427 Phil.

42
THIRD DIVISION
[ G.R. No. 138677, February 12, 2002 ]
TOLOMEO LIGUTAN AND LEONIDAS DE LA LLANA, PETITIONERS, VS. HON. COURT OF APPEALS
& SECURITY BANK & TRUST COMPANY, RESPONDENTS.

Facts:

Petitioners obtained a loan from respondent bank. Petitioners executed a promissory note binding
themselves, jointly and severally, to pay the sum borrowed with an interest of 15.189% per annum upon
maturity and to pay a penalty of 5% every month on the outstanding principal and interest in case of
default. Thereafter, despite several demands from the bank, petitioners failed to settle the debt. Since
petitioners defaulted on their obligation, the bank filed a complaint for recovery of the due amount.
Petitioners contend that the interest and the penalty imposed by respondent bank on its loan obligation are
manifestly exorbitant, iniquitous, and unconscionable.

Issue:

Whether or not the interest and penalty are exorbitant, iniquitous, and unconscionable.

Decision:

A penalty clause, expressly recognized by law, is an accessory undertaking to assume greater

liability on the part of an obligor in case of breach of an obligation. It functions to strengthen the coercive
force of the obligation and to provide, in effect, for what could be the liquidated damages resulting from
such a breach. Given the circumstances, not to mention the repeated acts of breach by petitioners of their
contractual obligation, the Court sees no cogent ground to modify the ruling of the appellate court.
Anent the stipulated interest of 15.189% per annum, on its face, does not appear as being that
excessive. The interest prescribed in loan financing arrangements is a fundamental part of the banking
business and the core of a bank's existence.
557 Phil. 326
THIRD DIVISION
[ G.R. No. 159912, August 17, 2007 ]
UNITED COCONUT PLANTERS BANK, PETITIONER, VS. SPOUSES SAMUEL AND ODETTE
BELUSO, RESPONDENTS.

Facts:

UCPB granted spouses Beluso a Promissory Notes Line under a Credit Agreement whereby the
latter could avail from the former credit. Spouses Beluso constituted, other than their promissory notes, a
real estate mortgage over parcels of land as additional security for the obligation.
Thereafter, spouses Beluso, however, failed to make any payment. Thus, UCPB foreclosed the
properties mortgaged by the spouses Beluso to secure the credit line. Spouses Beluso filed a Petition for
Annulment, Accounting, and Damages and judgment was rendered declaring the interest rate used by
UCPB void as the interest rates and the bases therefor were determined solely by petitioner UCPB.

Issue:

Whether or not the provision on interest rate is void.

Decision:

The provision stating that the interest shall be at the "rate indicative of DBD retail rate or as
determined by the Branch Head" is indeed dependent solely on the will of petitioner UCPB. As UCPB is
given this choice, the rate should be categorically determinable in both choices. If either of these two
choices presents an opportunity for UCPB to fix the rate at will, the bank can easily choose such an option,
thus making the entire interest rate provision violative of the principle of mutuality of contracts.
G.R. No. 187678
FIRST DIVISION
[ G.R. No. 187678, April 10, 2013 ]
SPOUSES IGNACIO F. JUICO AND ALICE P. JUICO, PETITIONERS, VS. CHINA BANKING
CORPORATION, RESPONDENT.

Facts:

Spouses Juico obtained a loan from respondent bank secured by a real estate mortgage. When
petitioners failed to pay the monthly amortizations due, respondent demanded the full payment of the
outstanding balance with accrued monthly interests. The mortgaged property was sold at public auction. As
its demand was unheeded, respondent filed a collection suit. Petitioners insist that the interest rates were
unilaterally imposed by the bank and thus violate the mutuality of contracts. They argue that the escalation
clause in the promissory notes does not give respondent the unbridled authority to increase the interest
rate unilaterally.

Issue:

Whether or not the interest rates imposed are valid.

Decision:

The escalation clause is void because it grants respondent the power to impose an increased rate
of interest without a written notice to petitioners and their written consent. An appropriate form must also be
signed by the petitioners to indicate their conformity to the new rates. Compliance with these requisites is
essential to preserve the mutuality of contracts. For indeed, one-sided impositions do not have the force of
law between the parties, because such impositions are not based on the parties’ essential equality,
Modifications in the rate of interest for loans pursuant to an escalation clause must be the result of
an agreement between the parties. Unless such important change in the contract terms is mutually agreed
upon, it has no binding effect. In the absence of consent on the part of the petitioners to the modifications in
the interest rates, the adjusted rates cannot bind them.
585 Phil. 555
THIRD DIVISION
[ G.R. No. 173654-765, August 28, 2008 ]
PEOPLE OF THE PHILIPPINES, PETITIONERS, VS. TERESITA PUIG AND ROMEO PORRAS,
RESPONDENT.

