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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
October-2001 Jurisprudence                 

  • G.R. No. 137841 October 1, 2001 - PEOPLE OF THE PHIL. v. ALBERTO CHUA

  • G.R. No. 117512 October 2, 2001 - REBECCA ALA-MARTIN v. HON. JUSTO M. SULTAN

  • G.R. No. 120098 October 2, 2001 - RUBY L. TSAI v. HON. COURT OF APPEALS EVER TEXTILE MILLS

  • G.R. No. 124037 October 2, 2001 - PEOPLE OF THE PHILIPPINES v. REYNALDO DE GUZMAN

  • G.R. No. 126592 October 2, 2001 - ROMEO G. DAVID v. JUDGE TIRSO D.C. VELASCO, ET AL.

  • G.R. No. 129900 October 2, 2001 - JANE CARAS y SOLITARIO v. HON. COURT OF APPEALS and PEOPLE OF THE PHILIPPINES

  • G.R. No. 133000 October 2, 2001 - PATRICIA NATCHER petitioner v. HON. COURT OF APPEALS AND THE HEIRS OF GRACIANO DEL ROSARIO-LETICIA DEL ROSARIO

  • G.R. No. 133895 October 2, 2001 - ZENAIDA M. SANTOS v. CALIXTO SANTOS, ET AL.

  • G.R. Nos. 135522-23 October 2, 2001 - PEOPLE OF THE PHIL. v. AMORSOLO G. TORRES

  • G.R. No. 137777 October 2, 2001 - THE PRESIDENTIAL AD-HOC FACT FINDING COMMITTEE, ET AL. v. THE HON. OMBUDSMAN ANIANO DESIERTO, ET AL.

  • G.R. No. 138322 October 2, 2001 - GRACE J. GARCIA v. REDERICK A. RECIO

  • G.R. No. 138929 October 2, 2001 - PEOPLE OF THE PHIL. v. FLORENTINO DEL MUNDO

  • G.R. No. 139050 October 2, 2001 - REPUBLIC OF THE PHILIPPINES v. THE COURT OF TAX APPEALS and AGFHA

  • G.R. No. 142877 October 2, 2001 - JINKIE CHRISTIE A. DE JESUS and JACQUELINE A. DE JESUS v. THE ESTATE OF DECEDENT JUAN GAMBOA DIZON

  • G.R. No. 125081 October 3, 2001 - PEOPLE OF THE PHILIPPINES v. REMEDIOS PASCUA

  • G.R. No. 128195 October 3, 2001 - ELIZABETH LEE and PACITA YULEE v. REPUBLIC OF THE PHILIPPINES

  • G.R. Nos. 128514 & 143856-61 October 3, 2001 - PEOPLE OF THE PHILIPPINES v. NILO LEONES

  • G.R. Nos. 142602-05 October 3, 2001 - PEOPLE OF THE PHILIPPINES v. BONIFACIO ARIOLA

  • A.M. No. 01-6-192-MCTC October 5, 2001 - Request To Designate Another Judge To Try And Decide Criminal Case No. 3713

  • A.M. No. RTJ-01-1610 October 5, 2001 - ATTY. EDGAR H. TALINGDAN v. JUDGE HENEDINO P. EDUARTE

  • G.R. No. 124498 October 5, 2001 - EDDIE B. SABANDAL v. HON. FELIPE S. TONGCO Presiding Judge

  • G.R. No. 127441 October 5, 2001 - DOROTEO TOBES @ DOTING v. COURT OF APPEALS

  • G.R. No. 130499 October 5, 2001 - PEOPLE OF THE PHILIPPINES v. PAMFILO QUIMSON @ "NOEL QUIMSON

  • G.R. No. 130962 October 5, 2001 - PEOPLE OF THE PHILIPPINES v. JOSE REAPOR y SAN JUAN

  • G.R. No. 131040 October 5, 2001 - PEOPLE OF THE PHIL. v. MICHAEL FRAMIO SABAGALA

  • G.R. No. 132044 October 5, 2001 - PEOPLE OF THE PHILIPPINES v. ANTONIO @ Tony EVANGELISTA Y BINAY

  • G.R. No. 132718 October 5, 2001 - PEOPLE OF THE PHILIPPINES v. JOSE CASTILLON III and JOHN DOE

  • G.R. Nos. 135452-53 October 5, 2001 - PEOPLE OF THE PHIL. v. IRENEO M. ALCOREZA

  • G.R. No. 139760 October 5, 2001 - FELIZARDO S. OBANDO v. HON. COURT OF APPEALS

  • G.R. No. 144189 October 5, 2001 - R & M GENERAL MERCHANDISE v. COURT OF APPEALS, ET AL.

