Credit - June 29, 2015 Cases

7/23/2019 Credit - June 29, 2015 Cases

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G.R. No. 194201 November 27, 2013

SPOUSES BAYANI H. ANDAL AND GRAIA G. ANDAL,Petitioners,

vs.

PHILIPPINE NA!IONAL BAN" REGIS!ER O# DEEDS O# BA!ANGAS I!Y $OSE .

ORALES,Respondents.

Before the Court is a Petition for Review on Certiorari1under Rule 45 of the Rules of Court

seeking to partially set aside the Decision,dated !" #arch "1", and the

Resolution,!dated 1! $cto%er "1", of the Court of &ppeals 'C&( in C&)*.R. C+ o.

-15". he challenged Decision dis/issed the appeal of herein respondent Philippine

ational Bank 'respondent %ank( and affir/ed the decision of the Regional rial Court

'RC(, Branch 04, Batangas City with the /odification that the interest rate to %e applied %y

respondent %ank on the principal loan o%ligation of petitioners pouses Bayani 2. &ndal and

*racia *. &ndal 'petitioners spouses( shall %e 13 per annu/, to %e co/puted fro/

default.

&s found %y the C&, the facts of this case are as follows

on epte/%er 6, 1--5, 7petitioners)spouses8 o%tained a loan fro/ 7respondent %ank8 in

the a/ount ofP1,0"5,"""."", for which they eecuted twelve '1( pro/issory notes

7undertaking8 to pay 7respondent %ank8 the principal loan with varying interest rates of 16.53

to 63 per interest period. 9t was agreed upon %y the parties that the rate of interest /ay %e

increased or decreased for the su%se:uent interest periods, with prior notice to 7petitioners)

spouses8, in the event of changes in interest rates prescri%ed %y law or the #onetary Board

, or in the %ank;s overall cost of funds.

o secure the pay/ent of the said loan, 7petitioners)spouses8 eecuted in favor of

7respondent %ank8 a real estate /ortgage using as collateral five '5( parcels of land

including all i/prove/ents therein, all situated in Batangas City and covered %y ransfer

Certificate of itle 'C( os. )

the real estate /ortgage, particularly with respect to the three '!( parcels of land covered %y

C os. )ust enrich/ent at their epense, giving

7respondent %ank8 no right to foreclose their /ortgaged properties. .

$n &ugust 6, ""4 7respondent %ank8 filed its answer, denying the allegations in the

co/plaint. 7respondent %ank8 alleged that the penalty charges i/posed on the loan

was epressly stipulated under the credit agree/ents and in the pro/issory notes@ although7petitioners)spouses8 paid to 7respondent %ank8P14,0"","""."" on =uly 1", ""1, the for/er

was still inde%ted to the latter in the a/ount of P

!!,-

date of the twelve '1( pro/issory notes covered %y the real estate /ortgages, to

%e applied on a declining %alance of the principal after the partial pay/entsof P14,0"",""."" 'paid =uly 16, ""1( and P,""",""".""


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!. Declaring as illegal and void the foreclosure sales , the Certificates of ales and the

consolidation of titles of the su%>ect real properties, including the cancellation of the new

ransfer Certificates of itle in the na/e of the 7respondent8 %ank and reinstating

ransfer Certificates of itle os. )

epenses after foreclosure were furnished %y the 7respondent8 %ank during the court

hearings. he central legal :uestion is that there is no agree/ent in writing fro/ the

7petitioners)spouses8A%orrowers for the interest rate for each interest period neither fro/ the

data co/ing fro/ the Central Bank or the cost of /oney which is understood to /ean the

interest cost of the %ank deposits for/ the pu%lic. uch i/position of the increased interest

without the consent of the %orrower is null and void pursuant to &rticle 1-5< of the Civil

Code and as held in the pronounce/ent of the upre/e Court in several cases and C.B.

Circular o. 11-1 that the interest rate for each re)pricing period under the floating rate of

interest is su%>ect to /utual agree/ent in writing. &rt. 1-5< states that no interest is due

unless it has %een epressly stipulated and agreed to in writing.

&ny stipulation where the fiing of interest rate is the sole prerogative of the

creditorA/ortgagee, %elongs to the class of potestative condition which is null and void

under &rt. 1!"0 of the ew Civil Code. he fulfill/ent of a condition cannot %e left to the

sole will of 7one of8 the contracting parties.

9n the instant case, if the interest is declared null and void, the foreclosure sale for a higher

a/ount than what is legally due is likewise null and void %ecause under the Civil Code, a

/ortgage /ay %e foreclosed only to enforce the fulfill/ent of the o%ligation for whose

security it was constituted '&rt. 1


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setting aside the penalty charges, as such is contrary to the principle of the o%ligatory force

of contracts under &rticles 1!15 and 115- of the Civil Code.-

he C& disposed of the issue in the following /anner

e partly agree with 7respondent %ank;s8 contention.

ettled is the rule that the contracting parties are free to enter into stipulations, clauses,

ter/s and conditions as they /ay dee/ convenient, as long as these are not contrary to

law, /orals, good custo/s, pu%lic order or pu%lic policy. Pursuant to &rticle 115- of the Civil

Code, these o%ligations arising fro/ such contracts have the force of law %etween the

parties and should %e co/plied with in good faith. .

9n the case at %ar, 7respondent %ank8 and 7petitioners)spouses8 epressly stipulated in the

pro/issory notes the rate of interest to %e applied to the loan o%tained %y the latter fro/ the

for/er, .

7Respondent %ank8 insists that 7petitioner)spouses8 agreed to the interest rates stated in the

pro/issory notes since the latter voluntarily signed the sa/e. 2owever, we find /ore

credi%le and %elieva%le the version of 7petitioners)spouses8 that they were /ade to sign the

said pro/issory notes in %lank with respect to the rate of interest and penalty charges, and

su%se:uently, 7respondent8 %ank filled in the %lanks, i/posing high interest rate %eyond

which they were /ade to understand at the ti/e of the signing of the pro/issory notes.

he signing %y 7petitioners)spouses8 of the pro/issory notes in %lank ena%led 7respondent8

%ank to i/pose interest rates on the loan o%ligation without prior notice to 7petitioners)

spouses8. he unilateral deter/ination and i/position of interest rates %y 7respondent8 %ank

without 7petitioners)spouses;8 assent is o%viously violative of the principle of /utuality of

contracts ordained in &rticle 1!"0 of the Civil Code .

7Respondent %ank;s8 act converted the loan agree/ent into a contract of adhesion where

the parties do not %argain on e:ual footing, the weaker party;s participation, herein

7petitioners)spouses8, %eing reduced to the alternative to take it or leave it. 7Respondent8

%ank tried to sidestep this issue %y averring that 7petitioners)spouses8, as %usiness/en,

were on e:ual footing with 7respondent %ank8 as far as the su%>ect loan agree/ents are

concerned. hat /ay %e true insofar as entering into the original loan agree/ents and

/ortgage contracts are concerned. 2owever, that does not hold true when it co/es to the

unilateral deter/ination and i/position of the escalated interest rates i/posed %y

7respondent8 %ank.

he Court further notes that in the case at %ar, 7respondent8 %ank i/posed different rates in

the twelve '1( pro/issory notes interest rate of 103 in five '5( pro/issory notes@ 16.53 in

two '( pro/issory notes@ !3 in one '1( pro/issory note@ and 63 in three '!( pro/issory

notes. $%viously, the interest rates are ecessive and ar%itrary. hus, the foregoing interest

rates i/posed on 7petitioners)spouses;8 loan o%ligation without their knowledge and consent

should %e disregarded, not only for %eing ini:uitous and eor%itant, %ut also for %eing

violative of the principle of /utuality of contracts.

