digested cases in credit transactions

G.R. No. 113412 April 17, 1996

Spouses PONCIANO ALMEDA and EUFEMIA P. ALMEDA,petitioner,vs.THE COURT OF APPEALS and PHILIPPINE NATIONAL BANK,respondents.

KAPUNAN,J.:p

On various dates in 1981, the Philippine National Bank granted to herein petitioners, the spouses Ponciano L. Almeda and Eufemia P. Almeda several loan/credit accommodations totaling P18.0 Million pesos payable in a period of six years at an interest rate of 21%per annum. To secure the loan, the spouses Almeda executed a Real Estate Mortgage Contract covering a 3,500 square meter parcel of land, together with the building erected thereon (the Marvin Plaza) located at Pasong Tamo, Makati, Metro Manila. A credit agreement embodying the terms and conditions of the loan was executed between the parties. Pertinent portions of the said agreement are quoted below:

SPECIAL CONDITIONS

xxx xxx xxx

The loan shall be subject to interest at the rate of twenty one per cent (21%)per annum, payable semi-annually in arrears, the first interest payment to become due and payable six (6) months from date of initial release of the loan. The loan shall likewise be subject to the appropriate service charge and a penalty charge of three per cent (30%)per annumto be imposed on any amount remaining unpaid or not rendered when due.

xxx xxx xxx

III. OTHER CONDITIONS

(c) Interest and Charges

The Bank reserves the right to increase the interest ratewithin the limits allowed by lawat any time depending on whatever policy it may adopt in the future; provided, that the interest rate on this/these accommodations shall be correspondingly decreased in the event that the applicable maximum interest rate is reduced by law or by the Monetary Board. In either case, the adjustment in theinterestrateagreed upon shall take effect on the effectivity date of the increase or decrease of the maximum interest rate.

1

1. Between 1981 and 1984, petitioners made several partial payments on the loan totaling. P7,735,004.66,

2. a substantial portion of which was applied to accrued interest.

3. On March 31, 1984, respondent bank, over petitioners' protestations, raised the interest rate to 28%, allegedly pursuant to Section III-c (1) of its credit agreement. Said interest rate thereupon increased from an initial 21% to a high of 68% between March of 1984 to September, 1986.

4. Petitioner protested the increase in interest rates, to no avail. Before the loan was to mature in March, 1988, the spouses filed on February 6, 1988 a petition for declaratory relief with prayer for a writ of preliminary injunction and temporary restraining order with the Regional Trial Court of Makati, docketed as Civil Case No. 18872. In said petition, which was raffled to Branch 134 presided by Judge Ignacio Capulong, the spouses sought clarification as to whether or not the PNB could unilaterally raise interest rates on the loan, pursuant to the credit agreement's escalation clause, and in relation to Central Bank Circular No. 905. As a preliminary measure, the lower court, on March 3, 1988, issued a writ of preliminary injunction enjoining the Philippine National Bank from enforcing an interest rate above the 21% stipulated in the credit agreement. By this time the spouses were already in default of their loan obligations.

Invoking the Law on Mandatory Foreclosure (Act 3135, as amended and P.D. 385), the PNB countered by ordering the extrajudicial foreclosure of petitioner's mortgaged properties and scheduled an auction sale for March 14, 1989. Upon motion by petitioners, however, the lower court, on April 5, 1989, granted a supplemental writ of preliminary injunction, staying the public auction of the mortgaged property.

On January 15, 1990, upon the posting of a counterbond by the PNB, the trial court dissolved the supplemental writ of preliminary injunction. Petitioners filed a motion for reconsideration. In the interim, respondent bank once more set a new date for the foreclosure sale of Marvin Plaza which was March 12, 1990. Prior to the scheduled date, however, petitioners tendered to respondent bank the amount of P40,142,518.00, consisting of the principal (P18,000,000.00) and accrued interest calculated at the originally stipulated rate of 21%. The PNB refused to accept the payment.

5. As a result of PNB's refusal of the tender of payment, petitioners, on March 8, 1990, formally consigned the amount of P40,142,518.00 with the Regional Trial Court in Civil Case No. 90-663. They prayed therein for a writ of preliminary injunction with a temporary restraining order. The case was raffled to Branch 147, presided by Judge Teofilo Guadiz. On March 15, 1990, respondent bank sought the dismissal of the case.

On March 30, 1990 Judge Guadiz in Civil Case No. 90-663 issued an order granting the writ of preliminary injunction enjoining the foreclosure sale of "Marvin Plaza" scheduled on March 12, 1990. On April 17, 1990 respondent bank filed a motion for reconsideration of the said order.

On August 16, 1991, Civil Case No. 90-663 we transferred to Branch 66 presided by Judge Eriberto Rosario who issued an order consolidating said case with Civil Case 18871 presided by Judge Ignacio Capulong.

For Judge Ignacio's refusal to lift the writ of preliminary injunction issued March 30, 1990, respondent bank filed a petition forCertiorari, Prohibition andMandamuswith respondent Court of Appeals, assailing the following orders of the Regional Trial Court:

1. Order dated March 30, 1990 of Judge Guadiz granting the writ of preliminary injunction restraining the foreclosure sale of Mavin Plaza set on March 12, 1990;

2. Order of Judge Ignacio Capulong dated January 10, 1992 denying respondent bank's motion to lift the writ of injunction issued by Judge Guadiz as well as its motion to dismiss Civil Case No. 90-663;

3. Order of Judge Capulong dated July 3, 1992 denying respondent bank's subsequent motion to lift the writ of preliminary injunction; and

Order of Judge Capulong dated October 20, 1992 denying respondent bank's motion for reconsideration.

On August 27, 1993, respondent court rendered its decision setting aside the assailed orders and upholding respondent bank's right to foreclose the mortgaged property pursuant to Act 3135, as amended and P.D. 385. Petitioners' Motion for Reconsideration and Supplemental Motion for Reconsideration, dated September 15, 1993 and October 28, 1993, respectively, were denied by respondent court in its resolution dated January 10, 1994.

Hence the instant petition.

This appeal bycertiorarifrom the respondent court's decision dated August 27, 1993 raises two principal issues namely:

1) Whether or not respondent bank was authorized to raise its interest rates from 21% to as high as 68% under the credit agreement; and

2) Whether or not respondent bank is granted the authority to foreclose the Marvin Plaza under the mandatory foreclosure provisions of P.D. 385.

In its comment dated April 19, 1994, respondent bank vigorously denied that the increases in the interest rates were illegal, unilateral, excessive and arbitrary, it argues that the escalated rates of interest it imposed was based on the agreement of the parties. Respondent bank further contends that it had a right to foreclose the mortgaged property pursuant to P.D. 385, after petitioners were unable to pay their loan obligations to the bank based on the increased rates upon maturity in 1984.

The instant petition is impressed with merit.

The binding effect of any agreement between parties to a contract is premised on two settled principles:

(1) that any obligation arising from contract has the force of law between the parties; and

(2) that there must be mutuality between the parties based on their essential equality.6Any 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.

It is plainly obvious, therefore, from the undisputed facts of the case that respondent bank unilaterally altered the terms of its contract with petitioners by increasing the interest rates on the loan without the prior assent of the latter. In fact, the manner of agreement is itself explicitly stipulated by the Civil Code when it provides, in Article 1956 that "No interest shall be due unless it has been expressly stipulated in writing." What has been "stipulated in writing" from a perusal of interest rate provision of the credit agreement signed between the parties is that petitioners were bound merely to pay 21% interest, subject to a possible escalation or de-escalation, when 1) the circumstances warrant such escalation or de-escalation; 2) within the limits allowed by law; and 3) upon agreement.

Indeed, the interest rate which appears to have been agreed upon by the parties to the contract in this case was the 21% rate stipulated in the interest provision. Any doubt about this is in fact readily resolved by a careful reading of the credit agreement because the same plainly uses the phrase "interest rateagreed upon," in reference to the original 21% interest rate. The interest provision states:

(c) interest and Charges

The Bank reserves the right to increase the interest ratewithin the limits allowed by lawat any time depending on whatever policy it may adopt in the future; provided, that the interest rate on this/these accommodations shall be correspondingly decreased in the event that the applicable maximum interest rate is reduced by law or by the Monetary Board. In either case, the adjustment in theinterest rate agreed uponshall take effect on the effectivity date of the increase or decrease of the maximum interest rate.

InPhilippine National Bank v.Court of Appeals,7this Court disauthorized respondent bank from unilaterally raising the interest rate in the borrower's loan from 18% to 32%, 41% and 48% partly because the aforestated increases violated the principle of mutuality of contracts expressed in Article 1308 of the Civil Code. The Court held:

CB Circular No. 905, Series of 1982 (Exh. 11) removed the Usury Law ceiling on interest rates

. . . increases in interest rates are not subject to any ceiling prescribed by the Usury Law.

but it did not authorize the PNB, or any bank for that matter, to unilaterally and successively increase the agreed interest rates from 18% to 48% within a span of four (4) months, in violation of P.D. 116 which limits such changes to once every twelve months.

Besides violating P.D. 116, the unilateral action of the PNB in increasing the interest rate on the private respondent's loan, violated the mutuality of contracts ordained in Article 1308 of the Civil Code:

Art. 308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them.

