G.R. No.

96354 June 8, 1993

LAPERAL DEVELOPMENT CORPORATION and SUNBEAMS

CONVENIENCE FOOD CORPORATION, petitioners,
vs.
HON. COURT OF APPEALS and THE HEIRS OF FILOTEO T.
BANZON, respondents.

Vicente R. Acsay for petitioners.

CRUZ, J.:

In Civil Case No. Q-34907 in the Court of First Instance of Rizal, Quezon
City, Atty. Filoteo T. Banzon sought recovery of attorney's fees from Oliverio
Laperal, Laperal Development Corporation, and Imperial Development
Corporation for professional services rendered by him in the following
cases:

1. Land Registration Case No. 20, Court of First Instance of Bataan,

Branch 1.

2. Land Registration Case, Court of First Instance of Bataan, Branch 2.

3. G.R. No. L-47074, Laperal Development Corp., et al. vs. Hon. Abraham
P. Vera, Ascario Tuazon, et al.

4. Petition for Land Registration, Court of First Instance of Bataan, Branch

1.

5. Land Registration Case No. N-398, Court of First Instance of Baguio.

6. Civil Case No. 3922, Court of First Instance of Bataan, Branch 2, Oliverio
Laperal vs. Mario Francisco.

7. Civil Case No. 4062, Court of First Instance of Bataan, Republic vs.
Sunbeams Convenience Foods, Inc., et al.

8. Civil Case No. 4437, Court of First Instance of Bataan, Laperal

Development Corporation et al. vs. Spouses Ascario Tyazon and
Purificacion Ampil, et al.
9. Administrative action filed by the Solicitor General against Laperal
Development Corporation for annulment of title to 400 hectares of land.

10. Civil Case No. Q-22933, Court of First Instance of Quezon City,
Imperial Development Corp. vs. P & B Taxicab Inc..

On April 8, 1983, the case was decided on the basis of a Compromise

Agreement reading in part as follows:

Atty. Filoteo Banzon by this agreement, does hereby voluntarily and freely
waive, forfeit, or consider as fully paid any and all other claims of money or
otherwise that he may have against the defendants, in all cases in the
Philippines that he may have handled for the defendants in the past,
including whatever money claims he may have in the above-entitled case
outside of this agreement, inclusive of representation fees, representation
expenses, appearance fees, or retainers fees, or other forms of attorneys
fees and, hereby re-affirm that he will undertake upon his professional oath
and standing, to protect the interest of the defendants in all unfinished
appealed cases that the herein plaintiff had appeared in the past in
representation of the defendants, without any further renumeration or
attorneys fees, representation fees, appearance fees and expenses in
connection therewith.

On May 19, 1987, Banzon filed a complaint against Oliverio Laperal.

Laperal Development Corporation. Imperial Development Corporation,
Sunbeams Convenience Foods, Inc. and Vicente Acsay for: 1) the
annulment of the aforequoted portion of the Compromise Agreement; 2) the
collection of attorney's fees for his services in the cases of: a) Imperial
Development Corporation vs. Añover, b) Republic vs. Sunbeams
Convenience Foods, Inc., et al., and c) Laperal Development vs. Ascario
Tuazon and Ascario Tuazon v. Judge Maglalang, et al.; 3) the recovery of
the amount of P10,000.00 that was adjudged payable to him as attorney's
fees by Ascario Tuazon in Civil Case No. 3918; and 4) the payment to him
of nominal damages and attorney's fees.

Docketed as Civil Case 50823 in Branch 92 of the Regional Trial Court of

Quezon City, this case was dismissed on the ground that the trial court had
no jurisdiction to annul the Compromise Agreement as approved by an
equal and coordinate court. It was held that the issue was cognizable by
the Court of Appeals. An additional ground was that the Compromise
Agreement already covered the plaintiff's professional services in the
aforementioned cases.1

On appeal, the decision was affirmed on the issue of jurisdiction. The Court
of Appeals held, however, that attorney's fees were due the private
respondent in the cases of Laperal Development Corporation v. Ascario
Tuazon and Ascario Tuazon v. Judge Maglalang and Republic v. Sunbeams
Convenience Foods. Inc..2

The petitioners are now before us to challenge the decision insofar as it

orders them to pay Banzon attorney's fees for his legal services in the
aforementioned cases.

