Republic of the Philippines

METROPOLITAN TRIAL COURT

National Capital Judicial Region
Branch 74, Taguig City
Hall of Justice Building, DPWH Compound
Gen. Santos Ave., Lower Bicutan, Taguig City
metc2tgg074@judiciary.gov.ph
(0955) 073 6294, (0907) 804 6362

ROBINSON BANK Civil Case No. 22-2635

CORPORATION, SCC
Plaintiff,
For: Sum of Money
- versus -
DANIEL R. GALONO, Promulgated:
Defendant. ___________________
x ------------------------------------------------------------------------------ x

DECISION
The small claims action filed in this case is for money owed
under a contract of loan. In the Statement of Claim/s,1 Plaintiff claims
the Defendant owes him the principal amount of Ninety Two
Thousand Nine Hundred Ninety-Six Pesos and 96/100 (̈́₱92,996.96)
representing the amount owed for his Robinson’s Credit Card No.
5230912020233505, with interest at the rate of 3.5% per month.

On August 3, 2022, Plaintiff appeared through its authorized

representative, Elias Y. Tabernero, during the hearing.2

Attempts for alternative dispute resolution failed. The court

thus proceeded with the hearing of the case which was likewise termi-
nated on August 3, 2022.

In establishing the small claim, Plaintiff presented the following

documentary evidence:

1. Affidavit;3
2. Credit Card Application Form;4
3. Identification Card;5
4. Collection Effort;6

1
Records, pp. 1-9.
2
Records, p. 52.
3
Records, pp. 10-11.
4
Records, p. 12.
5
Records, p. 13.
6
Records, p. 14.
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DECISION
Civil Case No. 21-2635 SCC

5. Robinson’s Bank Statement of Account;7

6. Demand Letter;8
7. Affidavit of Service;9
8. Robinson’s Bank Secretary’s Certificate;10
9. Special Power of Attorney;11
10. Certificate of Incorporation;12
11. Certificate of Filing of the Articles and Plan of Merger;13

With the same having been submitted for judgment, this Court
finds the claim of the Plaintiff partly meritorious.

WHEREFORE, the small claim is PARTIALLY GRANTED.

A perusal of the records reveals that that Defendant defaulted in

the payment of his credit card beginning August 17, 2021 as shown in
the Plaintiff’s Collection Effort below:

7
Records, pp. 15-20.
8
Records, p. 21.
9
Records, p. 22.
10
Records, pp.23-24.
11
Records, p. 25.
12
Records, p. 26.
13
Records, p. 27.
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DECISION
Civil Case No. 21-2635 SCC

In the present case, the loan of Defendant is composed of the

following amounts:

Principal ₱92,996.96
Interest (3.5% per ₱3,254.89
month)

The Supreme Court held in Nacar v. Gallery Frames14 that legal

interest is six percent (6%) per annum, as follows:

Thus, from the foregoing, in the absence of an express

stipulation as to the rate of interest that would govern the parties,
the rate of legal interest for loans or forbearance of any money,
goods or credits and the rate allowed in judgments shall no longer
be twelve percent (12%) per annum — as reflected in the case of
Eastern Shipping Lines and Subsection X305.1 of the Manual of
Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1
of the Manual of Regulations for Non-Bank Financial Institutions,
before its amendment by BSP-MB Circular No. 799 — but will now
be six percent (6%) per annum effective July 1, 2013. It should be
noted, nonetheless, that the new rate could only be applied
prospectively and not retroactively. Consequently, the twelve
percent (12%) per annum legal interest shall apply only until June
30, 2013. Come July 1, 2013 the new rate of six percent (6%) per
annum shall be the prevailing rate of interest when applicable.

The Supreme Court also held in Nacar v. Gallery Frames that

when the obligation consisting of a loan or forbearance of money is
breached, the interest due shall be that which was stipulated in
writing.15 However, in Spouses Tan v. Dumlao,16 the Supreme Court
modified its ruling and held that the imposition of an iniquitous and
unconscionable interest rate will render the same void in which case,
courts may reduce the interest rate as reason and equity demand.
Thus, it held that:
Likewise, we also affirm the CA’s disposition with respect to
the rate of interest to be applied on petitioners’ obligation. Contrary
to the ruling of the RTC which held that the parties are still bound
by the void stipulated interest rates until May 29, 1997, the CA held
that when the interest stipulated by the parties is declared to be ex-
cessive, iniquitous or unconscionable, it is deemed as if it was never
agreed upon and the legal rate of interest is applied instead. The CA
held that the stipulated interest rates cannot be given effect at any
time even if voluntarily assumed by petitioners. Indeed, the imposi-
tion of iniquitous and unconscionable interest rate renders the
same void. Since the stipulation on the interest rate is void, it is as if
there was no express contract thereon, in which case, courts may re-
duce the interest rate as reason and equity demand.