2owever, we do not agree with the trial court in fiing the rate of interest of udicial or etra)>udicial de/and and

su%>ect to the provisions of &rticle 11


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he C& denied respondent %ank;s #otion for Reconsideration for lack of /erit. 9t likewise

found no /erit in petitioners)spouses; contention that no interest is due on their principal

loan o%ligation fro/ the ti/e of foreclosure until finality of the >udg/ent annulling the

foreclosure sale. &ccording to the C&

ota%ly, this Court disregarded the stipulated rate7s8 of interest on the su%>ect

pro/issory notes after finding that the sa/e are ini:uitous and eor%itant, and for %eingviolative of the principle of /utuality of contracts. evertheless, in F:uita%le PC9 Bank v. g

heung gor, the upre/e Court ruled that %ecause the escalation clause was annulled,

the principal a/ount of the loan was su%>ect to the original or stipulated interest rate of

interest, and that upon /aturity, the a/ount due was su%>ect to legal interest at the rate of

13 per annu/. 9n this case, while we si/ilarly annulled the escalation clause contained in

the pro/issory notes, this Court opted not to i/pose the original rates of interest stipulated

therein for %eing ecessive, the sa/e %eing 16.53 to 63 per interest period.

Relevantly, the 2igh Court held in &sian Cathay ?inance and Geasing Corporation v.

pouses Cesario *ravador and or/a De +era, et. al. that stipulations authoriing the

i/position of ini:uitous or unconsciona%le interest are contrary to /orals, if not against the

law. . he nullity of the stipulation on the usurious interest does not, however, affect the

lender;s right to recover the principal of the loan. he de%t due is to %e considered without

the stipulation of the ecessive interest. & legal interest of 13 per annu/ will %e added in

place of the ecessive interest for/erly i/posed.

?ollowing the foregoing rulings of the upre/e Court, it is clear that the i/position %y this

Court of a 13 rate of interest per annu/ on the principal loan o%ligation of 7petitioners)

spouses8, co/puted fro/ the ti/e of default, is proper as it is consistent with prevailing

>urisprudence.

hile the decisions of the pecial eventh Division and the inth Division of this Court in

C&)*.R. C+ o. 65!"! and in C&)*.R. o. 6


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ruling of the upre/e Court in the recent case of Dario acar v. *allery ?ra/es andAor

?elipe Bordey, =r.,"effective 1 =uly "1!, the rate of interest for the loan or for%earance of

any /oney, goods or credits and the rate allowed in >udg/ents, in the a%sence of an

epress contract as to such rate of interest, shall %e si percent '


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G.R. No. 11392& O/ober 23, 199&

SEURI!Y BAN" AND !RUS! O(PANY, petitioner,

vs.

REGIONAL !RIAL OUR! O# (A"A!I, BRANH &1, (AG!ANGGOL EUSEBIO +-

LEILA EN!URA,respondents.

Luestions of law which are of first i/pression are sought to %e resolved in this case hould

the rate of interest on a loan or for%earance of /oney, goods or credits, as stipulated in a

contract, far in ecess of the ceiling prescri%ed under or pursuant to the Esury Gaw, prevail

over ection of Central Bank Circular o. -"5 which prescri%es that the rate of interest

thereof shall continue to %e 13per annumM Do the Courts have the discretion to ar%itrarily

override stipulated interest rates of pr o/issory notes and stipulated interest rates of

pro/issory notes and there%y i/pose a 13 interest on the loans, in the a%sence of

evidence >ustifying the i/position of a higher rateM

his is a petition for review on certiorari for the purpose of assailing the decision of

2onora%le =udge ?ernando +. *orospe of the Regional rial Court of #akati, Branch udg/ent in favor of petitioner BC, the dispositive portion which reads

2FRF?$RF, pre/ises a%ove)considered, and plaintiffIs clai/

having %een duly proven, >udg/ent is here%y rendered in favor of

plaintiff and as against defendant Fuse%io who is here%y ordered to

1. Pay the su/ of P1ointly and severally with defendant Fuse%io

without a need for de/and upon her. 7


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Conse:uently, an $rder was issued %y the court a "uo denying the /otion to grant the rates

of interest %eyond 13per annum@ and holding defendant Geila +entura >ointly and

severally lia%le with co)defendants Fuse%io.

2ence, this petition.

he sole issue to %e settled in this petition is whether or not the !3 rate of interestper

annum agreed upon %y petitioner %ank and respondents is allowa%le and not against the

Esury Gaw.

e find /erit in this petition.

?ro/ the ea/ination of the records, it appears that indeed the agreed rate of interest as

stipulated on the three '!( pro/issory notes is !3per annum. 'he applica%le provision of

law is the Central Bank Circular o. -"5 which took effect on Dece/%er , 1-0,

particularly ections 1 and which state 9

ec. 1. he rate of interest, including co//issions, pre/iu/s, fees

and other charges, on a loan or for%earance of any /oney, goods orcredits, regardless of /aturity and whether secured or unsecured, that

/ay %e charged or collected %y any person, whether natural or

>udicial, shall not %e su%>ect to any ceiling prescri%ed under or

pursuant to the Esury Gaw, as a/ended.

ec. . he rate of interest for the loan or for%earance of any /oney,

goods or credits and the rate allowed in >udg/ents, in the a%sence of

epress contract as to such rate of interest, shall continue to %e twelve

per cent '13(per annum.

CB Circular -"5 was issued %y the Central BankIs #onetary Board pursuant to P.D. 1udiciary. 9t /ust see to

it that is /andate is o%eyed.

he rate of interest was agreed upon %y the parties freely. ignificantly, respondent did not

:uestion that rate. 9t is not for respondent court a "uo to change the stipulations in the

contract where it is not illegal. ?urther/ore, &rticle 1!"< of the ew Civil Code provides that

contracting parties /ay esta%lish such stipulations, clauses, ter/s and conditions as they

/ay dee/ convenient, provided they are not contrary to law, /orals, good custo/s, pu%lic

order, or pu%lic policy. e find no valid reason for the respondent courta "uo to i/pose a

13 rate of interest on the principal %alance owing to petitioner %y respondent in the


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presence of a valid stipulation. 9n a loan or for%earance of /oney, the interest due should %e

that stipulated in writing, and in the a%sence thereof, the rate shall %e 13per

annum. 132ence, only in the a%sence of a stipulation can the court i/pose the 13 rate of

interest.

he pro/issory notes were signed %y %oth parties voluntarily. herefore, stipulations therein

are %inding %etween the/. Respondent Fuse%io, likewise, did not :uestion any of thestipulations therein. 9n fact, in the Co//ent filed %y respondent Fuse%io to this court, he

chose not to :uestion the decision and instead epressed his desire to negotiate with the

petitioner %ank for ter/s within which to settle his o%ligation. 14

9 +9F $? 2F ?$RF*$9*, the decision of the respondent court a "uo, is here%y

&??9R#FD with the #$D9?9C&9$ that the rate of interest that should %e i/posed %e

!3per annum.

G.R. No. 141'11 November 1%, 2001

#IRS! (E!RO INES!(EN! ORPORA!ION, petitioner,vs.

ES!E DEL SOL (OUN!AIN RESERE, IN., ALEN!IN S. DAE*, $R., (ANUEL .SALIEN!ES, (A. ROIO A. DE EGA, ALEANDER G. ASUNION, ALBER!O (.LADORES, IEN!E (. DE ERA, $R., +- #ELIPE B. SESE, respondents.