  • G.R. No. 121948 October 8, 2001 - PERPETUAL HELP CREDIT COOPERATIVE v. BENEDICTO FABURADA

  • G.R. No. 123075 October 8, 2001 - PEOPLE OF THE PHIL. v. PEDRO L. NUELAN

  • G.R. No. 129926 October 8, 2001 - PEOPLE OF THE PHIL. v. NOLE M. ZATE

  • G.R. No. 137599 October 8, 2001 - PEOPLE OF THE PHILIPPINES v. GILBERT BAULITE and LIBERATO BAULITE

  • G.R. No. 138941 October 8, 2001 - AMERICAN HOME ASSURANCE COMPANY v. TANTUCO ENTERPRISES

  • G.R. No. 141297 October 8, 2001 - DOMINGO R. MANALO v. COURT OF APPEALS (Special Twelfth Division) and PAIC SAVINGS AND MORTGAGE BANK

  • A.M. No. 01-9-246-MCTC October 9, 2001 - OFFICE OF THE COURT ADMINISTRATOR v. JUDGE ALIPIO M. ARAGON

  • G.R. No. 138886 October 9, 2001 - PEOPLE OF THE PHILIPPINES v. SP01 WILFREDO LEAÑO SP01 FERDINAND MARZAN SPO1 RUBEN B. AGUSTIN SP02 RODEL T. MADERAL * SP02 ALEXANDER S. MICU and SP04 EMILIO M. RAMIREZ

  • G.R. No. 141182 October 9, 2001 - HEIRS OF PEDRO CUETO Represented by ASUNCION CUETO v. HON. COURT OF APPEALS (SPECIAL FORMER FIRST DIVISION) and CONSOLACION COMPUESTO

  • A.M. No. 99-12-03-SC October 10, 2001 - RE: INITIAL REPORTS ON THE GRENADE INCIDENT THAT OCCURRED AT ABOUT 6:40 A.M. ON DECEMBER 6, 1999

  • G.R. No. 129313 October 10, 2001 - SPOUSES MA. CRISTINA D. TIRONA and OSCAR TIRONA v. HON. FLORO P. ALEJO as Presiding Judge

  • G.R. Nos. 135679 & 137375 October 10, 2001 - PEOPLE OF THE PHILIPPINES v. GODOFREDO RUIZ

  • G.R. No. 136258 October 10, 2001 - PEOPLE OF THE PHIL. v. CARLOS FELICIANO

  • A.M. No. 2001-9-SC October 11, 2001 - DOROTEO IGOY v. GILBERT SORIANO

  • A.M. No. RTJ-99-1485 October 11, 2001 - TEOFILO C. SANTOS v. JUDGE FELICIANO V. BUENAVENTURA

  • G.R. No. 80796 & 132885 October 11, 2001 - PROVINCE OF CAMARINES NORTE v. PROVINCE OF QUEZON

  • G.R. No. 118387 October 11, 2001 - MARCELO LEE v. COURT OF APPEALS and HON. LORENZO B. VENERACION and HON. JAIME T. HAMOY

  • G.R. Nos. 123913-14 October 11,2001

    PEOPLE OF THE PHIL. v. PABLO CALLOS

  • G.R. No. 130415 October 11, 2001 - PEOPLE OF THE PHILIPPINES v. ALVIN YRAT y BUGAHOD and RAUL JIMENA, ET AL.

  • G.R. No. 130562 October 11, 2001 - Brigida Conculada v. Hon. Court Of Appeals

  • G.R. No. 112526 October 12, 2001 - STA. ROSA REALTY DEVELOPMENT CORPORATION v. COURT OF APPEALS

  • G.R. No. 122710 October 12, 2001 - PHILIPPINE NATIONAL BANK v. COURT OF APPEALS and REMINGTON INDUSTRIAL SALES CORPORATION

  • G.R. Nos. 134769-71 October 12, 2001 - PEOPLE OF THE PHIL. v. ROBERTO BATION

  • G.R. No. 137843 October 12, 2001 - PEOPLE OF THE PHIL. v. EDUARDO S. AÑONUEVO

  • G.R. No. 139904 October 12, 2001 - PEOPLE OF THE PHIL. v. CONRADO MERCADO

  • G.R. No. 136470 October 16, 2001 - VENANCIO R. NAVA v. COMMISSION ON AUDIT

  • G.R. No. 140794 October 16, 2001 - PEOPLE OF THE PHIL. v. RICARDO T. AGLIDAY

  • A.M. No. P-00-7-323-RTJ October 17, 2001 - RE: RELEASE BY JUDGE MANUEL T. MURO, RTC, BRANCH 54 MANILA, OF AN ACCUSED IN A NON-BAILABLE OFFENSE

