Alberto v. CA

G.R. No. 119088 (June 30, 2000)

Facts:

Petitioner Atty. Zaida Ruby S. Alberto was retained by respondents Epifanio J. Alano and Cecilia P. Alano to represent them in a case before the Securities and Exchange Commission (SEC) concerning their stockholdings in Natalia Realty, Inc. The retainer agreement stipulated that the respondents would pay the petitioner a contingent fee of 10% of any awarded real estate and a fixed sum of Two Hundred Thousand Pesos (P200,000.00).

Petitioner filed SEC Case No. 3054 on behalf of the respondents, seeking liquidation, accounting, and damages against Eugenio S. Baltao and others associated with Natalia Realty, Inc. However, during the proceedings, the respondents moved to dismiss the case after reaching a settlement with the opposing parties without consulting the petitioner. The SEC subsequently dismissed the case on January 19, 1989.

Upon learning of the settlement, which involved the transfer of 35 hectares of land to the respondents, the petitioner demanded payment of her fees, but the respondents refused. Consequently, the petitioner filed a complaint for collection of the agreed fees and damages, which resulted in a favorable judgment for her, declaring her entitled to 3.5 hectares of the awarded land and monetary damages.

After the judgment became final, the petitioner attempted to execute the decision but found that the respondents had minimal personal properties available for levy. It was later discovered that Natalia Realty, Inc. had sold 23 hectares of the awarded land to Yolanda Alano, the respondents' daughter, shortly before the dismissal of the SEC case. This prompted the petitioner to file a second amended complaint to declare the sale null and void, alleging that it was simulated.

The trial court dismissed the second amended complaint for insufficiency of cause of action, a decision that was affirmed by the Court of Appeals.

Legal Issues:

1. Did the petitioner’s second amended complaint state a sufficient cause of action against the respondents?
2. Was the cancellation of the notice of lis pendens justified?
3. Did the petitioner have the legal standing to challenge the deed of sale between Natalia Realty, Inc. and Yolanda Alano?

Arguments:

• Petitioner’s Arguments:

  • The petitioner contended that the second amended complaint sufficiently alleged a cause of action based on the retainer agreement and the breach thereof by the respondents. She argued that the sale of the land to Yolanda Alano was simulated and prejudiced her right to collect attorney's fees.
  • The petitioner maintained that the notice of lis pendens was necessary to protect her claim, as the sale of the property could affect her ability to collect her fees.

• Respondents’ Arguments:

  • The respondents argued that the petitioner was a stranger to the deed of sale and thus lacked the legal standing to challenge it. They asserted that the sale did not affect the petitioner’s claim for attorney's fees, as there were still remaining properties from which her fees could be collected.
  • They also contended that the second amended complaint failed to state a cause of action, as it did not allege any direct injury or obligation on the part of Yolanda Alano.

Court’s Decision and Legal Reasoning:

The Supreme Court granted the petition, reversing the Court of Appeals' decision. The Court held that the second amended complaint did indeed state a sufficient cause of action. It emphasized that a cause of action exists if there is a right in favor of the plaintiff, an obligation on the part of the defendant, and an act or omission by the defendant that violates the plaintiff's right.

The Court noted that the petitioner had a right to her attorney's fees based on the retainer agreement, which was confirmed by the earlier judgment in her favor. The Court found that the sale of the land to Yolanda Alano, executed shortly before the dismissal of the SEC case, raised suspicions of fraud and warranted further examination.

Regarding the notice of lis pendens, the Court ruled that it was appropriate to protect the petitioner’s claim, as her action sought to enforce a lien against the property in question. The Court clarified that a notice of lis pendens serves as a warning to potential buyers that the property is subject to litigation, thus protecting the rights of the party who filed it.

Significant Legal Principles Established:

1. A cause of action exists when there is a right in favor of the plaintiff, an obligation on the part of the defendant, and a violation of that right by the defendant.
2. A party may challenge a deed of sale if they can demonstrate that their rights are affected, even if they are not a direct party to the contract.
3. The notice of lis pendens is a protective measure that can be applied in cases where a party claims an interest in real property, even if the action does not directly involve title or possession.