Before us is a petition for review on certiorari of the Decision1of the Court of &ppealsdatedove/%er 0, 1--- in C&)*.R. C+ o. 5!!0 reversing the Decision!of the Regional rialCourt of Pasig City, Branch 15- dated =une , 1--4 in Civil Case o. !-4. Fssentially, theCourt of &ppeals found and declared that the fees provided for in the Enderwriting andConsultancy &gree/ents eecuted %y and %etween petitioner ?irst #etro 9nvest/ent Corp.'?#9C( and respondent Fste del ol #ountain Reserve, 9nc. 'Fste del ol( si/ultaneouslywith the Goan &gree/ent dated =anuary !1, 1-60 were /ere su%terfuges to ca/ouflage theusurious interest charged %y petitioner ?#9C.

he facts of the case are as follows

9t appears that on =anuary !1, 1-60, petitioner ?#9C granted respondent Fste del ol a loanof even #illion hree 2undred Fighty)?ive housand ?ive 2undred Pesos'P6,!05,5"".""( to finance the construction and develop/ent of the Fste del ol #ountainReserve, a sportsAresort co/ple pro>ect located at Barrio Puray, #ontal%an, Rial.4

Ender the ter/s of the Goan &gree/ent, the proceeds of the loan were to %e released onstaggered %asis. 9nterest on the loan was pegged at siteen '1


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&F#F $? &CC$E $? FF DFG $G #$E&9 RFFR+F, 9C.& $? =EF !, 1-0"

P&R9CEG&R

otal a/ount due as of 11))60 per revised a/ortiation schedule dated 1)!)60

9nterest on P6,---,

Past due interest under ection udicial foreclosure of the real estate /ortgageon =une !, 1-0".1&t the pu%lic auction, petitioner ?#9C was the highest %idder of the/ortgaged properties for ine #illion Pesos 'P-,""",""".""(. he total a/ount of hree#illion $ne 2undred Fighty)Fight housand i 2undred hirty Pesos and eventy)?ive

Centavos 'P!,100,

charges and partly against the principal, due as of =une !, 1-0", there%y leaving a %alanceof i #illion Fight 2undred ity)hree housand wo 2undred inety)even Pesos andeventy)hree Centavos 'P

DefendantsI counterclai/s are dis/issed, for lack of /erit.

?inding the decision of the trial court unaccepta%le, respondents interposed an appeal to theCourt of &ppeals. $n ove/%er 0, 1---, the appellate court reversed the challengeddecision of the trial court. he appellate court found and declared that the fees provided for


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in the Enderwriting and Consultancy &gree/ents were /ere su%terfuges to ca/ouflage theecessively usurious interest charged %y the petitioner ?#9C on the loan of respondent Fstedel ol@ and that the stipulated penalties, li:uidated da/ages and attorneyIs fees wereecessive, ini:uitous, unconsciona%le and revolting to the conscience, and declared thatin lieu thereof, the stipulated one ti/e twenty '"3( percent penalty on the a/ount due andten '1"3( percent of the a/ount due as attorneyIs fees would %e reasona%le and suffice toco/pensate petitioner ?#9C for those ite/s. hus, the appellate court dis/issed the

co/plaint as against the individual respondents sureties and ordered petitioner ?#9C to payor rei/%urse respondent Fste del ol the a/ount of ine 2undred eventy)$ne housandPesos 'P-61,""".""( representing the difference %etween what is due to the petitioner andwhat is due to respondent Fste del ol, %ased on the following co/putation16

& DEF $ 2F 7PF99$FR8

Principal of Goan P6,!0,5"".""

&dd "3 one)ti/e Penalty &ttorneyIs fees

1,46


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f8 RF?EFD $ C$9DFR 2F ?&C 2& RFP$DF FF, &D2E 2F 9D9+9DE&G RFP$DF, &RF 9GG $BG9*&FD $ 2FPF99$FR.

Petitioner essentially assails the factual findings and conclusion of the appellate court thatthe Enderwriting and Consultancy &gree/ents were eecuted to conceal a usurious loan.9n:uiry upon the veracity of the appellate courtIs factual findings and conclusion is not the

function of this Court for the upre/e Court is not a trier of facts. $nly when the factualfindings of the trial court and the appellate court are opposed to each other does this Courteercise its discretion to re)ea/ine the factual findings of %oth courts and weigh which,after considering the record of the case, is /ore in accord with law and >ustice.

&fter a careful and thorough review of the record including the evidence adduced, we findno reason to depart fro/ the findings of the appellate court.

?irst, there is no /erit to petitioner ?#9CIs contention that Central Bank Circular o. -"5which took effect on =anuary 1, 1-0! and re/oved the ceiling on interest rates for securedand unsecured loans, regardless of /aturity, should %e applied retroactively to a contracteecuted on =anuary !1, 1-60, as in the case at %ar, that is, while the Esury Gaw was in fullforce and effect. 9t is an ele/entary rule of contracts that the laws, in force at the ti/e thecontract was /ade and entered into, govern it."#ore significantly, Central Bank Circularo. -"5 did not repeal nor in any way a/end the Esury Gaw %ut si/ply suspended thelatterIs effectivity.1he illegality of usury is wholly the creature of legislation. & Central BankCircular cannot repeal a law. $nly a law can repeal another law.hus, retroactiveapplication of a Central Bank Circular cannot, and should not, %e presu/ed.!

econd, when a contract %etween two '( parties is evidenced %y a written instru/ent, suchdocu/ent is ordinarily the %est evidence of the ter/s of the contract. Courts only need torely on the face of written contracts to deter/ine the intention of the parties. 2owever, thisrule is not without eception.4he for/ of the contract is not conclusive for the law will notper/it a usurious loan to hide itself %ehind a legal for/. Parol evidence is ad/issi%le toshow that a written docu/ent though legal in for/ was in fact a device to cover usury. 9ffro/ a construction of the whole transaction it %eco/es apparent that there eists a corruptintention to violate the Esury Gaw, the courts should and will per/it no sche/e, howeveringenious, to %ecloud the cri/e of usury.5

9n the instant case, several facts and circu/stances taken altogether show that theEnderwriting and Consultancy &gree/ents were si/ply cloaks or devices to cover an illegalsche/e e/ployed %y petitioner ?#9C to conceal and collect ecessively usurious interest,and these are

a( he Enderwriting and Consultancy &gree/ents are %oth dated =anuary !1, 1-60 which isthe sa/e date of the Goan &gree/ent.


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In usurious loans! the entire o3ligation does not 3ecome void 3ecause of an agreement forusurious interest4 the unpaid principal de3t still stands and remains valid 3ut the stipulationas to the usurious interest is void! conse"uently! the de3t is to 3e considered withoutstipulation as to the interest.4!he reason for this rule was ade:uately eplained in the caseofngel 5ose )arehousing Co*! Inc* v* Chelda nterprises44where this Court held

9n si/ple loan with stipulation of usurious interest, the prestation of the de%tor to

pay the principal de%t, which is the cause of the contract '&rticle 1!5", CivilCode(, is not illegal. he illegality lies only as to the prestation to pay thestipulated interest@ hence, %eing separa%le, the latter only should %e dee/edvoid, since it is the only one that is illegal.

hus, the nullity of the stipulation on the usurious interest does not affect the lenderIs rightto receive %ack the principal a/ount of the loan. ith respect to the de%tor, the a/ount paidas interest under a usurious agree/ent is recovera%le %y hi/, since the pay/ent is dee/edto have %een /ade under restraint, rather than voluntarily.45

his Court agrees with the factual findings and conclusion of the appellate court, to wit

e find the stipulated penalties, li:uidated da/ages and attorneyIs fees,ecessive, ini:uitous and unconsciona%le and revolting to the conscience as they

hardly allow the %orrower any chance of survival in case of default. &nd trueenough, FF folded up when the appellee etra>udicially foreclosed on its'FFIs( develop/ent pro>ect and literally closed its offices as %oth the appelleeand FF were at the ti/e holding office in the sa/e %uilding. &ccordingly, wehold that "3 penalty on the a/ount due and 1"3 of the proceeds of theforeclosure sale as attorneyIs fees would suffice to co/pensate the appellee,especially so %ecause there is no clear showing that the appellee hired theservices of counsel to effect the foreclosure, it engaged counsel only when it wasseeking the recovery of the alleged deficiency.

