Credtrans Cases 2.1
-
Upload
jo-al-gealon -
Category
Documents
-
view
214 -
download
0
Transcript of Credtrans Cases 2.1
-
7/24/2019 Credtrans Cases 2.1
1/123
ContentsVerdejo v. CA.............................................................................................................. 1
Philippine Rabbit Bus Lines v. Cruz............................................................................. 5
GSIS v CA....................................................................................................................
!CPB v Beluso.......................................................................................................... 1"
A.C #nt. In$. v. CIAC %&& s 55................................................................................... 5'
(e) Sa*pa+uita v P(B............................................................................................ 5%
Verdejo v. CAG.R. (o. ,,,-5 anuar/ %0 1""
IL2R#34 V#R3#40 petitioner0
vs.
6# 64(. C4!R 42 APP#ALS0 64(. S42R4(I4 G. SA740 Presidin+ ud+e0 RC0 Br.
III0 Pasa/ Cit/0 and 6#R8I(IA PAI(I40 # AL.0 respondents.
R # S 4 L ! I 4 (
PA3ILLA0 .9
Petition :or revie) on $ertiorari o: the de$ision ; rendered b/ the respondent
appellate $ourt0 dated %" (ove*ber 1"
-
7/24/2019 Credtrans Cases 2.1
2/123
)hi$h denied the petitioner@s *otion :or re$onsideration o: said de$ision o: %"
(ove*ber 1"
-
7/24/2019 Credtrans Cases 2.1
3/123
he petitioner opposed the *otion $lai*in+ that he had alread/ led a noti$e o:
appeal throu+h the *ail so that the *otion :or e?e$ution )as i*proper. 5
he private respondent0 ho)ever0 replied that the petitioner@s noti$e o: appeal )as
led be/ond the re+le*entar/ period and reiterated her pra/er :or the issuan$e o: a
)rit o: e?e$ution. pp.
-
7/24/2019 Credtrans Cases 2.1
13/123
re:und o: e?$ess pa/*ents0 plus da*a+es and attorne/@s :ees JC2I 3e$ision0 p. %1-
Rollo0 p. ,K.
4n 8ar$h 10 1,
-
7/24/2019 Credtrans Cases 2.1
14/123
Petitioner led on une %
-
7/24/2019 Credtrans Cases 2.1
15/123
he petition is i*pressed )ith *erit.
here is no dispute as to the :a$ts o: the $ase. B/ a+ree*ent o: the parties the
issues in this $ase are li*ited to the loan o: P-5'0'''.'' deno*inated as A$$ount
(o. -1'55 JRollo0 p. , oint Re$ord on Appeal0 p. 1%K subje$t o: the A*end*ent
o: Real 8ort+a+e dated ul/
-
7/24/2019 Credtrans Cases 2.1
16/123
A$$ordin+ to the $o*putation o: the GSIS J#?hibit C0 also #?hibit -"K the total
a*ounts0 $olle$ted on A$$t. (o. -1&&% as o: 3e$e*ber 110 1,5 total P-'0,&5.
-
7/24/2019 Credtrans Cases 2.1
17/123
2irst0 the title >A*end*ent o: Real #state 8ort+a+e> re$o+nizes the e?isten$e and
eDe$tivit/ o: the previous *ort+a+e $ontra$t. Se$ond0 no)here in the a:oresaid
A*end*ent did the parties *ani:est their intention to supersede the ori+inal
$ontra$t. 4n the $ontrar/ in the 6#R#AS $lauses0 the e?isten$e o: the previous
*ort+a+e $ontra$t )as :ull/ re$o+nized and the :a$t that the sa*e )as just bein+
a*ended as to a*ount and a*ortization is :ull/ established as to obviate an/doubt. hird0 the A*end*ent o: Real #state 8ort+a+e dated ul/
-
7/24/2019 Credtrans Cases 2.1
18/123
... e a+ree that plaintiD should be $redited )ith P11015%.'% o: the re insuran$e
pro$eeds as the sa*e is ad*itted in para+raph J&K o: its Ans)er and should be
added to their pa/*ents. Jpar. 1-K.
Contrar/ thereto0 para+raph & o: the Ans)er o: the GSIS states9
hat the/ JGSISK spe$i$all/ den/ the alle+ations in Para+raph 110 the truth bein+
that plaintiDs are not entitled to a $redit o: P10-"1.', as re insuran$e pro$eeds
sin$e the/ )ere onl/ entitled to0 and )ere $redited )ith0 the a*ount o: P11015%.'%
as pro$eeds o: their re insuran$e poli$/. Jpar. &0 A*ended Ans)erK.
As $an be +leaned :ro* the :ore+oin+0 petitioner=appellant GSIS had alread/
$redited the a*ount o: P11015%.'%. hus0 )hen the Court o: Appeals *ade the
a:oreEuoted rulin+0 it )as a$tuall/ doubl/ $reditin+ the a*ount o: P11015%.'% )hi$h
had been previousl/ $redited b/ petitioner=appellant GSIS JRollo0 pp. 1,'=1,1K.
III.
As to )hether or not the interest rates on the loan a$$ounts o: the 8edinas are
usurious0 it has alread/ been settled that the !sur/ La) applies onl/ to interest b/
)a/ o: $o*pensation :or the use or :orbearan$e o: *one/ JLopez v. 6ernaez0 -%
Phil.
-
7/24/2019 Credtrans Cases 2.1
19/123
sa*e prin$iple in the later $ase o: #Euitable Banin+ Corp. JsupraK0 )here this Court
held that the stipulation about pa/*ent o: su$h additional rate partaes o: the
nature o: a penalt/ $lause0 )hi$h is san$tioned b/ la).
IV.
Based on the ndin+ that the GSIS had the le+al ri+ht to i*pose an interest per
annu*0 $o*pounded *onthl/0 on the loans o: the 8edinas and an interest o:
M1% per annu* on all due and unpaid a*ortizations or install*ents0 there is no
Euestion that the 8edinas :ailed to settle their a$$ounts )ith the GSIS )hi$h as
$o*puted b/ the latter rea$hed an outstandin+ balan$e o: P
-
7/24/2019 Credtrans Cases 2.1
20/123
S4 4R3#R#3.
UCPB v Beluso
UNI!" C#C#NU
PLAN!RS BAN$%
Petitioner0
=versus=
SP#US!S SA&U!L and
#"!! B!LUS#%
Respondents.
G.R. No.'())'*
Present9
YNARES-SANTIAGO,J.,
Chairperson,
A!SRIA=8ARI(#H0
C6IC4=(AHARI40
(AC6!RA0 and
R#7#S0JJ.
Pro*ul+ated9
Au+ust 1,0 %'',
?= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = == = =?
3 # C I S I 4 (
%'
-
7/24/2019 Credtrans Cases 2.1
21/123
C6IC4=(AHARI40J.9
his is a Petition :or Revie) onCertiorariunder Rule &5 o: theRules o: Court0 )hi$h sees to annul the Court o: Appeals3e$ision1Qdated%1 anuar/ %''-and its Resolution%QdatedSepte*ber %''-in CA=G.R. CV (o.
-
7/24/2019 Credtrans Cases 2.1
22/123
he spouses Beluso availed the*selves o: the $redit lineunder the :ollo)in+ Pro*issor/ (otes9
P( 3ate o: P( 8aturit/ 3ate A*ountSe$ured
"-1&=
-
7/24/2019 Credtrans Cases 2.1
23/123
6o)ever0 the spouses Beluso alle+ed that the a*ounts $overed
b/ these last t)o pro*issor/ notes )ere never released or$redited to their a$$ount and0 thus0 $lai*ed that the prin$ipalindebtedness )as onl/P% 8illion.