In order that obligations arising from contracts may have the force of law between the parties, there must bemutualitybetween the parties based on their essential equality. A contract containing a condition which makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties, is void (Garcia vs. Rita Legarda, Inc., 21 SCRA 555). Hence, even assuming that the P1.8 million loan agreement between the PNB and the private respondent gave the PNB a license (although in fact there was none) to increase the interest rate at will during the term of the loan, that license would have been null and void for being violative of the principle of mutuality essential in contracts. It would have invested the loan agreement with the character of a contract of adhesion, where the parties do not bargain on equal footing, the weaker party's (the debtor) participation being reduced to the alternative "to take it or lease it" (Qua vs. Law Union & Rock Insurance Co., 95 Phil. 85). Such a contract is a veritable trap for the weaker party whom the courts of justice must protect against abuse and imposition.

PNB's successive increases of the interest rate on the private respondent's loan, over the latter's protest, were arbitrary as they violated an express provision of the Credit Agreement (Exh. 1) Section 9.01 that its terms "may be amended only by an instrument in writing signed by the party to be bound as burdened by such amendment." The increases imposed by PNB also contravene Art. 1956 of the Civil Code which provides that "no interest shall be due unless it has been expressly stipulated in writing."

The debtor herein never agreed in writing to pay the interest increases fixed by the PNB beyond 24%per annum, hence, he is not bound to pay a higher rate than that.

That an increase in the interest rate from 18% to 48% within a period of four (4) months is excessive, as found by the Court of Appeals, is indisputable.

Clearly, the galloping increases in interest rate imposed by respondent bank on petitioners' loan, over the latter's vehement protests, were arbitrary.

Moreover, respondent bank's reliance on C.B. Circular No. 905, Series of 1982 did not authorize the bank, or any lending institution for that matter, to progressively increase interest rates on borrowings to an extent which would have made it virtually impossible for debtors to comply with their own obligations. True, escalation clauses in credit agreements are perfectly valid and do not contravene public policy. Such clauses, however, (as are stipulations in other contracts) are nonetheless still subject to laws and provisions governing agreements between parties, which agreements while they may be the law between the contracting parties implicitly incorporate provisions of existing law. Consequently, while the Usury Law ceiling on interest rates was lifted by C.B. Circular 905, nothing in the said circular could possibly be read as granting respondent bankcarte blancheauthority to raise interest rates to levels which would either enslave its borrowers or lead to a hemorrhaging of their assets. Borrowing represents a transfusion of capital from lending institutions to industries and businesses in order to stimulate growth. This would not, obviously, be the effect of PNB's unilateral and lopsided policy regarding the interest rates of petitioners' borrowings in the instant case.

Apart from violating the principle of mutuality of contracts, there is authority for disallowing the interest rates imposed by respondent bank, for the credit agreement specifically requires that the increase be "within the limits allowed by law". In the case ofPNB v.Court of Appeals, cited above, this Court clearly emphasized that C.B. Circular No. 905 could not be properly invoked to justify the escalation clauses of such contracts, not being a grant of specific authority.

Furthermore, the escalation clause of the credit agreement requires that the same be made "within the limits allowed by law," obviously referring specifically to legislative enactments not administrative circulars. Note that the phrase "limits imposed by law," refers only to the escalation clause. However, the same agreement allows reduction on the basis of law or the Monetary Board. Had the parties intended the word "law" to refer to both legislative enactments and administrative circulars and issuances, the agreement would not have gone as far as making a distinction between "law or the Monetary Board Circulars" in referring to mutually agreed upon reductions in interest rates. This distinction was the subject of the Court's disquisition in the case ofBanco Filipino Savings and Mortgage Bank v.Navarro8where the Court held that:

What should be resolved is whether BANCO FILIPINO can increase the interest rate on the LOAN from 12% to 17%per annumunder the Escalation Clause. It is our considered opinion that it may not.

The Escalation Clause reads as follows:

I/We hereby authorize Banco Filipino tocorrespondingly increase.

the interest rate stipulated in this contract without advance notice to me/us in the event.

a law

increasing

the lawful rates of interest that may be charged

on this particular

kind of loan. (Paragraphing and emphasis supplied)

It is clear from the stipulation between the parties that the interest rate may be increased "in the event alawshould be enacted increasing the lawful rate of interest that may be chargedon this particular kind of loan." The Escalation Clause was dependent on an increase of rate made by "law" alone.

CIRCULAR No. 494, although it has the effect of law, is not a law. "Although a circular duly issuedis not strictly a statute or a law, it has, however, the force and effect of law." (Emphasis supplied). "An administrative regulation adopted pursuant to law has the force and effect of law." "That administrative rules and regulations have the force of law can no longer be questioned."

The distinction between a law and an administrative regulation is recognized in the Monetary Board guidelines quoted in the latter to the BORROWER of Ms. Paderes of September 24, 1976 (supra). According to the guidelines, for a loan's interest to be subject to the increases provided in CIRCULAR No. 494, there must be an Escalation Clause allowing the increase "in the event thatany law or Central Bank regulationis promulgated increasing the maximum rate for loans." The guidelines thus presuppose that a Central Bank regulation is not within the term "any law."

The distinction is again recognized by P.D. No. 1684, promulgated on March 17, 1980, adding section 7-a to the Usury Law, providing that parties to an agreement pertaining to a loan could stipulate that the rate of interest agreed upon may be increased in the event that the applicable maximum rate of interest is increased "by law or by the Monetary Board." To quote:

Sec. 7-a. Parties to an agreement pertaining to a loan or forbearance of money, goods or credits may stipulate that the rate of interest agreed upon may be increased in the event that the applicable maximum rate of interest

is increased by law or by the Monetary Board:

Provided, That such stipulation shall be valid only if there is also a stipulation in the agreement that the rate of interest agreed upon shall be reduced in the event that the applicable maximum rate of interest is reduced by law or by the Monetary Board;

Provided, further, That the adjustment in the rate of interest agreed upon shall take effect on or after the effectivity of the increase or decrease in the maximum rate of interest.' (Paragraphing and emphasis supplied).

It is now clear that from March 17, 1980, escalation clauses to be valid should specifically provide: (1) that there can be an increase in interest if increased by law or by the Monetary Board; and (2) in order for such stipulation to be valid, it must include a provision for reduction of the stipulated interest "in the event that the applicable maximum rate of interest is reduced by law or by the Monetary Board."

Petitioners never agreed in writing to pay the increased interest rates demanded by respondent bank in contravention to the tenor of their credit agreement. That an increase in interest rates from 18% to as much as 68% is excessive and unconscionable is indisputable. Between 1981 and 1984, petitioners had paid an amount equivalent to virtually half of the entire principal (P7,735,004.66)which was applied to interest alone. By the time the spouses tendered the amount of P40,142,518.00 in settlement of their obligations; respondent bank was demanding P58,377,487.00 over and above those amounts already previously paid by the spouses.

Escalation clauses are not basically wrong or legally objectionable so long as they are not solely potestative but based on reasonable and valid grounds.9Here, as clearly demonstrated above, not only the increases of the interest rates on the basis of the escalation clause patently unreasonable and unconscionable, but also there are no valid and reasonable standards upon which the increases are anchored.

We go now to respondent bank's claim that the principal issue in the case at bench involves its right to foreclose petitioners' properties under P.D. 385. We find respondent's pretense untenable.

Presidential Decree No. 385 was issued principally to guarantee that government financial institutions would not be denied substantial cash inflows necessary to finance the government's development projects all over the country by large borrowers who resort to litigation to prevent or delay the government's collection of their debts or loans.10In facilitating collection of debts through its automatic foreclosure provisions, the government is however, not exempted from observing basic principles of law, and ordinary fairness and decency under the due process clause of the Constitution.11

In the first place, because of the dispute regarding the interest rate increases, an issue which was never settled on merit in the courts below, the exact amount of petitioner's obligations could not be determined. Thus, the foreclosure provisions of P.D. 385 could be validly invoked by respondent only after settlement of the question involving the interest rate on the loan, and only after the spouses refused to meet their obligations following such determination. InFilipinas Marble Corporation v.Intermediate Appellate Court,12involving P.D. 385's provisions on mandatory foreclosure, we held that:

We cannot, at this point, conclude that respondent DBP together with the Bancom people actually misappropriated and misspent the $5 million loan in whole or in part although the trial court found that there is "persuasive" evidence that such acts were committed by the respondent. This matter should rightfully be litigated below in the main action. Pending the outcome of such litigation, P.D. 385 cannot automatically be applied for if it is really proven that respondent DBP is responsible for the misappropriation of the loan, even if only in part, then the foreclosure of the petitioner's properties under the provisions of P.D. 385 to satisfy the whole amount of the loan would be a gross mistake. It would unduly prejudice the petitioner, its employees and their families.

Only after trial on the merits of the main case can the true amount of the loan which was applied wisely or not, for the benefit of the petitioner be determined. Consequently, the extent of the loan where there was no failure of consideration and which may be properly satisfied by foreclosure proceedings under P.D. 385 will have to await the presentation of evidence in a trial on the merits.

InRepublic Planters Bank v.Court of Appeals13the Court reiterating thedictumin Filipinas Marble Corporation, held:

The enforcement of P.D. 385 will sweep under the rug' this iceberg of a scandal in the sugar industry during the Marcos Martial Law years. This we can not allow to happen. For the benefit of future generations, all the dirty linen in the PHILSUCUCOM/NASUTRA/RPB closets have to be exposed in public so that the same may NEVER be repeated.

