Case Summary (G.R. No. 225433)
Facts
– Petitioner purchased P1,263,104.22 worth of materials on 60-day credit at 24% interest per annum.
– Payments were made by postdated checks, all dishonored upon deposit.
– Respondent’s 22 January 2008 demand went unheeded; complaint filed on 5 February 2008.
– Petitioner admitted purchases but alleged substandard deliveries, lack of valuable consideration, U.S. buyer rejections, factory fire and economic recession.
Ruling of the Trial Court
RTC found petitioner failed to prove materials were substandard. Sales invoices and dishonored checks established respondent’s claim. 24% interest was upheld as not unconscionable. Judgment awarded:
- P1,263,104.22 plus 24% interest per annum from 5 February 2008 until paid.
- P50,000 attorney’s fees.
- Costs of suit.
Ruling of the Court of Appeals
CA affirmed RTC, holding that:
– Petitioner admitted issuance of postdated checks.
– Petitioner failed to substantiate claim of substandard materials.
– 24% interest clearly stipulated and not unfair; petitioner had opportunity to negotiate.
Issues
- Admissibility and probative value of respondent’s sales invoices.
- Default in contractual obligations by petitioner.
- Applicability of Arts. 1192 and 1283 (tempering liability and set-off).
- Validity of 24% per annum interest.
- Whether 24% applies only until finality of judgment.
Admissibility of the Sales Invoices
Under Rule 8, Secs. 7–8 and Sec. 10, documents attached to the complaint are deemed admitted in the absence of specific oath-bound denial of genuineness or execution. Petitioner’s general admission of existence but denial of execution without factual particulars amounted to admission of genuineness and execution.
Default in the Contractual Obligations
Petitioner bore burden of proving non-compliance with material specifications. No evidence other than uncorroborated denials was offered. Sales invoices bore receipted clause “Received merchandise in good order & condition.” Dishonored checks confirmed nonpayment.
Applicability of Articles 1192 and 1283
Arts. 1192 (equitable tempering when both breach) and 1283 (set-off of damages) apply only if petitioner proved damages arising from respondent’s breach. Petitioner failed to substantiate substandard delivery; no tempering or set-off warranted.
Validity of the 24% Interest Rate
Precedent consistently upholds 24% per annum when expressly agreed in writing. Petitioner, an established customer, could not show disadvantage or absence of negotiation. 24% was not unconscionable under existing jurisprudence.
Imposition of Legal Interest
– Stipulated interest continues until full payment; legal interest applies only in absence of stipulation (Art. 2209).
– Legal interest rate modified by BSP-MB Circular 799 (effective 1 July 2013) from 12% to 6% per annum.
– Inte
Case Syllabus (G.R. No. 225433)
The Case
- Petition for review under Rule 45 assails the Court of Appeals’ Decision dated April 21, 2016 and Resolution dated June 29, 2016 in CA-G.R. CV No. 102465.
- The Court of Appeals had affirmed the Regional Trial Court, Branch 128, Caloocan City Decision of January 27, 2014 in Civil Case No. C-22007.
- The petition challenges findings on default, quality of deliveries, admissibility of sales invoices, and validity and application of a 24% per annum interest stipulation.
Facts
- Lara’s Gifts & Decors, Inc. (petitioner) manufactures, sells, and exports handicraft products.
- Midtown Industrial Sales, Inc. (respondent) sells industrial and construction materials; petitioner is one of its customers.
- From January to December 2007, petitioner purchased materials worth ₱1,263,104.22 on a 60-day credit term, with a 24% per annum interest on overdue accounts as stated in the sales invoices.
- Petitioner paid by issuing postdated China Bank checks, all of which bounced for insufficient funds or account closure.
- Petitioner then replaced them with postdated Export and Industry Bank checks, which also bounced.
- Respondent sent a demand letter dated January 21, 2008 (received January 22, 2008) and filed a Complaint for Sum of Money with Prayer for Attachment on February 5, 2008.
- In its Answer, petitioner admitted the purchases and credit term but claimed deliveries were substandard, challenged the checks as without value, and cited a factory fire on February 19, 2008 destroying inventories.
Ruling of the Trial Court
- Held petitioner failed to prove materials were substandard or of poor quality; its denials were self-serving and uncorroborated.
- Found respondent’s claim of ₱1,263,104.22 supported by invoices and bounced checks.
- Upheld the 24% per annum interest stipulation as not unconscionable.
- Ordered petitioner to