HILARIO P. SORIANO and ROSALINDA ILAGAN, petitioners, vs.
PEOPLE OF THE As early as the start of the last century, this Court had ruled that a single act or
PHILIPPINES, BANGKO SENTRAL NG PILIPINAS (BSP), and PHILIPPINE DEPOSIT
INSURANCE CORPORATION (PDIC), respondents. G.R. Nos. 159517-18. June 30,
2009.*
Motion to Quash; The fundamental test in considering a motion to quash
anchored on Section 3(a), Rule 117 of the 1985 Rules on Criminal Procedure, is
the sufficiency of the averments in the information; that is, whether the facts
alleged, if hypothetically admitted, would establish the essential elements of the
offense charged as defined by law. Facts that constitute the defense of the
petitioners against the charge under the information must be proved by them
during trial. Such facts or circumstances do not constitute proper grounds for a
motion to quash the information on the ground that the material averments do
not constitute the offense.
Facts: Soriano and Ilagan were the President and General Manager, respectively,
of the Rural Bank of San Miguel (Bulacan), Inc. (RBSM). Allegedly, on June 27,
1997 and August 21, 1997, during their incumbency as president and manager of
the bank, petitioners indirectly obtained loans from RBSM. They falsified the loan
applications and other bank records, and made it appear that Virgilio J. Malang
and Rogelio Maaol obtained loans of P15M each, when in fact they did not.
The prosecutor charged Soriano in the RTC with violation of Section 83 of R.A.
No. 337 or the General Banking Act, as amended or Violation of the Director,
Officer, Stockholder or Related Interest (DOSRI) Rules (DOSRI Rules). An
information for estafa thru falsification of commercial document was also filed
against Soriano and Ilagan.
Petitioners moved to quash the informations arguing that the prosecutor
charged more than one offense for a single act. Soriano was charged with
violation of DOSRI rules and estafa thru falsification of commercial document for
allegedly securing fictitious loans. They further argued that the facts as alleged in
the information do not constitute an offense. RTC denied the motion to quash.
CA sustained the denial of petitioners separate motions to quash.
Issue: Whether or not the contention of the petitioner has merit.
Held: The contention has no merit.
In Loney v. People, this Court, in upholding the filing of multiple charges against
the accused, held:
incident might offend against two or more entirely distinct and unrelated
provisions of law thus justifying the prosecution of the accused for more than
one offense. The only limit to this rule is the Constitutional prohibition that no
person shall be twice put in jeopardy of punishment for the same offense. In
People v. Doriquez, we held that two (or more) offenses arising from the same
act are not the same
x x x if one provision [of law] requires proof of an additional fact or element
which the other does not, x x x. Phrased elsewise, where two different laws (or
articles of the same code) define two crimes, prior jeopardy as to one of them is
no obstacle to a prosecution of the other, although both offenses arise from the
same facts, if each crime involves some important act which is not an essential
element of the other.
In this case, however, Soriano was faced not with one information charging
more than one offense, but with more than one information, each charging a
different offenseviolation of DOSRI rules in one, and estafa thru falsification of
commercial documents in the others. Ilagan, on the other hand, was charged
with estafa thru falsification of commercial documents in separate informations.
Thus, petitioners erroneously invoke duplicity of charges as a ground to quash
the Informations.
The fundamental test in considering a motion to quash anchored on Section 3(a),
Rule 117 of the 1985 Rules on Criminal Procedure, is the sufficiency of the
averments in the information; that is, whether the facts alleged, if hypothetically
admitted, would establish the essential elements of the offense charged as
defined by law.
JOSE C. GO, Petitioner, vs.BANGKO SENTRAL NG PILIPINAS, Respondent.
G.R. No. 178429
October 23, 2009
Facts: Jose Go, the Director and the President and Chief Executive Officer of the
Orient Commercial Banking Corporation (Orient Bank) was charged before the
RTC for violation of Section 83 of RA 337 or the General Banking Act. Go allegedly
borrowed the deposits/funds of the Orient Bank and/or acting as guarantor,
indorser of obligor for loans to other persons. He then used the borrowed
deposits/funds in facilitating and granting and/or of credit lines/loans to the New
Zealand Accounts loans in the total amount of PHP 2,754,905,857. He completed
the alleged transaction without the written approval of the majority of the Board
of Directors of said Orient Bank. Go then filed a motion to quash the Information.
