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[ GR No. 6626, Oct 06, 1911 ]



20 Phil. 323

[ G.R. No. 6626, October 06, 1911 ]




This decision concerns the appeals entered under respective bills of exception by counsel for Jose de la Pefia y de Ramon, the administrator of the  estate of the deceased Jose de la Pena y Gomiz, from the order of October 14, 1910, and by counsel for Federico Hidalgo, from the mandate contained in the last paragraph of the order of the 18th of the same month, directing that  the amount deposited as bond, less the sum of P8,500, be returned to the defendant, and also by counsel for the intervening attorneys, Chicote & Miranda, Frederick G. Waite, and C. W. O'Brien, from the said order of October 18, in so far as it declares that the counterclaim by  the  said  Hidalgo against Pena was presented in his capacity as administrator of the  aforementioned estate and that the interveners' lien could not avail to prevent the set-off decreed in the said first order  appealed from.

After a regular trial in the Court of  First  Instance of this city of the case of Jose  de la Pena y de Ramon, as administrator of the estate of  his deceased father, Jose de la Pena y Gomiz, vs. Federico Hidalgo, for the payment of a sum of money, the record of  the proceedings was forwarded to this court on appeal.  By the decision rendered on August 17,  1910,[1] this court sentenced the defendant  Hidalgo to pay to Jose de la Pena y de Ramon,  as administrator, the sum of P6,774.50 with legal interest from May  23,  1906, and, likewise, sentenced the said Jose de la Pena y de Ramon to pay to  Federico Hidalgo, as a  counterclaim, the sum  of P9,000, with legal interest thereon from May 21, 1907, the date of the  counterclaim; and affirmed the judgment appealed from in so far as it was in agreement with the said decision, and reversed it in so far as it was not in accordance therewith.   That decision became final.

The record of proceedings  having been  remanded  for execution to the  Court of First  Instance whence it originated, the judge,  by order of October 14, 1910, decreed that both amounts for which the defendant Hidalgo and the administrator Pena were mutually liable in concurrent sums, should off-set each other, and that, consequently, the plaintiff, Pena y de Ramon, in conformity with the final decision of this court, was liable for the payment of the difference between  such amounts, or P2,274.93, together with the interest at 6 per cent from the said date.

At this stage of the proceedings for the execution of the judgment that had  become final, the attorneys for the said plaintiff, Messrs. Chicote & Miranda, Frederick Garfield Waite, and C. W.  O'Brien  represented  by C.  A. DeWitt, asked that they be permitted to intervene in the proceedings, as they held a lien upon  the amount awarded in the said decision of this court, rendered in favor of the plaintiff and against the defendant, and alleged that the lien  which they held was upon the judgment entered  in favor of the plaintiff in his capacity as administrator, against the defendant; that the  defendant could  not set off  his judgment against that of the plaintiff, and that, notwithstanding that  the defendant was entitled to the  judgment awarded  him by virtue of his counterclaim, yet, in  consideration of the fact that their  lien affected the judgment of the lower court, which was  in no wise reversed, the said lien was valid with respect to  any judgment that the  plaintiff had  obtained against the defendant, notwithstanding  such counterclaim. In spite  of the defendant's opposition, the court, ruling on this incidental question raised, issued the aforecited order of October  18, 1910.

Counsel for the administrator  Pena did not file a brief calculated to prove the soundness  of his appeal from  the order of  October 14, 1910, whereby there was declared a set-off  between the amounts for which the plaintiff and the defendant were liable, up to the  sum where the liability of the one equaled that of the other, the latter to pay to the former the difference, together with the interest.   This order is pursuant to the law and in perfect harmony with the decision rendered in the  case by this court, and,  though  it was not  duly impugned,  its legality  and  correctness will be considered in this decision in demonstrating that of the other order of the 18th of the same month, appealed from by the intervening attorneys and by the  counsel  for Federico Hidalgo.

With respect to the said order of the 18th of October, the second of those appealed from in this incidental issue,  it must be borne in mind, for the proper determination of the pending appeals, that the main action, from which the said incidental issue proceeded, was prosecuted  in the Court of First Instance of this city by Jose de la Pena y de Ramon, in his capacity as judicial administrator of  the estate of his deceased  father, Jose de la Pena y Gomte, against Federico Hidalgo,  for the payment of various sums which  the latter was owing, with interest, to the estate; and  that the defendant, in answering the complaint filed by  the said administrator, presented a counterclaim  and,  in turn, asked that he be absolved from the complaint with the costs against the plaintiff and that the latter be sentenced to the payment of P9,000 which the testator, Jose de la Pena y Gomiz, owed to Hidalgo.  So that if the complaint in the  main action was filed by the administrator of the estate of the deceased Pena y Gomiz, the counterclaim presented in the same suit by the defendant,  Federico Hidalgo, in  answering the complaint of the administrator  of  the estate, had for its  object the collection of a certain sum with interest, which the deceased testator,  during his lifetime, owed the said defendant.