Facts:

112 cases of Qualified Theft were filed against respondents who were the Cashier and Bookkeeper
of private complainant Rural Bank of Pototan, Inc. After perusing the Informations in these cases, the trial
court did not find the existence of probable cause since the element of “taking without the consent of the
owners” was missing on the ground that it is the depositors-clients, and not the Bank, which filed the
complaint in these cases, who are the owners of the money allegedly taken by respondents and, hence,
are the real parties-in-interest.

Issue:

Whether or not the Bank is a real party-in-interest on the money deposits.

Decision:

In a long line of cases involving Qualified Theft, this Court has firmly established the nature of
possession by the Bank of the money deposits therein, and the duties being performed by its employees
who have custody of the money or have come into possession of it. The Court has consistently considered
the allegations in the Information that such employees acted with grave abuse of confidence, to the
damage and prejudice of the Bank, without particularly referring to it as owner of the money deposits, as
sufficient to make out a case of Qualified Theft.
The Bank acquires ownership of the money deposited by its clients; and the employees of the
Bank, who are entrusted with the possession of money of the Bank due to the confidence reposed in them,
occupy positions of confidence. The Informations, therefore, sufficiently allege all the essential elements
constituting the crime of Qualified Theft.
596 Phil. 760
THIRD DIVISION
[ G.R. No. 173227, January 19, 2009 ]
SEBASTIAN SIGA-AN, PETITIONER, VS. ALICIA VILLANUEVA, RESPONDENT.

Facts:

Respondent was a businesswoman engaged in supplying office materials and equipment to the
Philippine Navy Office while petitioner was a military officer and comptroller of the same. Respondent
claimed that petitioner approached her and offered to loan her the amount of P540,000.00. Since she
needed capital for her business transactions, she accepted petitioner’s proposal. The loan agreement was
not reduced in writing and there was no stipulation as to the payment of interest for the loan.

Issue:

Whether or not interest was due to petitioner in the absence in the absence of express stipulation.

Decision:

It appears that petitioner and respondent did not agree on the payment of interest for the loan.
Neither was there convincing proof of written agreement between the two regarding the payment of
interest. Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no
interest shall be due unless it has been expressly stipulated in writing. Payment of monetary interest is
allowed only if there was an express stipulation for the payment of interest and the agreement for the
payment of interest was reduced in writing. The concurrence of the two conditions is required for the
payment of monetary interest. No interest was due on the loan because there was no written agreement as
regards payment of interest.
549 Phil. 49
THIRD DIVISION
[ G.R. NO. 155223, April 03, 2007 ]
BOBIE ROSE V. FRIAS, REPRESENTED BY HER ATTORNEY-IN- FACT, MARIE F. FUJITA,
PETITIONER, VS. FLORA SAN DIEGO-SISON, RESPONDENT.

Facts:

Petitioner and respondent entered into a memorandum of agreement over a house and lot and
have agreed that in consideration of P3,000,000.00. They agreed that petitioner may still offer the property
to other persons who may be interested to buy the same but in case there is no other buyer within the first
six months from the execution of the contract no interest shall be charged by respondent on the P3 million.
However, in the event that on the sixth month respondent would decide not to purchase the property,
petitioner has a period of another six months within which to pay the sum of P3 million to earn compounded
bank interest for the last six months only.
Responded declined to purchase the property. Petitioner subsequently failed to pay respondent.
Respondent filed a complaint for sum of money. The trial court rendered judgment in favor of the
respondent. Petitioner contends that the interest awarded which should run until fully paid is contrary to the
agreement that petitioner has to pay the loan with compounded bank interest for the last six months only if
respondent would decide not to purchase the property.

Issue:

Whether or not interest runs until fully paid.

