Phil Engineering Co. v.

Green
G.R. No. 24486
December 16, 1926
Section 2
FACTS:
On July 1, 1923, the promissory note Mr. Green issued in favor of Phil. Engineering Co. had
mature. On October 23, 1923, a formal demand on Mr. Green to make payment. Thereafter, he
was allowed to make partial payments to fulfill his obligation. Mr. Green continued to make
payments until January 16, 1924.
Defendants claimed that that a letter, dated September 10, signed the VP and the General
Manager of the Corporation gave him until September 30 to settle his obligation, but had filed a
complaint on September 24. In the defense of the company, it stated that on September 18, the
VP and General Managers September 10 was cancelled.
The company stated that the judge failed to allow the sum of P3,250.84, provided in the note, for
expenses and attorneys fees, and the allowance by the trial court to the plaintiff of the sum of
P3,309.49 for accumulated interest when the amount should have been P3,315.87.
The judgment was likewise attacked since it did not allow costs to the plaintiff for litigation
expenses. A clause on the note indicated that the debtor agrees to pay costs taxable under the
Code of Civil Procedure.
ISSUE:
1.
Whether the complaint was prematurely filed
2.
Whether the plaintiff is allowed to get fees, legal interest and judicial cost.
HELD:
1. No, the complaint was not prematurely filed.
It was in fact, filed fourteen months after the maturity of the note. Though defendant argued that
the time of the payment of the note was extended by verbal understanding, It is well settled that
the time of payment of a bill or note may be extended by an oral agreement, but that an
agreement to extend the time of payment in order to be valid must be for a definite time.
2. Yes, the fees, legal interest and costs are recoverable.
The Court stated that the plaintiff, corporation, is allowed to costs under the Civil Code of
Procedure and not by reason of the note.
A number of decisions have sanctioned stipulations for attorney's fees in negotiable instruments
where the stipulations have been found to be unconscionable or unreasonable. (Bachrach v
Golingco)

Prepared by: Raymond John S. Cheng

The fees should have been fixed at 10% of the face of the loan (*note* not stated why 10%), the
loan amounted to P23,319.93. Thus, the attorneys fee should be P2,332.
The Court also allowed P3,315.87 claimed by plaintiff because the same was admitted as
evidence without objection from the defendant. Moreover, the sum should bear legal interest
from September 25, 1924, the day following the filing of the complaint (Art. 1109 of the Civil
Code, Usury Law Sec. 5).

Prepared by: Raymond John S. Cheng