New Sampaguita
New Sampaguita
New Sampaguita
*
G.R. No. 148753. July 30, 2004.
_______________
* THIRD DIVISION.
566
567
568
569
570
571
PANGANIBAN, J.:
The Case
1
Before us is a Petition for Review under Rule 45 of the
Rules of2 Court, seeking to nullify
3
the June 20, 2001
Decision of the Court of Appeals (CA) in CA-G.R. CV No.
55231. The decretal portion of the assailed Decision reads
as follows:
_______________
572
The Facts
“On February 11, 1989, Board Resolution No. 05, Series of 1989
was approved by [Petitioner] NSBCI [1)] authorizing the company
to x x x apply for or secure a commercial loan with the PNB in an
aggregate amount of P8.0M, under such terms agreed by the
Bank and the NSBCI, using or mortgaging the real estate
properties registered in the name of its President and Chairman
of the Board [Petitioner] Eduardo R. Dee as collateral; [and] 2)
authorizing [petitioner-spouses] to secure the loan and to sign any
[and all] documents which may be required by [Respondent]
PNB[,] and that [petitioner-spouses] shall act as sureties or co-
obligors who shall be jointly and severally liable with [Petitioner]
NSBCI for the payment of any [and all] obligations.
“On August 15, 1989, Resolution No. 77 was approved by
granting the request of [Respondent] PNB thru its Board NSBCI
for an P8 Million loan broken down into a revolving credit line of
P7.7M and an unadvised7
line of P0.3M for additional operating
and working capital to mobilize its various construction projects,
namely:
_______________
4 Petitioners herein.
5 Respondent herein.
6 CA Decision, pp. 24-25; Rollo, pp. 182-183.
7 “Working capital” refers to current assets minus current liabilities.
573
VOL. 435, JULY 30, 2004 573
New Sampaguita Builders Construction, Inc. (NSBCI) vs.
Philippine National Bank
_______________
574
_______________
575
576
‘In view of the foregoing, the Court believes and so holds that the
[respondent] has no cause of action against the [petitioners].’
9
_______________
577
Issues
“I
“II
“III
“IV
“V
_______________
10 The Petition was deemed submitted for decision on August 19, 2002,
upon receipt by the Court of petitioners’ Memorandum signed by Atty.
Cesar M. Cariño. Respondent’s Memorandum, signed by Attys. Flerida P.
Zaballa-Banzuela and Dinah B. Tabada, was filed on June 28, 2002.
579
“VI
At the
12
outset, it must be stressed that only questions of
law may be raised in a petition for review on certiorari
under Rule 45 of the Rules of Court. As a rule, questions of
fact cannot be the
_______________
580
13
subject of this mode 14of appeal, for “[t]he Supreme Court is
not a trier of facts.” As exceptions to this rule, however, 15
factual findings of the CA may be reviewed on appeal
when, inter16
alia, the factual inferences are manifestly
mistaken;
17
the judgment is based on a misapprehension of
facts; or the CA manifestly overlooked certain relevant
and undisputed facts that, if properly 18
considered, would
justify a different legal conclusion. In the present case,
these exceptions exist in various instances, thus prompting
us to take cognizance of factual issues and to decide upon
them in the interest19
of justice and in the exercise of our
sound discretion.
Indeed, Petitioner NSBCI’s loan accounts with
respondent appear to be bloated with some iniquitous
imposition of interests, penalties, other charges and
attorney’s fees. To demonstrate this point, the Court shall
take up one by one the promissory notes, the credit
agreements and the disclosure statements.
_______________
13 Perez v. Court of Appeals, 374 Phil. 388, 409-410; 316 SCRA 43,
October 1, 1999.
14 Far East Bank & Trust Co. v. Court of Appeals, 326 Phil. 15, 18; 256
SCRA 15, 18, April 1, 1996, per Hermosisima Jr., J.
15 Alsua-Betts v. Court of Appeals, 92 SCRA 332, 366, July 30, 1979.
16 Luna v. Linatoc, 74 Phil. 15, October 28, 1942.
17 De La Cruz v. Sosing, 94 Phil. 26, 28, November 27, 1953.
18 Larena v. Mapili, 408 SCRA 484, 489, August 7, 2003, per
Panganiban, J.; and The Heirs of Felicidad Canque v. Court of Appeals,
341 Phil. 738, 750; 27 SCRA 741, July 21, 1997.
19 Feria and Noche, Civil Procedure Annotated, Vol. 2 (2001), p. 203.
20 Exhibits “C”, “C-1”, and “C-2”; Exhibits “13”, “13-B”, and “13-C”;
folder of exhibits, Vol. I, pp. 5-7.
21 De Leon, Comments and Cases on Credit Transactions (1995), p. 32.
581
No interest
22
shall be due, unless expressly stipulated in
writing. It would be the zenith of farcicality to specify and
agree upon rates that could be subsequently upgraded at
whim by only one party to the agreement. 23
The “unilateral determination and imposition” of
increased rates is “violative of the principle
24
of mutuality of
25
contracts ordained in Article 1308 of the Civil Code.”
One-sided impositions do not have the force of law between
the parties, because such impositions are not based on the
parties’ essential equality. 26
Although escalation clauses are valid in maintaining
fiscal stability and
27
retaining the value of money on long-
term contracts, giving respondent an unbridled right to
adjust the interest independently and upwardly would
completely take away from petitioners the “right to assent
28
to an important modification in their agreement” and
would also negate the element of mutuality in their
contracts. The clause cited earlier made the fulfillment of
the contracts
29
“dependent exclusively upon the uncontrolled
will” of respondent and was therefore void. Besides, the
pro forma promis-
_______________
“Escalation clauses are not basically wrong or legally objectionable as long as they
are not solely potestative but based on reasonable and valid grounds.” Polotan Sr.
v. Court of Appeals, 357 Phil. 250, 260; 296 SCRA 247, 258, September 25, 1998,
per Romero, J.
