Title
Bataan Hardwood Corp. vs. Dy Pac and Co., Inc.
Case
G.R. No. L-29492
Decision Date
Feb 29, 1972
Dy Pac sued Bataan Hardwood for breach of contract over unpaid loans and failure to insure a mortgaged vessel. Courts ruled for Dy Pac, awarding damages, attorney’s fees, and vessel possession, affirming single cause of action with multiple reliefs.
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Case Digest (G.R. No. L-29492)

Facts:

Contractual Agreement

  • On January 21, 1960, Dy Pac & Company (plaintiff-appellant) and Bataan Hardwood Corporation (defendant-appellee) entered into a contract where Dy Pac would advance money to Bataan Hardwood for logs, which Bataan Hardwood would sell to Dy Pac.
  • By July 6, 1960, Bataan Hardwood owed Dy Pac P21,000.00, confirmed in a new contract (Exhibit A). The contract stipulated:
    • Payment of P21,000.00 with 1% monthly interest starting July 1, 1960.
    • Installments of P1,500.00 per month, split into two payments of P750.00 every 15th and 30th of the month, starting July 15, 1960.
    • From January 9, 1961, the balance would be paid at P1,000.00 per week, deducted from the purchase price of logs sold to Dy Pac.

Security and Penalties

  • As security, Bataan Hardwood and Mauro B. Ganzon mortgaged a vessel, "Batman ex LCT 1282," in favor of Dy Pac.
  • Domingo B. Sanchez agreed that the mortgage would be superior to his prior mortgage on the vessel.
  • Bataan Hardwood was required to insure the vessel for at least P30,000.00 in favor of Dy Pac.
  • In case of default, Dy Pac could terminate the contract, and the entire outstanding balance would become due. A penalty of P100.00 per day would apply after a 5-day demand period.
  • If Dy Pac foreclosed the mortgage, the penalty would be added to the principal plus an additional 25% of the total amount due.

Breach of Contract

  • Bataan Hardwood failed to insure the vessel and was irregular in paying installments and interest.
  • By October 19, 1960, Bataan Hardwood had only paid P2,250.00 in installments and interest up to August 15, 1960.
  • Dy Pac sent multiple demand letters, and on November 4, 1960, sent a final demand letter.
  • Bataan Hardwood responded by paying two additional installments of P1,500.00 but still owed P17,250.00.
  • Dy Pac insured the vessel itself, spending P2,131.56 on premiums and documentary stamps.

Legal Action

  • On August 28, 1961, Dy Pac filed a complaint in the Court of First Instance of Manila, seeking:
    • Possession of the vessel for foreclosure.
    • Payment of P17,250.00 with 1% monthly interest.
    • Penalty of P100.00 per day from November 14, 1960.
    • Reimbursement of P2,131.56 for insurance premiums.
    • Attorney’s fees equivalent to 25% of the total amount due.

Trial Court Decision

  • The trial court ruled in favor of Dy Pac, ordering Bataan Hardwood, Ganzon, and Sanchez to pay:
    • P17,250.00 with 1% monthly interest from August 16, 1960.
    • P2,131.56 with legal interest from the filing of the complaint.
    • Attorney’s fees of P300.00.
  • The court denied Dy Pac’s request for the P100.00 daily penalty and 25% attorney’s fees, deeming the penalty immoral and the attorney’s fees sufficient.

Appeal to the Court of Appeals

  • Both parties appealed. Bataan Hardwood’s appeal was dismissed for failure to file a brief.
  • The Court of Appeals modified the trial court’s decision:
    • Increased attorney’s fees to P2,000.00.
    • Awarded P2,000.00 as liquidated damages for the penalty clause.
    • Declared Dy Pac entitled to possession of the vessel for extrajudicial foreclosure.

Motion for Reconsideration

  • Bataan Hardwood moved to reduce the attorney’s fees and penalty.
  • The Court of Appeals reduced the attorney’s fees to P800.00 but upheld the rest of the decision.

Issue:

  1. Whether the Court of Appeals erred in granting separate reliefs for replevin and recovery of a sum of money, arising from a single cause of action.
  2. Whether the penalty of P100.00 per day was valid and enforceable.
  3. Whether the attorney’s fees awarded were reasonable.

Ruling:

  • The Supreme Court affirmed the Court of Appeals’ decision with modifications:
    • The appellate court did not err in granting separate reliefs for replevin and recovery of a sum of money, as these arose from a single cause of action (breach of contract).
    • The penalty of P100.00 per day was valid but reduced to P2,000.00 as liquidated damages.
    • Attorney’s fees were increased to P2,000.00, including an additional P1,200.00 for services rendered in the Supreme Court.
  • The Court emphasized that a single cause of action can give rise to multiple reliefs, and splitting causes of action is prohibited.

Ratio:

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