Republic
of the
Supreme
Court
SECOND DIVISION
|
RGM INDUSTRIES, INC., Petitioner,
- versus - UNITED PACIFIC CAPITAL
CORPORATION, Respondent.
|
G.R. No. 194781
Present: CARPIO, J., Chairperson, BRION, PEREZ, SERENO, and
REYES, JJ. Promulgated: June 27, 2012 |
x-----------------------------------------------------------------------------------------x
RESOLUTION
REYES, J.:
At bar is a Petition for
Review on Certiorari, under Rule 45 of the Rules of Court, seeking to
annul and set aside the Decision[1] dated July
23, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 87727 which affirmed
with modification the Decision[2] dated April
11, 2005 of the Regional Trial Court (RTC), Branch 147 of Makati City, in Civil
Case No. 99-1888, ordering RGM Industries, Inc. (petitioner) to pay its
obligation to United Pacific Capital Corporation (respondent). The RTC's judgment was modified as to the
interest rates and penalty charges imposed.
Likewise
assailed is the CA's Resolution[3] dated
December 14, 2010 denying the petitioner's motion for reconsideration.
The
uniform factual findings of the courts a quo[4]
The
respondent is a domestic corporation engaged in the business of lending and
financing. On March 3, 1997, it granted
a thirty million peso short-term credit facility in favor of the petitioner. The loan amount was sourced from individual
funders on the basis of a direct-match facility for which a series of
promissory notes were issued by the petitioner for the payment of the loan.
The
petitioner failed to satisfy the said promissory notes as they fell due and the
loan had to be assumed in full by the respondent which thereby stepped into the
shoes of the individual funders.
Consequently,
on April 4, 1998, the petitioner issued in favor of the respondent a
consolidated promissory note in the principal amount of P27,852,075.98 for a term of fourteen
(14) days and maturing on April 28, 1998. The stipulated interest on the consolidated
promissory note was 32% per annum. In
case of default, a penalty charge was imposed in an amount equivalent to 8% per
month of the outstanding amount due and unpaid computed from the date of
default.
The
petitioner failed to satisfy the consolidated promissory note, the principal
balance of which as of April 28, 1998 was P27,668,167.87.
The
respondent thus sent demand letters to the petitioner but the latter failed to
pay and instead asked for restructuring of the loan. The respondent declined the request and on
October 5, 1999, filed the herein complaint for collection of sum of money
against the petitioner.
The
petitioner did not dispute the loan it owes but claimed that the agreed
interest rate was fixed at 15.5% per annum and not the varying interest rates
imposed by the respondent which reached as high as 40% per annum. The petitioner asserted that the respondent
unilaterally imposed the increased interest rates in violation of the principle
of mutuality of contracts.
The
respondent, on the other hand, argued that the increased interest rates were
mutually agreed upon and that the same cannot be considered usurious because
usury is legally non-existent in this jurisdiction.
Ruling of
the RTC
The RTC ruled in favor of the respondent and held
thus:
WHEREFORE, premises considered,
Judgment is hereby rendered for the (respondent) ordering the (petitioner) RGM
Industries[,] Inc. as the Issuer of the consolidated promissory note, to pay
(respondent) the amount of [P]27,668.167.87
representing the outstanding principal obligation plus interest at the rate of
32% per annum and penalty charges at the rate of 8% per month from date of
default on the consolidated promissory note until fully paid, and an amount
equivalent to 25% of the amount due as and for attorney's fees, and to pay the
costs of suit.
SO ORDERED.[5]
Ruling of
the CA
On appeal, the CA affirmed the RTC's judgment but
modified the interest rates and penalty charges imposed. The CA held that the interest rates levied by the
respondent were excessive and unconscionable hence, must be reduced to 12% per
annum. The CA likewise lowered the
penalty charges to 2% per month considering that the P7,504,522.27 paid by the petitioner
was already applied thereto and the nature of the contract between the parties
was a short-term credit facility. The
attorney's fees were reduced from 25% to 10% of the outstanding obligation. The decretal portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is hereby PARTLY GRANTED. The impugned Decision is AFFIRMED with MODIFICATIONS. The interest rate of 32% per annum is equitably reduced to 12% per annum, the penalty charge of 8% per month to 2% per month and attorney's fees of 25% of the total unpaid obligation to 10%.
