GR 97006; (February, 1993) (Digest)
G.R. No. 97006 February 9, 1993
ERNESTO F. ROLDAN and MARIETTA A. ROLDAN, petitioners, vs. THE COURT OF APPEALS and COMMERCIAL CREDIT CORPORATION OF DAVAO, respondents.
FACTS
Petitioners spouses Ernesto and Marietta Roldan purchased fifteen trucks on installment for P1,250,000.00 from private respondent Commercial Credit Corporation of Davao on June 7, 1971. They failed to fully pay their obligation, prompting private respondent to file a suit against them on November 21, 1981. The trial court rendered a decision on July 28, 1987, ordering the petitioners to pay, in solidum, the principal balance, past due charges, liquidated damages, attorney’s fees equivalent to 25% of the total amount due, the value of a dishonored check, and costs. The Court of Appeals dismissed the petitioners’ appeal and motion for reconsideration. In this petition, the petitioners do not dispute the facts but contest the award of attorney’s fees as gargantuan, exorbitant, and unconscionable, seeking its reduction based on quantum meruit. The record includes correspondence showing private respondent’s counsel, Atty. Honesto A. Cabarroguis, negotiating for the payment of his attorney’s fees directly from the petitioners, including a proposal for a P100,000.00 downpayment towards a total fee of P577,320.20.
ISSUE
Whether the attorney’s fees awarded by the trial court, as affirmed by the Court of Appeals, are unconscionable and should be reduced.
RULING
Yes, the attorney’s fees are reduced. The Supreme Court held that while stipulations on attorney’s fees in contracts are binding, the court has the regulatory prerogative to determine their reasonableness and may reduce them if found unconscionable. The attorney’s fees stipulated in the promissory note are in the nature of liquidated damages awarded to the litigant, not directly to the counsel. The trial court erred in its computation by including liquidated damages and other charges in the base amount for calculating the 25% attorney’s fees. The correct computation should be 25% of the principal balance only, which is P579,576.13, resulting in attorney’s fees of P144,894.03. The Court partially granted the petition, awarding attorney’s fees in the amount of P144,894.03 to the private respondent and retaining the other awards of the trial court as affirmed by the Court of Appeals. The Court also admonished the conduct of private respondent’s counsel for acting like a middleman focused on collecting his fee, which lessens the dignity of the legal profession.