retainer agreement whereby the Union obligates itself to pay Atty. Cruz a retainer
fee of P3000.00 in consideration of his firm’s undertaking to render the services. During the existence of
the agreement, the Union referred to Atty. Cruz the claim of its members for holiday, mid-year and year-
end bonuses against Traders Royal Bank (TRADERS) which was filed with the NLRC. The Union obtained a
favorable judgment from the NLRC and was challenged before the SC by Traders. The SC modified the
decision, deleting the award for mid-year and year-end bonuses but affirmed the award for holiday pay
differential amounting to P175,794.32. When he received the order of the SC, Atty. Cruz notified the
Union, Traders and the NLRC of his right to exercise and enforce his attorney’s lien over the award for the
holiday pay differential. He filed a motion with the labor arbiter for determining attorney’s fees in and
prayed the amount of 10% of the total award (P17,579.43) be given. The labor arbiter granted his petition
which led the Union to appeal to the NLRC. The NLRC affirmed the decision of the labor arbiter and denied
the subsequent motion for reconsideration.

The Union argues that the NLRC acted without jurisdiction in making the award for attorney’s fees and
argues that the said fees should have been incorporated in the main case and not after the SC has already
reviewed and passed upon the decision of the NLRC. Also, there shouldn’t be payment of attorney’s fees
anymore because of anything due to Atty. Cruz is already covered by the P3,000.00 retainer.

On the other hand, Atty. Cruz argues that attorney’s fees are mere incidents of the main case where the
Union was awarded its money claims and to include such fees in the case would presuppose that the fees
will be paid by Traders to the Union. Also, according to him, the P3000.00 retainer fee is not the attorney’s
fees contemplated for.

Issue:

W/N Atty. Cruz is entitled to “attorney’s fees” from the award despite the P3,000.00 retainer fee?

Held:

YES but only to the extent of P10,000.00. The P3,000.00 retainer fee doesn’t cover the services that Atty.
Cruz rendered before the labor arbiter and the NLRC in behalf of the Union. It was intended merely as a
consideration for the law firm’s commitment to render services in Part A and Part B of the retainer
agreement (see NB).

The SC had a lengthy discussion to make the judgment clear regarding the types of attorney’s fees,
retainer fees and the basis of what’s supposed to be “reasonable compensation” and will be dealt with
here in seriatim.

There are two commonly accepted concepts of attorney’s fees, the so-called ordinary and extraordinary.
In its ordinary concept, an attorney’s 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 attorney’s fee is an
indemnity for damages ordered by the court to be paid by the losing party in litigation. The basis of this is
any of the cases provided by law where such award can be made, and is payable not to the lawyer but to
the client unless they have agreed otherwise. It is the first type of attorney’s fees which Atty. Cruz
demanded before the labor arbiter.

The Court said that it was within Atty. Cruz’ right to make his claim for attorney’s fees only after the
judgment has been deemed final by the SC . In such a case, lawyer’s have two options, either to file it
before judgment is rendered \with the award being held in abeyance until the main case from which the
attorney’s fees has become final, or wait for the final judgment just as Atty. Cruz did.

As regards the concept of retainer, there are also two types of retainer, a general retainer/retaining fee
and a special retainer.
A general retainer is the fee paid to a lawyer to secure his future services as general counsel for any
ordinary legal problem that may arise in the routinary business of the client and referred to him for legal
action. The reason for this is that the lawyer is deprived of the opportunity of rendering services for a fee
to the opposing party or other parties. In fine, it is a compensation for lost opportunity.
A special retainer is a fee for a specific case handled or special service rendered by the lawyer for a client.
In Hilado, in reference to general retainer, the Court said that the payment of retainer has no relation to
the obligation of the client to pay his attorney for the services for which he has retained him to perform.
In the case at bar, the SC said that the P3,000.00 fee is not a payment for Atty. Cruz’s execution or
performance of the services listed in the contract, that the fee was independent and different from the
compensation which Atty. Cruz should receive.

