Riguer vs. Mateo

A written contract for attorney's fees controls the amount to be paid unless the court finds the stipulated amount unconscionable or unreasonable, in which case the court may reduce the fee to a reasonable amount based on established factors including the value of the property involved, the client's financial capacity, and the extent of services rendered.

Petitioner Eduardo N. Riguer, a farmer of advanced age with limited educational attainment, engaged respondent Atty. Edralin S. Mateo in 2002 to represent him in civil and criminal cases involving a parcel of land covered by TCT No. 12112. The parties initially agreed that compensation would consist of acceptance, appearance, and pleading fees, which Riguer regularly paid. During the pendency of the appeal in the civil case, Atty. Mateo prepared and had Riguer sign a document entitled "Kasunduan," stipulating additional payments: ₱30,000.00 as reimbursement of expenses, ₱50,000.00 upon a favorable decision, and ₱250,000.00 once the subject land was sold. The dispute arose when Riguer refused to pay the ₱250,000.00 after the land was sold for ₱600,000.00, prompting Atty. Mateo to file a collection suit.

Sometime in 2002, Eduardo N. Riguer, a farmer of advanced age with limited educational attainment, engaged the services of Atty. Edralin S. Mateo to represent him in civil and criminal cases involving a parcel of land covered by Transfer Certificate of Title No. 12112. The parties agreed that compensation would consist of acceptance fees, appearance fees, and pleading fees, which Riguer religiously paid. On January 16, 2007, the RTC rendered a judgment favorable to Riguer in the civil case. During the pendency of the appeal, Atty. Mateo prepared and had Riguer sign a document entitled "Kasunduan," which stated that Riguer agreed to pay Atty. Mateo the following: ₱30,000.00 as reimbursement for expenses in the civil case, ₱50,000.00 in case of a favorable decision, and ₱250,000.00 once the land covered by TCT No. 12112 was sold. Atty. Mateo judicially admitted that he prepared the document during the pendency of the appeal.

On May 21, 2009, the appeal was decided in favor of Riguer, prompting Atty. Mateo to demand payment of the fees agreed upon in the Kasunduan. Riguer refused to pay. He claimed he was unaware he had signed the Kasunduan because it was lumped with other documents to be signed for the appeal, and that Atty. Mateo took advantage of his lack of education and advanced age. Riguer, however, paid the ₱30,000.00 and ₱50,000.00 embodied in the Kasunduan, as Atty. Mateo verbally required him to do so. After two years, or on May 30, 2011, Atty. Mateo filed a Complaint for Collection of Attorney's Fees with Urgent Prayer for Issuance of Preliminary Attachment before the MTCC.

The MTCC ruled in favor of Atty. Mateo, ordering Riguer to pay ₱250,000.00 with 6% interest per annum and ₱5,494.50 as costs of suit. The MTCC found that the Kasunduan bound Riguer as he never denied signing it, and disregarded his claim that he was unaware of having signed it. The RTC affirmed the MTCC decision in toto, holding the attorney's fees just and equitable on the basis of quantum meruit. The CA sustained the RTC, rejecting the claim that the Kasunduan was inserted among appeal documents — noting the document was signed a month before the trial court rendered its decision — and holding that even if the Kasunduan were void, Atty. Mateo was still entitled to attorney's fees on the basis of quantum meruit. The CA also noted that Riguer's claim that the ₱250,000.00 was grossly disproportionate to the selling price of ₱600,000.00 was raised only for the first time on appeal. Riguer's motions for reconsideration before the CA were denied, the first for being filed out of time and the second as a prohibited second motion for reconsideration.

• Timeliness of Motion for Reconsideration: Riguer argued that the CA erred in reckoning the 15-day period from May 15, 2015, when the notice was received by Marisol Macaldo, who was never employed by his former counsel's law firm but was a former helper of the father of one of the lawyers. He asserted that service was defective because it was never served at the office of his counsel but at the latter's family home.
• Second Motion for Reconsideration: Riguer dismissed the CA's ruling that his motion for reconsideration of the September 3, 2015 resolution was a second motion for reconsideration, contending it raised a different issue.
• Fraud in the Execution of the Kasunduan: Riguer stressed that he was misled into signing the Kasunduan as it was included in voluminous documents for appeal, and that Atty. Mateo took advantage of his lack of education and advanced age. He insisted the document belied the true intent of the parties and that the ₱250,000.00 attorney's fees was unreasonable.
• Value of the Property: Riguer asserted that Atty. Mateo's claim that the property was valued at ₱3 million was unsubstantiated, and that the price indicated in the notarized deed of sale — ₱600,000.00 — was controlling as it was a public document.

