In 1989, during the months of August and September, respondent Luz Despabiladeras obtained on credit from petitioner Roger Manzano various construction materials which she used in her construction project at the Camarines Sur Polytechnic Colleges (CSPC).

By petitioner's claim, he delivered to respondent during above-said period a total of P307,140.50 worth of construction materials payable upon respondent's initial collection from CSPC, to bear 8% monthly interest until fully paid.^[1]

Respondent having paid the amount of only P130,000.00 exclusive of interest, despite receipt of payments from CSPC, petitioner filed on April 6, 1990 a complaint^[2] against her for sum of money with damages before the Regional Trial Court of Iriga City with the following prayer:

WHEREFORE, it is respectfully prayed that pending the final determination of this case, a supplier's lien be established and enforced on the yet collectible payments that defendant has against the Camarines Sur Polytechnic Colleges, and, after hearing, that judgment issue ordering defendant to pay plaintiff the following:

a) P201,711.74 plus 8% monthly interest thereon from September 20, 1989 until payment in full;

b) Attorney's fees of P10,000.00 plus equivalent of P500.00 per court appearance as well as 25% of the total award in favor of the plaintiff;

c) Moral damages in such amount as this Honorable Court may determine;

d) The value of lost business opportunities as well as the cost of money as the plaintiff may be able to prove;

e) Such other litigation expenses as plaintiff may be able to prove;

f) Exemplary damages in such amount as this Honorable Court may assess;

g) The costs.

Plaintiff respectfully prays for such other reliefs as may be consistent with justice and equity.

In her Answer with Counterclaim,^[3] respondent alleged that petitioner had substantially altered the prices of the construction materials delivered to her; and that in addition to the P130,000.00 she had paid petitioner, she had made additional payments to petitioner via two checks (one in the amount of P43,069.00 and the other in the amount of P14,000.00).

Petitioner filed his Reply and Answer to Counterclaim alleging, inter alia, that the two checks represented payment for past obligations other than that subject of the case.

Branch 36 of the Iriga Regional Trial Court (the trial court) later granted petitioner's "Motion to Establish and Enforce Plaintiff's Supplier's Lien" and accordingly ordered the President of the CSPC "to retain the sum of P201,711.74 from the final payment due to the defendant . . . pending final resolution of this case."^[4]

As required by the trial court, petitioner filed a bond in the amount of P50,000.00 to answer for any damages arising from the grant and enforcement of supplier's lien.

Issues having been joined, the case was set for pre-trial.

After the pre-trial, the trial judge issued the following order:^[5]

At this pre-trial conference, there is no dispute that the plaintiff delivered and defendant received certain construction materials but the defendant does not agree on the cost claimed by the plaintiff. Wherefore, it is mutually agreed that the plaintiff shall submit an offer to stipulate showing an itemized list of construction materials delivered to the defendant together with the cost claimed by the plaintiff within fifteen (15) days furnishing copy thereof to the defendant who will state her objections if any, or comment therein within the same period of time.

x x x (Emphasis and underscoring supplied)

Instead of submitting "an offer to stipulate," petitioner filed on October 24, 1990 a "Request for Admission"^[6] asking respondent to admit within 15 days from receipt the following:

1. That on the specific dates set forth in Annexes A, A-1 and A-2 hereof, plaintiff delivered to and defendant received the various items particularly described in said annexes duly covered by the invoices respectively set forth therein;
   
   
2. That of the total amount of P314,610.50 representing the value of the goods described in Annexes A, A-1 and A-2, plaintiff has paid only P130,000.00. (Underscoring supplied)
   

No response to the Request for Admission was proffered by respondent until in the course of the trial of the case or on April 8, 1991, respondent filed a list^[7] of items admitted to have been delivered and those not admitted, noting therein that "Deliveries admitted do not bear the actual price agreed [upon] or the specifications requested," which filing the trial court noted in its order of even date.^[8]

Petitioner later filed a Motion for Partial Judgment and Execution^[9] alleging that "substantial justice would be served if partial judgment would issue (on the pleadings) in respect to those items admitted to have been received by [respondent]" and attaching as Annex "A"^[10] a list prepared by petitioner containing the items (with the corresponding prices) admitted to have been received by the respondent.

