G.R. No. 248898. September 07, 2020
BRYAN L. UYSIPUO, PETITIONER, VS. RCBC BANKARD SERVICES CORPORATION, RESPONDENT.
PERLAS-BERNABE, J.:
certiorari[1] are the Decision[2] dated April 11, 2019 and the
Resolution[3]
dated August 20, 2019 of the Court of Appeals (CA) in CA-G.R. CV No.
109701 which affirmed with modification the Decision[4]
dated March 24, 2017 of the Regional Trial Court of Pasig City, Branch
268 (RTC) in Civil Case No. 72809-PSG, and accordingly, directed
petitioner Bryan L. Uysipuo (petitioner) to pay respondent RCBC Bankard.
Services Corporation (RCBC) the following sums:
(a) P787,500.00 as the principal obligation;
(b)
an amount equivalent to six percent (6%) per annum of the principal
obligation computed from the date of extra-judicial demand,
i.e., November 26, 2010, until full payment, as legal
interest; (c)
an amount equivalent to six percent (6%) per annum of the principal
obligation computed from August 2009 until full payment, as late payment
interest; (d) P50,000.00 as attorney’s fees; and
(e) costs of litigation.
The Facts
Sometime in 2009, petitioner applied for and was
issued a
credit card by Bankard, Inc. (Bankard), a domestic banking corporation
engaged in the business of extending credit,[5]
allowing the former to avail of the latter’s credit services. Under the
terms and conditions governing the issuance and use of the said card, a
copy of which was given to petitioner, the cardholder was required to
settle his account on or before the due date indicated in his statement
of account, subject to the payment of interest and late payment charges,
in case of default, at the respective monthly rates of three point five
percent (3.5%) and seven percent (7%). Subsequently, petitioner started
making purchases with the use of the credit card, and, for a certain
period, was duly paying his obligations. However, he later defaulted in
his payments, and, as of May 9, 2010, had incurred an unpaid balance of
P1,757,024.53, inclusive of interests and late payment charges. Later, a
formal letter of demand was sent to petitioner, which he duly received
on November 26, 2010 but failed to heed.[6] Thus, on December 15, 2010, Bankard filed a
complaint[7]
with the RTC praying for the payment of the amount of P1,757,024.53,
plus interest and late payment charges, attorney’s fees, and costs of
suit. Bankard was later substituted by respondent RCBC Bankard Services
Corporation (RCBC).[8]
For his part, petitioner asserted that his credit
card
purchases only amounted to P300,000.00, which ballooned to the amount of
P1,757,024.53 because of the imposition of illegal interests and
surcharges.[9]
The
RTC Ruling
In a Decision[10] dated March 24, 2017, the RTC ruled in RCBC’s
favor, and accordingly, ordered petitioner to pay RCBC:
(a) the total outstanding obligation in the amount
of P1,757,024.53; (b)
interest on the total outstanding obligation at the rate of 12% per
annum from November 26, 2010 until June 30, 2013 and 6% per annum from
July 1, 2013 until full payment; (c) interest on
accrued interest at the rate of 12% per annum from the date of the
filing of the complaint, i.e., December 15, 2010
until June 30, 2013 and 6% per annum from July 1, 2013 until full
payment; (d) attorney’s fees in the amount of
P50,000.00; and (e) costs of litigation.[11]
The RTC found that RCBC had sufficiently established a valid claim
against petitioner, as it was proven that he used his credit card to
make purchases and had voluntarily accepted the terms and conditions
governing the issuance and use of the same.[12] Aggrieved, petitioner
appealed[13] to
the CA.
The CA Ruling
In a Decision[14] dated April 11, 2019, the CA
affirmed the decision of the RTC with
modification.
The CA found that the stipulated amount of interest and late penalty
charges, at the respective monthly rates of three point five percent
(3.5%) and seven percent (7%), were excessive and unconscionable, and
thus, equitably reduced each of them to the prevailing legal rates.
Anent the amount of the principal obligation, the CA found the same to
be in the amount of P787,500.00, which was the balance due to be paid
within August 2009.[15]Accordingly, the CA ordered petitioner to pay
RCBC: (a) the amount of P787,500.00 as the
principal obligation; (b)
an amount equivalent to six percent (6%) per annum of the principal
obligation computed from the date of extra-judicial demand,
i.e., November 26, 2010, until full payment as
legal interest; (c)
an amount equivalent to six percent (6%) per annum of the principal
obligation computed from August 2009 until full payment as late payment
interest; (d) attorney’s fees in the amount of
P50,000.00; and (e) costs of litigation.[16]
Undeterred, petitioner moved for
reconsideration,[17] which was denied in a Resolution[18] dated August 20,
2019; hence, the instant petition.
