Macalinao v.

BPI
[GR No. 175490. September 17, 2009.]

Velasco, Jr., J.:

Facts: Petitioner Macalihao is a cardholder of BPI Mastercard. She made some

purchases with the carol ahol defaulted ih its baymeht. BPI then filed with the
MeTC of
Makati a complaint for a sum of money against her and her husband.

In its complaint, respondeht BPI prayed for the paymeht of the card purchases plus
3.25% finance charges and 6% 0f the amount due from Feb. 29, 2004, as well as an
amount equal to 25% of the total amOUflt due as attorney's fees, as well as costs.

The court ruled ih favor of BPI and ordered petitioner to pay the debt plus
ihterest
and behalty Charges of 2% per month. The RTC affirms in toto, including the reduced
rate.

Upon review by the CA, the appellate court held that the MeTC erred in modifying
the
amount of interest rate from 3% monthly to 0th 2% considering that petitioner
Macalihao freely availed herself of the credit card facility offered by respondent
BPI to
the general public.

Issue: WON the interest rate of 3% is UhCOhsciOhable and should be reduced.

Held: Yes. [Tjhe interest rate and penalty Charge of 3% per mOhth should be
equitably
reduced to 2% per month or 24% per annum. [ljt should be noted that this is hot the
first time that this Court has COhSidered the interest rate of 36% per annum as
excessive and unconscionable.

Since the stipulatiOh Oh the interest rate is void. it is as if there was no

express
contract thereon Hence, courts may reduce the interest rate as reason arid equity
demand.

Thus, under the Circumstances, the Court finds it equitable to reduce the interest
rate
begged by the CA at 1.5% monthly to 1% monthly and penalty Charge fixed by the CA
at 1.5% monthly to 1% monthly or a total of 2% per mOhth or 24% per annum in line
with the prevailing jurisprudence and in accordance with Art. 1229 of the Civil
Code.

Sgs. Solangon v. Salazar

[GR No. 125944. June 29, 2001.]

Sandoval—Gutierrez, J..'

Facts: Petitioners obtained from respondent three separate loans of P6000000,

P13651200 and P23000000 secured by real estate mortgage with an ihterest of 6%
per month or 72% per annum. For failure of petitioners to pay their third loah
obligation in the amOUht of P23000000 plus the stipulated ihterest, respondent
foreclosed the mortgage.

Hehce, petitioners filed a complaint for ahhulmeht of mortgage before the RegiOhal
Trial Court of Malolos, Bulacah. Petitioners alleged that the subsequent mortgages
were merely continuatioris of the first one, which is null and void because it
provided for unconscionable rate of interest.

The trial court dismissed the petition. The CA affirms, finding that the ihterest
of 72%
per ceht per annum or 6% per mOhth is hot unconscionable.

Issue: WON the CA ruled ih ruling that an interest rate of 72% per cent per annum
or
6% per month cm a loan obligation secured by a real estate mortgage is hot
unconscionable.

Held: Yes. While the Usury Law ceiling on interest rates was lifted by CB. Circular
No.
905, nothing in the said Circular grants lenders carte blanche authority to raise
interest rates to levels which will either enslave their borrowers or lead to a
hemorrhaging of their assets.

In Mede/ v. Court ofAbpeals, this court had the occasion to rule Oh this question —
whether or hot the stipulated rate of interest at 5.5% per month on a loan
amounting
to P50000000 is usurious.

Commonwealth Insurance Corp. v. CA and RCBC

[GR No. 130886. January 29, 2004.]

Austria—Martinez, J.:

Facts: In 1984, respondent RCBC granted loan lines to Jigs Manufacturing Corp. and
Elba Industries Inc. secured by surety bonds by petitioner CIC. Jigs and Elba
defaulted
in the payment of the loans, resulting in demands by RCBC to CIC. The latter made
several payments totaling P2 million, but a substantial balance remained unpaid. A
final demand for payment was ignored by CIC.

The trial court ruled in favor of RCBC. The latter, unsatisfied, filed a motion for
reconsideration asking that CIC be held liable for interests from the date of
demand at
12% per annum. The trial court denies.

The CA grants the petition for the interest, ruling that the Obligation to pay such
interest does not arise from the contract of suretyship but from law as a result of
delay or mora. Such an interest is not, therefore, covered by the limitation of
appellee’s liability expressed in the contract. The CA denied ClC’s MR.

Issue: WON petitioner should be held liable to pay legal interest over and above
its
principal obligation under the surety bonds issued by it.

