[ A.C. No. 12880. November 23, 2021 ]
REINARIO B. BIHAG, MATEO CORTES, BENJAMIN CABATIC, NASSROLLAH D. MONTUD, TEDDY BERNALES, KARIM MACAROMPAN, DONATO CALICA, JR., CLAIRE GREBERN ELUMIR, AND EDGAR DEMAVIVAS, COMPLAINANTS, VS. ATTY. EDGARDO O. ERA,• RESPONDENT.
CONCURRING AND DISSENTING OPINION
CAGUIOA, J.:
This is a disbarment complaint filed against respondent Atty. Edgardo O. Era (respondent) for deceitful conduct relative to his professional fees in his engagement with the Lanao del Norte Electric Cooperative (LANECO).1 The ponencia finds respondent guilty of violating the Lawyer's Oath, Rule 138 of the Rules of Court, and Canons 1, 7, 10, 15, 17, 20, and Rules 1.01, 1.02, 7.03, 10.01, 10.02, 10.03, 20.01, 20.02 and 20.04 of the Code of Professional Responsibility (CPR). In view of these violations and his having been previously suspended twice by the Court from the practice of law, the ponencia now imposes the supreme penalty of disbarment against respondent.2
I agree that respondent's actions,3 aggravated by his previous offenses,4 warrant his disbarment. However, I demur from the finding in the ponencia that the professional fees respondent charged LANECO are unreasonable and must perforce be adjusted. According to the ponencia, "[a]s [it] may be readily gleaned from his fee structure x x x [it was] [o]bviously [respondent's] intention x x x to turn the engagement contract into a money-making venture."5
There is no serious dispute that the Court is given the power to determine the reasonableness or the unconscionable character of a lawyer's fee, and such power is a matter falling within the regulatory prerogative of the Court.6 Section 24, Rule 138 of the Rules of Court likewise provides, in part, that no court shall be bound by the opinion of attorneys as expert witnesses as to the proper compensation, but may disregard such testimony and base its conclusion on its own professional knowledge. A written contract for services shall control the amount to be paid therefor, unless found by the court to be unconscionable or unreasonable.
That acknowledged, there is, however, no hard and fast rule which will serve as guide in determining what is or what is not a reasonable fee. That must be determined from the facts of each case.7 In this regard, I respectfully submit that the amount of legal fees alone does not make them decidedly unreasonable or unconscionable. Fees are charged based on a number of circumstances and, to my mind, only when lawyers employ fraud, deceit, or any form of machination against their clients in charging fees should the Court step in. Absent any of these circumstances, professional fees stipulated in an engagement contract that has been freely and intelligently entered into between a lawyer and his or her client should remain valid and binding.
Well-settled is the rule that the "[f]reedom of contract is both a constitutional and statutory right," and that "the contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy."8 Moreover, consent is essential for the existence of a contract and it presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; and spontaneity by fraud.9
In this case, there is neither allegation nor proof that the consent of the LANECO Board of Directors (BOD) was unintelligent, forced, or was procured through fraud. Rather, the exact opposite is extant in the own allegations of complainants. While the directors claim that they did not bother going into the details of the engagement proposal of respondent because they were impressed with and convinced of his qualifications and expertise,10 it is very telling that apart from signing the engagement contract itself, they also signed two board resolutions pertaining to respondent's engagement.11
However, in concluding that respondent's fees were unreasonable, the ponencia observed that respondent exercised deceit against LANECO when he took advantage of his superior knowledge of the law and filed two actions on behalf of LANECO when only one would have sufficed. The ponencia further observed that the fees were not commensurate with the difficulty of the cases that respondent filed. The petitions mainly questioned the validity of the 1993 Provincial Tax Code on account of the lack of public consultations and publication. This issue, according to the ponencia, was not novel or complicated, and did not require extensive skill, effort, and research.12 With due respect, I disagree.
Firstly, the engagement contract clearly provided that respondent's professional services would entail the filing and handling of two petitions to dispute the franchise and real property tax assessments.13 Clearly, respondent had been transparent from the beginning about what his legal fees would be for and how he would handle the legal concerns of LANECO. Again, there is nary an allegation or complaint from LANECO that it was ever coerced or strong-armed in any way in entering into said contract.