&ttorneyIs fees as provided in penal clauses are in the nature of li:uidated da/ages. olong as such stipulation does not contravene any law, /orals, or pu%lic order, it is %indingupon the parties. onetheless, courts are e/powered to reduce the a/ount of attorneyIsfees if the sa/e is ini:uitous or unconsciona%le.4udge shall e:uita%ly reduce the penalty when the principalo%ligation has %een partly or irregularly co/plied with %y the de%tor. Fven if therehas %een no perfor/ance, the penalty /ay also %e reduced %y the courts if it isini:uitous or unconsciona%le.

&rt. 6. Gi:uidated da/ages, whether intended as an inde/nity or a penalty,shall %e e:uita%ly reduced if they are ini:uitous or unconsciona%le.

9n the case at %ar, the a/ount of hree #illion $ne 2undred Fighty)Fight housand i2undred hirty Pesos and eventy)?ive Centavos '-!,100,

&ccordingly, we agree with the appellate court that a reduction of the attorneyIs fees to ten'1"3( percent is appropriate and reasona%le under the facts and circu/stances of thiscase.

Gastly, there is no /erit to petitioner ?#9CIs contention that the appellate court erred inawarding an a/ount allegedly not asked nor prayed for %y respondents. hether the eacta/ount of the relief was not epressly prayed for is of no /o/ent for the reason that the

relief was plainly warranted %y the allegations of the respondents as well as %y the facts asfound %y the appellate court. & party is entitled to as /uch relief as the facts /ay warrant 46

9n view of all the foregoing, the Court is convinced that the appellate court co//itted noreversi%le error in its challenged Decision.

2FRF?$RF, the instant petition is here%y DF9FD, and the assailed Decision of theCourt of &ppeals is &??9R#FD. Costs against petitioner.

G.R. No. 131&22 November 27, 199'

LE!IIA Y. (EDEL, DR. RA#AEL (EDEL +- SERANDO #RANO, petitioners,

vs.

OUR! O# APPEALS, SPOUSES ERONIA R. GON*ALES +- DANILO G.GON*ALES, $R. -o5 6e-5 b8e88 -er /e /r+-e +me +- 8/:6e ;GON*ALES

REDI! EN!ERPRISES;, respondents.

he case %efore the Court is a petition for review on certiorari, under Rule 45 of the Revised

Rules of Court, seeking to set aside the decision of the Court of &ppeals,1and its resolution

denying reconsideration, 2the dispositive portion of which decision reads as follows

2FRF?$RF, the appealed >udg/ent is here%y #$D9?9FD such that

defendants are here%y)ordered to pay the plaintiff the su/ of

P5"","""."", plus 5.53 per /onth interest and 3 service charge per

annu/ effective =uly !, 1-0


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he facts of the case, as found %y the Court of &ppeals in its decision, which are considered

%inding and conclusive on the parties herein, as the appeal is li/ited to :uestions of law, are

as follows

$n ove/%er 6, 1-05, ervando ?ranco and Geticia #edel 'hereafter ervando and

Geticia( o%tained a loan fro/ +eronica R. *onales 'hereafter +eronica(, who was engaged

in the /oney lending %usiness under the na/e *onales Credit Fnterprises, in thea/ount of P5","""."", paya%le in two /onths. +eronica gave only the a/ount of

P46,"""."", to the %orrowers, as she retained P!,"""."", as advance interest for one

/onth at


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$n /aturity of the loan, the %orrowers failed to pay the inde%tedness of P5"","""."", plus

interests and penalties, evidenced %y the a%ove):uoted pro/issory note.

$n ?e%ruary ", 1--", +eronica R. *onales, >oined %y her hus%and Danilo *. *onales,

filed with the Regional rial Court of Bulacan, Branch 1


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$n &pril 15, 1--6, defendants)appellants filed a /otion for reconsideration of the said

decision. By resolution dated ove/%er 5, 1--6, the Court of &ppeals denied the

/otion. 12

2ence, defendants interposed the present recoursevia petition for review oncertiorari. 13

e find the petition /eritorious.

Basically, the issue revolves on the validity of the interest rate stipulated upon. hus, the

:uestion presented is whether or not the stipulated rate of interest at 5.53 per /onth on the

loan in the su/ of P5"","""."", that plaintiffs etended to the defendants is usurious. 9n

other words, is the Esury Gaw still effective, or has it %een repealed %y Central Bank

Circular o. -"5, adopted on Dece/%er , 1-0, pursuant to its powers under P.D. o.

11


18/44

operations, or /ay fi the /ai/u/ differences which /ay eist %etween the interest or

rediscount rates of the Central Bank and the rates which the %anks /ay charge their

custo/ers if the respective credit docu/ents are not to lose their eligi%ility for rediscount or

advances in the Central Bank.

&ny /odifications in the /ai/u/ interest rates per/itted for the %orrowing or lending

operations of the %anks shall apply only to future operations and not to those /ade prior tothe date on which the /odification %eco/es effective.

9n order to avoid possi%le evasion of /ai/u/ interest rates set %y the #onetary Board, the

Board /ay also fi the /ai/u/ rates that %anks /ay pay to or collect fro/ their custo/ers

in the for/ of co//issions, discounts, charges, fees or pay/ents of any sort. 'Enderlining

ours(

$n #arch 16, 1-0", the Esury Gaw was a/ended %y Presidential Decree 'P.D.( o. 1


19/44

sought to a/end &ct o. udicial functions.16=udicial functions are eercised %y a %ody or

officer clothed with authority to deter/ine what the law is and what the legal rights of the

parties are with respect to the /atter in controversy. Luasi)>udicial function is a ter/ that

applies to the action or discretion of pu%lic ad/inistrative officers or %odies given the

authority to investigate facts or ascertain the eistence of facts, hold hearings, and draw

conclusions fro/ the/ as a %asis for their official action using discretion of a >udicial

nature.10

he CB)#B 'now BP)#B( was created to perfor/ eecutive functions with respect to the

esta%lish/ent, operation or li:uidation of %anking and credit institutions, and %ranches and

agencies thereof.

1-

9t does not perfor/ >udicial or :uasi)>udicial functions. Certainly, theissuance of CB Circular o. -"5 was done in the eercise of an eecutive function.

Certiorari will not lie in the instant case."

B. Petitioners have no locus standi to file the Petition

Gocus standi is defined as a right of appearance in a court of >ustice on a given :uestion.

9n private suits, ection , Rule ! of the 1--6 Rules of Civil Procedure provides that every

action /ust %e prosecuted or defended in the na/e of the real party in interest, who is the

party who stands to %e %enefited or in>ured %y the >udg/ent in the suit or the party entitled

to the avails of the suit. uccinctly put, a party;s standing is %ased on his own right to the

relief sought.1

Fven in pu%lic interest cases such as this petition, the Court has generally adopted thedirect in>ury test that the person who i/pugns the validity of a statute /ust have a

personal and su%stantial interest in the case such that he has sustained, or will sustain

direct in>ury as a result.hus, while petitioners assert a pu%lic right to assail CB Circular

o. -"5 as an illegal eecutive action, it is nonetheless re:uired of the/ to /ake out a

sufficient interest in the vindication of the pu%lic order and the securing of relief. 9t is

significant that in this petition, the petitioners do not allege that they sustained any personal

in>ury fro/ the issuance of CB Circular o. -"5.