In an/ $ase0 !CPB applied interest rates on the diDerentpro*issor/ notes ran+in+ :ro* 1" to -&.2ro* 1< to2ebruar/ 1" the spouses Beluso )ere able to pa/ the total su*o:P,
-
7/24/2019 Credtrans Cases 2.1
24/123
he spouses Beluso0 ho)ever0 :ailed to *ae an/ pa/*ent o:the :ore+oin+ a*ounts.
4n% Septe*ber 1"0 !CPB de*anded that the spousesBeluso pa/ their total obli+ation o:P%0-%05&-.'' plus %5attorne/s :ees0 but the spouses Beluso :ailed to $o*pl/there)ith.4n%" 3e$e*ber 1"0 !CPB :ore$losed the properties*ort+a+ed b/ the spouses Beluso to se$ure their $redit line0)hi$h0 b/ that ti*e0 alread/ ballooned toP-0,"&0
-
7/24/2019 Credtrans Cases 2.1
25/123
de:endant=appellant !CPB is not liable :or attorne/s :ees or the $osts
o: suit.,Q
4n Septe*ber %''-0 the Court o: Appeals denied !CPBs8otion :or Re$onsideration :or la$ o: *erit.!CPB thus led thepresent petition0 sub*ittin+ the :ollo)in+ issues :or ourresolution9
I
6#6#R 4R (4 6# 64(4RABL# C4!R 42 APP#ALS C488I#3
S#RI4!S A(3 R#V#RSIBL# #RR4R 6#( I A22IR8#3 6# 3#CISI4(
42 6# RIAL C4!R 6IC6 3#CLAR#3 V4I3 6# PR4VISI4( 4(
I(#R#S RA# AGR##3 !P4( B###( P#II4(#R A(3
R#SP4(3#(S
II
6#6#R 4R (4 6# 64(4RABL# C4!R 42 APP#ALS C488I#3
S#RI4!S A(3 R#V#RSIBL# #RR4R 6#( I A22IR8#3 6#
C48P!AI4( B7 6# RIAL C4!R 42 R#SP4(3#(S I(3#B#3(#SS
A(3 4R3#R#3 R#SP4(3#(S 4 PA7 P#II4(#R 6# A84!( 42
4(L7 4(# 8ILLI4( 2IV# 6!(3R#3 SIO7 64!SA(3 6R## 6!(3R#3
#IG6 P#S4S JP105
-
7/24/2019 Credtrans Cases 2.1
26/123
IV
6#6#R 4R (4 6# 64(4RABL# C4!R 42 APP#ALS C488I#3S#RI4!S A(3 R#V#RSIBL# #RR4R 6#( I A22IR8#3 6# 3#CISI4(
42 6# RIAL C4!R 6IC6 24!(3 P#II4(#R LIABL# 24R
VI4LAI4( 42 6# R!6 I( L#(3I(G AC
V
6#6#R 4R (4 6# 64(4RABL# C4!R 42 APP#ALS C488I#3
S#RI4!S A(3 R#V#RSIBL# #RR4R 6#( I 2AIL#3 4 4R3#R 6#
3IS8ISSAL 42 6# CAS# B#CA!S# 6# R#SP4(3#(S AR# G!IL7 42
24R!8 S64PPI(G"Q
Validit+ o, the Interest Rates
he Court o: Appeals held that the i*position o: interest inthe :ollo)in+ provision :ound in the pro*issor/ notes o: thespouses Beluso is void0 as the interest rates and the basesthere:or )ere deter*ined solel/ b/ petitioner !CPB9
24R VAL!# R#C#IV#30 I0 andMor e0 on or be:ore due date0 SPS.
SA8!#L A(3 43## B#L!S4 JB4RR4#RK0 jointl/ and severall/
pro*ise to pa/ to !(I#3 C4C4(! PLA(#RS BA( JL#(3#RK or
order at !CPB Bld+.0 8aati Avenue0 8aati Cit/0 Philippines0 the su*o: TTTTTTTTTTTTTT P#S4S0 JPTTTTTK0 Philippine Curren$/0 )ith interest
thereon at the rate indi$ative o: 3B3 retail rate or as deter*ined b/
the Bran$h 6ead.Q
%
-
7/24/2019 Credtrans Cases 2.1
27/123
!CPB asserts that this is a reversible error0 and $lai*s that)hile the interest rate )as not nu*eri$all/ Euantied in the :a$eo: the pro*issor/ notes0 it )as nonetheless $ate+ori$all/ ?ed0 atthe ti*e o: e?e$ution thereo:0 at the rate indi$ative o: the 3B3
retail rate. !CPB $ontends that said provision *ust be read )ithanother stipulation in the pro*issor/ notes subje$tin+ to revie)the interest rate as ?ed9
he interest rate shall be subje$t to revie) and *a/ be
in$reased or de$reased b/ the L#(3#R $onsiderin+ a*on+ others the
prevailin+ nan$ial and *onetar/ $onditions or the rate o: interest and
$har+es )hi$h other bans or nan$ial institutions $har+e or oDer to
$har+e :or si*ilar a$$o**odations andMor the resultin+ protabilit/ to
the L#(3#R a:ter due $onsideration o: all dealin+s )ith the
B4RR4#R.1'Q
In this re+ard0 !CPB avers that these are valid re:eren$erates ain to a prevailin+ rate or pri*e rate allo)ed b/ this CourtinPolotan v. Court of Appeals.11Q2urther*ore0 !CPB ar+ues thateven i: the proviso as deter*ined b/ the bran$h head is$onsidered void0 su$h a de$laration )ould notipso factorenderthe $onne$tin+ $lause indi$ative o: 3B3 retail rate void in vie) o:the separabilit/ $lause o: the Credit A+ree*ent0 )hi$h reads9
Se$tion .'" Separabilit/ Clause. I: an/ one or *ore o: the
provisions $ontained in this AGR##8#(0 or do$u*ents e?e$uted in
$onne$tion here)ith shall be de$lared invalid0 ille+al or unen:or$eable
in an/ respe$t0 the validit/0 le+alit/ and en:or$eabilit/ o: the re*ainin+
provisions hereo: shall not in an/ )a/ be aDe$ted or i*paired.1%Q
A$$ordin+ to !CPB0 the i*position o: the Euestioned interestrates did not in:rin+e on the prin$iple o: *utualit/ o: $ontra$ts0be$ause the spouses Beluso had the libert/ to $hoose )hether ornot to rene) their $redit line at the ne) interest rates pe++ed b/petitioner.1-Q!CPB also $lai*s that assu*in+ there )as an/de:e$t in the *utualit/ o: the $ontra$t at the ti*e o: its in$eption0su$h de:e$t )as $ured b/ the subseEuent $ondu$t o: the spouses
%,
http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn13http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn10http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn12http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn13 -
7/24/2019 Credtrans Cases 2.1
28/123
Beluso in availin+ the*selves o: the $redit line :ro* April 1< to2ebruar/ 1" )ithout airin+ an/ protest )ith respe$t to theinterest rates i*posed b/ !CPB.A$$ordin+ to !CPB0 there:ore0 thespouses Beluso are in estoppel.1&Q
e a+ree )ith the Court o: Appeals0 and nd no *erit in the$ontentions o: !CPB.