It is of paramount national interest, that we allow the trial court to proceed with dispatch to allow the parties below to present their evidence.

Furthermore, petitioners made a valid consignation of what they, in good faith and in compliance with the letter of the Credit Agreement, honestly believed to be the real amount of their remaining obligations with the respondent bank. The latter could not therefore claim that there was no honest-to-goodness attempt on the part of the spouse to settle their obligations. Respondent's rush to inequitably invoke the foreclosure provisions of P.D. 385 through its legal machinations in the courts below, in spite of the unsettled differences in interpretation of the credit agreement was obviously made in bad faith, to gain the upper hand over petitioners.

In the face of the unequivocal interest rate provisions in the credit agreement and in the law requiring the parties to agree to changes in the interest rate in writing, we hold that the unilateral and progressive increases imposed by respondent PNB were null and void. Their effect was to increase the total obligation on an eighteen million peso loan to an amount way over three times that which was originally granted to the borrowers. That these increases, occasioned by crafty manipulations in the interest rates is unconscionable and neutralizes the salutary policies of extending loans to spur business cannot be disputed.

WHEREFORE, PREMISES CONSIDERED, the decision of the Court of Appeals dated August 27, 1993, as well as the resolution dated February 10, 1994 is hereby REVERSED AND SET ASIDE. The case is remanded to the Regional Trial Court of Makati for further proceedings.

SO ORDERED.

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[G.R. No. 131622.November 27, 1998]

LETICIA Y. MEDEL DR. RAFAEL MEDEL and SERVANDO FRANCO,petitioners, vs.COURT OF APPEALS, SPOUSES VERONICA R. GONZALES and DANILO G. GONZALES, JR., doing lending business under the trade name and style "GONZALES CREDIT ENTERPRISES",respondents.

D E C I S I O N

PARDO,J.:

The case before the Court is a petition for review oncertiorari,under Rule 45 of the Revised Rules of Court, seeking to set aside the decision of the Court of Appeals,[1]and its resolution denying reconsideration,[2]the dispositive portion of which decision reads as follows:

"WHEREFORE, the appealed judgment is hereby MODIFIED such that defendants are hereby ordered to pay the plaintiff:the sum ofP500,000.00, plus 5.5% per month interest and 2% service charge per annum effective July 23, 1986, plus 1% per month of the total amount due and demandable as penalty charges effective August 23, 1986, until the entire amount is fully paid.

"The award to the plaintiff ofP50,000.00 as attorney's fees is affirmed.And so is the imposition of costs against the defendants.

SO ORDERED."[3]

The Court required the respondents to comment on the petition,[4]which was filed on April 3, 1998,[5]and the petitioners to reply thereto, which was filed on May 29, 1998.[6]We now resolve to give due course to the petition and decide the case.

The facts of the case, as found by the Court of Appeals in its decision, which are considered binding and conclusive on the parties herein, as the appeal is limited to questions of law, are as follows:

On November 7, 1985, Servando Franco and Leticia Medel (hereafter Servando and Leticia) obtained a loan from Veronica R. Gonzales (hereafter Veronica), who was engaged in the money lending business under the name "Gonzales Credit Enterprises", in the amount ofP50,000.00, payable in two months.Veronica gave only the amount ofP47,000.00, to the borrowers, as she retainedP3,000.00, as advance interest for one month at 6% per month.Servado and Leticia executed a promissory note forP50,000.00, to evidence the loan, payable on January 7, 1986.

On November 19, 1985, Servando and Leticia obtained from Veronica another loan in the amount ofP90,000.00, payable in two months, at 6% interest per month.They executed a promissory note to evidence the loan, maturing on January 19, 1986.They received onlyP84,000.00, out of the proceeds of the loan.

On maturity of the two promissory notes, the borrowers failed to pay the indebtedness.

On June 11, 1986, Servando and Leticia secured from Veronica still another loan in the amount ofP300,000.00, maturing in one month, secured by a real estate mortgage over a property belonging to Leticia Makalintal Yaptinchay, who issued a special power of attorney in favor of Leticia Medel, authorizing her to execute the mortgage.Servando and Leticia executed a promissory note in favor of Veronica to pay the sum ofP300,000.00, after a month, or on July 11, 1986.However, only the sum ofP275,000.00, was given to them out of the proceeds of the loan.

Like the previous loans, Servando and Medel failed to pay the third loan on maturity.

On July 23, 1986, Servando and Leticiawith the latter's husband, Dr. Rafael Medel, consolidated all their previous unpaid loans totalingP440,000.00, and sought from Veronica another loan in the amount ofP60,000.00, bringing their indebtedness to a total ofP500,000.00, payable on August 23, 1986.The executed a promissory note, reading as follows:

"Baliwag, BulacanJuly 23, 1986

"Maturity DateAugust 23, 1986

"P500,000.00

"FOR VALUE RECEIVED, I/WE jointly and severally promise to pay to the order of VERONICA R. GONZALES doing business in the business style of GONZALES CREDIT ENTERPRISES, Filipino, of legal age, married to Danilo G. Gonzales, Jr., of Baliwag Bulacan, the sum of PESOS ........ FIVE HUNDRED THOUSAND ..... (P500,000.00) Philippine Currencywithinterestthereonattherateof5.5PERCENTpermonthplus2%servicechargeperannumfromdatehereofuntil fully paid according to the amortization schedule contained herein.(Underscoring supplied)

"Payment will be made in full at the maturity date.

"ShouldI/WEfailtopayanyamortizationorportionhereofwhendue, all the other installments together with all interest accrued shall immediately be due and payable and I/WE hereby agree to pay anadditionalamountequivalenttoonepercent(1%)permonthoftheamountdueanddemandableaspenaltychargesintheformofliquidateddamagesuntil fully paid; and the furthersumofTWENTYFIVEPERCENT(25%)thereoninfull, without deductionsasAttorney'sFeewhether actually incurred or not, of the total amount due and demandable, exclusive of costs and judicial or extra judicial expenses.(Underscoring supplied)

"I, WE further agree that in the event the present rate of interest on loan is increased by law or the Central Bank of the Philippines, the holder shall have the option to apply and collect the increased interest charges without notice although the original interest have already been collected wholly or partially unless the contrary is required by law.

"It is also a special condition of this contract that the parties herein agree that the amount of peso-obligation under this agreement is based on the present value of peso, and if there be any change in the value thereof, due to extraordinary inflation or deflation, or any other cause or reason, then the peso-obligation herein contracted shall be adjusted in accordance with the value of the peso then prevailing at the time of the complete fulfillment of obligation.

"Demand and notice of dishonor waived.Holder may accept partial payments and grant renewals of this note or extension of payments, reserving rights against each and all indorsers and all parties to this note.

"IN CASE OF JUDICIAL Execution of this obligation, or any part of it, the debtors waive all his/their rights under the provisions of Section 12, Rule 39, of the Revised Rules of Court."

On maturity of the loan, the borrowers failed to pay the indebtedness ofP500,000.00, plus interests and penalties, evidenced by the above-quoted promissory note.

On February 20, 1990, Veronica R. Gonzales, joined by her husband Danilo G. Gonzales, filed with the Regional Trial Court of Bulacan, Branch 16, at Malolos, Bulacan, a complaint for collection of the full amount of the loan including interests and other charges.

In his answer to the complaint filed with the trial court on April 5, 1990, defendant Servando alleged that he did not obtain any loan from the plaintiffs; that it was defendants Leticia and Dr. Rafael Medel who borrowed from the plaintiffs the sum ofP500,000.00, and actually received the amount and benefited therefrom; that the loan was secured by a real estate mortgage executed in favor of the plaintiffs, and that he (Servando Franco) signed the promissory note only as a witness.

In their separate answer filed on April 10,1990, defendants Leticia and Rafael Medel alleged that the loan was the transaction of Leticia Yaptinchay, who executed a mortgage in favor of the plaintiffs over a parcel of real estate situated in San Juan, Batangas; that the interest rate is excessive at 5.5% per month with additional service charge of 2% per annum, and penalty charge of 1% per month; that the stipulation for attorney's fees of 25% ofthe amount due is unconscionable, illegal and excessive, and that substantialpayments made were applied to interest, penalties and other charges.

After due trial, the lower court declared that the due execution and genuineness of the four promissory notes had been duly proved, and ruled that although the Usury Law had been repealed, the interest charged by the plaintiffs on the loans was unconscionable and "revolting to the conscience".Hence, the trial court applied "the provision of the New [Civil] Code" that the "legal rate of interest for loan or forbearance of money, goods or credit is 12% per annum."[7]

Accordingly, on December 9, 1991, the trial court rendered judgment, the dispositive portion of which reads as follows:

"WHEREFORE,premises considered, judgment is hereby rendered, as follows:

"1.Ordering the defendants Servando Franco and Leticia Medel, jointly and severally, to pay plaintiffs the amount ofP47,000.00 plus 12% interest per annum from November 7, 1985 and 1% per month as penalty, until the entire amount is paid in full.

