Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated MAR 29 2004.

G.R. No. 147010 (Pioneer Insurance and Surety Corporation vs. De Dios Transportation Co., Inc. and De Dios Marikina Transit Corporation.)

Before us, are motions for reconsideration filed by both the petitioner and the respondents of our decision in Pioneer Insurance and Surety Corporation v. De Dios Transportation, Co., Inc. and De Dios Marikina Transit Corporation,[1] denying the petition and directing the Regional Trial Court of Quezon City, Branch 223 to resolve on the merits the Motion to Execute Against Injunction Bond filed by the respondents after the parties have adduced evidence in Civil Case No. Q-95-24462.[2]

In its motion for reconsideration, the petitioner-movant Pioneer Insurance and Surety Corporation, averred that (a) the appeal in CA-G.R. CV No. 61310 was already withdrawn at the time the respondents filed their motion to execute against the injunction bond; (b) the motion to execute against the injunction bond in itself is an improper motion and should not have been entertained, much less given due course; and (c) the decision is anchored on unwarranted presumption of bad faith on the part of the petitioner.[3]

The petitioner-movant asseverates that at the time the respondents filed a motion to execute against injunction bond, the Court of Appeals had lost jurisdiction to entertain it because the decision of the RTC had become final and executory, owing to the timely filing of a motion to withdraw appeal. It contends that the filing of the withdrawal of appearance by the Padilla Reyes and Dela Torre Law Office is already constitutive of the “written request for substitution of counsel and written consent of the client.” Citing the case of Rinconada Telephone Company, Inc. v. Hon. Buenviaje,[4] substantial compliance should be deemed to have been made. Considering further that Cuyokiat and Goldfinger ratified the notice of the withdrawal of appearance of the Padilla Reyes and De la Torre Law Office and the withdrawal of appeal by the Luis Q. Uranza, Jr. & Associates, filed on September 14, 1999, on September 16 and 28, 1999, respectively, both should be given retroactive effect.

The petitioner agrees that the attorneys are merely agents of their clients; hence, they enjoy a presumption of having been duly authorized as embedded in Article 1900 of the Civil Code and Section 23, Rule 138 of the Rules of Court. The petitioner, thus, concludes that the substitution of the Padilla Reyes and De la Torre Law Office by Luis Q. Uranza, Jr. & Associates was with its authority and had the effect of validating the former’s withdrawal of appearance as well as the latter’s entry of appearance. More importantly, Luis Q. Uranza, Jr. & Associates had the authority to withdraw the petitioner’s appeal. Citing the case of Arambulo v. Court of Appeals,[5] a motion to withdraw appeal, being a matter of right, need not be approved by the court.[6]

The petitioner went on to say that a client has the absolute right to terminate the services of counsel. Such right includes the right to make a change or substitution of counsel at any stage of the proceedings. Thus, the notice of withdrawal of appeal and the motion for substitution of counsel did not require the conformity of counsel nor of the court. It assuages that the aforementioned notices were not mere scraps of paper but had legal effect.

The petitioner-movant also stresses that the motion to execute against injunction bond is an improper motion because the real purpose for its filing is to satisfy the judgment debt out of the injunction bond, and not to recover damages incurred by reason of an improperly issued writ of preliminary injunction.

The petitioner-movant alleges that the declaration of this Court that the submission of the appellants on September 28, 1999 of the requisite conformity to the withdrawal of appeal should not be given retroactive effect so as not to foreclose the right of the respondent to file with the CA a motion to execute against the injunction bond, and enable the petitioner to escape liability on the same, necessarily implied that the petitioner acted in bad faith in filing a motion to withdraw appeal and notice of withdrawal of its previous counsel, both without the required conformity of petitioner-movant on September 14, 1999.

The petitioner-movant, thus, prayed:

WHEREFORE, petitioner respectfully prays that this Honorable Court reconsider and set aside its Decision dated 18 July 2003 and, in lieu thereof, issue a new one giving due course to the Petition dated 30 March 2001 and granting the reliefs prayed for therein.[7]

For their part, the respondents-movants De Dios Transportation Co., Inc. and De Dios Marikina Transit Corporation, posit that the since the Court affirmed the decision of the Court of Appeals which had determined that there were factual grounds to grant the motion to execute against injunction bond, issued by the petitioner, the decision of the CA should be affirmed in toto and, thus, grant their motion to execute against injunction bond.[8]

After a careful review of the assailed decision, this Court resolves to deny both motions for reconsideration.

As we have explained, in the absence of the conformity/consent of the petitioner in the notice of withdrawal of appearance and motion to withdraw appeal, the same are considered as mere scraps of paper which cannot preclude the filing of a motion to execute against injunction bond.