Decision:

The Memorandum of Agreement executed between the petitioner and respondent on is the law
between the parties. Certainly, there is nothing in their agreement that suggests that interest will be
charged for six months only even if it takes defendant-appellant an eternity to pay the loan.
The agreement that the amount given shall bear compounded bank interest for the last six months
only, i.e., referring to the second six-month period, does not mean that interest will no longer be charged
after the second six-month period since such stipulation was made on the logical and reasonable
expectation that such amount would be paid within the date stipulated. Considering that petitioner failed to
pay the amount given which under the Memorandum of Agreement shall be considered as a loan, the
monetary interest for the last six months continued to accrue until actual payment of the loaned amount.
The payment of regular interest constitutes the price or cost of the use of money and thus, until the
principal sum due is returned to the creditor, regular interest continues to accrue since the debtor continues
to use such principal amount. It has been held that for a debtor to continue in possession of the principal of
the loan and to continue to use the same after maturity of the loan without payment of the monetary
interest, would constitute unjust enrichment on the part of the debtor at the expense of the creditor.
G.R. No. 189871
EN BANC
[ G.R. No. 189871, August 13, 2013 ]
DARIO NACAR, PETITIONER, VS. GALLERY FRAMES AND/OR FELIPE BORDEY, JR.,
RESPONDENTS.

Facts:

Petitioner filed a complaint for constructive dismissal against respondents. The Labor Arbiter found
that petitoner was dismissed from employment without a valid or just cause and rendered a decision in his
favor. Thus, petitioner was awarded backwages and separation pay in lieu of reinstatement.
For failure of the respondent to comply the execution order after it became final and executory,
petitioner filed a motion for re-computation. Petitioner posits that he is also entitled to the payment of
interest from the finality of the decision until full payment by the respondents.

Issue:

Is petitioner entitled to the payment of legal interest?

Decision:

When the judgment of the court awarding a sum of money becomes final and executory, the rate of
legal interest 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. However, the BSP–Monetary Board issued
Circular No. 799, Series of 2013, effective July 1, 2013, revised the rate of interest in the absence of an
express contract of interest for the loan or forbearance of any money, goods or credits and the rate allowed
in judgments to 6% per annum. To its effect, respondents are ordered to pay petitioner interest of 12% per
annum to the total monetary awards, computed from May 27, 2002 to June 30, 2013, and 6% per annum
from July 1, 2013 until their full satisfaction.
G.R. No. 175139
FIRST DIVISION
[ G.R. No. 175139, April 18, 2012 ]
HERMOJINA ESTORES, PETITIONER, VS. SPOUSES ARTURO AND LAURA SUPANGAN,
RESPONDENTS.

Facts:

Petitioner and respondent spouses entered into a Conditional Deed of Sale whereby petitioner
offered to sell, and respondent spouses offered to buy, a parcel of land. After almost seven years from the
time of the execution of the contract and notwithstanding payment of P3.5 million on the part of respondent
spouses, petitioner still failed to comply with her obligation as expressly provided in the contract. Hence,
respondent spouses demanded the return of the amount. When petitioner failed to return the amount
despite demand, respondent spouses filed a complaint for sum of money. Petitioner argued that since the
Conditional Deed of Sale provided only for the return of the down payment in case of breach, they cannot
be held liable to pay legal interest as well.

Issue:

Whether or not interest may be imposed even in the absence of stipulation in the contract.

Decision:

It is proper to impose interest notwithstanding the absence of stipulation in the contract. Article
2210 of the Civil Code expressly provides that interest may, in the discretion of the court, be allowed upon
damages awarded for breach of contract. In this case, there is no question that petitioner is legally
obligated to return the P3.5 million because of her failure to fulfill the obligation under the Conditional Deed
of Sale, despite demand. Petitioner enjoyed the use of the money from the time it was given to her until
now. Thus, she is already in default of her obligation from the date of demand.
465 Phil. 999
FIRST DIVISION
[ G.R. No. 158382, January 27, 2004 ]
MANSUETO CUATON, PETITIONER, VS. REBECCA SALUD AND COURT OF APPEALS (SPECIAL
FOURTEENTH DIVISION), RESPONDENTS.

Facts:

Respondent, joined by her husband, instituted a suit for foreclosure of real estate mortgage with
damages against petitioner and his mother. The trial court rendered a decision declaring the mortgage as
void, because it was executed by petitioner in favor of respondent without expressly stating that he was
merely acting as a representative of his mother, in whose name the mortgaged lot was titled. The court
ordered petitioner to pay respondent the loan secured by the mortgage plus interests of 10% and 8% per
month. Petitioner argued that the award of interest was iniquitous and exorbitant.

Issue:

Whether or not the 8% and 10% monthly interest rates imposed on the loan obligation are valid.

Decision:

Parties to a loan agreement have been given wide latitude to agree on any interest rate. However,
nothing in the Central Bank Circular No. 905, Series of 1982, 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.
The stipulated interest rates are illegal if they are unconscionable.
Applying the rules laid down in the case of Eastern Shipping Lines, Inc. v. Court of Appeals, when
the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest,
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.