He averred that the use of the word "and/or" meant that he was charged for
being either a borrower or a guarantor, or for being both. Thus the charge do not
constitute an offense. That the Section 83 of RA 337 penalized only directors and
officers xxx who acted either as borrower or as guarantor, but not as both. Also
that the Information did not constitute an offense since the information failed to
state the amount he purportedly borrowed. According to Go, the second
paragraph of Section 83, serves as an exception to the first paragraph which
allows the banks to extend credit accommodations to their directors, officers,
and stockholders, provided it is "limited to an amount equivalent to the
respective outstanding deposits and book value of the paid-in capital
contribution in the bank." The RTC granted Gos motion to quash the
Information.
The prosecution filed a petition for certiorari before the CA. The CA granted the
petition. It explained that the allegation that Go acted either as a borrower or a
guarantor or both did not necessarily mean that Go acted both as borrower and
guarantor for the same loan at the same time. It agreed with the prosecutions
stand that the second paragraph of Section 83 of RA 337 is not an exception to
the first paragraph. Hence, this petition.
Issue: whether or not the allegation that Go acted as borrower or gurantor
rendered the information defective?
Whether or not the failure to state that Go borrowed beyond the limit of
his outstanding deposits and book value of the paid-in capital contribution in the
bank rendered the Information defective?
Ruling: No, the information was not defective. The following elements of
violation of Section 83 of RA 337 which must be present to constitute a violation
of its first paragraph: 1. the offender is a director or officer of any banking
institution; 2. the offender, either directly or indirectly, for himself or as
representative or agent of another, performs any of the following acts: a. he
borrows any of the deposits or funds of such bank; or b. he becomes a guarantor,
indorser, or surety for loans from such bank to others, or c. he becomes in any
manner an obligor for money borrowed from bank or loaned by it; 3. the
offender has performed any of such acts without the written approval of the
majority of the directors of the bank, excluding the offender, as the director
concerned.
The language of the law is broad enough to encompass either act of borrowing
or guaranteeing, or both. Banks were not created for the benefit of their
directors and officers; they cannot use the assets of the bank for their own
benefit, except as may be permitted by law. Congress has thus deemed it
essential to impose restrictions on borrowings by bank directors and officers in
order to protect the public, especially the depositors. Hence, when the law
prohibits directors and officers of banking institutions from becoming in any
manner an obligor of the bank (unless with the approval of the board), the terms
of the prohibition shall be the standards to be applied to directors transactions
such as those involved in the present case.
Credit accommodation limit is not an exception nor is it an element of the
offense as contrary to Gos claims.
Section 83 of RA 337 actually imposes three restrictions: approval, reportorial,
and ceiling requirements.
The approval requirement (found in the first sentence of the first paragraph of
the law) refers to the written approval of the majority of the banks board of
directors required before bank directors and officers can in any manner be an
obligor for money borrowed from or loaned by the bank. Failure to secure the
approval renders the bank director or officer concerned liable for prosecution
and, upon conviction, subjects him to the penalty provided in the third sentence
of first paragraph of Section 83.
The reportorial requirement, on the other hand, mandates that any such
approval should be entered upon the records of the corporation, and a copy of
the entry be transmitted to the appropriate supervising department. The
reportorial requirement is addressed to the bank itself, which, upon its failure to
do so, subjects it to quo warranto proceedings under Section 87 of RA 337.
The ceiling requirement under the second paragraph of Section 83 regulates the
amount of credit accommodations that banks may extend to their directors or
officers by limiting these to an amount equivalent to the respective outstanding
deposits and book value of the paid-in capital contribution in the bank. Again,
this is a requirement directed at the bank. In this light, a prosecution for violation
of the first paragraph of Section 83, such as the one involved here, does not
require an allegation that the loan exceeded the legal limit. Even if the loan
involved is below the legal limit, a written approval by the majority of the banks
directors is still required; otherwise, the bank director or officer who becomes an
obligor of the bank is liable. Compliance with the ceiling requirement does not
dispense with the approval requirement.
Evidently, the failure to observe the three requirements under Section 83 paves
the way for the prosecution of three different offenses, each with its own set of
elements. A successful indictment for failing to comply with the approval
requirement will not necessitate proof that the other two were likewise not
observed.
G. R. No. 194515
SPOUSES OSCAR AND GINA GIRONELLA, Petitioners, -versus-
PHILIPPINE NATIONAL BANK, Respondent.
