POLYTRADE CORPORATION, PLAINTIFF-APPELLEE, VS. VICTORIANO BLANCO, DEFENDANT-APPELLANT.

Suit before the Court of First Instance of Bulacan
on four causes of action to recover the purchase price of raw hide delivered by
plaintiff to defendant.^[1]
Plaintiff corporation has its principal office and place of business in Makati, Rizal.  Defendant is a resident of Meycauayan, Bulacan.  Defendant moved to dismiss upon the ground of
improper venue.  He claims that by
contract suit may only be lodged in the courts of Manila.  The Bulacan court
overruled him.  He did not answer the
complaint.  In consequence, a default
judgment was rendered against him on September
21, 1966, thus:

“WHEREFORE, judgment is hereby rendered in favor of plaintiff
and against defendant ordering defendant to pay plaintiff the following
amounts:

First Cause of Action – P60,845.67, with interest thereon at 1% a
month from May 9, 1965 until
the full amount is paid.

Second Cause of Action – P51,952.55, with interest thereon at 1% a
month from March 30, 1965
until the full amount is paid.

Third Cause of Action – P53,973.07, with interest thereon at 1% a
month from July 3, 1965
until the full amount is paid.

Fourth Cause of Action – P41,075.22, with interest thereon at 1% a
month^[2]
until the full amount is paid.

In addition, defendant shall pay plaintiff attorney’s fees
amounting to 25% of the principal amount due in each cause of action, and the
costs of the suit.  The amount of P400.00
shall be deducted from the total amount due plaintiff in accordance with this
judgment.”

Defendant appealed.

1.  The forefront question is
whether or not venue was properly laid in the province
of Bulacan
where defendant is a resident.

Section 2(b), Rule 4 of the Rules of Court on venue of personal
actions triable by courts of first instance – and
this is one – provides that such “actions may be commenced and tried where
the defendant or any of the defendants resides or may be found, or where the
plaintiff or any of the plaintiffs resides, at the election of the
plaintiff.” Qualifying this provision is Section 3 of the same Rule which
states that venue may be stipulated by written agreement – “By written agreement of the
parties the venue of an action may be changed or transferred from one province
to another.”

Defendant places his case upon Section 3 of Rule 4 just
quoted.  According to defendant,
plaintiff and defendant, by written contracts covering the four causes of
action, stipulated that:  “The
parties agree to sue and be sued in the Courts of Manila.” This agreement
is valid.^[3]
Defendant says that because of such covenant he can only be sued in the courts
of Manila.  We are thus called upon to shake meaning from
the terms of the agreement just quoted.

But first to the facts.  No
such stipulation appears in the contracts covering the first two causes of
action.  The general rule set forth in
Section 2(b), Rule 4, governs, and as to said two causes of action, venue was
properly laid in Bulacan, the province of defendant’s
residence.

The stipulation adverted to is only found in the agree­ments
covering the third and fourth causes of action, An accurate reading, however,
of the stipulation, “The parties agree to sue and be sued in the Courts of
Manila”, does not preclude the filing of suits in the residence of
plaintiff or defendant.  The plain
meaning is that the parties merely consented to be sued in Manila,
Qualifying or restrictive words which would indicate that Manila
and Manila alone is the venue are
totally absent therefrom.  We cannot read into that clause that
plaintiff and defendant bound themselves to file suits with respect to the last
two transactions in question only or exclusively in Manila.  For, that agreement did not change or
transfer venue.  It simply is
permissive.  The parties solely agreed to
add the courts of Manila as
tribunals to which they may resort.  They
did not waive their right to pursue remedy in the courts specifically mentioned
in Section 2(b) of Rule 4.  Renuntiatio non praesumitur.

Illuminating on this point is Engel vs. Shubert Theatrical Co., 151 N.Y.S.
593, 594.  And this, because there the
stipulation as to venue is along lines similar to the present.  Said stipulation reads:  “In case of dispute, both contracting
parties agree to submit to the jurisdiction of the Vienna
courts.” And the ruling is: 
“By the clause in question the parties do not agree to submit their
disputes to the jurisdiction of the Viennese courts, and to those courts
only.  There is nothing exclusive in the
language used.  They do agree to
submit to the Viennese jurisdiction, but they say not a word in restriction of
the jurisdiction of courts elsewhere; and whatever may be said on the subject
of the legality of contracts to submit controversies to courts of certain
jurisdictions exclusively, it is entirely plain that such agreements should be
strictly construed, and should not be extended by impli­cation.”