The defendant may, pursuant to section 95 of the Code of Procedure in  Civil Actions, set forth by answer as many defenses  and counterclaims as he may have, whatever their nature.   Section 96 of the same code provides that a counterclaim, to be available as a defense in an answer, must be one in favor of all the substantial defendants and against all the substantial plaintiffs in the action.

A counterclaim is  termed a mutual  petition,  because both parties sue each other mutually in the same action, each of them assuming" the double  role of plaintiff and defendant, before the trial judge, and the two suits are brought under a single proceeding where both actions are  tried at the same time and finally determined in one and the same judgment

The different amounts sought to be recovered by Jose de la Pena y de Ramon, as the administrator of the estate of the deceased Jose de la Pena y Gomiz, from the defendant,  Federico Hidalgo, constitute various separate obligations contracted by the latter, according to the complaint, in favor of the deceased testator, Pena y Gomiz; and the amount of the counterclaim was likewise a debt which the said testator at his  death left unpaid and owing the defendant Hidalgo; therefore, Jose de la Pena y de Ramon, as administrator, and Federico Hidalgo  are  the substantial  plaintiffs and defendants, reciprocally, in the aforementioned main action.

It is evident, by a simple perusal of the finding of facts and of the grounds of law of the final decision rendered in that action, that the same was instituted by Jose de la Pena y de Ramon, not by himself and in  his own representation,  but in his capacity as administrator of the estate of his deceased father, Jose de  la Pena y Gomiz,  demanding payment of certain amounts which, according to his third amended complaint, the defendant Federico Hidalgo owed the latter; and it is none the less  evident  that the counterclaim presented by the defendant Federico Hidalgo had for its sole object the collection of a certain sum which was owing to him by the deceased testator, Jose de la Pena y Gomiz, and that the plaintiff, Jose de la Pena y de Ramon, per se and personally, had nothing to do with this debt of the estate, which concerned him only as such administrator.  This is shown by the record and clearly appears in the said decision which disposed  of  the plaintiff-administrator's complaint and the defendant-debtor's counterclaim. That  decision, from the beginning  to the  end, evidences without contradiction or proof to the contrary, all that has been hereinbefore stated; it shows who were the contending parties, the nature of the questions raised by complaint and counterclaim  and the respective  purposes sought by the one and the other; it is therefore unreasonable to affirm that the counterclaim was made against Pena y de  Ramon personally, apart from his position as administrator.

If in any place or in any line of the said decision mention was made  of the  name of the plaintiff Pena  y de Ramon without the title of his office as administrator of the estate, it probably was because  the complaint was filed  and the action was brought by him in his capacity of administrator, and the counterclaim, also, was directed against him as such administrator;  and if in any paragraph the said title of his office was omitted in designating him, such omission can not serve  as a ground for concluding  that the  counterclaim allowed and the sentence imposed in the said decision were against Jose de la Pena y de Ramon as a private individual and not as the administrator of the estate, for the reason that the said Pena y de Ramon is not by himself and in his own name a party to the said action, but is such only in his capacity of administrator of the aforementioned estate; and the sentence contained in the decision referred to can in no wise be  understood to have been made against Jose de la Pena y de Ram6n personally, but in his capacity of administrator of the  estate, which  alone  was liable  for the debt owing to the defendant; if mention was therein made of the plaintiff by name, it is because he was the representative of the debtor estate.

The intervening attorneys allege  that,  in the aforesaid suit between the administrator Pena y de Ramon  and Hidalgo,  two judgments were rendered,  one against the defendant  Hidalgo and the other against the administrator Pena y de Ramon.  This averment is incorrect, because, as has been seen and is obvious to all who intervened in the said suit, there was but one judgment appealed from and but one decision rendered in second instance by this court, which in part modified the prior judgment in first instance.  A complaint and a counterclaim having been entered in the said suit, it logically follows that the decision should contain a finding relative to the demand contained in the  complaint and another finding concerning the counterclaim.  This separation of findings  in one decision does hot denote distinct judgments, but different disposals of the several questions raised in the suit and comprised within a  single decision, which alone terminated the double litigation.  Reason and justice will not support the claim that the sentence therein contained, directing Jose de la Pena y de Ramon to pay to the defendant Hidalgo the sum of P9,000 and interest by virtue of the counterclaim, was pronounced  against the plaintiff in his personal capacity  and not as  administrator of the estate, inasmuch as Pena y de Ramon did  not initiate or prosecute his suit, in the  said main action on his own account, but in his capacity as administrator; and the debt demanded in the counterclaim was one owing by the estate, which he represented in that action, and by his father, the testator  Pena y Gomiz, as the judge of First Instance, in directing in his order of October 14, 1910, in fulfillment and execution of  the decision  of this court, so recognized such debt and declared in an unmistakable manner that Hidalgo was entitled, as  a  result of the set-off between the  two amounts specified in the decision of the Supreme Court and which the administrator  Pena y de Ramon and  the defendant Hidalgo were mutually owing to each other, to collect the sum of P2,274.93  with interest thereon at the rate of 6 per cent per annum,  this amount being the  difference between  the two debts set off against each other and which is owing to the defendant from the estate.