"2.Ordering the defendants Servando Franco and Leticia Y. Medel to plaintiffs, jointly and severally the amount ofP84,000.00 with 12% interest per annum and 1% per cent per month as penalty from November 19,1985 until the whole amount is fully paid;

"3.Ordering the defendants to pay the plaintiffs, jointly and severally, the amount ofP285,000.00 plus 12% interest per annum and 1% per month as penalty from July 11, 1986, until the whole amount is fully paid;

"4.Ordering the defendants to pay plaintiffs, jointly and severally, the amount ofP50,000.00 as attorney's fees;

"5.All counterclaims are hereby dismissed.

"With costs against the defendants."[8]

In due time, both plaintiffs and defendants appealed to the Court of Appeals.

In their appeal, plaintiffs-appellants argued that the promissory note, which consolidated all the unpaid loans of the defendants, is the law that governs the parties.They further argued that Circular No. 416 of the CentralBank prescribing the rate of interest for loans or forbearance of money, goods or credit at 12% per annum, applies only in the absence of a stipulation on interest rate, but not when the parties agreed thereon.

The Court of Appeals sustained the plaintiffs-appellants' contention.It ruled that "the Usury Law having become 'legally inexistent' with the promulgation by the Central Bank in 1982 of Circular No. 905, the lender and borrower could agree on any interest that may be charged on the loan".[9]The Court of Appeals further held that "the imposition of 'an additional amount equivalent to 1% per month of the amount due and demandable as penalty charges in the form of liquidated damages until fully paid' was allowed by law".[10]

Accordingly, on March 21, 1997, the Court of Appeals promulgated it decision reversing that of the Regional Trial Court, disposing as follows:

"WHEREFORE, the appealed judgment is hereby MODIFIED such that defendants are hereby ordered to pay the plaintiffs the sum ofP500,000.00, plus 5.5% per month interest and 2% service charge per annum effective July 23, 1986, plus 1% per month of the total amount due and demandable as penalty charges effective August 24, 1986, until the entire amount is fully paid.

"The award to the plaintiffs ofP50,000.00 as attorney's fees is affirmed.And so is the imposition of costs against the defendants.

"SO OREDERED."[11]

On April 15, 1997, defendants-appellants filed a motion for reconsideration of the said decision.By resolution dated November 25, 1997, the Court of Appeals denied the motion.[12]

Hence, defendants interposed the present recourseviapetition for review oncertiorari.[13]

We find the petition meritorious.

Basically, the issue revolves on the validity of the interest rate stipulated upon.Thus, the question presented is whether or not the stipulated rate of interest at 5.5% per month on the loan in the sum ofP500,000.00, that plaintiffs extended to the defendants is usurious.In other words, is the Usury Law still effective, or has it been repealed by Central Bank Circular No. 905, adopted on December 22, 1982, pursuant to its powers under P.D. No. 116, as amended by P.D. No. 1684?

We agree with petitioners that the stipulated rate of interest at 5.5% per month on theP500,000.00 loan is excessive, iniquitous, unconscionable and exorbitant.13However, we can not consider the rate "usurious" because this Court has consistently held that Circulr No. 905 of the Central Bank, adopted on December 22, 1982, has expressly removed the interest ceilings prescribed by the Usury Law[14]and that the Usury Law is now "legally inexistent".[15]

In Security Bank and Trust Companyvs.Regional Trial Court of Makati, Branch 61[16]the Court held that CB Circular No. 905 "did not repeal nor in anyway amend the Usury Law but simply suspended the latter's effectivity."Indeed, we have held that "a Central Bank Circular can not repeal a law.Only a law can repeal another law."[17]In the recent case of Florendo vs. Court of Appeals[18], the Court reiterated the ruling that "by virtue of CB Circular 905, the Usury Law has been rendered ineffective"."Usury has been legally non-existent in our jurisdiction.Interest can now be charged as lender and borrower may agree upon."[19]

Nevertheless, we find the interest at 5.5% per month, or 66% per annum, stipulated upon by the parties in the promissory note iniquitous or unconscionable, and, hence, contrary to morals ("contra bonos mores"), if not against the law.[20]The stipulation is void.[21]The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if they are iniquitous or unconscionable.[22]

Consequently, the Court of Appeals erred in upholding the stipulation of the parties.Rather, we agree with the trial court that, under the circumstances, interest at 12% per annum, and an additional 1% a month penalty charge as liquidated damages may be more reasonable.

WHEREFORE, the Court hereby REVERSES and SETS ASIDE the decision of the Court of Appeals promulgated on March 21, 1997, and its resolution dated November 25, 1997.Instead, we render judgment REVIVING and AFFIRMING the decision dated December 9, 1991, of the Regional Trial Court of Bulacan, Branch 16, Malolos, Bulacan, in Civil Case No. 134-M-90, involving the same parties.

No pronouncement as to costs in this instance

SO ORDERED.

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[G.R. No. 125944.June 29, 2001]

SPOUSES DANILO SOLANGON and URSULA SOLANGON,petitioners, vs.JOSE AVELINO SALAZAR,respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ,J.:

Petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, of the decision of the Court of Appeals in CA-G.R. CV No. 37899, affirming the decision of the Regional Trial Court, Branch 16, Malolos, Bulacan, in Civil Case No. 375-M-91, Spouses Danilo and Ursula Solangon vs. Jose Avelino Salazar for annulment of mortgage.The dispositive portion of the RTC decision reads:

WHEREFORE, judgment is hereby rendered against the plaintiffs in favor of the defendant Salazar, as follows:

1.Ordering the dismissal of the complaint;

2.Ordering the dissolution of the preliminary injunction issued on July 8, 1991;

3.Ordering the plaintiffs to pay the defendant the amount of P10,000.00 by way of attorneys fees; and

4.To pay the costs.

SO ORDERED.[1]

The facts as summarized by the Court of Appeals in its decision being challenged are:

On August 22, 1986, the plaintiffs-appellants executed a deed or real estate mortgage in which they mortgaged a parcel of land situated in Sta. Maria, Bulacan, in favor ofthe defendant-appellee, to secure payment of a loan of P60,000.00 payable within a period of four (4) months, with interest thereon at the rate of 6% per month (Exh. B).

On May 27, 1987, the plaintiffs-appellants executed a deed of real estate mortgage in which they mortgaged the same parcel of land to the defendant-appellee, to secure payment of a loan of P136,512.00, payable within a period of one (1) year, with interest thereon at the legal rate (Exh. 1).

On December 29, 1990, the plaintiffs-appellants executed a deed of real estate mortgage in which they mortgaged the same parcel of land in favor of defendant-appellee, to secure payment of a loan in the amount of P230,000.00 payable within a period of four (4) months, with interest thereon at the legal rate (Exh. 2, Exh. C).

This action was initiated by the plaintiffs-appellants to prevent the foreclosure of the mortgaged property.They alleged that they obtained only one loan form the defendant-appellee, and that was for the amount of P60,000.00, the payment of which was secured by the first of the above-mentioned mortgages.The subsequent mortgages were merely continuations of the first one, which is null and void because it provided for unconscionable rate of interest.Moreover, the defendant-appellee assured them that he will not foreclose the mortgage as long as they pay the stipulated interest upon maturity or within a reasonable time thereafter.They have already paid the defendant-appellee P78,000.00 and tendered P47,000.00 more, but the latter has initiated foreclosure proceedings for their alleged failure to pay the loan P230,000.00 plus interest.

On the other hand, the defendant-appellee Jose Avelino Salazar claimed that the above-described mortgages were executed to secure three separate loans of P60,000.00 P136,512.00 and P230,000.00, and that the first two loans were paid, but the last one was not.He denied having represented that he will not foreclose the mortgage as long as the plaintiffs-appellants pay interest.

In their petition, spouses Danilo and Ursula Solangon ascribe to the Court of Appeals the following errors:

1.The Court of Appeals erred in holding that three (3) mortgage contracts were executed by the parties instead of one (1);

2.The Court of Appeals erred in ruling that a loan obligation secured by a real estate mortgage with an interest of 72% per cent per annum or 6% per month is not unconscionable;

4.The Court of Appeals erred in holding that the loan of P136,512.00 HAS NOT BEEN PAID when the mortgagee himself states in his ANSWER that the same was already paid; and

5.The Court of Appeals erred in not resolving the SPECIFIC ISSUES raised by the appellants.

In his comment, respondent Jose Avelino Salazar avers that the petition should not be given due course as it raises questions of facts which are not allowed in a petition for review on certiorari.

We find no merit in the instant petition.

The core of the present controversy is the validity of the third contract of mortgage which was foreclosed.

Petitioners contend that they obtained from respondent Avelino Salazar only one (1) loan in the amount of P60,000.00 secured by the first mortgage of August 1986.According to them, they signed the third mortgage contract in view of respondents assurance that the same will not be foreclosed.The trial court, which is in the best position to evaluate the evidence presented before it, did not give credence to petitioners corroborated testimony and ruled:

The testimony is improbable.The real estate mortgage was signed not only by Ursula Solangon but also by her husband including the Promissory Note appended to it.Signing a document without knowing its contents is contrary to common experience.The uncorroborated testimony of Ursula Solangon cannot be given weight.[2]

Petitioners likewise insist that, contrary to the finding of the Court of appeals, they had paid the amount of P136,512.00, or the second loan.In fact, such payment was confirmed by respondent Salazar in his answer to their complaint.