The Issue Before the
Court
The issue for the Court’s resolution is whether or
not the CA
erred in ordering the payment of the amount of P787,500.00 as the
principal obligation, plus interest and late payment interest thereon at
the prevailing legal rates.
The Court’s Ruling
The petition is without merit.
I.
At the outset, the Court notes that petitioner
admits his
indebtedness to RCBC on account of his use of the credit card issued to
him. However, he insists that he should only be made to pay the
principal obligation amounting to P300,000.00, as RCBC’s imposition of
illegal interests and late payment charges should be struck down for
being unconscionable.[19] On the other hand, the courts a
quo
valued the principal obligation differently, in that the RTC pegged the
same at P1,757,024.53, while the CA lowered it to P787,500.00. While
factual findings of the lower courts are generally considered final and
binding on this Court,[20] the Court is nevertheless allowed to make its
own when, among others, the factual findings of the lower courts are
conflicting,[21]
as in this case. Guided by the foregoing considerations, the Court
deems it proper to make its own findings to determine petitioner’s
principal obligation to RCBC.
Records show that, from April 2009 to October 8,
2009,
petitioner made purchases with the use of his credit card in the total
amount of P4,834,774.18,[22] and merely paid the total amount of
P3,623,773.85,[23]
leaving a difference of P1,211,000.33
as the total unpaid obligation. Such finding may be gathered from a
review of petitioner’s statement of account covering the aforesaid
period, as summarized by the CA:[24]
Date
Balance
Payments
Fees/
Charges
Due
Based on the foregoing, the CA erred in finding that the
principal
obligation merely amounted to the sum of P787,500.00, which was the
balance due to be paid within the month of August of 2009, considering
that such amount was already paid by petitioner in the succeeding months
of September and October of 2009, within which the latter made further
purchases on credit. Accordingly, the Court finds that petitioner’s
principal obligation to RCBC should amount to
P1,211,000.33, which, as
previously explained, remains unpaid.
II.
Anent the proper amount of
interest and late payment charges,
the CA correctly found that the monthly interest rate of 3.5% as well
as the penalty charge for late payment of 7% was excessive, iniquitous,
unconscionable, and exorbitant, and hence, must be equitably
tempered.[25]
Nonetheless, the Court deems it appropriate to adjust the interest
rates imposed by the CA in accordance with prevailing jurisprudence.
Case law states that there are two (2) types of interest, namely,
monetary interest and compensatory interest. Monetary interest is the
compensation fixed by the parties for the use or forbearance of money.
On the other hand, compensatory interest is that imposed by law or by
the courts as penalty or indemnity for damages. Accordingly, the right
to recover interest arises only either by virtue of a contract (monetary
interest) or as damages for delay or failure to pay the principal loan
on which the interest is demanded (compensatory interest).[26]
Anent monetary interest, the parties are free to
stipulate
their preferred rate. However, courts are allowed to equitably temper
interest rates that are found to be excessive, iniquitous,
unconscionable, and/or exorbitant, such as stipulated interest rates of
three percent (3%) per month or higher. In such instances, it is well to
clarify that only the unconscionable interest rate is nullified and
deemed not written in the contract; whereas the parties’ agreement on
the payment of interest on the principal loan obligation subsists. It is
as if the parties failed to specify the interest rate to be imposed on
the principal amount, in which case the legal
rate of interest prevailing at the time the agreement was entered
into
would have to be applied by the Court. This is because, according to
jurisprudence, the legal rate of interest is the presumptive reasonable
compensation for borrowed money.[27] Such monetary interest should be computed from
default, i.e., from extrajudicial or judicial demand,
until full payment,[28]
In addition, the aforesaid monetary interest shall itself earn
compensatory interest at the prevailing legal rates, pursuant to Article
2212 of the Civil Code, which states that ‘[i]nterest due shall earn
legal interest from the time it is judicially demanded, although the
obligation may be silent upon this point.’ To be sure, [the foregoing
provision] contemplates the presence of stipulated or conventional
interest, i.e., monetary interest, which has accrued
when demand
was judicially made.” In contrast, Article 2212 of the Civil Code finds
no application if there was no stipulated/monetary interest agreed upon
by the parties which could further earn compensatory interest.[29]
In this case, the courts a quo
correctly found that petitioner voluntarily agreed to the payment of
interest and late payment charges as stipulated in the credit card terms
and conditions.[30] Notably,
both impositions partook the nature of monetary interest as it was
intended as compensation for the use or forbearance of money arising
from petitioner’s purchases on credit.[31]
Since the stipulated rates were struck down for being unconscionable,
the Court finds that a straight monetary interest at the prevailing rate
of twelve percent (12%) per annum[32] should instead be imposed on the principal
obligation, reckoned from the date of default, i.e.,
from extrajudicial demand on November 26, 2010, until full payment.