Arti$le 1-'" o: the Civil Code provides9
Art. 1-'". he $ontra$t *ust bind both $ontra$tin+ parties itsvalidit/ or $o*plian$e $annot be le:t to the )ill o: one o: the*.
e applied this provision inPhilippine National Bank v. Courtof Appeals015Q)here )e held9
In order that obli+ations arisin+ :ro* $ontra$ts *a/ have the
:or$e o: la) bet)een the parties0 there *ust be *utualit/ bet)een the
parties based on their essential eEualit/. A $ontra$t $ontainin+ a
$ondition )hi$h *aes its :ulll*ent dependent e?$lusivel/ upon the
un$ontrolled )ill o: one o: the $ontra$tin+ parties0 is void JGar$ia vs.
Rita Le+arda0 In$.0 %1 SCRA 555K. 6en$e0 even assu*in+ that the P1."
*illion loan a+ree*ent bet)een the P(B and the private respondent
+ave the P(B a li$ense Jalthou+h in :a$t there )as noneK to in$rease
the interest rate at )ill durin+ the ter* o: the loan0 that li$ense )ould
have been null and void :or bein+ violative o: the prin$iple o: *utualit/
essential in $ontra$ts. It )ould have invested the loan a+ree*ent )ith
the $hara$ter o: a $ontra$t o: adhesion0 )here the parties do not
bar+ain on eEual :ootin+0 the )eaer part/@s Jthe debtorK parti$ipationbein+ redu$ed to the alternative >to tae it or leave it> JUua vs. La)
!nion Ro$ Insuran$e Co.0 5 Phil. "5K. Su$h a $ontra$t is a veritable
trap :or the )eaer part/ )ho* the $ourts o: justi$e *ust prote$t
a+ainst abuse and i*position.
%"
http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn14http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn15http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn14http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn15 -
7/24/2019 Credtrans Cases 2.1
29/123
he provision statin+ that the interest shall be at the rateindi$ative o: 3B3 retail rate or as deter*ined b/ the Bran$h 6eadis indeed dependent solel/ on the )ill o: petitioner !CPB. !nder
su$h provision0 petitioner !CPB has t)o $hoi$es on )hat theinterest rate shall be9 J1K a rate indi$ative o: the 3B3 retail rateor J%K a rate as deter*ined b/ the Bran$h 6ead. As !CPB is +iventhis $hoi$e0 the rate should be $ate+ori$all/ deter*inableinboth$hoi$es.I: either o: these t)o $hoi$es presents anopportunit/ :or !CPB to ? the rate at )ill0 the ban $an easil/$hoose su$h an option0 thus *ain+ the entire interest rateprovision violative o: the prin$iple o: *utualit/ o: $ontra$ts.
(ot just one0 but rather both0 o: these $hoi$es aredependent solel/ on the )ill o: !CPB.Clearl/0 a rate asdeter*ined b/ the Bran$h 6ead +ives the latter un:ettereddis$retion on )hat the rate *a/ be. he Bran$h 6ead *a/ $hoosean/ rate he or she desires.As re+ards the rate indi$ative o: the3B3 retail rate0 the sa*e $annot be $onsidered as valid :or bein+ain toa prevailin+ rate or pri*e rate allo)ed b/ this CourtinPolotan.he interest rate inPolotanreads9
he Cardholder a+rees to pa/ interest per annu* at - plus the pri*e
rate o: Se$urit/ Ban and rust Co*pan/. ? ? ?.1
-
7/24/2019 Credtrans Cases 2.1
30/123
he stipulation in the pro*issor/ notes subje$tin+ the interestrate to revie) does not render the i*position b/ !CPB o: interestrates on the obli+ations o: the spouses Beluso valid.A$$ordin+ tosaid stipulation9
he interest rate shall be subje$t to revie) and *a/ be
in$reased or de$reased b/ the L#(3#R $onsiderin+ a*on+ others the
prevailin+ nan$ial and *onetar/ $onditions or the rate o: interest and
$har+es )hi$h other bans or nan$ial institutions $har+e or oDer to
$har+e :or si*ilar a$$o**odations andMor the resultin+ protabilit/ to
the L#(3#R a:ter due $onsideration o: all dealin+s )ith the
B4RR4#R.1,Q
It should be pointed out that the authorit/ to revie) the interestrate )as +iven !CPB alone as the lender.8oreover0 !CPB *a/appl/ the $onsiderations enu*erated in this provision as it)ishes.As )orded in the above provision0 !CPB *a/ +ive as*u$h )ei+ht as it desires to ea$h o: the :ollo)in+ $onsiderations9J1K the prevailin+ nan$ial and *onetar/ $ondition J%K the rate o:interest and $har+es )hi$h other bans or nan$ial institutions
$har+e or oDer to $har+e :or si*ilar a$$o**odations andMor J-Kthe resultin+ protabilit/ to the L#(3#R J!CPBK a:ter due$onsideration o: all dealin+s )ith the B4RR4#R Jthe spousesBelusoK.A+ain0 as in the $ase o: the interest rate provision0 thereis no ?ed *ar+in above or belo) these $onsiderations.
In vie) o: the :ore+oin+0 the Separabilit/ Clause $annot saveeither o: the t)o options o: !CPB as to the interest to be i*posed0
as both options violate the prin$iple o: *utualit/ o: $ontra$ts.
!CPB lie)ise :ailed to $onvin$e us that the spouses Beluso)ere in estoppel.
-'
http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn17http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn17 -
7/24/2019 Credtrans Cases 2.1
31/123
#stoppel $annot be predi$ated on an ille+al a$t. As bet)eenthe parties to a $ontra$t0 validit/ $annot be +iven to it b/ estoppeli: it is prohibited b/ la) or is a+ainst publi$ poli$/.1"Q
he interest rate provisions in the $ase at bar are ille+al notonl/ be$ause o: the provisions o: the Civil Code on *utualit/ o:$ontra$ts0 but also0 as shall be dis$ussed later0 be$ause the/violate the ruth in Lendin+ A$t.(ot dis$losin+ the true nan$e$har+es in $onne$tion )ith the e?tensions o: $redit is0:urther*ore0 a :or* o: de$eption )hi$h )e $annot $ountenan$e.Itis a+ainst the poli$/ o: the State as stated in the ruth in Lendin+A$t9
Se$. %. Declaration of Policy. It is hereb/ de$lared to be the
poli$/ o: the State to prote$t its $itizens :ro* a la$ o: a)areness o:
the true $ost o: $redit to the user b/ assurin+ a :ull dis$losure o: su$h
$ost )ith a vie) o: preventin+ the unin:or*ed use o: $redit to the
detri*ent o: the national e$ono*/.1Q
8oreover0 )hile the spouses Beluso indeed a+reed to rene)the $redit line0 the oDendin+ provisions are :ound in thepro*issor/ notes the*selves0 not in the $redit line.In ?in+ theinterest rates in the pro*issor/ notes to $over the rene)ed $reditline0 !CPB still reserved to itsel: the sa*e t)o options J1K a rateindi$ative o: the 3B3 retail rate or J%K a rate as deter*ined b/the Bran$h 6ead.
