THIRD
DIVISION
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SPOUSES RODELIO and ALICIA POLTAN,
Petitioners, - versus
- BPI FAMILY SAVINGS BANK, INC. and JOHN
DOE, Respondents. |
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G.R. No. 164307 Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ,
CALLEJO, SR.,*
CHICO-NAZARIO, and NACHURA, JJ. Promulgated: |
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D E C I S I O N
CHICO-NAZARIO, J.:
In
a Complaint docketed as Civil Case No. 94-70655 for replevin
and damages filed with the Regional Trial Court (RTC) of Manila, Branch XVIII, by
respondent BPI Family Savings Bank, Inc. (BPI) against petitioners Rodelio and Alicia Poltan, BPI
alleged that on 11 November 1991, the petitioners obtained a loan evidenced by
a promissory note[1] from Mantrade Development Corporation (Mantrade)
secured by a chattel mortgage[2]
over a 1-unit Nissan Sentra Motor Vehicle, more
particularly described as follows:
ONE (1) N. SENTRA 1400 4-DOOR SED. IX
MODEL: 1991 with Aircon, Stereo & Magwheels
MOTOR NO.: GA14-440327B
SERIAL NO.: BCAB13-A37402
COLOR: PLATINUM GREEN
On
P286,540.06, including accrued interest, or to return to BPI the
possession of the motor vehicle for the purpose of foreclosure in accordance
with the undertaking stated in the chattel mortgage. Petitioners failed and refused to heed said demand. It is specifically provided in the promissory
note and chattel mortgage that failure to pay any installment when due shall
make the subsequent installments and the entire balance of the obligation due
and payable.[5] BPI, in its complaint, further prayed for the
award of attorney’s fees, liquidated damages and other expenses incurred in
connection with the petitioners’ failure to pay their balance on the loan.
In
their Answer to the Complaint,[6]
the petitioners did not deny that they purchased the vehicle from Mantrade on installment and the same loan was subsequently
assigned to BPI. They disclosed that BPI
required them to obtain a motor vehicle insurance policy from FGU Insurance
Corporation (FGU Insurance). They had
been religiously paying the monthly installments on the vehicle until it
figured in an accident where it became a total wreck. Under the terms of the insurance policy from
FGU Insurance, the vehicle had to be replaced or its value paid to them. Due to the failure and refusal of FGU Insurance
to replace the vehicle or pay its value, the petitioners stopped the payment of
the monthly installment.
On
the date agreed upon by the parties for the pre-trial of the case, the
petitioners failed to appear. Upon
motion of BPI, the petitioners were declared as in default and BPI was allowed
to present its evidence ex-parte.[7] The petitioners filed a Motion for
Reconsideration[8] which
the trial court granted in its Order, dated
In
a Decision[13] dated
WHEREFORE,
judgment is hereby rendered ordering the defendants to pay, jointly and
severally, the plaintiff the sum of P286,540.06 with penalty charges
thereon for late payment at the rate of 36% per annum from May 28, 1994, until
fully paid, and attorney’s fees in the sum of P10,000.00, plus the costs
of this suit.[14]
The
petitioners appealed to the Court of Appeals.