It is readily apparent that petitioners are raising issues of fact in this petition.In a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, as amended, only questions of law may be raised and they must be distinctly set forth. The settled rule is that findings of fact of the lower courts (including the Court of Appeals) are final and conclusive and will not be reviewed on appeal except:(1) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on a misapprehension of facts; (5) when the findings of facts are conflicting; (6) when the Court of Appeals, in making its findings,went beyond the issues of the case and such findingsare contrary to the admission of both appellant and appellee; (6) when the findings of the Court of Appeals are contrary to those of the trial court; and (7) when the findings of fact are conclusions without citation of specific evidence on which they are based.[3]

None of these instances are extant in the present case.

Parenthetically, petitioners are questioning the rate of interest involved here.They maintain that the Court of Appealserredin decreeing that the stipulated interest rate of 72% per annum or 6% per month isnot unconscionable.

The Court of Appeals, in sustaining the stipulated interest rate, ratiocinated that since the Usury Law had been repealed by Central Bank Circular No. 905 there is no more maximum rate of interest and the rate will just depend on the mutual agreement of the parties.Obviously, this was in consonance with our ruling inLiam Law v. Olympic Sawmill Co.[4]

The factual circumstances of the present case require the application of a different jurisprudential instruction.While the Usury Law ceiling on interest rates was lifted by C.B. Circular No. 905, nothing in the said circular grants lenderscarte blancheauthority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.[5]InMedel v. Court of Appeals,[6]this court had the occasion to rule on this question - whether or not the stipulated rate of interest at5.5%per month on a loan amounting to P500,000.00 is usurious.While decreeing that the aforementioned interest was not usurious, this Court held that the same must be equitably reduced for beinginiquitous,unconscionableandexorbitant,thus:

We agree with petitioners that the stipulated rate of interest at 5.5% per month on the P500,000.00 loan is excessive, iniquitous, unconscionable and exorbitant.However, we can not consider the rate usurious because this Court has consistently held that Circular No. 905 of the Central Bank, adopted on December 22, 1982, has expressly removed the interest ceilings prescribed by the Usury Law and that the Usury Law is now legally inexistent.

In Security Bank and Trust Company vs. Regional Trial Court of Makati, Branch 61 the Court held that CB Circular No. 905 did not repeal nor in any way amend the Usury Law but simply suspended the latters effectivity.Indeed, we have held that a Central Bank Circular can not repeal a law.Only a law can repeal another law.In the recent case of Florendo v. Court of Appeals, the Court reiterated the ruling that by virtue of CB Circular 905, the Usury Law has been rendered ineffective. Usury Law has been legally non-existent in our jurisdiction.Interest can now be charged as lender and borrower may agree upon.

Nevertheless, we find the interest at 5.5 % per month, or 66% per annum, stipulated upon by the parties in the promissory note iniquitous or unconscionable, and hence, contrary to morals (contra bonos mores), if not against the law.The stipulation is void.The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if they are iniquitous or unconscionable.(Emphasis supplied)

In the case at bench, petitioners stand on a worse situation.They are required to pay the stipulated interest rate of6%per month or72%per annum which is definitely outrageous and inordinate.Surely, it is more consonant with justice that the said interest rate be reduced equitably.An interest of 12% per annum is deemed fair and reasonable.

WHEREFORE, the appealed decision of the Court of Appeals is AFFIRMED subject to the MODIFICATION that the interest rate of 72% per annum is ordered reduced to 12 % per annum.

SO ORDERED.

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[G.R. No. 146942.April 22, 2003]

CORAZON G. RUIZ,petitioner,vs. COURT OF APPEALS and CONSUELO TORRES,respondents.

D E C I S I O N

PUNO,J.:

On appeal is the decision[1]of the Court of Appeals in CA-G.R. CV No. 56621 dated 25 August 2000, setting aside the decision[2]of the trial court dated 19 May 1997 and lifting the permanent injunction on the foreclosure sale of the subject lot covered by TCT No. RT-96686, as well as its subsequent Resolution[3]dated 26 January 2001, denying petitioners Motion for Reconsideration.

The facts of the case are as follows:

Petitioner Corazon G. Ruiz is engaged in the business of buying and selling jewelry.[4]She obtained loans from private respondent Consuelo Torres on different occasions, in the following amounts:P100,000.00;P200,000.00;P300,000.00; andP150,000.00.[5]Prior to their maturity, the loans were consolidated under one (1) promissory note dated March 22, 1995, which reads as follows:[6]

P750,000.00Quezon City, March 22, 1995

P R O M I S S O R YN O T E

For value received, I,CORAZON RUIZ, as principal andROGELIO RUIZas surety in solidum, jointly and severally promise to pay to the order ofCONSUELO P. TORRESthe sum of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000.00) Philippine Currency, to earn an interest at the rate of three per cent (3%) a month, for thirteen months, payable every _____ of the month, and to start onApril 1995and to mature onApril 1996, subject to renewal.

If the amount due is not paid on date due, a SURCHARGE of ONE PERCENT of the principal loan, for every month default, shall be collected.

Remaining balance as of the maturity date shall earn an interest at the rate of ten percent a month, compounded monthly.

It is finally agreed that the principal and surety in solidum, shall pay attorneys fees at the rate of twenty-five percent (25%) of the entire amount to be collected, in case this note is not paid according to the terms and conditions set forth, and same is referred to a lawyer for collection.

In computing the interest and surcharge, a fraction of the month shall be considered one full month.

In the event of an amicable settlement, the principal and surety in solidum shall reimburse the expenses of the plaintiff.

(Sgd.) Corazon Ruiz__________________

PrincipalSurety

The consolidated loan ofP750,000.00 was secured by a real estate mortgage on a 240-square meter lot in New Haven Village, Novaliches, Quezon City, covered by Transfer Certificate of Title (TCT) No. RT-96686, and registered in the name of petitioner.[7]The mortgage was signed by Corazon Ruiz for herself and as attorney-in-fact of her husband Rogelio.It was executed on 20 March 1995, or two (2) days before the execution of the subject promissory note.[8]

Thereafter, petitioner obtained three (3) more loans from private respondent, under the following promissory notes:(1) promissory note dated 21 April 1995, in the amount ofP100,000.00;[9](2) promissory note dated May 23, 1995, in the amount ofP100,000.00;[10]and (3) promissory note dated December 21, 1995, in the amount ofP100,000.00.[11]These combined loans ofP300,000.00 were secured byP571,000.00 worth of jewelry pledged by petitioner to private respondent.[12]

From April 1995 to March 1996, petitioner paid the stipulated 3% monthly interest on theP750,000.00 loan,[13]amounting toP270,000.00.[14]After March 1996, petitioner was unable to make interest payments as she had difficulties collecting from her clients in her jewelry business.[15]

Due to petitioners failure to pay the principal loan ofP750,000.00, as well as the interest payment for April 1996, private respondent demanded payment not only of theP750,000.00 loan, but also of theP300,000.00 loan.[16]When petitioner failed to pay, private respondent sought the extra-judicial foreclosure of the aforementioned real estate mortgage.[17]

On September 5, 1996, Acting Clerk of Court and Ex-Officio Sheriff Perlita V. Ele, Deputy Sheriff In-Charge Rolando G. Acal and Supervising Sheriff Silverio P. Bernas issued a Notice of Sheriffs Sale of subject lot. The public auction was scheduled on October 8, 1996.[18]

On October 7, 1996, one (1) day before the scheduled auction sale, petitioner filed a complaint with the RTC of Quezon City docketed as Civil Case No. Q-96-29024, with a prayer for the issuance of a Temporary Restraining Order to enjoin the sheriff from proceeding with the foreclosure sale and to fix her indebtedness to private respondent toP706,000.00.The computed amount ofP706,000.00 was based on the aggregate loan ofP750,000.00, covered by the March 22, 1995 promissory note, plus the other loans ofP300,000.00, covered by separate promissory notes, plus interest, minusP571,000.00 representing the amount of jewelry pledged in favor of private respondent.[19]

The trial court granted the prayer for the issuance of a Temporary Restraining Order,[20]and on 29 October 1996, issued a writ of preliminary injunction.[21]In its Decision dated May 19, 1997, it ordered the Clerk of Court and Ex-Officio Sheriff to desist with the foreclosure sale of the subject property, and it made permanent the writ of preliminary injunction.It held that the real estate mortgage is unenforceable because of the lack of the participation and signature of petitioners husband. It noted that although the subject real estate mortgage stated that petitioner was attorney-in-fact for herself and her husband, the Special Power of Attorney was never presented in court during the trial.[22]

The trial court further held that the promissory note in question is a unilateral contract of adhesion drafted by private respondent.It struck down the contract as repugnant to public policy because it was imposed by a dominant bargaining party (private respondent) on a weaker party (petitioner).[23]Nevertheless, it held that petitioner still has an obligation to pay the private respondent.Private respondent was further barred from imposing on petitioner the obligation to pay the surcharge of one percent (1%) per month from March 1996 onwards, and interest of ten percent (10%) a month, compounded monthly from September 1996 to January 1997.Petitioner was thus ordered to pay the amount ofP750,000.00 plus three percent (3%) interest per month, or a total ofP885,000.00, plus legal interest from date of [receipt of] the decision until the total amount ofP885,000.00 is paid.[24]

Aside from the foregoing, the trial court took into account petitioners proposal to pay her other obligations to private respondent in the amount ofP392,000.00.[25]

The trial court also recognized the expenses borne by private respondent with regard the foreclosure sale and attorneys fees.As the notice of the foreclosure sale has already been published, it ordered the petitioner to reimburse private respondent the amount ofP15,000.00 plus attorneys fees of the same amount.[26]

Thus, the trial court computed petitioners obligation to private respondent, as follows:

Principal Loan .P750,000.00

Interest.. 135,000.00

Other Loans..392,000.00

Publication Fees.15,000.00

Attorneys Fees 15,000.00

TOTALP1,307,000.00

with legal interest from date of receipt of decision until payment of total amount ofP1,307,000.00 has been made.[27]

Private respondents motion for reconsideration was denied in an Order dated July 21, 1997.

