Cases for Revalida Up to Mutuum

7/17/2019 Cases for Revalida Up to Mutuum

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INTRODUCTION TO CREDIT TRANSACTIONS

PANTALEON VS. AMEX INTERNATIONAL

AMEX motion for reconsideration was granted.

A credit card is dened as any card !"ate co#!on $oo% or ot&erde'ice e(isting for t&e !#r!ose of o$taining money goods!ro!erty "a$or or ser'ices or anyt&ing of 'a"#e on credit.

Nat#re of )) Transactions* T&e $an% credit card systemin'o"'es a tri!artite re"ations&i! $etween t&e iss#er $an%t&e card&o"der and merc&ants !artici!ating in t&e system. T&e iss#er $an% esta$"is&es an acco#nt on $e&a"f of t&e!erson to w&om t&e card is iss#ed and t&e two !arties enterinto an agreement w&ic& go'erns t&eir re"ations&i!. T&isagreement !ro'ides t&at t&e $an% wi"" !ay for card&o"dersacco#nt t&e amo#nt of merc&andise or ser'ices !#rc&asedt&ro#g& t&e #se of t&e credit card and wi"" a"so ma%e cas&"oans a'ai"a$"e to t&e card&o"der. It a"so states t&at t&ecard&o"der s&a"" $e "ia$"e to t&e $an% for ad'ances and!ayments made $y t&e $an% and t&at t&e card&o"ders

o$"igation to !ay t&e $an% s&a"" not $e a+ected or im!aired$y any dis!#te c"aim or demand $y t&e card&o"der wit&res!ect to any merc&andise or ser'ice !#rc&ased.

T&e merc&ants !artici!ating in t&e system agree to &onort&e $an%s credit cards. T&e $an% irre'oca$"y agrees to &onorand !ay t&e sa"es s"i!s !resented $y t&e merc&ant if t&emerc&ant !erforms &is #nderta%ings s#c& as c&ec%ing t&e"ist of re'o%ed cards $efore acce!ting t&e card. ( ( (.

T&ese s"i!s are forwarded to t&e mem$er $an% w&ic&origina""y iss#ed t&e card. T&e card&o"der recei'es astatement from t&e $an% !eriodica""y and may t&en decidew&et&er to ma%e !ayment to t&e $an% in f#"" wit&in as!ecied !eriod free of interest or to defer !ayment and#"timate"y inc#r an interest c&arge.

Sim!"y !#t e'ery credit card transaction in'o"'es t&ree contractsname"y* ,a- t&e sales contract $etween t&e credit card &o"der andt&e merc&ant or t&e $#siness esta$"is&ment w&ic& acce!ted t&ecredit card ,$- t&e loan agreement $etween t&e credit cardiss#er and t&e credit card &o"der and "ast"y ,c- t&e promise topay $etween t&e credit card iss#er and t&e merc&ant or $#sinessesta$"is&ment.

Use of credit card a mere oer to enter into loan

agreements

A"t&o#g& we recogni/e t&e e(istence of a re"ations&i! $etween t&ecredit card iss#er and t&e credit card &o"der #!on t&e acce!tance$y t&e card&o"der of t&e terms of t&e card mem$ers&i! agreement

,c#stomari"y signied $y t&e act of t&e card&o"der in signing t&e$ac% of t&e credit card- we have to distinguish thiscontractual relationship rom the creditor!de"torrelationship which only arises after the credit card issuerhas approved the cardholders purchase re#uest$ T&e rstre"ates mere"y to an agreement !ro'iding for credit faci"ity to t&ecard&o"der. T&e "atter in'o"'es t&e act#a" credit on "oan agreementin'o"'ing t&ree contracts name"y* t&e sales contract $etween t&ecredit card &o"der and t&e merc&ant or t&e $#siness esta$"is&mentw&ic& acce!ted t&e credit card t&e loan agreement $etween t&ecredit card iss#er and t&e credit card &o"der and t&epromise topay $etween t&e credit card iss#er and t&e merc&ant or $#siness

esta$"is&ment.

0rom t&e "oan agreement !ers!ecti'e t&e contract#a" re"ations&i!$egins to e(ist on"y #!on t&e meeting of t&e o+er1234 andacce!tance of t&e !arties in'o"'ed. In more concrete terms w&encard&o"ders #se t&eir credit cards to !ay for t&eir !#rc&ases t&eymere"y o+er to enter into "oan agreements wit& t&e credit cardcom!any. On"y after t&e "atter a!!ro'es t&e !#rc&ase re5#ests t&att&e !arties enter into $inding "oan contracts in %ee!ing wit& Artic"e6768 of t&e )i'i" )ode

CO%%ODATU%

PA9:;O VS. )A

<ased on t&e Kasunduan Pa=#yo !ermitted >#e'arra to reside int&e &o#se and "ot free of rent $#t >#e'arra was #nder o$"igation tomaintain t&e !remises in good condition. >#e'arra !romised to'acate t&e !remises on Pa=#yos demand $#t >#e'arra $ro%e &is!romise and ref#sed to &eed Pa=#yos demand to 'acate.

?e do not s#$scri$e to t&e )o#rt of A!!ea"s t&eory t&att&e Kasunduan is one of commodatum.

http://sc.judiciary.gov.ph/jurisprudence/2010/august2010/174269.htm#_ftn26




In a contract of commodatum one of t&e !arties de"i'ers to

anot&er somet&ing not cons#ma$"e so t&at t&e "atter may #se t&e

same for a certain time and ret#rn it.1@74 An essentia" feat#re

of commodatum is t&at it is grat#ito#s. Anot&er feat#re

of commodatum is t&at t&e #se of t&e t&ing $e"onging to anot&er is

for a certain !eriod.1@4 T&#s t&e $ai"or cannot demand t&e ret#rn of

t&e t&ing "oaned #nti" after e(!iration of t&e !eriod sti!#"ated or

after accom!"is&ment of t&e #se for w&ic&t&e commodatum is constit#ted.1@34 If t&e $ai"or s&o#"d &a'e #rgent

need of t&e t&ing &e may demand its ret#rn for tem!orary #se. 1@@4 If

t&e #se of t&e t&ing is mere"y to"erated $y t&e $ai"or &e can

demand t&e ret#rn of t&e t&ing at wi"" in w&ic& case t&e

contract#a" re"ation is ca""ed a precarium.1@B4 :nder t&e )i'i"

)ode precarium is a %ind of commodatum.1@C4

T&e Kasunduan re'ea"s t&at t&e accommodation accorded $y

Pa=#yo to >#e'arra was not essentia""y grat#ito#s. ?&i"e

t&e Kasunduan did not re5#ire >#e'arra to !ay rent it o$"igated

&im to maintain t&e !ro!erty in good condition. T&e im!osition of

t&is o$"igation ma%es t&e Kasunduan a contract di+erent from

a commodatum. T&e e+ects of t&e Kasunduan are a"so di+erent

from t&at of a commodatum. )ase "aw on e=ectment &as treated

re"ations&i! $ased on to"erance as one t&at is a%in to a "and"ordD

tenant re"ations&i! w&ere t&e wit&drawa" of !ermission wo#"d res#"t

in t&e termination of t&e "ease. 1@84 T&e tenants wit&&o"ding of t&e

!ro!erty wo#"d t&en $e #n"awf#". T&is is sett"ed =#ris!r#dence.

E'en ass#ming t&at t&e re"ations&i! $etween Pa=#yo and

>#e'arra is one of commodatum >#e'arra as $ai"ee wo#"d sti""&a'e t&e d#ty to t#rn o'er !ossession of t&e !ro!erty to Pa=#yo t&e

$ai"or. T&e o$"igation to de"i'er or to ret#rn t&e t&ing recei'ed

attac&es to contracts for safe%ee!ing or contracts of commission

administration and commodatum.1B4 T&ese contracts certain"y

in'o"'e t&e o$"igation to de"i'er or ret#rn t&e t&ing recei'ed. 1B64

REP:<LI) VS. <A>TAS

On C May 68C 9ose V. <agtas $orrowed from t&e Re!#$"ic of t&eP&i"i!!ines t&ro#g& t&e <#rea# of Anima" Ind#stry t&ree $#""s* a RedSind&i wit& a $oo% 'a"#e of P66B@.@ a <&agnari of P672.3@ anda Sa&iniwa" of PB.@ for a !eriod of one year from C May 68Cto B May 688 for $reeding !#r!oses s#$=ect to a go'ernmentc&arge of $reeding fee of 6F of t&e $oo% 'a"#e of t&e $#""s.

