Case Summary (G.R. No. 201001)
Petitioner
MCMP Construction Corporation
Respondent
Monark Equipment Corporation
Key Dates
• December 5, 2000 and January 29, 2001 – Delivery acknowledgments signed by MCMP
• 30 days from invoice dates – Payment due under contract terms
• April 15, 2001 and August 15, 2001 – Partial payments of Php 100,000 each
• April 30, 2002 – Outstanding balance Php 1,282,481.83 (inclusive of interest, penalties, collection fee)
• June 18, 2002 – Suit for Sum of Money filed in RTC, Quezon City (Civil Case No. Q-02-47092)
• November 20, 2007 – RTC decision in favor of Monark
• April 28, 2008 – RTC order denying MCMP’s reconsideration, granting partial reconsideration for future charges
• October 14, 2011 – Court of Appeals decision affirming RTC
• March 9, 2012 – CA resolution denying motion for reconsideration
• November 10, 2014 – Supreme Court decision
Applicable Law
• 1987 Philippine Constitution
• Rule 130, Sections 3, 5, and 6 (Best Evidence Rule and exceptions)
• Rule 131, Section 3(e) (Presumption from suppressed evidence)
• Civil Code Article 1229 (Equitable reduction of penalty)
• Civil Code Article 2227 (Equitable reduction of liquidated damages)
• Jurisprudence: Country Bankers Insurance Corp. v. Lagman; Macalinao v. BPI; Pentacapital Investment Corp. v. Mahinay
Facts of Lease and Contract Stipulations
Monark and MCMP entered a Rental Equipment Contract under which MCMP agreed to pay rent within 30 days of invoice, plus 24% annual interest, 1% monthly collection fee (compounded), 2% monthly penalty, and 25% attorney’s fees on suit, submitting to specified Metro Manila courts. Despite delivery and partial payments, MCMP defaulted on the majority of the obligation.
Non-Payment and Initiation of Suit
As of April 30, 2002, MCMP owed Php 1,282,481.83. Monark filed suit on June 18, 2002. MCMP defended on grounds of prematurity, lack of detailed breakdown, and an unwritten usage-time agreement.
Trial Court Findings and RTC Disposition
The RTC credited Monark’s evidence, including Peregrino’s testimony and secondary evidence of the lost contract, and ruled MCMP liable for the balance, stipulated fees, and costs. MCMP’s motion for reconsideration was denied; Monark’s partial reconsideration was granted to include continuing charges until full satisfaction.
Application of the Best Evidence Rule
MCMP challenged the admissibility of secondary evidence. The Court reiterated that Rule 130 §3 allows secondary evidence when the original is lost without bad faith, and §§5–6 set proof requirements: existence, execution, loss, and absence of bad faith. Peregrino’s uncontested testimony satisfied these elements. MCMP’s failure to produce its copy, despite court order, invoked the presumption under Rule 131 §3(e) that suppressed evidence would be adverse.
Verification of Delivery
MCMP’s own witnesses confirmed equipment delivery to project sites, nullifying MCMP’s denial.
Equitable Reduction of Exorbitant Rates
While upholding MCMP’s liability, the Supreme Court deemed the combined 60% annual rate (24% interest + 2% penalty + 1% collection fee compounded) and 25% a
Case Syllabus (G.R. No. 201001)
Facts
- In 2000, MCMP Construction Corporation (MCMP) entered into a Rental Equipment Contract with Monark Equipment Corporation (Monark) to lease five pieces of heavy equipment for projects in Tanay, Rizal and Llavac, Quezon.
- Monark delivered the equipment pursuant to invoices and Documents Acknowledgment Receipt Nos. 04667 (signed December 5, 2000 by Jorge Samonte) and 5706 (signed January 29, 2001 by Rose Takahashi).
- The invoices stipulated payment terms:
• Credit sales payable within 30 days from invoice date
• Interest at 24% per annum on all amounts
• Collection fee of 1% compounded monthly
• Penalty charge of 2% per month for late payment
• Attorney’s fees equal to 25% of any amount due in case of suit
• Submission to the jurisdiction of the courts of Quezon City, Makati, Pasig, or Manila - MCMP failed to pay within 30 days and made only two partial payments of PhP 100,000.00 each (April 15, 2001 and August 15, 2001).
- As of April 30, 2002, MCMP’s unpaid balance amounted to PhP 1,282,481.83 (PhP 765,380.33 principal; PhP 253,226.17 interest; PhP 253,226.17 penalty; PhP 10,649.16 collection fee).
Procedural History
- June 18, 2002: Monark filed a suit for sum of money (Civil Case No. Q-02-47092) before the RTC, Branch 96, Quezon City.
- July 5, 2002: MCMP filed its Answer, claiming premature suit and alleging an unrecorded oral agreement to pay only for actual usage time.
- During trial, Monark’s Senior Account Manager, Reynaldo Peregrino, testified that the original Contract was lost despite diligent search; he offered a photocopy. MCMP refused to produce its copy despite court order.
- November 20, 2007: RTC rendered judgment in favor of Monark ordering MCMP to pay PhP 1,282,481.83 inclusive of interests, 25% attorney’s fees, and costs of suit.
- January 31, 2008 & January 29, 2008: MCMP filed Motion for Reconsideration; Monark filed Motion for Clarification/Partial Reconsideration.
- April 28, 2008: RTC denied MCMP’s motion and granted Monark’s, clarifying that interest, fees, and charges should continue accruing until full payment as per original stipulations.
- MCMP appealed to the Court of Appeals (C