Polytrade Corporation v. Blanco
REITERATIONFacts
The Antecedents: Plaintiff-appellee Polytrade Corporation filed a suit against defendant-appellant Victoriano Blanco before the Court of First Instance of Bulacan to recover the purchase price of rawhide delivered. Plaintiff is a corporation with principal office in Makati, Rizal, while defendant is a resident of Meycauayan, Bulacan. Defendant moved to dismiss the complaint on the ground of improper venue, asserting that the contracts stipulated that suits should be lodged in the courts of Manila. Procedural History: The Bulacan court overruled the motion to dismiss. Defendant failed to answer the complaint, leading to a default judgment rendered against him on September 21, 1966. The judgment ordered the defendant to pay specific amounts for four causes of action, with interest at 1% per month, attorney's fees equivalent to 25% of the principal amount for each cause of action, and costs. Defendant appealed the decision. The Petition: The defendant-appellant challenged the venue laid in Bulacan, the rate of interest awarded, and the amount of attorney's fees granted.
Issue(s)
Whether venue was properly laid in the province of Bulacan. Whether the stipulated interest rate of one percentum per month was validly awarded. Whether the awarded attorney's fees were exorbitant and unconscionable.
Ruling
The appealed judgment is affirmed, except that the interest granted in reference to the fourth cause of action should start from March 24, 1965. Costs are against the defendant-appellant.
Ratio Decidendi
On the issue of venue: The Court held that venue was properly laid in Bulacan. While Section 3 of Rule 4 of the Rules of Court allows venue to be changed by written agreement, the stipulation "The parties agree to sue and be sued in the Courts of Manila" was found to be permissive, not exclusive. The absence of qualifying or restrictive words meant that Manila was merely an additional venue, not the sole venue. The general rule under Section 2(b) of Rule 4, allowing suits in the residence of the defendant or plaintiff, was not waived. The Court cited Engel vs. Shubert Theatrical Co. to support the strict construction of venue stipulations, emphasizing that they should not be extended by implication. On the issue of interest rate: The Court affirmed the award of interest at one percentum per month. Although the sales confirmation orders mentioned interest accruing on postdated checks beyond 30 days, the governing trust receipts executed by the defendant expressly stipulated that "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." This express covenant in the trust receipts was binding. On the issue of attorney's fees: The Court upheld the award of attorney's fees, viewing them as liquidated damages or a penal clause, not attorney's fees between attorney and client. Article 2227 of the Civil Code allows for equitable reduction of liquidated damages if iniquitous or unconscionable. However, the Court found the 25% of the principal amount awarded not to be unconscionable given the circumstances. The defendant did not deny the principal liability, did not file an answer, and the writ of attachment yielded minimal recovery, suggesting the suit was maintained for delay. The trial court had already reduced the stipulated fees from 25% of principal and interest to 25% of the principal alone, which the Supreme Court found reasonable, citing Universal Motors Corporation vs. Dy Hian Tat.
Main Doctrine
A stipulation in a contract that parties agree to sue and be sued in a specific court is generally considered permissive, not exclusive, unless restrictive or qualifying words are used to indicate exclusivity. The general rule on venue under the Rules of Court applies unless the stipulation clearly and unequivocally transfers or changes the venue.