T&e a!!e""ant contends t&at t&e Sa&iniwa" $#"" was accidenta""y%i""ed d#ring a raid $y t&e G#% in No'em$er 6837 #!on t&e

s#rro#nding $arrios of Gacienda 0e"icidad Inta" <aggao )agayanw&ere t&e anima" was %e!t and t&at as s#c& deat& was d#eto force majeure s&e is re"ie'ed from t&e d#ty of ret#rning t&e $#""or !aying its 'a"#e to t&e a!!e""ee. T&e contention is wit&o#t merit.

T&e "oan $y t&e a!!e""ee to t&e "ate defendant 9ose V. <agtas of t&e

t&ree $#""s for $reeding !#r!oses for a !eriod of one year from C

May 68C to B May 688 "ater on renewed for anot&er year as

regards one $#"" was s#$=ect to t&e !ayment $y t&e $orrower of

$reeding fee of 6F of t&e $oo% 'a"#e of t&e $#""s. T&e a!!e""ant

contends t&at t&e contract was commodatum and t&at for t&at

reason as t&e a!!e""ee retained owners&i! or tit"e to t&e $#"" its&o#"d s#+er its "oss d#e to force majeure. A contract of

commodatum is essentia""y grat#ito#s.6 If t&e $reeding fee $e

considered a com!ensation t&en t&e contract wo#"d $e a "ease of

t&e $#"". :nder artic"e 6@B6 of t&e )i'i" )ode t&e "essee wo#"d $e

s#$=ect to t&e res!onsi$i"ities of a !ossessor in $ad fait& $eca#se

s&e &ad contin#ed !ossession of t&e $#"" after t&e e(!iry of t&e

contract. And e'en if t&e contract $e commodatum sti"" t&e

a!!e""ant is "ia$"e $eca#se artic"e 682 of t&e )i'i" )ode !ro'ides

t&at a $ai"ee in a contract of commodatum H

. . . is "ia$"e for "oss of t&e t&ings e'en if it s&o#"d $e

t&ro#g& a fort#ito#s e'ent*

,2- If &e %ee!s it "onger t&an t&e !eriod sti!#"ated . . .

,7- If t&e t&ing "oaned &as $een de"i'ered wit& a!!raisa" of

its 'a"#e #n"ess t&ere is a sti!#"ation e(em!ting t&e $ai"ee

from res!onsi$i"ity in case of a fort#ito#s e'ent

:INTOS VS. <E)J

http://sc.judiciary.gov.ph/jurisprudence/2004/jun2004/146364.htm#_ftn63






















T&e !"ainti+ ref#sed to get t&e f#rnit#re in 'iew of t&e fact t&at t&edefendant &ad dec"ined to ma%e de"i'ery of a"" of t&em. OnNo'em$er 63t& $efore 'acating t&e &o#se t&e defendantde!osited wit& t&e S&eri+ a"" t&e f#rnit#re $e"onging to t&e !"ainti+ and t&ey are now on de!osit in t&e ware&o#se sit#ated at No. 6326Ri/a" A'en#e in t&e c#stody of t&e said s&eri+.

T&e contract entered into $etween t&e !arties is oneof commadatum $eca#se #nder it t&e !"ainti+ grat#ito#s"y granted

t&e #se of t&e f#rnit#re to t&e defendant reser'ing for &erse"f t&eowners&i! t&ereof $y t&is contract t&e defendant $o#nd &imse"f toret#rn t&e f#rnit#re to t&e !"ainti+ #!on t&e "atters demand.

T&e o$"igation 'o"#ntari"y ass#med $y t&e defendant to ret#rn t&ef#rnit#re #!on t&e !"ainti+Ks demand means t&at &e s&o#"d ret#rna"" of t&em to t&e !"ainti+ at t&e "atterKs residence or &o#se. T&edefendant did not com!"y wit& t&is o$"igation w&en &e mere"y!"aced t&em at t&e dis!osa" of t&e !"ainti+ retaining for &is $enett&e t&ree gas &eaters and t&e fo#r e"etric "am!s. T&e !ro'isions of artic"e 66@8 of t&e )i'i" )ode cited $y co#nse" for t&e !arties arenot s5#are"y a!!"ica$"e. T&e tria" co#rt t&erefore erred w&en it

came to t&e "ega" conc"#sion t&at t&e !"ainti+ fai"ed to com!"y wit&&er o$"igation to get t&e f#rnit#re w&en t&ey were o+ered to &er.

%UTUU%

)ONSOLIATE <ANJ AN TR:ST )ORPORATION VS. )A

Res!ondents )ontinenta" )ement )or!oration ,&ereinafterres!ondent )or!oration- and >regory T. Lim ,&ereinafterres!ondent Lim- o$tained from !etitioner )onso"idated <an% and Tr#st )or!oration Letter of )redit No. OMD272BB in t&e amo#nt of P6@C63. On t&e same date res!ondent )or!oration !aid amargina" de!osit of P723. to !etitioner. T&e "etter of creditwas #sed to !#rc&ase aro#nd 'e &#ndred t&o#sand "iters of $#n%er f#e" oi" from Petro!&i" )or!oration w&ic& t&e "atterde"i'ered direct"y to res!ondent )or!oration in its <#"acan !"ant. Inre"ation to t&e same transaction a tr#st recei!t for t&e amo#nt of P6632.87 was e(ec#ted $y res!ondent )or!oration wit&res!ondent Lim as signatory. )"aiming t&at res!ondents fai"ed tot#rn o'er t&e goods co'ered $y t&e tr#st recei!t or t&e !roceedst&ereof !etitioner "ed a com!"aint for s#m of money wit&a!!"ication for !re"iminary attac&ment174$efore t&e Regiona" Tria")o#rt of Mani"a.

T&e !etition m#st $e denied. Neit&er do we nd error w&en t&e

"ower co#rt and t&e )o#rt of A!!ea"s set aside as in'a"id t&eoating rate of interest e(&orted $y !etitioner to $e a!!"ica$"e. T&e

!ertinent !ro'ision in t&e tr#st recei!t agreement of t&e !arties

(ing t&e interest rate states*

I ?E =oint"y and se'era""y agree to any increase or decrease in t&e

interest rate w&ic& may occ#r after 9#"y 6 68C6 w&en t&e )entra"

<an% oated t&e interest rate and to !ay additiona""y t&e !ena"ty

of 6F !er mont& #nti" t&e amo#nts or insta""ments d#e and

#n!aid #nder t&e tr#st recei!t on t&e re'erse side &ereof isare f#""y!aid.184

?e agree wit& res!ondent )o#rt of A!!ea"s t&at t&e foregoing

sti!#"ation is in'a"id t&ere $eing no reference rate set eit&er $y it

or $y t&e )entra" <an% "ea'ing t&e determination t&ereof at t&e

so"e wi"" and contro" of !etitioner.In t&at case t&e contract#a"

!ro'ision stating t&at if t&ere occ#rs any c&ange in t&e !re'ai"ing

mar%et rates t&e new interest rate shall "e the guiding

rate in com!#ting t&e interest d#e on t&e o#tstanding o$"igation

wit&o#t need of ser'ing notice to t&e )ard&o"der ot&er t&an t&e

re5#ired !osting on t&e mont&"y statement ser'ed to t&e

)ard&o"der1664 was considered 'a"id. T&e afore5#oted !ro'ision was

#!&e"d notwit&standing t&at it may !arta%e of t&e nat#re of an

esca"ation c"a#se $eca#se at t&e same time it !ro'ides for t&e

decrease in t&e interest rate in case t&e !re'ai"ing mar%et rates

dictate its red#ction.