Private respondent appealed to the Court of Appeals.The appellate court set aside the decision of the trial court.It ruled that the real estate mortgage is valid despite the non-participation of petitioners husband in its execution because the land on which it was constituted is paraphernal property of petitioner-wife.Consequently, she may encumber the lot without the consent of her husband.[28]It allowed its foreclosure since the loan it secured was not paid.

Nonetheless, the appellate court declared as invalid the 10% compounded monthly interest[29]and the 10% surcharge per month stipulated in the promissory notes dated May 23, 1995 and December 1, 1995,[30]and so too the 1% compounded monthly interest stipulated in the promissory note dated 21 April 1995,[31]for being excessive, iniquitous, unconscionable, and contrary to morals.It held that the legal rate of interest of 12% per annum shall apply after the maturity dates of the notes until full payment of the entire amount due, and that the only permissible rate of surcharge is 1% per month, without compounding.[32]The appellate court also granted attorneys fees in the amount ofP50,000.00, and not the stipulated 25% of the amount due, following the ruling in the case ofMedel v. Court of Appeals.[33]

Now, before this Court, petitioner assigns the following errors:

(1) PUBLIC RESPONDENT COURT OF APPEALS GRAVELY ERRED IN RULING THAT THE PROMISSORY NOTE OFP750,000.00 IS NOT A CONTRACT OF ADHESION DESPITE THE CLEAR SHOWING THAT THE SAME IS A READY-MADE CONTRACT PREPARED BY (THE) RESPONDENT CONSUELO TORRES AND DID NOT REFLECT THEIR TRUE INTENTIONS AS IT WEIGHED HEAVILY IN FAVOR OF RESPONDENT AND AGAINST PETITIONER.

(2) PUBLIC RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DECLARING THAT THE PROPERTY COVERED BY THE SUBJECT DEED OF MORTGAGE OF MARCH 20, 1995 IS A PARAPHERNAL PROPERTY OF THE PETITIONER AND NOT CONJUGAL EVEN THOUGH THE ISSUE OF WHETHER OR NOT THE MORTGAGED PROPERTY IS PARAPHERNAL WAS NEVER RAISED, NOR DISCUSSED AND ARGUED BEFORE THE TRIAL COURT.

(3) PUBLIC RESPONDENT COURT OF APPEALS GRAVELY ERRED IN DISREGARDING THE TRIAL COURTS COMPUTATION OF THE ACTUAL OBLIGATIONS OF THE PETITIONER WITH (THE) RESPONDENT TORRES EVEN THOUGH THE SAME IS BASED ON EVIDENCE SUBMITTED BEFORE IT.

The pertinent issues to be resolved are:

(1) Whether the promissory note ofP750,000.00 is a contract of adhesion;

(2) Whether the real property covered by the subject deed of mortgage dated March 20, 1995 is paraphernal property ofpetitioner; and

(3) Whether the rates of interests and surcharges on the obligation of petitioner to private respondent are valid.

I

We hold that the promissory note in the case at bar is not a contract of adhesion.InSweet Lines, Inc. vs. Teves,[34]this Court discussed the nature of a contract of adhesion as follows:

. . . there are certain contracts almost all the provisions of which have been drafted only by one party, usually a corporation.Such contracts are calledcontracts of adhesion,because the only participation of the other party is the signing of his signature or his adhesion thereto.Insurance contracts, bills of lading, contracts of sale of lots on the installment plan fall into this category.[35]

. . . it is drafted only by one party, usually the corporation, and is sought to be accepted or adhered to by the other party . . . who cannot change the same and who are thus made to adhere hereto on the take it or leave it basis . . . [36]

In said case ofSweet Lines,[37]the conditions of the contract on the 4 x 6 inches passenger ticket are in fine print.Thus we held:

. . . it is hardly just and proper to expect the passengers to examine their tickets received from crowded/congested counters, more often than not during rush hours, for conditions that may be printed thereon, much less charge them with having consented to the conditions, so printed, especially if there are a number of such conditions in fine print, as in this case.[38]

We further stressed in the said case that the questioned Condition No. 14 was prepared solely by one party which was the corporation, and the other party who was then a passenger had no say in its preparation.The passengers have no opportunity to examine and consider the terms and conditions of the contract prior to the purchase of their tickets.[39]

In the case at bar, the promissory note in question did not contain any fine print provision which could not have been examined by the petitioner.Petitioner had all the time to go over and study the stipulations embodied in the promissory note.Aside from the March 22, 1995 promissory note forP750,000.00, three other promissory notes of different dates and amounts were executed by petitioner in favor of private respondent.These promissory notes contain similar terms and conditions, with a little variance in the terms of interests and surcharges.The fact that petitioner and private respondent had entered into not only one but several loan transactions shows that petitioner was not in any way compelled to accept the terms allegedly imposed by private respondent.Moreover, petitioner, in her complaint[40]dated October 7, 1996 filed with the trial court, never claimed that she was forced to sign the subject note.Paragraph five of her complaint states:

That on or about March 22, 1995 plaintiff was required by the defendant Torres to execute a promissory note consolidating her unpaid principal loan and interests which said defendant computed to be in the sum ofP750,000.00 . . .

To be required is certainly different from being compelled.She could have rejected the conditions made by private respondent.As an experienced business- woman, she ought to understand all the conditions set forth in the subject promissory note.As held by this Court inLee, et al. vs. Court of Appeals, et al.,[41]it is presumed that a person takes ordinary care of his concerns.[42]Hence, the natural presumption is that one does not sign a document without first informing himself of its contents and consequences.This presumption acquires greater force in the case at bar where not only one but several documents were executed at different times by petitioner in favor of private respondent.

II

We also affirm the ruling of the appellate court that the real property covered by the subject deed of mortgage is paraphernal property. The property subject of the mortgage is registered in the name of Corazon G. Ruiz, of legal age, married to Rogelio Ruiz, Filipinos.Thus, title is registered in the name of Corazon alone because the phrase married to Rogelio Ruiz is merely descriptive of the civil status of Corazon and should not be construed to mean that her husband is also a registered owner.Furthermore, registration of the property in the name of Corazon G. Ruiz, of legal age, married to Rogelio Ruiz is not proof that such property was acquired during the marriage, and thus, is presumed to be conjugal.The property could have been acquired by Corazon while she was still single, and registered only after her marriage to Rogelio Ruiz.Acquisition of title and registration thereof are two different acts.[43]The presumption under Article 116 of the Family Code that properties acquired during the marriage are presumed to be conjugal cannot apply in the instant case.Before such presumption can apply, it must first be established that the property was in fact acquired during the marriage.In other words, proof of acquisition during the marriage is a conditionsine qua nonfor the operation of the presumption in favor of conjugal ownership.[44]No such proof was offered nor presented in the case at bar.Thus, on the basis alone of the certificate of title, it cannot be presumed that said property was acquired during the marriage and that it is conjugal property.Since there is no showing as to when the property in question was acquired, the fact that the title is in the name of the wife alone is determinative of its nature as paraphernal, i.e., belonging exclusively to said spouse.[45]The only import of the title is that Corazon is the owner of said property, the same having been registered in her name alone, and that she is married to Rogelio Ruiz.[46]

III

We now resolve the issue of whether the rates of interests and surcharges on the obligation of petitioner to private respondent are legal.

The four (4) unpaid promissory notes executed by petitioner in favor of private respondent are in the following amounts and maturity dates:

(1)P750,000.00, dated March22, 1995 matured on April 21, 1996;

(2)P100,000.00, dated April 21, 1995 matured on August 21, 1995;

(3)P100,000.00, dated May23, 1995 matured on November 23, 1995; and

(4)P100,000.00, dated December 21, 1995 matured on March 1, 1996.

TheP750,000.00 promissory note dated March 22, 1995 has the following provisions:

(1) 3% monthly interest, from the signing of the note until its maturity date;

(2) 10% compounded monthly interest on the remaining balance at maturity date;

(3) 1% surcharge on the principal loan for every month of default; and

(4) 25% attorneys fees.

TheP100,000.00 promissory note dated April 21, 1995 has the following provisions:


(2) 10% monthly interest on the remaining balance at maturity date;

(3) 1% compounded monthly surcharge on the principal loan for every month of default; and


The two (2) otherP100,000.00 promissory notes dated May 23, 1995 and December1, 1995 have the following provisions:


(2) 10% compounded monthly interest on the remaining balance at maturity date;

(3) 10% surcharge on the principal loan for every month of default; and


We affirm the ruling of the appellate court, striking down as invalid the 10% compounded monthly interest, the 10% surcharge per month stipulated in the promissory notes dated May 23, 1995 and December 1, 1995, and the 1% compounded monthly interest stipulated in the promissory note dated April 21, 1995.The legal rate of interest of 12% per annum shall apply after the maturity dates of the notes until full payment of the entire amount due.Also, the only permissible rate of surcharge is 1% per month, without compounding.We also uphold the award of the appellate court of attorneys fees, the amount of which having been reasonably reduced from the stipulated 25% (in the March 22, 1995 promissory note) and 10% (in the other three promissory notes) of the entire amount due, to a fixed amount ofP50,000.00.However, we equitably reduce the 3% per month or 36% per annum interest present in all four (4) promissory notes to 1% per month or 12% per annum interest.

