G.R. No. 209906 - Coca-Cola Bottlers Philippines, Inc. vs. Menez

MCMP Construction Corp. (MCMP) leased five (5) heavy equipment from Monark Equipment Corp. (Monark) under a Rental Equipment Contract executed in 2000; deliveries to MCMP’s project sites in Tanay, Rizal and Llavac, Quezon were evidenced by invoices and Acknowledgment Receipt Nos. 04667 (Dec. 5, 2000) and 5706 (Jan. 29, 2001).
The invoices stipulated: payment within 30 days; interest at 24% p.a.; collection fee of 1% compounded monthly; penalty charge of 2% per month on overdue amounts; attorneys’ fees of 25% of any amount due; and submission to the jurisdiction of courts in Quezon City, Makati, Pasig, or Manila.

MCMP failed to settle the rental fees after the 30-day term, making only two partial payments of PhP 100,000.00 each (Apr. 15 and Aug. 15, 2001). As of April 30, 2002, the unpaid balance amounted to PhP 1,282,481.83 (principal PhP 765,380.33; accumulated interest PhP 253,226.17; 2% monthly penalty PhP 253,226.17; collection fee PhP 10,649.16).
Monark filed a Sum of Money suit in RTC Branch 96, Quezon City on June 18, 2002 (Civil Case No. Q-02-47092). MCMP answered on July 5, 2002, claiming (a) premature filing; and (b) an unwritten agreement to pay only for actual equipment usage, not full possession time.

Monark’s Senior Account Manager, Reynaldo Peregrino, testified that Monark’s original contract was lost despite diligent search; he offered a photocopy. MCMP failed to produce its copy despite a court directive and objected under the Best Evidence Rule.
On November 20, 2007, RTC rendered judgment ordering MCMP to pay PhP 1,282,481.83 plus 25% attorneys’ fees and costs. On April 28, 2008, RTC denied MCMP’s motion for reconsideration and granted Monark’s motion for clarification to include post-April 30, 2002 interest and charges per contract terms.

The Court of Appeals affirmed the RTC Decision and Order on October 14, 2011, and denied MCMP’s motion for reconsideration on March 9, 2012.
On November 10, 2014, the Supreme Court dismissed MCMP’s Rule 45 petition for lack of merit, upheld the admissibility of secondary evidence, but reduced the interest rate to 12% p.a., penalty and collection charges to 6% p.a., and attorneys’ fees to 5%, modifying the RTC’s dispositive portion accordingly.

Whether Monark satisfactorily proved the loss of the original contract and absence of bad faith, justifying the introduction of a photocopy.
Whether MCMP’s failure to produce its copy invoked the presumption under Rule 131, Sec. 3(e), permitting secondary evidence.

Validity of Stipulated Interest, Penalty, Collection Fees, and Attorneys’ Fees

Whether the contractual stipulations of 24% p.a. interest, 1% monthly collection fee, and 2% monthly penalty are iniquitous and unconscionable.
Whether the 25% attorneys’ fees clause constitutes a penalty or liquidated damages that must be equitably reduced.

Whether the Supreme Court correctly applied precedents (e.g., Macalinao v. BPI; Pentacapital v. Mahinay) and Civil Code Arts. 1229, 2227 to reduce the rates.
Whether the adjusted rates (12% p.a. interest; 6% p.a. penalty/collection; 5% attorneys’ fees) are legally justified.