Wednesday, October 19, 2011

Attorney's fees; nature of; how recovered - G.R. No. 169293

G.R. No. 169293

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In the absence of stipulation, attorney’s fees may be recovered as actual or compensatory damages under any of the circumstances provided for in Article 2208 of the Civil Code,[28] to wit:

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;

(3) In criminal cases of malicious prosecution against the plaintiff;

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;

(6) In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

(9) In a separate civil action to recover civil liability arising from a crime;

(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.

Even if it were true that DBP had a hand in the transfer of Traverse’s insurance coverage to Central, such act is not sufficient to hold it solidarily liable with Central for the payment of attorney’s fees and cost of litigation under the above provision of the Civil Code.

Records show that during the testimony of the former insurance examiner of DBP-Tarlac, Victoria Punzalan (Punzalan), she claimed that she had repeatedly reminded Mrs. Lourdes Roxas, Traverse’s President, of the impending expiration of Traverse’s insurance coverage with FGU.[29] Mrs. Roxas, however replied that her son would not be able to attend to it as he was out of the country at that time. Subsequently, Atty. Ruperto Zamora of Central called up Punzalan, upon the supposed instruction of Mrs. Roxas, to draw up Traverse’s insurance coverage.[30] DBP only came to know that Traverse had already renewed its insurance policy with FGU on May 6, 1981, after Central had already drawn up Policy No. TAR 1056.[31]

We thus find that DBP could not be blamed for facilitating such transfer in light of the previous delays in Traverse’s submission of its insurance policy. It is worthy to note that Policy No. TAR 1056 was drawn on May 7, 1986, the date that Traverse’s previous FGU policy was set to expire. Moreover, Central was not only one of DBP’s accredited insurance companies, but it also had a local branch office, which made transactions with it faster and easier.

This Court also cannot sustain the insinuation that DBP’s lax attitude in pursuing its claim against Central was tantamount to bad faith as to make it liable for attorney’s fees and costs of suit. Even a resort to the principle of equity will not justify making DBP liable.

The award of attorney’s fees is the exception rather than the rule and the court must state explicitly the legal reason for such award.[32] As we held in ABS-CBN Broadcasting Corporation v. Court of Appeals[33]:

The general rule is that attorney’s fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 demands factual, legal, and equitable justification. Even when a claimant is compelled to litigate with third persons or to incur expenses to protect his rights, still attorney’s fees may not be awarded where no sufficient showing of bad faith could be reflected in a party’s persistence in a case other than an erroneous conviction of the righteousness of his cause.[34] (Emphasis supplied.)

It should be remembered that Traverse’s insurance policy was assigned to DBP. While it is true that DBP still had the real estate mortgage to ensure the payment of Traverse’s loan, it would be in its favor to facilitate Central’s payment on Policy No. TAR 1056 rather than go through the process of foreclosing Traverse’s lot or having to demand payment again, albeit from Traverse this time. Moreover, Traverse’s own evidence shows that DBP had tried its best to facilitate and coordinate meetings between Traverse and Central. DBP Tarlac even suggested to its main office to have Central blacklisted from its roster of accredited insurance companies as an effect of its handling of the Traverse fire insurance claim.[35]

It was not DBP’s act of facilitating the transfer of Traverse’s insurance policy from FGU to Central that compelled Traverse to litigate its claims, but rather Central’s persistent refusal to pay such claims. Thus, only Central should be held liable for the payment of attorney’s fees and costs of suit.

In view of the foregoing, the Motion filed by DBP to direct the lower court to issue a writ of partial execution has become moot.

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