!rror in Co-putation
!CPB asserts that )hile both the RC and the Court o:Appeals voided the interest rates i*posed b/ !CPB0 both :ailed toin$lude in their $o*putation o: the outstandin+ obli+ation o: thespouses Beluso the le+al rate o: interest o: 1% perannu*.2urther*ore0 the penalt/ $har+es )ere also deleted in the
-1
http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn19http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn18http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn19 -
7/24/2019 Credtrans Cases 2.1
32/123
de$isions o: the RC and the Court o: Appeals.Se$tion %.'&0Arti$le II on Interest and other Ban Char+es o: the subje$t CreditA+ree*ent0 provides9
Se$tion %.'& Penalt/ Char+es. In addition to the interest provided
:or in Se$tion %.'1 o: this ARICL#0 an/ prin$ipal obli+ation o: the
CLI#( hereunder )hi$h is not paid )hen due shall be subje$t to a
penalt/ $har+e o: one per$ent J1K o: the a*ount o: su$h obli+ation
per *onth $o*puted :ro* due date until the obli+ation is paid in :ull. I:
the ban a$$elerates teh Jsi$K pa/*ent o: avail*ents hereunder
pursuant to ARICL# VIII hereo:0 the penalt/ $har+e shall be used on
the total prin$ipal a*ount outstandin+ and unpaid $o*puted :ro* the
date o: a$$eleration until the obli+ation is paid in :ull.%'Q
Para+raph & o: the pro*issor/ notes also states9
In $ase o: non=pa/*ent o: this Pro*issor/ (ote J(oteK at
*aturit/0 IMe0 jointl/ and severall/0 a+ree to pa/ an additional su*
eEuivalent to t)ent/=ve per$ent J%5K o: the total due on the (ote as
attorne/s :ee0 aside :ro* the e?penses and $osts o: $olle$tion )hether
a$tuall/ in$urred or not0 and a penalt/ $har+e o: one per$ent J1K per
*onth on the total a*ount due and unpaid :ro* date o: de:ault until
:ull/ paid.%1Q
Petitioner :urther $lai*s that it is lie)ise entitled toattorne/s :ees0 pursuant to Se$tion .'< o: the Credit A+ree*ent0
thus9
I: the BA( shall reEuire the servi$es o: $ounsel :or the
en:or$e*ent o: its ri+hts under this AGR##8#(0 the (oteJsK0 the
$ollaterals and other related do$u*ents0 the BA( shall be entitled to
re$over attorne/s :ees eEuivalent to not less than t)ent/=ve per$ent
-%
http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn21 -
7/24/2019 Credtrans Cases 2.1
33/123
J%5K o: the total a*ounts due and outstandin+ e?$lusive o: $osts and
other e?penses.%%Q
Another alle+ed $o*putational error pointed out b/ !CPB isthe ne+ation o: the Co*poundin+ Interest a+reed upon b/ theparties under Se$tion %.'% o: the Credit A+ree*ent9
Se$tion %.'% Co*poundin+ Interest. Interest not paid )hen due shall
:or* part o: the prin$ipal and shall be subje$t to the sa*e interest rate
as herein stipulated.%-Q
and para+raph - o: the subje$t pro*issor/ notes9
Interest not paid )hen due shall be added to0 and be$o*e part o: the
prin$ipal and shall lie)ise bear interest at the sa*e rate.%&Q
!CPB lastl/ avers that the appli$ation o: the spouses Belusospa/*ents in the disputed $o*putation does not ree$t the partiesa+ree*ent.he RC dedu$ted the pa/*ent *ade b/ the spousesBeluso a*ountin+ toP,
-
7/24/2019 Credtrans Cases 2.1
34/123
Se$tion -.'- Appli$ation o: Pa/*ent. Pa/*ents *ade b/ the
CLI#( shall be applied in a$$ordan$e )ith the :ollo)in+ order o:
pre:eren$e9
1. A$$ounts re$eivable and other out=o:=po$et e?penses
%. 2ront=end 2ee0 4ri+ination 2ee0 Attorne/s 2ee and other
e?penses o: $olle$tion
-. Penalt/ $har+es
&. Past due interest
5. Prin$ipal a*ortizationMPa/*ent in arrears
-
7/24/2019 Credtrans Cases 2.1
35/123
de*and does not nulli:/ the de*and itsel:0 )hi$h is valid )ithrespe$t to the proper a*ount.A $ontrar/ rulin+ )ould put$o**er$ial transa$tions in disarra/0 as validit/ o: de*ands )ouldbe dependent on the e?a$tness o: the $o*putations thereo:0
)hi$h are too o:ten $ontested.
here bein+ a valid de*and on the part o: !CPB0 albeite?$essive0 the spouses Beluso are $onsidered in de:ault )ithrespe$t to the proper a*ount and0 there:ore0 the interests and thepenalties be+an to run at that point.
As re+ards the a)ard o: 1% le+al interest in :avor o:petitioner0 the RC a$tuall/ re$o+nized that said le+al interestshould be i*posed0 thus9 here bein+ no valid stipulation as tointerest0 the le+al rate o: interest shall be $har+ed.%,QIt see*sthat the RC inadvertentl/ overlooed its non=in$lusion in its$o*putation.
he spouses Beluso had even ori+inall/ ased :or the RC toi*pose this le+al rate o: interest in both the bod/ and the pra/ero: its petition )ith the RC9
1%. Sin$e the provision on the ?in+ o: the rate o: interest b/ the
sole )ill o: the respondent Ban is null and void0 onl/ the le+al rate o:
interest )hi$h is 1% per annu* $an be le+all/ $har+ed and i*posed
b/ the ban0 )hi$h )ould a*ount to onl/ about P50'''.'' sin$e
1< up to Au+ust -10 1".
? ? ? ?
6#R#24R#0 in vie) o: the :ore+oin+0 petiitoners pra/ :or
jud+*ent or order9
-5
http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn27http://sc.judiciary.gov.ph/jurisprudence/2007/august2007/159912.htm#_ftn27 -
7/24/2019 Credtrans Cases 2.1
36/123
? ? ? ?
%. B/ )a/ o: e?a*ple :or the publi$ +ood a+ainst the Banstain+ un:air advanta+e o: the )eaer part/ to their $ontra$t0 de$larin+
the le+al rate o: 1% per annu*0 as the i*posable rate o: interest up
to 2ebruar/ %"0 1 on the loan o: %.-5' *illion.%"Q
All these sho) that the spouses Beluso had a$no)led+ed be:orethe RC their obli+ation to pa/ a 1% le+al interest on theirloans.hen the RC :ailed to in$lude the 1% le+al interest in its$o*putation0 ho)ever0 the spouses Beluso *erel/ de:ended inthe appellate $ourts this non=in$lusion0 as the sa*e )as bene$ialto the*.e see0 ho)ever0 suF$ient basis to i*pose a 1% le+alinterest in :avor o: petitioner in the $ase at bar0 as )hat )e havevoided is *erel/ the stipulated rate o: interest and not thestipulation that the loan shall earn interest.
e *ust lie)ise uphold the $ontra$t stipulation providin+the $o*poundin+ o: interest.he provisions in the CreditA+ree*ent and in the pro*issor/ notes providin+ :or the$o*poundin+ o: interest )ere neither nullied b/ the RC or theCourt o: Appeals0 nor assailed b/ the spouses Beluso in theirpetition )ith the RC.he $o*poundin+ o: interests has:urther*ore been de$lared b/ this Court to be le+al.e have heldinTan v. Court of Appeals,%Qthat9
ithout prejudi$e to the provisions o: Arti$le %%1%0 interest due
and unpaid shall not earn interest. o/ever% the 0ontra0tin1parties -a+ b+ stipulation 0apitalize the interest due and
unpaid% /hi0h as added prin0ipal% shall earn ne/ interest.
-
-
7/24/2019 Credtrans Cases 2.1
37/123
As re+ards the i*position o: penalties0 ho)ever0 althou+h )eare lie)ise upholdin+ the i*position thereo: in the $ontra$t0 )end the rate iniEuitous.Lie in the $ase o: +rossl/ e?$essiveinterests0 the penalt/ stipulated in the $ontra$t *a/ also be
redu$ed b/ the $ourts i: it is iniEuitous or un$ons$ionable.
