FIRST DIVISION
RESTITUTA M.
IMPERIAL,
Petitioner,
G.R.
No.
149004
April 14, 2004
-versus-
ALEX A. JAUCIAN,
Respondent.
D E C I S I
O N
PANGANIBAN,
J.:chanroblesvirtuallawlibrary
Iniquitous and unconscionable
stipulations on interest rates, penalties and attorney’s fees are
contrary
to morals. Consequently, courts are granted authority to reduce
them
equitably. If reasonably exercised, such authority shall not be
disturbed
by appellate courts. The Case
Before us is a Petition
for Review[1]
under Rule 45 of the Rules of Court, assailing the July 19, 2000
decision[2]
and the June 14, 2001 Resolution[3]
of the Court of Appeals (CA) in CA-GR CV No. 43635. The decretal
portion of the Decision is as follows:chanrobles virtual law library
“WHEREFORE, premises
considered, the appealed Decision of the Regional Trial Court, 5th
Judicial
Region, Branch 21, Naga City, dated August 31, 1993, in Civil Case No.
89-1911 for Sum of Money, is hereby AFFIRMED in toto.”[4]chanrobles virtual law library
The assailed Resolution
denied petitioner’s Motion for Reconsideration.cralaw:red
The dispositive portion
of the August 31, 1993 Decision, promulgated by the Regional Trial
Court
(RTC) of Naga City (Branch 21) and affirmed by the CA, reads as follows:
“WHEREFORE,
Judgment is hereby rendered declaring Section I, Central Bank Circular
No. 905, series of 1982 to be of no force and legal effect, it having
been
promulgated by the Monetary Board of the Central Bank of the
Philippines
with grave abuse of discretion amounting to excess of jurisdiction;
declaring
that the rate of interest, penalty, and charges for attorney’s fees
agreed
upon between the parties are unconscionable, iniquitous, and in
violation
of Act No. 2655, otherwise known as the Usury Law, as amended; and
ordering
Defendant to pay Plaintiff the amount of FOUR HUNDRED SEVENTY-EIGHT
THOUSAND,
ONE HUNDRED NINETY-FOUR and 54/100 (P478,194.54) PESOS, Philippine
currency,
with regular and compensatory interests thereon at the rate of
twenty-eight
(28%) per centum per annum, computed from August 31, 1993 until full
payment
of the said amount, and in addition, an amount equivalent to ten (10%)
per centum of the total amount due and payable, for attorney’s fees,
without
pronouncement as to costs.”[5] The Facts
The CA summarized the
facts of the case in this wise:chanrobles virtual law library
“The
present
controversy arose from a case for collection of money, filed by Alex A.
Jaucian against Restituta Imperial, on October 26, 1989. The
complaint
alleges, inter alia, that defendant obtained from plaintiff six (6)
separate
loans for which the former executed in favor of the latter six (6)
separate
promissory notes and issued several checks as guarantee for
payment.
When the said loans became overdue and unpaid, especially when the
defendant’s
checks were dishonored, plaintiff made repeated oral and written
demands
for payment.chanrobles virtual law library
“Specifically, the
six
(6) separate loans obtained by defendant from plaintiff on various
dates
are as follows:
(a)
November 13,
1987
P 50,000.00
(b)
December 28,
1987
40,000.00
(c)
January 6,
1988
30,000.00
(d)
January 11,
1988
50,000.00
(e)
January 12,
1988
50,000.00
(f)
January 13,
1988
100,000.00
Total
P320,000.00
“The loans were
covered
by six (6) separate promissory notes executed by defendant. The
face
value of each promissory notes is bigger [than] the amount released to
defendant because said face value already include[d] the interest from
date of note to date of maturity. Said promissory notes, which
indicate
the interest of 16% per month, date of issue, due date, the
corresponding
guarantee checks issued by defendant, penalties and attorney’s fees,
are
the following:chanrobles virtual law library
1.
Exhibit ‘D’ – for loan of P40,000.00 on December 28, 1987, with face
value
of P65,000.00;
2.
Exhibit ‘E’ – for loan of P50,000.00 on January 11, 1988, with face
value
of P82,000.00;
3.
Exhibit ‘F’ – for loan of P50,000.00 on January 12, 1988, with face
value
of P82,000.00;
4.
Exhibit ‘G’ – for loan of P100,000.00 on January 13, 1988, with face
value
of P164,000.00;
5.
