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Barons Mktg.

vs CA

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