-'Q
e nd the penalt/ i*posed b/ !CPB0 ran+in+ :ro* -'.&1to -
-
7/24/2019 Credtrans Cases 2.1
38/123
In su*0 )e hold that spouses Beluso should still be heldliable :or a $o*pounded le+al interest o: 1% per annu* and apenalt/ $har+e o: 1% per annu*. e also hold that0 instead o:a)ardin+ attorne/s :ees in :avor o: petitioner0 )e shall *erel/
aFr* the deletion o: the a)ard o: attorne/s :ees to the spousesBeluso.
Annul-ent o, the 2ore0losure Sale
Properties o: spouses Beluso had been :ore$losed0 titles to)hi$h had alread/ been $onsolidated on1 2ebruar/ %''1and%'
8ar$h %''1in the na*e o: !CPB0 as the spouses Beluso :ailed toe?er$ise their ri+ht o: rede*ption )hi$h e?pired on%5 8ar$h%'''.he RC0 ho)ever0 annulled the :ore$losure o: *ort+a+ebased on an alle+ed in$orre$t $o*putation o: the spouses Belusosindebtedness.
!CPB alle+es that none o: the +rounds :or the annul*ent o: a:ore$losure sale are present in the $ase at bar.2urther*ore0 theannul*ent o: the :ore$losure pro$eedin+s and the $erti$ates o:sale )ere *ooted b/ the subseEuent issuan$e o: ne) $erti$ateso: title in the na*e o: said ban.!CPB $lai*s that the spousesBelusos a$tion :or annul*ent o: :ore$losure $onstitutes a $ollateralatta$ on its $erti$ates o: title0 an a$t pros$ribed b/ Se$tion &" o:Presidential 3e$ree (o. 15%0 other)ise no)n as the Propert/Re+istration 3e$ree0 )hi$h provides9
Se$tion &". Certicate not subect to collateral attack.A
$erti$ate o: title shall not be subje$t to $ollateral atta$. It $annot bealtered0 *odied or $an$elled e?$ept in a dire$t pro$eedin+ in
a$$ordan$e )ith la).
-"
-
7/24/2019 Credtrans Cases 2.1
39/123
he spouses Beluso retort that sin$e the/ had the ri+ht tore:use pa/*ent o: an e?$essive de*and on their a$$ount0 the/$annot be said to be in de:ault :or re:usin+ to pa/ thesa*e.ConseEuentl/0 a$$ordin+ to the spouses Beluso0 the
en:or$e*ent o: su$h ille+al and over$har+ed de*and throu+h:ore$losure o: *ort+a+e should be voided.
e a+ree )ith !CPB and aFr* the validit/ o: the :ore$losurepro$eedin+s.Sin$e )e alread/ :ound that a valid de*and )as*ade b/ !CPB upon the spouses Beluso0 despite bein+ e?$essive0the spouses Beluso are $onsidered in de:ault )ith respe$t to theproper a*ount o: their obli+ation to !CPB and0 thus0 the propert/the/ *ort+a+ed to se$ure su$h a*ounts *a/ be:ore$losed.ConseEuentl/0 pro$eeds o: the :ore$losure sale shouldbe applied to the e?tent o: the a*ounts to )hi$h !CPB isri+ht:ull/ entitled.
As ar+ued b/ !CPB0 none o: the +rounds :or the annul*ent o:a :ore$losure sale are present in this $ase. he +rounds :or theproper annul*ent o: the :ore$losure sale are the :ollo)in+9 J1K thatthere )as :raud0 $ollusion0 a$$ident0 *utual *istae0 brea$h o:
trust or *is$ondu$t b/ the pur$haser J%K that the sale had notbeen :airl/ and re+ularl/ $ondu$ted or J-Kthat the pri$e )asinadeEuate and the inadeEua$/ )as so +reat as to sho$ the$ons$ien$e o: the $ourt.-&Q
Liabilit+ ,or Violation o, ruth in Lendin1 A0t
he RC0 aFr*ed b/ the Court o: Appeals0 i*posed a neo:P%
-
7/24/2019 Credtrans Cases 2.1
40/123
!CPB $hallen+es this i*position0 on the ar+u*ent thatSe$tion
-
7/24/2019 Credtrans Cases 2.1
41/123
Ad*ittedl/ the ori+inal $o*plaint did not e?pli$itl/ alle+e a violation o:
the ruth in Lendin+ A$t and no a$tion to :or*all/ ad*it the a*ended
petition )as *ade either b/ respondentsQ spouses Beluso and the
lo)er $ourt. In su$h transa$tions0 the debtor and the lendin+institutions do not deal on an eEual :ootin+ and this la) )as intended
to prote$t the publi$ :ro* hidden or undis$losed $har+es on their loan
obli+ations0 reEuirin+ a :ull dis$losure thereo: b/ the lender. e nd
that its in:rin+e*ent *a/ be in:erred or i*plied :ro* alle+ations that
)hen respondentsQ spouses Beluso e?e$uted the pro*issor/ notes0
the interest rate $har+eable thereon )ere le:t blan. hus0 petitionerQ
!CPB :ailed to dis$har+e its dut/ to dis$lose in :ull to respondentsQ
Spouses Beluso the $har+es appli$able on their loans.-
-
7/24/2019 Credtrans Cases 2.1
42/123
the outstandin+ unpaid balan$e o: the obli+ation.-"Q2urther*ore0the spouses Belusos pra/er :or su$h other relie:s just andeEuitable in the pre*ises should be dee*ed to in$lude the $ivilpenalt/ provided :or in Se$tion
-
7/24/2019 Credtrans Cases 2.1
43/123
? ? ? ?
J$K An/ person )ho )ill:ull/ violates an/ provision o: thisA$t or an/ re+ulation issued thereunder shall be ned b/ not less
than P10''' or *ore than P50''' or i*prison*ent :or not less than
;' -etitioners are erely guarantors of the ortgage de!t
of petitioner corporation hich has a separate personality
fro the )petitioner(spouses*'
B' The /oint and solidary agreeent e2ecuted !y
)petitioner( spouses* are contracts of adhesion not
!inding on the:
C' The .BC5 Board Resolution is not alid and !inding on
)petitioner(spouses* !ecause they ere copelled to
e2ecute the said Resolution):* otherise),* Respondent
-.B ould not grant petitioner corporation the loan:
D' The Respondent -.B had already in its possession the
properties of the )petitioner(spouses* hich sered as a
collateral to the loan o!ligation of petitioner corporation),*
and to still allo Respondent -.B to recoer the
deficiency clai aounting to a ery su!stantial aount
of -"'$ illion ould constitute un/ust enrichent on the
part of Respondent -.B'
5
Whether or not the e2tra/udicial foreclosure proceedings and auction
sale, including all su!se3uent proceedings),* are null and oid for
,%
-
7/24/2019 Credtrans Cases 2.1
73/123
non(copliance ith /urisdictional and other andatory
re3uireents: hether or not the petition for e2tra/udicial foreclosure
of ortgage as filed preaturely: and hether or not the finding of
fraud !y the trial court is aply supported !y the eidence on record')$$*
The foregoing may be summed up into two main
issues9frst, whether the loan accounts are bloatedC
and second, whether the e%tra=udicial foreclosure and
subse"uent claim for de:ciency are valid and proper.
T+$ Co"% R"n
The 'etition is partly meritorious.
