G.R. No. 144712. July 04, 2002
SPOUSES SILVESTRE AND CELIA PASCUAL, PETITIONERS, VS. RODRIGO V. RAMOS, RESPONDENT.
DAVIDE, JR., C.J.:
Before us is a petition for review on certiorari assailing the 5
November 1999 Decision[1] and the 18
August 2000 Resolution[2] of the Court of
Appeals in CA G.R. CV No. 52848. The former affirmed the 5 June 1995 and 7
September 1995 Orders of the Regional Trial Court, Malolos, Bulacan, Branch 21,
in Civil Case No. 526-M-93, and the latter denied petitioner’s motion for
reconsideration.
The case at bar stemmed from the petition[3] for consolidation of title or ownership
filed on 5 July 1993 with the trial court by herein respondent Rodrigo V. Ramos
(hereafter RAMOS) against herein petitioners, Spouses Silvestre and Celia
Pascual (hereafter the PASCUALs). In his petition, RAMOS alleged that on 3 June
1987, for and in consideration of P150,000, the PASCUALs executed in his favor a
Deed of Absolute Sale with Right to Repurchase over two parcels of land and the
improvements thereon located in Bambang, Bulacan, Bulacan, covered by Transfer
Certificate of Title (TCT) No. 305626 of the Registry of Deeds of Bulacan. This
document was annotated at the back of the title. The PASCUALs did not exercise
their right to repurchase the property within the stipulated one-year period;
hence, RAMOS prayed that the title or ownership over the subject parcels of land
and improvements thereon be consolidated in his favor.
In their Answer,[4] the PASCUALs
admitted having signed the Deed of Absolute Sale with Right to Repurchase for a
consideration of P150,000 but averred that what the parties had actually agreed
upon and entered into was a real estate mortgage. They further alleged that
there was no agreement limiting the period within which to exercise the right to
repurchase and that they had even overpaid RAMOS. Furthermore, they interposed
the following defenses: (a) the trial court had no jurisdiction over the subject
or nature of the petition; (b) RAMOS had no legal capacity to sue; (c) the cause
of action, if any, was barred by the statute of limitations; (d) the petition
stated no cause of action; (e) the claim or demand set forth in RAMOS’s pleading
had been paid, waived, abandoned, or otherwise extinguished; and (f) RAMOS has
not complied with the required confrontation and conciliation before the
barangay.
By way of counterclaim, the PASCUALs prayed that RAMOS be ordered to execute
a Deed of Cancellation, Release or Discharge of the Deed of Absolute Sale with
Right to Repurchase or a Deed of Real Estate Mortgage; deliver to them the
owner’s duplicate of TCT No. T-305626; return the amount they had overpaid; and
pay each of them moral damages and exemplary damages in the amounts of P200,000
and P50,000, respectively, plus attorney’s fees of P100,000; appearance fee of
P1,500 per hearing; litigation expenses; and costs of suit.
After the pre-trial, the trial court issued an order[5] wherein it identified the following
issues: (1) whether the Deed of Absolute Sale with Right to Repurchase is an
absolute sale or a mere mortgage; (2) whether the PASCUALs have paid or overpaid
the principal obligation; (3) whether the ownership over the parcel of land may
be consolidated in favor of RAMOS; and (4) whether damages may be awarded.
