FIRST DIVISION
[G.R. No. 247012. September 11, 2019.]
MONDRAGON INTERNATIONAL PHILIPPINES, INC. AND JOSE ANTONIO U. GONZALEZ, petitioners, vs.CHINA BANKING CORPORATION, respondent.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedSeptember 11, 2019which reads as follows:
"G.R. No. 247012 (Mondragon International Philippines, Inc. and Jose Antonio U. Gonzalez v. China Banking Corporation).
Antecedents
The case stemmed from a collection of sum of money filed by China Banking Corporation (respondent) before the Regional Trial Court (RTC) of Makati City. The obligation arose from several loans where petitioner Mondragon International Philippines, Inc. (MIPI) issued promissory notes (PNs), with petitioner Jose Antonio U. Gonzalez (Gonzalez) as its surety, in favor of respondent. The trial court ruled in favor of respondent having found petitioners in default of their obligations under the four PNs. The RTC held that the terms of the PNs expressly provide that prior demand for payment by respondent is not needed in order that petitioner MIPI may be held in default. In addition, the RTC cited Mondragon Leisure and Resorts Corporation v. Court of Appeals1 wherein this Court had settled that the 1997 Asian Economic Crisis was not an instance of caso fortuito. Petitioners were ordered to jointly and severally pay respondent the principal amount of P49,500,000.00 with interests, penalties, and attorney's fees.
On appeal, the Court of Appeals (CA) affirmed the ruling of the RTC with modification. The appellate court held that respondent has a cause of action against petitioners contrary to the claim of the latter. Petitioner MIPI may be held in default by its mere failure to pay the principal amount or the monthly amortizations as the PNs are clear, categorical, and undisputed in providing the specific dates of payment for the debt and the resulting immediate default in case of non-payment, without need of notice. The CA also upheld the liability of petitioner Gonzalez as surety, as evidence showed that he had voluntarily entered into two (2) Surety Agreements. The RTC's award of interest rate at 12% per annum was modified by the appellate court to conform to the stipulated interest rates of 19.5% and 19.75% per annum under the subject PNs. On the other hand, the RTC's award of attorney's fees equivalent to 10% of the total amount due was found to be exorbitant, thus, the CA fixed the award of attorney's fees to P10,000,000.00. In addition, the CA imposed a legal interest rate of 6% per annum from the finality of judgment until full payment of the entire amount due.
The Court's Ruling
After review of the records, the Court resolves to deny the petition for failure to sufficiently show that the CA committed any reversible error in its August 30, 2018 Decision 2 and May 3, 2019 Resolution, 3 as to warrant the exercise of the Court's appellate jurisdiction.
It is worthy to note that petitioners do not deny the existence of its P49,500,000.00 loan from respondent. It mainly raises the prematurity of filing an action prior to a demand from respondent.
In insisting that respondent has no cause of action, petitioners claim that the ruling of the trial court is not supported by evidence. It likewise faults the CA in failing to address and to delve into the evidence presented in the lower court. Petitioners argue that the testimonies of the witnesses presented were hearsay. They also raised an error of the CA in failing to appreciate the differences of the PNs attached to the complaint. 4
As to the issue on the existence of a cause of action, petitioner clearly calls for a re-examination of the factual findings of the lower courts. It is an oft-repeated rule that "a petition for review under Rule 45 is limited only to questions of law. Factual questions are not the proper subject of an appeal by certiorari. This Court will not review facts, as it is not our function to analyze or weigh all over again evidence already considered in the proceedings below. As held in Diokno v. Hon. Cacdac, 5 a re-examination of factual findings is outside the province of a petition for review on certiorari x x x." 6
While the rule limiting review to errors of law admits of exceptions, none of them apply in this case. As such, the Court is bound by the findings of fact by the CA, which affirmed the findings of fact of the RTC. The lower courts found that, considering petitioner MIPI is in default for failure to pay its obligation, respondent has a cause of action against it. The RTC and the CA have held that the evidence of respondent is sufficient to establish the claim against petitioners.
At any rate, the PNs readily reveal that prior notice is not necessary before petitioner MIPI can be held in default. There are four instances when demand is not necessary to constitute the debtor in default: (1) when there is an express stipulation to that effect; (2) where the law so provides; (3) when the period is the controlling motive or the principal inducement for the creation of the obligation; and (4) where demand would be useless. In the first two paragraphs, it is not sufficient that the law or obligation fixes a date for performance; it must further state expressly that after the period lapses, default will commence. 7 In this case, the terms of the PNs expressly provide a stipulation to constitute the debtor in default.
With regard to the imposition of a stipulated interest rate, penalty charge, attorney's fees, and legal interest rate, We agree with the CA's ruling.
The PNs show that petitioner MIPI agreed to pay the stipulated interest at the rate of 19.5% and 19.75% per annum, penalty charge of 1% per day of the total amount due from date of default until fully paid, and 10% of the total amount due including interests, charges and penalties, in full and without any deduction, as and for attorney's fees. 8 It is clear that petitioner MIPI voluntarily agreed to pay the amounts specified with the corresponding charges. They cannot escape liability claiming that the PNs were contracts of adhesion when they repeatedly entered into the same terms in several transactions. Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. 9
We agree with the CA that the stipulated interest at the rates of 19.5% and 19.75% per annum are fair and valid considering the amount of the loan obligation of petitioner MIPI; therefore, such must be honored.
The RTC's reduction of the penalty charges, as affirmed by the CA, is also proper. "The penalty charges specified in a loan agreement is in the nature of liquidated damages under Article 2226 of the Civil Code, which is separate and distinct from interest payments. Article 2227 of the same Code provides that liquidated damages shall be equitably reduced if they are iniquitous or unconscionable, as in this case." 10
In the same way, the CA's reduction of the award of attorney's fees found to be exorbitant is appropriate. Under the circumstances, it is but fair to set a fixed amount for attorney's fees. In fact, the RTC observed that the proceeding before it was simple and required minimal legal work; in addition, the relevant documentary evidence of respondent and the existence of debt were impliedly admitted, albeit the defense of prematurity of the institution of action. 11
Lastly, there is no error committed by the CA in imposing legal interest. This is in accordance with Eastern Shipping Lines, Inc. v. Court of Appeals, 12 as modified by Nacar v. Gallery Frames, 13 which provides that "[w]hen the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, x x x shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit."
WHEREFORE, in view thereof, the petition is DENIED.
SO ORDERED."
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1. 499 Phil. 268 (2005).
2.Rollo, Vol. 1, pp. 129-142; penned by Associate Justice Pablito A. Perez, with Associate Justices Mariflor P. Punzalan Castillo and Danton Q. Bueser, concurring.
3.Id. at 144-146.
4.Id. at 65-78.
5. 553 Phil. 405 (2007).
6.Miro v. Vda. de Erederos, 721 Phil. 772, 785 (2013).
7.Rivera v. Spouses Chua, 750 Phil. 663, 680-681 (2015).
8.Rollo, Vol. 1, pp. 296, 298, 300 and 302.
9. NEW CIVIL CODE, Art. 1159.
10.Spouses Tan v. Philippine Savings Bank, G.R. No. 211306, March 13, 2019; citing Metropolitan Bank & Trust Company v. Chuy Lu Tan, 792 Phil. 70, 83-84 (2016).
11.Rollo, Vol. 1, p. 141.
12. 304 Phil. 236 (1994).
13. 716 Phil. 267, 283 (2013).