September 16, 2015
FACTS: Spouses Oscar and Gina Gironella obtained two (2) loans from PNB dated
11 November 1991 and 16 January 1992 in the amount of Php 7, 500, 000.00 and
Php 2, 000, 000.00 for the construction of Dagupan Village Hotell and Sports
Complex. The loans were co-terminus, both payable on installment and secured
by the same real estate mortgage over a parcel of land covered by TCT No. 56059
in favor of PNB.
On May 1992 the spouses applied another loan with PNB amounting Php 5, 800,
000.00 for the construction of the restaurant and purchase of generator set.
The Spouses Gironella believed that the third loan would be approved and that
they used their generated income for the construction while the loan is still
pending, resulting to default of their previous two (2) loans.
The Spouses proposed a restructuring of the Php 5, 800, 000.00 and maintain
payment for the interests of the previous loans.
By the year 2000 the PNB wrote a letter to the Spouses Gironella for the
restructuring of the said loan and that it will be subject for evaluation and
approval of the higher management.
On 7 February 2000, the Spouses Gironella gave a qualified acceptance of PNBs
proposed restructuring, specifically referring to specific terms in the 25 January
2000 proposal of PNB. However PNB rejected the counter offer of the Spouses
Gironella and later on filed for Extra-Judicial Foreclosure of the mortgage
property.
The Spouses file a Complaint before the RTC with prayer for issuance of a
Temporary Restraining Order (TRO) and preliminary injunction to enjoin
enforcement of the original credit agreements, and security therefor, between
the parties. The RTC granted the petition.
PNB appealed to the CA questioning the trial courts decision. CA ruled in favor of
PNB, the appellate court found that there was no final agreement reached by the
parties where the offer was certain and acceptance thereof by the other party
was absolute. The appellate court held that, in this case, a qualified acceptance
equated to a counter-offer and, at that point, there was no absolute and
unqualified acceptance which is identical in all respects with that of the offer so
as to produce consent or meeting of the minds.
ISSUE: WHETHER OR NOT there is fraud or gross negligence when the PNB did
not approved their loan application by giving them false hope or assurances.
WHETHER OR NOT there is a Perfected Contract or Partial
Restructuring of Loan.
HELD: The Spouses Gironella claim fraud and gross negligence, as plaintiffs, the
Spouses Gironella had the duty, the burden of proof, to present evidence,
required by law, on the facts in issue necessary to establish their claim.
The foregoing statement fails to take into consideration the three (3) distinct
stages of a contract: (1) preparation or negotiation, (2) perfection, and finally, (3)
consummation. Necessarily, the Spouses Gironella as debtors applying for an
additional loan, ought to participate in the negotiations thereof and await PNBs
assessment and processing of their additional loan application.
A contract is perfected by mere consent. In turn, consent is manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are
to constitute the contract. The offer must be certain and the acceptance
seasonable and absolute. If qualified, the acceptance would merely constitute a
counter-offer as what occurred in this case.
To reach that moment of perfection, the parties must agree on the same thing in
the same sense, so that their minds meet as to all the terms. The minds of
parties must meet at every point; nothing can be left open for further
arrangement. So long as there is any uncertainty or indefiniteness, or future
negotiations or considerations to be had between the parties, there is not a
completed contract, and in fact, there is no contract at all.
The Spouses Gironellas payments under its original loan cannot be considered as
partial execution of the proposed restructuring of loan agreement.
The letter dated 20 January 2000 which qualifiedly accepted by the Spouses on 7
February 2000 and constituted a counter-offer in which PNB ultimately rejected
on 8 March 2000, clearly show that the parties never passed the negotiation
stage. There was no meeting of the minds on the restructuring of the loans.
Thus, the Spouses Gironella's original Php 9,500,000.00 loan agreement subsists.
The SC affirmed the CAs decision and held that PNB is not liable either for fraud,
gross negligence or abuse of right. PNB did not breach any agreement, the
restructured loan was never perfected and PNB was not liable to pay the spouses
any forms of damages.
PEOPLE VS GO
__________________________________________________________________
________
People of the Philippines versus Jose Go and Aida Dela Rosa
GR No 201644 September 24, 2014 Perlas - Bernabe, J.
__________________________________________________________________
________
FACTS
On September 28, 2000, 7 informations were filed before the RTC charging
various accused, including Go and Dela Rosa, of Estafa through Falsification of
Commercial Documents for allegedly defrauding Oriental Commercial Banking
Corporation (OCBC)of the amount of P159, 000, 000. 00.