Among the documents offered in evidence by RAMOS during the trial on the
merits was a document denominated as Sinumpaang Salaysay[6] signed by RAMOS and Silvestre Pascual, but
not notarized. The contents of the document read:
Ako, si SILVESTRE PASCUAL, Filipino, nasa hustong gulang, may asawa at
kasalukuyang naninirahan sa Bambang, Bulacan, Bulacan, ay nagsasabing buong
katotohanan at sumusumpa sa aking mga salaysay sa kasulatang ito:
- Na ngayong June 3, 1987 dahil sa aking matinding pangangailangan ng puhunan
ay lumapit ako at nakiusap kay Rodrigo Ramos ng Taal, Pulilan, Bulacan na
pautangin ako ng halagang P150,000.00. - Na aming napagkasunduan na ang nasabing utang ay babayaran ko ng tubo ng
seven percent (7%) o P10,500.00 isang buwan (7% per month). - Na bilang sangla (collateral security) sa aking utang, kami ay nagkasundo na
mag-execute ng Deed of Sale with Right to Repurchase para sa aking bahay at lupa
(TCT No. 305626) sa Bo. Taliptip, Bambang, Bulacan, Bulacan ngayong June 3, 1987
at binigyan ako ni Mr. Ramos ng isang taon hanggang June 3, 1988 upang mabiling
muli ang aking isinanla sa kaniya sa kasunduang babayaran kong lahat ang capital
na P150,000.00 pati na ang P10,500.00 na tubo buwan buwan. - Na bilang karagdagang condition, si RODRIGO RAMOS ay pumayag sa aking
kahilingan na kung sakali na hindi ko mabayaran ng buo ang aking pagkakautang
(Principal plus interest) sa loob ng isang taon mula ngayon, ang nakasanglang
bahay at lupa ay hindi muna niya iilitin (foreclose) o ipalilipat sa pangalan
niya at hindi muna kami paaalisin sa tinitirhan naming bahay hanggat ang tubo
(interest) na P10,500.00 ay nababayaran ko buwan buwan. - Na ako ay sumasang-ayon sa kundisyon ni Rodrigo Ramos na pagkatapos ng isang
taon mula ngayon hanggang June 3, 1988 at puro interest lamang ang aking
naibabayad buwan-buwan, kung sakaling hindi ako makabayad ng tubo for six (6)
consecutive months (1/2 year after June 3, 1988 (6 na buwang hindi bayad ang
interest ang utang ko) si Rodrigo Ramos ay binibigyan ko ng karapatan at
kapangyarihan na mag-mayari ng aming bahay at lupa at kami ng aking pamilya ay
kusang loob na aalis sa nasabing bahay at lupa na lumalabas na ibinenta ko sa
kaniya dahil hindi ako nakasunod sa aming mga pinagkasunduang usapan. - At bilang finale ng aming kasunduan, ako ay nangangako na hindi maghahabol
ng ano mang sukli sa pagkakailit ng aming bahay at lupa kung sakali mang
dumating sa ganuong pagkakataon o sitwasyon o di kaya’y magsasampa ng reklamo
kanino man.
Bilang pagsang-ayon sa mga nasabing kasunduan, kami ay
lumagda sa ibaba nito kalakip ng aming mga pangalan ngayong ika-3 ng Hunyo,
1987.
For their part, the PASCUALs presented documentary evidence consisting of
acknowledgment receipts[7] to prove the
payments they had made.
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. Accordingly, in its
Decision[8] of 15 March 1995 the trial
court decreed as follows:
WHEREFORE, judgment is hereby rendered in favor of the defendants and against
the plaintiff in the following manner:
- Dismissing the plaintiff’s petition;
- Directing the Register of Deeds to cancel the annotation of the Deed of Sale
with Right to Repurchase on the dorsal side of TCT No. 305626; - Awarding the defendants the sum of P141,500.00 as overpayment on the loan
and interests; - Granting the defendants attorney’s fee in the sum of P15,000.00 and
P3,000.00 for litigation expenses.
With costs against the plaintiff.
RAMOS moved for the reconsideration of the decision, alleging that the trial
court erred in using an interest rate of 7% per annum in the computation of the
total amount of obligation because what was expressly stipulated in the
Sinumpaang Salaysay was 7% per month. The total interest due from 3
June 1987 to 3 April 1995 was P987,000. Deducting therefrom the interest
payments made in the sum of P344,000, the amount of P643,000 was still due as
interest. Adding the latter to the principal sum of P150,000, the total amount
due from the PASCUALs as of 3 April 1995 was P793,000.
Finding merit in the motion for reconsideration, which was not opposed by the
PASCUALs, the trial court issued on 5 June 1995 an Order[9] 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. The trial court acknowledged that it had inadvertently declared the
interest rate to be 7% per annum when, in fact, the Sinumpaang Salaysay
stipulated 7% per month. 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.
Aggrieved by the modification of the decision, the PASCUALs filed a motion to
reconsider the Order of 5 June 1995. They alleged that the motion for
reconsideration filed by RAMOS was a mere scrap of paper because they received a
copy of said motion only a day before the hearing, in violation of the
3-day-notice rule. Moreover, they had already paid the interests and had in fact
overpaid the principal sum of P150,000. Besides, RAMOS, being an individual,
could not charge more than 1% interest per month or 12% per annum; and, the
interest of either 5% or 7% a month is exorbitant, unconscionable, unreasonable,
usurious and inequitable.
RAMOS opposed the motion of the PASCUALs. He contended that the
non-compliance with the 3-day-notice rule was cured when the trial court gave
them an opportunity to file their opposition, but despite the lapse of the
period given them, no opposition was filed. It is not correct to say that he was
not allowed to collect more than 1% per month interest considering that with the
moratorium on the Usury Law, the allowable interest is that agreed upon by the
parties. In the absence of any evidence that there was fraud, force or undue
influence exerted upon the PASCUALs when they entered into the transaction in
question, their agreement embodied in the Sinumpaang Salaysay should be
respected. Furthermore, the trial court had already reduced the interest rate to
5% per month, a rate which is not exorbitant, unconscionable, unreasonable and
inequitable.