Petitioners also do not clai/ that pu%lic funds were %eing /isused in the enforce/ent of CB

Circular o. -"5. 9n Kilos%ayan, 9nc. v. #orato,!involving the on)line lottery contract of the

PC$, there was no allegation that pu%lic funds were %eing /isspent, which according to
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20/44

the Court would have /ade the action a pu%lic one, and >ustify relaation of the

re:uire/ent that an action /ust %e prosecuted in the na/e of the real party)in)interest. he

Court held, /oreover, that the status of Kilos%ayan as a people;s organiation did not give it

the re:uisite personality to :uestion the validity of the contract. hus

Petitioners do not in fact show what particularied interest they have for %ringing this suit. 9t

does not detract fro/ the high regard for petitioners as civic leaders to say that their interestfalls short of that re:uired to /aintain an action under the Rule !, ec. .4

C. he Petition raises no issues of transcendental i/portance.

9n the 1--! case of =oya v. Presidential Co//ission on *ood *overn/ent,5it was held

that no :uestion involving the constitutionality or validity of a law or govern/ental act /ay

%e heard and decided %y the court unless there is co/pliance with the legal re:uisites for

>udicial in:uiry, na/ely 'a( that the :uestion /ust %e raised %y the proper party@ '%( that

there /ust %e an actual case or controversy@ 'c( that the :uestion /ust %e raised at the

earliest possi%le opportunity@ and 'd( that the decision on the constitutional or legal :uestion

/ust %e necessary to the deter/ination of the case itself.

9n Prof. David v. Pres. #acapagal)&rroyo,


21/44

anyway a/end the Esury Gaw %ut si/ply suspended the latter;s effectivity@!6that a CB

Circular cannot repeal a law, 7for8 only a law can repeal another law@!0that %y virtue of CB

Circular o. -"5, the Esury Gaw has %een rendered ineffective@!-and Esury has %een

legally non)eistent in our >urisdiction. 9nterest can now %e charged as lender and %orrower

/ay agree upon.4"

9n ?irst #etro 9nvest/ent Corp. v. Fste Del ol #ountain Reserve, 9nc.41

cited in DBP v.Pere,4we also %elied the contention that the CB was engaged in self)legislation. hus

Central Bank Circular o. -"5 did not repeal nor in any way a/end the Esury Gaw %ut

si/ply suspended the latter;s effectivity. he illegality of usury is wholly the creature of

legislation. & Central Bank Circular cannot repeal a law. $nly a law can repeal another law.

.4!

9n PB v. Court of &ppeals,44an escalation clause in a loan agree/ent authoried the PB

to unilaterally increase the rate of interest to 53 per annu/, plus a penalty of ust/ent in the interest rate that shall accrue on a loan

or for%earance of /oney, goods or credits. 9n fine, they can agree to ad>ust, upward or

downward, the interest previously stipulated. .45

hus, according to the Court, %y lifting the interest ceiling, CB Circular o. -"5 /erely

upheld the parties; freedo/ of contract to agree freely on the rate of interest. 9t cited &rticle

1!"< of the ew Civil Code, under which the contracting parties /ay esta%lish such

stipulations, clauses, ter/s and conditions as they /ay dee/ convenient, provided they are

not contrary to law, /orals, good custo/s, pu%lic order, or pu%lic policy.

F. he BP)#B has authority to enforce CB Circular o. -"5.

ection 1 of CB Circular o. -"5 provides that he rate of interest, including co//issions,

pre/iu/s, fees and other charges, on a loan or for%earance of any /oney, goods, or

credits, regardless of /aturity and whether secured or unsecured, that /ay %e charged or

collected %y any person, whether natural or >uridical, shall not %e su%>ect to any ceiling

prescri%ed under or pursuant to the Esury Gaw, as a/ended. 9t does not purport to

suspend the Esury Gaw only as it applies to %anks, %ut to all lenders.

Petitioners contend that, granting that the CB had power to suspend the Esury Gaw, the

new BP)#B did not retain this power of its predecessor, in view of ection 1!5 of R.&. o.

6


22/44

%e eercised %y the creditor upon failure %y the de%tor to pay the de%t due. he de%t due is

considered as without the stipulated ecessive interest, and a legal interest of 13 per

annu/ will %e added in place of the ecessive interest for/erly i/posed,5!following the

guidelines laid down in the land/ark case of Fastern hipping Gines, 9nc. v. Court of

&ppeals,54regarding the /anner of co/puting legal interest

99. ith regard particularly to an award of interest in the concept of actual and co/pensatoryda/ages, the rate of interest, as well as the accrual thereof, is i/posed, as follows

1. hen the o%ligation is %reached, and it consists in the pay/ent of a su/ of

/oney, i.e., a loan or for%earance of /oney, the interest due should %e that

which /ay have %een stipulated in writing. ?urther/ore, the interest due shall

itself earn legal interest fro/ the ti/e it is >udicially de/anded. 9n the a%sence of

stipulation, the rate of interest shall %e 13 per annu/ to %e co/puted fro/

default, i.e., fro/ >udicial or etra>udicial de/and under and su%>ect to the

provisions of &rticle 11udicially or etra>udicially '&rt. 11udg/ent

of the court is /ade 'at which ti/e the :uantification of da/ages /ay %e

dee/ed to have %een reasona%ly ascertained(. he actual %ase for the

co/putation of legal interest shall, in any case, %e on the a/ount finally

ad>udged.

!. hen the >udg/ent of the court awarding a su/ of /oney %eco/es final and

eecutory, the rate of legal interest, whether the case falls under paragraph 1 or

paragraph , a%ove, shall %e 13 per annu/ fro/ such finality until itssatisfaction, this interi/ period %eing dee/ed to %e %y then an e:uivalent to a

for%earance of credit.55'Citations o/itted(

he foregoing rules were further clarified in unga)Chan v. Court of &ppeals,5udg/ents

involving such loan or for%earance of /oney, goods, or credit, while the
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23/44

eight '03( per centu/ per annu/, co/puted fro/ &ugust !1, 1--! until fullpay/ent of the said a/ount, and in addition, an a/ount e:uivalent to ten '1"3(per centu/ of the total a/ount due and paya%le, for attorney;s fees, withoutpronounce/ent as to costs.5

!e #+/8

he C& su//aried the facts of the case in this wise

he present controversy arose fro/ a case for collection of /oney, filed %y &le&. =aucian against Restituta 9/perial, on $cto%er


24/44

'e( =anuary 1, 1-00

'f( =anuary 1!, 1-00

otal

he loan on ove/%er 1!, 1-06 and =anuary udg/ent of the trial court, holding that thelatter;s clear and detailed co/putation of petitioner;s outstanding o%ligation to respondentwas convincing and satisfactory.

2ence, this Petition.6

!e I88e8

Petitioner raises the following argu/ents for our consideration

1. hat the petitioner has fully paid her o%ligations even %efore filing of this case.

. hat the charging of interest of twenty)eight '03( per centu/ per annu/without any writing is illegal.

!. hat charging of ecessive attorney;s fees is he/orrhagic.

4. Charging of ecessive penalties per /onth is in the guise of hidden interest.

5. he non)inclusion of the hus%and of the petitioner at the ti/e the case wasfiled should have dis/issed this case.0

!e or/8 R65

he Petition has no /erit.