The arraignment underwent several postponements before trial on the merits
ensued. However, the trial also underwent series of postponements/
cancellations caused mainly by the prosecution, leading to its failure to present
its evidence despite the lapse of 5 years. This prompted the respondents to file a
Motion to Dismiss for failure to prosecute and for violation of their right to
speedy trial.
In January 9, 2008, the RTC dismissed the case, ruling that the respondents right
to speedy trial was violated. The prosecution filed a Motion for Reconsideration,
which the RTC granted, resulting to the reinstatement of the case. The
respondents, thereafter, moved for reconsideration but was denied.
The respondents, then, filed a Petition for Certiorari before the CA but failed to
implead the People as party to the case. The CA, without first ordering
respondents to implead the People, annulled and set aside the RTC order,
resulting to the dismissal of the case.
Philippine Deposit Insurance Corporation (PDIC), the private complainant, moved
for reconsideration, which was denied. PDIC transmitted copies of the CA
decision to the OSG resulting to the filing of the instant petition. The OSG
contended, among others, that the People, who is the petitioner in this case, was
neither impleaded nor served a copy of the petition, thereby violating its right to
due process of law, hence, rendering the CA without authority to promulgate its
issuances.
ISSUE
WON the criminal case against Go and Dela Rosa were properly dismissed by the
CA, without the People, as represented by the OSG, having been impleaded.
RULING
No, the CA erred in dismissing the case without impleading the People.
The People is an indispensable party to the proceedings and Sec 7 Rule 3 of the
Rules on Civil Procedure defines indispensable parties to be parties-in-interest
without whom no final determination can be had of an action. The presence of
indispensable parties is necessary to vest the court with jurisdiction, absence of
which, renders all subsequent actions of the court null ad void for want of
authority to act, not only to the absent parties but even as to those present.
Union Bank of the Philippines vs. Court of Appeals
Facts:
In a memo of agreement dated May 27, 1992, DRossa Incorporated (DRI)
agreed to mortgage its parcels of land covered by TCT in favor of Union Bank as
security for the credit facility of Josephine Marine Trading Corporation (JMTC).
JMTC availed P3 million from the credit line.
Subsequently, Union Bank increased the credit facility of JMTC to P27
million, from which JMTC availed P18,318,170.18. Upon JMTCs failure to pay its
obligation, Union Bank instituted foreclosure proceedings on DRIs properties.
DRIs properties were auctioned where Union Bank was declared the
highest bidder
DRI filed a supplemental complaint seeking to declare the public sale as
null. It claimed that its liability is only P3 million which was the liability incurred
by JMTC under its first agreement with Union Bank. However, Union Bank
alleged that DRI was liable to JMTCs total outstanding obligations, regardless of
whether it was incurred during or subsequent to the first agreement.
On December 27, 1999, the trial court dismissed DRIs for lack of merit
On appeal, CA reversed the decision-- DRI could not be held liable for
more than P8.61 M even if JMTC availed more than this amount. It also noted
that the date of the public sale as contained in the notice varies with the actual
date of sale. As such, it declared as null the foreclosure sale because a
foreclosure sale carried out on a day different from the published notice is a total
nullity. Hence, this petition for review on certiorari
ISSUE:
Whether CA erred in finding the foreclosure sale of DRIs mortgaged
properties as null for lack of republication of the notice of sale.
RULING:
Yes. In this case, DRI expressly agreed to secure all the obligations of
JMTC, whether presently owing or subsequently incurred. Thus, its liability is not
limited to P8.61 million only
The parties intent to constitute DRIs real estate properties as continuing
securities, liable for the current as well as the future obligations of JMTC. A
mortgage liability is usually limited to the amount mentioned in the contract, but
where the intent of the contracting parties is manifest that the mortgage
property shall also answer for future loans or advancements, the same is valid
and binding between the parties.
A mortgage liability is usually limited to the amount mentioned in the
contract, but where the intent of the contracting parties is manifest that the
mortgage property shall also answer for future loans or advancements, the same
is valid and binding between the parties; A blanket mortgage clause, also
known as a dragnet clause in American jurisprudence, is one which is
specifically phrased to subsume all debts of past or future origins, enabling the
parties to provide continuous dealings, the nature or extent of which may not be
known or anticipated at the time, and they avoid the expense and inconvenience
of executing a new security on each new transaction.
G.R. No. 148325 September 3, 2007
REYNALDO P. FLOIRENDO, JR., petitioner,
vs.