In a Decision[15]
dated
On
remand, the schedules of hearing of the case as set by the trial court were postponed
for several times. The hearing was
finally set on
WHEREFORE,
judgment is hereby rendered ordering the defendants to pay, jointly and
severally, the plaintiff the sum of P286,340.00 with penalty charges thereon
for late payment at the rate of 36% per annum from May 20, 1994, until fully
paid, and attorney’s fees in an amount equivalent to 25% of the sum due, plus
the costs of this suit.[16]
Aggrieved
by the Decision, petitioners again appealed to the Court of Appeals.[17] In a Decision, dated
Hence,
this Petition filed by the petitioners where they raise the following issues:
1. WHETHER OR NOT THE PETITIONERS HAD BEEN UNJUSTLY DEPRIVED BY THE TRIAL COURT A QUO AND THE COURT OF APPEALS OF THEIR CONSTITUTIONAL AND STATUTORY RIGHT TO PROCEDURAL AND SUBSTANTIVE DUE PROCESS OF LAW WHEN THE TRIAL COURT, MOVED BY AN UNFAIR ATTITUDE OF DISCRIMINATION AND UNFAIRNESS, SUDDENLY ALLOWED THE BPI TO PRESENT EVIDENCE EX PARTE ON JANUARY 11, 2000 – THUS, TOTALLY ELIMINATING THE OPPORTUNITY OF THE PETITIONERS POLTAN TO BE HEARD – SIMPLY BECAUSE THEIR FORMER LAWYER ATTY. DOMINGO S. CRUZ, WAS ABSENT DURING THAT PARTICULAR HEARING (JANUARY 10, 2000), DESPITE THE FACT THAT THE TRIAL COURT KNEW FROM THE RECORD THAT ATTY. CRUZ HAD BEEN PRESENT IN THE PAST MANY HEARINGS PRIOR TO JANUARY 10, 2000, WHILE THE COUNSEL FOR RESPONDENT HAD BEEN ABSENT IN FOR MANY HEARINGS PRIOR TO JANUARY 10, 2000;
2. WHETHER OR NOT PETITIONERS POLTAN HAD BEEN DEPRIVED OF THEIR CONSTITUTIONAL AND STATUTORY RIGHT TO PROCEDURAL AND SUBSTANTIVE DUE PROCESS OF LAW AS SHOWN BY THE BIASED PATTERN OF BEHAVIOR OF THE PRESIDING JUDGE OF THE TRIAL COURT SINCE 1995, IN THAT, THE PRESIDING JUDGE IN 1995, WITHOUT ANY VALID BASIS AS SHOWN BY THE (FIRST) 1997 DECISION OF THE COURT OF APPEALS (EXHIBIT “H”), ALLOWED A BASELESS MOTION FOR JUDGMENT ON THE PLEADINGS, THUS, DEPRIVING THE PETITIONERS POLTAN OF THEIR RIGHT TO PRESENT EVIDENCE, FOR THE FIRST TIME; AND IN THAT, THE PRESIDING JUDGE IN 2000, FOR THE SECOND TIME, PRESUMABLY IRKED BY THE 1997 APPELLATE REVERSAL, AGAIN DEPRIVED THE PETITIONERS POLTAN OF THEIR RIGHT TO DUE PROCESS OF LAW BY SUDDENLY ALLOWING THE RESPONDENT TO PRESENT EVIDENCE EX PARTE AND BY ISSUING THE QUESTIONED EX PARTE DECISION, WHICH THE COURT OF APPEALS LATER ERRONEOUSLY AFFIRMED IN ITS QUESTIONED DECISION DATED JUNE 30, 2004;
3. WHETHER OR NOT THE PETITIONERS POLTAN
HAD BEEN DEPRIVED OF THEIR CONSTITUTIONAL AND STATUTORY RIGHT TO PROCEDURAL AND
SUBSTANTIVE DUE PROCESS OF LAW, IN THAT THE UNEXPLAINED GROSS NEGLIGENCE OF
THEIR FORMER COUNSEL, ATTY. DOMINGO S. CRUZ, TO APPEAR DURING THE HEARING SET
ON JANUARY 10, 2000, DESPITE NOTICE, AND WITHOUT OFFERING AN EXPLANATION TO THE
TRIAL COURT OR FILING A MOTION FOR RECONSIDERATION OF THE ORDER, DATED JANUARY
10, 2000, HAD UNJUSTIFIABLY RESULTED IN A GRAVE MISCARRIAGE OF JUSTICE TO THE
EXTREME PREJUDICE OF THE PETITIONERS POLTAN, WHO ARE NOW EXPOSED TO THE GREAT
AND HIGHLY DETRIMENTAL RISK OF PAYING THE RESPONDENT BPI THE HUGE AMOUNT OF
ALMOST TWO MILLION PESOS (P2,000,000.00), IF WE CONSIDER THE TOTALITY
AND CURRENT STATUS OF THE JUDGMENT AWARD MADE IN FAVOR OF BPI, WITHOUT
AFFORDING THE PETITIONERS POLTAN A FAIR CHANCE AND OPPORTUNITY TO BE HEARD;
