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    Facts:: Contention of Sps. Pascual

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    Eunice Estera
    The case involves a loan agreement between Spouses Pascual and Rodrigo Ramos where the Pascuals borrowed 150,000 pesos and used their property as collateral. The agreement stipulated an interest rate of 7% per month. The Pascuals defaulted on payments and failed to exercise their right to repurchase the property within the allotted time. The trial court initially found the transaction was a loan and that the Pascuals had overpaid but later modified its decision. The Court of Appeals affirmed the trial court's rulings. The Supreme Court held that parties are bound by the terms of agreements they voluntarily enter into and found no evidence the 7% interest rate was illegal, unconscion

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    Facts:: Contention of Sps. Pascual

    Uploaded by

    Eunice Estera
    88 views2 pages
    The case involves a loan agreement between Spouses Pascual and Rodrigo Ramos where the Pascuals borrowed 150,000 pesos and used their property as collateral. The agreement stipulated an interest rate of 7% per month. The Pascuals defaulted on payments and failed to exercise their right to repurchase the property within the allotted time. The trial court initially found the transaction was a loan and that the Pascuals had overpaid but later modified its decision. The Court of Appeals affirmed the trial court's rulings. The Supreme Court held that parties are bound by the terms of agreements they voluntarily enter into and found no evidence the 7% interest rate was illegal, unconscion

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    1.-Pascual-v.-Ramos

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    The case involves a loan agreement between Spouses Pascual and Rodrigo Ramos where the Pascuals borrowed 150,000 pesos and used their property as collateral. The agreement stipulated an interest rate of 7% per month. The Pascuals defaulted on payments and failed to exercise their right to repurchase the property within the allotted time. The trial court initially found the transaction was a loan and that the Pascuals had overpaid but later modified its decision. The Court of Appeals affirmed the trial court's rulings. The Supreme Court held that parties are bound by the terms of agreements they voluntarily enter into and found no evidence the 7% interest rate was illegal, unconscion

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    88 views2 pages

    Facts:: Contention of Sps. Pascual

    Uploaded by

    Eunice Estera
    The case involves a loan agreement between Spouses Pascual and Rodrigo Ramos where the Pascuals borrowed 150,000 pesos and used their property as collateral. The agreement stipulated an interest rate of 7% per month. The Pascuals defaulted on payments and failed to exercise their right to repurchase the property within the allotted time. The trial court initially found the transaction was a loan and that the Pascuals had overpaid but later modified its decision. The Court of Appeals affirmed the trial court's rulings. The Supreme Court held that parties are bound by the terms of agreements they voluntarily enter into and found no evidence the 7% interest rate was illegal, unconscion

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    © All Rights Reserved
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    of 2

    [G.R. No. 144712.

      July 4, 2002]
    SPOUSES SILVESTRE and CELIA PASCUAL, petitioners, vs. RODRIGO V.
    RAMOS, respondent.

    FACTS:

    This case is a petition for consolidation of title or ownership filed on 5 July 1993 with the trial court by herein
    respondent  Rodrigo V. Ramos against herein petitioners, Spouses Silvestre and Celia Pascual.  On June 3, 1987, Sps.
    Pascual entered into a loan agreement with Ramos in the amount of Php 150,000.00 with interest of 7% per month. As
    collateral the spouses Pascual executed a Deed of Absoute Sale with Right of Repurchase within one year covering the
    Spouses’ property in Bo. Taliptip, Bambang, Bulacan, Bulacan. The Spouses defaulted in payment and failed to exercise
    the right of repurchase within one. Hence the present case.

    The trial court found that the transaction between the parties was actually a loan in the amount of  P150,000, the
    payment of which was secured by a mortgage of the property covered by TCT No. 305626.  It also found that the
    PASCUALs had made payments in the total sum of P344,000, and that with interest at 7% per annum, the PASCUALs
    had overpaid the loan by P141,500.

    On MR by Ramos – the trial court issued on 5 June 1995 an Order modifying its decision by deleting the award
    of P141,500 to the PASCUALs as overpayment of the loan and interest and ordering them to pay RAMOS P511,000
    representing the principal loan plus interest.  It noted that during trial, the PASCUALs never disputed the stipulated
    interest rate.  However, the court declared that the 7% per month interest is too burdensome and onerous.  Invoking the
    protective mantle of Article 24 of the Civil Code, which mandates the courts to be vigilant for the protection of a party at a
    disadvantage due to his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the
    trial court unilaterally reduced the interest rate from 7% per month to 5% per month.   Thus, the interest due from 3 June
    1987 to 3 April 1995 was P705,000.  Deducting therefrom the payments made by the PASCUALs in the amount
    of P344,000, the net interest due was P361,000.  Adding thereto the loan principal of P150,000, the total amount due from
    the PASCUALs was P511,000.

    The Court of Appeals affirmed in toto  the trial court’s Orders.

    Contention of Sps. Pascual


    · the interest of either 5% or 7% a month is exorbitant, unconscionable, unreasonable, usurious and inequitable.
    · Invoking this Court’s ruling in Medel v. Court of Appeals,[12] they argue that the 5% per month interest is excessive,
    iniquitous, unconscionable and exorbitant.  Moreover, respondent should not be allowed to collect interest of more
    than 1% per month because he tried to hide the real transaction between the parties by imposing upon them to sign a
    Deed of  Absolute Sale with Right  to Repurchase.

    Contention of Ramos
    there was nothing illegal on the rate of interest agreed upon by the parties, since the ceilings on interest rates prescribed
    under the Usury Law had expressly been removed, and hence parties are left freely at their discretion to agree on any
    rate of interest.  Moreover, there was no scheme to hide a usurious transaction.  

    ISSUE: Whether or not the 7% interest agreed upon by the parties in the contract of loan is illegal for being excessive,
    unconscionable and exorbitant

    HELD:
    No. The Court held, “It is a basic principle in civil law that parties are bound by the stipulations in the contracts
    voluntarily entered into by them.  Parties are free to stipulate terms and conditions which they deem convenient provided
    they are not contrary to law, morals, good customs, public order, or public policy. [15]

    The interest rate of 7% per month was voluntarily agreed upon by RAMOS and the PASCUALs.  There is nothing
    from the records and, in fact, there is no allegation showing that petitioners were victims of fraud when they entered into
    the agreement with RAMOS.  Neither is there a showing that in their contractual relations with RAMOS, the PASCUALs
    were at a disadvantage on account of their moral dependence, ignorance, mental weakness, tender age or other
    handicap, which would entitle them to the vigilant protection of the courts as mandated by Article 24 of the Civil
    Code.  Apropos in our ruling in Vales vs. Villa:

    With the suspension of the Usury Law and the removal of interest ceiling, the parties are free to stipulate the interest
    to be imposed on loans. Absent any evidence of fraud, undue influence, or any vice of consent exercised by RAMOS on
    the PASCUALs, the interest agreed upon is binding upon them.  This Court is not in a position to impose upon parties
    contractual stipulations different from what they have agreed upon.  As declared in the decision of Cuizon v. Court of
    Appeals.

    It is not the province of the court to alter a contract by construction or to make a new contract for the parties; its duty
    is confined to the interpretation of the one which they have made for themselves without regard to its wisdom or folly as
    the court cannot supply material stipulations or read into the contract words which it does not contain. Thus, we cannot
    supplant the interest rate, which was reduced to 5% per month without opposition on the part of RAMOS.
    WHEREFORE, in view of all the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals in
    CA-G.R. CV No. 52848 is AFFIRMED in toto.

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