Subsequently, too, when respondent was trying to collect on his success fees, the BOD even issued another resolution approving it and the approval did not appear perfunctory as the amount was at a discounted rate of 9% instead of 10% of the base amount as stipulated in the engagement contract.14 Admittedly, respondent did misrepresent to LANECO that the favorable decision before the trial court had already attained finality, thereby entitling him to success fees. He also deceitfully pegged said success fees at a base amount different from what his engagement contract provides. Even so, this deceitful conduct did not attend the preparation and perfection of the contract between LANECO and respondent. What remains clear from the totality of the facts of the case is that during the preparation and perfection of the contract of engagement with respondent, the BOD was never kept in the dark, that negotiations were had, and that the parties dealt with each other at an arm's length.
Anent the ponencia's second observation, suffice it to say that lawyers have the liberty to fix the legal fees they would charge their clients, subject to what the rules provide. Canon 20 of the CPR requires that a lawyer shall charge only fair and reasonable fees, and in this connection, Rule 20.01 of the CPR further provides the various factors intended to guide lawyers in determining what is fair and reasonable. Thus:
Rule 20.01 - A lawyer shall be guided by the following factors in determining his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficulty of the questions involved;
c) The importance of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result of acceptance of the proffered case;
f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;
g) The amount involved in the controversy and the benefits resulting to the client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or established; and
j) The professional standing of the lawyer.
Parallel to the above, Section 24, Rule 138 of the Rules of Court partly provides that lawyers shall be entitled to have and recover from their clients no more than a reasonable compensation for their services, with a view to the importance of the subject matter of the controversy, the extent of the services rendered, and the professional standing of the attorney.
Proceeding from the above-cited rules, whether attorney's fees are unreasonable does not rest solely on the nature of the case to be handled or the kind and amount of work that will be required from the lawyer. An equally important factor is his or her professional standing in the legal community. Indeed, the reputation that lawyers have painstakingly built over the years in the legal profession accounts for something and the rules also recognize that lawyers may be justified to also anchor their fees on it. It should not be questionable therefore for any lawyer worth his or her salt to charge a fairly higher rate than most. Here, there is no finding or discussion as to whether respondent's professional standing should likewise have a bearing on the fees he charged LANECO. Notably, complainants themselves admitted that they were impressed with respondent's expertise and qualifications.
As well, regardless of the nature or complexity of the cases respondent handled for LANECO, accepting the latter as a client meant losing other employment or potential clients on the part of respondent because he naturally devoted time and attention to the cases of LANECO.
Simply put, the total amount LANECO paid to respondent as legal fees cannot be characterized as unreasonable by its sheer size alone. These fees are, after all, for services duly rendered. As may be observed, Rule 20.01(g) of the CPR allows that these services be weighed against the amount involved in the controversy and the benefits resulting to the client from the said services. What would have been unacceptable is to charge fees for services that were never rendered or sorely wanting. None of these circumstances appear in the case at hand.
To my mind, the lack of appreciation of these considerations renders an incomplete assessment of the reasonableness of the fees LANECO voluntarily agreed to pay respondent.
To emphasize yet again, the BOD — presumably comprised of astute businessmen — had agreed to the engagement contract of respondent and had issued two board resolutions relative thereto. To be sure, there was never any claim or evidence that the members of the BOD were naive or unversed in business matters.
All told, the determination of a proper fee requires consideration of the interests of both client and lawyer. However, the ultimate focus of the judiciary should be upon whether an attorney's action indicates a lack of consideration for his or her client's interest and an abuse of his or her professional relationship with his or her client.15 Unreasonable, unconscionable, or excessive fees should therefore be evidenced by fraud, misrepresentation, or overreaching by the lawyer, thereby rendering the charges, under the circumstances, a practical appropriation of the client's funds.16 I respectfully reiterate that absent any of these elements, an engagement contract freely and intelligently entered into between a lawyer and his or her client remains the law between them.