4. WHETHER OR NOT THE PETITIONERS POLTAN HAD BEEN DEPRIVED OF THEIR CONSTITUTIONAL AND STATUTORY RIGHT TO PROCEDURAL AND SUBSTANTIVE DUE PROCESS OF LAW WHEN THE TRIAL COURT, AS AFFIRMED BY THE COURT OF APPEALS, ALLOWED ON JANUARY 21, 2000 THE FORMER COUNSEL FOR THE RESPONDENT, I.E., THE LABAGUIS LOYOLA FELIPE ATIENZA SANCHEZ LAW OFFICES, WHICH HAD PREVIOUSLY WITHDRAWN AS COUNSEL FOR RESPONDENT, TO PRESENT EVIDENCE, EX PARTE, AND TO MOVE FOR THE REINSTATEMENT OF THE FIRST QUESTIONED DECISION OF TRIAL COURT (SEE ANNEX J TO J-4 OF THE PETITION) FOR AND IN BEHALF OF THE RESPONDENT BPI;
5. WHETHER OR NOT THE TRIAL COURT HAD THE LAWFUL JURISDICTION AND THE POWER TO HEAR AND DECIDE THE CASE EX PARTE ON THE BASIS OF THE EVIDENCE PRESENTED BY A LAW OFFICE WHICH HAD PREVIOUSLY WITHDRAWN ITS FORMAL APPEARANCE AND THUS HAD LOST ANY LEGAL ROLE, AUTHORITY, STANDING AND RIGHT TO PARTICIPATE IN THE PROCEEDINGS;
6. WHETHER OR NOT THE CONTRACTS PRESENTED IN EVIDENCE, EX PARTE, BY THE RESPONDENT WERE UNJUST AND UNACCEPTABLE CONTRACTS OF ADHESION WHOSE UNCONSCIONABLE TERMS AND CONDITIONS SHOULD BE REJECTED BY THIS HONORABLE COURT, IN THE INTEREST OF EQUITY AND JUSTICE, E.G., THE IMPOSITION OF 36% PENALTY CHARGE PER ANNUM AND 25% ATTORNEY’S FEES, ON THE BASIS ALONE OF A SUDDEN EX PARTE HEARING HELD ON JANUARY 11, 2000;
7. WHETHER OR NOT THE TERMS AND CONDITIONS OF THE COMPREHENSIVE CAR INSURANCE POLICY ISSUED BY FGU INSURANCE CORP., WHICH IS A SISTER COMPANY OF THE RESPONDENT CORPORATION, SHOULD BE DEEMED AS HAVING AUTOMATICALLY AND IPSO FACTO OPERATED IN FAVOR OF THE RESPONDENT BPI, AS THE ASSURED MORTGAGEE, AT THE TIME OF THE TOTAL-WRECK ACCIDENT INVOLVING THE CAR, ABOUT WHICH THE INSURER AND THE SAID ASSURED RESPONDENT BPI HAD BEEN DULY NOTIFIED; AND IF SO, WHETHER SUCH AUTOMATIC OPERATION SHOULD BE DEEMED AS HAVING RESULTED IN THE EXTINGUISHMENT OF THE OBLIGATION OF THE PETITIONERS TO THE RESPONDENT, AS THE ASSURED MORTGAGEE.[19]
The
appeal is not meritorious.
The
first three issues may be summed up into whether the allowance of the ex-parte presentation of evidence is
proper and whether the petitioners were denied due process.
On
the issue of validity of presentation of evidence ex-parte, be it noted that upon the remand of the case to the trial
court by the Court of Appeals, both BPI and the petitioners were duly notified
of the scheduled date of the hearing of the case by the trial court. At the hearing scheduled on
Admittedly,
there was a hearing conducted without the presence of the petitioners on
EXHIBIT A & B – Promissory Note and Chattel Mortgage
A-1 – Signature of the defendants;
A-3 – Acceleration clause to prove the obligation;
A-4 – Stipulation on Attorney’s fees;
C – Deed of Assignment;
D – Demand Letter;
E – Statement of Account to prove the obligation of the defendants as of the time of the filing of this suit.[30]
Relative to the fourth and fifth issues
raised by the petitioners on the matter of whether the counsel of BPI had
adequate authority to represent BPI at the time of the ex-parte presentation of evidence in view of the earlier withdrawal
of the said counsel, while it may be true that the counsel of BPI filed before
the trial court a notice of withdrawal of appearance on 27 December 1999,[31]
the same was not acted upon by the trial court. Instead, the withdrawal of
appearance of BPI’s counsel was “approved and noted
on
Anent
the sixth issue relating to the contract signed by the petitioners being in the
nature of a contract of adhesion, the
accepted rule is that a contract of adhesion is not per se inefficacious.
