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350 Phil. 950


[ G.R. No. 126848, March 12, 1998 ]




Petitioner Guillermo D. Olan, while still an employee of the Philippine Long Distance Telephone Company (“PLDT”) in its Operations and Dispatch Section in Intramuros, Manila, entered into an undated agreement with respondent Digna Rosales Enterprises, Incorporated, a corporation engaged in designing, manufacturing and retailing office uniforms, represented by its President, Digna Rosales, its co-respondent. The document was entitled, “Contract of Agreement,” and it expressed the following stipulations; viz:

“WHEREAS, the FIRST PARTY [Digna Rosales Enterprises, Inc.] will supply the labor and materials for the uniforms of male and female employees of Philippine Long Distance Tel.0ephone Company (PLDT).
“WHEREAS, the SECOND PARTY {Guillermo D. Olan] will facilitate the necessary recommendations of the FIRST PARTY to PLDT.
“WHEREAS, for the effort and services rendered by the SECOND PARTY to facilitate the contract, the latter is entitled to a fixed commission amounting to 35% of 5% or 1.75% of the total contract price.
“WHEREAS, the FIRST PARTY will pay the SECOND PARTY only and when there is a receipt of payment from PLDT in the following manner:

“a) Immediately upon clearance of PLDT check, 50% representing downpayment commission

“b) Immediately upon clearance of PLDT check, 25% representing payment on first fitting commission

“c) Immediately upon clearance of PLDT check, 15% representing payment on final delivery commission

“d) Immediately upon clearance of PLDT check, 10% representing payment on delivery of repaired uniforms commission

“WHEREAS, payments to the SECOND PARTY by the FIRST PARTY shall be made without need of demand by the latter.
“WHEREAS, both parties herein agree to work jointly and properly coordinate with each other in accordance with the agreed responsibilities, with mutual cooperation to attain success of this project.
“WHEREAS, this Agreement is valid as long as DIGNA ROSALES is the authorized uniform contractor of PLDT.
“WHEREAS, in case of legal suit may arise out of this contract, the parties hereto agree that the proper courts of Makati shall have jurisdiction over the case; furthermore that the Attorney’s fees equivalent to Twenty Percent (20%) of the amount mentioned shall be added to all cost of the suit as may be deemed proper by court.

“IN WITNESS WHEREOF, the parties hereunto set their hands x x x.”1

Petitioner claimed that he had complied with the agreement and that private respondents had collected a total amount of P39 million from PLDT for the supply of uniforms but that private respondents refused to pay him the agreed 1.75% of the total amount collected or P682,500.00; hence, the action for specific performance and damages.

Private respondents denied that petitioner had performed his contractual covenant, alleging that petitioner did not extend any assistance to respondent corporation; that it was private respondent Digna Rosales who did all the work which resulted in the award of the contract to respondent corporation; and that, in any case, the total contract price under the supply agreement obtained by it from PLDT amounted to only P1,848,225.00. Private respondents’ answer included a compulsory counterclaim for damages.

The Regional Trial Court of Makati, after trial, dismissed the complaint and granted the counterclaim, it held:

“IN VIEW OF ALL THE FOREGOING, this Court finds the preponderance of evidence to be in favor of the defendants and therefore hereby renders judgment DISMISSING the plaintiff’s COMPLAINT. The plaintiff is further ordered to pay defendants P200,000.00 as reimbursement for attorney’s fees, P45,000.00* as reimbursement for litigation expenses and costs of this suit.”2

On appeal, the Court of Appeals in its decision of 22 February 1996, penned by Justice Minerva P. Gonzaga-Reyes, affirmed the judgment of the trial court.

In the instant petition for review, petitioner poses the following issues: viz:

“Whether or not the private respondents have the right to unilaterally rescind the parties’ agreement?
“Whether or not the private respondents are entitled to the reimbursement for attorney’s fees as well as reimbursement for litigation expenses and costs of the suit?”3

The first issue basically boils down to whether or not petitioner has actually done his part of the bargain with private respondents. Although petitioner has attempted to structure the problem so as to show, on its surface, a question of law, it still remains to be, verily and essentially, a factual matter.

The trial court and the appellate court both responded negatively to the above question. The trial court concluded: “It is therefore the finding of this Court that on the basis of the recorded evidence the plaintiff Guillermo Olan failed to comply with his undertaking ‘to facilitate (defendants) to PLDT’ as required of him in his CONTRACT AGREEMENT with the defendants.”4 The appellate court, in turn, found: “As the evidence bears out, the contract with PLDT was secured not through the intervention of the plaintiff, who does not controvert defendant Rosales’ testimony that plaintiff’s brother disclaimed having anything to do with the uniform contract, and who does not dispute the fact that he did not exert any effort to recommend the defendant for the PLDT contract, apart from bringing defendant to the house of his brother, PLDT VP Gonzalo Villa testified that the did not know the plaintiff and that the latter never talked to him in connection with the uniform program.”5

It is not a function of the Supreme Court to assess and evaluate all over again the evidence, testimonial and documentary, adduced by the parties to an appeal particularly where, such as here, the findings of both the trial court and the appellate court on the matter coincide.6 There is utterly no cogent reason here shown that would justify the Court to discard those factual findings of the two courts below and to superimpose its own.

There is, however, some merit on the second issue raised, for which reason, indeed, the herein petition has been considered. A reading of the decision of the trial court and that of the appellate court would not reveal any explicit rationale for the award of attorney’s fees. Article 2208 of the Civil Code requires that the award of attorney’s fees must have factual and legal justification and not simply left for the court to speculate or conjecture about.7 An award of attorney’s fees, being an exception from the policy of not putting a premium or a penalty on the right to litigate, has since been limited to the grounds specified by law. The award must be properly explained in the text of the decision itself and cannot just so suddenly appear in the dispositive portion of the judgment of the court.8 Where a lower court fails to amply state the bases for the grant of attorney’s fees, the award can only be disallowed on appeal.9

WHEREFORE, the questioned decision of the Court of Appeals sustaining that of the court a quo, is AFFIRMED, with the MODIFICATION that the award of attorney’s fees should be, as it is so hereby, DELETED.


Davide, Jr., Bellosillo, Panganiban and Quisumbing JJ., concur.

1 Records, pp. 6-7.

* See TSN, 12 February 1992, p. 6.

2 Rollo, p. 290.

3 Rollo, p. 18.

4 Rollo, p. 36-37.

5 Rollo, p. 38.

6 South Sea Surety and Insurance Co., Inc. vs. Court of Appeals, 244 SCRA 744.

7 Consolidated Bank and Trust Corp. (Solidbank vs. Court of Appeals, 246 SCRA 193; PNB vs. Court of Appeals, 256 SCRA 491.

8 Cipriano vs. Court of Appeals, 263 SCRA 711.

9 PNB vs. Court of Appeals, supra.

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