Petitioner &as a"so fai"ed to con'ince #s t&at its transaction

wit& res!ondent )or!oration is rea""y a tr#st recei!t transaction

instead of mere"y a sim!"e "oan as fo#nd $y t&e "ower co#rt and

t&e )o#rt of A!!ea"s.

T&e recent case of Colinares v. Court of Appeals1624 a!!ears to

$e fo#rs5#are wit& t&e facts o$taining in t&e case at $ar. T&ere we

fo#nd t&at inasm#c& as t&e de$tor recei'ed t&e goods s#$=ect of

t&e tr#st recei!t $efore t&e tr#st recei!t itse"f was entered into t&e

transaction in 5#estion was a sim!"e "oan and not a tr#st recei!t

agreement. Prior to t&e date of e(ec#tion of t&e tr#st recei!t

owners&i! o'er t&e goods was a"ready transferred to t&e

de$tor. T&is sit#ation is inconsistent wit& w&at norma""y o$tains in a

!#re tr#st recei!t transaction w&erein t&e goods $e"ong in

http://sc.judiciary.gov.ph/jurisprudence/2001/apr2001/114286.htm#_edn3











owners&i! to t&e $an% and are on"y re"eased to t&e im!orter in

tr#st after t&e "oan is granted.

In t&e case at $ar as in Colinares t&e de"i'ery to res!ondent

)or!oration of t&e goods s#$=ect of t&e tr#st recei!t occ#rred "ong

$efore t&e tr#st recei!t itse"f was e(ec#ted. More s!ecica""y

de"i'ery of t&e $#n%er f#e" oi" to res!ondent )or!orations <#"acan

!"ant commenced on 9#"y B 68C2 and was com!"eted $y 9#"y 6868C2.1674 0#rt&er t&e oi" was #sed #! $y res!ondent )or!oration in

its norma" o!erations $y A#g#st 68C2.164 On t&e ot&er &and t&e

s#$=ect tr#st recei!t was on"y e(ec#ted near"y two mont&s after f#""

de"i'ery of t&e oi" was made to res!ondent )or!oration or on

Se!tem$er 2 68C2.

T&e danger in c&aracteri/ing a sim!"e "oan as a tr#st recei!t

transaction was e(!"ained in Colinares to wit*T&e Tr#st Recei!ts

Law does not see% to enforce !ayment of t&e "oan rat&er it

!#nis&es t&e dis&onesty and a$#se of condence in t&e &and"ing of

money or goods to t&e !re=#dice of anot&er regard"ess of w&et&er

t&e "atter is t&e owner. Gere it is crysta" c"ear t&at on t&e !art of

Petitioners t&ere was neit&er dis&onesty nor a$#se of condence in

t&e &and"ing of money to t&e !re=#dice of P<). Petitioners

contin#a""y endea'ored to meet t&eir o$"igations as s&own $y

se'era" recei!ts iss#ed $y P<) ac%now"edging !ayment of t&e "oan.

<y a"" indications t&en it is a!!arent t&at t&ere was rea""y no

tr#st recei!t transaction t&at too% !"ace. E'ident"y res!ondent

)or!oration was re5#ired to sign t&e tr#st recei!t sim!"y to

faci"itate co""ection $y !etitioner of t&e "oan it &ad e(tended to t&eformer.

:)P< VS. SPO:SES <EL:SO

On 6@ A!ri" 688@ :)P< granted t&e s!o#ses <e"#so aPromissory Notes Line #nder a )redit Agreement w&ere$y t&e "atterco#"d a'ai" from t&e former credit of #! to a ma(im#m amo#ntof P6.2 Mi""ion !esos for a term ending on 7 A!ri" 688B. T&e

s!o#ses <e"#so constit#ted ot&er t&an t&eir !romissory notes a

rea" estate mortgage o'er !arce"s of "and in Ro(as )ity T&e )reditAgreement was s#$se5#ent"y amended to increase t&e amo#nt of t&e Promissory Notes Line to a ma(im#m of P2.73 Mi""ion !esos andto e(tend t&e term t&ereof to 2C 0e$r#ary 688C. T&e t&ree!romissory notes were renewed se'era" times. On 7 A!ri" 688Bt&e !ayment of t&e !rinci!a" and interest of t&e "atter two!romissory notes were de$ited from t&e s!o#ses <e"#sos acco#ntwit& :)P< yet a conso"idated "oan for P6.7 Mi""ion was again

re"eased to t&e s!o#ses <e"#so #nder one !romissory note wit& ad#e date of 2C 0e$r#ary 688C.

To com!"ete"y a'ai" t&emse"'es of t&e P2.73 Mi""ion credit"ine e(tended to t&em $y :)P< t&e s!o#ses <e"#so e(ec#ted twomore !romissory notes for a tota" ofP73.*

T&e t&ree !romissory notes were renewed se'era"times. On 7 A!ri" 688B t&e !ayment of t&e !rinci!a" and interestof t&e "atter two !romissory notes were de$ited from t&e s!o#ses

<e"#sos acco#nt wit& :)P< yet a conso"idated "oan for P6.7 Mi""ionwas again re"eased to t&e s!o#ses <e"#so #nder one !romissorynote wit& a d#e date of 2C 0e$r#ary 688C.

To com!"ete"y a'ai" t&emse"'es of t&e P2.73 Mi""ion credit"ine e(tended to t&em $y :)P< t&e s!o#ses <e"#so e(ec#ted twomore !romissory notes for a tota" ofP73.*

T&e s!o#ses <e"#so &owe'er fai"ed to ma%e any !aymentof t&e foregoing amo#nts.

On 2 Se!tem$er 688C :)P< demanded t&at t&e s!o#ses<e"#so !ay t&eir tota" o$"igation of P287237. !"#s 23Fattorneys fees $#t t&e s!o#ses <e"#so fai"ed to com!"yt&erewit&. On 2C ecem$er 688C :)P< forec"osed t&e !ro!ertiesmortgaged $y t&e s!o#ses <e"#so to sec#re t&eir credit "ine w&ic&$y t&at time a"ready $a""ooned toP7BC@7..

t&e s!o#ses <e"#so "ed a Petition for Ann#"ment Acco#nting and

amages against :)P< wit& t&e RT) of Ma%ati )ity. RT) r#"ed in

fa'or of t&e s!o#ses <e"#so.








&alidity o the Interest Rates

T&e !ro'ision stating t&at t&e interest s&a"" $e at t&e rate indicati'e

of < retai" rate or as determined $y t&e <ranc& Gead is indeed

de!endent so"e"y on t&e wi"" of !etitioner :)P<. As regards t&e rate

indicati'e of t&e < retai" rate t&e same cannot $e considered as

'a"id for $eing a%in to a !re'ai"ing rate or !rime rate a""owed $y

t&is )o#rt in Polotan. T&e interest rate !ro'isions in t&e case at $arare i""ega" not on"y $eca#se of t&e !ro'isions of t&e )i'i" )ode on

m#t#a"ity of contracts $#t a"so as s&a"" $e disc#ssed "ater

$eca#se t&ey 'io"ate t&e Tr#t& in Lending Act. Not disc"osing t&e

tr#e nance c&arges in connection wit& t&e e(tensions of credit is

f#rt&ermore a form of dece!tion w&ic& we cannot co#ntenance. It

is against t&e !o"icy of t&e State as stated in t&e Tr#t& in Lending

Act.

