G.R. No. 234457 - Abel vs. Rule

In 1989, during the months of August and September, respondent Luz Despabiladeras obtained on credit from petitioner Roger Manzano various construction materials used for a construction project at the Camarines Sur Polytechnic Colleges (CSPC).
The delivery consisted of construction materials amounting to P307,140.50 which were to be paid upon respondent’s initial collection from CSPC with an agreement to bear 8% monthly interest until fully paid.

Respondent made a partial payment of P130,000.00 (exclusive of interest) despite receiving payments from CSPC.
Petitioner then filed a complaint for sum of money with damages before the Regional Trial Court of Iriga City requesting, among other reliefs, the establishment and enforcement of a supplier’s lien on the payments due from CSPC and additional amounts including interest, attorney’s fees, moral damages, lost business opportunities, costs, and exemplary damages.
In her Answer with Counterclaim, respondent contested the prices delivered and claimed that aside from the P130,000.00 paid, additional payments were made via two checks (one for P43,069.00 and another for P14,000.00). Petitioner countered that such checks were payments for past obligations not relevant to the present case.

At the pre-trial conference, the parties agreed that petitioner would submit an offer to stipulate an itemized list of materials and corresponding costs within 15 days for respondent’s objections or comments.
Instead, petitioner filed a Request for Admission asking respondent to admit specific facts regarding the deliveries and the total cost (P314,610.50) of the goods delivered and the partial payment of P130,000.00.
Respondent did not initially respond under oath to the Request for Admission within the prescribed period but later filed a list indicating which items were admitted and which were not, adding that admitted deliveries did not reflect the actual agreed price or specifications.

The trial court allowed the supplier’s lien by ordering the retention of P201,711.74 from the final payment due from CSPC, conditioned by the filing of a bond of P50,000.00 by the petitioner.
During the trial, evidence was presented including testimonies (notably by petitioner’s wife, Ederlinda K. Manzano) and documentary proofs of payments (cleared checks and receipts).
The trial court eventually found that, based on the respondent’s failure to deny the Request for Admission, it was established that the respondent had received goods totaling P314,610.50 and had only paid P130,000.00, with subsequent admissions by petitioner confirming additional payments aggregating to P97,000.00 and P25,000.00.
As a result, the trial court computed an outstanding balance, initially determining an unpaid amount of P87,610.50, and ruled that although an 8% monthly interest could not be applied (due to the lack of a written agreement), interest at the legal rate (12% per annum) was permissible from the filing of the complaint.
The trial court also awarded attorney’s fees of P10,000.00 and ordered the respondent to pay the costs of suit while dismissing the claims for moral and exemplary damages.

The Court of Appeals set aside parts of the trial court’s ruling, particularly questioning the acceptance of the respondent’s admissions and the crediting of additional payments (P43,069.50, P14,200.00, and P25,000.00) which collectively could have amounted to full payment, leaving no balance.
The appellate court emphasized that the failure of respondent to file a sworn denial to the facts in the Request for Admission might not necessarily imply an admission because of their pre-trial agreement to file a comment instead.
Petitioner then filed a petition for review on certiorari raising issues mainly on the consequences of respondent’s non-compliance with the Rule 26 requirement.
Ultimately, the Supreme Court ruled in favor of petitioner by reinstating the trial court decision with modifications, specifically ordering respondent to pay the remaining balance of P62,610.50 plus interest at 12% per annum, and deleting the award for attorney’s fees after considering the proper application of Rule 26.

Whether the failure of the respondent to file a sworn denial under Rule 26, within the period stipulated, results in an implied admission of the facts stated in the Request for Admission.
How the disputed payments (the additional checks and amounts received aside from the P130,000.00) should be properly credited to determine the accurate outstanding balance of the account.
Whether the verbal agreement to charge 8% monthly interest can be enforced in the absence of a written stipulation, and if not, what interest rate is applicable under the law.
The proper quantum of the unpaid balance due the petitioner considering the alleged payments and admissions made during the trial.
Whether awards for attorney’s fees and other damages (moral, exemplary) are permissible under the circumstances and within the rules governing such recovery.