FIRST DIVISION
[G.R. No. 204042. March 6, 2019.]
SPOUSES ROMEO TAN AND SHIRLYN TAN, petitioners, vs.GONZALO T. DUMLAO, ELIZABETH U. LIM, AND P.R. FUNDS LENDING CORPORATION, respondents.
NOTICE
Sirs/Mesdames :
Please take notice that the Court, First Division, issued a Resolution datedMarch 6, 2019which reads as follows:
"G.R. No. 204042 (Spouses Romeo Tan and Shirlyn Tan v. Gonzalo T. Dumlao, Elizabeth U. Lim, and P.R. Funds Lending Corporation). — This is a petition for review on certiorari1 assailing the Decision 2 dated June 29, 2012 and Resolution 3 dated October 18, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 96000. The CA affirmed with modification the Decision 4 dated June 22, 2010 of Branch 215 of the Regional Trial Court (RTC) of Quezon City in Civil Case No. Q-98-35432.
In 1994, Spouses Romeo and Shirlyn Tan (petitioners) tried to borrow money from Gonzalo T. Dumlao (Dumlao) and Elizabeth U. Lim (Lim), owners of P.R. Funds Lending Corporation (P.R. Funds), a financing company, (collectively, respondents) to save their properties from foreclosure by PCI Bank. Since petitioners did not have the necessary amount, respondents advised them to borrow from China Bank instead. However, China Bank declined to extend petitioners a loan as it found them not credit worthy. Because of this, respondents stand as petitioners' co-borrowers with China Bank under certain conditions. 5 First, petitioners themselves will pay the loan. Second, petitioners will borrow from Philam Life Bank, and the proceeds will be used to pay the China Bank loan so that respondents could be removed as borrowers from China Bank. Third, petitioners will pay 2.5% fronting fee of the P5,000,000.00 original loan. Fourth, petitioners will pay respondents 3% per annum over the bank rate imposed on the monthly amortization until the loan is fully paid. Fifth, if petitioners failed to pay the loans, they will convey their properties to respondents, the consideration of which will be the amount that the latter advanced to China Bank. 6
Respondents accommodated petitioners in three loans amounting to a total of P9,500,000.00: P5,000,000.00 in January 1995, 7 P3,000,000.00 in February 1996, 8 and P1,500,000.00 in July 1996. 9 All these loans were to be paid by petitioners by monthly amortizations with China Bank. However, they were only able to pay up to November 1996. Thereafter, petitioners failed to pay the monthly amortizations, prompting respondents to advance the payments to protect their credit standing with China Bank. 10 CAIHTE
As of July 30, 1999, the total amount advanced by respondents to China Bank is P7,190,809.87. 11 This is supported by debit memos issued by China Bank to respondents. 12 However, pursuant to their agreement, respondents computed petitioners' total obligation at P9,847,410.26, broken down as follows: P7,559,518.24 which represents the 3% per annum mark-up over the prevailing bank rate and P2,287,892.02 past due interest. 13
Instead of settling their obligation, petitioners filed a complaint for sum of money and damages 14 against respondents, docketed as Civil Case No. Q-98-35432. Petitioners claimed that they already paid China Bank P3,959,869.69 as settlement of their loan obligation with the bank. Believing that they have already overpaid respondents, petitioners claimed that they are entitled to recover from respondents the amount paid to China Bank. 15
In their amended answer with counterclaim, 16 respondents assert that petitioners have failed to pay the China Bank loans according to the stipulated amortization payment, compelling respondents to cover up the difference, as evidenced by debit memos deducted from the latter's deposits with China Bank. 17 Thus, petitioners are obliged to pay respondents the amount of P7,190,809.87, representing payments or advances by the latter to China Bank on behalf of petitioners, as of July 30, 1999. 18 They also prayed that petitioners be made to pay the agreed 3% mark-up, with its accruing interest and penalties. 19
During the trial, Dumlao testified that petitioners recognized their obligations when they submitted the Proposed Settlement 20 dated May 29, 1997 in the related criminal cases that respondents filed against them. Petitioners proposed to pay P3,749,942.57 in installments. However, respondents rejected the proposal.
In its Decision 21 dated June 22, 2010, the RTC dismissed petitioners' complaint for failure to substantiate their claim. The trial court found that petitioners failed to adduce evidence to support their claim of overpayment. 22 The allegations of the complaint merely set forth financial transactions, lacking in details from which the RTC can infer the amount of overpayment, if any.
