FIRST DIVISION
[G.R. No. 237823. June 18, 2018.]
JOSE V. RAMIREZ, petitioner,vs. FIRST UNITED FINANCE AND LEASING CORP., AND RAUL F. MARCELO, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedJune 18, 2018which reads as follows: HSCATc
"G.R. No. 237823 (Jose V. Ramirez v. First United Finance and Leasing Corp., and Raul F. Marcelo). — The motion for extension to file petition for review dated March 20, 2018 is GRANTED. Nonetheless, after review of the records, we resolve to AFFIRM WITH MODIFICATION the Decision and Resolution of the Court of Appeals (CA).
The Court sees no cogent reason to depart from the factual findings of the trial court, especially since these were affirmed by the CA. Settled is the rule that factual findings of the trial court, when affirmed by the CA, are generally accorded respect and weight by this Court.
We, however, modify the awards of 5% penalty charge per month and 15% attorney's fees. In previous cases, we have recognized a penalty clause as an accessory obligation which the parties attach to a principal obligation for the purpose of ensuring the performance thereof by imposing on the debtor a special prestation (generally consisting of the payment of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled. 1 We have also held that parties may stipulate to recover attorney's fees in case of breach. 2 However, Articles 1229 3 and 2227 4 of the Civil Code empower the courts to reduce these penalties if they are iniquitous or unconscionable. The determination of whether the penalty is iniquitous or unconscionable is addressed to the sound discretion of the court and depends on several factors such as the type, extent, and purpose of the penalty, the nature of the obligation, the mode of breach and its consequences. 5
Accordingly, we find it equitable to reduce the award of penalty charge per month from 5% to 1%. We also deem it proper to further reduce the attorney's fees to 10%. To our mind, respondent had more than adequately protected itself from a possible breach of contract because of the stipulations on the payment of penalty charge, liquidated damages, and attorney's fees. 6 We further clarify that both the awards of 10% each as liquidated damages and attorney's fees should be taken to mean as 10% of the principal obligation only. 7 IDTSEH
WHEREFORE, the petition is DENIED. The Decision dated March 21, 2016 and Resolution dated March 1, 2018 of the Court of Appeals in CA-G.R. CV No. 101807 are AFFIRMED with the MODIFICATIONS that the awards of penalty charge and attorney's fees are reduced to 1% per month and 10% of the principal obligation, respectively.
SO ORDERED." Leonardo-de Castro, J., designated as Acting Chairperson of the First Division per Special Order No. 2559 dated May 11, 2018; Gesmundo, J., designated as Acting Member of the First Division per Special Order No. 2560 dated May 11, 2018.
Very truly yours,
(SGD.) LIBRADA C. BUENAActing Division Clerk of Court
Footnotes
1.Pentacapital Investment Corporation v. Mahinay, G.R. No. 171736, July 5, 2010, 623 SCRA 284, 305-306. Citation omitted.
2.Titan Construction Corporation v. Uni-Field Enterprises, Inc., G.R. No. 153874, March 1, 2007, 517 SCRA 180, 189. Citation omitted.
3. 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.
4. Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.
5.Titan Construction Corporation v. Uni-Field Enterprises, Inc., supra at 190. Citation omitted.
6.Id.
7.Id.; Mariano Lim v. Security Bank Corporation, G.R. No. 188539, March 12, 2014, 718 SCRA 709.