Barons Mktg.
vs CA
FACTS:
 August 31, 1973. Phelps Dodge appointed Barons Marketing as one of its dealers
of electrical wires and cables effective Sept. 1, 1973. Defendant was given 60
days credit for its purchases of Phelps Dodge’s electrical products
 Barons Marketing purchased, on credit, from Phelps Dodge’s electrical wires and
cable in the total amount of P4,102,483.30. This was then sold to MERALCO,
Baron Mktg being the accredited supplier of the electrical requirements of
MERALCO.
 Under the sales invoices issued by Phelps Dodge to Barons Mktg for the subject
purchases, it is stipulated that interest at 12% on the amount of atty’s fees and
collection.
 Baron’s Mktg paid P300,000 out of its total purchases leaving an unpaid account
of P3,802,478.20.
 Phelps Dodge wrote Barons Mktg demanding payment of its outstanding
obligations due Phelps Dodge.
 Baron Mktg responded by requesting if it could pay its outstanding account in
monthly installments of P500,000 plus 1% interest per month until full payment,
o This request was rejected and Phelps Dodge demanded full payment
 Phelps Dodge then filed a complaint before the Pasig Trial Court for the recovery
of P3,802,478.20 and it also prayed to be awarded with attorney’s fee at the
rate of 25% of the amount demanded, exemplary damages in the amount of
P100,000, the expenses of litigation and the costs of suit.
 The court ruled in favor of Phelps Dodge with the exemplary damages of P10,000
and recovery of P3,108,000
 Both parties appealed.
o Phelps Dodge claimed that court should have awarded the sum of
P3,802,478.20. It also said that the amount awarded was a result of
a typographical error.
o Barons Mktg claimed that Phelps Dodge’s claim for damages is a
result of “creditor’s abuse” and it also claimed that Phelps Dodge
failed to prove its cause of action against it.
 CA ruled in favor of Phelps Dodge with the correct amount but only with the 5%
for the Atty’s fee. No costs.
 Barons Mktg then alleged that the CA erred its decision.
o Petitioner also urges this Court to reduce the attorney’s fees for
being grossly excessive, considering the nature of the case which is
a mere action for collection of a sum of money.
ISSUE:
1. W/ON private respondent is guilty of abuse of right.
2. W/ON the attorney’s fee is excessive.
HELD:
1.
 No. a creditor cannot be considered in delay if he refuses to accept partial
performance because, unless otherwise provided by law or stipulated by the
parties, a creditor cannot be compelled to accept.
 Partial performance; however, if good faith necessitates acceptance or if the
creditor abuses his right in not accepting, the creditor will incur in delay if he
does not accept such partial performance.
2.
 ART. 1229. The judge shall equitably reduce the penalty when the principal
obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the
courts if it is iniquitous or unconscionable.
 It is true that we have upheld the reasonableness of penalties in the form of
attorneys fees consisting of twenty-five percent (25%) of the principal debt
plus interest.[20] In the case at bar, however, the interest alone runs to some
four and a half million pesos (P4.5M), even exceeding the principal debt
amounting to almost four million pesos (P4.0M). Twenty five percent (25%)
of the principal and interest amounts to roughly two million pesos (P2M). In
real terms, therefore, the attorneys fees and collection fees are manifestly
exorbitant. Accordingly, we reduce the same to ten percent (10%) of the
principal.
WHEREFORE, the decision of the Court of Appeals is hereby MODIFIED in that the
attorneys and collection fees are reduced to ten percent (10%) of the principal but is
AFFIRMED in all other respects.