Additionally, the accrued monetary interest itself shall earn
compensatory interest at the rate of twelve percent (12%) per annum from
the date of judicial demand, i.e., the filing of
the complaint
on December 15, 2010 until June 30, 2013, and thereafter, at the rate
of six percent (6%) per annum from July 1, 2013 until full payment.
Finally, the award of attorney’s fees in the amount of P50,000.00 shall
also earn legal interest at the rate of 6% per annum from the finality
of this Decision until full payment.
WHEREFORE, the petition is
DENIED. The Decision
dated April 11, 2019 and the Resolution dated August 20, 2019 of the
Court of Appeals in CA-G.R. CV No. 109701 are hereby
AFFIRMED with MODIFICATION.
Accordingly, petitioner Bryan L. Uysipuo is ordered to pay RCBC Bankard
Services Corporation the following amounts:
obligation in the amount of P1,211,000.33;
principal obligation at the rate of twelve percent (12%) per annum from
the date of default, i.e., from extrajudicial
demand on November 26, 2010, until full payment;
the accrued
monetary interest at the rate of twelve percent (12%) per annum from the
date of judicial demand, i.e., the filing of the
complaint on
December 15, 2010 until June 30, 2013, and thereafter, at the rate of
six percent (6%) per annum from July 1, 2013 until full payment;
amount of
P50,000.00, plus legal interest thereon at the rate of six percent (6%)
per annum, reckoned from the finality of this Decision until full
payment; and
suit.
SO ORDERED.
Hernando, Carandang,[*] and Delos Santos,
JJ., concur.
Inting, J., on official leave.
[*] Designated
Additional Member per raffle dated August 26, 2020.
[1] Rollo, pp. 37-68.
[2] Id.
71-86. Penned by
Associate Justice Priscilla J. Baltazar-Padilla (now a member of this
Court) with Associate Justices Marie Christine Azcarraga-Jacob and Louis
P. Acosta, concurring.
[3]
Id. at 32-34.
[4]
Id. at 110-115. Penned by Presiding Judge Maria Cheryl E.
Laqui-Ceguera.
[5]
Id. at 119.
[6]
See Demand Letter dated November 26, 2010; id. at 124.
[7] Id.
at 119-121.
[8]
Id. at 71-75. See also id. at 110-113.
[9]
See Answer dated April 18, 2012; id. at 116-118.
[10]
Id. at 110-115.
[11]
Id. at 115.
[12]
Id. at 113.
[13]
See Notice of Appeal dated August 18, 2017; CA
rollo, pp. 14-16.
[14]
Rollo, pp. 71-86.
[15]
Id. at 76-85.
[16]
Id. at 84-85.
[17]
See Motion for Reconsideration dated May 14, 2019; id. at
26-31.
[18]
Id. at 32-33.
[19]
See id. at 64.
[20]
See Borja v. Minoza, 812 Phil. 133, 142
(2017).
[21]
See New City Builders Inc. v. National Labor Relations
Commission, 499 Phil. 207, 21 5 (2005).
[22]
See rollo, p. 79. Computed as follows:
Statement
DatePurchases
May 10, 2009 P631,535.68 June 8, 2009 P787,500.00 July 8, 2009 P787,500.00 August 9, 2009 P264,738.50 September 8, 2009 P1,083,500.00 October 8, 2009 P1,280,000.00 P4,834,774.18
[23]
See id. Computed as follows:
P631,535.68 Payment for the balance due as of June 8,
2009P787,500.00 Payment for the balance due as of July 8,
2009P265,000.00 Payment for the balance due as of August 9,
2009P864,000.00 Payment for the balance due as of September 8, 2009 P1,075,738.17 Payment for the balance due as of October 8,
2009P3,623,773.85 Total
[24]
See id.
[25]
See id. at 82-85.
[26] Isla v. Estorga, G.R. No.
233974, July 2, 2018, 869 SCRA 410, citing Spouses Pen v.
Spouses Julian, 776 Phil. 50, 60 (2016).
[27] Id. at 417-418; citations omitted.
[28] See Lara’s Gifts & Decors,
Inc. v. Midtown Industrial Sales, Inc., G.R. No. 225433,
August 28, 2019.
[29] Isla v. Estorga, supra note
26. See also Park v. Choi, G.R. No. 220826, March 27,
2019.
[30] See rollo, p. 113.
[31] “[C]redit card obligation consists of a loan or
forbearance of money.” (Ledda v. Bank of the Philippine
Islands, 699 Phil. 273, 280 [2012]).
[32] “The 6% per
annum legal interest prescribed under BSP-MB Circular No. 799 took
effect on 1 July 2013 and could only be applied prospectively.”
Lara’s Gifts & Decors, Inc. v. Midtown Industrial
Sales, Inc., supra note 28.