FIRST
FIL-SIN LENDING CORPORATION,
Petitioner,
-versus-
G.R.
No. 160533
January
12, 2005
GLORIA D. PADILLO,
Respondent.
D
E C I S I O N
YNARES-SANTIAGO,
J.:
Before
us is a Petition for Review under Rule 45 of the Rules of Court,
seeking a reversal of the Court of Appeals’ Decision in CA-G.R. CV No.
75183[1] dated October 16, 2003, which reversed and set aside the
decision of the Regional Trial Court of Manila, Branch 21 in Civil Case
No. 00-96235.
On
July 22, 1997, respondent Gloria D. Padillo obtained a P500,000.00 loan
from petitioner First Fil-Sin Lending Corp. On September 7, 1997,
respondent obtained another P500,000.00 loan from petitioner. In
both instances, respondent executed a promissory note and disclosure
statement.[2]
For
the first loan, respondent made 13 monthly interest payments of
P22,500.00 each before she settled the P500,000.00 outstanding
principal obligation on February 2, 1999. As regards the second
loan, respondent made 11 monthly interest payments of P25,000.00 each
before paying the principal loan of P500,000.00 on February 2,
1999.[3] In sum, respondent paid a total of P792,500.00 for the
first loan and P775,000.00 for the second loan.
On
January 27, 2000, respondent filed an action for sum of money against
herein petitioner before the Regional Trial Court of Manila.
Alleging that she only agreed to pay interest at the rates of 4.5% and
5% per annum, respectively, for the two loans, and not 4.5% and 5% per
month, respondent sought to recover the amounts she allegedly paid in
excess of her actual obligations.
On
October 12, 2001,[4] the trial court dismissed respondent’s complaint,
and on the counterclaim, ordered her to pay petitioner P311,125.00 with
legal interest from February 3, 1999 until fully paid plus 10% of the
amount due as attorney’s fees and costs of the suit.[5] The trial
court ruled that by issuing checks representing interest payments at
4.5% and 5% monthly interest rates, respondent is now estopped from
questioning the provisions of the promissory notes.
On
appeal, the Court of Appeals (CA) reversed and set aside the decision
of the court a quo, the dispositive portion of which reads:
IN VIEW OF ALL
THE FOREGOING, the appealed decision is REVERSED and SET ASIDE and a
new one entered: (1) ordering First Fil-Sin Lending Corporation to
return the amount of P114,000.00 to Gloria D. Padillo, and (2) deleting
the award of attorney’s fees in favor of appellee. Other claims and
counterclaims are dismissed for lack of sufficient causes. No
pronouncement as to cost.
SO
ORDERED.[6]
The
appellate court ruled that, based on the disclosure statements executed
by respondent, the interest rates should be imposed on a monthly basis
but only for the 3-month term of the loan. Thereafter, the legal
interest rate will apply. The CA also found the penalty charges
pegged at 1% per day of delay highly unconscionable as it would
translate to 365% per annum. Thus, it was reduced to 1% per month
or 12% per annum.
Hence,
the instant petition on the following assignment of errors:
I
THE
COURT OF APPEALS ERRED IN FINDING THAT THE APPLICABLE INTEREST SHOULD
BE THE LEGAL INTEREST OF TWELVE PER CENT (12%) PER ANNUM DESPITE THE
CLEAR AGREEMENT OF THE PARTIES ON ANOTHER APPLICABLE RATE.
II
THE
COURT OF APPEALS ERRED IN IMPOSING A PENALTY COMPUTED AT THE RATE OF
TWELVE PER CENT (12%) PER ANNUM DESPITE THE CLEAR AGREEMENT OF THE
PARTIES ON ANOTHER APPLICABLE RATE.
III
THE
COURT OF APPEALS ERRED IN DELETING THE ATTORNEY’S FEES AWARDED BY THE
REGIONAL TRIAL COURT.[7]
Petitioner
maintains that the trial court and the CA are correct in ruling that
the interest rates are to be imposed on a monthly and not on a per
annum basis. However, it insists that the 4.5% and 5% monthly
interest shall be imposed until the outstanding obligations have been
fully paid.
As to
the penalty charges, petitioner argues that the 12% per annum penalty
imposed by the CA in lieu of the 1% per day as agreed upon by the
parties violates their freedom to stipulate terms and conditions as
they may deem proper.
Petitioner
finally contends that the CA erred in deleting the trial court’s award
of attorney’s fees arguing that the same is anchored on sound and legal
ground.
Respondent,
on the other hand, avers that the interest on the loans is per annum as
expressly stated in the promissory notes and disclosure statements. The
provision as to annual interest rate is clear and requires no room for
interpretation. Respondent asserts that any ambiguity in the
promissory notes and disclosure statements should not favor petitioner
since the loan documents were prepared by the latter.
We
agree with respondent.
Perusal
of the promissory notes and the disclosure statements pertinent to the
July 22, 1997 and September 7, 1997 loan obligations of respondent
clearly and unambiguously provide for interest rates of 4.5% per annum
and 5% per annum, respectively. Nowhere was it stated that the
interest rates shall be applied on a monthly basis.
