MCMP Construction Corp. v. Monark Equipment Corp.

Excessive and unconscionable interests are void for being contrary to morals, if not against the law.

G.R. No. 201001, 10 November 2014

Plaintiff Monark Equipment Corp. initiated a Complaint for a Sum of Money against Defendant MCMP Construction Corp. after the latter failed to pay rental fees for the use of five (5) pieces of heavy equipment as stated in their Rental Equipment Contract. In the agreement, interest and penalties were stated as follows:

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Obligations with a Penal Clause

If there is no stipulation to the contrary, the penalty in obligations that carry a penal clause substitutes the indemnity for damages, as well the payment of interests in case of non-compliance. This penalty is referred to as liquidated damages. To be entitled to the penalty, the creditor is not required to show proof of actual damages.

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