SAMPLE CASE DIGEST

GOBONSENG v. UNIBANCARD CORPORATION

[G.R. No. 160026, 10 December 2007]

FACTS:

Edmerito and Eduardo Gobonseng (petitioners) were credit card holder issued by
Unibancard Corporation (respondent). The pertinent contract reads, in part:

“All charges made through the use of [the] card shall be

paid by the UNICARD holder and/or co-obligor within twenty
(20) days from the date of the said statement of account without
the necessity of demand. These charges or balance thereof
remaining unpaid after this 20-day period shall bear interest at
the rate of 3% per month and a penalty equivalent to 5% of
the amount due for every month or a fraction of a month’s
delay.”

When they failed to pay their credit card debt, despite the demand letters
repeatedly sent, Unibancard filed a collection suit against them.

The Regional Trial Court (RTC) ruled in favor of Unibancard. Gobonseng were
ordered to pay, among others, the principal amount of obligation, plus interest of 3% per
month and penalties of 5% per month.

Petitioners went up to the Court of Appeals. They challenged the interest rate
and penalty charges. They argued that the interest should be fixed at the rate of 12%
per annum.

The court of appeals found that the penalty of 5% per month on top of 3%
monthly interest is considerably high. Thus, it reduced the penalty rate down to 1% per
month.

ISSUE:

Whether or not the Court of Appeals was correct in applying the 3% interest on
the principal amount, as well as the penalty due thereon.
RULING:

The Court of Appeals was correct in applying the 3% interest on the principal
amount owed by petitioners to respondent Unicard, as well as the penalty due thereon.,
for the following reasons:

One, Article 1226 of the Civil Code provides that in obligations with a penal
clause, the penalty shall substitute the indemnity for damages and the payment of
interests in case of noncompliance, if there is no stipulation to the contrary.

In other words, where the contract stipulates the rate of interest and the
amount of penalty to be paid in case of failure to pay the obligation within a given
period, both the penalty and the interest can be collected by the creditor.

Contrary to petitioners’ assertion, it is only when the parties to a contract have

failed to fix the rate of interest or when such amount is unwarranted that the Court will
apply the 12% interest per annum on a loan or forbearance of money.

In Medel v. Court of Appeals, the 12% interest rate per annum was applied
because this Court considered the stipulated rate of interest at 5.5% per month
excessive and iniquitous.

/rsr