However, the RTC found sufficient evidence to sustain respondents' counterclaim. It held that petitioners were bound by their admission of liability amounting to P3,749,942.57 in their Proposed Settlement, and were estopped from questioning the declarations they made therein. 23 As regards the imposable interest, the RTC annulled the alleged stipulated interest of 3% per annum accommodation fee in addition to the bank's monthly interest on the outstanding obligation, and the 3% interest per month on the amortized loan as they were excessive, iniquitous, and unconscionable. 24 In lieu thereof, the RTC imposed the legal interest of 12% per annum. Nevertheless, the RTC stated that it was bound by petitioners' admission in the Proposed Settlement and will respect the imposition of the interests as stipulated up to May 29, 1997, the date of the Proposed Settlement. 25 The relevant portions of the RTC Decision read:
The plaintiffs, in their Proposed Settlement admitted their obligation under Statement of Account dated May 8, 1997 in the amount of Php3,749,942.57. This Court may rely from this amount as the reckoning period from which the obligation of the plaintiffs may be determined, they being estopped from now assailing the same. Having nullified the imposition of exorbitant interests imposed by the defendants, nevertheless, this Court is bound by said admission of the plaintiffs and will respect the imposition of the interests but only up to May 29, 1997. Thereafter, the defendants shall be entitled only to the legal interest of 12% per annum on the unpaid obligations until the same is fully settled.
All the other claims for damages and attorney's fees of the defendants must be denied for his failure to substantiate the same by evidence.
WHEREFORE, premises considered, the complaint filed by the plaintiffs is hereby DISMISSED for failure to substantiate the same.
The counterclaim of the defendants is hereby [GRANTED] ordering the plaintiffs to pay the latter the amount of Php3,749,942.57 plus twelve (12%) interest from May 29, 1997 until the said amount is fully settled.
All other claims for damages and attorney's fees are denied for lack of factual and legal basis. HEITAD
SO ORDERED. 26
Both parties appealed the RTC Decision. As petitioners failed to file their brief, the CA issued a Resolution dated October 3, 2011 declaring their appeal abandoned and dismissed it. The CA then proceeded to resolve respondents' appeal. 27
In its Decision 28 dated June 29, 2012, the CA affirmed with modification the RTC Decision and held that the total sum of advances made by respondents as payment for petitioners' China Bank loan amounted to P7,190,809.87.
The CA further ruled that the RTC erred in giving effect to the interest respondents stipulated even after declaring it excessive and unconscionable. It held that when the interest stipulated by the parties is declared to be excessive, iniquitous, or unconscionable, it is deemed as if it was never agreed upon, and the legal rate of interest will be applied instead. Accordingly, it cannot be given effect at any time even if voluntarily assumed by the obligor. The CA found that the reckoning date of the imposition of legal interest should be May 29, 1997, or the date of petitioners' admission of liability. 29 Thus, petitioners were ordered to pay the amount of P7,190,809.87 plus 12% interest commencing from May 29, 1997 until full payment thereof. 30
Petitioners' subsequent motion for partial reconsideration was denied in a Resolution 31 dated October 18, 2012.
Petitioners now dispute the RTC and CA's findings that they are liable to pay respondents the amount advanced by the latter to China Bank and insist that they have already overpaid respondents.
We deny the petition.
At the outset, We emphasize that the Rules of Court require that only questions of law should be raised in a petition for review on certiorari as this Court is not a trier of facts. Factual findings of the appellate courts are final, binding or conclusive on the parties and upon Us when supported by substantial evidence.
Here, the questions of whether respondents were able to prove that they made advances to China Bank as payment for petitioners' loan and whether petitioners proved that they have already paid off their obligation to respondents are questions of fact that can be resolved only by reviewing and evaluating the parties' respective evidence. These questions require us not only to go over the records, but also to consider the credibility of the parties' witnesses and determine which between them presented evidence sufficient to prove their claims. We do not perform these tasks. While it is true that there are established exceptions 32 to this rule, this case does not fall under any of the exceptions. ATICcS
Moreover, petitioners' argument that they no longer have any obligation to respondents remains an unsubstantiated allegation. Petitioners failed to present any evidence to prove claim of payment to respondents. It is basic that one who alleges a fact has the burden of proving it and the proof should be clear, positive and convincing. Mere allegation is not evidence. 33
Thus, We affirm the CA's findings that petitioners are liable to pay respondents the total amount of P7,190,809.87 representing the total amount of advances made by respondents to China Bank to pay off petitioners' loan.