A contract of adhesion is defined as
one in which one of the parties imposes a ready-made form of contract, which
the other party may accept or reject, but which the latter cannot modify. One party prepares the stipulation in the
contract, while the other party merely affixes his signature or his “adhesion”
thereto, giving no room for negotiation and depriving the latter of the
opportunity to bargain on equal footing.[33]
Contracts of adhesion wherein one
party imposes a ready-made form of contract on the other are not entirely
prohibited. The one who adheres to the
contract is in reality free to reject it entirely; if he adheres, he gives his
consent.[34] A contract of adhesion is just as binding as
ordinary contracts. It is true that this
Court had, on occasion, struck down such contracts as being assailable when the
weaker party is left with no choice by the dominant bargaining party and is
thus completely deprived of the opportunity to bargain effectively. Nevertheless, contracts of adhesion are not
prohibited even as the courts remain careful in scrutinizing the factual
circumstances underlying each case to determine the respective claims of
contending parties on their efficacy.[35]
The petitioners failed to show that
they were under duress or forced to sign the loan documents. They were presumed to have signed the
assailed documents with full knowledge of their import.
As held in the case of Lee v. Court of Appeals,[36]
it is presumed that a person takes ordinary care of his concerns.[37] The natural presumption is that one does not
sign a document without first informing himself of its contents and
consequences. The petitioners obtained a
loan evidenced by a promissory note.
They admit that they obtained the loan and the due execution of the promissory
note. They also admit the due execution
of the chattel mortgage and the deed of assignment in favor of BPI.[38]
We also resolve the seventh issue
raised by petitioners in the negative. The
petitioners failed to show any provision in the insurance policy or mortgage
contract providing that the loss of the mortgaged vehicle extinguishes their
principal obligation to BPI. Similarly,
the petitioners’ contention that their obligation had been extinguished because
of the provision in the contract that the proceeds of the insurance policy is
for the benefit of the mortgagee is, likewise, unacceptable.
As very well expressed by the Court of
Appeals, while it is true that the proceeds from the insurance policy over the
mortgaged chattel is for the benefit of BPI,[39]
this will result in partial or full satisfaction of the obligation only if the
insurer pays the mortgagee, BPI, or if the insurance proceeds were paid to
BPI. In the case at bar, upon the loss
of the vehicle due to total wreck, the petitioners filed a claim under the
insurance policy, collected and received the proceeds thereof,[40]
but did not settle their obligation with BPI which remained outstanding despite
the loss of the vehicle.[41]
Upon the views we have laid, we find
that the obligation of the petitioners has been adequately proven, and that it
has not been extinguished.
We now hew to the issue of
the award of damages.
The
trial court, in conformity with the terms of the promissory note, awarded to
BPI the amount of P286,340.00 with penalty charges thereon for late
payment at the rate of 36% per annum from May 20, 1994, until fully paid, and
attorney’s fees in an amount equivalent to 25% of the amount due, plus the
costs of this suit.[42]
This award was affirmed by the Court of Appeals.
In certain cases, a stipulated penalty
may be reduced by the courts. This is sanctioned
by Article 1229 of the Civil Code, which states:
Art. 1229. 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.
Equity dictates that we review the
amounts of the award, considering the excessive interest rate and the too
onerous penalty and the resulting excessive attorney’s fees.[43]
We underscore the pronouncement of
this Court in the case of Ruiz v. Court
of Appeals[44]
regarding interest rates:
We affirm the ruling of the appellate court,
striking down as invalid the 10% compounded monthly interest, the 10% surcharge
per month stipulated in the promissory notes dated P50,000.00. However, we
equitably reduce the 3% per month or 36% per annum interest present in all four
(4) promissory notes to 1% per month or 12% per annum interest.
The foregoing rates of interests and
surcharges are in accord with Medel vs. Court of
Appeals [299 SCRA 481], Garcia vs.
Court of Appeals [167 SCRA 815], Bautista
vs. Pilar Development Corporation [312 SCRA 611],
and the recent case of Spouses Solangon vs. Salazar [G.R. No. 125944, P500,000.00 loan in Medel and a 6% per month or 72% per annum
interest on a P60,000.00 loan in Solangon for being
excessive, iniquitous, unconscionable and exorbitant. In both cases, we reduced the interest rate
to 12% per annum. We held that while the
Usury Law has been suspended by Central Bank Circular No. 905, s. 1982,
effective on P142,326.43 loan, and in Garcia vs. Court of Appeals, sustained the agreement of the parties
to a 24% per annum interest on an P8,649,250.00 loan. It is on the basis of these cases that we
reduce the 36% per annum interest to 12%.