Error in Computation

:)P< asserts t&at w&i"e $ot& t&e RT) and t&e )o#rt of A!!ea"s 'oided t&e interest rates im!osed $y :)P< $ot& fai"ed toinc"#de in t&eir com!#tation of t&e o#tstanding o$"igation of t&es!o#ses <e"#so t&e "ega" rate of interest of 62F !erann#m. 0#rt&ermore t&e !ena"ty c&arges were a"so de"eted in t&edecisions of t&e RT) and t&e )o#rt of A!!ea"s. Section 2. Artic"eII on Interest and ot&er <an% )&arges of t&e s#$=ect )reditAgreement. T&#s according to :)P< t&e interest c&arges !ena"tyc&arges and attorneys fees &ad $een erroneo#s"y e(c"#ded $y t&eRT) and t&e )o#rt of A!!ea"s from t&e com!#tation of t&e tota"amo#nt d#e and demanda$"e from s!o#ses <e"#so.

?e agree wit& :)P< on t&is score. As regards t&e award of 62F

"ega" interest in fa'or of !etitioner t&e RT) act#a""y recogni/ed t&at

said "ega" interest s&o#"d $e im!osed t&#s* T&ere $eing no 'a"id

sti!#"ation as to interest t&e "ega" rate of interest s&a"" $e c&arged.

?e see &owe'er s#cient $asis to im!ose a 62F "ega" interest in

fa'or of !etitioner in t&e case at $ar as w&at we &a'e 'oided is

mere"y t&e sti!#"ated rate of interest and not t&e sti!#"ation t&at

t&e "oan s&a"" earn interest.

?e m#st "i%ewise #!&o"d t&e contract sti!#"ation !ro'iding t&e

com!o#nding of interest.

As regards t&e im!osition of !ena"ties &owe'er a"t&o#g& we are

"i%ewise #!&o"ding t&e im!osition t&ereof in t&e contract we nd

t&e rate ini5#ito#s. Li%e in t&e case of gross"y e(cessi'e interests

t&e !ena"ty sti!#"ated in t&e contract may a"so $e red#ced $y t&e

co#rts if it is ini5#ito#s or #nconsciona$"e. ?e nd t&e !ena"tyim!osed $y :)P< ranging from 7.6F to 7@F to $e ini5#ito#s

considering t&e fact t&at t&is !ena"ty is a"ready o'er and a$o'e t&e

com!o#nded interest "i%ewise im!osed in t&e contract. If a 7@F

interest in itse"f &as $een dec"ared #nconsciona$"e $y t&is )o#rt1764 w&at more a 7.6F to 7@F !ena"ty o'er and a$o'e t&e

!ayment of com!o#nded interest :)P< itse"f m#st &a'e rea"i/ed

t&is as it ga'e #s a sam!"e com!#tation of t&e s!o#ses <e"#sos

o$"igation if $ot& t&e interest and t&e !ena"ty c&arge are red#ced

to 62F.

ESTORES VS. SPO:SES S:PAN>AN

T&e on"y iss#e !osed $efore #s is t&e !ro!riety of t&e im!osition of

interest and attorneys fees.

After a"most se'en years from t&e time of t&e e(ec#tion of t&e contract

and notwit&standing !ayment of P7.3 mi""ion on t&e !art of res!ondentD

s!o#ses !etitioner sti"" fai"ed to com!"y wit& &er o$"igations ,inform s to

stat#es of AR c"earance to $e mo'ed o#tside !erimeter of !ro!ertyetc-. Res!ondentDs!o#ses were amena$"e to t&e !ro!osa" !ro'ided an

interest of 62F com!o#nded ann#a""y s&a"" $e im!osed on t&e P7.3

mi""ion. Petitioner and Arias a'erred t&at t&ey are wi""ing to ret#rn t&e

!rinci!a" amo#nt of P7.3 mi""ion $#t wit&o#t any interest as t&e same

was not agreed #!on. Petitioner and Arias a'erred t&at t&ey are wi""ing

to ret#rn t&e !rinci!a" amo#nt of P7.3 mi""ion $#t wit&o#t any interest as

t&e same was not agreed #!on.

T&e !etition "ac%s merit.

?e s#stain t&e r#"ing of $ot& t&e RT) and t&e )A t&at it is proper toimpose interest notwithstanding the a"sence o stipulation in





the contract. Artic"e 226 of t&e )i'i" )ode e(!ress"y !ro'ides t&at1i4nterest may in t&e discretion of t&e co#rt $e a""owed #!on damagesawarded for $reac& of contract. In t&is case t&ere is no 5#estion t&at!etitioner is "ega""y o$"igated to ret#rn t&e P7.3 mi""ion $eca#se of &erfai"#re to f#""" t&e o$"igation #nder t&e )onditiona" eed of Sa"e des!itedemand. S&e &as in fact admitted t&at t&e conditions were not f#"""edand t&at s&e was wi""ing to ret#rn t&e f#"" amo#nt of P7.3 mi""ion $#t &asnot act#a""y done so. Petitioner en=oyed t&e #se of t&e money from t&e

time it was gi'en to &er #nti" now. T&#s s&e is a"ready in defa#"t of &ero$"igation from t&e date of demand i.e. on Se!tem$er 2B 2.

The interest at the rate of 12% is applicable in the instant case.

Anent t&e interest rate t&e general rule is t&at t&e a!!"ica$"e rate of interest s&a"" $e com!#ted in accordance wit& t&e sti!#"ation of t&e!arties. A$sent any sti!#"ation t&e a!!"ica$"e rate of interest s&a"" $e'() !er ann#m w&en t&e o$"igation arises o#t of a "oan or afor$earance of money goods or credits. In ot&er cases it s&a"" $e si(!ercent *+)-.14 In t&is case t&e !arties did not sti!#"ate as to t&ea!!"ica$"e rate of interest. T&e on"y 5#estion remaining t&erefore isw&et&er t&e @F as !ro'ided #nder Artic"e 228 of t&e )i'i" )ode or 62F

#nder )entra" <an% )irc#"ar No. 6@ is d#e.

T&e contract in'o"'ed in t&is case is admitted"y not a "oan $#t a)onditiona" eed of Sa"e. Gowe'er t&e contract !ro'ides t&at t&e se""er,!etitioner- m#st ret#rn t&e !ayment made $y t&e $#yer ,res!ondentDs!o#ses- if t&e conditions are not f#"""ed. E'en if t&e transactionin'o"'ed a )onditiona" eed of Sa"e can the stipulation governing thereturn of the money be considered as a forbearance of money whichrequired payment of interest at the rate of 12! ,e "elieve so$

-or"earance was dened as a contract#a" o$"igation of "ender orcreditor to refrain d#ring a gi'en !eriod of time from re5#iring t&e$orrower or de$tor to re!ay a "oan or de$t t&en d#e and !aya$"e. T&isdenition descri$es a "oan w&ere a de$tor is gi'en a !eriod wit&in w&ic&to !ay a "oan or de$t. In s#c& case for$earance of money goods orcredits wi"" &a'e no distinct denition from a "oan.

?e $e"ie'e &owe'er t&at t&e !&rase for$earance of money goods orcredits is meant to &a'e a se!arate meaning from a "oan ot&erwise t&erewo#"d &a'e $een no need to add t&at !&rase as a "oan is a"readys#cient"y dened in t&e )i'i" )ode.174 -or"earance o money. goods

or credits s&o#"d t&erefore refer to arrangements ot&er t&an "oanagreements w&ere a !erson ac5#iesces to t&e tem!orary #se of &is

money goods or credits !ending &a!!ening of certain e'ents orf#"""ment of certain conditions. In t&is case t&e res!ondentDs!o#ses!arted wit& t&eir money e'en $efore t&e conditions were f#"""ed. T&ey&a'e t&erefore a""owed or granted for$earance to t&e se""er ,!etitioner- to#se t&eir money !ending f#"""ment of t&e conditions. T&ey werede!ri'ed of t&e #se of t&eir money for t&e !eriod !ending f#"""ment of t&e conditions and w&en t&ose conditions were $reac&ed t&ey areentit"ed not on"y to t&e ret#rn of t&e !rinci!a" amo#nt !aid $#t a"so to

com!ensation for t&e #se of t&eir money. And t&e com!ensation for t&e#se of t&eir money a$sent any sti!#"ation s&o#"d $e t&e same rate of "ega" interest a!!"ica$"e to a "oan since t&e #se or de!ri'ation of f#nds issimi"ar to a "oan.