  • A.M. No. P-00-1419 October 17, 2001 - OFFICE OF THE COURT ADMINISTRATOR v. MAGDALENA G. MAGNO

  • A.M. No. RTJ-97-1390 & AM RTJ-98-1411 October 17, 2001 - ATTY. CESAR B. MERIS v. JUDGE CARLOS C. OFILADA

  • G.R. No. 123137 October 17, 2001 - PEOPLE OF THE PHILIPPINES v. PO2 ALBERT ABRIOL

  • G.R. No. 124513 October 17, 2001 - ROBERTO ERQUIAGA v. HON. COURT OF APPEALS

  • G.R. No. 127540 October 17, 2001 - EUGENIO DOMINGO v. HON. COURT OF APPEALS

  • G.R. No. 127830 October 17, 2001 - MANOLET LAVIDES v. ERNESTO B. PRE

  • G.R. No. 129069 October 17, 2001 - PEOPLE OF THE PHIL. v. JULIO R. RECTO

  • G.R. No. 129236 October 17, 2001 - PEOPLE OF THE PHIL. v. RAYMUNDO G. DIZON

  • G.R. No. 129389 October 17, 2001 - PEOPLE OF THE PHILIPPINES v. TEODORICO UBALDO

  • G.R. Nos. 132673-75 October 17, 200

    PEOPLE OF THE PHIL. v. DOMINADOR C. GOMEZ

  • G.R. No. 136291 October 17, 2001 - LETICIA M. MAGSINO v. REPUBLIC OF THE PHILIPPINES

  • G.R. No. 136869 October 17, 2001 - PEOPLE OF THE PHILIPPINES v. DENNIS MAZO

  • G.R. No. 141673 October 17, 2001 - MANUEL L. QUEZON UNIVERSITY/AUGUSTO B. SUNICO v. NLRC (Third Division), ET AL.

  • G.R. No. 142726 October 17, 2001 - PEOPLE OF THE PHIL. v. APOLONIO ACOSTA

  • G.R. No. 143190 October 17, 2001 - ANTONIO P. BELICENA v. SECRETARY OF FINANCE

  • G.R. No. 143990 October 17, 2001 - MARIA L. ANIDO v. FILOMENO NEGADO and THE HONORABLE COURT OF APPEALS

  • G.R. Nos. 121039-45 October 18, 2001 - THE PEOPLE OF THE PHILIPPINES v. MAYOR ANTONIO L. SANCHEZ

  • G.R. No. 132869 October 18, 2001 - GREGORIO DE VERA v. COURT OF APPEALS

  • G.R. No. 143486 October 18, 2001 - PEOPLE OF THE PHILIPPINES v. MARIO DUMAGAY TUADA

  • G.R. No. 144735 October 18, 2001 - YU BUN GUAN v. ELVIRA ONG

  • G.R. No. 116285 October 19, 2001 - ANTONIO TAN v. COURT OF APPEALS and the .C.C.P

  • G.R. Nos. 121201-02 October 19, 2001 - THE PEOPLE OF THE PHILIPPINES plaintiff-appellee v. GIO CONCORCIO @ JUN

  • G.R. No. 129995 October 19, 2001 - THE PROVINCE OF BATAAN v. HON. PEDRO VILLAFUERTE

  • G.R. No. 130730 October 19, 2001 - HERNANDO GENER v. GREGORIO DE LEON and ZENAIDA FAUSTINO

  • G.R. No. 133002 October 19, 2001 - PEOPLE OF THE PHILIPPINES v. INTOY GALLO @ PALALAM

  • G.R. No. 137904 October 19, 2001 - PURIFICACION M. VDA. DE URBANO v. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS)

  • A.M. No. 99-12-497-RTC October 23, 2001 - REQUEST OF JUDGE FRANCISCO L. CALINGIN

  • G.R. No. 121267 October 23, 2001 - SMITH KLINE & FRENCH LABORATORIES v. COURT OF APPEALS, ET AL.

  • G.R. No. 124036 October 23, 2001 - FIDELINO GARCIA v. COURT OF APPEALS, ET AL.

  • G.R. No. 124295 October 23, 2001 - JUDGE RENATO A. FUENTES v. OFFICE OF THE OMBUDSMAN-MINDANAO

  • G.R. No. 125193 October 23, 2001 - MANUEL BARTOCILLO v. COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES

  • G.R. No. 130846 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. ROGELIO PAMILAR y REVOLIO

  • G.R. No. 131841 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. RUBEN VILLARMOSA

  • G.R. No. 132373 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. TIRSO ARCAY @ "TISOY" and TEODORO CLEMEN @ "BOY

  • G.R. No. 134740 October 23, 2001 - IRENE V. CRUZ v. COMMISSION ON AUDIT

  • G.R. No. 135481 October 23, 2001 - LIGAYA S. SANTOS v. COURT OF APPEALS, ET AL.

