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SALVADOR CHUA and
VIOLETA CHUA, Petitioners, |
G.R. No. 170452
Present: |
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- versus - |
QUISUMBING, J.,
Chairperson, CARPIO MORALES, VELASCO,
JR., and BRION, JJ. |
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RODRIGO Respondents. |
Promulgated: August 13, 2008 |
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QUISUMBING, J.:
Before us is a
petition for review on certiorari assailing the Decision[1]
and Resolution[2]
dated
The pertinent facts are as
follows:
In February and March 1999,
petitioners P100,000;
b) P200,000; c) P150,000; d) P107,000; e) P200,000;
and f) P107,000. These loans were
evidenced by promissory notes with interest of 7% per month, which was later
reduced to 5% per month. Rodrigo and Ma.
P150,000 loan which was secured by a postdated check issued by
Respondents paid the loans
initially at 7% interest rate per month until September 1999 and then at 5%
interest rate per month from October to December 1999. Sometime in March 2000, respondents offered
to pay the principal amount of the loans through a Philippine National Bank
manager’s check worth P764,000, but petitioners refused to accept the
same insisting that the principal amount of the loans totalled P864,000.
On P864,000
with the Clerk of Court of the RTC of Quezon City. Later, they filed a case for consignation and
damages. Petitioners moved to dismiss
the case, but the RTC denied the motion, as well as the subsequent motion for
reconsideration.
By virtue of an order of Partial Judgment[4]
dated P864,000 to petitioners.
Trial on the validity of the stipulated interests on the
subject loans, as well as on the issue of damages, then proceeded.
On
On appeal, the Court of Appeals affirmed the trial court’s
decision. The Court of Appeals declared
illegal the stipulated interest rates of 7% and 5% per month for being
excessive, iniquitous, unconscionable and exorbitant. Accordingly, the Court of Appeals reduced the
stipulated interest rates of 7% and 5% per month (equivalent to 84% and 60% per
annum, respectively) to a fair and reasonable rate of 1% per month or 12% per
annum. The Court of Appeals also ordered
petitioners to refund to respondents all interest payments in excess of 12% per
annum. Petitioners sought
reconsideration, but it was denied.
Hence, this petition raising the lone issue of:
WHETHER
OR NOT THE HONORABLE COURT OF APPEALS COMMITTED A REVERSIBLE ERROR – OR ACTED
NOT IN ACCORD WITH THE LAW AND JURISPRUDENCE – WHEN IT AFFIRMED THE JUDGMENT OF
THE REGIONAL TRIAL COURT ORDERING THE RETURN OF THE EXCESS INTEREST TO
RESPONDENTS.[5]
Essentially, the
main issue is: (1) Did the Court of
Appeals err in ruling that the original stipulated interest rates of 7% and 5%,
equivalent to 84% and 60% per annum, are
unconscionable, and in ordering petitioners to refund to respondents all
payments of interest in excess of 12% per annum?
Petitioners aver that the stipulated interest of 5% monthly
and higher cannot be considered unconscionable because these rates are not
usurious by virtue of Central Bank (C.B.) Circular No. 905-82[6]
which had expressly removed the interest ceilings prescribed by the Usury
Law. Petitioners add that respondents
were in pari delicto since they agreed on the stipulated interest rates
of 7% and 5% per month. They further
aver they honestly believed that the interest rates they imposed on
respondents’ loans were not usurious.
Respondents, invoking Medel
v. Court of Appeals,[7]
counter that the stipulated interest rates of 7% and 5% per month are
iniquitous, unconscionable and exorbitant, thus, they are entitled to the
return of the excessive interest paid. They
also contend that petitioners cannot raise the defense of in pari delicto for
the first time on appeal. They further
contend that the defense of good faith is a factual issue which cannot be
raised by petitioners in a petition for review under Rule 45 of the Rules of
Civil Procedure.
The petition is patently devoid of merit.
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.[8] We need not unsettle the principle we had
affirmed in a plethora of cases that stipulated interest rates of 3%[9]
per month and higher[10]
are excessive, iniquitous, unconscionable and exorbitant. Such stipulations are void for being contrary
to morals, if not against the law.[11] While C.B. Circular No. 905-82, which took
effect on January 1, 1983, effectively removed the ceiling on interest rates
for both secured and unsecured loans, regardless of maturity,[12]
nothing in the said circular could possibly be read as granting carte
blanche authority to lenders to raise interest rates to levels which would
either enslave their borrowers or lead to a hemorrhaging of their assets.[13]
Petitioners cannot also
raise the defenses of in pari delicto and good faith.
