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, respondent Nature of Action: Petition for review




Facts: 1. Petitioner Titan Construction Corporation (petitioner) is engaged in the construction business. 2. Eespondent Uni-Fie d Enterprises! "nc. (respondent) is engaged in the business of se ing various construction #ateria s. $. Fro# 1%%& to 1%%$! petitioner purchased on credit various construction supp ies and #ateria s fro# respondent. Petitioner's purchases a#ounted to P(!)2&!*$$.12 but petitioner was on + ab e to pa+ P)!21,!(%,.(&! eaving a ba ance of P1!*&*!)$(.*2. -n 1% -ctober 1%%*! respondent sent a de#and etter to petitioner. .ut the ba ance re#ained unpaid. *. /espondent fi ed with the tria court a co#p aint for co ection of su# of #one+ with da#ages against petitioner. ,. Petitioner ad#itted the purchases but disputed the a#ount c ai#ed b+ respondent. Petitioner a so interposed a counterc ai# and sought to recover P2&*!,2(.%% fro# respondent based on da#aged vin+ ti es! non-de iver+ of #ateria s! and advances for uti it+ e0penses! dues! and insurance pre#iu#s on the condo#iniu# unit turned over b+ petitioner to respondent. ). Tria court rendered 1udg#ent in favor of respondent. a. The principa a#ount of P1!*&*!11*.&&2 b. "nterest Charges in the a#ount of P,&*!11*.&& p us accrued interest charges at 2*3 per annu# co#pounded +ear + rec4oned fro# 5u +! 1%%, up to the ti#e of fu pa+#ent2 c. 6i7uidated 8a#ages in the a#ount of P$2*!1*(.%*2 d. 9ttorne+'s Fees e7uiva ent to 2,3 of whatever a#ount is due and pa+ab e and accu#u ated appearance fees at P1!&&&.&& per hearing2 and e. Costs of suits. (. C9: a. "n the answer to the co#p aint! the e0istence of the de iver+ receipts and invoices were not denied b+ appe ant! rather! it ad#itted the transactions sub1ect of the instant case. C ear +! if the da#ages a eged are i7uidated or stipu ated! the+ are dee#ed ad#itted when not specifica + denied. b. 9ppe ant cannot 7uestion the interest rate on overdue accounts as the sa#e was provided for in the de iver+ receipts and sa es invoices! which have not been denied b+ it. Therefore! the ter#s and conditions therein have beco#e the aw between the parties! and both are bound b+ said conditions. Fai ure of a part+ to contest the ter#s and conditions resu ts in his ad#ission.

9ppe ant asserts that ;nowhere is there an+ stipu ation that p aintiff is entit ed to a 2*3 interest;. This is absurd. The <a es "nvoices and 8e iver+ /eceipts! contained the provision that: i. ;This invoice is the written contract between Unifie d Enterprises! "nc. and the above-na#ed custo#er. This is pa+ab e on de#and un ess otherwise indicated hereinabove. "nterest of 2*3 per annu# wi be charged on overdue accounts! co#pounded with the outstanding principa ob igation as the+ accrue. C ai#s or corrections hereto or in the goods #ust be co##unicated in writing to Uni-fie d Enterprises within two (2) da+s fro# receipt of the goods. 0 0 0 <hou d Unifie d Enterprises! "nc. be constrained to effect co ection through Court action and proceedings before the Fisca 's =sic>! said custo#er agrees to pa+ the fo owing additiona su#s: (1) 2,3 i7uidated da#ages based on the outstanding tota ob igation2 (2) 2,3 attorne+'s fees based on the tota c ai# inc uding said i7uidated da#ages2 ($) appearance fees of counse at P,&&.&& per hearing in addition to a other court costs and e0penses.? d. Contracts are perfected b+ #ere consent2 the stipu ations of the contract being the aw between the parties! courts have no a ternative but to enforce the# as the+ are agreed upon and written! there being no aw or pub ic po ic+ against the stipu ated provisions. Issue: @hether the awarding of i7uidated da#ages! attorne+'s fees! and interest properA He !: 1. T"e tria court an! t"e Court of A##ea s !i! not err in usin$ t"e !e i%er& recei#ts an! sa es in%oices as 'asis for t"e a(ar! of interest, i)ui!ate! !a*a$es, an! attorne&+s fees. a. Petitioner insists that the tria court and the Court of 9ppea s had no ega basis to award interest! i7uidated da#ages! and attorne+'s fees because the de iver+ receipts and sa es invoices! which served as the basis for the award! were not for#a + offered as evidence b+ respondent. Petitioner a so a eges that the de iver+ receipts and sa es invoices were in the nature of contracts of adhesion and petitioner had no option but to accept the conditions i#posed b+ respondent. i. <C: @hi e the de iver+ receipts and sa es invoices did not for# part of respondent's for#a offer of