  • G.R. No. 136105 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. ANTONIO PAREDES y SAUQUILLO

  • G.R. No. 136337 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. NELSON CABUNTOG

  • G.R. No. 139114 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. ROMAN LACAP Y CAILLES

  • G.R. No. 139274 October 23, 2001 - QUEZON PROVINCE v. HON. ABELIO M. MARTE

  • G.R. No. 139329 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. ERLINDO MAKILANG

  • G.R. Nos. 140934-35 October 23, 2001 - PEOPLE OF THE PHILIPPINES v. CONDE RAPISORA y ESTRADA

  • A.M. No. RTJ-01-1634 October 25, 2001 - OFFICE OF THE COURT ADMINISTRATOR v. SILVERIO Q. CASTILLO

  • G.R. No. 102367 October 25, 2001 - PEOPLE OF THE PHILIPPINES v. ABUNDIO ALBARIDO and BENEDICTO IGDOY

  • G.R. No. 126359 October 25, 2001 - PEOPLE OF THE PHIL v. CARLITO OLIVA

  • G.R. No. 127465 October 25, 2001 - SPOUSES NICETAS DELOS SANTOS v. COURT OF APPEALS

  • G.R. No. 133102 October 25, 2001 - PEOPLE OF THE PHILIPPINES v. DINDO AMOGIS y CRINCIA

  • G.R. Nos. 134449-50 October 25, 2001 - PEOPLE OF THE PHILIPPINES v. PEDRO HERNANDEZ y PALMA

  • G.R. No. 135813 October 25, 2001 - FERNANDO SANTOS v. Spouses ARSENIO and NIEVES REYES

  • G.R. No. 135822 October 25, 2001 - PEOPLE OF THE PHILIPPINES v. PIO DACARA y NACIONAL

  • G.R. Nos. 137494-95 October 25, 2001 - THE PEOPLE OF THE PHILIPPINES v. SOTERO REYES alias "TURING"

  • G.R. Nos. 142741-43 October 25, 2001 - PEOPLE OF THE PHILIPPINES v. ROMEO MANAYAN

  • A.M. No. P-01-1474 October 26, 2001 - ANTONIO C. REYES v. JOSEFINA F. DELIM

  • G.R. No. 120548 October 26, 2001 - PEOPLE OF THE PHILIPPINES v. JOSELITO ESCARDA

  • G.R. Nos. 121492 & 124325 October 26, 2001 - BAN HUA UY FLORES v. JOHNNY K.H. UY

  • G.R. No. 132169 October 26, 2001 - PEOPLE OF THE PHILIPPINES v. SANICO NUEVO @ "SANY

  • G.R. No. 133741-42 October 26, 2001 - PEOPLE OF THE PHILIPPINES v. LINO VILLARUEL

  • G.R. No. 134802 October 26, 2001 - PEOPLE OF THE PHILIPPINES v. RENATO Z. DIZON

  • G.R. No. 135920 October 26, 2001 - ENCARNACION ET AL. v. SEVERINA REALTY CORPORATION

  • G.R. No. 140719 October 26, 2001 - NICOLAS UY DE BARON v. COURT OF APPEALS

  • G.R. No. 140912 October 26, 2001 - PEOPLE OF THE PHILIPPINES v. RODRIGO DIAZ Y SEVILLETA

  • G.R. No. 141540 October 26, 2001 - EDUARDO TAN v. FLORITA MUECO and ROLANDO MUECO

  • G.R. No. 143231 October 26, 2001 - ALBERTO LIM v. PEOPLE OF THE PHILIPPINES

  • G.R. No. 144237 October 26, 2001 - WINSTON C. RACOMA v. MA. ANTONIA B. F. BOMA

  • G.R. Nos. 146319 & 146342 October 26, 2001 - BENJAMIN E. CAWALING v. THE COMMISSION ON ELECTIONS

  • G.R. No. 146593 October 26, 2001 - UNITED COCONUT PLANTERS BANK v. ROBERTO V. ONGPIN

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    G.R. No. 116285   October 19, 2001 - ANTONIO TAN v. COURT OF APPEALS and the .C.C.P

     
    PHILIPPINE SUPREME COURT DECISIONS

    SECOND DIVISION

    [G.R. No. 116285. October 19, 2001.]

    ANTONIO TAN, Petitioner, v. COURT OF APPEALS and the CULTURAL CENTER OF THE PHILIPPINES, Respondents.

    D E C I S I O N


    DE LEON, JR., J.:


    Before us is a petition for review of the Decision 1 dated August 31, 1993 and Resolution 2 dated July 13, 1994 of the Court of Appeals affirming the Decision 3 dated May 8, 1991 of the Regional Trial Court (RTC) of Manila, Branch 27.