The foregoing rates of interests and surcharges are in accord withMedel vs. Court of Appeals,[47]Garcia vs. Court of Appeals,[48]Bautista vs. Pilar Development Corporation,[49]and the recent case ofSpouses Solangon vs. Salazar.[50]This Court invalidated a stipulated 5.5% per month or 66% per annum interest on aP500,000.00 loan inMedel[51]and a 6% per month or 72% per annum interest on aP60,000.00 loan inSolangon[52]for being excessive, iniquitous, unconscionable and exorbitant.In both cases,we reduced the interest rate to 12% per annum.We held that while the Usury Law has been suspended by Central Bank Circular No. 905, s. 1982, effective on January 1, 1983, and parties to a loan agreement have been given wide latitude to agree on any interest rate, still stipulated interest rates are illegal if they are unconscionable. Nothing in the said circular grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.[53]On the other hand, inBautista vs. Pilar Development Corp.,[54]this Court upheld the validity of a 21% per annum interest on aP142,326.43 loan, and inGarcia vs. Court of Appeals,sustained the agreement of the parties to a 24% per annum interest on anP8,649,250.00 loan.It is on the basis of these cases that we reduce the 36% per annum interest to 12%.An interest of 12% per annum is deemed fair and reasonable. While it is true that this Court invalidated a much higher interest rate of 66% per annum inMedel[55]and 72% inSolangon[56]it has sustained the validity of a much lower interest rate of 21% inBautista[57]and 24% inGarcia.[58]We still find the 36% per annum interest rate in the case at bar to be substantially greater than those upheld by this Court in the two (2) aforecited cases.

The 1% surcharge on the principal loan for every month of default is valid.This surcharge or penalty stipulated in a loan agreement in case of default partakes of the nature of liquidated damages under Art. 2227 of the New Civil Code, and is separate and distinct from interest payment.[59]Also referred to as a penalty clause, it is expressly recognized by law.It is an accessory undertaking to assume greater liability on the part of an obligor in case of breach of an obligation.[60]The obligor would then be bound to pay the stipulated amount of indemnity without the necessity of proof on the existence and on the measure of damages caused by the breach.[61]Although the courts may not at liberty ignore the freedom of the parties to agree on such terms and conditions as they see fit that contravene neither law nor morals, good customs, public order or public policy, a stipulated penalty, nevertheless, may be equitably reduced if it is iniquitous or unconscionable.[62]In the instant case, the 10% surcharge per month stipulated in the promissory notes dated May 23, 1995 and December 1, 1995 was properly reduced by the appellate court.

In sum, petitioner shall pay private respondent the following:

1. Principal of loan under promissory note dated

March 22, 1995 ...P750,000.00

a.1% interest per month on principal from March 22, 1995 until fully paid, lessP270,000.00 paid by petitioner as interest from April 1995 to March 1996

b.1% surcharge per month on principal from May 1996 until fully paid


April 21, 1995 ..P100,000.00

a.1% interest per month on principal from April 21, 1995 until fully paid

b.1% surcharge per month on principal from September 1995 until fully paid


May 23, 1995 ....P100,000.00

a.1% interest per month on principal from May 23, 1995 until fully paid

b.1% surcharge per month on principal from December 1995 until fully paid


December 1, 1995...P100,000.00

a.1% interest per month on principal from December 1, 1995 until fully paid

b.1% surcharge per month on principal from April 1996 until fully paid

5. Attorneys fees...P50,000.00

Hence, since the mortgage is valid and the loan it secures remains unpaid, the foreclosure proceedings may now proceed.

IN VIEW WHEREOF, the appealed Decision of the Court of Appeals is AFFIRMED, subject to the MODIFICATION that the interest rate of 36% per annum is ordered reduced to 12 % per annum.

SO ORDERED.

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[G.R. No. 158382.January 27, 2004]

MANSUETO CUATON,petitioner, vs. REBECCA SALUD and COURT OF APPEALS (Special Fourteenth Division),respondents.

D E C I S I O N

YNARES-SANTIAGO,J.:

Before the Court is a petition for review oncertiorariassailing the August 31, 2001 Decision[1]of the Court of Appeals in CA-G.R. CV No. 54715 insofar as it affirmed the Judgment[2]of the Regional Trial Court of General Santos City, Branch 35, in SPL. Civil Case No. 359, imposing interest at the rate of 8% to 10% per month on the one-million-peso loan of petitioner.

On January 5, 1993, respondent Rebecca Salud, joined by her husband Rolando Salud, instituted a suit for foreclosure of real estate mortgage with damages against petitioner Mansueto Cuaton and his mother, Conchita Cuaton, with the Regional Trial Court of General Santos City, Branch 35, docketed as SPL. Civil Case No. 359.[3]The trial court rendered a decision declaring the mortgage constituted on October 31, 1991 as void, because it was executed by Mansueto Cuaton in favor of Rebecca Salud without expressly stating that he was merely acting as a representative of Conchita Cuaton, in whose name the mortgaged lot was titled.The court ordered petitioner to pay Rebecca Salud,inter alia, the loan secured by the mortgage in the amount of One Million Pesos plus a total P610,000.00 representing interests of 10% and 8% per month for the period February 1992 to August 1992, thus

Original loan ------------------------------------------------------P1,000,000.00

10% interest for the month of

February 1992

balance only ---------------------------------------------50,000.00


March 1992 ---------------------------------------------100,000.00


April 1992 ----------------------------------------------100,000.00


May 1992 -----------------------------------------------100,000.00


June 1992 -----------------------------------------------100,000.00


July 1992 ------------------------------------------------80,000.00


August 1992 --------------------------------------------80,000.00

---------------------

Total amount as of August 1992 ------------------P 1, 610,000.00[4]

The dispositive portion of the trial courts decision, reads:

WHEREFORE, premises considered, judgment is hereby rendered:

a)Declaring the mortgage executed by Mansueto Cuaton over the property owned by Conchita Cuaton, covered by TCT NO. T-34460, dated October 31, 1991, in favor of Rebecca Salud as unauthorized, void and unenforceable against defendant, Conchita Cuaton hence, the TRO issued against the foreclosure thereof is hereby made permanent.The annotation of the mortgage over said property is likewise cancelled;

b)Ordering defendant Mansueto Cuaton to pay plaintiff, Rebecca Salud, the sum of One Million Six Hundred Ten Thousand (P1,610,000.00) Pesos, with legal interest thereon, from January 5, 1993 until fully paid;

c)Ordering defendant, Mansueto Cuaton, to pay Attorneys fees of P25,000.00 in favor of the plaintiff, Rebecca Salud and to pay the cost of this suit.

Defendants counterclaims, being merely a result of the filing of plaintiffs complaint are hereby DISMISSED.

SO ORDERED.[5]

Both parties filed their respective notices of appeal.[6]

On August 31, 2001, the Court of Appeals rendered the assailed decision affirming the judgment of the trial court.Petitioner filed a motion for partial reconsideration of the trial courts decision with respect to the award of interest in the amount of P610,000.00, arguing that the same was iniquitous and exorbitant.[7]This was denied by the Court of Appeals on May 7, 2003.[8]

Hence, the instant petition on the sole issue of whether the 8% and 10% monthly interest rates imposed on the one-million-peso loan obligation of petitioner to respondent Rebecca Salud are valid.

We find merit in the petition.

InRuiz v. Court of Appeals,[9]we declared that the Usury Law was suspended by Central Bank Circular No. 905, s. 1982, effective on January 1, 1983, and that parties to a loan agreement have been given wide latitude to agree on any interest rate.However, nothing in the said Circular grants lenderscarte blancheauthority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets.The stipulated interest rates are illegal if they are unconscionable.

Thus, inMedel v. Court of Appeals,[10]andSpouses Solangon v. Salazar,[11]the Court annulled a stipulated 5.5% per month or 66% per annum interest on a P500,000.00 loan and a 6% per month or 72% per annum interest on a P60,000.00 loan, respectively, for being excessive, iniquitous, unconscionable and exorbitant.In both cases, the interest rates were reduced to 12% per annum.

In the present case, the 10% and 8% interest rates per month on the one-million-peso loan of petitioner are even higher than those previously invalidated by the Court in the above cases.Accordingly, the reduction of said rates to 12% per annum is fair and reasonable.