Their motion for reconsideration having been denied in the Order[10] of 7 September 1995, the PASCUALs
seasonably appealed to the Court of Appeals. They pointed out that since the
only prayer of RAMOS in his petition was to have the title or ownership over the
subject land and the improvements thereon consolidated in his favor and he did
not have any prayer for general relief, the trial court had no basis in ordering
them to pay him the sum of P511,000.
In its Decision[11] of 5 November
1999, the Court of Appeals affirmed in toto the trial court’s Orders of 5 June
1995 and 7 September 1995. It ruled that while RAMOS’s petition for
consolidation of title or ownership did not include a prayer for the payment of
the balance of the petitioners’ obligation and a prayer for general relief, the
issue of whether there was still a balance from the amount loaned was deemed to
have been raised in the pleadings by virtue of Section 5, Rule 10 of the Rules
of Court, which provides that “[w]hen issues not raised by the pleadings are
tried with the express or implied consent of the parties, they shall be treated
in all respects as if they had been raised in the pleadings.” In the course of
the trial, receipts were presented by the PASCUALs evidencing the payments they
had made. Taken in conjunction with the Sinumpaang Salaysay which
specified the interest rate at 7% per month, a mathematical computation readily
leads to the conclusion that there is still a balance due from the PASCUALs,
even at a reduced interest rate of 5% interest per month.
With the denial of their motion for reconsideration of the decision by the
Court of Appeals, the PASCUALs filed before us the instant petition raising the
sole issue of whether they are liable for 5% interest per month from 3 June 1987
to 3 April 1995. 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.
For his part, RAMOS contends that the issue raised by petitioners cannot be
entertained anymore because it was neither raised in the complaint nor
ventilated during the trial. In any case, 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. RAMOS then prays that the
challenged decision and resolution be affirmed and that petitioners be further
ordered to pay legal interest on the interest due from the time it was demanded.
We see at once the proclivity of the PASCUALs to change theory almost every
step of the case.
By invoking the decision in Medel v. Court of Appeals, the PASCUALs are
actually raising as issue the validity of the stipulated interest rate. It must
be stressed that they never raised as a defense or as basis for their
counterclaim the nullity of the stipulated interest. While overpayment was
alleged in the Answer, no ultimate facts which constituted the basis of the
overpayment was alleged. In their pre-trial brief, the PASCUALs made a long list
of issues, but not one of them touched on the validity of the stipulated
interest rate. Their own evidence clearly shows that they have agreed on, and
have in fact paid interest at, the rate of 7% per month. Exhibits “1” to “8”
specifically mentioned that the payments made were for the interest due on the
P150,000 loan of the PASCUALs. In the course of the trial, the PASCUALs never
put in issue the validity of the stipulated interest rate.
After the trial court sustained petitioners’ claim that their agreement with
RAMOS was actually a loan with real estate mortgage, the PASCUALs should not be
allowed to turn their back on the stipulation in that agreement to pay interest
at the rate of 7% per month. The PASCUALs should accept not only the favorable
aspect of the court’s declaration that the document is actually an equitable
mortgage but also the necessary consequence of such declaration, that is, that
interest on the loan as stipulated by the parties in that same document should
be paid. Besides, when RAMOS moved for a reconsideration of the 15 March 1995
Decision of the trial court pointing out that the interest rate to be used
should be 7% per month, the PASCUALs never lifted a finger to oppose the claim.
Admittedly, in their Motion for Reconsideration of the Order of 5 June 1995, the
PASCUALs argued that the interest rate, whether it be 5% or 7%, is exorbitant,
unconscionable, unreasonable, usurious and inequitable. However, in their
Appellants’ Brief, the only argument raised by the PASCUALs was that RAMOS’s
petition did not contain a prayer for general relief and, hence, the trial court
had no basis for ordering them to pay RAMOS P511,000 representing the principal
and unpaid interest. It was only in their motion for the reconsideration of the
decision of the Court of Appeals that the PASCUALs made an issue of the interest
rate and prayed for its reduction to 12% per annum.
In Manila Bay Club Corp. v. Court of Appeals,[13] this Court ruled that if an issue is
raised only in the motion for reconsideration of the decision of the Court of
Appeals, the effect is that it is as if it was never duly raised in that court
at all.