METROPOLITAN BANK and TRUST COMPANY, respondent.
DECISION
SANDOVAL-GUTIERREZ, J.:
FACTS:
Reynaldo P. Floirendo, Jr., petitioner, is the president and chairman of the Board
of Directors of Reymill Realty Corporation, a domestic corporation engaged in
real estate business. He obtained a loan ofP1,000,000.00 from the Metropolitan
Bank and Trust Company for the additional working capital for his company. As
security, he executed a real estate mortgage over his four (4) parcels of land.
Petitioner signed a promissory note fixing the rate of interest at "15.446% per
annum for the first 30 days, subject to upward/downward adjustment every 30
days thereafter"; and a penalty charge of 18% per annum "based on any unpaid
principal to be computed from date of default until payment of the obligation."
The bank started imposing higher interest rates on petitioners loan which varied
through the months and as a result, petitioner could no longer pay the high
interest rates charged by the bank. Thus, he negotiated for the renewal of his
loan. Respondent bank agreed provided petitioner would pay the arrears in
interest. Despite payment by petitioner, the bank, instead of renewing the loan,
filed a petition for foreclosure of mortgage which was granted.
Referring to the real estate mortgage and the promissory note as "contracts of
adhesion," petitioner alleged that the increased interest rates unilaterally
imposed by respondent bank are scandalous, immoral, illegal and
unconscionable. He also alleged that the terms and conditions of the real estate
mortgage and the promissory note are such that they could be interpreted by
respondent bank in whatever manner it wants, leaving petitioner at its mercy.
Petitioner thus prayed for reformation of these documents and the issuance of a
temporary restraining order (TRO) and a writ of preliminary injunction to enjoin
the foreclosure and sale at public auction of his four (4) parcels of land.
The bank asserted that the interest stipulated by the parties in the promissory
note is not per annum but on a month to month basis. That the interest
appearing therein was good only for the first 30 days of the loan, subject to
upward and downward adjustment every 30 days thereafter. The terms of the
real estate mortgage and promissory note voluntarily entered into by petitioner
are clear and unequivocal. There is, therefore, no legal and factual basis for an
action for reformation of instruments.
The RTC dismissed the complaint for reformation of instruments, dissolved the
writ of preliminary injunction and directed the sale at public auction of
petitioners mortgaged properties.
The court was convinced that there was certainly a meeting of the minds
between the parties. Plaintiff and defendant bank entered into a contract of
loan, the terms and conditions of which, especially on the rates of interest, are
clearly and unequivocally spelled out in the promissory note. The court believes
that there was absolutely no mistake, fraud or anything that could have
prevented a meeting of the minds between the parties.
ISSUE:
Whether or not the mortgage contract and the promissory note express the true
agreement between the parties herein?
HELD: NO
FALLO:
The SC hold that the increases of interest rate unilaterally imposed by
respondent bank without petitioners assent are violative of the principle of
mutuality of contracts ordained in Article 1308 of the Civil Code which provides:
Article 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
The binding effect of any agreement between the parties to a contract is
premised on two settled principles: (1) that obligations arising from contracts
have the force of law between the contracting parties; and (2) that there must
be mutuality between the parties based on their essential equality to which is
repugnant to have one party bound by the contract leaving the other free
therefrom. Any contract which appears to be heavily weighed in favor of one of
the parties so as to lead to an unconscionable result is void. Any stipulation
regarding the validity or compliance of the contract which is left solely to the will
of one of the parties is likewise invalid.
The provision in the promissory note authorizing respondent bank to increase,
decrease or otherwise change from time to time the rate of interest and/or bank
charges "without advance notice" to petitioner, "in the event of change in the
interest rate prescribed by law or the Monetary Board of the Central Bank of the
Philippines," does not give respondent bank unrestrained freedom to charge any
rate other than that which was agreed upon. Here, the monthly
upward/downward adjustment of interest rate is left to the will of respondent
bank alone. It violates the essence of mutuality of the contract.
Similarly, contract changes must be made with the consent of the contracting
parties. The minds of all the parties must meet as to the proposed modification,
especially when it affects an important aspect of the agreement. In the case of
loan contracts, it cannot be gainsaid that the rate of interest is always a vital
component, for it can make or break a capital venture. Thus, any change must be
mutually agreed upon, otherwise, it is bereft of any binding effect.