14
G.R. No. 189871, August 13, 2013, 716 PHIL 267-283.
15
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 716 PHIL 267-283.
16
G.R. No. 204042 (Notice), March 6, 2019.
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DECISION
Civil Case No. 21-2635 SCC

In view, however, of Our ruling in Nacar v. Gallery

Frames, We modify the rate of legal interest imposed. In Nacar, We
discussed the modification on the rules in the computation of legal
interest as a result of the Bangko Sentral ng Pilipinas Monetary
Board's Resolution No. 796 dated May 16, 2013. We explained:

xxx

To recapitulate and for future guidance, the guide-

lines laid down in the case of Eastern Shipping Lines are
accordingly modified to embody BSP-MB Circular No. 799,
as follows:

I. When an obligation, regardless of its

source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held li-
able for damages. The provisions under Title XVIII on
“Damages” of the Civil Code govern in determining the
measure of recoverable damages.

II. With regard particularly to an award of in-

terest in the concept of actual and compensatory damages,
the rate of interest, as well as the accrual thereof, is im-
posed, as follows:

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 in-
terest due should be that which may have been stip-
ulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is ju-
dicially demanded. In the absence of stipulation,
the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extra-
judicial demand under and subject to the provisions
of Article 1169 of the Civil Code.

2. When an obligation, not constituting

a loan or forbearance of money, is breached, an in-
terest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be ad-
judged on unliquidated claims or damages, except
when or until the demand can be established with
reasonable certainty. Accordingly, where the de-
mand is established with reasonable certainty, the
interest shall begin to run from the time the claim is
made judicially or extrajudicially (Art. 1169, Civil
Code), but when such certainty cannot be so rea-
sonably established at the time the demand is
made, the interest shall begin to run only from the
date the judgment of the court is made (at which
time the quantification of damages may be deemed
to have been reasonably ascertained). The actual
base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
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DECISION
Civil Case No. 21-2635 SCC

3. When the judgment of the court

awarding a sum of money becomes final and execu-
tory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be
6% per annum from such finality until its satisfac-
tion, this interim period being deemed to be by
then an equivalent to a forbearance of credit.17

Applying the foregoing pronouncements of the Supreme Court

to the present case, the interest of Four Thousand Two Pesos and
49/100 (₱4,002.49) per month plus other penalty and surcharges
imposed under the Credit Card Terms and Conditions is excessive,
iniquitous, and unconscionable. Notwithstanding the void stipulation,
Plaintiff shall still be entitled to interest as the same has been
expressly agreed upon.18 However, legal interest shall instead be
applied on the loan.

The relevant amounts are thus:

Principal ₱92,996.96
Plus: Interest (6% per annum)
₱1,008.95
( 03.08.2017 to 09.12.2022)
Less: Amounts paid ---
Unpaid amount ₱93,882.91

Considering Defendant received a loan from Plaintiff, he is

bound to pay the latter the amount loaned.19

Accordingly, Defendant is ordered to pay Plaintiff the following

amounts:

1. The unpaid amount of Ninety-Three Thousand Eight

Hundred Eighty-Two and 91/10 (₱93,882.91);

2. Interest of six percent (6%) per annum from the filing of

the Statement of Claim/s on December 9, 2021 until the finality of
this Decision or the amount of Four Thousand Three Hundred
Ninety-Eight and 35/100 (₱4,398.35); and

3. The total monetary award from paragraphs (1) and (2)

above (i.e., ₱98,281.26) shall further earn six percent (6%) per annum
from finality of this Decision until fully paid.

17
Spouses Tan v. Dumlao, G.R. No. 204042 (Notice), March 6, 2019.
18
See Art. 1956, Civil Code.
19
See Art. 1953, Civil Code.
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DECISION
Civil Case No. 21-2635 SCC

SO ORDERED.

GIA ANGELI R. GERALDEZ-ABARQUEZ

Presiding Judge

Copy Furnish:

Robinson’s Banking Corporation rep. by Elias Tabernero (Plaintiff) 17th Floor Galleria
Corporate Center EDSA cor. Ortigas Ave. Quezon City 1605
Daniel Galono (Defendant) 5 MH Del Pillar Street Zone 6, Signal Village, Taguig City

GGA/mllt