Suelto v. Sison
REITERATIONFacts
The Antecedents: Respondents Sison brothers negotiated the sale of their three parcels of land to respondent Santos Land Development Corporation (the corporation). Atty. Danilo A. Basa, counsel for the corporation, was present to draft the Memorandum of Agreement (MOA) and Deed of Absolute Sale. A Road Right-of-Way Agreement dated May 29, 1984, was attached as an integral part of a new agreement prepared by Atty. Arturo V. Agudo, counsel for the Sisons, notarized on January 10, 1994. On January 15, 1994, the parties agreed to sign the MOA prepared by Atty. Basa. Petitioner Atty. Martin T. Suelto, another retained counsel of the corporation, was asked to review the MOA. Petitioner made revisions, including adding the names of the Sisons' spouses and a second sentence to paragraph 5(h) regarding the delineation of the Road Right of Way, which necessitated a Joint Affidavit of Clarification and Confirmation. The MOA stipulated that the corporation would retain 10% of the total purchase price to defray expenses, including notarial and attorney's fees. Petitioner notarized the MOA on January 15, 1994. Subsequently, three Deeds of Absolute Sale were executed and notarized by Atty. Agudo. Petitioner billed the corporation for legal fees amounting to ₱604,123.05 for the preparation and notarization of the MOA and preparation of the Deeds of Absolute Sale. The Sisons, by letter dated February 21, 1994, denied any obligation to petitioner, stating it was their understanding that the corporation would prepare all documents and shoulder expenses, and that they had their own legal adviser. Petitioner failed to collect his fees, prompting him to file a complaint for Collection of Sum of Money and Attorney's Fees against the Sisons. Procedural History: The Regional Trial Court (RTC) of Davao City ruled that the Sisons were liable to pay petitioner ₱100,000.00 for notarial fees and actual litigation costs. The RTC found that while petitioner's services were primarily for the corporation, the Sisons were also benefited and should recompense him on the principle of quantum meruit and quasi-contract. The Court of Appeals reversed the RTC decision, agreeing with the Sisons that the corporation engaged petitioner's services and agreed to pay his fees. The appellate court also presumed that all expenses pertinent to the sale had been discharged when the corporation returned the balance of the 10% retained amount to the Sisons. The Petition: Petitioner filed a Petition for Review on Certiorari before the Supreme Court, assailing the Court of Appeals' decision.
Issue(s)
Whether the Court of Appeals' decision is contrary to the evidence presented regarding the obligation to pay notarial fees and the application of quasi-contract. Whether the Court of Appeals committed grave abuse of discretion in disregarding the Best Evidence Rule and in presuming all expenses were discharged upon the return of the retained balance. Whether the Court of Appeals erred in marginalizing the services of the petitioner, considering the reasonableness of the fees and the Sisons' preference for a lawyer of their choice.
Ruling
The Supreme Court reversed and set aside the decision of the Court of Appeals and reinstated the decision of the Regional Trial Court, holding the Sisons liable to pay Atty. Suelto the sum of ₱100,000.00 for notarial fees, plus actual litigation costs.
Ratio Decidendi
On the issue of liability for notarial fees and the application of quasi-contract: The Court found that the Sisons, by their own admission, were willing to pay notarial fees provided the lawyer was of their choice. The MOA explicitly stated that 10% of the purchase price would be retained to defray expenses, including notarial fees. Although the corporation returned the balance of the retained amount, this did not extinguish the Sisons' obligation, especially since petitioner's fees remained unsettled. The Court applied the principle of quantum meruit and quasi-contract, citing Article 2142 of the Civil Code, to prevent unjust enrichment. The Court noted that the Sisons, having agreed to the MOA provision regarding the use of the retained funds for notarial fees, were under an obligation to settle a reasonable amount for the services rendered by petitioner, even if they preferred a different notary. The trial court correctly applied Article 2142 of the Civil Code on quasi-contract, stating that "[c]ertain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi contract to the end that no one shall be unjustly enriched or benefited at the expense of another." This principle justified holding the Sisons liable for the reasonable value of petitioner's services, as they were benefited by his notarization of the MOA and the Joint Affidavit, and it would be unjust for them to be enriched at his expense. On the Court of Appeals' presumption and disregarding the Best Evidence Rule: The appellate court's presumption that all expenses had been discharged upon the return of the retained balance was deemed incongruous with the established fact that petitioner's notarial fees had not been paid. The Court emphasized that the MOA provision for covering notarial fees from the retained amount did not specify which lawyer would perform the services, making the Sisons liable for reasonable fees when the balance was returned without petitioner's claim being settled. On the reasonableness of the fees and the Sisons' preference for a lawyer of their choice: The trial court's determination of ₱100,000.00 as reasonable notarial fees, inclusive of litigation costs, was upheld. This amount was considered fair and conscionable, balancing the corporation's unreasonable billing of ₱604,123.05 and the Sisons' desire to "save on expenses" by using a lawyer of their choice. The Court considered the limited nature of petitioner's services, which involved perusing the MOA, making minor revisions, and preparing a Joint Affidavit that primarily benefited his client, the corporation. The trial court's assessment, based on its professional knowledge and the circumstances, was deemed appropriate. The Court acknowledged the Sisons' preference for a lawyer of their choice to notarize the documents to "save some expenses." However, the MOA provision did not contain such a qualification. Therefore, the Sisons, having agreed to the general provision for covering notarial fees from the retained amount, were still obligated to pay reasonable fees when the balance was returned to them without petitioner's claim being settled.
Main Doctrine
Where a contract provides for the retention of a percentage of the purchase price to cover expenses including notarial and attorney's fees, and the balance of the retained amount is returned without settling these fees, the seller, having agreed to the provision, is obligated to settle reasonable fees for services rendered.