RCBC vs CA

289 SCRA 292

FACTS
GOYU was granted credit facilities and
accommodations by the RCBC initially in the
amount of P 30 million. Upon GOYUs application,
the credit was increased to P50 Million, then P90
Million, then P117 Million. As security, GOYU
executed 2 REM and 2 CM in favor of RCBC, which
were registered with the RD. Under the 4
contracts, GOYU committed itself to insure the
mortgaged properties with an insurance company
approved by RCBC, and subsequently endorse
and deliver the insurance policies to RCBC. GOYU
then obtained 10 policies from MICO. GOYUs
buildings were gutted by fire and it claimed
indemnity from MICO but the latter denied the
claim on the ground that the insurance policies
were either attached pursuant to writs of
attachments/garnishments issued by various
courts or that the proceeds were also claimed by
other creditors of GOYU. GOYU, alleging better
rights to the proceeds, filed for specific
performance and damges before the RTC of
Manila Br 3. The trial court ruled in favor of GOYU
for the fire loss claims but ordered it to pay RCBC
its loan obligations. On appeal to the CA, it
affirmed the ruling with regard to the liabilities of
MICO and RCBC. The trial court and appellate
courts both held that, since the endorsements do
not bear the signature of any officer of GOYU,
they concluded that the endorsements are
defective. The CA then ordered GOYU to pay its
obligation to RCBC without any interest,
surcharges and penalties.
ISSUE: Whether or not the ruling of the appellate
court is correct.
HELD
The Court held in the negative. The essence or
rationale for the payment of interest or cost of
money is separate and distinct from that of
surcharges and penalties. The charging of
interest for loans forms a very essential and
fundamental element of the banking business.
FIRST FIL-SIN LENDING CORPORATION,
petitioner, vs. GLORIA D. PADILLO,
respondent.
G.R. No. 160533 January 12, 2005

As between two parties to a written agreement,

the party who gave rise to the mistake or error in
the provisions of the same is estopped from
asserting a contrary intention to that contained
therein.
FACTS:
Respondent Gloria D. Padillo obtained a
P500,000.00 loan from petitioner First Fil-Sin
Lending Corp. Respondent obtained another
P500,000.00 loan from petitioner. In both
instances, respondent executed a promissory
note and disclosure statement.
For the first loan, respondent made 13 monthly
interest payments of P22,500.00 each before she
settled the P500,000.00 outstanding principal
obligation. As regards the second loan,
respondent made 11 monthly interest payments
of P25,000.00 each before paying the principal
loan of P500,000.00. In sum, respondent paid a
total of P792,500.00 for the first loan and
P775,000.00 for the second loan.
Respondent Padillo then filed an action for sum of
money against herein petitioner before the RTC
alleging that she only agreed to pay interest at
the rates of 4.5% and 5% per annum,
respectively, for the two loans, and not 4.5% and
5% per month. Respondent sought to recover the
amounts she allegedly paid in excess of her
actual obligations.
The RTC dismissed respondents complaint and
ordered her to pay petitioner P311,125.00 with
legal interest. On appeal, the CA reversed and set
aside the decision of the RTC and ruled that,
based on the disclosure statements executed by
respondent, the interest rates should be imposed
on a monthly basis but only for the 3-month term
of the loan. Thereafter, the legal interest rate will
apply. Hence, the instant petition.
Petitioner maintains that the interest rates are to
be imposed on a monthly and not on a per annum
basis and the monthly interest shall be imposed
until the outstanding obligations have been fully
paid. On the other hand, respondent avers that
the interest on the loans is per annum as
expressly stated in the promissory notes and
disclosure statements. The provision as to annual
interest rate is clear and requires no room for
interpretation. Respondent asserts that any
ambiguity in the promissory notes and disclosure

statements should not favor petitioner since the

loan documents were prepared by the latter.
ISSUE: Whether the interest on the loans is per
annum, and not monthly, as expressly stated in
the promissory notes and disclosure statements
YES.
RULING: We agree with respondent. Perusal of
the promissory notes and the disclosure
statements pertinent to the loan obligations of
respondent clearly and unambiguously provide
for interest rates of 4.5% per annum and 5% per
annum, respectively. Nowhere was it stated that
the interest rates shall be applied on a monthly
basis.
Thus, when the terms of the agreement are clear
and explicit that they do not justify an attempt to
read into it any alleged intention of the parties,
the terms are to be understood literally just as
they appear on the face of the contract. It is only
in instances when the language of a contract is
ambiguous or obscure that courts ought to apply
certain established rules of construction in order
to ascertain the supposed intent of the parties.
However, these rules will not be used to make a
new contract for the parties or to rewrite the old
one, even if the contract is inequitable or harsh.
They are applied by the court merely to resolve
doubts and ambiguities within the framework of
the agreement.
The lower court and the CA mistook the Loan
Transactions Summary for the Disclosure
Statement. The former was prepared exclusively
by petitioner and merely summarizes the
payments made by respondent and the income
earned by petitioner. There was no mention of
any interest rates and having been prepared
exclusively by petitioner, the same is self serving.
On the contrary, the Disclosure Statements were
signed by both parties and categorically stated
that interest rates were to be imposed annually,
not monthly.
As such, since the terms and conditions
contained in the promissory notes and disclosure
statements are clear and unambiguous, the same
must be given full force and effect. The expressed
intention of the parties as laid down on the loan
documents controls.
Notably, petitioner even admitted that it was
solely responsible for the preparation of the loan