Indeed, attorneys are agents of their clients. By virtue thereof, they can, by their acts bind their clients. However, as Article 1900[9] and Section 23 of Rule 138 of the Rules of Court[10] prescribe, attorneys as agents of their clients can only bind the latter if the acts performed are within the scope of their authority. Particularly, an attorney has no authority to compromise a client’s litigation, or cause the withdrawal of appeal,[11] unless a special power of attorney is given to effect the same.[12]

While we agree that the client has authority to terminate the services of counsel, it does not have an absolute authority to substitute counsel. This is in accordance with Section 26, Rule 1 38 of the Rules of Court, which provides:

Section 26. Change of Attorneys. - An attorney may retire at any time from any action or special proceeding, by the written consent of his client filed in court. He may also retire at any time from an action or special proceeding, without the consent of his client, should the court, on notice to the client and attorney, and on hearing determine that he ought to be allowed to retire. In case of substitution, the name of the attorney newly employed shall be entered on the docket of the court in place of the former one, and written notice of change shall be given to the adverse party....

Citing Arambulo v. Court of Appeals, the petitioner contends that the withdrawal of appeal, as a matter of right, did not require the approval of the court. A careful study of the case will show that it spoke of the dispensability of the court’s approval in a notice to withdraw appearance of counsel but not of a motion to withdraw appeal. It was thus enunciated:

In the instant case, it is not disputed that the Withdrawal of Appearance of Atty. Jose Jimenez, Jr. was filed with the trial court on 12 February 1991. Since the withdrawal was with the client’s consent, no approval thereof by the trial court was required because a court approval is indispensable only if the withdrawal is without the client’s consent ...[13]

We agree with the petitioner-movant that it had absolute authority to terminate the services of its counsel, to make changes or substitution of counsel. However, as we have ruled in the case of Rinconada Telephone Company, Inc. v. Hon. Buenviaje,[14] the substitution must conform with the following requisites:

The right of client to terminate his relations with his counsel is universally recognized (Enos v. Casting, 67 ALR 430). Such termination may be with or without cause (Aro v. Narawa, L-24146, April 28, 1969, 21 SCRA 1160). The right of a client to terminate the authority of his counsel includes the right to make a change or substitution at any stage of the proceedings. To be valid, any such change or substitution must be made: a) upon written application; b) with the written consent of the client; c) upon written consent of the attorney to be substituted; d) in case the consent of attorney to be substituted cannot be obtained, there must be at least a proof of notice that the motion for substitution has been served upon him in the manner prescribed by the rules (Section 26, Rule 138, Rules of Court).

Accordingly, there is no reason to reconsider our decision declaring the notice of withdrawal of appearance filed by the Padilla Reyes & De la Torre Law Office and the motion for withdrawal of appeal filed by Luis Q. Uranza, Jr. & Associates as mere scraps of paper, with no legal effect.

It is herein emphasized that the assailed decision was not based on the presumption of bad faith on the part of the petitioner. As can be gleaned from the decision, the same was anchored on applicable laws and existing jurisprudence.

As regards the motion of the respondent-movant and the petitioner’s allegations that the motion to execute against the injunction bond is improper because the purpose of the respondent is to satisfy the judgment out of the injunction bond, the aforequoted portion of the decision is instructive:

On the third and fourth grounds, the same should be addressed to and resolved by the trial court after due hearing and presentation of evidence. As it was, the trial court denied the motion of the respondents on its finding that it had no jurisdiction to take cognizance of the motion, without affording the parties the right to adduce evidence thereon.[15]

WHEREFORE, the motions for reconsideration filed by the petitioner Pioneer Insurance and Surety Corporation and the respondents De Dios Transportation Co., Inc. and De Dios Marikina Transit Corporation are DENIED.

SO ORDERED.

Very truly yours,

(Sgd.) LUDICHI YASAY-NUNAG

Clerk of Court

[9] Art. 1900. So far as third persons are concerned, an act is deemed to have been performed within the scope of the agent’s authority, if such act is within the terms of the power of attorney, as written, even if the agent has in fact exceeded the limits of his authority according to an understanding between the principal and the agent. (Civil Code).

[10] Section 23. Authority to bind clients. - Attorneys have authority to bind their clients in any case by any agreement in relation thereto made in writing, and in taking appeals, and in all matters of ordinary judicial procedure. But they cannot, without special authority, compromise their client’s litigation, or receive anything in discharge of a client’s claim but the full amount in cash. (Rule 138, Rules of Court).

[12] Lim Pin v. Liao Tan, 115 SCRA 290 (1982).