The defense of in pari delicto was not raised in the RTC, hence,
such an issue cannot be raised for the first time on appeal. Petitioners must have seasonably raised it in
the proceedings before the lower court, because questions raised on appeal are
confined only within the issues framed by the parties.[14] The defense of good faith must also fail
because such an issue is a question of fact[15]
which may not be properly raised in a petition for review under Rule 45 of the
Rules of Civil Procedure which allows only questions of law.[16]
As well set forth in Medel:[17]
We agree … that the stipulated rate of interest at
5.5% per month on the P500,000.00 loan is excessive, iniquitous,
unconscionable and exorbitant. However, we can not consider the rate “usurious”
because this Court has consistently held that Circular No. 905 of the Central
Bank, adopted on December 22, 1982, has expressly removed the interest ceilings
prescribed by the Usury Law and that the Usury Law is now “legally inexistent.”
In Security Bank and Trust Company vs. Regional
Trial Court of Makati, Branch 61, the Court held that CB Circular
No. 905 “did not repeal nor in any way amend the Usury Law but simply suspended
the latter’s effectivity.” Indeed, we have held that “a Central Bank Circular
can not repeal a law. Only a law can repeal another law.” In the recent case of
Florendo vs. Court of Appeals, the Court reiterated the ruling that “by
virtue of CB Circular 905, the Usury Law has been rendered ineffective.” “Usury
has been legally non-existent in our jurisdiction. Interest can now be charged
as lender and borrower may agree upon.”
Nevertheless, we find the interest at 5.5% per month,
or 66% per annum, stipulated upon by the parties in the promissory note
iniquitous or unconscionable, and, hence, contrary to morals (“contra bonos
mores”), if not against the law. The stipulation is void.
WHEREFORE,
the petition is DENIED for lack
of merit. The assailed Decision and
Resolution dated
SO ORDERED.
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LEONARDO A. QUISUMBING Associate Justice |
WE CONCUR:
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RENATO C. CORONA Associate Justice |
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CONCHITA CARPIO MORALES Associate Justice |
PRESBITERO J. VELASCO,
JR. Associate Justice |
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ARTURO D. BRION Associate Justice |
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A T T E S T A T I O N
I attest that the
conclusions in the above Decision had been reached in consultation before the
case was assigned to the writer of the opinion of the Court’s Division.
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LEONARDO A. QUISUMBING Associate Justice Chairperson |
C E R T I F I C A T I O N
Pursuant to Section
13, Article VIII of the Constitution, and the Division Chairperson’s
Attestation, I certify that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
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REYNATO S. PUNO Chief Justice |
* Designated
as additional member in view of the official leave of absence of Associate
Justice Dante O. Tinga.
[1] Rollo, pp. 28-34. Penned by Associate Justice Juan Q. Enriquez,
Jr. with Associate Justices Portia Aliño-Hormachuelos and Vicente Q. Roxas
concurring.
[2]
[3]
[4]
[5]
[6] SECTION
1. The rate of interest, including commissions, premiums, fees and other
charges, on a loan or forbearance of any money, goods or credits, regardless of
maturity and whether secured or unsecured, that may be charged or collected by
any person, whether natural or juridical, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.
[7] G.R. No. 131622,
[8] Ruiz
v. Court of Appeals, G.R. No. 146942,
[9]
[10] Solangon
v. Salazar, G.R. No. 125944, June 29, 2001, 360 SCRA 379, 384-385; Imperial
v. Jaucian, G.R. No. 149004, April 14, 2004, 427 SCRA 517, 525-526; Cuaton
v. Salud, G.R. No. 158382, January 27, 2004, 421
[11] Medel v. Court of Appeals, supra note
7 at 489.
[12] Dio v.
Japor, G.R. No. 154129,
[13] Almeda v. Court of Appeals, G.R. No.
113412,
[14] Lim v. Queensland Tokyo Commodities,
Inc., G.R. No. 136031,
[15] Abad
v. Guimba, G.R. No. 157002,
[16] Kay Products, Inc. v. Court of Appeals,
G.R. No. 162472, July 28, 2005, 464 SCRA 544, 553.
[17] Medel v. Court of Appeals, supra note 7 at 489.