Bio-Research, Inc. v. Univille Development Corporation

FIRST DIVISION

[G.R. No. 199257. April 18, 2018.]

BIO-RESEARCH, INC., petitioner, vs. UNIVILLE DEVELOPMENT CORPORATION, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, First Division, issued a Resolution datedApril 18, 2018which reads as follows:

"G.R. No. 199257 (Bio-Research, Inc. v. Univille Development Corporation). — This is a petition for review on certiorari1 assailing the Court of Appeals' (CA) Decision 2 dated November 8, 2011 in CA-G.R. CV No. 94688, which dismissed petitioner's appeal and affirmed the judgment of Branch 146, Regional Trial Court of Makati City (RTC) in Civil Case No. 05-980. The RTC found petitioner liable to pay respondent the amount of P1,884,966.44 in unpaid rentals, plus 5% interest per month, 5% per month penalty charge and 10% of the amount due to respondent as attorney's fees. 3

On December 3, 1999, Univille Development Corporation (respondent) entered into a lease contract 4 with Bio-Research, Inc. (petitioner) whereby the latter would rent respondent's parcel of land and improvements thereon located along Quezon Avenue, Barangay Tatalon, Quezon City for a term of five years. Given the stipulated term, the contract would expire on November 30, 2004. The monthly rental was stipulated at P500,000.00, exclusive of the value-added tax (VAT). For each succeeding year, the contract's escalation clause provided for an increase of 10% of the previous year's rental. 5

Prior to the expiration of the contract, respondent informed petitioner of its intention not to renew the lease. 6 Nonetheless, negotiations transpired for the renewal of the contract. Petitioner continued to occupy the premises pending negotiations and even after the expiration of the contract on November 30, 2004. 7

Petitioner then decided to cease business operations. In a letter dated January 7, 2005, 8 it requested to be given a period of 30 days from January 8, 2005 to vacate the leased premises and turn over its possession to respondent. It also advised that rental for December 2004 is being prepared. 9 Respondent replied with a letter dated January 10, 2005, 10 informing petitioner that its rental arrearages including late payment interests and rentals for December 2004 and January 2005 already amounted to P4,310,760.53. It consequently made a final demand for petitioner to make full payment within 10 days from receipt of the letter. Respondent also agreed on the 30 days extension requested by petitioner, provided rental is duly paid and full possession of the premises is turned over and surrendered to it by February 15, 2005. 11 Petitioner subsequently turned over the premises to respondent on February 4, 2005. 12

On November 8, 2005, respondent filed a complaint 13 for sum of money against petitioner before the RTC to collect P1,884,966.44 in rental arrearages, 5% penalty per month on the amount due computed from the time of delay until payment is made, P500,000.00 as moral damages, P200,000.00 as exemplary damages and 25% of all amounts due to it as attorney's fees. 14 The complaint alleged that the lease contract contained an escalation clause whereby the monthly rental would increase by 10% each succeeding year starting from the second year of the contract's term and that the payment scheme of the monthly rentals would be as follows: TIADCc

 

PERIOD	MONTHLY RENTAL plus 10% VAT	LESS: 5% WITHHOLDING TAX	NET MONTHLY RENTAL
Dec. 1999 to Nov. 2000	PhP500,000.00 + PhP50,000.00	PhP25,000.00	PhP525,000.00
Dec. 2000 to Nov. 2001	PhP550,000.00 + PhP55,000.00	PhP27,500.00	PhP577,500.00
Dec. 2001 to Nov. 2002	PhP605,000.00 + PhP60,500.00	PhP30,250.00	PhP635,250.00
Dec. 2002 to Nov. 2003	PhP665,500.00 + PhP66,550.00	PhP33,275.00	PhP698,775.00
Dec. 2003 to Nov. 2004	PhP732,050.00 + PhP73,205.00	PhP36,602.50	PhP768,652.50 15

 

The complaint also alleged that in a letter dated January 10, 2005, respondent demanded from petitioner payment of its outstanding obligation amounting to P4,310,760.53. When the leased premises were turned over on February 4, 2005, petitioner delivered to respondent a Banco de Oro Check No. 0069407 dated December 9, 2004 bearing the amount of P477,272.73. This payment was deducted from petitioner's outstanding obligation consisting of rental arrearages and late payment interests in the updated amount of P4,558,389.17, thereby leaving a balance of P4,081,116.44. 16 From this amount, respondent further deducted petitioner's guarantee deposit amounting to P2,196,150.00, thereby reducing the latter's outstanding obligation to P1,884,966.44, broken down as follows:

 

Rental Arrearages:
	September 2004	768,652.50
	October 2004	768,652.50
	November 2004	768,652.50
	December 2004	768,652.50
	January 2005	768,652.50
	February 2005	102,487.02
		–––––––––––
		3,945,749.52
Less: payment made on 02-04-05	477,272.73
		–––––––––––
		3,468,476.79
Add: Late payment interest (5%)	612,639.65
	–––––––––––
		4,081,116.44
Less: Total guarantee deposit	2,196,150.00
	–––––––––––
OUTSTANDING OBLIGATION	1,884,966.44 17

 

The complaint alleged that despite demand for payment, petitioner refused to settle its unpaid obligation. 18

Petitioner, for its part, countered in its answer 19 that the stipulation in the lease contract which fixed the late payment interest at 5% per month was void for being extremely unconscionable, hence contrary to law and public policy; that negotiations were made for the renewal of the lease contract but the same failed due to its economic situation; that it ceased operations on December 1, 2004 and proceeded to clear out the premises and remove its assets; that the use of the leased premises after the expiration of the contract on November 30, 2004 was merely incidental and that all rentals due to respondent had already been settled. 20 Petitioner prayed for the dismissal of the complaint, and by way of counterclaim, payment of P300,000.00 as attorney's fees and P400,000.00 as exemplary damages. 21

After the issues had been joined, the RTC set the case for pre-trial and mediation. The parties, however, failed to reach an amicable settlement. Thus, pre-trial and trial on the merits ensued. 22 AIDSTE

On October 21, 2009, the RTC rendered its Decision, 23 the dispositive portion of which reads:

PREMISES CONSIDERED, judgment is rendered ordering defendant Bioresearch to pay plaintiff its outstanding obligation in the amount of P1,884,966.44, plus interest of five (5%) percent per month and five (5%) percent per month as penalty computed from March 2005 until payment is made by defendant.

For having been forced to litigate in order to protect its pecuniary rights, a reduced award of ten (10%) percent as attorney's fees is found justified instead of twenty five (25%) percent of the amount due to plaintiff.

SO ORDERED. 24

Feeling aggrieved, petitioner filed an appeal with the CA. On November 8, 2011, the CA rendered the assailed Decision 25 dismissing the appeal and affirming the RTC Decision. It held that given that the existence of the obligation was fully established by the evidence on record, the burden of proving that it has been extinguished by payment rests on petitioner which offered such defense. Petitioner referred to a check voucher dated November 30, 2004 to support its assertion that the rents due from September to November 2004 have already been paid. However, the CA held that this voucher is not a receipt. It is not also necessarily an evidence of payment, but a way or method of recording or keeping track of payments made. Unless supported by actual payment, a voucher remains a piece of paper having no evidentiary weight. 26 As regards the claim of petitioner that there was no basis for the RTC to order payment of interest at 5% per month and penalty at 5% per month, the CA ruled that it is estopped from impugning the validity of default interest and penalty stipulated in the contract. 27 Also, it found that it was well within the RTC's discretion to grant attorney's fees at the reduced rate of 10% instead of the 25% stipulated in the contract given that respondent had established that it was compelled to utilize the services of legal counsel and resort to legal action due to petitioner's refusal to settle its obligation. 28

Hence, this petition.

Petitioner alleges that respondent is not entitled to the award of 5% interest and 5% penalty charge since it is not entitled to the principal claim of P1,884,966.44 in the first place. The computation of such amount is self-serving, dishonest and erroneous, having been made by respondent's "scheming accountant" who made it appear that there was delay in the payment of rentals, when in fact there was none. 29 Petitioner claims that rental payments from September to December 2004, as well as from January to February 4, 2005, have all been paid. Furthermore, the award of 5% interest per month and 5% penalty charge per month are unconscionable. 30 Too, there is no legal and factual basis for the award of attorney's fees as petitioner had already settled its obligations. On the other hand, it is petitioner that should be awarded attorney's fees after it was compelled to incur legal expenses to protect its interests from respondent's unjustifiable claims. 31 Petitioner therefore prayed for the Court to reverse the CA Decision and award it P300,00.00 as attorney's fees and P400,000.00 as exemplary damages. 32