• Proper Service of CA Decision: Atty. Mateo countered that the CA correctly denied Riguer's first motion for reconsideration, claiming that the certification of the Postmaster proved the decision was properly served on Riguer's counsel at the address indicated in the records.
• Questions of Fact: Atty. Mateo asserted that even if technicalities were brushed aside, the petition failed because it raised questions of fact, which were beyond the ambit of a petition for review under Rule 45.
• Validity of the Attorney's Fees: Atty. Mateo stated that the courts a quo were correct in awarding attorney's fees in accordance with the written contract assented to by Riguer. He claimed the ₱250,000.00 was appropriate, considering the property was valued at around ₱3 million at the time the contract was executed.
• Fictitious Deed of Sale: Atty. Mateo pointed out that Riguer could not rely on the deed of sale as basis to reduce the award because the same was fictitious, elaborating that it was common not to indicate the accurate price of property sold to lessen the tax to be levied from the sale.

• Timeliness of Motion for Reconsideration: Whether Riguer's motion for reconsideration of the April 13, 2015 CA Decision was timely filed.
• Entitlement to Attorney's Fees: Whether Atty. Mateo is entitled to recover ₱250,000.00 in attorney's fees pursuant to the Kasunduan.

• Timeliness of Motion for Reconsideration: No. The motion was filed out of time, the 15-day period being correctly reckoned from May 15, 2015 when Macaldo received the CA decision at counsel's address of record. Notwithstanding, procedural rules were relaxed in the interest of substantial justice.
• Entitlement to Attorney's Fees: Partially yes. The Kasunduan was valid and binding, fraud not having been established by clear and convincing evidence. However, the stipulated ₱250,000.00 was unconscionable and was reduced to ₱100,000.00, as it constituted nearly 50% of the property's actual selling price of ₱600,000.00.

• Timeliness of Motion for Reconsideration: Under Section 9, Rule 13 of the Rules of Court, service of judgments may be served personally or by registered mail, addressed to the party or counsel at his office, if known, otherwise at his residence. The CA correctly reckoned the 15-day period from May 15, 2015, when Macaldo received the decision, not May 18, 2015, when counsel was allegedly informed. The Philippine Postal Corporation certified that the decision was received through Macaldo at counsel's address. The motion was filed only on June 2, 2015, rendering it out of time. Notwithstanding this procedural lapse, the Court relaxed the rules in the interest of substantial justice, citing CMTC International Marketing Corporation vs. Bhagis International Trading Corporation, because a denial of the petition would allow Atty. Mateo to collect unconscionable attorney's fees. The merits of the petition warranted a relaxation of procedural rules to attain justice swiftly.

• Entitlement to Attorney's Fees: The Court agreed that Riguer failed to establish fraud in the execution of the Kasunduan. While Atty. Mateo judicially admitted preparing the document during the pendency of the appeal, this was insufficient to prove fraud and deceit. Under the standard articulated in Tankeh vs. DBP, fraud in a civil case involving contractual relations must be established by clear and convincing evidence — a standard higher than preponderance but less than proof beyond reasonable doubt. Mere allegations do not suffice; absent sufficient proof, the contract binds the parties and is the law between them. However, under Section 24, Rule 138 of the Rules of Court, a written contract for attorney's fees controls the amount to be paid unless found by the court to be unconscionable or unreasonable. Courts have the regulatory prerogative to determine the reasonableness of stipulated attorney's fees. Applying the standards from Rayos vs. Atty. Hernandez, the ₱250,000.00 was unconscionable for four reasons: first, it amounted to almost 50% of the property's value, which was sold for only ₱600,000.00; second, Riguer was a farmer of advanced age with limited educational attainment; third, the stipulated fee referred only to Atty. Mateo's services for the appeal, as trial court fees had already been paid; and fourth, Atty. Mateo admitted he believed he was entitled to 10% attorney's fees, yet the Kasunduan fixed ₱250,000.00 based on his claim that the property was worth ₱3 million. The deed of sale, being notarized, enjoyed a presumption of regularity under Dela Pena vs. Avila, and its contents — stating the property was sold for ₱600,000.00 — could only be set aside by clear and convincing evidence, which Atty. Mateo failed to present. The Court reduced the fee to ₱100,000.00, recognizing Atty. Mateo's right to just compensation while preventing deprivation of the client's property.

• Unconscionability of Stipulated Attorney's Fees — A written contract for attorney's fees controls the amount to be paid unless the court finds the stipulated amount unconscionable or unreasonable. Stipulated attorney's fees are unconscionable whenever the amount is by far so disproportionate compared to the value of the services rendered as to amount to fraud perpetrated upon the client. The decree of unconscionability does not preclude recovery but justifies the court's fixing of a reasonable compensation. The Court identified ten circumstances for determining reasonableness: (1) the amount and character of the service rendered; (2) labor, time, and trouble involved; (3) the nature and importance of the litigation or business; (4) the responsibility imposed; (5) the amount of money or value of the property affected; (6) the skill and experience called for; (7) the professional character and social standing of the attorney; (8) the results secured; (9) whether the fee is absolute or contingent; and (10) the financial capacity and economic status of the client. In this case, the ₱250,000.00 fee was reduced to ₱100,000.00 because it constituted nearly 50% of the property's selling price of ₱600,000.00, the client was a farmer of advanced age with limited education, and the fee covered only appellate services.