Petitioners #nwarranted wit&&o"ding of t&e money w&ic& rig&tf#""y!ertains to res!ondentDs!o#ses amo#nts to for$earance of money w&ic&can $e considered as an in'o"#ntary "oan.T&#s t&e a!!"ica$"e rate of interest is 62F !er ann#m.

RE0ORMINA VS. TOMOL

Gow m#c& $y way of "ega" interest s&o#"d a =#dgment de$tor !ayt&e =#dgment creditor

PetitionersK motion for t&e reconsideration of t&e 5#estionedReso"#tion &a'ing $een denied t&ey now come $efore :s t&ro#g&t&e instant !etition !raying for t&e setting aside of t&e saidReso"#tion and for a dec"aration t&at t&e =#dgment in t&eir fa'ors&o#"d $ear "ega" interest at t&e rate of twe"'e ,62F- !ercent !erann#m !#rs#ant to )entra" <an% )irc#"ar No. 6@ dated 9#"y 2868B.

In t&e com!#tation of t&e Q"ega" interestQ decreed in t&e =#dgment

so#g&t to $e e(ec#ted !etitioners c"aim t&at t&e Q"ega" interestQ

s&o#"d $e at t&e rate of twe"'e ,62F- !ercent !er ann#m in'o%ing

in s#!!ort of t&eir aforesaid s#$mission )entra" <an% of t&e

P&i"i!!ines )irc#"ar No. 6@. :!on t&e ot&er &and !ri'ate

res!ondents insist t&at said "ega" interest s&o#"d $e at t&e rate of

si( ,@F- !ercent !er ann#m on"y !#rs#ant to and $y a#t&ority of

Artic"e 228 of t&e New )i'i" )ode in re"ation to Artic"es 226 and

2266 t&ereof. !etitioners contend t&at )entra" <an% )irc#"ar No.

6@ w&ic& !ro'ides H

http://sc.judiciary.gov.ph/jurisprudence/2012/april2012/175139.htm#_ftn34





<y 'irt#e of t&e a#t&ority granted to it #nder Section

6 of Act 2@33 as amended ot&erwise %nown as t&e

Q:s#ry LawQ t&e Monetary <oard in its Reso"#tion No.

6@22 dated 9#"y 28 68B &as !rescri$ed t&at t&e

rate of interest for t&e loan or forbearance of any

money goods or credits and t&e rate a""owed in

judgments" in t&e a$sence of e(!ress contract as to

s#c& rate of interest s&a"" $e twe"'e ,62F- !er cent!er ann#m. T&is )irc#"ar s&a"" ta%e e+ect

immediate"y. ,Ita"ics s#!!"ied-

inc"#des t&e =#dgment so#g&t to $e e(ec#ted in t&is case $eca#se

it is co'ered $y t&e !&rase 2nd t&e rate a""owed in =#dgments in t&e

a$sence of e(!ress contract as to s#c& rate of interest ... Q in t&e

afore5#oted circ#"ar.

T&e !etition is de'oid of merit. )onse5#ent"y its dismissa" is in

order.

Acting !#rs#ant to t&is grant of a#t&ority t&e Monetary <oard

increased t&e rate of "ega" interest from t&at of si( ,@F- !ercent !er

ann#m origina""y a""owed #nder Section I of Act No. 2@33 to twe"'e

,62F- !ercent !er ann#m.

It wi"" $e noted t&at Act No. 2@33 dea"s wit& interest on ,6- "oans

,2- for$earances of any money goods or credits and ,7- rate

a""owed in =#dgments.

T&e iss#e now isHw&at %ind of =#dgment is referred to #nder t&esaid "aw. Petitioners maintain t&at it co'ers a"" %inds of monetary

=#dgment.

T&e contention is de'oid of merit. T&e =#dgments s!o%en of and

referred to are /udgments in litigations involving loans or

or"earance o any 0money. goods or credits$ Any ot&er %ind

of monetary =#dgment w&ic& &as not&ing to do wit& nor in'o"'ing

"oans or for$earance of any money goods or credits does not fa""

wit&in t&e co'erage of t&e said "aw for it is not wit&in t&e am$it of

t&e a#t&ority granted to t&e )entra" <an%. Coming to the case at"ar. the decision herein sought to "e e1ecuted is one

rendered in an Action or Damages or in2ury to persons and

loss o property and does not involve any loan. much less

or"earances o any money. goods or credits$ As correct"y

arg#ed $y t&e !ri'ate res!ondents t&e "aw a!!"ica$"e to t&e said

case is Artic"e 228 of t&e New )i'i" )ode. To ma%e )entra" <an%

)irc#"ar No. 6@ a!!"ica$"e to any case ot&er t&an t&ose s!ecica""y

!ro'ided for $y t&e :s#ry Law wi"" ma%e t&e same of do#$tf#"

constit#tiona"ity since t&e Monetary <oard wi"" $e e(ercising"egis"ati'e f#nctions w&ic& was $eyond t&e intendment of P.. No.

66@.

SPO:SES 9:I)O VS. )GINA <ANJIN> )ORPORATION

Petitioners are now $efore t&is )o#rt raising t&e so"e iss#e o whether the interest rates imposed upon them "yrespondent are valid. Petitioners contend t&at t&e interest ratesim!osed $y res!ondent are not 'a"id as t&ey were not $y 'irt#e of any "aw or <ang%o Sentra" ng Pi"i!inas ,<SP- reg#"ation or any

reg#"ation t&at was !assed $y an a!!ro!riate go'ernment entity. T&ey insist t&at t&e interest rates were #ni"atera""y im!osed $y t&e$an% and t&#s 'io"ate t&e !rinci!"e of m#t#a"ity of contracts. T&eyarg#e t&at t&e esca"ation c"a#se in t&e !romissory notes does notgi'e res!ondent t&e #n$rid"ed a#t&ority to increase t&e interestrate #ni"atera""y. Any c&ange m#st $e m#t#a""y agreed #!on.

T&e a!!ea" is !art"y meritorio#s. Escalation clauses refer tosti!#"ations a""owing an increase in t&e interest rate agreed #!on$y t&e contracting !arties. T&is )o#rt &as "ong recogni/ed t&att&ere is not&ing in&erent"y wrong wit& esca"ation c"a#ses w&ic& are'a"id sti!#"ations in commercia" contracts to maintain sca" sta$i"ityand to retain t&e 'a"#e of money in "ong term contracts. 22 Gence

such stipulations are not void per se. Ne'ert&e"ess anesca"ation c"a#se Qw&ic& grants t&e creditor an #n$rid"ed rig&t toad=#st t&e interest inde!endent"y and #!ward"y com!"ete"yde!ri'ing t&e de$tor of t&e rig&t to assent to an im!ortantmodication in t&e agreementQ is 'oid. A sti!#"ation of s#c& nat#re'io"ates t&e !rinci!"e of m#t#a"ity of contracts. 2 T&#s t&is )o#rt&as !re'io#s"y n#""ied t&e #ni"atera" determination and im!osition$y creditor $an%s of increases in t&e rate of interest !ro'ided in"oan contracts.