The Court is thus called upon to decide whether or not the CA erred in: (1) awarding respondent the amount of P1,884,966.44; (2) ordering petitioner to pay interest of 5% per month; (3) ordering it to further pay 5% per month in penalty charges computed from March 2005 until payment is made; (4) awarding attorney's fees to respondent in the amount of 10% of the monetary award due to it; and (5) not awarding exemplary damages and attorney's fees in favor of petitioner. 33

There is no dispute that the relevant period subject of this case is September 2004 to February 4, 2005, in which petitioner was alleged to have been remiss in the payment of its rental obligations. Petitioner insists that it has fully paid its obligations to respondent. To prove alleged payment of rent from September to November 2004, it presented a check voucher, marked as Exhibit "B" to the petition, which shows the following computation: AaCTcI

Rental payment at Volvo Branch for the month of September to November, 2004.

 

Rent — 09/04 to 11/04 (P732,050.00 [x 3 mos.])	P2,196,150.00
Add: VAT (P73,205.00 [x 3 mos.])	219,615.00
	––––––––––––
	P2,415,765.00
Less: Withholding Tax (P36,602.50 [x 3 mos.])	109,807.50
	––––––––––––
	P2,305,957.50
Less: Security Deposit 34	2,196,150.00
	––––––––––––
	P109,807.50 35
	===========

 

Petitioner claims that since the lease contract expired on November 30, 2004, respondent should have already applied its guarantee deposit as payment for the rentals due for the months of September, October and November 2004. 36 After the guarantee deposit is applied and its payment of P109,807.50 to respondent on November 30, 2004 considered, it has fully satisfied its rental obligations and thus cannot be held in default. 37

Petitioner moreover asserts that it has paid respondent P477,272.73, representing rental fees for December 2004, based on a verbal agreement to renew the lease contract at P500,000.00 per month, less withholding tax of P22,727.73. 38 Petitioner asserts that its delivery to respondent of three Metrobank checks totalling P500,000.00 representing payment of the guarantee deposit for the new month-to-month oral lease contract perfected and consummated the said oral lease contract, so that respondent is not justified in charging it P768,652.50 monthly rental for December 2004, as indicated in its Statement of Account. 39

Finally, petitioner argues that respondent is not entitled to rental payments from January to February 2005 since this period was requested by petitioner solely for the purpose of vacating and moving out all of its equipment and fixtures out of the leased premises. Thus, its possession of the leased premises for such period was merely incidental to the cessation of its business operations and removal of these equipment and fixtures. For respondent to charge it rentals for this period is tantamount to injustice and unjust enrichment. 40

Petitioner's position is utterly unmeritorious.

First, it was erroneous for petitioner to apply the guarantee deposit to rental fees due from September to November 2004 since the lease contract proscribes it. The pertinent provision of the lease contract states: EcTCAD

SECTION V — GUARANTEE DEPOSIT

Upon signing of this Contract, the LESSEE shall pay to the LESSOR on or before October 25, 1999, as and by way of guarantee deposit, an amount equivalent to three (3) months' rental x x x. This sum, which shall be non-interest bearing, cannot be applied by the LESSEE to unpaid rent nor to the last month's rental, and shall be kept intact throughout the life of this Contract.

In case of the LESSEE's failure to make the deposit herein provided upon signing of this Contract, the LESSOR reserves the right to cancel this Contract and said Contract shall thereupon become null and void and shall cease to have any force and effect. Except as hereinafter provided, this deposit shall be returned to the LESSEE without interest within seven (7) days from the expiration of this lease, or turnover of the LEASED PREMISES, whichever is later, minus whatever amounts may be necessary to cover/answer for damages to the LEASED PREMISES occasioned by the LESSEE's fault or negligence, unpaid bills for water, electricity, telephone, association dues and garbage fees, should there be any outstanding at the time of the termination/cancellation of the contract, as well as for any and all other repairs necessary to restore the LEASED PREMISES to its original condition. The payment of this deposit shall not relieve the LESSEE in any way from paying the agreed upon monthly rentals on their due dates, and all other fees and additional charges as provided for under this Contract, and its failure to do so shall constitute a default or breach of this contract. x x x 41 (Emphasis supplied.)

Clearly, the guarantee deposit was not intended to satisfy any rental fee due from petitioner at any given time. It was rather intended to answer for any damage to the leased premises occasioned by petitioner's fault, unpaid obligations of petitioner at the time of the termination of the contract, and any repairs necessary to restore the leased premises to its original condition.