Under Article 1310 of the Civil Code, courts are granted authority to
reduce/increase interest rates equitably, thus:
Article 1310. The determination shall not be obligatory if it is evidently
inequitable. In such case, the courts shall decide what is equitable under the
circumstances.
In this case, respondent bank started to increase the agreed interest rate of
15.446% per annum to 24.5% on July 11, 1997 and every month thereafter; 27%
on August 11, 1997; 26% on September 10, 1997; 33% on October 15, 1997;
26.5% on November 27, 1997; 27% on December 1997; 29% on January 13,
1998; 30.244% on February 7, 1998; 24.49% on March 9, 1998; 22.9% on April
18, 1998; and 18% on May 21, 1998. Obviously, the rate increases are excessive
and arbitrary. It bears reiterating that respondent bank unilaterally increased the
interest rate without petitioners knowledge and consent.
The petitioner negotiated for the renewal of his loan and he paid the interests
due. Respondent bank then could not claim that there was no attempt on his
part to comply with his obligation. Yet, respondent bank hastily filed a petition to
foreclose the mortgage to gain in taking petitioners parcels of land at bargain
prices. Obviously, respondent bank acted in bad faith.
In sum, we find that the requisites for reformation of the mortgage contract and
promissory note are present in this case. There has been meeting of minds of the
parties upon these documents. However, these documents do not express the
parties true agreement on interest rates. And the failure of these documents to
express their agreement on interest rates was due to respondent banks
inequitable conduct.
Henceforth, the SC GRANTED the petition. The interest he paid in excess of
15.446% should be applied to the payment of the principal obligation.
Macalinao vs. BPI
Ileana Macalinao was an APPROVED cardholder of BPI Mastercard
She made some purchases through the use of the said credit card and defaulted
in paying for said purchases. She subsequently received a demand letter from BPI
asking for the payment of PhP 141,518.34.
Terms and Conditions:
The charges or balance thereof remaining unpaid after the payment due date
indicated on the monthly Statement of Accounts shall bear interest at the rate of
3% per month for BPI Express Credit, BPI Gold Mastercard and an additional
penalty fee equivalent to another 3% of the amount due for every month or a
fraction of a months delay.
PROVIDED that if there occurs any change on the prevailing market rates, BCC
shall have the option to adjust the rate of interest and/or penalty fee due on the
outstanding obligation with prior notice to the cardholder. The Cardholder
hereby authorizes BCC to correspondingly increase the rate of such interest [in]
the event of changes in the prevailing market rates, and to charge additional
service fees as may be deemed necessary in order to maintain its service to the
Cardholder.
Macalinao failed to settle her obligations, and thus BPI filed a complaint for
collection of sum of money.
CA Ruling:
The amount of PhP 141,518.34 already incorporated the interest rates in the said
amount. Thus, the said amount should not be made as basis in computing the
total obligation of petitioner Macalinao. The CA also held, however, that the
MeTC erred in modifying the amount of interest rate from 3% monthly to only
2% considering that petitioner Macalinao freely availed herself of the credit card
facility offered by respondent BPI to the general public.
Statement of the Issue:
Macalinao claims that the interest rate and penalty charge of 3% per month
imposed by the CA is iniquitous as the same translates to 36% per annum or
thrice the legal rate of interest. On the other hand, respondent BPI asserts that
said interest rate and penalty charge are reasonable as the same are based on
the Terms and Conditions Governing the Issuance and Use of the BPI Credit Card.
SC Ruling
We are of the opinion that the interest rate and penalty charge of 3% per month
should be equitably reduced to 2% per month or 24% per annum. Indeed, in the
Terms and Conditions Governing the Issuance and Use of the BPI Credit Card,
there was a stipulation on the 3% interest rate. But, we held in Chua vs. Timan:
We need not unsettle the principle we had affirmed in a plethora of cases that
stipulated interest rates of 3% per month and higher are excessive, iniquitous,
unconscionable and exorbitant. Such stipulations are void for being contrary to
morals, if not against the law. While C.B. Circular No. 905-82, which took effect
on January 1, 1983, effectively removed the ceiling on interest rates for both
secured and unsecured loans, regardless of maturity, nothing in the said circular
could possibly be read as granting carte blanche authority to lenders to raise
interest rates to levels which would either enslave their borrowers or lead to a
hemorrhaging of their assets.
Since the stipulation on the interest rate is void, it is as if there was no express
contract thereon. Hence, courts may reduce the interest rate as reason and
equity demand.[18]
The same is true with respect to the penalty charge. Pertinently, Article 1229 of
the Civil Code states:
Art. 1229. 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.