• Standard of Proof for Fraud in Civil Cases — Fraud alleged in an ordinary civil case involving contractual relations must be established by clear and convincing evidence — a standard less than proof beyond reasonable doubt but greater than preponderance of evidence. Mere allegations will not suffice; the burden rests on the party alleging fraud. In this case, Riguer's bare allegation that he was misled into signing the Kasunduan, without clear and convincing proof, was insufficient to nullify the contract.

• Presumption of Regularity of Notarized Documents — A notarized document is a public document that enjoys a presumption of regularity as to its due execution and the truth of its contents. It may be set aside only by clear, strong, and convincing evidence to the contrary, with the burden on the party contesting the document. In this case, the notarized deed of sale stating the property was sold for ₱600,000.00 prevailed over Atty. Mateo's unsubstantiated claim that the true value was ₱3 million.

• Relaxation of Procedural Rules in the Interest of Substantial Justice — While procedural rules should be treated with utmost respect, the Court may disregard them for compelling reasons where strict obedience would defeat the ends of justice. Strong considerations of substantive justice justify relaxation of procedural rules. In this case, the untimely filing of the motion for reconsideration was excused because denying the petition would allow collection of unconscionable attorney's fees.

• "A written contract for services shall control the amount to be paid therefor unless found by the court to be unconscionable or unreasonable." — This passage quotes Section 24, Rule 138 of the Rules of Court, the statutory basis for the Court's power to reduce stipulated attorney's fees found to be unconscionable.

• "Stipulated attorney's fees are unconscionable whenever the amount is by far so disproportionate compared to the value of the services rendered as to amount to fraud perpetrated upon the client." — This formulation from Rayos vs. Atty. Hernandez defines the standard for unconscionability of attorney's fees and is the controlling test applied in the case.

• "The imputation of fraud in a civil case requires the presentation of clear and convincing evidence. Mere allegations will not suffice to sustain the existence of fraud." — This passage from Tankeh vs. DBP articulates the elevated standard of proof required to nullify a contract on the ground of fraud, which the Court applied in rejecting Riguer's claim of deception.

• "Absent clear and convincing evidence to contradict the same, we find that the CA correctly pronounced the Deed of Absolute Sale was valid and binding." — This passage from Dela Pena vs. Avila states the presumption of regularity accorded to notarized documents, which the Court applied in upholding the ₱600,000.00 selling price over Atty. Mateo's unsubstantiated claim of a higher true value.

• CMTC International Marketing Corporation vs. Bhagis International Trading Corporation, 700 Phil. 575 (2012) — Cited for the doctrine that procedural rules may be relaxed in the interest of substantial justice where strict application would defeat the ends of justice. Followed to justify entertaining Riguer's petition notwithstanding the untimely filing of his motion for reconsideration.

• Tankeh vs. DBP, 720 Phil. 641 (2013) — Cited for the standard of proof required to establish fraud in civil cases involving contractual relations: clear and convincing evidence. Followed in rejecting Riguer's claim that he was deceived into signing the Kasunduan.

• Rayos vs. Atty. Hernandez, 544 Phil. 447 (2007) — Cited for the test of unconscionability of stipulated attorney's fees and the ten circumstances to consider in determining reasonableness. Followed as the controlling framework for reducing the ₱250,000.00 fee.

• Dela Pena vs. Avila, 681 Phil. 553 (2012) — Cited for the presumption of regularity accorded to notarized documents and the requirement of clear and convincing evidence to rebut it. Followed in upholding the deed of sale's stated consideration of ₱600,000.00 over Atty. Mateo's bare assertion of a higher true value.

• Rilloraza, Africa, de Ocampo and Africa vs. Eastern Telecommunications Phils., Inc., 369 Phil. 1 (1999) — Cited for the proposition that whether or not there is an agreement, courts can fix a reasonable compensation for lawyers' professional services.

• Radiowealth Finance Co., Inc. vs. International Corporate Bank, 261 Phil. 1022 (1990) — Cited for the principle that as an officer of the court, a lawyer submits to the court's authority, and the power to determine the reasonableness of attorney's fees is a regulatory prerogative of the courts.

• Section 24, Rule 138, Rules of Court — Provides that a written contract for attorney's fees controls the amount to be paid unless found by the court to be unconscionable or unreasonable. Applied as the statutory basis for reducing the stipulated ₱250,000.00 to ₱100,000.00.

• Section 9, Rule 13, Rules of Court — Governs service of judgments, final orders, or resolutions, which may be served personally or by registered mail addressed to the party or counsel at his office, if known, otherwise at his residence. Applied in upholding the CA's reckoning of the 15-day period from the date Macaldo received the decision at counsel's address.

• Section 2, Rule 52, Rules of Court — Prohibits the filing of a second motion for reconsideration. Applied by the CA in denying Riguer's January 2016 motion.

• Article 2209, Civil Code — Authorizes the imposition of legal interest in the absence of a stipulation. Applied by the MTCC in imposing 6% per annum interest on the attorney's fees award.

Antonio T. Carpio (on official leave), Diosdado M. Peralta (Acting Chairperson), Marvic M.V.F. Leonen (on leave), and Samuel R. Martires concurred. No separate concurring opinions were written.