Equally important, the above provision categorically provides that it is returnable to the lessee without interest within seven days from the expiration of the lease or the turnover of the leased premises, whichever is later. On the basis of the foregoing, petitioner is not justified in applying the guarantee deposit to rentals due from September to November 2004. Even if the lease contract automatically expired on November 30, 2004, petitioner did not turn over the leased premises to respondent on that date. And then again, the lease contract gives respondent a period of seven days to determine whether damages or unpaid bills or fees may be deducted from the guarantee deposit.

Petitioner argues that in September 2004, it informed respondent that the security deposit amounting to P2,196,150.00 will be applied as rental payments for the last three months of the contract. 42 However, there is no proof of respondent's acquiescence to this proposal. The fact that respondent did not treat the guarantee deposit as rental payments but instead adhered to the text of the lease contract proves that there was no parol agreement as regards the guarantee deposit. Accordingly, since petitioner inappropriately applied the guarantee deposit as rental payments, it is deemed to have been in default in the payment of rent from September to November 2004.

As regards rental payment for December 2004, petitioner's argument that it paid respondent P477,272.73 43 on the basis of an oral agreement for the extension of the lease at a rental rate of P500,000.00 per month, lacks basis. While respondent admits agreeing to the proposal of a reduced monthly rental of P500,000.00, 44 there is nothing on record that indicates a meeting of the minds between the parties with regard to the extension of the lease contract. Petitioner's letter to respondent dated January 7, 2005 45 is, however, telling. It shows that the extension of lease was a mere possibility that petitioner eventually decided to forego in view of its decision to close its business. Petitioner thus informed respondent that the three postdated checks it issued, supposedly to serve as security deposit for the lease extension, shall be cancelled. In lieu of the lease extension, petitioner requested for a period of 30 days to vacate the leased premises. The letter pertinently states: HSAcaE

We certainly discern your observation that we have already forwarded to you three (3) postdated checks in the total amount of [P1,500,000.00]. However, our understanding of the same was to represent our security deposit for the occupancy of the leased premises, should we be able to continue leasing the subject premises. Relatively, we issued those checks upon your deadline of one (1) day then imposed on us. In good faith, and thinking that maintaining the premises was still viable, we then issued said checks just in case we finally renewed our Contract of Lease.

At any rate, after broaching rigidly and prudently among us the performance of the Branch/store during the last three (3) years of operations there, particularly the sales thereof, which turn out to be negative, brought about mainly by the current economic crisis the country is into, we find it impossible now to still continue operating the store on the premises. That even the amount of [P400,000.00] monthly rental, which we sue for in our December 28, 2004 letter-correspondence, turns out to be difficult to sustain with (sic). Thus, we have no recourse but to terminate our operations on the subject premises at No. 108 Quezon Avenue, Quezon City.

May we respectfully request that we be given at least thirty (30) days from tomorrow, January 8, 2005, to fully vacate the Leased Premises at No. 108 Quezon Avenue, Quezon City, and the possession thereof turn over to your good company.

Consequently, pleased (sic) be advised that our unpaid rental for December 2004, is now under preparation: the same shall be delivered to you on or before the end of the thirty (30) days period. Anent the three (3) postdated checks we issued suppose (sic) to be representing our security deposit shall be cancelled accordingly. 46 (Emphasis supplied.)

The foregoing circumstances clearly show that there was no meeting of the minds between the parties as regards the extension of a contract of lease, much less, a new monthly rental rate of P500,000.00. Hence, there is no basis at all for petitioner to assert that the rental rate for December 2004 was satisfied by its payment to respondent of the amount of P477,272.73.

Finally, it is absurd for petitioner to assert that it is not liable to pay rent for its continued occupation of the leased premises from the months of January to February 4, 2005, since it requested that period solely to be able to remove its equipment and fixtures from the premises. In the first place, the contract of lease clearly provides that "[the lessee] shall return and surrender the [leased premises] without need of further notice at the expiration or valid termination of [the] lease x x x, except when an extension is granted." 47 This indicates that at the time of the expiration of the lease contract, the leased premises should have already been cleared and ready to be turned over to respondent. The lease contract does not provide for a rent-free extension for petitioner to be able to wrap up its business and vacate the premises. Significantly, respondent made it clear in its letter to petitioner dated January 10, 2005 that it agrees to allow the latter to vacate the leased premises provided rental is paid. 48 In view of this factual setting, petitioner cannot evade liability for payment of rent for the months of January to February 4, 2005, the date it finally vacated the leased premises.