Thus, under the circumstances, the Court finds it equitable to reduce the interest
rate pegged by the CA at 1.5% monthly to 1% monthly and penalty charge fixed
by the CA at 1.5% monthly to 1% monthly or a total of 2% per month or 24% per
annum in line with the prevailing jurisprudence and in accordance with Art. 1229
of the Civil Code.
GR No. 206459, April 6, 2016
Sps Florante and Luzviminda Jonsay et al (Petitioners) v Solidbank Corp.
(Respondent)
Third Division
Ponente: Reyes, J.
Nature of Action: Annulment of the Extrajudicial Foreclosure of Mortgage,
Injunction, Accounting and Damages with Prayer for the Immediate Issuance of a
Writ of Preliminary Prohibitory Injunction.
FACTS:
Momarco, controlled and owned by the Spouses Jonsay, is an importer,
manufacturer and distributor of animal health and feedmill products catering to
cattle, hog and poultry producers. Momarco obtained loans of P40,000,000.00
and P20,000,000.00, respectively, from Solidbank for which the Spouses Jonsay
executed a blanket mortgage over three parcels of land they owned in Calamba
City, Laguna. The stipulated rate of interest was 18.75% per annum, along with
an escalation clause tied to increases in pertinent Central Bank-declared interest
rates, by which Solidbank was eventually able to unilaterally increase the interest
charges up to 30% per annum. Momarco religiously paid the monthly interests
charged by Solidbank from November 1995 until January 1998. Claiming business
reverses brought on by the 1997 Asian financial crisis, Momarco tried
unsuccessfully to negotiate a moratorium or suspension in its interest payments.
Solidbank proceeded to extra-judicially foreclose on the mortgage, and at the
auction sale was held and Solidbank was the highest bidder. Sheriff Adelio
Perocho issued a certificate of sale to Solidbank, duly annotated on the lots'
titles. A month before the expiration of the period to redeem the lots, the
petitioners filed a Complaint against Solidbank, Sheriff Perocho and the Register
of Deeds of Calamba, Laguna, for Annulment of the Extrajudicial Foreclosure of
Mortgage, Injunction, Accounting and Damages with Prayer for the Immediate
Issuance of a Writ of Preliminary Prohibitory Injunction. The RTC ruled that the
mortgage contract and the promissory notes prepared by Solidbank, which the
Spouses Jonsay signed in blank, were contracts of adhesion and ruled in favor of
petitioners finding among others that the extra-judicial foreclosure is void and
ordered the reduction of the interest rate of the indebtedness to 12% per
annum. On appeal, the CA rendered judgment affirming the RTC in toto. In a
motion for reconsideration however, the CA amended its decision and find the
extra-judicial foreclosure valid but maintained the reduction of interest rate to
12% per annum.
ISSUE:
Whether or not the lending bank may unilaterally increase the interest rate
without prior notice to and consent of the borrower.
RULING:
No. An escalation clause in a loan agreement granting the lending bank authority
to unilaterally increase the interest rate without prior notice to and consent of
the borrower is void
In Philippine National Bank v. CA, the Court declared void the escalation clause in
a credit agreement whereby the "bank reserves the right to increase the interest
rate within the limits allowed by law at any time depending on whatever policy it
may adopt in the future x x x." The Court said:
It is basic that there can be no contract in the true sense in the absence of the
element of agreement, or of mutual assent of the parties. If this assent is
wanting on the part of one who contracts, his act has no more efficacy than if it
had been done under duress or by a person of unsound mind.
Similarly, contract changes must be made with the consent of the contracting
parties. The minds of all the parties must meet as to the proposed modification,
especially when it affects an important aspect of the agreement. In the case of
loan contracts, it cannot be gainsaid that the rate of interest is always a vital
component, for it can make or break a capital venture. Thus, any change must be
mutually agreed upon, otherwise, it is bereft of any binding effect. We cannot
countenance petitioner bank's posturing that the escalation clause at bench
gives it unbridled right to unilaterally upwardly adjust the interest on private
respondents' loan. That would completely take away from private respondents
the right to assent to an important modification in their agreement, and would
negate the element of mutuality in contracts.
The "unilateral determination and imposition" of increased rates is "violative of
the principle of mutuality of contracts ordained in Article 1308 of the Civil Code."