Venue here was properly laid.

2.  Defendant next challenges
the lower court’s grant to plaintiff of interest at the rate of one per centum
per month.  Defendant says that no such
stipulation as to right of interest appears in the sales confirmation orders
which provided:  “TERMS – 60 days
after delivery with interest accruing on postdated cheques
beyond 30 days.” The flaw in this argument lies in that the interest and
the rate thereof are expressly covenanted in the covering trust receipts
executed by defendant in favor of plaintiff, as follows:  “All obligations of the under­signed
under this agreement of trust shall bear interest at the rate of one per centum
(1%) per month from the date due until paid.”

On this score, we find no error.

3.  Defendant protests the
award of attorneys’ fees which totals P51,961.63, i.e., 25% of
the total principal in­debtedness of P207,846.51 (exclusive of interest).  Defendant’s thesis is that the foregoing sum
is “exhorbitant and unconscionable.”

To be borne in mind is that the attorneys’ fees here pro­vided is
not, strictly speaking, the attorneys’ fees recoverable as between attorney and
client spoken of and regulated by the Rules of Court.  Rather, the attorneys’ fees here are in the
nature of liquidated damages and the stipulation therefor
is aptly called a penal clause.^[4]
It has been said that so long as such stipulation does not contravene law,
morals, or public order, it is strictly binding upon defendant.^[5]
The attorneys’ fees so provided are awarded in favor of the litigant, not his
counsel.  It is the litigant, not
counsel, who is the judgment creditor entitled to enforce the judgment by
execution.^[6]

The governing law then is Article 2227 of the Civil Code, viz: 
“Liquidated damages, whether intended as an indemnity or a penalty,
shall be equitably reduced if they are iniquitous or unconscionable.” For
this reason, we do not really have to strictly view the reasonableness of the
attorneys’ fees in the light of such factors as the amount and character of the
ser­vices rendered, the nature and importance of the litigation, and the professional
character and the social standing of the attorney.  We do concede, however, that these factors
may be an aid in the determination of the iniquity or unconscionableness
of attorneys’ fees as liquidated damages.

May the attorneys’ fees (P51,961.63) here granted be tagged as
iniquitous or unconscionable?  Upon the
circum­stances, our answer is in the negative. 
Plaintiff’s lawyers concededly are of high standing.  More important is that this case should not
have gone to court.  It could have been
easily avoided had defendant been faithful in complying with his obli­gations.  It is not denied that the raw hide was
converted into leather and sold by defendant. 
He raises no defense.  In fact, he
did not even answer the complaint in the lower court, and was thus declared in
default.  Nor does he deny the principal
liability.  Add to all these the fact
that the writ of attachment issued below upon defendant’s properties yielded no
more than P400 and the picture is complete. 
The continued maintenance by defendant of the suit is plainly intended
for delay.  The attor­neys’ fees awarded
cannot be called iniquitous or unconscionable.

In the very recent case of Universal Motors Corporation
vs. Dy Hian
Tat (1969), 28 SCRA 161, 170, we allowed attorneys’ fees in the form of
liquidated damages at the rate of 25% of the total amount of the
indebtedness.  Here, the trial court has
already reduced the attorneys’ fees from the stipulated 25% “of the total
amount involved, principal and interest, then unpaid” to only 25% of the principal
amount due.  There is no reason why such
judgment should be disturbed.

For the reasons given, the appealed judgment is hereby
affirmed, except that interest granted, in reference to the fourth cause of
action, should start from March 24,
1965.

Costs against defendant-appellant.

SO ORDERED.

Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee, and Barredo, JJ., concur.

^[1]
Civil Case 224-V, entitled “Polytrade Corporation,
Plaintiff, versus Victoriano Blanco, Defendant.”

^[2]
Interest should start from March 24,
1965.  See:  Decision, R.A., pp. 38-39.

^[3]
Navarro vs. Aguila, 66 Phil. 604, 608; Borreros vs. Philippine Engineering Corporation,
L-6500, September 16, 1954; Bautista vs. De Borja
(1966), 18 SCRA 474, 480, citing Central Azucarera
de Tarlac vs. De Leon, 56 Phil. 169.

^[4]
Luneta Motor Company vs. Limgenco,
73 Phil. 80, 81.

^[5]
Government vs. Lim, 61 Phil. 737, 739.

^[6]
Gan Tion vs. Court of Appeals (1969),
28 SCRA 235, 237.