In the aforementioned decision of this court, by  which the complaint and the counterclaim presented by the  parties to the said suit were disposed of, the amount which the defendant Hidalgo should pay to the administrator  of the estate of the deceased Pena y Gomiz and the  sum which the said administrator,  designated by his  name of Jose de la Pena y de Ramon, should, by virtue of the counterclaim, pay to the defendant, Federico Hidalgo, alone were  specified; the resultant difference, after the set-off should have been made, was not stated, as it was considered that this merely arithmetical operation  would necessarily be  performed in the course of the execution proceedings by the judge of the Court of First Instance  charged  with carrying out the final  decision rendered in the case.  This, in fact, he did do in his order of October 14, by directing that the plaintiff should pay the said sum, that is, the difference which was found to exist, after making the set-off between the respective amounts the litigating parties were sentenced to pay. The failure to state in the said decision that both debts  were set off against each other up to a concurrent sum, can not avail as a ground for alleging that the attorneys of the administrator Pena y de  Ramon have acquired a  lien on the amount which Hidalgo should pay to the administrator  Pena y de Ram6n in preference to the creditor of the amount that is the subject of the  counterclaim.

It is to be observed that, although counsel for the plaintiff Pena excepted to the order of October 14, 1910, by which the judge of the Court of First Instance, following the final decision of this court, declared a set-off between the amounts that were owing reciprocally  by both parties and  directed the said plaintiff to pay to the defendant the difference of P2,274.93 with interest  at the rate of 6 per cent per annum, he did not present any bill of exceptions nor any brief  with the required assignment of errors, doubtless because he was convinced that the appeal which he would have to maintain was directed against  a final decision of this court.

It is lawful and proper  to allow  the  set-off between the two amounts specified in the said  decision,  in  accordance with the provisions of articles  1195, 1196,  and 1202 of the Civil  Code,  because the credit  of P6,774.50,  together  with the legal interest thereon, to the payment of which the defendant Hidalgo was  sentenced, belongs to the estate of the deceased Pena y Gomiz, represented by the plaintiff, Pena y de Ramon, and the P9,000, with interest, which,  in turn, the plaintiff-administrator was sentenced to pay  to the said defendant, was a debt of the testator which it is now incumbent upon his estate to repay to his creditor; therefore, as the trial judge very well says in the order of October 18, appealed from, the lien of the intervening attorneys can not serve to prevent the set-off, for the reason that such interveners rendered their services to Jose de la Pena y de Ramon as administrator of the said estate, and the credit by which the debt owing to this estate by the defendant Hidalgo appears to be set off consists of a debt of the estate in favor of its debtor, Hidalgo.

If it be just that the estate of the deceased Pena y Gomiz should collect the amount owing it by'Hidalgo, as determined by final decision, it  is equally just that Hidalgo should have the same right to collect the sum which the said estate owes him, according to the same decision; therefore, in order to comply with such decision, determining the two liabilities directly opposed to each other, it  consequently and logically follows that a set-off  of both credits, up  to a concurrent amount,  must be effected; and if the lien or the right to collect professional  fees on the part of the attorneys were superior to the right of the creditor of the estate, the result would be that the executory decision would not be complied with; there would then be no set-off and the defendant would be compelled to pay to the said administrator his debt to the estate, through the aforementioned lien  of the intervening attorneys, but could not collect, nor apply to the  payment of the credit owing him by the same  estate, the amount of his debt to the latter; this would be illegal and opposed to the most rudimentary principles of  justice and,  furthermore, would be an absurdity and contrary to common sense.