Held: Yes. Jurisprudence is Clear on this matter. If a surety upon demand fails to
pay,
he can be held liable for interest, even if in thus paying, its liability becomes
more than
the principal obligation. The increased liability is not because of the contract
but
because of the default and the necessity of judicial collection.
Petitioner’s liability under the suretyship contract is different from its
liability
under the law. There is no question that as a surety, petitioner should not be made
to
pay more than its assumed obligation under the surety bonds.

However, it is clear from the above—Cited jurisprudence that petitioner’s liability

for
the payment of interest is not by reason of the suretyship agreement itself but
because Of the delay in the payment of its obligation under the said agreement.

Sun Life of Canada v. Tan Kit

[GR No. 183272. October 15, 2014.]
Del Castillo, J..'

Facts: Respondent Sandra Tan Kit is the widow and designated beneficiary of
Norberto Tan Kit in a life insurance policy. Respondent filed a Claim under the
policy
after Norberto died of disseminated gastric carcinoma.

Petitioner Sun Lite denied the Claim on account of Norberto’s failure to truthfully
disclose his smoking history under the insurance application. Believing that the
policy
is null and void, petitioner opined that its liability is limited to the REFUND of
the
premiums paid. Respondent refused to accept the Check to pay back the premiums.

Petitioner filed a complaint for rescission of insurance contract before the RTC in
Makati. The RTC rules against petitioner, ruling that petitioner had already
Cleared
Norberto of any misrepresentation. Petitioner’s MR was denied.

On appeal to the CA, the appellate court reversed the RTC, holding that Norberto is
guilty of concealment, misleading petitioner in forming its estimates of the risks
of the
insurance policy. The CA ordered petitioner to reimburse respondents the sum of the
premiums paid, with interest of 12% per annum from the time of death of the
insured.

Issue: WON petitioner is liable to pay interest on the premium to be refunded to

respondents.

Held: No. There are two kinds of interest — monetary and compensatory.

”Monetary interest refers to the compensation set by the parties for the use or
forbearance of money." No such interest shall be due unless it has been expressly
stipulated in writing.

”On the other hand, compensatory interest refers to the penalty or indemnity for
damages imposed by law or by the courts.” The interest mentioned in Articles 2209
and 2212 28 of the Civil Code applies to compensatory interest.

Clearly and contrary to resbonolents’ assertion, the interest imposed by the CA is

not
monetary interest because aside from the fact that there is no use or forbearance
of
money involved in this case, the subject interest was not one which was agreed upon
by the parties in writing.

This being the case and judging from the tenor of the CA, there can be no other
conclusion than that the interest imposed by the appellate court is in the nature
of
compensatory interest. As a form of damages, compensatory interest is due only if
the obliqor is proven to have failed to comply with his obligation.

Based on the foregoing, we find that petitioner broberly complied with its
obligation
under the law and contract. Hence, it should not be made liable to pay compensatory
interest.

Federal Builders Inc. v. Foundation Specialists Inc.

[GR No. 194507. September 8,2014]
Peralta, J..'

Facts: Petitioner FBI entered an agreement with FSI whereby the latter, as sub—
contractor, undertook the construction of the diaphragm wall, cabbing beam and
guide walls of the Trafalgar Plaza in Makati.

On January 1992, PSI filed a complaint for sum of money against FBI before the RTC
of Makati alleging that FBI refused to pay despite demand and despite its
completion
of 97% of the contracted works. FBI countered by Claiming FSI completed only 85%
of the works.

The RTC ruled in favor of FSI, ordering FBI to pay the surn of certain billings
blus12%
legal interest. The CA affirms, but deleted the sum of the cost of undelivered
cement
and reduced attorney’s fees — sustaining the 12% interest.

Issue: WON the imposed 12% legal interest on the disputed Claim is valid.

Held: No, since this this case does NOT involve a loan or forbearance of money. In
the
landmark case of Eastern Shipping Lines Inc. v. CA, We laid down the guidelines in
computing legal interest:

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. In the absence of stipulation, the
rate of interest shall be 12% per annum...

2. When an obligation, not constituting a loan or forbearance of money, is

breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum.

Forbearance of money, goods or credits, therefore, refers to arrangements other

than
loan agreements, where a person acquiesces to the temporary use of his money,
goods or credits bending the happening of certain events or fulfilment of certain
conditions.

Consequently, if those conditions are breached, said person is entitled not only to
the
return of the principal amount paid, but also to compensation for the use of his
money which would be the same rate of legal interest applicable to a loan since the
use or deprivation of funds therein is similar to a loan.

This case, however, does not involve an acquiescence to the temporary use ofa
party’s money but a performance of a particular service.

Thus, in the absence of any stipulation as to interest in the agreement between the
parties herein, the matter of interest award arising from the dispute in this case
would
actually fall under the second paragraph of the above—quoted guidelines in the
landmark case of Eastern Shipping Lines.