Exhibit ‘H’ – This particular promissory note covers the second renewal
of the original loan of P50,000.00 on November 13, 1987, which was
renewed
for the first time on March 16, 1988 after certain payments, and which
was renewed finally for the second time on January 4, 1988 also after
certain
payments, with a face value of P56,240.00;
6.
Exhibit ‘I’ – This particular promissory note covers the second renewal
of the original loan of P30,000.00 on January 6, 1988, which was
renewed
for the first time on June 4, 1988 after certain payments, and which
was
finally renewed for the second time on August 6, 1988, also after
certain
payments, with [a] face value of P12,760.00;
“The particulars
about
the postdated checks, i.e., number, amount, date, etc., are indicated
in
each of the promissory notes. Thus, for Exhibit ‘D’, four (4) PB
checks were issued; for Exhibit ‘E’ four (4) checks; for Exhibit ‘F’
four
(4) checks; for Exhibit ‘G’ four (4) checks; for Exhibit ‘H’ one (1)
check;
for Exhibit ‘I’ one (1) check;chanrobles virtual law library
“The arrangement
between
plaintiff and defendant regarding these guarantee checks was that each
time a check matures the defendant would exchange it with cash.chanrobles virtual law library
“Although,
admittedly,
defendant made several payments, the same were not enough and she
always
defaulted whenever her loans mature[d]. As of August 16, 1991,
the
total unpaid amount, including accrued interest, penalties and
attorney’s
fees, [was] P2,807,784.20.
“On the other
hand,
defendant claims that she was extended loans by the plaintiff on
several
occasions, i.e., from November 13, 1987 to January 13, 1988, in the
total
sum of P320,000.00 at the rate of sixteen percent (16%) per
month.
The notes mature[d] every four (4) months with unearned interest
compounding
every four (4) months if the loan [was] not fully paid. The loan
releases [were] as follows:
(a)
November 13,
1987
P 50,000.00
(b)
December 28,
1987
40,000.00
(c)
January 6,
1988
30,000.00
(d)
January 11,
1988
50,000.00
(e)
January 12,
1988
50,000.00
(f)
January 13,
1988
100,000.00
Total
P320,000.00
“The loan on
November
13, 1987 and January 6, 1988 ha[d] been fully paid including the
usurious
interests of 16% per month, this is the reason why these were not
included
in the complaint.
“Defendant alleges
that
all the above amounts were released respectively by checks drawn by the
plaintiff, and the latter must produce these checks as these were
returned
to him being the drawer if only to serve the truth. The above
amount
are the real amount released to the defendant but the plaintiff by
masterful
machinations made it appear that the total amount released was
P462,600.00.
Because in his computation he made it appear that the true amounts
released
was not the original amount, since it include[d] the unconscionable
interest
for four months.
“Further,
defendant
claims that as of January 25, 1989, the total payments made by
defendants
[were] as follows:
a.
Paid releases on November 13, 1987 of P50,000.00 and January 6, 1988 of
P30,000.00 these two items were not included in the complaint affirming
the fact that these were
paid
P 80,000.00
b.
Exhibit ‘26’
Receipt
231,000.00chanrobles virtual law library
c.
Exhibit ‘8-25’
Receipt
65,300.00chanrobles virtual law library
d.
Exhibit ‘27’
Receipt
65,000.00
Total
P441,780.00
Less:
320,000.00
Excess
Payment
P121,780.00
“Defendant
contends
that from all perspectives the above excess payment of P121,780.00 is
more
than the interest that could be legally charged, and in fact as of
January
25, 1989, the total releases have been fully paid.
“On 31 August
1993,
the trial court rendered the assailed decision.”[6] Ruling of
the
Court of Appeals
On appeal, the CA held
that without judicial inquiry, it was improper for the RTC to rule on
the
constitutionality of Section 1, Central Bank Circular No. 905, Series
of
1982. Nonetheless, the appellate court affirmed the judgment of
the
trial court, holding that the latter’s clear and detailed computation
of
petitioner’s outstanding obligation to respondent was convincing and
satisfactory.chanrobles virtual law library
Hence, this Petition.[7]
The Issues
Petitioner raises the
following arguments for our consideration:chanrobles virtual law library
“1.
That the petitioner has fully paid her obligations even before filing
of
this case.chanrobles virtual law library
“2.
That the charging of interest of twenty-eight (28%) per centum per
annum
without any writing is illegal.chanrobles virtual law library
“3.
That charging of excessive attorney’s fees is hemorrhagic.chanrobles virtual law library
“4.
Charging of excessive penalties per month is in the guise of hidden
interest.
“5.