    The facts are as follows:chanrob1es virtual 1aw library

    On May 14, 1978 and July 6, 1978, petitioner Antonio Tan obtained two (2) loans each in the principal amount of Two Million Pesos (P2,000,000.00) or in the total principal amount of Four Million Pesos (P4,000,000.00), from respondent Cultural Center of the Philippines (CCP, for brevity) evidenced by two (2) promissory notes with maturity dates on May 14, 1979 and July 6, 1979, respectively. Petitioner defaulted but after a few partial payments he had the loans restructured by respondent CCP, and petitioner accordingly executed a promissory note (Exhibit "A") on August 31, 1979 in the amount of Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and Thirty-Two Centavos (P3,411,421.32) payable in five (5) installments. Petitioner Tan failed to pay any installment on the said restructured loan of Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and Thirty-Two Centavos (P3,411,421.32), the last installment falling due on December 31, 1980. In a letter dated January 26, 1982, petitioner requested and proposed to respondent CCP a mode of paying the restructured loan, i.e., (a) twenty percent (20%) of the principal amount of the loan upon the respondent giving its conformity to his proposal; and (b) the balance on the principal obligation payable in thirty-six (36) equal monthly installments until fully paid. On October 20, 1983, petitioner again sent a letter to respondent CCP requesting for a moratorium on his loan obligation until the following year allegedly due to a substantial deduction in the volume of his business and on account of the peso devaluation. No favorable response was made to said letters. Instead, respondent CCP, through counsel, wrote a letter dated May 30, 1984 to the petitioner demanding full payment, within ten (10) days from receipt of said letter, of the petitioner’s restructured loan which as of April 30, 1984 amounted to Six Million Eighty-Eight Thousand Seven Hundred Thirty-Five Pesos and Three Centavos (P6,088,735.03).chanrob1es virtua1 1aw 1ibrary

    On August 29, 1984, respondent CCP filed in the RTC of Manila a complaint for collection of a sum of money, docketed as Civil Case No. 84-26363, against the petitioner after the latter failed to settle his said restructured loan obligation. The petitioner interposed the defense that he merely accommodated a friend, Wilson Lucmen, who allegedly asked for his help to obtain a loan from respondent CCP. Petitioner claimed that he has not been able to locate Wilson Lucmen. While the case was pending in the trial court, the petitioner filed a Manifestation wherein he proposed to settle his indebtedness to respondent CCP by proposing to make a down payment of One Hundred Forty Thousand Pesos (P140,000.00) and to issue twelve (12) checks every beginning of the year to cover installment payments for one year, and every year thereafter until the balance is fully paid. However, respondent CCP did not agree to the petitioner’s proposals and so the trial of the case ensued.chanrob1es virtua1 1aw 1ibrary

    On May 8, 1991, the trial court rendered a decision, the dispositive portion of which reads:chanrob1es virtual 1aw library

    WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant, ordering defendant to pay plaintiff, the amount of P7,996,314.67, representing defendant’s outstanding account as or August 28, 1986, with the corresponding stipulated interest and charges thereof, until fully paid, plus attorney’s fees in an amount equivalent to 25% of said outstanding account, plus P50,000.00, as exemplary damages, plus costs.

    Defendant’s counterclaims are ordered dismissed, for lack of merit.

    SO ORDERED. 4

    The trial court gave five (5) reasons in ruling in favor of respondent CCP. First, it gave little weight to the petitioner’s contention that the loan was merely for the accommodation of Wilson Lucmen for the reason that the defense propounded was not credible in itself. Second, assuming, arguendo, that the petitioner did not personally benefit from the said loan, he should have filed a third party complaint against Wilson Lucmen, the alleged accommodated party but he did not. Third, for three (3) times the petitioner offered to settle his loan obligation with respondent CCP. Fourth, petitioner may not avoid his liability to pay his obligation under the promissory note (Exh. "A") which he must comply with in good faith pursuant to Article 1159 of the New Civil Code. Fifth, petitioner is estopped from denying his liability or loan obligation to the private Respondent.chanrob1es virtua1 1aw 1ibrary

    The petitioner appealed the decision of the trial court to the Court of Appeals insofar as it charged interest, surcharges, attorney’s fees and exemplary damages against the petitioner. In his appeal, the petitioner asked for the reduction of the penalties and charges on his loan obligation. He abandoned his alleged defense in the trial court that he merely accommodated his friend, Wilson Lucmen, in obtaining the loan, and instead admitted the validity of the same. On August 31, 1993, the appellate court rendered a decision, the dispositive portion of which reads:chanrob1es virtual 1aw library

    WHEREFORE, with the foregoing modification, the judgment appealed from is hereby AFFIRMED.

    SO ORDERED. 5

    In affirming the decision of the trial court imposing surcharges and interest, the appellate court held that:chanrob1es virtual 1aw library

    We are unable to accept appellant’s (petitioner’s) claim for modification on the basis of alleged partial or irregular performance, there being none. Appellant’s offer or tender of payment cannot be deemed as a partial or irregular performance of the contract, not a single centavo appears to have been paid by the defendant.

    However, the appellate court modified the decision of the trial court by deleting the award for exemplary damages and reducing the amount of awarded attorney’s fees to five percent (5%), by ratiocinating as follows:chanrob1es virtual 1aw library

    Given the circumstances of the case, plus the fact that plaintiff was represented by a government lawyer, We believe the award of 25% as attorney’s fees and P500,000.00 as exemplary damages is out of proportion to the actual damage caused by the non-performance of the contract and is excessive, unconscionable and iniquitous.

