A.C. No. 12661 - Katipu, Jr. vs. Carrera

The case arose from a collection of money action filed by Alex A. Jaucian against Restituta M. Imperial on October 26, 1989.
The dispute involved several loans allegedly given by the plaintiff to the defendant, evidenced by six separate promissory notes and corresponding guarantee checks.
The Regional Trial Court (RTC) of Naga City rendered a decision on August 31, 1993, which was later affirmed by the Court of Appeals (CA).
The petitioner elevated the issue through a Petition for Review under Rule 45, seeking to challenge both the RTC’s decision and the CA’s resolution denying a Motion for Reconsideration.

The total principal released amounted to P320,000.00.
Promissory notes executed by the defendant included a stipulation for interest at 16% per month and provided details on due dates, penalties, attorney’s fees, and additional charges.
Each note’s face value exceeded the original loan release since it incorporated interest computed from the date of the note up to its maturity.

For each loan, guarantee checks were issued which were to be exchanged for cash upon maturity.
Specific exhibits (aDa, aEa, aFa, aGa, aHa, aIa) documented the terms, the number of checks issued per note, and the arrangement regarding the conversion of checks into cash.
Despite several partial payments made by the defendant, the payments were consistently insufficient to meet the demands of the loans, accrual of interests, and additional charges.

The RTC computed the remaining obligation considering the total loans, accrued interest, penalties, and attorney’s fees, culminating in a contested balance.
As of August 16, 1991, the cumulative unpaid amount had escalated to P2,807,784.20.
The RTC’s factual findings confirmed that only a total of P116,540.00 had been paid on twenty-nine separate occasions toward the principal of P320,000.00.
Subsequent computations by the lower courts and affirmations by the CA upheld these findings.

The trial court declared Section I of the Central Bank Circular No. 905, series of 1982, devoid of force and legal effect, arguing that it was promulgated with grave abuse of discretion.
The decision also held that stipulated interest rates, penalties, and attorney’s fees were iniquitous, unconscionable, and contrary to the morals and provisions of the Usury Law.

Petitioner's contention that she had already fully paid her loan obligations prior to filing the case.
The issue centers on whether the factual findings regarding the remaining balance (P208,430) are supportable based on the evidence.

The argument that interest charged at twenty-eight (28%) percent per annum (resulting from an initial 16% per month rate, later reduced) is illegal, particularly as there was no further written agreement modifying said rate.
The issue involves determining the applicable rate under equitable adjustment and whether the lower courts erred in applying a rate higher or lower than the petitioner's desired 12% per annum.

The allegation that the agreed attorney’s fees, initially at 25% of the principal and accrued interest, are exorbitant.
The petitioner argues these fees should be curtailed based on equitable grounds given her partial compliance with the obligation.

The contention that the stipulated penalty of 5% per month (or 60% per annum), effectively functioning as concealed interest, exceeds what is justifiable and should be considered iniquitous.
This issue questions the appropriateness of the penalty rate and if it should be equitably reduced.

The petitioner maintained that the omission of her husband from the proceedings should have led to the dismissal of the case as a defect in joinder.
The issue examines whether this non-joinder affects the adjudication of the case or constitutes a mere technicality that can be remedied.