An examination of the list of cases for which Banzon was suing for
attorney's fees in Civil Case No. Q-34907 shows that the case of Laperal
Development Corporation v. Ascario Tuazon was included therein although
it was erroneously referred to as Civil Case No. 4437. Even if it was not
mentioned in the complaint, it was nevertheless covered by the
Compromise Agreement, where Atty. Banzon waived all other claims
against the
defendants * "in all cases in the Philippines that he may have handled for
the defendants in the past, including whatever money claims he may have
in the above-entitled case outside of this agreement." He also undertook
therein to protect the interest of the defendants in all unfinished appealed
cases where he appeared in the past in representation of latter, without any
further remuneration or attorney's fees, representation fees, appearance
fees and expenses in connection therewith.

The undertaking clearly covered the case of Laperal Development

Corporation v. Ascario Tuazon, (AC-G.R. CV No. 70186), which was still
pending in the Court of Appeals at the time of the Compromise Agreement,
and the subsequent case of Ascario Tuazon v. Judge Maglalang (CA-G.R.
SP No. 07370). The respondent court erred in supposing that the said
agreement covered only past services, disregarding the clear stipulation for
the continuation of the private respondent's services in all pending
appealed cases in which he had earlier appeared.

Concerning the case of Republic vs. Sunbeams Convenience Foods, Inc.

(G.R. No. 50464), the Court of Appeals said:
At the time of the execution of the compromise agreement and rendition of
the judgment based thereon on April 8, 1983, the aforementioned case
bearing G.R. No. 50464 was still pending in the Supreme Court. It was not,
however, the subject of the compromise agreement (Exhibits C and 2;
Annex 2, answer, pp. 47-55, 65-66, rec.). It could not have been so
because Sunbeams Convenience Foods, Inc. was not a party defendant in
the second amended complaint, although reference was made to it in the
appellant's seventh cause of action for which he has rendered professional
services but for which attorney's fees were being claimed from the herein
appellee Oliverio Laperal (Exhibits A and 1). But nothing is mentioned in the
second amended complaint and in the compromise agreement (Exhibits A
and 1; C and 2) which would indicate that Sunbeams Convenience Foods,
Inc. itself was a party plaintiff therein privy to the case. Appellee Oliverio
Laperal and Sunbeams Convenience Foods, Inc. do not appear to be one
and the same.

It appearing that it was the herein appellant who filed the brief for
Sunbeams Convenience Foods, Inc. in the Supreme Court on March 14,
1980 (Exhibit D), he should be compensated for his services.

Banzon's claim for attorney's fees in the said case was also among those
enumerated in his complaint in Civil Case No. Q-34907 against Oliverio
Laperal, Laperal Development Corporation, and Imperial Development
Corporation. Notably, Sunbeams Convenience Foods, Inc. (Sunbeams, for
brevity), referred to in the complaint as "Mr. Laperal's Corporation," was not
joined by name as a party-defendant. Apparently, the private respondent
believed that Oliverio Laperal, being the president of the said company,
was directly obligated to him for the attorney's fees due him for his handling
of the case for Sunbeams.

It is settled that a corporation is clothed with a personality separate and

distinct from that of the persons composing it. 3 It may not generally be held
liable for the personal indebtedness of its stockholders or those of the
entities connected with it.4 Conversely, a stockholder cannot be made to
answer for any of its financial obligations even if he should be its president.5

There is no evidence that Sunbeams and Laperal are one and the same
person. While it is true that Laperal is a stockholder, director and officer of
Sunbeams, that status alone does not make him answerable for the
liabilities of the said corporation. Such liabilities include Banzon's attorney's
fees for representing it in the case of Republic v. Sunbeams Convenience
Foods, Inc.