It is now sett"ed t&at an escalation clause is void where thecreditor unilaterally determines and imposes an increase in

the stipulated rate o interest without the e1pressconormity o the de"tor$ S#c& #n$rid"ed rig&t gi'en to creditors

http://www.lawphil.net/judjuris/juri2013/apr2013/gr_187678_2013.html#fnt22







to ad=#st t&e interest inde!endent"y and #!ward"y wo#"dcom!"ete"y ta%e away from t&e de$tors t&e rig&t to assent to anim!ortant modication in t&eir agreement and wo#"d a"so negatet&e e"ement of m#t#a"ity in t&eir contracts.7 ?&i"e a cei"ing oninterest rates #nder t&e :s#ry Law was a"ready "ifted #nder )entra"<an% )irc#"ar No. 83 not&ing t&erein Qgrants "enders carte$"anc&e a#t&ority to raise interest rates to "e'e"s w&ic& wi"" eit&erens"a'e t&eir $orrowers or "ead to a &emorr&aging of t&eir assets.Q

Gere t&e esca"ation c"a#se in t&e !romissory notes a#t&ori/ing t&eres!ondent to ad=#st t&e rate of interest on t&e $asis of a "aw orreg#"ation iss#ed $y t&e )entra" <an% of t&e P&i"i!!ines s&o#"d $eread toget&er wit& t&e statement after t&e rst !aragra!& w&ere norate of interest was (ed as it wo#"d $e $ased on !re'ai"ing mar%etrates. #hile the latter is not strictly an escalation clause" its clear import was that interest rates would vary as determined by prevailing mar$et rates. E'ident"y t&e !arties intended t&e intereston !etitioners "oan inc"#ding any #!ward or downwardad=#stment to $e determined $y t&e !re'ai"ing mar%et rates andnot dictated $y res!ondents !o"icy. It may a"so $e mentioned t&atsince t&e dereg#"ation of $an% rates in 68C7 t&e )entra" <an% &as

s&ifted to a mar%etDoriented interest rate !o"icy. T&isnotwit&standing we &o"d t&at t&e esca"ation c"a#se is sti"" 'oid$eca#se it grants res!ondent t&e !ower to im!ose an increasedrate of interest wit&o#t a written notice to !etitioners and t&eirwritten consent. Res!ondents mont&"y te"e!&one ca""s to!etitioners ad'ising t&em of t&e !re'ai"ing interest rates wo#"d nots#ce.

EASTERN SGIPPIN> LINES VS. )A

?&et&er t&e !ayment of "ega" interest on an award for "oss or

damage is to $e com!#ted from t&e time t&e com!"aint is "ed orfrom t&e date t&e decision a!!ea"ed from is rendered and w&et&ert&e a!!"ica$"e rate of interest referred to a$o'e is twe"'e !ercent,62F- or si( !ercent ,@F-.

)onceded"y t&ere &a'e $een seeming 'ariances in t&e a$o'e

&o"dings. T&e cases can !er&a!s $e c"assied into two gro#!s

according to t&e simi"arity of t&e iss#es in'o"'ed and t&e

corres!onding r#"ings rendered $y t&e co#rt. T&e Q3rst groupQ

wo#"d consist of t&e cases of %eformina v . &omol ,68C3-" Philippine

%abbit 'us (ines v . Cru) ,68C@-" *lorendo

v . %ui) ,68C8- and +ational Power Corporation v . Angas ,6882-. In

t&e Qsecond group4 wo#"d $e ,alayan -nsurance Company

v .,anila Port ervice ,68@8-" +a$pil and ons v . Court of

Appeals ,68CC-" and American /0press -nternational v .-ntermediate

Appellate Court ,68CC-.

In t&e Q3rst group4 t&e $asic iss#e foc#ses on t&e a!!"ication of eit&er t&e @F ,#nder t&e )i'i" )ode- or 62F ,#nder t&e )entra"<an% )irc#"ar- interest per annum. It is easi"y discerni$"e in t&esecases t&at t&ere &as $een a consistent &o"ding t&at t&e )entra"

<an% )irc#"ar im!osing t&e 62F interest per annum a!!"ies on"y to"oans or for$earance '+ of money goods or credits as we"" as to =#dgments in'o"'ing s#c& "oan or for$earance of money goods orcredits and t&at t&e @F interest #nder t&e )i'i" )ode go'erns w&ent&e transaction in'o"'es t&e !ayment of indemnities in t&e conce!tof damage arising from t&e $reac& or a de"ay in t&e !erformance of o$"igations in genera". T&e Qsecond group4. did not a"ter t&e!rono#nced r#"e on t&e a!!"ication of t&e @F or 62F interest per annum '5de!ending on w&et&er or not t&e amo#nt in'o"'ed is a"oan or for$earance on t&e one &and or one of indemnity fordamage on t&e ot&er &and. Unli6e. however. the 43rst group4which remained consistent in holding that the running o

the legal interest should "e rom the time o the 3ling o the complaint until ully paid. the 4second group4 varied onthe commencement o the running o the legal interest$

T&e fact#a" circ#mstances may &a'e ca""ed for di+erent

a!!"ications g#ided $y t&e r#"e t&at t&e co#rts are 'ested wit&

discretion de!ending on t&e e5#ities of eac& case on t&e award of

interest. Nonet&e"ess it may not $e #nwise $y way of c"arication

and reconci"iation to s#ggest t&e fo""owing rules o thum" or

uture guidance.

I. ?&en an o$"igation regard"ess of its so#rce i.e. "aw contracts5#asiDcontracts de"icts or 5#asiDde"icts '7 is $reac&ed t&e

contra'enor can $e &e"d "ia$"e for damages. '8 T&e !ro'isions #nder

Tit"e XVIII on QamagesQ of t&e )i'i" )ode go'ern in determining t&e

meas#re of reco'era$"e damages. (9

II. ?it& regard !artic#"ar"y to an award of interest in t&e conce!t of

act#a" and com!ensatory damages t&e rate of interest as we"" as

t&e accr#a" t&ereof is im!osed as fo""ows*

6. ,hen the o"ligation is "reached. and it consists in thepayment o a sum o money. i $e$. a loan or or"earance o





money. the interest due should "e that which may have

"een stipulated in writing. (' 0#rt&ermore the interest due

shall itsel earn legal interest rom the time it is 2udicially

demanded. (( In t&e a$sence of sti!#"ation t&e rate of interest

s&a"" $e '() per annum to "e computed rom deault i.e.

from =#dicia" or e(tra=#dicia" demand #nder and s#$=ect to t&e

!ro'isions of Artic"e 66@8 (: of t&e )i'i" )ode.

2. ,hen an o"ligation. not constituting a loan or

or"earance o money. is "reached. an interest on the

amount o damages awarded may "e imposed at

the discretion of the court (; at t&e rate of @F per annum. (< No

interest &owe'er s&a"" $e ad=#dged on #n"i5#idated c"aims or

damages e1cept w&en or #nti" t&e demand can $e esta$"is&ed wit&

reasona$"e certainty. (+ According"y w&ere t&e demand is

esta$"is&ed wit& reasona$"e certainty the interest shall "egin to

run rom the time the claim is made 2udicially or

e1tra2udicially ,Art. 66@8 )i'i" )ode- $#t w&en s#c& certainty

cannot $e so reasona$"y esta$"is&ed at t&e time t&e demand is

made t&e interest s&a"" $egin to r#n on"y rom the date the

2udgment o the court is made ,at w&ic& time t&e 5#antication

of damages may $e deemed to &a'e $een reasona$"y ascertained-.

T&e act#a" $ase for t&e com!#tation of "ega" interest s&a"" in any

case $e on t&e amo#nt na""y ad=#dged.

7. ,hen the 2udgment o the court awarding a sum o

money "ecomes 3nal and e1ecutory. t&e rate of "ega" interest

w&et&er t&e case fa""s #nder !aragra!& 6 or !aragra!& 2 a$o'e

s&a"" "e '() per annum rom such 3nality until itssatisaction t&is interim !eriod $eing deemed to $e $y t&en an

e5#i'a"ent to a for$earance of credit.

NA)AR VS. >ALLER; 0RAMESD refer to my own notes and digest

MA)ALINAO VS. <PI

Petitioner I"eana Maca"inao was an a!!ro'ed card&o"der of <PIMastercard one of t&e credit card faci"ities of res!ondent <an% of t&e P&i"i!!ine Is"ands ,<PI-.174Petitioner Maca"inao made some!#rc&ases t&ro#g& t&e #se of t&e said credit card and defa#"ted in

!aying for said !#rc&ases. S&e s#$se5#ent"y recei'ed a "etter dated 9an#ary 3 2 from res!ondent <PI demanding !ayment of t&e

amo#nt of one &#ndred fortyDone t&o#sand 'e &#ndred eig&teen!esos and t&irtyDfo#r centa'os ,P&P 6636C.7-. :nder t&e Termsand )onditions >o'erning t&e Iss#ance and :se of t&e <PI )reditand <PI Mastercard t&e c&arges or $a"ance t&ereof remaining#n!aid after t&e !ayment d#e date indicated on t&e mont&"yStatement of Acco#nts shall "ear interest at the rate o :)per month and an additional penalty ee e#uivalent toanother :) per month.

