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"


2/123

)hi$h denied the petitioner@s *otion :or re$onsideration o: said de$ision o: %"

(ove*ber 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.


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,


14/123

Petitioner led on une %


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/


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.


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/


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.


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


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 (

%'


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.


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&=


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,


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


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


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


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


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

%


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


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


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


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


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


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

-%


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,


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


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


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.

-


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 -


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).

-"


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%


40/123

!CPB $hallen+es this i*position0 on the ar+u*ent thatSe$tion


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.-


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


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

,%


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


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


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


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

,


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


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


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.


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

"'


81/123

une 20, GG,


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


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.


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

"&


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


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


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


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


89/123

and regular,)F+and that the ordinary course of business

was followed.)F-+

As to the second 1isclosure


90/123

'8&, 1agupan &ranch 55 testi:ed that the 1isclosure


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


92/123

Penalty, or Increases

Thereo, !n"usti#ed

8o penalty charges or increases thereof appear either in

the 1isclosure


93/123

thus transform it from a snivelling paper tiger to a

growling :nancial watchdog of hapless borrowers.

-


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


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


96/123

breakdown :gures of such non5:nance charge are

speci:ed in the 1isclosure


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


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


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


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


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


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


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


104/123

As no redemption)-0+was e%ercised within one year after

the date of registration of the #erti:cate of


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


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'


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>


+$%0(+"%%0 @)&,000,000(@=&+,#"$'=0G#"$'==6* 2 $%'&1 2 )"%=+&*6

;ount due as of +"%%0

?ess> -ayent on +"%%0 @pro(rated upon interest6

Balance

;dd>


+=0%0($"=$%0 @)&,000,000(@=&+,#"$'=0G#"$'==G


108/123

5nterest at $"1 p'a'

#%%$(#$&%$ @)&,000,000(@=&+,#"$'=0G#"$'==G -ayent on $$"%%$ @pro(rated upon interest6

Balance

;dd>


$$=0%$($""0%$ @)&,000,000(@=&+,#"$'=0G#"$'==G


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'

$"=$#% @",


110/123

?ess> -ayent on &=$%0 @pro(rated upon interest6

Balance

;dd>


+$%0(+"%%0 @)", -ayent on +"%%0 @pro(rated upon interest6

Balance

;dd>


+=0%0($"=$%0 @)",


111/123


#$+%$(%$%$ @)",


112/123

.et proceeds

-rincipal

;dd>


$&%0 @=00,000 2 "$'&1 2 )$=+&*6

;ount due as of $&%0

?ess> -ayent on $&%0 @pro(rated upon interest6

Balance

;dd>


$+%0(==0%0 @)=00,000(== -ayent on ==0%0 @pro(rated upon interest6

Balance

;dd>


==$%0(&=$%0 @)=00,000(==


113/123


+$%0(+"%%0 @)=00,000(@==


+=0%0($"=$%0 @)=00,000(@==


#%%$(#$&%$ @)=00,000(@==


#$+%$(%+%$ @)=00,000(@==


114/123

5nterest at $"1 p'a' upon autoatic

conersion

%


$$=0%$($""0%$ @)=00,000(@==


115/123

-aya!le -ro(rated

$&%0 -. @$6 - $#+,%#+'=0 - &4=,#0


116/123

##%$ -. @$6 #0+,+=%'%% 4%=,%0+'=$

-. @"6 &"=,$$='%4 ="0,=0='0#

-. @=6 ,4&"'++ =&,


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


118/123

burden.)-D+This legal principle was the rationale for the

pro5rated computations shown on


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+


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


121/123

First, the


122/123

Third, although the


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

Date post:	22-Feb-2018
Category:	Documents
Upload:	jo-al-gealon
View:	214 times
Download:	0 times

Credtrans Cases 2.1

Documents