#r8/ I88e=

Computation of Outstanding Obligation

&rguing that she had already fully paid the loan %efore the filing of the case, petitioneralleges that the two lower courts /isappreciated the facts when they ruled that she still hadan outstanding %alance of P"0,4!".

his issue involves a :uestion of fact. uch :uestion eists when a dou%t or differencearises as to the truth or the falsehood of alleged facts@ and when there is need for acali%ration of the evidence, considering /ainly the credi%ility of witnesses and the eistenceand the relevancy of specific surrounding circu/stances, their relation to each other and tothe whole, and the pro%a%ilities of the situation.-


25/44

9t is a well)entrenched rule that pure :uestions of fact /ay not %e the su%>ect of an appeal%y certiorari under Rule 45 of the Rules of Court, as this re/edy is generally confined to:uestions of law.1"he >urisdiction of this Court over cases %rought to it is li/ited to thereview and rectification of errors of law allegedly co//itted %y the lower court. &s a rule, thelatter;s factual findings, when adopted and affir/ed %y the C&, are final and conclusive and/ay not %e reviewed on appeal.11

*enerally, this Court is not re:uired to analye and weigh all over again the evidencealready considered in the proceedings %elow.19n the present case, we find no co/pellingreason to overturn the factual findings of the RC )) that the total a/ount of the loansetended to petitioner was P!",""", and that she paid a total of onlyP11ust and e:uita%le in another. 9n the present case, ini:uitous andunconsciona%le was the parties; stipulated penalty charge of 5 percent per /onth or ustified inreducing the stipulated penalty charge to the /ore e:uita%le rate of 14 percent per annu/.

he Pro/issory ote carried a stipulation for attorney;s fees of 5 percent of the principala/ount and accrued interests. trictly speaking, this covenant on attorney;s fees is differentfro/ that /entioned in and regulated %y the Rules of Court.10Rather, the attorney;s fees

here are in the nature of li:uidated da/ages and the stipulation therefor is aptly called apenal clause.1-o long as the stipulation does not contravene the law, /orals, pu%lic orderor pu%lic policy, it is %inding upon the o%ligor. 9t is the litigant, not the counsel, who is the>udg/ent creditor entitled to enforce the >udg/ent %y eecution.

evertheless, it appears that petitioner;s failure to co/ply fully with her o%ligation was not/otivated %y ill will or /alice. he twenty)nine partial pay/ents she /ade were a/anifestation of her good faith. &gain, &rticle 1- of the Civil Code specifically e/powersthe >udge to r educe the civil penalty e:uita%ly, when the principal o%ligation has %een partlyor irregularly co/plied with. Epon this pre/ise, we hold that the RC;s reduction ofattorney;s fees )) fro/ 5 percent to 1" percent of the total a/ount due and paya%le )) isreasona%le.

#@/ I88e=

Non-Inclusion of Petitioners Husband

Petitioner contends that the case against her should have %een dis/issed, %ecause herhus%and was not included in the proceedings %efore the RC.

e are not persuaded. he hus%and;s non)>oinder does not warrant dis/issal, as it is/erely a for/al re:uire/ent that /ay %e cured %y a/end/ent."ince petitioner allegesthat her hus%and has already passed away, such an a/end/ent has thus %eco/e /oot.

>HERE#ORE,the Petition is DNID. Costs against petitioner.


26/44

SO ORDERED

G.R. No. 17%490 Se

5A6A""! 11-,5


27/44

>udicial cost, if the pay/ent of the account is enforced though court action. +enue of all civilsuits to enforce this &gree/ent or any other suit directly or indirectly arising fro/ therelationship %etween the parties as esta%lished herein, whether arising fro/ cri/es,negligence or %reach thereof, shall %e in the process of courts of the City of #akati or inother courts at the option of BCC.4'F/phasis supplied.(1avvphi1

?or failure of petitioner #acalinao to settle her o%ligations, respondent BP9 filed with the

#etropolitan rial Court '#eC( of #akati City a co/plaint for a su/ of /oney against herand her hus%and, Danilo =. #acalinao. his was raffled to Branch udged %y the trial court appeared to %e the resultof a reco/putation at the reduced rate of 3 per /onth. ote that the total a/ount sought%y the plaintiff)appellee was P154,ointly and severally ordered topay respondent Bank of the Philippine 9slands the following

1. he a/ount of $ne 2undred wenty i housand even 2undred i Pesos

and eventy Centavos plus interest and penalty charges of !3 per /onth fro/=anuary 5, ""4 until fully paid@

. P1","""."" as and %y way of attorney;s fees@ and

!. Cost of uit.

$ $RDFRFD.1!

&lthough sued >ointly with her hus%and, petitioner #acalinao was the only one who filed thepetition %efore the C& since her hus%and already passed away on $cto%er 10, ""5.14

9n its assailed decision, the C& held that the a/ount of PhP 141,510.!4 'the a/ount sought

to %e satisfied in the de/and letter of respondent BP9( is clearly not the result of the re)co/putation at the reduced interest rate as previous higher interest rates were alreadyincorporated in the said a/ount. hus, the said a/ount should not %e /ade as %asis inco/puting the total o%ligation of petitioner #acalinao. ?urther, the C& also e/phasied thatrespondent BP9 should not co/pound the interest in the instant case a%sent a stipulation tothat effect. he C& also held, however, that the #eC erred in /odifying the a/ount ofinterest rate fro/ !3 /onthly to only 3 considering that petitioner #acalinao freely availedherself of the credit card facility offered %y respondent BP9 to the general pu%lic. 9t eplainedthat contracts of adhesion are not invalid per se and are not entirely prohi%ited.

Petitioner #acalinao;s /otion for reconsideration was denied %y the C& in its Resolutiondated ove/%er 1, ""


28/44

9.

2F RFDEC9$ $? 9FRF R&F, ?R$# -.53 $ 3, 2$EGD BF EP2FGD9CF 2F 9PEG&FD R&F $? 9FRF & EC$C9$&BGF &D99LE9$E, &D 2E 9GGF*&G.

99.

2F C$ER $? &PPF&G &RB9R&R9G #$D9?9FD 2F RFDECFD R&F $?9FRF ?R$# 3 $ !3, C$R&R $ 2F F$R $? 9 $ DFC99$.

999.

2F C$ER & LE$, 9F&D $? PR$CFFD9* 92 & RFC$#PE&9$, 2$EGD2&+F D9#9FD 2F C&F ?$R ?&9GERF $? RFP$DF BP9 $ PR$+F 2FC$RRFC $E $? PF99$FR; $BG9*&9$, $R 9 2F &GFR&9+F,RF#&DFD 2F C&F $ 2F G$FR C$ER ?$R RFP$DF BP9 $ PRFFPR$$? $? 2F C$RRFC $E 2FRF$?.

$ur Ruling

he petition is partly /eritorious.

!e I/ere8/ R+/e +- Pe+6/: +r5e o@ 3 Per (o/ or 3& Per Am So6- BeRe-e- /o 2 Per (o/ or 24 Per Am

9n its Co/plaint, respondent BP9 originally i/posed the interest and penalty charges at therate of -.53 per /onth or 1113 per annu/. his was declared as unconsciona%le %y thelower courts for %eing clearly ecessive, and was thus reduced to 3 per /onth or 43 perannu/. $n appeal, the C& /odified the rate of interest and penalty charge and increasedthe/ to !3 per /onth or !


29/44

the a/ount of the principal o%ligation. hus, this allegedly necessitates a re)ea/ination ofthe evidence presented %y the parties. ?or this reason, petitioner #acalinao furthercontends that the dis/issal of the case or its re/and to the lower court would %e a /oreappropriate disposition of the case.

uch contention is untena%le. Based on the records, the su//ons and a copy of theco/plaint were served upon petitioner #acalinao and her hus%and on #ay 4, ""4.

evertheless, they failed to file their &nswer despite such service. hus, respondent BP9/oved that >udg/ent %e rendered accordingly.1Conse:uently, a decision was rendered %ythe #eC on the %asis of the evidence su%/itted %y respondent BP9. his is in consonancewith ec. < of the Revised Rule on u//ary Procedure, which states

ec. udg/ent as /ay %e warranted %y the facts alleged in the co/plaint and li/ited towhat is prayed for therein Provided, however, that the court /ay in its discretion reduce thea/ount of da/ages and attorney;s fees clai/ed for %eing ecessive or otherwiseunconsciona%le. his is without pre>udice to the applica%ility of ection !'c(, Rule 1" of theRules of Court, if there are two or /ore defendants. '&s a/ended %y the 1--6 Rules of CivilProcedure@ e/phasis supplied.(

Considering the foregoing rule, respondent BP9 should not %e /ade to suffer for petitioner

#acalinao;s failure to file an answer and conco/itantly, to allow the latter to su%/itadditional evidence %y dis/issing or re/anding the case for further reception of evidence.ignificantly, petitioner #acalinao herself ad/itted the eistence of her o%ligation torespondent BP9, al%eit with reservation as to the principal a/ount. hus, a dis/issal of thecase would cause great in>ustice to respondent BP9. i/ilarly, a re/and of the case forfurther reception of evidence would unduly prolong the proceedings of the instant case andrender inutile the proceedings conducted %efore the lower courts.

ignificantly, the C& correctly used the %eginning %alance of PhP -4,04!.6" as %asis for there)co/putation of the interest considering that this was the first a/ount which appeared onthe tate/ent of &ccount of petitioner #acalinao. here is no other a/ount on which the re)co/putation could %e %ased, as can %e gathered fro/ the evidence on r ecord. ?urther/ore,%arring a showing that the factual findings co/plained of are totally devoid of support in therecord or that they are so glaringly erroneous as to constitute serious a%use of discretion,such findings /ust stand, for this Court is not epected or re:uired to ea/ine or contrast

the evidence su%/itted %y the parties.