0or fai"#re of !etitioner Maca"inao to sett"e &er o$"igationsres!ondent <PI "ed wit& t&e Metro!o"itan Tria" )o#rt ,MeT)- of Ma%ati )ity a com!"aint for a s#m of money against &er and &er&#s$and ani"o S9. Maca"inao. In said com!"aint res!ondent <PI!rayed for t&e !ayment of t&e amo#nt of one &#ndred ftyDfo#rt&o#sand si( &#ndred eig&t !esos and se'entyDeig&t centa'os ,P&[email protected] !"#s 7.23F nance c&arges and "ate !ayment c&argese5#i'a"ent to @F of t&e amo#nt d#e from 0e$r#ary 28 2 and anamo#nt e5#i'a"ent to 23F of t&e tota" amo#nt d#e as attorneysfees and of t&e cost of s#it. &e MeT) r#"ed in fa'or of res!ondent<PI and ordered !etitioner Maca"inao and &er &#s$and to !ay t&eamo#nt of P&P 6636C.7 !"#s interest and !ena"ty c&arges of 2F

!er mont&. &e RT) armed in toto t&e decision of t&e MeT)

T&e !etition is !art"y meritorio#s. In t&e instant !etition Maca"inaoc"aims t&at t&e interest rate and !ena"ty c&arge of 7F !er mont&im!osed $y t&e )A is ini5#ito#s as t&e same trans"ates to 7@F !erann#m or t&rice t&e "ega" rate of interest. On t&e ot&er &andres!ondent <PI asserts t&at said interest rate and !ena"ty c&argeare reasona$"e as t&e same are $ased on t&e Terms and )onditions>o'erning t&e Iss#ance and :se of t&e <PI )redit )ard. ,e 3nd orpetitioner$ ,e are o the opinion that the interest rate andpenalty charge o :) per month should "e e#uita"lyreduced to () per month or (;) per annum$

Indeed in t&e Terms and )onditions >o'erning t&e Iss#anceand :se of t&e <PI )redit )ard t&ere was a sti!#"ation on t&e 7Finterest rate. Nevertheless. it should "e noted that this is notthe 3rst time that this Court has considered the interestrate o :+) per annum as e1cessive and unconsciona"le$

Since t&e sti!#"ation on t&e interest rate is 'oid it is as if t&ere was no e(!ress contract t&ereon. Gence co#rts may red#cet&e interest rate as reason and e5#ity demand. T&e same is tr#ewit& res!ect to t&e !ena"ty c&arge. Nota$"y #nder t&e Terms and)onditions >o'erning t&e Iss#ance and :se of t&e <PI )redit )ardit was a"so stated t&erein t&at res!ondent <PI s&a"" im!ose an

additiona" !ena"ty c&arge of 7F !er mont&. In t&e instant case t&erecords wo#"d re'ea" t&at !etitioner Maca"inao made !artia"

http://sc.judiciary.gov.ph/jurisprudence/2009/september2009/175490.htm#_ftn3




!ayments to res!ondent <PI as indicated in &er <i""ing Statements.124 0#rt&er t&e sti!#"ated !ena"ty c&arge of 7F !er mont& or 7@F!er ann#m in addition to reg#"ar interests is indeed ini5#ito#s and#nconsciona$"e.

Thus. under the circumstances. the Court 3nds ite#uita"le to reduce the interest rate pegged "y the CA at'$<) monthly to ') monthly and penalty charge 31ed "ythe CA at '$<) monthly to ') monthly or a total o () per

month or (;) per annum in line with the prevailing 2urisprudence and in accordance with Art$ '((8 o the CivilCode$

LEA VS. <PI

T&is case arose from a co""ection s#it "ed $y res!ondent <an% of t&e P&i"i!!ine Is"ands ,<PI- against Ledda for t&e "atters #n!aidcredit card o$"igation. As one of <PIs 'a"#ed c"ients Ledda wasiss#ed a !reDa!!ro'ed <PI credit card. T&e <PI )redit )ard Pac%agew&ic& inc"#ded t&e Terms and )onditions go'erning t&e #se of t&e

credit card was de"i'ered at Leddas residence on 6 9#"y 23. T&ereafter Ledda #sed t&e credit card for 'ario#s !#rc&ases of goods and ser'ices and cas& ad'ances. Ledda defa#"ted in t&e!ayment of &er credit card o$"igation w&ic& <PI c"aimed in t&eircom!"aint amo#nted to P3C67.B7 !er Statement of Acco#ntdated 8 Se!tem$er 2B.3 )onse5#ent"y <PI sent "etters to Leddademanding t&e !ayment of s#c& amo#nt re!resenting t&e !rinci!a"o$"igation wit& 7.23F nance c&arge and @F "ate !ayment c&arge!er mont&.

)iting ,acalinao v. 'an$ of the Philippine -slands t&e )o#rt of A!!ea"s &e"d t&at t&e interest rates and !ena"ty c&arges im!osed$y <PI for Leddas nonD!ayment of &er credit card o$"igation

tota""ing 8.23F !er mont& or 666F !er ann#m are e(or$itant and#nconsciona$"e. According"y t&e )o#rt of A!!ea"s red#ced t&emont&"y nance c&arge to 6F and t&e "ate !ayment c&arge to 6For a tota" of 2F !er mont& or 2F !er ann#m.

The petition is partially meritorious.

?e agree wit& Ledda. The ruling in Alcara= v$ Court o Appeals'< applies s#uarely to the present case$ In A"cara/!etitioner t&ere as a prescreened client o E#uita"le CreditCard Networ6. Inc$. did not su"mit or sign any applicationorm or document "eore the issuance o the credit card . T&ere is no evidence that petitioner Alcara) was shown a copy of the terms and conditions before or after the issuance of the credit

card in his name" much less that he has given his consent thereto.It m#st $e noted t&at <PI did not !resent as e'idence t&e Termsand )onditions w&ic& Ledda a""eged"y recei'ed and acce!ted.)"ear"y <PI fai"ed to !ro'e Leddas conformity and acce!tance of t&e sti!#"ations contained in t&e Terms and )onditions. T&ereforeas t&e )o#rt &e"d in A"cara/ t&e Terms and )onditions do not $ind!etitioner ,Ledda in t&is case- wit&o#t a c"ear s&owing t&at ( ( (!etitioner was aware of and consented to t&e !ro'isions of 1s#c&4

doc#ment.On t&e ot&er &and ,acalinao v. 'an$ of the Philippine -slandsw&ic& t&e )o#rt of A!!ea"s cited in'o"'es a di+erent set of facts. T&ere !etitioner Maca"inao did not c&a""enge t&e e(istence of t&e Terms and )onditions >o'erning t&e Iss#ance and :se of t&e <PI)redit )ard and &er consent to its !ro'isions inc"#ding t&eim!osition of interests and ot&er c&arges on &er #n!aid <PI creditcard o$"igation. ,acalinao simply questioned the legality of thestipulated interest rate and penalty charge" claiming that suchcharges are iniquitous. In fact one of Maca"inaos assigned errors$efore t&is )o#rt reads* T&e red#ction of interest rate from 8.23Fto 2F s&o#"d $e #!&e"d since t&e stipulated rate o interest

was #nconsciona$"e and ini5#ito#s and t&#s i""ega".T&ereforet&ere is e'idence t&at %acalinao was ully aware o thestipulations contained in the Terms and Conditions>overning the Issuance and Use o the Credit Card. #n"i%e int&is case w&ere t&ere is no e'idence t&at Ledda was aware of orconsented to t&e Terms and )onditions for t&e #se of t&e creditcard.