6%#& Man I##"$'
Bloated Loan Accounts
,-
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn11 -
7/24/2019 Credtrans Cases 2.1
74/123
At the outset, it must be stressed that only "uestions of
law)/+may be raised in a petition for review on certiorari
under (ule - of the (ules of #ourt. As a rule, "uestions
of fact cannot be the sub=ect of this mode of appeal, )2+for
)t+he
-
7/24/2019 Credtrans Cases 2.1
75/123
imposition of interests, penalties, other charges and
attorneys fees. To demonstrate this point, the #ourt shall
take up one by one the promissory notes, the credit
agreements and the disclosure statements.Increases in
Interest Baseless
Promissory Notes. ;n each drawdown, the 'romissory
8otes speci:ed the interest rate to be charged9 G.-
percent in the :rst, and /.- percent in the second and
again in the third. ?owever, a uniform clause therein
permitted respondent to increase the rate within the
limits allowed by law at any time depending on whatever
policy it may adopt in the future % % %, )/0+without even
giving prior notice to petitioners. The #ourt holds that
petitioners accessory duty to pay interest)/+did not give
respondent unrestrained freedom to charge any rateother than that which was agreed upon. 8o interest shall
be due, unless e%pressly stipulated in writing.)//+;t would
be the @enith of farcicality to specify and agree upon
,5
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn22http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn20http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn21http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn22 -
7/24/2019 Credtrans Cases 2.1
76/123
rates that could be subse"uently upgraded at whim by
only one party to the agreement.
The unilateral determination and imposition)/2+of
increased rates is violative of the principle of mutuality
of contracts ordained in Article 20F)/+of the #ivil #ode.
)/-+One5sided impositions do not have the force of law
between the parties, because such impositions are not
based on the parties essential e"uality.
Although escalation clauses)/B+are valid in
maintaining :scal stability and retaining the value of
money on long5term contracts,)/D+giving respondent an
unbridled right to ad=ust the interest independently and
upwardly would completely take away from petitioners
the right to assent to an important modi:cation in their
agreement)/F+and would also negate the element of
mutuality in their contracts. The clause cited earlier
,
-
7/24/2019 Credtrans Cases 2.1
77/123
made the ful:llment of the contracts dependent
e%clusively upon the uncontrolled will)/G+of respondent
and was therefore void. &esides, the pro forma
promissory notes have the character of a contract
dadhsion,)20+where the parties do not bargain on e"ual
footing, the weaker partys )the debtors+ participation
being reduced to the alternative to take it or leave it.)2+
,,
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn29http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn30http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn31http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn29http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn30http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn31 -
7/24/2019 Credtrans Cases 2.1
78/123
Hhile the Usury aw)2/+ceiling on interest rates was
lifted by )#entral &ank+ #ircular 8o. G0-,)22+nothing in
the said #ircular grants lenders carte blancheauthority
to raise interest rates to levels which will either enslave
their borrowers or lead to a hemorrhaging of their
assets.)2+;n fact, we have declared nearly ten years ago
that neither this #ircular nor '1 BF, which further
amended the Usury aw, authori@ed either party to
unilaterally raise the interest rate without the others
consent.)2-+
oreover, a similar case eight years ago pointed out
to the same respondent 3'8&4 that borrowing signi:ed a
capital transfusion from lending institutions to
businesses and industries and was done for the purpose
of stimulating their growthC yet respondents continued
unilateral and lopsided policy)2B+of increasing interest
rates without the prior assent)2D+of the borrower not only
,"
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn32http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn33http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn34http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn35http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn36http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn37http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn32http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn33http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn34http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn35http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn36http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn37 -
7/24/2019 Credtrans Cases 2.1
79/123
defeats this purpose, but also deviates from this
pronouncement. Although such increases are not
usurious, since the Usury aw is now legally
ine%istent)2F+55 the interest ranging from /B percent to 2-
percent in the statements of account)2G+55 must be
e"uitably reduced for being ini"uitous, unconscionable
and e%orbitant.)0+(ates found to be ini"uitous or
unconscionable are void, as if it there were no e%press
contract thereon.)+Above all, it is undoubtedly against
public policy to charge e%cessively for the use of money.
)/+
;t cannot be argued that assent to the increases can be
implied either from the une F, GG re"uest of
petitioners for loan restructuring or from their lack of
response to the statements of account sent byrespondent.
-
7/24/2019 Credtrans Cases 2.1
80/123
une"uivocal and decisive act showing such purpose.
)2+&esides, the statements were not letters of
information sent to secure their conformityC and even if
we were to presume these as an o!er, there was no
acceptance. 8o one receiving a proposal to modify a loan
contract, especially interest 55 a vital component 55 is
obliged to answer the proposal.)+ $urthermore,
respondent did not follow the stipulation in the
'romissory 8otes providing for the automatic conversion
of the portion that remained unpaid after D20 days 55 or
two years from date of original release 55 into a medium5
term loan, sub=ect to the applicable interest rate to be
applied from the dates of original release.)-+
;n the :rst,)B+second)D+and third)F+'romissory 8otes,
the amount that remained unpaid as of October /D,GFG, 1ecember GFG and anuary , GG0 55 their
respective due dates 55 should have been automatically
converted by respondent into medium5term loans on
"'
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn43http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn44http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn45http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn46http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn47http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn48http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn43http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn44http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn45http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn46http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn47http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn48 -
7/24/2019 Credtrans Cases 2.1
81/123
une 20, GG,
-
7/24/2019 Credtrans Cases 2.1
82/123
annum on loans and forbearance of money, as provided
for by #& #ircular B.)-0+
Credit Agreements. Aside from the promissory notes,
another main document involved in the principal
obligation is the set of credit agreements e%ecuted and
their anne%es.
The :rst #redit Agreement)-+dated une G, GFG 55
although o!ered and admitted in evidence, and even
referred to in the :rst 'romissory 8ote 55 cannot be
given weight.
First, it was not signed by respondent through its branch
manager.)-/+Apparently it was surreptitiously
acknowledged before respondents counsel, who
un>inchingly declared that it had been signed by the
parties on every page, although respondents signature
does not appear thereon.)-2+
"%
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn50http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn51http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn52http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn53http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn50http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn51http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn52http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn53 -
7/24/2019 Credtrans Cases 2.1
83/123
Second, it was ob=ected to by petitioners,)-+contrary to
the trial courts :ndings.)--+?owever, it was not the
Agreement, but the revolving credit
line)-B+of '-,000,000, that e%pired one year from the
Agreements date of implementation.)-D+
Third, there was no attached anne% that contained the
6eneral #onditions.)-F+Even the Acknowledgment did not
allude to its e%istence.)-G+Thus, no terms or conditions
could be added to the Agreement other than those
already stated therein.
-
7/24/2019 Credtrans Cases 2.1
84/123
percent agreed upon should continue to be applied on
the availment, until its automatic conversion to a
medium5term loan.
The second #redit Agreement)B/+dated August 2, GFG,
provided for interest 55 respondents prime rate, plus the
applicable spread)B2+in e!ect as of the date of each
availment,)B+on a revolving credit line of 'D,D00,000)B-+55
but did not state any provision on its increase or
decrease.)BB+#onse"uently, petitioners could not be made
to bear interest more than such prime rate plus
spread. The #ourt gives weight to this second #redit
Agreement for the following reasons.
First, this document submitted by respondent was
admitted by petitioners.)BD+Again, contrary to their
assertion, it was not the Agreement 55 but the credit line
55 that e%pired one year from the Agreements date of
"&
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn62http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn63http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn64http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn65http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn66http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn67http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn62http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn63http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn64http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn65http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn66http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn67 -
7/24/2019 Credtrans Cases 2.1
85/123
implementation.)BF+Thus, the terms and conditions
continued to apply, even if drawdowns could no longer
be made.