The non-inclusion of the husband of the petitioner at the time the case
was filed should have dismissed this case.”[8] The Court’s
Ruling
The Petition has no
merit.cralaw:red
First Issue:
Computation of Outstanding Obligation
Arguing that she had
already fully paid the loan before the filing of the case, petitioner
alleges
that the two lower courts misappreciated the facts when they ruled that
she still had an outstanding balance of P208,430.cralaw:red
This issue involves
a question of fact. Such question exists when a doubt or
difference
arises as to the truth or the falsehood of alleged facts; and when
there
is need for a calibration of the evidence, considering mainly the
credibility
of witnesses and the existence and the relevancy of specific
surrounding
circumstances, their relation to each other and to the whole, and the
probabilities
of the situation.[9]chanrobles virtual law library
It is a well-entrenched
rule that pure questions of fact may not be the subject of an appeal by
certiorari under Rule 45 of the Rules of Court, as this remedy is
generally
confined to questions of law.[10]
The jurisdiction of this Court over cases brought to it is limited to
the
review and rectification of errors of law allegedly committed by the
lower
court. As a rule, the latter’s factual findings, when adopted and
affirmed by the CA, are final and conclusive and may not be reviewed on
appeal.[11]
Generally, this Court
is not required to analyze and weigh all over again the evidence
already
considered in the proceedings below.[12]
In the present case, we find no compelling reason to overturn the
factual
findings of the RTC -- that the total amount of the loans extended to
petitioner
was P320,000, and that she paid a total of only P116,540 on twenty-nine
dates. These findings are supported by a preponderance of
evidence.
Moreover, the amount of the outstanding obligation has been
meticulously
computed by the trial court and affirmed by the CA. Petitioner
has
not given us sufficient reason why her cause falls under any of the
exceptions
to this rule on the finality of factual findings.cralaw:red
Second Issue:
Rate of Interest
The trial court, as
affirmed by the CA, reduced the interest rate from 16 percent to 1.167
percent per month or 14 percent per annum; and the stipulated penalty
charge,
from 5 percent to 1.167 percent per month or 14 percent per annum.cralaw:red
Petitioner alleges that
absent any written stipulation between the parties, the lower courts
should
have imposed the rate of 12 percent per annum only.cralaw:red
The records show that
there was a written agreement between the parties for the payment of
interest
on the subject loans at the rate of 16 percent per month. As
decreed
by the lower courts, this rate must be equitably reduced for being
iniquitous,
unconscionable and exorbitant. “While the Usury Law ceiling on interest
rates was lifted by C.B. Circular No. 905, nothing in the said circular
grants lenders carte blanche authority to raise interest rates to
levels
which will either enslave their borrowers or lead to a hemorrhaging of
their assets.”[13]chanrobles virtual law library
In Medel v. CA,[14]
the Court found the stipulated interest rate of 5.5 percent per month,
or 66 percent per annum, unconscionable. In the present case, the
rate is even more iniquitous and unconscionable, as it amounts to 192
percent
per annum. When the agreed rate is iniquitous or unconscionable,
it is considered “contrary to morals, if not against the law.
[Such]
stipulation is void.”[15]
Since the stipulation
on the interest rate is void, it is as if there were no express
contract
thereon.[16]
Hence, courts may reduce the interest rate as reason and equity
demand.
We find no justification to reverse or modify the rate imposed by the
two
lower courts.cralaw:red
Third and Fourth
Issue: Penalties and Attorney’s Fees
Article 1229 of the
Civil Code states thus:
“The judge
shall equitably reduce the penalty when the principal obligation has
been
partly or irregularly complied with by the debtor. Even if there
has been no performance, the penalty may also be reduced by the courts
if it is iniquitous or unconscionable.”chanrobles virtual law library
In exercising this
power
to determine what is iniquitous and unconscionable, courts must
consider
the circumstances of each case.[17]
What may be iniquitous and unconscionable in one may be totally just
and
equitable in another. In the present case, iniquitous and
unconscionable
was the parties’ stipulated penalty charge of 5 percent per month or 60
percent per annum, in addition to regular interests and attorney’s
fees.
Also, there was partial performance by petitioner when she remitted
P116,540
as partial payment of her principal obligation of P320,000. Under
the circumstances, the trial court was justified in reducing the
stipulated
penalty charge to the more equitable rate of 14 percent per annum.