Likewise, we also affirm the CA's disposition with respect to the rate of interest to be applied on petitioners' obligation. Contrary to the ruling of the RTC which held that the parties are still bound by the void stipulated interest rates until May 29, 1997, the CA held that when the interest stipulated by the parties is declared to be excessive, iniquitous or unconscionable, it is deemed as if it was never agreed upon and the legal rate of interest is applied instead. 34 The CA held that the stipulated interest rates cannot be given effect at any time even if voluntarily assumed by petitioners. Indeed, the imposition of iniquitous and unconscionable interest rate renders the same void. Since the stipulation on the interest rate is void, it is as if there was no express contract thereon, in which case, courts may reduce the interest rate as reason and equity demand. 35
In view, however, of Our ruling in Nacar v. Gallery Frames, 36 We modify the rate of legal interest imposed. In Nacar, We discussed the modification on the rules in the computation of legal interest as a result of the Bangko Sentral ng Pilipinas Monetary Board's Resolution No. 796 dated May 16, 2013. We explained:
Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated May 16, 2013, approved the amendment of Section 2 of Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799, Series of 2013, effective July 1, 2013, the pertinent portion of which reads:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:
Section[ ]1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum.
Section[ ]2. In view of the above, Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
xxx xxx xxx
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows: TIADCc
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein. 37 (Emphasis and citations omitted.)
Accordingly, and pursuant to our ruling in Nacar, the sum of P7,190,809.87 due to respondents shall earn interest at the rate of 12% per annum from May 29, 1997 until June 30, 2013 and thereafter, at the rate of 6% per annum from July 1, 2013 until finality of this Resolution. The total amount owing to respondents as set forth in this Resolution shall further earn legal interest at the rate of 6% per annum from its finality until full payment. 38
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 96000 dated June 29, 2012 and October 18, 2012 are AFFIRMED with MODIFICATION by directing petitioners to pay respondents the following: AIDSTE
1) The principal amount of P7,190,809.87;
2) Interest of 12% per annum from May 29, 1997 until June 30, 2013;
3) Interest of 6% per annum from July 1, 2013 until finality of this Resolution; and
4) The total monetary award shall further earn an interest of 6% per annum from finality of this Resolution until fully paid.
SO ORDERED."
Very truly yours,
(SGD.) LIBRADA C. BUENADivision Clerk of Court
Footnotes
1.Rollo, pp. 8-22.
2.Id. at 107-120; penned by Presiding Justice Andres B. Reyes, Jr. (now a Member of this Court), concurred in by Associate Justices Sesinando E. Villion and Amy C. Lazaro-Javier.
3.Id. at 121-125.
4.Id. at 88-106.
5. RTC records, pp. 209, 225-226.
6.Id. at 225-226, 1018-1019.
7.Id. at 632-633.
8.Id. at 634.
9.Id. at 631.
10.Rollo, p. 98.
11. RTC records, pp. 792.
12.Id. at 794-841.
13.Id. at 792.
14.Rollo, pp. 23-27. On April 25, 2002, petitioners filed an amended complaint, see rollo, pp. 28-33.
15.Id. at 31.
16.Id. at 71-87.
17.Id. at 76.
18.Id. at 78.
19.Id. at 75, 85.
20. RTC records, pp. 649-650.
21. Supra note 4.
22. Rollo, pp. 102-103.
23. Id. at 106.
24. Id. at 104.
25. Id. at 106.
26. Id.
27. CA rollo, pp. 162-163.
28. Supra note 2.
29. Rollo, pp. 117-118.
30. Id. at 120.
31. Supra note 3.
32. These exceptions are: (1) When the conclusion is a finding grounded entirety on speculation, surmises and conjectures; (2) When the inference made is manifestly mistaken, absurd or impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (7) When the findings are contrary to those of the trial court; (8) When the findings of fact are conclusions without citation of specific evidence on which they are based; (9) When the facts set forth in the petition as well as in the petitioners' main and reply briefs are not disputed by the respondents; and (10) When the findings of fact of the Court of Appeals are premised on the supposed absence of evidence and contradicted by the evidence on record (Daayata v. People, G.R. No. 205745, March 8, 2017, 820 SCRA 58, 67-68, citations omitted).
33. Noblejas v. Italian Maritime Academy Phils., Inc., et al., 735 Phil. 713, 721 (2014) citing General Milling Corporation-Independent Labor Union v. General Milling Corporation, G.R. No. 183122, June 15, 2011, 652 SCRA 235, 258.
34. Rollo, p. 117.
35. Fausto v. Multi Agri-Forest and Community Development Cooperative (Formerly MAF Camarines Sur Employee Cooperative, Inc.), G.R. No. 213939, October 12, 2016, 806 SCRA 50, 71. Citation omitted.
36. G.R. No. 189871, August 13, 2013, 703 SCRA 439.
37. Id. at 454-458.
38. See United Alloy Philippines Corporation v. United Coconut Planters Bank, G.R. No. 175949, January 30, 2017, 816 SCRA 70.