Second, there was no D5page anne%)BG+o!ered in
evidence that contained the 6eneral #onditions,
)D0+notwithstanding the Acknowledgment of its e%istence
by respondents counsel. Thus, no terms or conditions
could be appended to the Agreement other than those
speci:ed therein.
Third, the /5page 6eneral #onditions)D+o!ered and
admitted in evidence had no probative value. There was
no reference to it in the Acknowledgment of the
AgreementC neither was respondents signature on any of
the pages thereof. Thus, the 6eneral #onditions
stipulations on interest ad=ustment,)D/+whether on a :%ed
or a >oating scheme, had no e!ect whatsoever on the
"5
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn68http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn69http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn70http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn71http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn72http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn68http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn69http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn70http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn71http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn72 -
7/24/2019 Credtrans Cases 2.1
86/123
Agreement. #ontrary to the trial courts :ndings,)D2+the
6eneral #ondition were correctly ob=ected to by
petitioners.)D+The rate of /.- percent agreed upon in
the second 8ote thus continued to apply to the second
availment, until its automatic conversion into a medium5
term loan.
The third #redit Agreement)D-+dated
-
7/24/2019 Credtrans Cases 2.1
87/123
The #ourt also :nds that,frst, although this document
was admitted by petitioners,)DD+it was the credit line that
e%pired one year from the implementation of the
Agreement.)DF+The terms and conditions therein
continued to apply, even if availments could no longer be
drawn after e%piry.
Second, there was again no D5page anne%)DG+o!ered that
contained the 6eneral #onditions,)F0+regardless of the
Acknowledgment by the same respondents counsel
a!irming its e%istence. Thus, the terms and conditions in
this Agreement relating to interest cannot be e%panded
beyond that which was already laid down by the parties.
Disclosure Statements. ;n the present case, the
1isclosure
-
7/24/2019 Credtrans Cases 2.1
88/123
indicated in the 'romissory 8otes. Although no method
of computation was provided showing how such rates
were arrived at, we will nevertheless take up the
-
7/24/2019 Credtrans Cases 2.1
89/123
and regular,)F+and that the ordinary course of business
was followed.)F-+
As to the second 1isclosure
-
7/24/2019 Credtrans Cases 2.1
90/123
'8&, 1agupan &ranch 55 testi:ed that the 1isclosure
-
7/24/2019 Credtrans Cases 2.1
91/123
;n sum, the three disclosure statements, as well as the
two credit agreements considered by this #ourt, did not
provide for any increase in the speci:ed interest
rates. Thus, none would now be permitted. Hhen cross5
e%amined, ulia Ang5ope@, $inance Account Analyst ;; of
'8&, 1agupan &ranch, even testi:ed that the bases for
computing such rates were those sent by the head o!ice
from time to time, and not those indicated in the notes or
disclosure statements.)G/+
;n addition to the preceding discussion, it is then
useless to labor the point that the increase in rates
violates the impairment)G2+clause of the #onstitution,
)G+because the sole purpose of this provision is to
safeguard the integrity of valid contractual agreements
against unwarranted interference by the
-
7/24/2019 Credtrans Cases 2.1
92/123
Penalty, or Increases
Thereo, !n"usti#ed
8o penalty charges or increases thereof appear either in
the 1isclosure
-
7/24/2019 Credtrans Cases 2.1
93/123
thus transform it from a snivelling paper tiger to a
growling :nancial watchdog of hapless borrowers.
-
-
7/24/2019 Credtrans Cases 2.1
94/123
&esides, we have earlier said that the 8otes are
contracts of adhesionC although not invalid per se, any
apparent ambiguity in the loan contracts 55 taken as a
whole 55 shall be strictly construed against respondent
who caused it.)0+Horse, in the statements of account,
the penalty rate has again been unilaterally increased by
respondent to 2B percent without petitioners consent. As
a result of its move, such li"uidated damages intended as
a penalty shall be e"uitably reduced by the #ourt to
@ilch)0/+for being ini"uitous or unconscionable.)02+
Although the :rst 1isclosure ects the true and e!ective cost of loans
from respondent. 8ovation can never be presumed,
)0+and the animus novandimust appear by e%press
&
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn101http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn102http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn103http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn104http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn101http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn102http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn103http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn104 -
7/24/2019 Credtrans Cases 2.1
95/123
agreement of the parties, or by their acts that are too
clear and une"uivocal to be mistaken.)0-+To allow
novation will surely >out the policy of the
-
7/24/2019 Credtrans Cases 2.1
96/123
breakdown :gures of such non5:nance charge are
speci:ed in the 1isclosure
-
7/24/2019 Credtrans Cases 2.1
97/123
reasonableness)+based on quantum meruit)/+and to
reduce)2+the amount thereof if e%cessive.)+
;n addition, the dis"uali:cation argument in the A!idavit
of 'ublication raised by petitioners no longer holds
water, inasmuch as Act GB)-+has repealed the
-
7/24/2019 Credtrans Cases 2.1
98/123
He also a!irm the #As dis"uisition on the debt relief
package 31('4.
(espondents #ircular is not an outright grant of
assistance or e%tension of payment,)G+but a mere o!er
sub=ect to speci:c terms and conditions.
'etitioner 8
-
7/24/2019 Credtrans Cases 2.1
99/123
only when regular payment amorti@ations have been
established, or when the merits of the credit application
would so =ustify.)/2+
The branch managers recommendation to
restructure or e%tend a total outstanding loan not
e%ceeding 'F,000,000 is not :nal, but sub=ect to the
approval of respondents &ranches 1epartment #redit
#ommittee, chaired by its e%ecutive vice5president.
)/+Aside from being further conditioned on other
pertinent policies of respondent,)/-+such approval
nevertheless needs to be reported to its &oard of
1irectors for con:rmation.)/B+;n fact, under the 6eneral
&anking aw of /000,)/D+banks shall grant loans and
other credit accommodations only in amounts and for
periods of time essential to the e!ective completion ofoperations to be :nanced, consistent with safe and sound
banking practices.)/F+The onetary &oard 55 then and
now 55 still prescribes, by regulation, the conditions and
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn123http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn124http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn125http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn126http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn127http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn128http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn123http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn124http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn125http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn126http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn127http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn128 -
7/24/2019 Credtrans Cases 2.1
100/123
limitations under which banks may grant e%tensions or
renewals of their loans and other credit
accommodations.)/G+
1''
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn129http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn129 -
7/24/2019 Credtrans Cases 2.1
101/123
'ntries in Su)sidiary Ledgers
*egular and Correct
#ontrary to petitioners assertions, the subsidiary ledgers
of respondent properly re>ected all entries pertaining to
'etitioner 8
-
7/24/2019 Credtrans Cases 2.1
102/123
S$on Man I##"$'
'-tra"udicial &oreclosure alid, But
De#ciency Claims '-cessie
(espondent aptly e%ercised its option to foreclose themortgage,)2-+after petitioners had failed to pay all the
8otes in full when they fell due.)2B+The e%tra=udicial sale
and subse"uent proceedings are therefore valid, but the
alleged de:ciency claim cannot be recovered.