Opposing the Motion for Partial Judgment and Execution,^[11] respondent alleged:

2. That the motion appears to have been based on the list of items on file with the court which defendant admitted to have been delivered to her by plaintiff but which, will still be litigated in order to determine the actual cost or value as the delivery receipts did not contain or reflect the true agreement between the parties or the cost does not appear on the receipt at the time of the delivery of the items;
   
   
3. That furthermore, defendant in her answer alleged payments in three (3) checks which amounted to a total of P187,269.00, which if applied to the actual cost of the items admitted to have been delivered would be more than enough to satisfy defendant's indebtedness;
   
   
4. That the matter of cost of the items listed in [the motion] is litigious, hence, a partial judgment and execution will not be proper as prayed for by the plaintiff. (Underscoring supplied)
   

At the hearing conducted on August 2, 1991, petitioner's wife, Ederlinda K. Manzano, testified that in addition to the P130,000.00, she and petitioner also received P97,000.00 which came, upon agreement of the parties, from the "retention lien" of the CSPC.

Petitioner, by counsel, also admitted having received P25,000.00 upon the expiration of respondent's counterbond which was posted for the dissolution of petitioner's bond.

On February 21, 1994, the trial court issued the following order:^[12]

Considering that the defendant, up to this time ha[s] not answered under oath the request for admission, dated October 23, 1990, as prayed for by the counsel for the plaintiff, the facts requested to be admitted are hereby confirmed.

The plaintiff then presented the last witness, Ederlinda K. Manzano, whose direct testimony was completed. x x x After the testimony of the witness, the counsel for the plaintiff formally offered Exhibits A to E and submarkings which were all admitted. After the admission of the documentary exhibits, the plaintiff rested his case. (Emphasis and underscoring supplied)

At the reception of evidence for the defense, respondent offered documentary evidence including two cleared checks payable to petitioner, one dated August 10, 1989 in the amount of P43,069.00, and another dated August 12, 1989 in the amount of P14,200.00. As reflected in petitioner's Reply and Answer to Counterclaim, the receipt of the checks was admitted but it was claimed that they represented payment for previous accounts, not for respondent's account subject of the present case.

By Decision^[13] of July 7, 1997, the trial court found for petitioner.

x x x Despite receipt of said request for admission, defendant did not answer the same, under oath, consequently, defendant is deemed to have admitted that plaintiff delivered to her and she received the goods delivered with the total value of P314,610.50 and that of the said total amount, she has paid only P130,000.00.

There is no more need for the Court to examine and discuss the evidence submitted by the plaintiff to prove the account of defendant because what has been admitted need not be proved. On the other hand, the evidence submitted by defendant which are intended to impress upon the Court that aside from P130,000.00, she paid on September 20, 1989, she made other payments, and that her total unpaid balance is not the amount being demanded by plaintiff, have to be ignored by the court, without even ruling on their credibility, because of her aforesaid admission that her total account is P314,610.50 and out of which, she has paid only P130,000.00. Admission made by the parties in the pleadings, or in the course of the trial or other proceedings do not require proof and cannot be contradicted unless previously shown to have been made through palpable mistake (Yu v. Magpayo, 44 SCRA 163). There is no showing in this case of such fact. In another case, the Supreme Court ruled that an admission made in the pleadings cannot be controverted by the party making such admission and are conclusive as to him. All proofs submitted by him contrary thereto and inconsistent therewith should be ignored, whether or not objection is interposed (Elayda v. Court of Appeals, 199 SCRA 349).

Plaintiff through his witness has admitted in the course of her testimony, that plaintiff received additional payment in the amount of P97,000.00 as a result of the order of this Court dated June 14, 1991. This was confirmed by plaintiff's counsel (tsn, p. 14, Feb. 21, 1994). And so, as matters now stand, defendant had already paid the plaintiff the total amount of P227,000.00 (P130,000.00 plus P97,000.00) out of the total obligation of P314,610.50, thereby leaving an unpaid balance of P87,610.50.

Plaintiff insists that there was an agreement between him and the defendant for the latter to pay 8% monthly interests on the purchase on credit. Defendant denied that there was such an agreement. According to the counsel for plaintiff in his memorandum, it [is] just "a matter of one's word against the other's." Plaintiff did not present any written agreement as to payment of interests. In her testimony, Erlinda Manzano admitted that their agreement for the payment of interest was only verbal (tsn, p. 6, Jan. 17, 1996). Consequently, plaintiff cannot collect the said 8% monthly interest because no interest shall be due unless it has been expressly stipulated in writing (Art. 1956, Civil Code of the Philippines). Plaintiff, however, is entitled to interest at the legal rate from the filing of the complaint. Legal rate in this case means 12% per annum (A.C. Enterprises, Inc. v. Construction Industry Arbitration Commission, 224 SCRA 55).

The Court cannot grant the moral, exemplary and other damages prayed for by the plaintiff. The defendant had the right to resist the demands for payment of interest which is not due by virtue of the provision of law herein before cited. Plaintiff is, however, entitled to a reasonable attorney's fee in the amount of P10,000.00 for he had to institute this case in order to collect.