Section 37 of the Code of Procedure in Civil Actions prescribes, among other provisions, that  a lawyer shall have a lien upon all  judgments and decrees for  the payment of money, and executions issued in pursuance of such judgments and decrees which he has secured in a litigation of his client, from and after, but not before, the time when he shall have caused to  be  entered upon  the  records of the court, *   *  *  and shall have the same right  and power  over such judgments, decrees and executions to enforce his lien as his client had or may have, to the extent that may be necessary for the payment  of his just fees  and disbursements.

If it be taken into account that, while the  administrator Pena y de Ramon is  entitled  to collect from Hidalgo the P6,774.50 which the latter is owing to the  estate left by the said Pena's father, this estate must, in turn, pay to the said Hidalgo P9,000; and that, on comparing these two amounts with each other, in proceeding with the execution of the final judgment, it would necessarily be disclosed by the operation that the said estate or  its administrator, far from collecting any  sum whatever from its or his credit, would have  to pay Hidalgo the difference resulting from the set-off between the one amount and the other, up to a concurrent sum, it will  be understood at once that the attorneys for the  representative of that estate can  not  collect any part whatever of the amount awarded in the executory decision, because that sum was  intended to cover a large part of the debt of the testator and the latter's testate succession  will still have to pay the difference.

The lien or  right to collect fees for professional service, which  the appellant attorneys possess to the  sum awarded in the  final decision, is equal to the right of their client, to that of the administrator Pena y de  Ramon,  recognized in the said decision, pursuant to the provisions of the aforecited section 37 of the Code of Civil  Procedure.   The  preference claimed by these interveners over the creditor's right, by virtue of the latter's counterclaim, does not appear to be established by this section; and if  the estate of the deceased Pena is obliged to pay to Hidalgo P9,OOO,  it is not entitled to collect from the latter the said  P6,774.50 by way of a set-off, unless it shall previously have satisfied the whole amount of its debt, which it has not done; therefore the attorneys of the representative of the said estate are not entitled  to collect their fees out of the said amount recognized by decision to belong to their client, but subject  to a  set-off by  virtue of a counterclaim, as their rights are no better than those of the creditor Hidalgo.

The judgment appealed from having been reversed with respect to that portion thereof relative to the liability asked by the administrator of the estate to be laid against Federico Hidalgo, the sole judgment to be executed is that contained in the decision rendered in second instance and in this decision, as has been shown; and the result, in short, has been in no wise favorable to the plaintiff because, instead of being able to collect the amount of his credit owing by Hidalgo to the estate, he still finds himself obliged to pay the defendant the difference resulting from the set-off to  which the counter-claim, made by the latter for a greater sum, gave rise; and therefore, the right claimed by the appellant attorneys  to collect their fees  out of the amount awarded to the  said administrator, is in  all respects unsustainable, inasmuch as, in consequence of the  counterclaim, there  was a  set-off against that amount and the plaintiff has nothing to collect, but, on the contrary, is still  liable for the difference which was found to exist after the reciprocal debts of both parties had been set off against each other.

The right of the attorneys  for the administrator Pena y  de Ramon, to collect fees for professional service, under section  37 of  the  Code of Civil Procedure, is restricted to the personal funds of their client, to amounts awarded to the latter by final decision, but does not comprise sums of money which, according to the same decision, must  be applied  to the payment of a legitimate debt  of their client ordered to be made in such decision by virtue  of a prior counterclaim.

We know of no  legal  provision which  grants  to the attorneys for the losing party in a suit, or who has not obtained a judgment authorizing him to  collect money from the adverse party, the privilege of  collecting their professional fees with preference over, and better right than, the said adverse party,  the legitimate creditor of the said attorneys' client.

The suit was prosecuted for the collection of amounts which both parties reciprocally were owing each other, and a  decision  was rendered  deciding the complaint and the counterclaim and determining the sums which the  litigate ing parties must mutually pay; therefore, the final judgment must be  executed, as  provided by  the trial  judge, pursuant to its terms, and no impediment to such execution can be had in the improper contention made  by the appellant attorneys, who can invoke no law or just  reason which authorizes  them to collect their prpfessional fees  out of the bond given by Hidalgo, once the same was  not deposited as security for the payment of the said fees.

For the foregoing reasons,  whereby the errors attributed by the appellant attorneys to  the trial judge have been duly refuted, it is our opinion and we hold that we should and hereby do  affirm the order of October 14, 1910, and also the order of the 18th of the same month,  with the  exception of the final provision of  this last order, of October 18, which we reverse and direct  that return be made to Federico Hidalgo of the sum of P8,500 retained by the clerk of the court below as a result of the motion of intervention herein concerned.  No special  finding is made as  to the costs.  So  ordered.

Mapa, Johnson, and Moreland, JJ., concur.


[1] 16 Phil. Rep., 450.