Stipulations authorizing iniquitous or unconscionable interests are contrary to morals (contra bonos mores), if not against the law.[12]Under Article 1409 of the Civil Code, these contracts are inexistent and void from the beginning.They cannot be ratified nor the right to set up their illegality as a defense be waived.[13]

Moreover, the contention regarding the excessive interest rates cannot be considered as an issue presented for the first time on appeal.The records show that petitioner raised the validity of the 10% monthly interest in his answer filed with the trial court.[14]To deprive him of his right to assail the imposition of excessive interests would be to sacrifice justice to technicality.Furthermore, an appellate court is clothed with ample authority to review rulings even if they are not assigned as errors.This is especially so if the court finds that their consideration is necessary in arriving at a just decision of the case before it.We have consistently held that an unassigned error closely related to an error properly assigned, or upon which a determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as an error.[15]Since respondents pointed out the matter of interest in their Appellants Brief[16]before the Court of Appeals, the fairness of the imposition thereof was opened to further evaluation.The Court therefore is empowered to review the same.

The case ofEastern Shipping Lines, Inc. v. Court of Appeals,[17]laid down the following guidelines on the imposition of interest, to wit:

1.When the obligation is breached, and it consists in the payment of a sum of money,i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default,i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 23 of the Civil Code.

x x xx x xx x x

3.When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

Applying the foregoing rules, the interest of 12% per annum imposed by the Court (in lieu of the invalidated 10% and 8% per month interest rates) on the one-million-peso loan should be computed from the date of the execution of the loan on October 31, 1991 until finality of this decision.After the judgment becomes final and executory until the obligation is satisfied, the amount due shall further earn interest at 12% per year.

WHEREFORE, in view of all the foregoing, the instant petition isGRANTED.The August 31, 2001 Decision of the Court of Appeals in CA-G.R. CV No. 54715, which affirmed the Decision of the Regional Trial Court of General Santos City, Branch 35, in SPL. Civil Case No. 359, isMODIFIED.The interest rates of 10% and 8% per month imposed by the trial court is reduced to 12% per annum, computed from the date of the execution of the loan on October 31, 1991 until finality of this decision.After the judgment becomes final and executory until the obligation is satisfied, the amount due shall further earn interest at 12% per year.

SO ORDERED.

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[G.R. No. 149004.April 14, 2004]

RESTITUTA M. IMPERIAL,petitioner,vs. ALEX A. JAUCIAN,respondent.

D E C I S I O N

PANGANIBAN,J.:

Iniquitous and unconscionable stipulations on interest rates, penalties and attorneys fees are contrary to morals.Consequently, courts are granted authority to reduce them equitably.If reasonably exercised, such authority shall not be disturbed by appellate courts.

The Case

Before us is a Petition for Review[1]under Rule 45 of the Rules of Court, assailing theJuly 19, 2000Decision[2]and theJune 14, 2001Resolution[3]of the Court of Appeals (CA) in CA-GR CV No. 43635.The decretal portion of the Decision is as follows:

WHEREFORE, premises considered, the appealed Decision of the Regional Trial Court, 5thJudicial Region, Branch 21,NagaCity, datedAugust 31, 1993, in Civil Case No. 89-1911 for Sum of Money, is herebyAFFIRMEDin toto.[4]

The assailed Resolution denied petitioners Motion for Reconsideration.

The dispositive portion of the August 31, 1993 Decision, promulgated by the Regional Trial Court (RTC) of Naga City (Branch 21) and affirmed by the CA, reads as follows:

Wherefore, Judgment is hereby rendered declaring Section I, Central Bank Circular No. 905, series of 1982 to be of no force and legal effect, it having been promulgated by the Monetary Board of the Central Bank of the Philippines with grave abuse of discretion amounting to excess of jurisdiction; declaring that the rate of interest, penalty, and charges for attorneys fees agreed upon between the parties are unconscionable, iniquitous, and in violation of Act No. 2655, otherwise known as the Usury Law, as amended; and ordering Defendant to pay Plaintiff the amount of FOUR HUNDRED SEVENTY-EIGHT THOUSAND, ONE HUNDRED NINETY-FOUR and 54/100 (P478,194.54) PESOS, Philippine currency, with regular and compensatory interests thereon at the rate of twenty-eight (28%) per centum per annum, computed from August 31, 1993 until full payment of the said amount, and in addition, an amount equivalent to ten (10%) per centum of the total amount due and payable, for attorneys fees, without pronouncement as to costs.[5]

The Facts

The CA summarized the facts of the case in this wise:

The present controversy arose from a case for collection of money, filed by Alex A. Jaucian against Restituta Imperial, onOctober 26, 1989.The complaint alleges,inter alia, that defendant obtained from plaintiff six (6) separate loans for which the former executed in favor of the latter six (6) separate promissory notes and issued several checks as guarantee for payment.When the said loans became overdue and unpaid, especially when the defendants checks were dishonored, plaintiff made repeated oral and written demands for payment.

Specifically, the six (6) separate loans obtained by defendant from plaintiff on various dates are as follows:

(a)November 13, 1987P50,000.00

(b)December 28, 198740,000.00

(c)January 6, 198830,000.00

(d)January 11, 198850,000.00

(e)January 12, 198850,000.00

(f)January 13, 1988100,000.00

TotalP320,000.00

The loans were covered by six (6) separate promissory notes executed by defendant.The face value of each promissory notes is bigger [than] the amount released to defendant because said face value already include[d] the interest from date of note to date of maturity.Said promissory notes, which indicate the interest of 16% per month, date of issue, due date, the corresponding guarantee checks issued by defendant, penalties and attorneys fees, are the following:

1.Exhibit D for loan ofP40,000.00 onDecember 28, 1987, with face value ofP65,000.00;

2.Exhibit E for loan ofP50,000.00 on January 11, 1988, with face value ofP82,000.00;

3.Exhibit F for loan ofP50,000.00 onJanuary 12, 1988, with face value ofP82,000.00;

4.Exhibit G for loan ofP100,000.00 onJanuary 13, 1988, with face value ofP164,000.00;

5.Exhibit H This particular promissory note covers the second renewal of the original loan ofP50,000.00 on November 13, 1987, which was renewed for the first time on March 16, 1988 after certain payments, and which was renewed finally for the second time on January 4, 1988 also after certain payments, with a face value ofP56,240.00;

6.Exhibit I This particular promissory note covers the second renewal of the original loan ofP30,000.00 on January 6, 1988, which was renewed for the first time on June 4, 1988 after certain payments, and which was finally renewed for the second time on August 6, 1988, also after certain payments, with [a] face value ofP12,760.00;

The particulars about the postdated checks, i.e., number, amount, date, etc., are indicated in each of the promissory notes.Thus, for Exhibit D, four (4) PB checks were issued; for Exhibit E four (4) checks; for Exhibit F four (4) checks; for Exhibit G four (4) checks; for Exhibit H one (1) check; for Exhibit I one (1) check;

The arrangement between plaintiff and defendant regarding these guarantee checks was that each time a check matures the defendant would exchange it with cash.

Although, admittedly, defendant made several payments, the same were not enough and she always defaulted whenever her loans mature[d].As ofAugust 16, 1991, the total unpaid amount, including accrued interest, penalties and attorneys fees, [was]P2,807,784.20.

On the other hand, defendant claims that she was extended loans by the plaintiff on several occasions, i.e., from November 13, 1987 to January 13, 1988, in the total sum ofP320,000.00 at the rate of sixteen percent (16%) per month.The notes mature[d] every four (4) months with unearned interest compounding every four (4) months if the loan [was] not fully paid.The loan releases [were] as follows:

(a)November 13, 1987P50,000.00

(b)December 28, 198740,000.00

(c)January 6, 198830,000.00

(d)January 11, 198850,000.00

(e)January 12, 198850,000.00

(f)January 13, 1988100,000.00

TotalP320,000.00

The loan onNovember 13, 1987andJanuary 6, 1988ha[d] been fully paid including the usurious interests of 16% per month, this is the reason why these were not included in the complaint.

Defendant alleges that all the above amounts were released respectively by checks drawn by the plaintiff, and the latter must produce these checks as these were returned to him being the drawer if only to serve the truth.The above amount are the real amount released to the defendant but the plaintiff by masterful machinations made it appear that the total amount released wasP462,600.00.Because in his computation he made it appear that the true amounts released was not the original amount, since it include[d] the unconscionable interest for four months.

Further, defendant claims that as ofJanuary 25, 1989, the total payments made by defendants [were] as follows:

a.Paid releases onNovember 13, 1987ofP50,000.00 andJanuary 6, 1988ofP30,000.00 these two items were not included in the complaint affirming the fact that these were paidP80,000.00

b.Exhibit 26 Receipt231,000.00

c.Exhibit 8-25 Receipt65,300.00

d.Exhibit 27 Receipt65,000.00

TotalP441,780.00

Less:320,000.00

Excess PaymentP121,780.00

Defendant contends that from all perspectives the above excess payment ofP121,780.00 is more than the interest that could be legally charged, and in fact as ofJanuary 25, 1989, the total releases have been fully paid.

On31 August 1993, the trial court rendered the assailed decision.[6]

Ruling of the Court of Appeals

On appeal, the CA held that without judicial inquiry, it was improper for the RTC to rule on the constitutionality of Section 1, Central Bank Circular No. 905, Series of 1982.Nonetheless, the appellate court affirmed the judgment of the trial court, holding that the latters clear and detailed computation of petitioners outstanding obligation to respondent was convincing and satisfactory.

Hence, this Petition.[7]

The Issues

Petitioner raises the following arguments for our consideration:

1.That the p

digested cases in credit transactions

Documents

spouses almeda

loan totaling

spouses ponciano almeda

philippine national

respondent bank

said agreement

central bank circular

conditions c