9n view of the ruling that only 13 /onthly interest and 13 penalty charge can %e applied tothe %eginning %alance of PhP -4,04!.6", this Court finds the following co/putation /oreappropriate

tate/entDate

PreviousBalance

Purchases'Pay/ents(

Balance9nterest

'13(

1"A6A"" -4,04!.6" -4,04!.6" -40.44

11A6A"" -4,04!.6" '15,"""( 6-,04!.6" 6-0.44 6-0.44

1A!1A"" 6-,04!.6" !",!"0.0" 11",15.5" 1,1"1.5! 1,1"1.5!

1A6A""! 11",15.5" 11",15.5" 1,1"1.5! 1,1"1.5!

A6A""! 11",15.5" 11",15.5" 1,1"1.5! 1,1"1.5!

!A6A""! 11",15.5" '10,""".""( -,15.5" -1.5! -1.5!

4A6A""! -,15.5" -,15.5" -1.5! -1.5!

5A6A""! -,15.5" '1",""".""( 0,15.5" 01.5! 01.5!


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ANI!A A. LEDDA,Petitioner,

vs.

BAN" O# !HE PHILIPPINE ISLANDS,Respondent.

he Case

his petition for re%iew1assails the 15 =uly "11 Decision and - ?e%ruary "1Resolution!of the Court of &ppeals in C&)*.R. C+ o. -!646. he Court of &ppeals

partially granted the appeal filed %y petitioner &nita &. Gedda 'Gedda( and /odified the 4

=une ""- Decision4of the Regional rial Court, #akati City, Branch udg/ent is here%y rendered against herein defendant &9& &. GFDD& and in

favor of the plaintiff.

Fnsua%ly, the herein defendant &9& &. GFDD& is here%y ordered to pay the herein plaintiff

Bank of the Philippine 9slands 'BP9( the following su/s, to wit

1. ?ive 2undred ?orty)Fight housand $ne 2undred ?orty)hree Pesos and eventy)hree

Centavos 'P540,14!.6!( as and for actual da/ages, with finance and late)pay/ent charges

at the rate of three and one)fourth percent '!.53( and si percent 'ected Gedda;s argu/ent that the docu/ent containing the er/s

and Conditions governing the use of the BP9 credit card is an actiona%le docu/ent

conte/plated in ection 6, Rule 0 of the 1--6 Rules of Civil Procedure. he Court of

&ppeals held that BP9;s cause of action is %ased on Gedda;s avail/ent of the %ank;s credit

facilities through the use of her creditAplastic cards, coupled with her refusal to pay BP9;s

outstanding credit for the cost of the goods, services and cash advances despite lawful

de/ands.

Citing #acalinao v. Bank of the Philippine 9slands,0the Court of &ppeals held that the

interest rates and penalty charges i/posed %y BP9 for Gedda;s non)pay/ent of her credit

card o%ligation, totalling -.53 per /onth or 1113 per annu/, are eor%itant and

unconsciona%le. &ccordingly, the Court of &ppeals reduced the /onthly finance charge to

13 and the late pay/ent charge to 13, or a total of 3 per /onth or 43 per annu/.
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he Court of &ppeals reco/puted Gedda;s total credit card o%ligation %y deducting

P


32/44

ter/s and conditions %efore or after the issuance of the credit card in his na/e, /uch less

that he has given his consent thereto.

9n this case, BP9 issued a pre)approved credit card to Gedda who, like &lcara, did not sign

any credit card application for/ prior to the issuance of the credit card. Gike the credit card

issuer in &lcara, BP9, which has the %urden to prove its affir/ative allegations, failed to

esta%lish Gedda;s agree/ent with the er/s and Conditions governing the use of the credit

card. 9t /ust %e noted that BP9 did not present as evidence the er/s and Conditions which

Gedda allegedly received and accepted.1udicially de/anded fro/ Gedda the pay/ent of her overdue credit

card o%ligation. hus, the 13 legal interest shall %e co/puted fro/ $cto%er ""6, whenGedda, through her niece ally D. *anceTa,5received BP9;s letterustification for

the award of attorney;s fees.6he /atter of attorney;s fees cannot %e stated only in the

dispositive portion of the decision.0he %ody of the court;s decision /ust state the reasonsfor the award of attorney;s fees.-9n ?rias v. an Diego)ison,!"the Court held

&rticle "0 of the ew Civil Code enu/erates the instances where such /ay %e awarded

and, in all cases, it /ust %e reasona%le, >ust and e:uita%le if the sa/e were to %e granted.

&ttorney;s fees as part of da/ages are not /eant to enrich the winning party at the epense

of the losing litigant. hey are not awarded every ti/e a party prevails in a suit %ecause of

the policy that no pre/iu/ should %e placed on the right to litigate. he award of attorney;s

fees is the eception rather than the general rule.1wphi1&s such, it is necessary for the

trial court to /ake findings of facts and law that would %ring the case within the eception

and >ustify the grant of such award. he /atter of attorney;s fees cannot %e /entioned only
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in the dispositive portion of the decision. hey /ust %e clearly eplained and >ustified %y the

court in the %ody of its decision. $n appeal, the C& is precluded fro/ supple/enting the

%ases for awarding attorney;s fees when the trial court failed to discuss in its Decision the

reasons for awarding the sa/e. Conse:uently, the award of attorney;s fees should %e

deleted.1wphi1

9n this case, the trial court failed to state in the %ody of its decision the factual or legal

reasons for the award of attorney;s fees in favor of BP9. herefore, the sa/e /ust %e

deleted.

2FRF?$RF, we *R& the petition 9 P&R. Petitioner &nita &. Gedda is $RDFRFD to

pay respondent Bank of the Philippine 9slands the a/ount of .P!, 1!0.50, representing

her unpaid credit card o%ligation, with interest thereon at the rate of 13 per annu/ to %e

co/puted fro/ $cto%er ""6, until full pay/ent thereof. he award of attorneyIs fees is

DFGFFD for lack of %asis.

$ $RDFRFD.

G.R. No8. 1%0773 C 1%3%99 Seudicially foreclosed and

the /ortgaged property sold at a pu%lic auction on 0 =uly 1--


34/44

co/plaint, they %elatedly raised the /atters in their emorandum. onetheless, these

points warrant %rief co//ent.

$n the other hand, petitioners argue in *.R. o. 15!5-- that the RC did not co//it any

grave a%use of discretion when it issued the orders dated ! &ugust 1--- and < =anuary

""", and that these orders could not have %een the proper su%>ects of a petition for

certiorari and /anda/us. #ore accurately, the >usticia%le issues %efore us are whether the

Court of &ppeals could properly entertain the petition for certiorari fro/ the ti/eliness

aspect, and whether the appellate court correctly concluded that the writ of possession

could no longer %e stayed.

e first resolve the petition in *.R. o. 15"66!.

