GR 121772; (January, 2003) (Digest)
G.R. No. 121772; January 13, 2003
ELNORA R. CORTES and EDMUNDO CORTES, petitioners, vs. COURT OF APPEALS, F. S. MANAGEMENT & DEVELOPMENT CORP., respondents.
FACTS
Petitioners, the spouses Cortes, retained Atty. Felix Moya to represent them in a civil case for specific performance filed by F.S. Management and Development Corporation. No formal agreement on attorney’s fees was made. The parties later decided to enter into a compromise, and the Cortes spouses received checks from FSMDC. Atty. Moya then filed an urgent motion to fix his attorney’s fees at thirty-five percent of the amount received. On July 2, 1991, the parties settled in open court, with the spouses agreeing to pay Atty. Moya P100,000.00 as attorney’s fees, to be paid “out of any check paid by the plaintiff to defendants.” The trial court issued an order reflecting this agreement.
Subsequently, the Cortes spouses terminated Atty. Moya’s services. They later contended that their agreement to pay P100,000.00 was contingent upon the checks from FSMDC being honored, which they alleged were dishonored. They offered to pay only P50,000.00 subject to certain conditions. Atty. Moya moved for enforcement of the P100,000.00 agreement. The trial court ordered payment, and the Court of Appeals affirmed but imposed a six percent per annum legal interest from July 25, 1992.
ISSUE
Whether the award of P100,000.00 as attorney’s fees is valid and reasonable under the circumstances.
RULING
The Supreme Court modified the decision. The agreement for P100,000.00, made in open court and embodied in a July 2, 1991 order, constituted a binding compromise on the amount of attorney’s fees. However, the Court emphasized that attorney’s fees are always subject to the court’s power of supervision to ensure they are reasonable and commensurate with the services rendered, in line with the fiduciary nature of the attorney-client relationship and the public interest in the legal profession. While agreements are respected, courts may reduce fees found to be unconscionable.
Upon review, the Court found the stipulated P100,000.00 to be excessive relative to the services performed, which involved pre-trial work and a compromise settlement before a full-blown trial. Consequently, exercising its supervisory authority, the Court reduced the attorney’s fees to P50,000.00, deemed reasonable under the circumstances. The legal interest imposed by the Court of Appeals was also deleted, as the obligation to pay attorney’s fees did not arise from a loan or forbearance of money, and no delay could be attributed prior to the finality of the judgment fixing the reasonable amount.