    In a Resolution dated July 13, 1994, the appellate court denied the petitioner’s motion for reconsideration of the said decision.

    Hence, this petition anchored on the following assigned errors:chanrob1es virtual 1aw library

    I


    THE HONORABLE COURT OF APPEALS COMMITTED A MISTAKE IN GIVING ITS IMPRIMATUR TO THE DECISION OF THE TRIAL COURT WHICH COMPOUNDED INTEREST ON SURCHARGES.

    II


    THE HONORABLE COURT OF APPEALS ERRED IN NOT SUSPENDING IMPOSITION OF INTEREST FOR THE PERIOD OF TIME THAT PRIVATE RESPONDENT HAS FAILED TO ASSIST PETITIONER IN APPLYING FOR RELIEF OF LIABILITY THROUGH THE COMMISSION ON AUDIT AND THE OFFICE OF THE PRESIDENT.

    III


    THE HONORABLE COURT OF APPEALS ERRED IN NOT DELETING AWARD OF ATTORNEY’S FEES AND IN REDUCING PENALTIES.

    Significantly, the petitioner does not question his liability for his restructured loan under the promissory note marked Exhibit "A." The first question to be resolved in the case at bar is whether there are contractual and legal bases for the imposition of the penalty, interest on the penalty and attorney’s fees.

    The petitioner imputes error on the part of the appellate court in not totally eliminating the award of attorney’s fees and in not reducing the penalties considering that the petitioner, contrary to the appellate court’s findings, has allegedly made partial payments on the loan. And if penalty is to be awarded, the petitioner is asking for the non-imposition of interest on the surcharges inasmuch as the compounding of interest on surcharges is not provided in the promissory note marked Exhibit "A." The petitioner takes exception to the computation of the private respondent whereby the interest, surcharge and the principal were added together and that on the total sum interest was imposed. Petitioner also claims that there is no basis in law for the charging of interest on the surcharges for the reason that the New Civil Code is devoid of any provision allowing the imposition of interest on surcharges.chanrob1es virtua1 1aw 1ibrary

    We find no merit in the petitioner’s contention. Article 1226 of the New Civil Code provides that:chanrob1es virtual 1aw library

    In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.

    The penalty may be enforced only when it is demandable in accordance with the provisions of this Code.

    In the case at bar, the promissory note (Exhibit "A") expressly provides for the imposition of both interest and penalties in case of default on the part of the petitioner in the payment of the subject restructured loan. The pertinent 6 portion of the promissory note (Exhibit "A") imposing interest and penalties provides that:chanrob1es virtual 1aw library

    For value received, I/We jointly and severally promise to pay to the CULTURAL CENTER OF THE PHILIPPINES at its office in Manila, the sum of THREE MILLION FOUR HUNDRED ELEVEN THOUSAND FOUR HUNDRED + PESOS (P3,411.421.32) Philippine Currency, . . .

    x       x       x


    With interest at the rate of FOURTEEN per cent (14%) per annum from the date hereof until paid. PLUS THREE PERCENT (3%) SERVICE CHARGE.

    In case of non-payment of this note at maturity/on demand or upon default of payment of any portion of it when due, I/We jointly and severally agree to pay additional penalty charges at the rate of TWO per cent (2%) per month on the total amount due until paid, payable and computed monthly. Default of payment of this note or any portion thereof when due shall render all other installments and all existing promissory notes made by us in favor of the CULTURAL CENTER OF THE PHILIPPINES immediately due and demandable. (Emphasis supplied)

    x       x       x


    The stipulated fourteen percent (14%) per annum interest charge until full payment of the loan constitutes the monetary interest on the note and is allowed under Article 1956 of the New Civil Code. 7 On the other hand, the stipulated two percent (2%) per month penalty is in the form of penalty charge which is separate and distinct from the monetary interest on the principal of the loan.

    Penalty on delinquent loans may take different forms. In Government Service Insurance System v. Court of Appeals, 8 this Court has ruled that the New Civil Code permits an agreement upon a penalty apart from the monetary interest. If the parties stipulate this kind of agreement, the penalty does not include the monetary interest, and as such the two are different and distinct from each other and may be demanded separately. Quoting Equitable Banking Corp. v. Liwanag, 9 the GSIS case went on to state that such a stipulation about payment of an additional interest rate partakes of the nature of a penalty clause which is sanctioned by law, more particularly under Article 2209 of the New Civil Code which provides that:chanrob1es virtua1 1aw 1ibrary

    If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum.