One-sided impositions do not have the force of law between the parties, because
such impositions are not based on the parties' essential equality. Although
escalation clauses are valid in maintaining fiscal stability and retaining the value
of money on long-term contracts, giving respondent an unbridled right to adjust
the interest independently and upwardly would completely take away from
petitioners the "right to assent to an important modification in their agreement"
and would also negate the element of mutuality in their contracts. The clause
cited earlier made the fulfillment of the contracts "dependent exclusively upon
the uncontrolled will" of respondent and was therefore void. Besides, the pro
forma promissory notes have the character of a contract of adhesion, "where the
parties do not bargain on equal footing, the weaker party's [the debtor's]
participation being reduced to the alternative 'to take it or leave it."'
PHILIPPINE NATIONAL BANK vs. HEIRS OF BENEDICTO AND AZUCENA ALONDAY
G.R. No. 171865, October 12, 2016, J. Bersamin
In order for the all-embracing or dragnet clauses to secure future and other
loans, the loans thereby secured must be sufficiently described in the mortgage
contract.
Facts:
In 1974, the Sps. Alonday obtained an agricultural loan by mortgaging their
property in Davao covered by OCT No. P-3599. Later, the Sps. Alonday obtained a
commercial loan by mortgaging their residential lot covered by TCT No. T-66139.
Notably, the mortgage contracts both contained a dragnet clause, which state
that the mortgage shall also stand as security for said obligations and any and
all other obligations of the Mortgagor to the Mortgagee of whatever kind and
nature, whether such obligations have been contracted before, during or after
the constitution of this mortgage.
The second loan was fully paid. The first loan, however, was not. Hence,
petitioner foreclosed the property mortgaged as a security for the first loan. But
since the proceeds of the sale were not sufficient to cover the balance of the first
loan, petitioner also foreclosed the property mortgaged to secure the second
loan.
The Sps. Alonday filed a complaint against petitioner recover damages and
attorneys fees, averring that the foreclosure was illegal. The RTC and CA ruled in
favor of the Sps Alonday.
Issues:
1) Whether the dragnet clause in the first mortgage contract for the
security of the first loan could authorize the foreclosure of the property under
the mortgage to secure a second loan despite the full payment of the second
loan.
2) Whether the award of damages and attorneys fees is proper.
Ruling:
1) The dragnet clause contained in the first mortgage contract executed
between the parties for the security of the first loan could not authorize the
foreclosure of the property under the mortgage to secure the second loan.
In order for the all-embracing or dragnet clauses to secure future and other
loans, the loans thereby secured must be sufficiently described in the mortgage
contract. Considering that the agricultural loan had been pre-existing when the
mortgage was constituted on the property covered by TCT No. T-66139, it would
have been easy for the petitioner to have expressly incorporated the reference
to such agricultural loan in the mortgage contract covering the commercial loan.
But the petitioner did not. Being the party that had prepared the contract of
mortgage, its failure to do so should be construed that it did not at all
contemplate the earlier loan when it entered into the subsequent mortgage.
Moreover, the mortgage contracts executed by the Spouses Alonday were
contracts of adhesion exclusively prepared by the petitioner. A contract of
adhesion, albeit valid, becomes objectionable only when it takes undue
advantage of one of the parties the weaker party- by having such party just
adhere to the terms of the contract. Hence, the mortgage contracts in this case
should be construed strictly against the petitioner as the party who had drafted
the same.
2) The award of damages is not proper. The amount of actual damages
awarded must be reduced because the amount upon which the initial award was
based is merely an assertion that is not supported by evidence.
Petitioner should also be made liable for compensatory interest, which is
imposed by law or by courts as penalty or indemnity for damages. Petitioner is
liable for interest on the actual damage, representing the value of the property
that was lost to the Sps. Alonday through the unwarranted foreclosure, the same
to be reckoned from the date of judicial demand (i.e., the filing of the action by
the Spouses Alonday). At the time thereof, the rate was 12% per annum, and
such rate shall run until June 30, 2013. Thereafter, or starting on July 1, 2013, the
rate of interest shall be 6% per annum until full payment of the obligation.
In addition, Article 2212 of the Civil Code requires that interest due shall earn
legal interest from the time it is judicially demanded, although the obligation
may be silent upon this point. Accordingly, the interest due shall itself earn legal
interest of 6% per annum from the date of finality of the judgment until its full
satisfaction, the interim period being deemed to be an equivalent to a
forbearance of credit.