SO ORDERED.[6]
Its motion for reconsideration[7] of the
foregoing issuance having been denied,[8] the petitioner
interposed the present petition arguing that the modified interest rates and
penalty charges decreed by the CA are still exorbitant and that the CA failed
to appreciate the partial payments already made when it upheld the amount of P27,668,167.87 as petitioner's
outstanding balance.
Our Ruling
The petition is partially impressed with merit.
The issue on partial payments and their application to the
outstanding balance involves a calibration of the evidence presented, hence,
factual in nature and not reviewable in the petition at bar. Oft-repeated is the rule that petitions for
review under Rule 45 of the Rules of Court may be brought only on questions of
law, not on questions of fact.[9]
Nevertheless, we are convinced that the courts a quo, in
concluding the outstanding balance of the petitioner, have both
carefully considered and appreciated the evidence of partial payments adduced. As found by the CA, the payments made by the petitioner
before the complaint was filed were duly deducted from the outstanding balance;
while the payments made during the pendency of the case were applied to the due
and outstanding penalty charges.
We affirm the interest rate decreed by the CA. Stipulated interest rates are illegal if they
are unconscionable and courts are allowed to temper interest rates when
necessary. In exercising this vested
power to determine what is iniquitous and unconscionable, the Court must
consider the circumstances of each case. What may be iniquitous and unconscionable in
one case, may be just in another.[10]
We cannot uphold the petitioner's invocation of our ruling
in DBP v. Court of Appeals,[11] wherein
the interest rate imposed was reduced to 10% per annum. The overriding circumstance prompting such
pronouncement was the regular payments made by the borrower. Evidently, such fact is wanting in the case at
bar, hence, the petitioner cannot demand for a similar interest rate.
The circumstances attendant herein are similar to those in Trade
& Investment Development Corporation of the Philippines v. Roblett
Industrial Construction Corporation[12]
wherein we levied the legal interest rate of 12% per annum.
However, pursuant to Bank
of the Philippine Islands, Inc. v. Yu,[13] we deem it
proper to further reduce the penalty charge decreed by the CA from 2% per month
to 1% per month or 12% per annum in view of the following factors: (1)
respondent has already received P7,504,522.27 in penalty charges, and (2) the loan
extended to respondent was a short-term credit facility.
On
the basis of the same precedent, the attorney's fees must likewise be equitably
reduced considering that: (1) the petitioner has already made partial payments;
(2) the attorney's fees are not an integral part of the cost of borrowing but a
mere incident of collection;[14] and (3)
the attorney's fees were intended as penal clause to answer for liquidated
damages, hence, the rate of 10% of the unpaid obligation is too onerous.[15] Under the premises, attorneys fees equivalent
to one percent (1%) of the outstanding balance is reasonable.[16]
WHEREFORE,
in consideration of the foregoing, the Petition is hereby PARTLY GRANTED. The Decision dated July 23, 2010 of the Court
of Appeals in CA-G.R. CV No. 87727 is AFFIRMED
with the MODIFICATIONS that: (1) the
penalty charge is reduced to 1% per month or 12% per annum; and (2) the
attorney's fees is reduced to 1% of the total unpaid obligation.
SO
ORDERED.
BIENVENIDO
L. REYES
Associate
Justice
WE CONCUR:
ANTONIO T.
CARPIO
Senior Associate Justice
Chairperson, Second Division
|
ARTURO D. BRION Associate Justice |
JOSE Associate Justice |
MARIA
Associate Justice
C E R T I F I
C A T I O N
I certify that the
conclusions in the above Resolution had been reached in consultation before the
case was assigned to the writer of the opinion of the Courts Division.
ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296,
The Judiciary Act of 1948, as Amended)
[1] Penned by Associate Justice Priscilla J. Baltazar-Padilla, with Associate Justices Fernanda Lampas Peralta and Rodil V. Zalameda, concurring; rollo, pp. 9-24.
[2] Penned by Presiding Judge Maria Cristina J. Cornejo; id. at 49-51.
[3]
[4] Supra notes 1 and 2.
[5] Rollo, p. 51.
[6] Id. at 23.
[7]
[8]
[9] Imperial v. Jaucian, 471 Phil. 484, 493 (2004).
[10]
Trade & Investment Development Corporation of the
[11] 398 Phil. 413 (2000).
[12] Supra
note 10.
[13] G. R. No. 184122,
January 20, 2010, 610 SCRA 412.
[14] New Sampaguita Builders Construction, Inc. (NSBCI) v. PNB, 479 Phil. 483, 510 (2004).
[15] Civil Code, Article 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable.
[16] Supra note 13, at 425.