documents, and that it failed to correct the pro

forma note p.a. to per month. Since the mistake
is exclusively attributed to petitioner, the same
should be charged against it. This unilateral
mistake cannot be taken against respondent who
merely affixed her signature on the pro forma
loan agreements. As between two parties to a
written agreement, the party who gave rise to the
mistake or error in the provisions of the same is
estopped from asserting a contrary intention to
that contained therein. The checks issued by
respondent do not clearly and convincingly prove
that the real intent of the parties is to apply the
interest rates on a monthly basis. Absent any
proof of vice of consent, the promissory notes
and disclosure statements remain the best
evidence to ascertain the real intent of the
parties.
The same promissory note provides that x x x
any and all remaining amount due on the
principal upon maturity hereof shall earn interest
at the rate of _____ from date of maturity until
fully paid. The CA thus properly imposed the legal
interest of 12% per annum from the time the
loans matured until the same has been fully paid
on February 2, 1999. As decreed in Eastern
Shipping Lines, Inc. v. Court of Appeals, in the
absence of stipulation, the rate of interest shall
be 12% per annum to be computed from default.
DISPOSITIVE: WHEREFORE, in view of the
foregoing, the October 16, 2003 decision of the
Court of Appeals in CA-G.R. CV No. 75183 is
AFFIRMED with the MODIFICATION that the
interest rates on the July 22, 1997 and September
7, 1997 loan obligations of respondent Gloria D.
Padillo from petitioner First Fil-Sin Lending
Corporation be imposed and computed on a per
annum basis, and upon their respective
maturities, the interest rate of 12% per annum
shall be imposed until full payment. In addition,
the penalty at the rate of 12% per annum shall be
imposed on the outstanding obligations from date
of default until full payment. SO ORDERED
Integrated Realty Corp vs PNB
GR No. 60705, 28 June 1989
174 SCRA 295
FACTS: Raul Santos made a time deposit with
OBM in the amount of P500H and he was issued a
certificate of time deposits. On another date,
Santos again made a time deposit with OBM in
the amount of P200H, he was again issued a CTD.

IRC, thru its president Raul Santos, applied for a

loan and/or credit line (P700H) with PNB. To
secure such, Santos executed a Deed of
Assignment of the 2 time deposits. After due
dates of the time deposit certificates, OBM did
not pay PNB. PNB then demanded payment from
IRC and Santos, but they replied that the loan was
deemed paid with the irrevocable assignment of
the time deposit certificates.
PB then filed with RTC to collect from IRC and
Santos with interest. The trial court ruled in favor
of PNB ordering IRC and Santos to pay PNB the
total amount of P700H plus interest of 9% PA, 2%
additional interest and 1& PA penalty interest. On
appeal, the CA ordered OBM to pay IRC and
Santos whatever amts they will to PNB with
interest.
IRC and Santos now claim that OBM should
reimburse them for whatever amts they may be
adjudged to pay PNB by way of compensation for
damages incurred.
ISSUE: Whether or not the claim of IRC and
Santos will prosper.
HELD: When respondent Santos invested his
money in time deposits with OBM, they entered
into a contract of simple loan or mutuum, not a
contract of deposit. Thus, when PNB demanded
from OBM payment of the amounts due on the
two time deposits which matured on January 11,
1968 and February 6, 1968, respectively, there
was as yet no obstacle to the faithful compliance
by OBM of its liabilities thereunder. Consequently,
for having incurred in delay in the performance of
its obligation, OBM should be held liable for
damages.
While it is true that under Article 1956 of the Civil
Code no interest shall be due unless it has been
expressly stipulated in writing, this applies only to
interest for the use of money. It does not
comprehend interest paid as damages.
OBM contends that it had agreed to pay interest
only up to the dates of maturity of the certificates
of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had
expired, unless the contracts are renewed. This is
true with respect to the stipulated interest, but
the obligations consisting as they did in the
payment of money, under Article 1108 of the Civil
Code he has the right to recover damages

resulting from the default of OBM and the

measure of such damages is interest at the legal
rate of six percent (6%) per annum on the
amounts due and unpaid at the expiration of the
periods respectively provided in the contracts. In
fine, OBM is being required to pay such interest,
not as interest income stipulated in the
certificates of time deposit, but as damages for
failure and delay in the payment of its obligations
which thereby compelled IRC and Santos to resort
to the courts.

Bataan Seedling vs Republic, GR No.

141009, 2 July 2002, 383 SCRA 590
FACTS
Petitioner entered into a contract with
respondent, represented by the DENR for the
reforestation of a forest land within a period of 3
years. Petitioner undertook to report to DENR any
event or condition which delays or may delay the
project. With the contract was the release of
mobilization fund but the fund was to be returned
upon completion or deducted from periodic
release of mhoneys to petitioner. Believing that
petitioners failed to comply with their obligations,
respondent sent a notice of cancellation.
Petitioners failed to respond to the notice, thus,
respondent filed a complaint for damages against
petitioners. The RTC held that respondent had
sufficient grounds to cancel the contract but saw
no reason why the mobilization fund and the cash
advances should be refunded or that petitioners
are liable for liquidated damages. Both parties
appealed to the CA, which affirmed the trial court
and that the balnce of the fund should be
returned with 12% interest.
ISSUE: Whether the order to refund the balance
of the fund with 12% interest pa is proper.
HELD
No. Interest at the rate of 12% pa is
impossible if there is no stipulation in the
contract. Herein subject contract does not contain
any stipulation as to interest. However, the
amount due to respondent does not represent a
loan or forbearance of money. The word
forbearance is defined, within, the context of
usury law, as a contractual obligation of lender or
creditor to refrain, during given period of time,

from requiring borrower or debtor to repay loan or

debt then due and payable. In the absence of
stipulation, the legal interest is 6% pa on the
amount finally adjudged by the Court.
Catungal vs Hao, GR No. 134972, 22 March
2001, 355 SCRA 29
FACTS
The original owner Aniana Galang, leased
a 3-storey building in Paraaque to BPI in 1972.
During the lease period, BPI subleased the ground
floor to Doris Hao. In 1984, Galang and Hao
executed a lease contract on the 2nd and 3rd floors
of the building. 2 years later, spouses Catungal
bought the property from Galang. Upon
expiration of the lease agreements, Catungal
demanded Hao to vacate the building. The
demand was unheeded so petitioners filed for
ejectment before the MeTC, which ordered Hao to
vacate the premises and pay P20,000 until she
finally vacates. Petitioners moved for clarificatory
or amended judgment on the ground that lthough
MeTC ordered defendant to vacate, it only
awarded rent or compensation for the use of said
property for the ground floor and not for the
entire subject property. the MeTC amended the
judgment but petitioners moved for
reconsideration praing that respondent be
ordered to pay P20,000 pm for the use and
occupancy of the ground floor and P10,000 pm
for the 2nd and 3rd floors. The case was referred to
RTC which affirmed the decision. On appeal to the
CA, the latter reduced the P20,000 to P8,000 and
the P10,000 each to P5,000 each.
ISSUE: Whether or not the RTC decision should
be reinstated
HELD: Yes, the plaintiff in an ejectment case is
entitled to damages caused by his loss of the use
and possession of the premises.

Banco Filipino vs CA
GR No. 129227, 30 May 2000
FACTS: Elsa and Calvin Arcilla secured, on 3
occassions, loan from petitioner as evidenced by
promissory note. REM was also executed. Under
said deeds, Banco Filipino may increase rate of
interest on said loans, within the limits allowed by
law. at that time, under Usury Law, the maximum
rate of interest for loans secured by REM was
12% pa. later, the Central bank issued Circular
No. 494 provinding for the maximum interest of
19%pa. meanwhile, Skyli Builders, thru President
Calvin Arcilla secured loans from BPI with FGU
Insurance as surety. Banco Filipino issued an
account statement with 17% pa as interest. The
Arcillas filed for annulment of the loan contracts
because the rate of interests charged were
usurious.
ISSUE: Whether or not respondents are entitled
to refund of the alleged interest overpayments.
HELD: Yes. Private respondents aver that they
are entitled to the refund inasmuch as the
escalation clause incorporated in the loan
contracts do not have a corresponding deescalation clause and is therefore, illegal.
In Banco Filipino Savings & Mortgage Bank vs
Navarro, the Court ruled that Central Bank
Circular 494, although it has the force and effect
of law, is not a law and is not the law
contemplated by the parties which authorizes the
petitioner to unilaterally raise the interest rate of
loan. The reliance on the circular was without any
legal basis.