Sunbeams should have been joined as a party-defendant in order that the

judgment of the lower court could legally affect it. But even if it was not
impleaded, the court could still validly proceed with the case because
Sunbeams was not an indespensable party but only a proper party. A
proper party is one which ought to be a party if complete relief is to be
accorded as between those already parties.6 A party is indespensable if no
final determination can be had of an action unless it is joined either as
plaintiff or defendant.7

The Compromise Agreement upon which the decision of the court was
based was between plaintiff Atty. Banzon and the defendants represented
by Oliverio Laperal. To repeat, Sunbeams was not a party to this
agreement and so could not be affected by it.

It is noted, however, that in his complaint in Civil Case No. 50823 against
Sunbeams et al., Banzon stated:

1. On the 1st cause of action, to declare the portions of the compromise

agreement (Annex A) alleged in par. 4 of the 1st cause of action where
plaintiff waives his attorney's fees and other fees in all other cases he
handled in the past for the defendants Oliverio Laperal and his corporations
not included in the complaint for attorney's fee . . . (emphasis supplied)

This declaration amounted to an admission that he had also waived his

attorney's fees in the cases he had handled for Laperal's corporations
which were not impleaded in Civil Case Q-34907, including Sunbeams.

Moreover, in the hearing Civil Case 50823, Banzon testified as follows.

Atty. Banzon: I am not claiming my attorney's fees from 1974 to 1981. What
I was claiming was the attorney's fees for the services I have rendered after
the compromise agreement in 1983 to 1987 by virtue of the new agreement
. . .. (TSN, Sept. 15, p. 7 Records, Vol. II, p. 129).

xxx xxx xxx

Court: So you are not claiming anymore your attorney's fees in those ten
cases?
Atty. Banzon: I am claiming only for the services I have rendered from 1983
to 1987 by virtue of a new agreement.

Court: These services of yours exclude the ten?

Atty. Banzon: Exclude the ten, Your Honor. (Ibid, p. 16)

xxx xxx xxx

Atty. Banzon: I admit, Your Honor that those 10 services are those services
I rendered in the past wherein I waived my attorney's fees; my services
covered from 1974 to 1981 but not my services after the compromise
agreement. (ibid, p. 22).

The Sunbeams case was one of the ten cases listed in the complaint in
Civil Case No. 34907. It was pending before this Court when Civil Case No.
Q-34907 and Civil Case No. 50823 were instituted. To prove his claim for
attorney's fees for his services in the Sunbeams case, Banzon submitted to
the Regional Trial Court of Quezon City, Branch 92, "Petitioner's
Brief" (Exh. "D") and "Petitioner's Reply to Respondents' Brief" (Exh. "D-1")
dated March 14, 1980 and August 12, 1980, respectively, which had earlier
been filled with this Court in connection with the said case. Significantly, the
preparation and filing of those pleadings were done sometime in 1980,
which means that they were among those ten cases referred to by Atty.
Banzon for which he had waived his attorney's fees. There is no other proof
of his services in the said case after 1983 to 1987.

The private respondent's claim for attorney's fees in the Sunbeam case
was waived by him not by virtue of the Compromise Agreement to which
Sunbeams, not being a defendant in Civil Case No. Q-34907, could not
have been a party. What militates against his claim is his own judicial
admission that he had waived his attorney's fees for the cases he had
handled from 1974 to 1981 for Oliverio Laperal and his corporations,
including those not impleaded in his complaint in Civil Case No. Q-34907.

ACCORDINGLY, the petition is GRANTED. The decision of the respondent

court dated November 21, 1990 is MODIFIED. Petitioners Laperal
Development Corporation and Sunbeams Convenience Foods, Inc. are
declared no longer liable to the private respondents for attorney's fees in
AC-G.R. CV No. 70186, CA-G.R. SP No. 07370 and G.R. No. 50464.
Costs against the private respondent.
SO ORDERED.

Griño-Aquino, Bellosillo and Quiason, JJ., concur.