Auction Price Ade(uate
1'%
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn135http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn136http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn135http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn136 -
7/24/2019 Credtrans Cases 2.1
103/123
;n the accessory contract)2D+of real mortgage,)2F+in
which immovable property or real rights thereto are
used as security)2G+for the ful:llment of the principal
loan obligation,)0+the bid price may be lower than the
propertys fair market value.)+ ;n fact, the loan value
itself is only D0 percent of the appraised value.)/+As
correctly emphasi@ed by the appellate court, a low bid
price will make it easier)2+for the owner to e!ect
redemption)+by subse"uently reac"uiring the property
or by selling the right to redeem and thus recover
alleged losses. &esides, the public auction sale has been
regularly and fairly conducted,)-+there has been ample
authority to e!ect the sale,)B+and the #erti:cates of
Title can be relied upon. 8o personal notice)D+is even
re"uired,)F+because an e%tra=udicial foreclosure is an
action in rem, re"uiring only notice by publication and
posting, in order to bind parties interested in the
foreclosed property.)G+
1'-
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn137http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn138http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn139http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn140http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn141http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn142http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn143http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn144http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn145http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn146http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn147http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn148http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn149http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn137http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn138http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn139http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn140http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn141http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn142http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn143http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn144http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn145http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn146http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn147http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn148http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn149 -
7/24/2019 Credtrans Cases 2.1
104/123
As no redemption)-0+was e%ercised within one year after
the date of registration of the #erti:cate of
-
7/24/2019 Credtrans Cases 2.1
105/123
and /.- percent on the respective availments 55 sub=ect
to the / percent legal rate revision upon automatic
conversion into medium5term loans 55 plus percent
attorneys fees, without additional charges on penalty,
insurance or any increases thereof.
Accordingly, the e%cessive interest rates in the
-
7/24/2019 Credtrans Cases 2.1
106/123
vanishes. ;nstead, there is an overpayment by more
than '2 million, as shown in the following -ayent on ==0%0 @pro(rated upon interest6
Balance
;dd>
5nterest at $%'&1 p'a'
1'
-
7/24/2019 Credtrans Cases 2.1
107/123
==$%0(&=$%0 @)&,000,000(=&+,#"$'=0* 2 $%'&1 2 )+"=+&*6
;ount due as of &=$%0
?ess> -ayent on &=$%0 @pro(rated upon interest6
Balance
;dd>
5nterest at $%'&1 p'a'
+$%0(+"%%0 @)&,000,000(@=&+,#"$'=0G#"$'==6* 2 $%'&1 2 )"%=+&*6
;ount due as of +"%%0
?ess> -ayent on +"%%0 @pro(rated upon interest6
Balance
;dd>
5nterest at $%'&1 p'a'
+=0%0($"=$%0 @)&,000,000(@=&+,#"$'=0G#"$'==G
-
7/24/2019 Credtrans Cases 2.1
108/123
5nterest at $"1 p'a'
#%%$(#$&%$ @)&,000,000(@=&+,#"$'=0G#"$'==G -ayent on $$"%%$ @pro(rated upon interest6
Balance
;dd>
5nterest at $"1 p'a'
$$=0%$($""0%$ @)&,000,000(@=&+,#"$'=0G#"$'==G
-
7/24/2019 Credtrans Cases 2.1
109/123
SCHEDULE 2: PN (2)dradon aount on %$#%
?ess> 5nterest deducted in adance @per %$#% Disclosure tateent6
.et proceeds
-rincipal
;dd>
5nterest at "$'&1 p'a'
$"=$#% @",
-
7/24/2019 Credtrans Cases 2.1
110/123
?ess> -ayent on &=$%0 @pro(rated upon interest6
Balance
;dd>
5nterest at "$'&1 p'a'
+$%0(+"%%0 @)", -ayent on +"%%0 @pro(rated upon interest6
Balance
;dd>
5nterest at "$'&1 p'a'
+=0%0($"=$%0 @)",
-
7/24/2019 Credtrans Cases 2.1
111/123
5nterest at "$'&1 p'a'
#$+%$(%$%$ @)",
-
7/24/2019 Credtrans Cases 2.1
112/123
.et proceeds
-rincipal
;dd>
5nterest at "$'&1 p'a'
$&%0 @=00,000 2 "$'&1 2 )$=+&*6
;ount due as of $&%0
?ess> -ayent on $&%0 @pro(rated upon interest6
Balance
;dd>
5nterest at "$'&1 p'a'
$+%0(==0%0 @)=00,000(== -ayent on ==0%0 @pro(rated upon interest6
Balance
;dd>
5nterest at "$'&1 p'a'
==$%0(&=$%0 @)=00,000(==
-
7/24/2019 Credtrans Cases 2.1
113/123
5nterest at "$'&1 p'a'
+$%0(+"%%0 @)=00,000(@==
5nterest at "$'&1 p'a'
+=0%0($"=$%0 @)=00,000(@==
5nterest at "$'&1 p'a'
#%%$(#$&%$ @)=00,000(@==
5nterest at "$'&1 p'a'
#$+%$(%+%$ @)=00,000(@==
-
7/24/2019 Credtrans Cases 2.1
114/123
5nterest at $"1 p'a' upon autoatic
conersion
%
5nterest at $"1 p'a'
$$=0%$($""0%$ @)=00,000(@==
-
7/24/2019 Credtrans Cases 2.1
115/123
-aya!le -ro(rated
$&%0 -. @$6 - $#+,%#+'=0 - &4=,#0
-
7/24/2019 Credtrans Cases 2.1
116/123
##%$ -. @$6 #0+,+=%'%% 4%=,%0+'=$
-. @"6 &"=,$$='%4 ="0,=0='0#
-. @=6 ,4&"'++ =&,
-
7/24/2019 Credtrans Cases 2.1
117/123
;n the preparation of the above5mentioned schedules,
these basic legal principles were followed9
First, the payments were applied to debts that were
already due.)--+Thus, when the :rst payment was made
and applied on anuary -, GG0, all 'romissory 8otes
were already due.
Second, payments of the principal were not made
until the interests had been covered.)-B+$or instance, the
:rst payment on anuary -, GG0 had initially been
applied to all interests due on the notes, before
deductions were made from their respective principal
amounts. The resulting decrease in interest balances
served as the bases for subse"uent pro5ratings.
Third, payments were proportionatelyapplied to all
interests that were due and of the same nature and
11,
http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn155http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn156http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn155http://sc.judiciary.gov.ph/jurisprudence/2004/jul2004/148753.htm#_ftn156 -
7/24/2019 Credtrans Cases 2.1
118/123
burden.)-D+This legal principle was the rationale for the
pro5rated computations shown on
-
7/24/2019 Credtrans Cases 2.1
119/123
;n :ne, under solutio indebiti)B0+or payment by mistake,
)B+there is no de:ciency receivable in favor of '8&, but
rather an e%cess claim or surplus)B/+payable by
respondentC this e%cess should immediately be returned
to petitioner5spouses or their assigns 55 not to mention
the buildings and improvements)B2+on and the fruits of
the property 55 to the end that no one may be un=ustly
enriched or bene:ted at the e%pense of another.)B+
-
7/24/2019 Credtrans Cases 2.1
120/123
?ess> Bid price $0,==4,000'00
E2cess - =,+#+,$0$'&"
Joint and Solidary Agreement. #ontrary to the
contention of the petitioner5spouses, their oint and
-
7/24/2019 Credtrans Cases 2.1
121/123
First, the
-
7/24/2019 Credtrans Cases 2.1
122/123
Third, although the
-
7/24/2019 Credtrans Cases 2.1
123/123
attorneys fees imposed upon the total unpaid balance of
the principal and interest as of the date of public
auction. The '/ million de:ciency claim therefore
vanishes, and a refund of '2,BFB,0.-/ arises.
H?E(E$O(E, this 'etition is herebyPA*TL/
0*ANT'D. The 1ecision of the #ourt of Appeals
isA&&I*1'D,with the1$DI&ICATI$Nthat '8&
is $*D'*'D to refund the sum of '2,BFB,0.-/
representing the overcollection computed above, plus
interest thereon at the legal rate of si% percent 3BK4 per
annum from the :ling of the #omplaint until the :nality