evidence! records show that the de iver+ receipts and sa es invoices for#ed part of petitioner's for#a offer of evidence. The de iver+ receipts and sa es invoices e0press + stipu ated the pa+#ent of interest! i7uidated da#ages! and attorne+'s fees in case of overdue accounts and co ection suits. Petitioner did not on + bind itse f to pa+ the principa a#ount! it a so pro#ised to pa+ (1) interest of 2*3 per annu# on overdue accounts! co#pounded with the principa ob igations as the+ accrue2 (2) 2,3 i7uidated da#ages based on the outstanding tota ob igation2 and ($) 2,3 attorne+'s fees based on the tota c ai# inc uding i7uidated da#ages. <ince petitioner free + entered into the contract! the stipu ations in the contract are binding on petitioner. b. 9 egation that the de iver+ receipts and sa es invoices are in the nature of contracts of adhesion. i. <C: Contracts of adhesion are as binding as ordinar+ contracts. ii. Those who adhere to the contract are in rea it+ free to re1ect it entire + and if the+ adhere! the+ give their consent. "t is true that on so#e occasions the Court struc4 down such contract as void when the wea4er part+ is i#posed upon in dea ing with the do#inant part+ and is reduced to the a ternative of accepting the contract or eaving it! co#p ete + deprived of the opportunit+ to bargain on e7ua footing. c. Considering that petitioner and respondent have been doing business fro# 1%%& to 1%%$ and that petitioner is not a s#a ti#e construction co#pan+! petitioner is ;presu#ed to have fu 4now edge and to have acted with due care or! at the ver+ east! to have been aware of the ter#s and conditions of the contract.; Petitioner was free to contract the services of another supp ier if respondent's ter#s were not acceptab e. Boreover! petitioner fai ed to show that in its transactions with respondent it was the wea4er part+ or that it was co#pe ed to accept the ter#s i#posed b+ the respondent. "n fact! petitioner on + 7uestioned the ter#s of the contract after the tria court issued its % <epte#ber 1%%( 8ecision. The Court! therefore! upho ds the va idit+ of the contract between petitioner and respondent. 2. ATTORNE,+S FEES: SC REDUCED THE A-OUNT .ECAUSE IT /AS E0OR.ITANT a. The aw a ows a part+ to recover attorne+'s fees under a written agree#ent. b. .arons Bar4eting Corporation v. Court of 9ppea s:

i. The attorne+'s fees here are in the nature of i7uidated da#ages and the stipu ation therefore is apt + ca ed a pena c ause. "t has been said that so ong as such stipu ation does not contravene aw! #ora s! or pub ic order! it is strict + binding upon defendant. The attorne+'s fees so provided are awarded in favor of the itigant! not his counse . ii. T"e Court fin!s t"e a(ar! of attorne&+s fees 1e)ui%a ent to 234 of ("ate%er a*ount is !ue an! #a&a' e1 to 'e e5or'itant 'ecause it inc u!es 678 t"e #rinci#a of P7,9:9,779.::; 628 t"e interest c"ar$es of P3:9,779.:: # us accrue! interest c"ar$es at 294 #er annu* co*#oun!e! &ear & rec<one! fro* =u & 7>>3 u# to t"e ti*e of fu #a&*ent; an! 6?8 i)ui!ate! !a*a$es of P?29,79@.>9. -oreo%er, t"e i)ui!ate! !a*a$es an! t"e attorne&+s fees ser%e t"e sa*e #ur#ose, t"at is, as #ena t& for 'reac" of t"e contract. T"erefore, (e re!uce t"e a(ar! of attorne&+s fees to 234 of t"e #rinci#a o' i$ation, or P?37,:2A.3:. $. LIBUIDATED DA-ACES /ERE PROPER a. The aw a so a ows parties to a contract to stipu ate on i7uidated da#ages to be paid in case of breach. 9 stipu ation on i7uidated da#ages is a pena t+ c ause where the ob igor assu#es a greater iabi it+ in case of breach of an ob igation. The ob igor is bound to pa+ the stipu ated a#ount without need for proof on the e0istence and on the #easure of da#ages caused b+ the breach. b. 9rtic es 122% and 222( of the Civi Code e#power the courts to reduce the pena t+ if it is ini7uitous or unconscionab e. The deter#ination of whether the pena t+ is ini7uitous or unconscionab e is addressed to the sound discretion of the court and depends on severa factors such as the t+pe! e0tent! and purpose of the pena t+! the nature of the ob igation! the #ode of breach and its conse7uences. i. The Court notes that respondent had #ore than ade7uate + protected itse f fro# a possib e breach of contract because of the stipu ations on the pa+#ent of interest! i7uidated da#ages! and attorne+'s fees.