    The penalty charge of two percent (2%) per month in the case at bar began to accrue from the time of default by the petitioner. There is no doubt that the petitioner is liable for both the stipulated monetary interest and the stipulated penalty charge. The penalty charge is also called penalty or compensatory interest. Having clarified the same, the next issue to be resolved is whether interest may accrue on the penalty or compensatory interest without violating the provisions of Article 1959 of the New Civil Code, which provides that:chanrob1es virtual 1aw library

    Without prejudice to the provisions of Article 2212, interest due and unpaid shall not earn interest. However, the contracting parties may by stipulation capitalize the interest due and unpaid, which as added principal, shall earn new interest.

    According to the petitioner, there is no legal basis for the imposition of interest on the penalty charge for the reason that the law only allows imposition of interest on monetary interest but not the charging of interest on penalty. He claims that since there is no law that allows imposition of interest on penalties, the penalties should not earn interest. But as we have already explained, penalty clauses can be in the form of penalty or compensatory interest. Thus, the compounding of the penalty or compensatory interest is sanctioned by and allowed pursuant to the above-quoted provision of Article 1959 of the New Civil Code considering that:chanrob1es virtual 1aw library

    First, there is an express stipulation in the promissory note (Exhibit "A") permitting the compounding of interest. The fifth paragraph of the said promissory note provides that: "Any interest which may be due if not paid shall be added to the total amount when due and shall become part thereof, the whole amount to bear interest at the maximum rate allowed by law." 10 Therefore, any penalty interest not paid, when due, shall earn the legal interest of twelve percent (12%) per annum, 11 in the absence of express stipulation on the specific rate of interest, as in the case at bar.

    Second, Article 2212 of the New Civil Code provides that "Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point." In the instant case, interest likewise began to run on the penalty interest upon the filing of the complaint in court by respondent CCP on August 29, 1984. Hence, the courts a quo did not err in ruling that the petitioner is bound to pay the interest on the total amount of the principal, the monetary interest and the penalty interest.

    The petitioner seeks the elimination of the compounded interest imposed on the total amount based allegedly on the case of National Power Corporation v. National Merchandising Corporation, 12 wherein we ruled that the imposition of interest on the damages from the filing of the complaint is unjust where the litigation was prolonged for twenty-five (25) years through no fault of the defendant. However, the ruling in the said National Power Corporation (NPC) case is not applicable to the case at bar inasmuch as our ruling on the issue of interest in that NPC case was based on equitable considerations and on the fact that the said case lasted for twenty-five (25) years "through no fault of the defendant." In the case at bar, however, equity cannot be considered inasmuch as there is a contractual stipulation in the promissory note whereby the petitioner expressly agreed to the compounding of interest in case of failure on his part to pay the loan at maturity. Inasmuch as the said stipulation on the compounding of interest has the force of law between the parties and does not appear to be inequitable or unjust, the said written stipulation should be respected.chanrob1es virtua1 1aw 1ibrary

    The private respondent’s Statement of Account (marked Exhibits "C" to "C-2") 13 shows the following breakdown of the petitioner’s indebtedness as of August 28, 1986:chanrob1es virtual 1aw library

    Principal P2,838,454.68

    Interest P576,167.89

    Surcharge P4,581,692.10

    ——————

    P7,996,314.67

    The said statement of account also shows that the above amounts stated therein are net of the partial payments amounting to a total of Four Hundred Fifty-Two Thousand Five Hundred Sixty-One Pesos and Forty-Three Centavos (P452,561.43) which were made during the period from May 13, 1983 to September 30, 1983. 14 The petitioner now seeks the reduction of the penalty due to the said partial payments. The principal amount of the promissory note (Exhibit "A") was Three Million Four Hundred Eleven Thousand Four Hundred Twenty-One Pesos and Thirty-Two Centavos (P3,411,421.32) when the loan was restructured on August 31, 1979. As of August 28, 1986, the principal amount of the said restructured loan has been reduced to Two Million Eight Hundred Thirty-Eight Thousand Four Hundred Fifty-Four Pesos and Sixty-Eight Centavos (P2,838,454.68). Thus, petitioner contends that reduction of the penalty is justifiable pursuant to Article 1229 of the New Civil Code which provides that: "The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable." Petitioner insists that the penalty should be reduced to ten percent (10%) of the unpaid debt in accordance with Bachrach Motor Company v. Espiritu. 15

    There appears to be a justification for a reduction of the penalty charge but not necessarily to ten percent (10%) of the unpaid balance of the loan as suggested by petitioner. Inasmuch as petitioner has made partial payments which showed his good faith, a reduction of the penalty charge from two percent (2%) per month on the total amount due, compounded monthly, until paid can indeed be justified under the said provision of Article 1229 of the New Civil Code.

    In other words, we find the continued monthly accrual of the two percent (2%) penalty charge on the total amount due to be unconscionable inasmuch as the same appeared to have been compounded monthly.