Petitioners contend that the agreed rate of interest of


35/44

hen in Gope and =avelona vs. Fl 2ogar ?ilipino, 46 Phil. 4-, e also held that the

standing >urisprudence of this Court on the :uestion under consideration was clearly to the

effect that the Esury Gaw, %y its letter and spirit, did not deprive the lender of his right to

recover fro/ the %orrower the /oney actually loaned to and en>oyed %y the latter. his

Court went further to say that the Esury Gaw did not provide for the forfeiture of the capital in

favor of the de%tor in usurious contracts, and that while the forfeiture /ight appear to %e

convenient as a drastic /easure to eradicate the evil of usury, the legal :uestion involved

should not %e resolved on the %asis of convenience.

$ther cases upholding the sa/e principle are Palileo vs. Cosio, -6 Phil. -1- and Pascua vs.

Pere, G)1-554, =anuary !1, 1-


36/44

2ence, it is clear and settled that the principal loan o%ligation still stands and re/ains valid.

By the sa/e token, since the /ortgage contract derives its vitality fro/ the validity of the

principal o%ligation, the invalid stipulation on interest rate is si/ilarly insufficient to render

void the ancillary /ortgage contract.

9t should %e noted that had the Court declared the loan and /ortgage agree/ents void for

%eing contrary to pu%lic policy, no prescriptive period could have run."uch %enefit is

o%viously not availa%le to petitioners.

et the RC pronounced that the co/plaint was %arred %y the four)year prescriptive period

provided in &rticle 1!-1 of the Civil Code, which governs voida%le contracts. his conclusion

was derived fro/ the allegation in the co/plaint that the consent of petitioners was vitiated

through undue influence. hile the RC correctly acknowledged the rule of prescription for

voida%le contracts, it erred in applying the rule in this case. e are hard put to conclude in

this case that there was any undue influence in the first place.

here is ulti/ately no showing that petitioners; consent to the loan and /ortgage

agree/ents was vitiated %y undue influence. he financial condition of petitioners /ay have

/otivated the/ to contract with respondents, %ut undue influence cannot %e attri%uted to

respondents si/ply %ecause they had lent /oney. &rticle 1!-1, in relation to &rticle 1!-" of

the Civil Code, grants the aggrieved party the right to o%tain the annul/ent of contract on

account of factors which vitiate consent. &rticle 1!!6 defines the concept of undue

influence, as follows

here is undue influence when a person takes i/proper advantage of his power over the

will of another, depriving the latter of a reasona%le freedo/ of choice. he following

circu/stances shall %e considered the confidential, fa/ily, spiritual and other relations

%etween the parties or the fact that the person alleged to have %een unduly influenced was

suffering fro/ /ental weakness, or was ignorant or in financial distress.

hile petitioners were allegedly financially distressed, it /ust %e proven that there is

deprivation of their free agency. 9n other words, for undue influence to %e present, the

influence eerted /ust have so overpowered or su%>ugated the /ind of a contracting party

as to destroy his free agency, /aking hi/ epress the will of another rather than hisown.1he alleged lingering financial woes of petitionersper secannot %e e:uated with the

presence of undue influence.

he RC had likewise concluded that petitioners were %arred %y laches fro/ assailing the

validity of the real estate /ortgage. e wholeheartedly agree. 9f indeed petitioners

unwillingly gave their consent to the agree/ent, they should have raised this issue as early

as in the foreclosure proceedings. 9t was only when the writ of possession was issued did

petitioners challenge the stipulations in the loan contract in their action for annul/ent of

/ortgage. Fvidently, petitioners slept on their rights. he Court of &ppeals succinctly /ade

the following o%servations

9n all these proceedings starting fro/ the foreclosure, followed %y the issuance of a

provisional certificate of sale@ then the definite certificate of sale@ then the issuance of C

o. -!!0 in favor of the defendants and finally the petition for the issuance of the writ of

possession in favor of the defendants, there is no showing that plaintiffs :uestioned the

validity of these proceedings. 9t was only after the issuance of the writ of possession in favor

of the defendants, that plaintiffs allegedly tendered to the defendants the a/ount

of Punction

whose period of efficacy is indefinite. 9t /ay %e properly assailed %y way of the special civil

action for certiorari, as it is interlocutory in nature.

&s a rule, the special civil action for certiorari under Rule ect of a special civil action for certiorari, as it is according to the/ a final order, as

opposed to an interlocutory order. hat the < =anuary """ Orderis interlocutory in nature

should %e %eyond dou%t. &n order is interlocutory if its effects would only %e provisional in

character and would still leave su%stantial proceedings to %e further had %y the issuing court
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in order to put the controversy to rest.4he in>unctive relief granted %y the order is definitely

final, %ut /erely provisional, its effectivity hinging on the ulti/ate outco/e of the then

pending action for annul/ent of real estate /ortgage. 9ndeed, an interlocutory order hardly

puts to a close, or disposes of, a case or a disputed issue leaving nothing else to %e done

%y the court in respect thereto, as is characteristic of a final order.

ince the < =anuary """ Order is not a final order, %ut rather interlocutory in nature, we

cannot agree with petitioners who insist that it /ay %e assailed only through an appeal

perfected within fifteen '15( days fro/ receipt thereof %y respondents. 9t is aio/atic that an

interlocutory order cannot %e challenged %y an appeal,

%ut is suscepti%le to review only through the special civil action of certiorari.5he sity 'Check o. ""1"6


38/44

9n =une 1--0, =ocelyn asked #arilou for the recall of Check o. ""1"6ust, oppressive andcontrary to law %ecause there was no written agree/ent to pay interest.

$n ove/%er !, 1--0, #arilou filed an &nswer6with pecial &ffir/ative Defenses andCounterclai/ alleging that =ocelyn voluntarily o%tained the said loans knowing fully well thatthe interest rate was at


39/44

=ocelyn posits that the C& erred when it held that the i/position of interest at the rates of


40/44

said docu/ent is an ineistent contract that is void fro/ the very %eginning as clearlyprovided for %y &rticle 14"-1-of the ew Civil Code.

=ocelyn further clai/s that she signed the said docu/ent and issued the seven postdatedchecks %ecause #arilou threatened to sue her for violation of BP Blg. .

=ocelyn is /isguided. Fven if there was indeed such threat /ade %y #arilou, the sa/e is

not considered as threat that would vitiate consent. &rticle 1!!5 of the ew Civil Code isvery specific on this /atter. 9t provides

&rt. 1!!5. here is violence when in order to wrest consent, serious or irresisti%le force ise/ployed.

A /re+/ /o e@ore oe8 6+m /ro5 om


41/44

Gikewise assailed is the C&;s =une ect. Rolando

clai/ed that it was not he who de/anded for the


42/44

Enconvinced, the RC, inits &pril 1-, ""6 Decision,14affir/ed the #eC Decision, vi

2FRF?$RF, pre/ises considered, the Decision appealed fro/ is here%y &??9R#FD in

all respects, with costs against the appellant.

$ $RDFRFD.15

Ruling of the Court of &ppeals

Endaunted, GO= went to the C& and echoed its argu/ents and proposed co/putation as

proffered %efore the RC.

9n a Decision1


43/44

paya%le, two conditions /ust concur a( epress stipulation for the pay/ent of interest@ and

%( the agree/ent to pay interest is reduced in writing.

2ere, it is undisputed that the parties did not put down in writing their agree/ent. hus, no

interest is due. he collection of interest without any stipulation in writing is prohi%ited %y

law.

But Rolando asserts that his situation deserves an eception to the application of &rticle

1-5


44/44

is ordered to pay respondent GO= Develop/ent Co/pany the a/ount of ,P

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