The lease contract provides that monthly rentals are due on or before the 16th day of each month. 49 Further:

In case of the LESSEE's default in the payment of any of the rentals as above stipulated, the LESSEE shall pay to the LESSOR interest at the rate of five percent [5%] per month or fraction thereof on any monthly rental not paid on time to be computed from the date of delinquency, plus a penalty of five percent (5%) for every month of delay. Any interest/penalty due and unpaid shall form part of the principal and earn interest/penalty at the stipulated rate.

xxx xxx xxx 50

Since petitioner failed to pay the appropriate monthly rental for the months of September to December 2004, January 2005 and February 4, 2005 at the time they were due, it is deemed to have been in default, thereby giving rise to its obligation to pay interest and penalty charges.

Coming now to the issues of whether the 5% monthly interest and 5% penalty charge stipulated in the contract are unconscionable as petitioner asserts, we rule in the affirmative. HESIcT

Article 1306 of the Civil Code provides:

Art. 1306.  The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

We have affirmed in so many cases that the stipulated interest rates of 3% per month and higher are excessive, iniquitous, unconscionable and exorbitant. 51 Such stipulations are contrary to morals and therefore void ab initio under Article 1306 of the Civil Code. 52 In Castro v. Tan, we held that the freedom of contract is not absolute, but is understood to be subject to reasonable legislative regulation aimed at the promotion of public health, morals, safety and welfare. One such legislative regulation is found in Article 1306 of the Civil Code. 53 We thus declared in that case the stipulation of 5% interest per month iniquitous and unconscionable and, in its stead, imposed the legal interest of 12% per annum. 54 In doing so, we held that there is no unilateral alteration of the terms and conditions of the contract entered into by the parties, since it is more consonant with justice that the subject interest rate be equitably reduced and the legal interest of 12% per annum is deemed fair and reasonable. 55

In Menchavez v. Bermudez, 56 we likewise struck down the stipulated interest rate of 5% per month for being iniquitous and unconscionable. We held that since the stipulation on the interest rate is void, it is as if there was no express contract on said interest rate. Hence, courts may reduce the interest rate as reason and equity demands. 57

In Albos v. Embisan, 58 we similarly held that a 5% monthly rate, be it simple or compounded, written or verbal, is void for being too exorbitant, thus running afoul of Article 1306 of the New Civil Code. 59 We also declared that the imposition of an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It is tantamount to a repugnant spoliation and an iniquitous deprivation of property, repulsive to the common sense of man. It has no support in law, in principles of justice, or in the human conscience nor is there any reason whatsoever which may justify such imposition as righteous and as one that may be sustained within the sphere of public or private morals. 60

As jurisprudence on the nullity of excessive interest rates is both clear and consistent, we do not find any cogent reason to deviate therefrom. Following the judicial pronouncement in the above-cited cases, the 5% per month interest rate imposed in this case is nullified for being unconscionable. In lieu thereof, a simple interest of 12% per annum is imposed.

We note at this point the outrageous computation of interest by respondent in the amount of P722,447.15. In its comment, respondent gave a breakdown of this amount, which was calculated beginning November 15 to December 15, 2003, and ending on February 1 to 4, 2005. 61 This computation is inappropriate considering that respondent presented evidence of petitioner's default only beginning September 2004. Petitioner thus cannot be made to pay interest rates prior to that time.

We likewise hold the 5% monthly compounded penalty charge imposed by the lease contract in case of petitioner's default similarly unconscionable, and accordingly must be reduced. caITAC

In Ligutan v. Court of Appeals, 62 we held that a penalty clause, expressly recognized by law, is an accessory undertaking to assume greater liability on the part of an obligor in case of breach of an obligation. It functions to strengthen the coercive force of the obligation and to provide, in effect, for what could be the liquidated damages resulting from such a breach. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach. Although a court is not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit that contravene neither law nor morals, good customs, public order or public policy, a stipulated penalty, nevertheless, may be equitably reduced by the courts if it is iniquitous or unconscionable or if the principal obligation has been partly or irregularly complied with. 63

Pertinently, Article 1229 of the Civil Code states:

Art. 1229.  The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.