Thus,
when the terms of the agreement are clear and explicit that they do not
justify an attempt to read into it any alleged intention of the
parties, the terms are to be understood literally just as they appear
on the face of the contract.[8] It is only in instances
when the language of a contract is ambiguous or obscure that courts
ought to apply certain established rules of construction in order to
ascertain the supposed intent of the parties. However, these
rules will not be used to make a new contract for the parties or to
rewrite the old one, even if the contract is inequitable or
harsh. They are applied by the court merely to resolve doubts and
ambiguities within the framework of the agreement.[9]
The
lower court and the CA mistook the Loan Transactions Summary for the
Disclosure Statement. The former was prepared exclusively by
petitioner and merely summarizes the payments made by respondent and
the income earned by petitioner. There was no mention of any
interest rates and having been prepared exclusively by petitioner, the
same is self serving. On the contrary, the Disclosure Statements
were signed by both parties and categorically stated that interest
rates were to be imposed annually, not monthly.
As
such, since the terms and conditions contained in the promissory notes
and disclosure statements are clear and unambiguous, the same must be
given full force and effect. The expressed intention of the
parties as laid down on the loan documents controls.
Also,
reformation cannot be resorted to as the documents have not been
assailed on the ground of mutual mistake. When a party sues on a
written contract and no attempt is made to show any vice therein, he
cannot be allowed to lay claim for more than what its clear
stipulations accord. His omission cannot be arbitrarily supplied
by the courts by what their own notions of justice or equity may
dictate.[10]
Notably,
petitioner even admitted that it was solely responsible for the
preparation of the loan documents, and that it failed to correct the
pro forma note “p.a.” to “per month”.[11] Since the mistake is
exclusively attributed to petitioner, the same should be charged
against it. This unilateral mistake cannot be taken against
respondent who merely affixed her signature on the pro forma loan
agreements. As between two parties to a written agreement, the
party who gave rise to the mistake or error in the provisions of the
same is estopped from asserting a contrary intention to that contained
therein. The checks issued by respondent do not clearly and
convincingly prove that the real intent of the parties is to apply the
interest rates on a monthly basis. Absent any proof of vice of
consent, the promissory notes and disclosure statements remain the best
evidence to ascertain the real intent of the parties.
The
same promissory note provides that “x x x any and all remaining amount
due on the principal upon maturity hereof shall earn interest at the
rate of _____ from date of maturity until fully paid.” The CA
thus properly imposed the legal interest of 12% per annum from the time
the loans matured until the same has been fully paid on February 2,
1999. As decreed in Eastern Shipping Lines, Inc. v. Court of
Appeals,[12] “in the absence of stipulation, the rate of interest shall
be 12% per annum to be computed from default.”
As
regards the penalty charges, we agree with the CA in ruling that the 1%
penalty per day of delay is highly unconscionable. Applying
Article 1229 of the Civil Code, courts shall equitably reduce the
penalty when the principal obligation has been partly or irregularly
complied with, or if it is iniquitous or unconscionable.
With
regard to the attorney’s fees, the CA correctly deleted the award in
favor of petitioner since the trial court’s decision does not reveal
any explicit basis for such an award. Attorney’s fees are not
automatically awarded to every winning litigant. It must be shown
that any of the instances enumerated under Art. 2208[13] of the Civil
Code exists to justify the award thereof.[14] Not one of such instances
exists here. Besides, by filing the complaint, respondent was
merely asserting her rights which, after due deliberations, proved to
be lawful, proper and valid.
WHEREFORE, in view of the foregoing,
the October 16, 2003 decision of the Court of Appeals in CA-G.R. CV No.
75183 is AFFIRMED with the MODIFICATION that the interest rates
on the July 22, 1997 and September 7, 1997 loan obligations of
respondent Gloria D. Padillo from petitioner First Fil-Sin Lending
Corporation be imposed and computed on a per annum basis, and upon
their respective maturities, the interest rate of 12% per annum shall
be imposed until full payment. In addition, the penalty at the
rate of 12% per annum shall be imposed on the outstanding obligations
from date of default until full payment.
SO
ORDERED.
Davide,
Jr., C.J., (Chairman),
Quisumbing, Carpio, and Azcuna, JJ.,
concur.
[1]
Penned by Associate Justice Conrado M. Vasquez, Jr. and concurred in by
Associate Justices Bienvenido L. Reyes and Regalado E. Maambong.
[2]
Rollo, p. 34.
[3] Id.
[4]
Penned by Judge Amor A. Reyes.
[5]
Rollo, p. 33.
[6]
Id. at 40.
[7]
Id. at 16.
[8]
Azarraga v. Rodriguez, 9 Phil. 637 (1908).
[9]
Corley, R.N. and W.J. Robert, Principles of Business Law (9th Ed.,
1971), p. 115.
[10]
A. Tolentino, Commentaries and Jurisprudence on the Civil Code of the
Philippines Vol. 4 (1986 Ed.), pp. 554-555, citing Jardenil v. Solas,
73 Phil. 626 (1942).
[11]
Rollo, p. 19.
[12]
G.R. No. 97412, 12 July 1994, 234 SCRA 78, 95.
[13]
In the absence of stipulation, attorney’s fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1)
When exemplary damages are awarded;
(2)
When the defendant’s act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his
interest;
(3)
In criminal cases of malicious prosecution against the plaintiff;
(4)
In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5)
When the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiff’s plainly valid, just and demandable claim;
(6)
In actions for legal support;
(7)
In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8)
In actions for indemnity under workmen’s compensation and employer’s
liability laws;
(9)
In a separate civil action to recover civil liability arising from a
crime;
(10)
When at least double judicial costs are awarded;
(11)
In any other case where the court deems it just and equitable that
attorney’s fees and expenses of litigation should be recovered.
In all
cases, the attorney’s fees and expenses of litigation must be
reasonable.
[14]
Insular Life Assurance Company, Ltd., et al. v. Robert Young, et al.,
G.R. Nos. 140964 & 142267, 16 January 2002, 373 SCRA 626, 642.
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