In the light of the defendant's admission herein before explained, her contention that her remaining balance is lesser than the amount being claimed by plaintiff, is without merit. Defendant's claim that she is not liable to pay the 8% monthly interests is correct, but she should have rendered payment of the amount being claimed by the plaintiff minus the 8% monthly interest and if plaintiff refuses to accept, consign the amount in Court.

x x x

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay the former the sum of

a) P87,610.50 plus interest at the legal rate (12% per annum) from the filing of the complaint up to the time of actual payment;

b) P10,000.00 as reasonable attorney's fees; and

c) the costs of suit.

All other claims and counterclaims are hereby dismissed.^[14] (Emphasis and underscoring supplied)

At the Court of Appeals, respondent faulted the trial court

1. [for] ruling that defendant-appellant has admitted the facts requested for admission, particularly the matter of having paid only P130,000.00; and
   
   
2. [for] failing to credit another payment which was even admitted by the plaintiff-appellee to have been paid by defendant-appellant.^[15]
   

By Decision^[16] of March 31, 2000, the Court of Appeals set aside that of the trial court and dismissed petitioner's complaint, holding as follows:

If at all there was failure by the appellant to file a sworn statement denying the request for admission, it was precisely because of the agreement by the parties during the pre-trial period that the appellant would only file a comment, which she did by submitting a list of items, either admitting receipt of construction materials or denying receipt thereof. Necessarily, the appellant could not have impliedly admitted the facts mentioned in the request for admission. The Court even required the appellee to present evidence on the "matters" mentioned in the request for admission, or on the issue concerning payment and the balance of the indebtedness. Aside from that, the appellee was even allowed to present evidence on rebuttal. This is not to mention the fact that documents showing payments, other than the P130,000.00, were admitted by the Court. If indeed the unpaid balance was admitted, supposedly because of denial of the request for admission, then, necessarily the appellant should have been prevented by the Court from presenting evidence contradicting such admissions.

Supposedly admitted by the court was the payment of P130,000.00 and a separate amount of P97,000.00 that was admitted by the appellee. There was another payment that the Court did not mention in the amount of P25,000.00. Even counsel admitted that after the expiration of the counter bond in and "in consideration" thereof, the plaintiff was able to get the amount of P25,000.00. If admitted, said amount should also be credited in favor of appellant.

To sum these up, the amount that should be credited would be P252,000.00.

If however, the two other payments -1) for P43,069.50, Exhibit "1," and 2) for P14,200.00, Exhibit "2," are accepted, then computation wise, the total amount of P309,269.50 had already been paid.

It is obvious to us that there is already full payment. (Underscoring supplied)

Hence, petitioner's present petition for review on certiorari which raises the following issue:

What is the legal consequence when a request for admission of material and relevant facts pursuant to Rule 26 is not answered under oath within the period stated in the Rules by a party litigant served therefore?^[17]

Petitioner contends that when respondent failed to deny under oath the truth of the material facts subject of petitioner's Request for Admission, she is deemed to have admitted them : that he delivered to her, and she received various construction materials costing a total of P314,610.50, P130,000.00 of which had been partially paid.^[18]

Petitioner further contends that the appellate court committed a reversible error "when it considered that the agreement in the October 2, 1990 pre-trial and the request for admission dated October 23, 1990 refer to one and the same thing;"^[19] that "even the trial court on November 15, 1990^[20] required respondent to file her comment on the request for admission, [which] comment is understood to mean the comment as required by Rule 26 which should be under oath even the same is not stated in the pre-trial order of November 15, 1990 because the trial court does not have any discretion to amend or repeal Rule 26 and its effects;"^[21] that the list of items submitted by respondent "is not in keeping with what is required by Rule 26 and therefore cannot be considered as compliance to said Rule;"^[22] and that "the fact that despite the admission by respondent of the matters contained in the request for admission, the trial court allowed said respondent to present her evidence that even tended to contradict her previous admission does not deprive the trial court in the appreciation of evidence submitted prior to the rendition of the decision to disregard the evidence presented by respondent for being inconsistent [with] and immaterial [to] her previous admission by virtue of her failure to respond the request for admission pursuant to Rule 26."^[23]

Petitioner's arguments are impressed with merit.

At the commencement on April 6, 1990 of the action, the prevailing rule, Rule 26 of the 1964 Rules of Court, Sections 1 and 2 of which were substantially reproduced in the present Rules,^[24] provides:

SECTION 1. Request for admission. At any time after issues have been joined, a party may serve upon any other party a written request for the admission by the latter of the genuineness of relevant documents described in and exhibited with the request or of the truth of any material and relevant matters of fact set forth in the request. Copies of the documents shall be delivered with the request unless copies have already been furnished.