    Considering petitioner’s several partial payments and the fact he is liable under the note for the two percent (2%) penalty charge per month on the total amount due, compounded monthly, for twenty-one (21) years since his default in 1980, we find it fair and equitable to reduce the penalty charge to a straight twelve percent (12%) per annum on the total amount due starting August 28, 1986, the date of the last Statement of Account (Exhibits "C" to "C-2"). We also took into consideration the offers of the petitioner to enter into a compromise for the settlement of his debt by presenting proposed payment schemes to respondent CCP. The said offers at compromise also showed his good faith despite difficulty in complying with his loan obligation due to his financial problems. However, we are not unmindful of the respondent’s long overdue deprivation of the use of its money collectible from the petitioner.

    The petitioner also imputes error on the part of the appellate court for not declaring the suspension of the running of the interest during that period when the respondent allegedly failed to assist the petitioner in applying for relief from liability. In this connection, the petitioner referred to the private respondent’s letter 16 dated September 28, 1988 addressed to petitioner which partially reads:chanrob1es virtua1 1aw 1ibrary

    Dear Mr. Tan:chanrob1es virtual 1aw library

    x       x       x


    With reference to your appeal for condonation of interest and surcharge, we wish to inform you that the center will assist you in applying for relief of liability through the Commission on Audit and Office of the President . . . .

    While your application is being processed and awaiting approval, the center will be accepting your proposed payment scheme with the downpayment of P160,000.00 and monthly remittances of P60,000.00 . . .

    x       x       x


    The petitioner alleges that his obligation to pay the interest and surcharge should have been suspended because the obligation to pay such interest and surcharge has become conditional, that is dependent on a future and uncertain event which consists of whether the petitioner’s request for condonation of interest and surcharge would be recommended by the Commission on Audit and the Office of the President to the House of Representatives for approval as required under Section 36 of Presidential Decree No. 1445. Since the condition has not happened allegedly due to the private respondent’s reneging on its promise, his liability to pay the interest and surcharge on the loan has not arisen. This is the petitioner’s contention.

    It is our view, however, that the running of the interest and surcharge was not suspended by the private respondent’s promise to assist the petitioners in applying for relief therefrom through the Commission on Audit and the Office of the President.

    First, the letter dated September 28, 1988 alleged to have been sent by the respondent CCP to the petitioner is not part of the formally offered documentary evidence of either party in the trial court. That letter cannot be considered evidence pursuant to Rule 132, Section 34 of the Rules of Court which provides that: "The court shall consider no evidence which has not been formally offered . . . ." Besides, the said letter does not contain any categorical agreement on the part of respondent CCP that the payment of the interest and surcharge on the loan is deemed suspended while his appeal for condonation of the interest and surcharge was being processed.

    Second, the private respondent correctly asserted that it was the primary responsibility of petitioner to inform the Commission on Audit and the Office of the President of his application for condonation of interest and surcharge. It was incumbent upon the petitioner to bring his administrative appeal for condonation of interest and penalty charges to the attention of the said government offices.

    On the issue of attorney’s fees, the appellate court ruled correctly and justly in reducing the trial court’s award of twenty-five percent (25%) attorney’s fees to five percent (5%) of the total amount due.

    WHEREFORE, the assailed Decision of the Court of Appeals is hereby AFFIRMED with MODIFICATION in that the penalty charge of two percent (2%) per month on the total amount due, compounded monthly, is hereby reduced to a straight twelve percent (12%) per annum starting from August 28, 1986. With costs against the petitioner.chanrob1es virtua1 1aw 1ibrary

    SO ORDERED.

    Bellosillo, Mendoza, Quisumbing and Buena, JJ., concur.

    Endnotes:



    1. Penned by Associate Justice Oscar M. Herrera and concurred in by Associate Justices Quirino D. Abad Santos, Jr. and Alfredo J. Lagamon; Rollo, pp. 72-83.

    2. Rollo, p. 84.

    3. Penned by Judge Willelmo C. Fortun; Records, pp. 295-306.4, Records, pp. 295-306.

    4. Records, pp. 295-306.

    5. Rollo, pp. 72-83.

    6. Records, p. 47.

    7. Article 1956. "No interest shall be due unless it has been expressly stipulated in writing" .

    8. 145 SCRA 311, 321 (1986).

    9. 32 SCRA 293 (1970).

    10. Records, p. 47.

    11. Central Bank Circular 416 series of 1974 — "By virtue of the authority granted to it under Section 1 of Act 2655, as amended, otherwise known as the ‘Usury Law’ the Monetary Board in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for the loan, or forbearance of any money, goods, or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be twelve (12%) per cent per annum. This Circular shall take effect immediately."cralaw virtua1aw library

    12. 117 SCRA 789 (I 982).

    13. RTC Records, p. 125.

    14. RTC Records, p. 123.

    15. 52 Phil 346 (1928).

    16. CA Rollo, p. 67.

    G.R. No. 116285   October 19, 2001 - ANTONIO TAN v. COURT OF APPEALS and the .C.C.P


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