Finally, with respect to what the Court deems as “reasonable compensation”, the Court surrenders that
such is a question of fact. However, it said that in numerous decisions, it has applied the doctrine of
quantum meruit to prevent unjust enrichment. Based on such guideline, which was already codified in
Rule 20.01 of the Code of Professional Responsibility, the factors to be considered in determining the
amount of attorney’s fees are:
1) the time spent and the extent of services rendered and required;
2) the novelty and difficulty of the questions involved;
3) the importance of the subject matter;
4) the skill demanded;
5) the probability of losing other employment as a result of acceptance of the proferred case;
6) the customary charges for similar services and the schedule of fees of the IBP chapter to which the
lawyer belongs;
7) the amount involved in the controversy and the benefits resulting to the client from the services;
8) the contingency or certainty of compensation;
9) the character of the employment, whether occasional or established;
10) the professional standing of the lawyer.
In the case at bar, Atty. Cruz based his demand for attorney’s fee on the maximum amount that he can
ask in accordance with Art. 111 of the Labor Code but such fact doesn’t preclude the Court in lessening
the amount given that what was stated in the law was the maximum amount.
PADILLO V. CA

FACTS:
Veronica Padillo allege that she is the owner of a 251 square meter parcel of land with improvements in
Quezon City, which she bought from Marina de Vera-Quicho and Margarita de Vera. She blames Tomas
Averia and Beato Casilang for unlawful refusal to turn over the property in her favor. Thus, she claims for
declaratory relief and damages.
Casilang denied the charges. He insisted that he already vacated the subject property, and thus, the case
against him should be dismissed. Averia counters with a motion to dismiss, on the ground of a previous
decided case against de Vera-Quicho.
Prior to the institution of the case by Padillo, there were already 3 cases which involved the same subject
property.
Case 1 – which ordered de Vera-Quicho to transfer said property in favor of Averia
Case 2 – where the Register of Deeds was ordered to register the deed of sale between Padillo and De
Vera . ho
Case 3 – a complaint for recission for recission of the deed of sale
The resolution to the motion to dismiss on this current was deferred until the resolution of Case 3 and
Case 2 (there were a lot of appeals). However, the motion to dismiss was denied by the Trial court while
Case 2 was pending. The CA reversed the decision and ordered suspension of this current case in the Trial
Court until the final termination of Case 2.
After Case 2 was terminated, the Trial Court ruled in favor of Padillo. The CA revered again the ruling, on
the grounds of res judicata. Hence, she elevated the case to the SC.

ISSUE:
W/N the Court was right in dismissing the case based on res judicata.

RULING: NO.
Res Judicata is applicable when (1) former judgment is final (2) rendered by court having competent
jursidiciton over subject matter and parties (3) judgment is bases on the merits (4) there must be identity
of parties, subject matter and cause of action.
Res Judicata is not applicable to this case due to the principle Law of the Case. Law of the case is defined
as the opinion delivered on a formal appeal. Once irrevocably established as the controlling legal rule
between sam parties in same case continues to be the law of the case, whether or not correct on general
principles.
The law of the case on the matter of pendency of Case 2 to bar this current case has already been settled.
Case 2 already became final because no appeal was filed in the CA. even if errouneous, it has become the
law of the case.
The court denies the monetary award asked by Padillo. The prayed damages was highly conjectural and
speculative. It was not proved. The rule is that actual, compensatory and consequential damages must be
proved. Only the amount of unrealized income will be given.
In additon, the award of moral and exemplary damages has no sound basis. There was no proof of bad
faith and malice on the part of Averia in instituting the case against Padillo. The law cannot impose a
penalty on the right to litigate.
With respect to atty’s fees, the award is exception rather than the rule. It is not awarded everytime a party
prevails in a suit. It is only awarded in the instances specified in Art 2208 of the Civil Code. Atty’s fees as
part of damages are not the same as atty’s fees in the concept of the amount paid to a lawyer. In addtion,
it should be reasonable. Thus the award of P 107,000 atty’s fees by the CA is reduced to P25,000