In exercising this power to determine what is iniquitous and unconscionable, courts must consider the circumstances of each case since what may be iniquitous and unconscionable in one may be totally just and equitable in another. 64

The question of whether a penalty is reasonable or iniquitous can be partly subjective and partly objective. Its resolution would depend on such factors as, but not necessarily confined to, the type, extent and purpose of the penalty, the nature of the obligation, the mode of breach and its consequences, the supervening realities, the standing and relationship of the parties, and the like, the application of which, by and large, is addressed to the sound discretion of the court. The stipulated penalty might likewise be reduced when a partial or irregular performance is made by the debtor. 65

We rule that the penalty charge of 5% per month is unconscionable. 66 We note that there is no indication of petitioner's default in any of the years that the lease contract was effective, apart from the current one. Further, petitioner's default appears to have been the product of a misapprehension of the provisions of the lease contract, rather than a result of bad faith. We also consider that petitioner was unable to pay due to the unconscionable interest and penalty charges imposed by the lease contract at the time when petitioner was about to go out of business. Just the same, however, it made partial payments to respondents in a good faith belief that its account is updated. In view of these circumstances, we reduce the penalty charge to a straight 6% per annum.

Similarly, we reduce the attorney's fees to 5% of the principal amount due. Attorney's fees are in the nature of liquidated damages, which pursuant to Article 2227 of the Civil Code, shall be equitably reduced if they are iniquitous or unconscionable.

We emphasize at this point that the parties' rights and obligations are first and foremost determined by the contract of lease, which is the law between them. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 67 As long as the terms of the contract are not contrary to law, morals, good customs, public order or public policy, they shall be respected by courts. The judiciary is not authorized to make or modify contracts; neither may it rescue parties from disadvantageous stipulations. Courts, however, are empowered to reduce iniquitous or unconscionable, liquidated damages, indemnities, penalties, 68 and interest rates agreed upon by the parties.

Moreover, the expiration of the lease contract on November 30, 2004 does not render the contract ineffectual insofar as the rights and obligations of the parties are concerned. Under Article 1670 of the Civil Code, if petitioner continued to occupy the leased premises for 15 days with the acquiescence of respondent, it is understood that there is an implied new lease for the duration that respondent has given and that the other terms of the original contract shall be revived. 69

Finally, petitioner is not entitled to an award of exemplary damages. It is a requisite for an award of exemplary damages that respondent's acts must be accompanied by bad faith or done in wanton, fraudulent or malevolent manner. 70 These circumstances are absent in this case. Likewise, petitioner is not entitled to attorney's fees as this is an award that the court may grant to respondent as a successful party in this case, as an indemnity for damages sustained by it in prosecuting, through counsel, its cause in court. 71 ICHDca

In sum, the Court rules that petitioner is liable to respondent for the following principal amount:

Rentals Due:
	September 2004	-	P768,652.50
	October 2004	-	768,652.50
	November 2004	-	768,652.50
	December 2004	-	768,652.50
	January 2005	-	768,652.50
	February 2005	-	102,487.02
			––––––––––––––
Total:		P3,945,749.52 72
Less: Partial payments		(P109,807.50) 73
			(477,272.73) 74
	Guarantee deposit	(2,196,150.00) 75
		––––––––––––––
Total Payable Amount	-	P1,162,519.29

 

 

Petitioner is also liable to pay interests and penalty charges on the principal amount beginning April 13, 2005, the date of extrajudicial demand made by respondent's counsel to petitioner, 76 and attorney's fees, as herein provided.

WHEREFORE, the petition is PARTIALLY GRANTED. Judgment is hereby rendered ordering petitioner Bio-Research, Inc. to pay respondent Univille Development Corporation:

1. The principal sum of P1,162,519.29;

2. Interest on the principal amount at 12% per annum from April 13, 2005 until June 30, 2013, and 6% per annum from July 1, 2013 until the finality of this Resolution. The amount due shall further earn interest at 6% per annum from the finality of this Resolution until full payment;

3. Penalty charge at the rate of 6% per annum from April 13, 2005 until the finality of this Resolution, which amount shall also further earn interest at 6% per annum from the finality of this Resolution until full payment; and

4. Attorney's fees pegged at 5% of the principal amount, or the amount of P58,125.96.

SO ORDERED." (Sereno, C.J., on leave; De Castro, J.,designated as Acting Chairperson of the First Division per Special Order No. 2540 dated February 28, 2018.) TCAScE

Very truly yours,

(SGD.) LIBRADA C. BUENADeputy Division Clerk of Court

 

Footnotes

1.Rollo, pp. 7-26.