)onsistent wit& A"cara/ ?edda must also pay interest on thetotal unpaid credit card amount at the rate o '() perannum since her credit card o"ligation consists o a loan oror"earance o money.

Artic"e 228 refers to indemnity for damages and not interest on"oan or for$earance of money w&ic& is t&e case &ere. In S#ngaD)&an '. )o#rt of A!!ea"s t&e )o#rt &e"d* Eastern S&i!!ing LinesInc. synt&esi/ed t&e r#"es on t&e im!osition of interest if !ro!erand t&e a!!"ica$"e rate as fo""ows* The '() per annum rateunder C@ Circular No$ ;'+ shall apply only to loans oror"earance o money. goods. or credits. as well as to

2udgments involving such loan or or"earance o money.goods. or credit. while the +) per annum under Art$ ((98 o the Civil Code applies when the transaction involves thepayment o indemnities in the concept o damage arisingrom the "reach or a delay in the perormance o

o"ligations in general.B with the application o "oth rates





rec6oned rom the time the complaint was 3led until thead2udged amount is ully paid$B In eit&er instance t&erec6oning period or the commencement o the running o the legal interest s&a"" $e s#$=ect to t&e condition t&at t&eco#rts are 'ested wit& discretion de!ending on t&e e5#ities of eac&case on t&e award of interest. ,Em!&asis s#!!"ied-.

In accordance wit& Eastern S&i!!ing Lines Inc. t&e 62F "ega"interest s&a"" $e rec%oned from t&e date <PI e(tra=#dicia""y

demanded from Ledda t&e !ayment of &er o'erd#e credit cardo$"igation. Thus. the '() legal interest shall "e computedrom ( Octo"er (995. when ?edda. through her niece SallyD$ >ancea.(< received @FIGs letter dated Se!tem$er 2Bdemanding t&e !ayment of t&e a""eged o'erd#e amo#nt of P3C67.B7.

TOLEO VS. G;EN

Petitioner 9oce"yn M. To"edo ,9oce"yn- w&o was t&en t&e ViceDPresident of

t&e )o""ege Ass#rance P"an ,)AP- P&i"s. Inc. o$tained se'era" "oans from

res!ondent Mari"o# M. Gyden ,Mari"o#-. oce"yn &ad $een re"igio#s"y

!aying Mari"o# t&e sti!#"ated mont&"y interest $y iss#ing c&ec%s and

de!ositing s#ms of money in t&e $an% acco#nt of t&e "atter. Gowe'er

t&e tota" !rinci!a" amo#nt of P28. remained #n!aid. T&#s in

A!ri" 688C Mari"o# 'isited 9oce"yn in &er oce at )AP in )e$# )ity and

as%ed 9oce"yn and t&e ot&er em!"oyees w&o were "i%ewise inde$ted to

&er to ac%now"edge t&eir de$ts. A doc#ment entit"ed

Ac6nowledgment o De"t134 for t&e amo#nt of P28. was

signed $y 9oce"yn wit& two of &er s#$ordinates as witnesses. T&e said

amo#nt re!resents t&e !rinci!a" conso"idated amo#nt of t&e

aforementioned !re'io#s de$ts d#e on ecem$er 23 688C. A"so on saidoccasion 9oce"yn iss#ed 'e c&ec%s to Mari"o# re!resenting renewa"

!ayment of &er 'e !re'io#s "oans. 9oce"yn ordered t&e sto! !ayment on

t&e remaining c&ec%s and on Octo$er 2B 688C "ed wit& t&e RT) of

)e$# )ity a com!"aint1@4 against Mari"o# for ec"aration of N#""ity and

Payment Ann#"ment S#m of Money In=#nction and amages.

/ocelyn averred that %arilou orced. threatened and intimidated

her into signing the Ac6nowledgment o De"t and at the same

time orced her to issue the seven postdated chec6s$ S&e

c"aimed t&at Mari"o# e'en t&reatened to s#e &er for 'io"ation of 'atasPambansa ,<P- 'lg. 22 or t&e <o#ncing )&ec%s Law if s&e wi"" not sign

t&e said doc#ment and draw t&e a$o'eDmentioned c&ec%s. 9oce"yn

f#rt&er c"aimed t&at t&e application o her total payment

o F<(7.<<9$99 to interest alone is illegal. unounded. un2ust.

oppressive and contrary to law "ecause there was no written

agreement to pay interest$ 9oce"yn !osits t&at t&e )A erred w&en it

&e"d t&at t&e im!osition of interest at t&e rates of @F to BF !er mont& is

not contrary to "aw not #nconsciona$"e and not contrary to mora"s. S&e

"i%ewise contends t&at t&e )A erred in r#"ing t&at t&e Ac%now"edgmentof e$t is 'a"id and $inding.

The petition is without merit$

The 6% to 7% interest per month paid by Jocelyn is not excessie under the circumstances of this case.

In 'iew of Central @an6 Circular No$ 89< s$ '87( w&ic& s#s!endedt&e :s#ry Law cei"ing on interest e+ecti'e 9an#ary 6 68C7 !arties to a"oan agreement &a'e wide "atit#de to sti!#"ate interestrates. Ne'ert&e"ess s#c& sti!#"ated interest rates may $e dec"ared asi""ega" if t&e same is #nconsciona$"e.164 T&ere is certain"y not&ing in said

circ#"ar w&ic& grants "enders carte blanche a#t&ority to raise interestrates to "e'e"s w&ic& wi"" eit&er ens"a'e t&eir $orrowers or "ead to a&emorr&aging of t&eir assets.1634 In fact in ,edel v. Court of Appeals16@4 we ann#""ed a sti!#"ated 3.3F !er mont& or @@F !er ann#m interestwit& additiona" ser'ice c&arge of 2F !er ann#m and !ena"ty c&arge of 6F !er mont& on a P3. "oan for $eing e(cessi'e ini5#ito#s#nconsciona$"e and e(or$itant.

In this case. however. we cannot consider the disputed +) to 5)monthly interest rate to "e ini#uitous or unconsciona"le is!!is the principle laid down in "edel .

It was clearly shown that "eore /ocelyn availed o said loans.

she 6new ully well that the same carried with it an interest

rate o +) to 5) per month. yet she did not complain$ In act.

when she availed o said loans. an advance interest o +) to 5)

was already deducted rom the loan amount. yet she never

uttered a word o protest. After years of $eneting from t&e

!roceeds of t&e "oans $earing an interest rate of @F to BF !er mont&

and !aying for t&e same /ocelyn cannot now go to court to have

the said interest rate annulled on the ground that it is

e1cessive. ini#uitous. unconsciona"le. e1or"itant. anda"solutely revolting to the conscience o man$

http://sc.judiciary.gov.ph/jurisprudence/2010/december2010/172139.htm#_ftn6














?e are con'inced t&at 9oce"yn did not come to co#rt for e5#ita$"e re"ief

wit& e5#ity or wit& c"ean &ands. It is !atent"y c"ear from t&e a$o'e

s#mmary of t&e facts t&at t&e cond#ct of 9oce"yn can $y no means $e

c&aracteri/ed as no$"y fair =#st and reasona$"e. T&is )o#rt "i%ewise

notes certain acts of 9oce"yn $efore "ing t&e case wit& t&e RT). It

t#rned o#t t&at s&e was on"y sweetDta"%ing Mari"o# into $e"ie'ing t&at

s&e &ad no money at t&at time. <#t as testied $y Sera!io Romarate

16C4 an em!"oyee of t&e <an% of )ommerce w&ere 9oce"yn is one of t&eir

c"ients t&ere was an a'ai"a$"e $a"ance of [email protected] in t&e "atters

acco#nt and yet s&e ordered for t&e sto! !ayments of t&e se'en c&ec%s

w&ic& can act#a""y $e co'ered $y t&e a'ai"a$"e f#nds in said

acco#nt. S&e t&en ca#g&t Mari"o# $y s#r!rise w&en s&e s#rre!titio#s"y

"ed a case for dec"aration of n#""ity of t&e doc#ment and for damages.



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