G.R. No.

169298

July 9, 2008

LAW FIRM OF TUNGOL & TIBAYAN, Petitioner, vs. COURT OF APPEALS and SPOUSES RENATO M. INGCO & MA. LUISA S. INGCO, Respondents. Facts: Spouses Renato Ingco acquired the services of the petitioner law firm to enforce delivery of a land title covering a 300-square meter lot in Tivoli Royale Subdivision, Quezon City. Atty Tibayan sent a letter to the Ingcos stating that the graduated attorneys fees would depend on the circumstances of the case. This agreement was embodied in Atty. Tibayans "Case Referral and Acceptance Confirmation," (hereinafter referred to as contract) dated November 9, 1998. Thereafter, representing the Ingcos, the law firm filed a complaint against Villa Crista Monte Realty and Development Corporation (Villa Crista) before the Housing and Land Use Regulatory Board (HLURB). The complaint alleged that the Ingcos paid a contract price of 5.1 million but the Villa Crista did not deliver the title and execute the deed of sale. After a series of transactions, the Ingcos and Villa Crista entered into a compromise agreement but despite such, Villa Crista was not able to pay. This prompted the HLURB to order a writ of execution ordering the ex-officio sheriff of RTC to execute judgment. The writ required Villa Crista to refund the amount of 5.1 M and 200k for liquidated damages and to seize, garnish or levy any of its property to satisfy judgment. The ex-officio sheriff then levied and auctioned 10 lots. Three of which were bought by the Ingcos for a bid price of 7.2M, which includes the refund of 5.1M and 1.5 attorneys fees. Thereafter, the Ingcos terminated the services of the petitioner. The firm then filed Statement of Claim for Attorneys Lien and a Motion to Enforce the Attorneys Lien. Both Motions sought to recover 25% of the excess of the existing prevailing selling price or fair market value of the three levied lots over the total bid price and expenses of P7,193,505.56. The firm claimed that the Ingcos still owed them 4.5M due to the additional benefit that they derived from the auction sale since the lots allegedly worth 23M. The HLURB arbiter granted the motion of the firm but this was reversed by the board on appeal stating that the realized gain of 23M was premature and the payment of 1.5M was more than sufficient and reasonable compensation. The firm appealed with the Office of he President set aside HLURBs decision and affirmed the decision of the arbiter. This however was reverse d by the Court of Appeals. Thus the Motion for Reconsideration. Issue: 1. WON THE CA COMMITTED A REVERSIBLE ERROR WHEN IT INTERPRETED THE ALLEGEDLY UNAMBIGUOUS TERMS OF THE CONTRACT. 2. WON THE CA JUSTICES ERR IN REFUSING TO INHIBIT THEMSELVES FROM THE CASE. HELD: 1. A courts purpose in examining a contract is to interpret the intent of the contracting parties, as objectively manifested by them. The process of interpreting a contract requires the court to make a preliminary inquiry as to whether the contract before it is ambiguous. A contract provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where the written terms of the contract are not ambiguous and can only be read one way, the court will interpret the contract as a matter of law. If the contract is determined to be ambiguous, then the interpretation of the contract is left to the court, to resolve the ambiguity in the light of the intrinsic evidence.

We are in agreement with the appellate court that what the law firm delivered to its clients was the refund of the amount claimed plus interest, stated in the compromise agreement with Villa Crista, not the title to the lot and more so, not the three lots purchased by the spouses at the execution sale. In our view, the law firm had been adequately paid its lawyers fees and is no longer entitled to additional fees on top of the P1.5 million it had received. In fact, the 25% attorneys fees based on the value of the lot, which is P5.1 million, multiplied by 25%, will only amount to P1,275,000. Thus, the firm had a bonus of P225,000, since they received P1,500,000 from the clients. We note that the Ingcos acquired the three lots as the highest bidder at the execution sale, since no one else bid higher. On this point, it can be said that the lots had been acquired not through the recovery efforts of the law firm. Had other persons bidded a higher price, the matter of the three lots would be entirely impertinent here. It is stretching the firms contractual rights to say that the three lots acquired in the auction by the Ingcos was thru the law firms contractual services. 2. While bias and partiality are recognized as valid reasons for the voluntary inhibition of a judge under Rule 137, Section 1, par. 2, of the Rules of Court, mere suspicion that a judge is partial is not enough. As long as the judges opinions were formed in the course of judicial proceedings based on the evidence presented, and on the conduct of the parties as observed by the magistrate in court, such opinions even if later found to be erroneous will not prove personal bias or prejudice on the part of the judge. In this case, the law firm has failed to present concrete proof that any or all members of the Court of Appeals Second Division had a person al interest in the case, or that their opinions on the case have stemmed from an extrajudicial source. We find no sufficient basis or reason to doubt their fairness and ability to decide this case with the "cold neutrality of an impartial judge."