An interest of 12% per annum is deemed fair and reasonable. While it is true that this Court invalidated
a much higher interest rate of 66% per annum in Medel and 72% in Solangon it has
sustained the validity of a much lower interest rate of 21% in Bautista and 24% in Garcia. We still find the
36% per annum interest rate in the case at bar to be substantially greater than
those upheld by this Court in the two (2) aforecited
cases.
The courts shall reduce equitably
liquidated damages,[45]
whether intended as an indemnity or a penalty, if they are iniquitous or
unconscionable.[46]
The question of whether a penalty is
reasonable or iniquitous is addressed to the sound discretion of the
courts. To be considered in fixing the
amount of penalty are factors such as – but not limited to – the type, extent
and purpose of the penalty; the nature of the obligation; the mode of the
breach and its consequences; the supervening realities; the standing and
relationship of the parties; and the like.[47]
Applying settled jurisprudence in this
case, we find that the interest stipulated upon by the parties in the
promissory note at the rate of 36% is iniquitous and unconscionable. Consequently, an interest of 12% per annum and
an attorney’s fees of P50,000.00 is deemed
reasonable.[48]
Wherefore, premises
considered, the Decision of the Court of Appeals dated 30 June 2004, affirming
the Decision of trial court, dated 14
June 1995, is Affirmed with the
modification that the interest rate be reduced to 12% per annum from 24 May
1994 until fully paid, and the award of attorney’s fees be reduced to P50,000.00. Costs against petitioners.
SO
ORDERED.
|
|
MINITA V. CHICO-NAZARIOAssociate Justice |
WE
CONCUR:
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson
Associate Justice
Associate Justice
ANTONIO EDUARDO B. NACHURA
Associate
Justice
ATTESTATION
I attest that the conclusions in the above
Decision were reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division.
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division
CERTIFICATION
Pursuant to Section 13, Article VIII
of the Constitution, and the Division Chairperson’s Attestation, it is hereby
certified that the conclusions in the above Decision were reached in
consultation before the case was assigned to the writer of the opinion of the
Court’s Division.
REYNATO S. PUNO
Chief Justice
* On leave.
[1] Records, p. 10.
[2]
[3]
[4]
[5]
[6]
[7]
[8]
[9] The
In the interest of substantial justice, and considering that the plaintiff had failed to present its evidence ex-parte on January 18, 1995, at 10:00 a.m., this Court’s order of January 16, 1995, declaring the defendants as in default due to their non-appearance on the scheduled pre-trial of this case, is hereby reconsidered and set aside.
Accordingly,
let the pre-trial of this case be set for
[10]
[11]
[12]
[13] Penned by Judge Perfecto A.S Laguio , Jr.
[14] Records, p. 166.
[15] Docketed as CA-G.R. CV No. 50980;
penned by then Associate Justice Salome A. Montoya with Associate Justices Eugenio S. Labitoria and
[16] Records, p. 275.
[17] Docketed as CA-G.R. CV No. 66950.
[18] Penned by
Associate Justice Rebecca De Guia-
[19] Rollo, pp. 255-257.
[20] Records, p. 266.
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29] Development Bank of the Philippines v. Court of Appeals, 362 Phil. 1, 13-14 (1999), cited in Dayrit v. Philippine Bank of Communications, 435 Phil. 120, 126 (2002).
[30] TSN,
[31] Records, p. 269.
[32]
[33] Philippine Commercial International Bank v.
Court of Appeals, 325 Phil. 588, 597 (1996).
[34] Ayala Corporation v. Ray Burton Development Corporation, 355 Phil. 475, 497 (1998).
[35] Pilipino
Telephone Corporation v. Tecson, G.R. No. 156966,
[36] 426 Phil. 290 (2002).
[37] Section 3(d), Rule 131, Rules of Court.
[38] Records, pp. 106-107.
[39] Rollo, p. 86.
[40] Records, p. 106;
[41] Rollo. p. 39.
[42] Records, p. 277.
[43] Permanent
Savings and Loan Bank v. Velarde, G.R. No.
140608,
[44] 449 Phil. 419, 433-435 (2003).
[45] Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof.
[46] Article 2227 of the Civil Code of
the
Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.
[47] Pryce
Corporation v. Philippine Amusement and Gaming Corporation, G.R. No.
157480, 6 May 2005, 458 SCRA 164, 182.
[48] Ruiz v. Court of Appeals, supra note 44 at 433.