GR 76591; (February, 1991) (Digest)
G.R. No. 76591 ; February 6, 1991
Planters Products, Inc., petitioner, vs. Hon. Court of Appeals, Insular Bank of Asia and America (now Philippine Commercial International Bank), Niceforo S. Agaton and Hon. Judge Rafael T. Mendoza, respondents.
FACTS
Petitioner Planters Products, Inc. (PPI) obtained credit from respondent Insular Bank of Asia and America (IBAA, now PCIB) and executed several trust receipt agreements. Upon PPI’s default, PCIB engaged its in-house counsel, respondent Atty. Niceforo S. Agaton, to file a collection suit (Civil Case No. 10242). The trust receipt agreements stipulated that the entrustee (PPI) would pay attorney’s fees equivalent to 15% of the total amount due if the entruster (PCIB) engaged legal counsel due to default. PCIB assigned its right to collect these stipulated attorney’s fees to Atty. Agaton as his compensation.
During the pendency of the suit, PPI and PCIB entered into private agreements leading to the sale of the merchandise covered by the trust receipts, with the proceeds applied to PPI’s obligation. The parties filed a joint motion to suspend proceedings but did not move for a judgment based on their settlement. Consequently, no final judgment was rendered in the case. Atty. Agaton then filed a claim in the trial court for the stipulated attorney’s fees. The trial court, after hearing, granted the claim but reduced the amount to P200,000. PPI opposed, contending its obligation had been fully settled.
ISSUE
Whether the respondent Court of Appeals correctly dismissed PPI’s petition for certiorari, thereby affirming the trial court’s award of attorney’s fees to Atty. Agaton.
RULING
The Supreme Court dismissed the petition, upholding the award. On the procedural issue, the Court ruled that the trial court’s order awarding attorney’s fees was a final order, not an interlocutory one, as it disposed of Atty. Agaton’s distinct claim for compensation, leaving nothing more to be adjudicated concerning that claim. Therefore, certiorari was an improper remedy against it.
On the substantive issue, the Court found the award legally sound. The trust receipt agreements validly stipulated the payment of attorney’s fees by PPI in case of default and the necessity for PCIB to engage counsel. The law recognizes the validity of such stipulations, provided they are not unconscionable. The fact that PPI was not a party to the retainer agreement between PCIB and Atty. Agaton is immaterial, as the attorney-client relationship can exist even when a third party is liable for the fee. The trial court exercised sound discretion in determining a reasonable amount, reducing the original claim. No grave abuse of discretion attended its decision, which was based on evidence and law.