The Promissory Note
carried a stipulation for attorney’s fees of 25 percent of the
principal
amount and accrued interests. Strictly speaking, this covenant on
attorney’s fees is different from that mentioned in and regulated by
the
Rules of Court.[18]
“Rather, the attorney’s fees here are in the nature of liquidated
damages
and the stipulation therefor is aptly called a penal clause.”[19]
So long as the stipulation does not contravene the law, morals, public
order or public policy, it is binding upon the obligor. It is the
litigant,
not the counsel, who is the judgment creditor entitled to enforce the
judgment
by execution.chanrobles virtual law library
Nevertheless, it appears
that petitioner’s failure to comply fully with her obligation was not
motivated
by ill will or malice. The twenty-nine partial payments she made were a
manifestation of her good faith. Again, Article 1229 of the Civil
Code specifically empowers the judge to reduce the civil penalty
equitably,
when the principal obligation has been partly or irregularly complied
with.
Upon this premise, we hold that the RTC’s reduction of attorney’s fees
-- from 25 percent to 10 percent of the total amount due and payable --
is reasonable.cralaw:red
Fifth Issue:
Non-Inclusion of Petitioner’s Husband
Petitioner contends
that the case against her should have been dismissed, because her
husband
was not included in the proceedings before the RTC.cralaw:red
We are not persuaded.
The husband’s non-joinder does not warrant dismissal, as it is merely a
formal requirement that may be cured by amendment.[20]
Since petitioner alleges that her husband has already passed away, such
an amendment has thus become moot.cralaw:red
WHEREFORE, the Petition
is DENIED. Costs against petitioner.cralaw:red
SO ORDERED.chanrobles virtual law library
Davide, Jr., C.J., (Chairman),
Ynares-Santiago, Carpio, and Azcuna, JJ.,
concur.
____________________________
Endnotes:
[1]
Rollo, pp. 13-42.chanrobles virtual law library
[2]
Id., pp. 43-54. Special Twelfth Division. Penned by Justice Bernardo P.
Abesamis and concurred in by Justices Eugenio S. Labitoria (Division
chairman)
and Elvi John S. Asuncion (member).
[3]
Id., p. 73.chanrobles virtual law library
[4]
Assailed CA Decision, p. 11; rollo, p. 53.chanrobles virtual law library
[5]
RTC Decision, p. 14; rollo, p. 68. Written by Judge David C.
Naval.
[6]
Assailed CA Decision, pp. 2-6; rollo, pp. 44-48.chanrobles virtual law library
[7]
This case was deemed submitted for resolution on May 14, 2002, upon
receipt
by the Court of petitioner’s Memorandum, which was signed by Atty.
Alfredo
V. Abundo. Respondent’s Memorandum, filed on March 26, 2002, was
signed by Atty. Fred P. Cledera.
[8]
Petitioner’s Memorandum, p. 7; rollo, p. 206.chanrobles virtual law library
[9]
Sesbreño v. Court of Appeals, 310 Phil. 671, January 26, 1995.chanrobles virtual law library
[10]
Spouses Uy v. Court of Appeals, 411 Phil. 788, June 21, 2001;
Metropolitan
Bank and Trust Company v. Wong, 412 Phil. 207, June 26, 2001; Spouses
Solangon
v. Salazar, 412 Phil. 816, June 29, 2001; Llana v. Court of Appeals,
361
SCRA 27, July 11, 2001.
[11]
Go v. Court of Appeals, 351 SCRA 145, February 5, 2001.chanrobles virtual law library
[12]
Bañas v. Asia Pacific Finance Corporation, 343 SCRA 527, October
18, 2000.chanrobles virtual law library
[13]
Spouses Solangon v. Salazar, supra, p. 822, per Sandoval-Gutierrez, J.chanrobles virtual law library
[14]
359 Phil. 820, November 27, 1998; citing Art. 1306, Civil Code.chanrobles virtual law library
[15]
Id., p. 830, per Pardo, J. See also Ibarra v. Aveyro, 37 Phil.
274,
December 6, 1917; Spouses Almeda v. Court of Appeals, 326 Phil. 309,
April
17, 1996.
[16]
Tongoy v. Court of Appeals, 123 SCRA 99, June 28, 1983.chanrobles virtual law library
[17]
RCBC v. Court of Appeals, 352 Phil. 101, April 20, 1998.chanrobles virtual law library
[18]
Bañas v. Asia Pacific Finance Corporation, supra.chanrobles virtual law library
[19]
Id., p. 537, per Bellosillo, J.chanrobles virtual law library
[20]
Spouses Uy v. Court of Appeals, supra.
chan
robles virtual law library |