SECTION 2. Implied Admission. Each of the matters of which an admission is requested shall be deemed admitted unless, within a period designated in the request, which shall not be less than ten (10) days after service thereof, or within such further time as the court may allow on motion and notice, the party to whom the request is directed serves upon the party requesting the admission a sworn statement either denying specifically the matters of which an admission is requested or setting forth in detail the reasons why he cannot truthfully either admit or deny those matters.

Objections on the ground of irrelevancy or impropriety of the matter requested shall be promptly submitted to the court for resolution.

x x x (Emphasis and underscoring supplied)

The agreement of the parties during the pre-trial conference of October 2, 1990, as reflected in the pre-trial order of even date, was that "the [petitioner] shall submit an offer to stipulate showing an itemized list of construction materials delivered to the [respondent] together with the cost claimed by the [petitioner] within fifteen (15) days[,] furnishing copy thereof to the [respondent] who will state her objections if any, or comment there[o]n within the same period of time." In substantial compliance with said agreement, petitioner chose to instead file a request for admission, a remedy afforded by a party under Rule 26.

The above-quoted Sections 1 and 2 of Rule 26 should not be disregarded, as in fact the trial court did not, when it ordered respondent to file comment thereon, just because the parties mutually agreed that petitioner submit "an offer to stipulate."

For, as stated earlier, the request for admission is a remedy afforded any party after the issues had been joined.

Respondent having failed to discharge what is incumbent upon her under Rule 26, that is, to deny under oath the facts bearing on the main issue contained in the "Request for Admission," she was deemed to have admitted that she received the construction materials, the cost of which was indicated in the request and was indebted to petitioner in the amount of P184,610.50 (P314,610.50 less the partial payment of P130,000.00).

During the trial, however, petitioner admitted that aside from the P130,000.00 partial payment, he had received a total of P122,000.00 (P97,000.00 plus P25,000.00). Respondent thus had a remaining balance of P62,610.50.

On the award of attorney's fees, the general rule is that attorney's fees cannot be recovered as part of damages because premium should not be placed on the right to litigate. Attorney's fees can be awarded only in the cases enumerated in Article 2208 of the Civil Code,^[25] none of which is present in the case at bar.

WHEREFORE, the petition is hereby GRANTED. The Decision of the Regional Trial Court of Iriga City, Branch 36, dated July 7, 1997 is hereby REINSTATED with the MODIFICATION that respondent Luz Despabiladeras is hereby ordered to pay petitioner Roger Manzano the amount of P62,610.50 plus interest at the legal rate (12% per annum) from the filing of the complaint up to the time of actual payment, and that the award of attorney's fees is deleted.

SO ORDERED.

Panganiban, (Chairman), Sandoval-Gutierrez, and Garcia, JJ., concur.
Corona, J., on leave.

---

^[1] Records at 1-2.

^[2] Id. at 1-4.

^[3] Id. at 43-48.

^[4] Id. at 28.

^[5] Id. at 70.

^[6] Id. at 78.

^[7] Id. at 96-97.

^[8] Id. at 98.

^[9] Id. at 104-106.

^[10] Id. at 106.

^[11] Id. at 107.

^[12] Id. at 146.

^[13] Records at 233-236.

^[14] Id. at 234-236.

^[15] Court of Appeals Rollo at 51.

^[16] Rollo at 28-34.

^[17] Id. at 17.

^[18] Id. at 19.

^[19] Id. at 20.

^[20] "Pre-trial Order" of November 15, 1990, Records at 82 reads:


SO ORDERED. (Underscoring supplied)

^[21] Rollo at 20.

^[22] Id. at 20-21.

^[23] Id. at 21.

^[24] Sections 1 and 2 of Rule 26 of the 1997 Rules of Civil Procedure are substantially the same. However, the present rules require that the request for admission should also be filed in court. Moreover, the period of 10 days to answer the request was extended to 15 days and that instead of "objections on the ground of impropriety of the matter requested shall be promptly submitted to the court for resolution" as provided in the former rule, the present rules provides that "Objections to any request for admission shall be submitted to the court by the party requested within the period for and prior to the filing of his sworn statement as contemplated in the preceding paragraph and his compliance therewith (with the request for admission) shall be deferred until such objections are resolved, which resolution shall be made as early as practicable." (HERRERA, O. II Remedial Law 2000 ed. 49-51).

^[25] American Home Assurance Company, 309 SCRA 250, 264 (1999).