Our ruling in Medel v. Court of Appeals[14] is not applicable to the present case. In
that case, the excessiveness of the stipulated interest at the rate of 5.5 % per
month was put in issue by the defendants in the Answer. Moreover, in addition to
the interest, the debtors were also required, as per stipulation in the
promissory note, to pay service charge of 2% per annum and a penalty charge of
1% per month plus attorney’s fee of equivalent to 25% of the amount due. In the
case at bar, there is no other stipulation for the payment of an extra amount
except interest on the principal loan. Thus, taken in conjunction with the
stipulated service charge and penalty, the interest rate of 5.5% in the Medel
case was found to be excessive, iniquitous, unconscionable, exorbitant and
hence, contrary to morals, thereby making such stipulation null and void.
Considering the variance in the factual circumstances of the Medel
case and the instant case, we are not prepared to apply the former lest it be
construed that we can strike down anytime interest rates agreed upon by parties
in a loan transaction.
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:
All men are presumed to be sane and normal and subject to be moved by
substantially the same motives. When of age and sane, they must take care of
themselves. In their relations with others in the business of life, wits, sense,
intelligence, training, ability and judgment meet and clash and contest,
sometimes with gain and advantage to all, sometimes to a few only, with loss and
injury to others. In these contests men must depend upon themselves – upon their
own abilities, talents, training, sense, acumen, judgment. The fact that one may
be worsted by another, of itself, furnishes no cause of complaint. One man
cannot complain because another is more able, or better trained, or has better
sense or judgment than he has; and when the two meet on a fair field the
inferior cannot murmur if the battle goes against him. The law furnishes no
protection to the inferior simply because he is inferior, any more than it
protects the strong because he is strong. The law furnishes protection to both
alike – to one no more or less than to the other. It makes no distinction
between the wise and the foolish, the great and the small, the strong and the
weak. The foolish may lose all they have to the wise; but that does not mean
that the law will give it back to them again. Courts cannot follow one every
step of his life and extricate him from bad bargains, protect him from unwise
investments, relieve him from one-sided contracts, or annul the effects of
foolish acts. Courts cannot constitute themselves guardians of persons who are
not legally incompetent. Courts operate not because one person has been defeated
or overcome by another, but because he has been defeated or overcome illegally.
Men may do foolish things, make ridiculous contracts, use miserable judgment,
and lose money by then – indeed, all they have in the world; but not for that
alone can the law intervene and restore. There must be, in addition, a violation
of law, the commission of what the law knows as an actionable wrong, before the
courts are authorized to lay hold of the situation and remedy it.[16]
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,[17]
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.
We are not persuaded by the argument of the PASCUALs that since RAMOS tried
to hide the real transaction by imposing upon them the execution of a Deed of
Absolute Sale with Right to Repurchase, he should not be allowed to collect more
than 1% per month interest. It is undisputed that simultaneous with the
execution of the said deed was the execution of the Sinumpaang
Salaysay, which set forth the true agreement of the parties. The PASCUALs
cannot then claim that they did not know the real transaction.
RAMOS’s claim that the interest due should earn legal interest cannot be
acted upon favorably because he did not appeal from the Order of the trial court
of 5 June 1995, which simply ordered the payment by the PASCUALs of the amount
of P511,000 without interest thereon. No relief can be granted a party who does
not appeal.[18] Therefore, the order of
the trial court should stand.
Incidentally, we noticed that in the Memorandum filed by RAMOS, the ruling in
Vales v. Valle was reproduced by his counsel without the proper citation. Such
act constitutes plagiarism. Atty. Felimon B. Mangahas is hereby warned that a
repetition of such act shall be dealt with accordingly.
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.
Costs against petitioners.
SO ORDERED.
Vitug, Kapunan, Ynares-Santiago, and
Austria-Martinez, JJ., concur.
[1] Rollo, 16-28. Per Salazar-Fernando,
R., with Guerrero, B. and Aliño-Hormachuelos, P. JJ., concurring.
[2] Id., 33-35.
[3] Original Record (OR), 3-5.
[4] OR, 17-20.
[5] OR, 34-35.
[6] Exhibit “I.”
[7] Exhibits “1” to “19,” inclusive.
[8] OR, 59-62. Per Judge Cesar M. Solis.
[9] OR, 70-71.
[10] OR, 83-84.
[11] Supra note 1.
[12] 299 SCRA 481 [1998].
[13] 245 SCRA 715, 729 [1995].
[14] Supra note 12.
[15] Article 1306, Civil Code; See also Manila
Bay Club Corp. v. Court of Appeals, supra note 13.
[16] 35 Phil. 769, 787-788 [1916]. See also
Sanchez v. Court of Appeals, 279 SCRA 647 [1997].
[17] 260 SCRA 645, 667 [1996].
[18] Consolidated Bank and Trust Corporation
(Solidbank) v. Court of Appeals, G.R. No. 114286, 19 April 2001.