Planters Products, Inc. v. Court of Appeals
REITERATIONFacts
1. The Antecedents: Petitioner Planters Products, Inc. (PPI) entered into an Omnibus Credit Line agreement with Insular Bank of Asia and America (IBAA), now Philippine Commercial International Bank (PCIB), for P47,000,000.00. Subsequently, PPI signed nine trust receipt agreements with IBAA, acknowledging receipt of chemicals and fertilizers with the obligation to deliver them or pay their value. PPI defaulted on these payments. IBAA, through its in-house counsel Atty. Niceforo S. Agaton, filed a collection case against PPI for P30,991,196.52 plus interest and attorney's fees, with IBAA assigning its right to collect attorney's fees to Atty. Agaton. 2. Procedural History: Civil Case No. 10242 was filed by IBAA against PPI. A writ of preliminary attachment was issued. Following agreements between PPI and PCIB, along with other banks, a joint motion to suspend proceedings was filed and granted. PCIB recovered P35,929,676.00 from the sale of merchandise. PPI paid attorney's fees to other law firms representing other banks. Atty. Agaton then filed a claim for attorney's fees amounting to P5,389,451.00 from PPI. PPI opposed this claim. The trial court, on February 27, 1986, granted the claim but reduced the attorney's fees to P200,000.00. PPI's motion for reconsideration was denied. Subsequently, PPI filed a Petition for Certiorari with the Court of Appeals, which dismissed the petition on September 10, 1986, ruling that certiorari was not the proper remedy. A motion for reconsideration was also denied on November 11, 1986. 3. The Petition: This petition for certiorari seeks to nullify the Court of Appeals' decision dismissing PPI's petition and its subsequent resolution denying the motion for reconsideration. PPI argues that the trial court committed grave abuse of discretion in awarding attorney's fees, contending that its obligation had been fully settled and that the orders were interlocutory, making certiorari the appropriate remedy. The petition raises two issues: (1) whether certiorari was the correct remedy, and (2) whether Atty. Agaton was legally entitled to attorney's fees. PPI asserts that the trial court's orders were interlocutory and that the Court of Appeals erred in treating them as final judgments, thus improperly directing PPI to an ordinary appeal instead of allowing certiorari.
Issue(s)
Whether the petition for certiorari filed before the Court of Appeals was the correct and proper remedy. Whether Atty. Niceforo S. Agaton is legally entitled to the payment of attorney's fees from PPI.
Ruling
The petition is DISMISSED. The Court of Appeals did not err in dismissing the petition for certiorari, thereby affirming the RTC's decision awarding attorney's fees.
Ratio Decidendi
On the issue of the proper remedy (certiorari): The Court reiterated that certiorari is a special civil action directed against a tribunal, board, or officer exercising judicial functions, alleging action without or in excess of jurisdiction, or with grave abuse of discretion, where there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law. "Grave abuse of discretion" is defined as a capricious and whimsical exercise of judgment equivalent to lack of jurisdiction, so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law. The Court found that the RTC's order awarding attorney's fees, even if erroneous, constituted a mere error of judgment, not grave abuse of discretion. Such an error of judgment is reviewable by appeal, not by certiorari. The Court clarified that an order is final when it disposes of the case on the merits and leaves nothing to be done except execution, distinguishing it from an interlocutory order which does not finally decide the case. The order awarding attorney's fees was deemed final and appealable. On the entitlement to attorney's fees: The Court found the claimant-lawyer entitled to attorney's fees based on the stipulation in the trust receipt agreements, which provided for attorney's fees equal to fifteen percent (15%) of the total amount due, but in no case less than P2,000.00, exclusive of expenses and costs. The Court noted that the relationship of attorney and client can exist even if a third party pays for the services, and that stipulations for attorney's fees in negotiable instruments and mortgages are valid if not unreasonable or unconscionable. The RTC's reduction of the awarded amount to P200,000.00 was considered reasonable. Therefore, the RTC did not commit grave abuse of discretion in awarding attorney's fees, as the award was based on evidence and law.
Main Doctrine
A petition for certiorari is not the proper remedy to assail an order that constitutes a mere error of judgment, not an act of grave abuse of discretion amounting to lack of jurisdiction. An order awarding attorney's fees, being final and disposing of the issue of fees, is appealable and not subject to certiorari unless issued with grave abuse of discretion.