In view of the foregoing, I dissent from the ponencia in ruling that respondent's attorney's fees should be reduced. However, for engaging in deceitful conduct, for violating other provisions of the CPR, and in consideration of his two previous infractions, I concur with the ponencia that respondent deserves the extreme penalty of disbarment.
• Also Edgar O. Era in some parts of the rollo.
Footnotes
1 See rollo, pp. 31-32. The engagement contract charged the following fees:
1. Engagement fee of P300,000.00 for the petition for declaratory relief, and P700,000.00 for the petition for prohibition with VAT to be paid by LANECO;
2. Consultation/hearing fee/appearance fee of P8,000.00 for managing lawyer, and P5,000.00 for an associate lawyer for every hearing/meeting/conference attended;
3. Pleading fee of P600.00/page;
4. Research fee of P2,000.00/hour for a managing lawyer, and P1,000.00/hour for an associate lawyer;
5. Mobilization fund of P150,000.00;
6. Pre-success fee of P1,000,000.00 if a preliminary injunction is issued in the petition for prohibition, and for a favorable judgment, a success fee of 10% of the total amount of real property tax being assessed and collected by the Provincial Government of Lanao del Norte based on the 1993 Provincial Revenue Code;
7. Pre-success fee of P300,000.00 if a preliminary injunction is issued in the petition for declaratory relief, and for a favorable judgment, a success fee of 10% of the total amount of franchise tax being assessed and collected by the Provincial Government of Lanao del Norte based on the 1993 Provincial Revenue Code;
8. Pre-termination fee of 10% of the total amount of real property tax being assessed and collected from LANECO from the petition for prohibition, and 10% of the total amount of franchise tax being assessed and collected from LANECO from the petition for declaratory relief.
2 Ponencia, p. 24.
3 I agree that respondent exhibited deceitful conduct when he:
1. Pegged his success fees of 10% at an exaggerated base rate of LANECO's "total amount of savings," instead of what was stipulated in his engagement contract, which was the "total amount of taxes being assessed and collected by the Provincial Government of Lanao del Norte against LANECO."
2. Misrepresented to LANECO that the favorable ruling of the trial court was already final, thereby entitling him to his success fees under the contract.
3. Connived with Engr. Resnol Torres in manipulating the outcome of the collection suit he filed to recover his success fees. Notably, the Court of Appeals (CA) nullified the judgment of the trial court, which was granted in favor of respondent, on the ground of "extrinsic fraud perpetrated by Atty. Era in connivance...with Resnol Torres." The CA decision has attained finality.
4 In Samson v. Era, A.C. No. 6664, July 16, 2013, 701 SCRA 241, respondent was suspended from the practice of law for two years for wittingly representing and serving conflicting interests. In Bonifacio v. Era, A.C. No. 11754, October 3, 2017, 841 SCRA 487, he was once again suspended from the practice of law for three years for willfully disobeying the Court's prior order suspending him by continuing to engage in unauthorized practice of law during said suspension.
5 Ponencia, p. 22.
6 Dalisay v. Mauricio, Jr., A.C. No. 5655, April 22, 2005, 456 SCRA 508, 514.
7 Id. at 514.
8 Morla v. Belmonte, G.R. No. 171146, December 7, 2011, 661 SRCA 717, 730. Citations omitted.
9 Lim, Jr. v. San, G.R. No. 159723, September 9, 2004, 438 SCRA 102, 106-107.
10 Ponencia, p. 2.
11 Id.
12 Id. at 22-23.
13 Id. at 3.
14 See id. at 4.
15 Romine, W., Legal Fees: Gross Overcharging By An Attorney Warranting Disciplinary Action, THE JOURNAL OF THE LEGAL PROFESSION, p. 131, accessed at < https://www.law.ua.edu/pubs/jlp_files/issues_files/vol02/vo102art09.pdf>.
16 Id. at 129, citing Bushman v. State Bar of California, 11 Cal. 3d 558, 522 P.2d 312, 113 Cal Rptr. 904 (1974).
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