FACTS:
Petitioner
obtained six (6) separate loans amounting to P 320,000.00 from the respondent.
In the written agreement, they agreed upon the 16% interest per month plus
penalty charge of 5% per month and the 25% attorney’s fee, failure to pay the
said loans on the stipulated date.
Petitioner
executed six (6) separate promissory notes and issued several checks as
guarantee for payment. When the said loans become overdue and unpaid,
especially when the petitioner’s checks issued were dishonored, respondent made
repeated oral and written demands for payment.
The
petitioner was able to pay only P 116,540.00 as found by the RTC. Although she
alleged that she had already paid the amount of P 441,780.00 and the excess of
P 121,780.00 is more than the interest that could be legally charged, the Court
affirms the findings of RTC that petitioner is still indebted to the
respondent.
ISSUE:
Whether
or not the stipulated interest of 16% per month, 5% per month for penalty
charge and 25% attorney’s fee are usurious.
HELD:
YES.
The rate must be equitably reduced for being iniquitous, unconscionable and
exorbitant. While the Usury Law ceiling on interest rates was lifted by C.B.
Circular No. 905, nothing in the said circular grants lenders carte blanche authority
to raise interests rates to levels which will either enslave their borrowers or
lead to a hemorrhaging of their assets.
When
the agreed rate is iniquitous or unconscionable, it considered contrary to
morals, if not against the law. Such stipulation is void. Since the stipulation
is void, it is as if there was no express contract thereon. Hence, courts may
reduce the interest rate as reason and equity demand.
The
interest rate of 16% per month was reduced to 1.167% per month or 14% per annum
and the penalty charge of 5% per month was also reduced to 1.167% per month or
14% per annum.
The
attorney’s fees here are in the nature of liquidated damages and the
stipulation therefor is aptly called a penal clause. So long as the stipulation
does not contravene the law, morals, public order or public policy, it is
binding upon the obligor. Nevertheless, in the case at bar, petitioner’s
failure to comply fully with her obligation was not motivated by ill will or
malice. The partial payments she made were manifestations of her good faith.
Hence the attorney’s fees were reduced to 10% of the total due and payable.
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