2.Id. at 28-39, penned by Associate Justice Apolinario D. Bruselas, Jr., with Associate Justices Mario L. Guariña III and Manuel M. Barrios, concurring.

3. CA rollo, p. 13.

4.Rollo, pp. 29, 64-78. The CA Decision stated that the parties entered into a lease contract on December 1, 1999. However, the lease contract in the records is dated December 3, 1999.

5.Id. at 29.

6.Id. at 79.

7.Id. at 30; Records, p. 2.

8.Rollo, p. 80.

9.Id. at 29, 80.

10.Id. at 81.

11.Id.

12.Rollo, p. 29.

13. Records, pp. 1-5.

14.Id. at 3.

15.Id. at 2.

16.Id.

17. Records, pp. 2-3. Emphasis in the original.

18.Id. at 3.

19.Id. at 35-39.

20.Id. at 36.

21.Id. at 38-39.

22.Rollo, p. 31.

23. CA rollo, pp. 9-13.

24.Id. at 13.

25.Supra note 2.

26.Rollo, p. 35.

27.Id. at 37.

28.Id. at 38.

29.Id. at 13.

30.Id. at 13-14.

31.Id. at 16.

32.Id. at 24.

33.Id. at 10-11.

34.Id. at 66. Denominated as "Guarantee Deposit" in the lease contract.

35.Id. at 40.

36.Id. at 16.

37.Id. at 13.

38.Id. at 21.

39.Id. at 22.

40.Id. at 23.

41.Id. at 66.

42.Id. at 19-20.

43.Id. at 21. Computed as follows:

 

Rental for December 2004	-	P454,545.45
Input tax	-	45,454.55
		––––––––––
		P500,000.00
Less: withholding tax	-	22,727.27
		––––––––––
Net pay	-	P477,272.73

 

44. Id. at 45.

45. Supra note 8.

46. Id.

47. Rollo, p. 75.

48. Id. at 81.

49. Id. at 66.

50. Id.

51. Chua v. Timan, G.R. No. 170452, August 13, 2008, 562 SCRA 146, 149-150.

52. Castro v. Tan, G.R. No. 168940, November 24, 2009, 605 SCRA 231, 238.

53. Id. at 239.

54. Id. at 240.

55. Id. at 241.

56. G.R. No. 185368, October 11, 2012, 684 SCRA 168.

57. Id. at 179.

58. G.R. No. 210831, November 26, 2014, 743 SCRA 283.

59. Id. at 294.

60. Id. at 295. Citation omitted.

61. Rollo, pp. 48-49.

62. G.R. No. 138677, February 12, 2002, 376 SCRA 560.

63. Id. at 567-568. Citations omitted.

64. Imperial v. Jaucian, G.R. No. 149004, April 14, 2004, 427 SCRA 517, 526.

65. Ligutan v. Court of Appeals, supra note 62 at 568. Citations omitted.

66. In MCMP Construction Corp. v. Monark Equipment Corp., G.R. No. 201001, November 10, 2014, 739 SCRA 432, 443, we held that the penalty charge of 2% per month is unconscionable. Similarly, in Pentacapital Investment Corporation v. Mahinay, G.R. No. 171736, July 5, 2010, 623 SCRA 284, 305-306, we held that the penalty charge of 3% per month is unconscionable and reduced it accordingly.

67. Morla v. Belmonte, G.R. No. 171146, December 7, 2011, 661 SCRA 717, 730-731. Citations omitted.

68. Pryce Corporation v. Philippine Amusement and Gaming Corporation, G.R. No. 157480, May 6, 2005, 458 SCRA 164, 167.

69. CIVIL CODE, Art. 1670. If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in Articles 1682 and 1687. The other terms of the original contract shall be revived.

70. "J" Marketing Corp. v. Sia, Jr., G.R. No. 127823, January 29, 1998, 285 SCRA 580, 583-584.

71. Aquino v. Casabar, G.R. No. 191470, January 26, 2015, 748 SCRA 181, 189-190. Citation omitted.

72. Rollo, pp. 47-48.

73. Id. at 13, 47.

74. Id.

75. Rollo, p. 13.

76. Id. at 84.