Case Digest (G.R. No. 170452)
Facts:
In February and March 1999, Salvador Chua and Violeta Chua, Petitioners, granted several loans to Rodrigo Timan, Ma. Lynn Timan and Lydia Timan, Respondents, evidenced by promissory notes bearing stipulated interest of seven percent per month later reduced to five percent per month, secured by postdated checks; respondents paid at those rates through December 1999. Respondents deposited PHP 864,000 with the Clerk of Court on May 3, 2000 and filed for consignation and damages; the RTC released the deposit by Partial Judgment, and on May 14, 2004 the RTC held the stipulated interest rates excessive and ordered refund of interest in excess of one percent per month; the Court of Appeals affirmed by Decision dated March 9, 2005 and denied reconsideration by Resolution dated November 24, 2005.Issues:
- Did the Court of Appeals err in declaring the stipulated interest rates of 7% and 5% per month unconscionable and in orderi
Case Digest (G.R. No. 170452)
Facts:
- Parties and capacity
- Salvador Chua and Violeta Chua, Petitioners, as lenders.
- Rodrigo Timan, Ma. Lynn Timan and Lydia Timan, Respondents, as borrowers.
- Loans and instruments
- Six loans made in February and March 1999 in the amounts of P100,000; P200,000; P150,000; P107,000; P200,000; and P107,000.
- Loans evidenced by promissory notes stipulating interest at 7% per month, later reduced by agreement to 5% per month.
- Security: Rodrigo and Ma. Lynn issued five postdated checks securing the loans; the P150,000 loan was secured by a postdated check issued by Lydia.
- Payment history and attempted settlement
- Respondents paid interest at 7% per month until September 1999.
- Respondents paid interest at 5% per month from October to December 1999.
- In March 2000 respondents offered a Philippine National Bank manager's check for P764,000 to pay principal; petitioners refused, insisting on P864,000.
- On May 3, 2000 respondents deposited P864,000 with the Clerk of Court of the RTC of Quezon City and thereafter filed an action for consignation and damages.
- Proceedings in the Regional Trial Court
- Petitioners moved to dismiss the consignation case; the RTC denied the motion and the subsequent motion for reconsideration.
- By Partial Judgment dated October 16, 2002, the Clerk of Court released P864,000 to petitioners.
- Trial proceeded on the validity of the stipulated interest rates and on damages.
- RTC Decision dated May 14, 2004: ruled the stipulated interest rates of 7% and 5% per month were excessive; ordered petitioners to refund interes...(Subscriber-Only)
Issues:
- Main issue presented
- 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.
- Arguments of the parties
- Petitioners' contentions:
- Central Bank Circular No. 905-82 removed the interest ceilings prescribed by the Usury Law, so stipulated rates of 5% per month and higher are not usurious.
- Respondents were in *pari delicto* because they agreed to the stipulated rates.
- Petitioners honestly believed the rates were not usurious (good faith).
- Respondents' contentions:
- Citing Medel v. Court of Appeals, the stipulated rates of 7% and 5% per month are iniquitous, uncons...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
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Doctrine:
- (Subscriber-Only)