Facts:
Francisco B. Joaquin, Jr. and
Rafael Suarez submitted a technical proposal on February 1, 1969 to the Board of Directors of
International Hotel Corporation (IHC) to render assistance in securing a DBP‑guaranteed foreign loan for the construction of IHC’s hotel, with nine phases enumerated and the Board approving phases one to six and earmarking P2,000,000.00 at its February 11, 1969 meeting. Joaquin requested additional compensation on July 11, 1969 in the amount of P500,000.00 and the stockholders on the same date authorized payment to Joaquin and Suarez in some form; Joaquin thereafter pursued negotiations with potential foreign financiers, recommended Materials Handling Corporation and later encountered negotiations with Barnes International and Weston International Corporation. DBP initially processed and conditionally approved guaranty but later cancelled its guaranty in December 1971 after the negotiations faltered; IHC then entered into its own agreement with Weston but DBP denied guaranty on grounds of noncompliance. IHC cancelled the 17,000 shares previously issued to Joaquin and Suarez as compensation, and on December 6, 1973 Joaquin and Suarez sued IHC and certain directors in the Regional Trial Court (RTC) seeking specific performance, annulment, damages and injunction, alleging wrongful cancellation and deprivation of rights and claiming compensation totaling P1,000,000.00 plus stock. The RTC rendered judgment on August 26, 1993 ordering IHC to pay Joaquin P200,000.00 and Suarez P50,000.00 plus attorneys’ fees of P20,000.00 and costs. Both parties appealed; the Court of Appeals (CA) in a decision promulgated November 8, 2002 affirmed liability but modified the award, ordering IHC to pay Joaquin P700,000.00 and Suarez P200,000.00 and upholding attorneys’ fees. IHC sought review by the Supreme Court by petition for certiorari, raising principally the applicability of
Article 1186 and
Article 1234 of the Civil Code and the propriety of attorneys’ fees.
Issues:
Whether the Court of Appeals correctly awarded compensation to
Joaquin and
Suarez despite their alleged non‑fulfillment of the obligation to secure a DBP‑guaranteed foreign loan? Whether the Court of Appeals correctly awarded attorneys’ fees to the respondents?
Ruling:
Ratio:
Doctrine: