09 Macalinao v. BPI

Civil Law Review II
G.R. No. 175490

Date: 09/17/2009
09 Macalinao v. BPI
Petitioner: Ileana Dr. Macalinao
Respondents: Bank of the Philippine Islands (BPI)
Ponente: Velasco, Jr., J.
Facts:
Petitioner Ileana Macalinao was an approved cardholder of BPI Mastercard, one of the credit card facilities of respondent BPI. She made some
purchases through the use of the said credit card and defaulted in paying for said purchases. She subsequently received a letter dated from respondent
BPI, demanding payment of the amount of PhP 141,518.34. Under the Terms and Conditions Governing the Issuance and Use of the BPI Credit and
BPI Mastercard, the charges or balance thereof remaining unpaid after the payment due date indicated on the monthly Statement of Accounts shall bear
interest at the rate of 3% per month and an additional penalty fee equivalent to another 3% per month.
For failure of petitioner Macalinao to settle her obligations, respondent BPI filed with the MeTC of Makati City a complaint for a sum of money against her
and her husband, Danilo SJ. Macalinao. (BPI vs. Spouses Ileana Dr. Macalinao and Danilo SJ. Macalinao). In said complaint, respondent BPI prayed for
the payment of the PhP 154,608.78 plus 3.25% finance charges and late payment charges equivalent to 6% of the amount due and an amount
equivalent to 25% of the total amount due as attorney’s fees, and of the cost of suit. After the summons and a copy of the complaint were served upon
petitioner Macalinao and her husband, they failed to file their Answer. Thus, respondent BPI moved that judgment be rendered in accordance with
Section 6 of the Rule on Summary Procedure. This was granted. In its Decision, the MeTC ruled in favor of BPI and ordered petitioner Macalinao and
her husband to pay the amount of PhP 141,518.34 plus interest and penalty charges of 2% per month,
Petitioner Macalinao and her husband appealed to the RTC of Makati City which affirmed the decision of the MeTC. Then they filed a petition for review
with the CA. The CA affirmed with modification the Decision of the RTC. The modification was with respect to the total amount due and interest rate
(3%). In its assailed decision, the CA held that the amount of PhP 141,518.34 (the amount sought to be satisfied in the demand letter of respondent BPI)
is clearly not the result of the re-computation at the reduced interest rate as previous higher interest rates were already incorporated in the said amount.
Thus, the said amount should not be made as basis in computing the total obligation of petitioner Macalinao. Further, the CA also emphasized that
respondent BPI should not compound the interest in the instant case absent a stipulation to that effect. The CA also held, however, that the MeTC erred
in modifying the amount of interest rate from 3% monthly to only 2% considering that petitioner Macalinao freely availed herself of the credit card facility
offered by respondent BPI to the general public. It explained that contracts of adhesion are not invalid per se and are not entirely prohibited.
Issues/Held:
 Should the interest rate be reduced from 9.25% to 2% since the stipulated rate of interest was unconscionable and iniquitious? Yes
Rationale:
 The Interest Rate and Penalty Charge of 3% Per Month or 36% Per Annum Should Be Reduced to 2% Per Month or 24% Per Annum
In its Complaint, respondent BPI originally imposed the interest and penalty charges at the rate of 9.25% per month or 111% per annum. This
was declared as unconscionable by the lower courts for being clearly excessive, and was thus reduced to 2% per month or 24% per annum.
On appeal, the CA modified the rate of interest and penalty charge and increased them to 3% per month or 36% per annum based on the
Terms and Conditions Governing the Issuance and Use of the BPI Credit Card, which governs the transaction between petitioner Macalinao
and respondent BPI. BPI asserts that said interest rate and penalty charge are reasonable as the same are based on the Terms and
Conditions Governing the Issuance and Use of the BPI Credit Card.
 We find for petitioner. The interest rate and penalty charge of 3% per month should be equitably reduced to 2% per month or 24% per annum.
 Indeed, in the Terms and Conditions Governing the Issuance and Use of the BPI Credit Card, there was a stipulation on the 3% interest rate.
Nevertheless, it should be noted that this is not the first time that this Court has considered the interest rate of 36% per annum as excessive
and unconscionable. We held in Chua vs. Timan: “The stipulated interest rates of 7% and 5% per month imposed on respondents’ loans must
be equitably reduced to 1% per month or 12% per annum. We need not unsettle the principle we had affirmed in a plethora of cases that
stipulated interest rates of 3% per month and higher are excessive, iniquitous, unconscionable and exorbitant. Such stipulations are void for
being contrary to morals, if not against the law.” Since the stipulation on the interest rate is void, it is as if there was no express contract
thereon. Hence, courts may reduce the interest rate as reason and equity demand.
 The same is true with respect to the penalty charge. Notably, under the Terms and Conditions Governing the Issuance and Use of the BPI
Credit Card, it was also stated therein that respondent BPI shall impose an additional penalty charge of 3% per month. Pertinently, Article
1229 of the Civil Code states: “The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly
complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.”
 In the instant case, the records would reveal that petitioner Macalinao made partial payments to respondent BPI, as indicated in her Billing
Statements. Further, the stipulated penalty charge of 3% per month or 36% per annum, in addition to regular interests, is indeed iniquitous
and unconscionable.
 Thus, under the circumstances, the Court finds it equitable to reduce the interest rate pegged 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 month or 24% per annum in line with the prevailing
jurisprudence and in accordance with Art. 1229 of the Civil Code.
 Accordingly, petitioner Macalinao is ordered to pay respondent BPI the following:
(1) The amount of one hundred twelve thousand three hundred nine pesos and fifty-two centavos (PhP 112,309.52) plus interest and penalty
charges of 2% per month from January 5, 2004 until fully paid;
(2) PhP 10,000 as and by way of attorney’s fees; and
(3) Cost of suit.
Naydia Carla A. Yoro (4-A)

February 2, 2012

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Civil Law Review II

G.R. No. 175490

Naydia Carla A. Yoro (4-A)

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