582
30
sory notes have the character of a contract d’adhésion,
“where the parties do not bargain on equal footing, the
weaker party’s [the debtor’s] participation 31
being reduced to
the alternative ‘to take it or32 leave it.’ ”
“While the Usury Law ceiling on interest 33
rates was
lifted by [Central Bank] Circular No. 905, nothing in the
said Circular grants lenders carte blanche authority to
raise interest rates to levels which will either enslave their
34
borrowers or lead to a hemorrhaging of their assets.” In
fact, we have declared nearly ten years ago that neither
this Circular nor PD 1684, which further amended the
Usury Law, “authorized either party to unilaterally35
raise
the interest rate without the other’s consent.”
Moreover, a similar case eight years ago pointed out to
the same respondent (PNB) that borrowing signified a
capital transfusion from lending institutions to businesses
and industries and was done for the purpose of stimulating
their growth; yet respondent’s continued “unilateral and
36
36
lopsided policy”
37
of increasing interest rates “without the
prior assent” of the borrower not only defeats this
purpose, but also deviates from this pronouncement.
Although such increases are not usurious, since the “Usury
Law is now le-
_______________
583
38
gally inexistent” —the interest ranging from 26 39
percent to
35 percent in the statements of account —“must be
equitably reduced
40
for being iniquitous, unconscionable and
exorbitant.” Rates found to be iniquitous or
unconscionable are 41
void, as if it there were no express
contract thereon. Above all, it is undoubtedly against 42
public policy to charge excessively for the use of money.
It cannot be argued that assent to the increases can be
implied either from the June 18, 1991 request of petitioners
for loan restructuring or from their lack of response to the
statements of account sent by respondent. Such request
does not indicate any agreement to an interest increase;
there can be no implied waiver of a right when there is no 43
clear, unequivocal and decisive act showing such purpose.
Besides, the statements were not letters of information
sent to secure their conformity; and even if we were to
presume these as an offer, there was no acceptance. No one
receiving a proposal to modify a loan contract, especially
interest—a44
vital component—is “obliged to answer the
proposal.”
Furthermore, respondent did not follow the stipulation
in the Promissory Notes providing for the automatic
conversion of the portion that remained unpaid after 730
days—or two years from date of original release—into a
medium-term loan, subject to the applicable 45interest rate to
be applied from the dates of original release.
_______________
38 Medel v. Court of Appeals, 359 Phil. 820, 829; 299 SCRA 481, 489,
November 27, 1998, per Pardo, J. See also People v. Dizon, 329 Phil. 685,
696; 260 SCRA 851, 859, August 22, 1996; Liam Law v. Olympic Sawmill
Co., 214 Phil. 385, 388; 129 SCRA 439, 442, May 28, 1984; People’s
Financing Corp. v. Court of Appeals, 192 SCRA 34, 40, December 4, 1990;
and Javier v. De Guzman Jr., 192 SCRA 434, 439, December 19, 1990.
39 These are billings sent by respondent to petitioner showing the
details of its outstanding claim against the latter as of a given date.
40 Spouses Solangon v. Salazar, supra, p. 822; p. 384.
41 Imperial v. Jaucian, supra, p. 525.
42 De Leon, supra, p. 50.
43 Tolentino, Commentaries and Jurisprudence on the Civil Code of the
Philippines, Vol. I (1990), p. 29.
44 Philippine National Bank v. Court of Appeals, supra at note 25, p. 63,
per Mendoza, J. (citing Philippine National Bank v. Court of Appeals,
supra at note 28, pp. 26-27).
45 Exhibits “C”, “C-1”, and “C-2”; Exhibits “13”, “13-B”, and “13-C”;
folder of exhibits, Vol. I, pp. 5-7.
584
46 47 48
In the first, second and third Promissory Notes, the
amount that remained unpaid as of October 27, 1989,
December 1989 and January 4, 1990—their respective due
dates—should have been automatically converted by
respondent into medium-term loans on June 30, 1991,
September 2, 1991, and September 7, 1991, respectively.
And on this unpaid amount should have been imposed the
same interest rate charged by respondent on other
medium-term loans; and the rate applied from June 29,
1989, September 1, 1989 and September 6, 1989—their
respective original release—until paid. But these steps
were not taken. Aside from sending demand letters,
respondent did not at all exercise its option to enforce
collection as of these Notes’ due dates. Neither did it renew
or extend the account.
In these three Promissory Notes, evidently, no complaint
for collection was filed with the courts. It was not until
January 30, 1992 that a Petition for Sale of the mortgaged 49
properties was filed—with the provincial sheriff, instead.
Moreover, respondent did not supply the interest rate to be
charged on medium-term loans granted by automatic
conversion. Because of this deficiency, we shall use the
legal rate of 12 percent per annum on loans and 50
forbearance of money, as provided for by CB Circular 416.
Credit Agreements. Aside from the promissory notes,
another main document involved in the principal obligation
is the set of credit agreements executed
51
and their annexes.
The first Credit Agreement dated June 19, 1989—
although offered and admitted in evidence, and even
referred to in the first Promissory Note—cannot be given
weight.
First, it was not52
signed by respondent through its
branch manager. Apparently it was surreptitiously
acknowledged before respondent’s counsel, who
unflinchingly declared that it had been
_______________
585
_______________
586
586 SUPREME COURT REPORTS ANNOTATED
New Sampaguita Builders Construction, Inc. (NSBCI) vs.
Philippine National Bank
_______________
587
69
Second, there was no 7-page annex offered 70
in evidence
that contained the General Conditions, notwithstanding
the Acknowledgment of its existence by respondent’s
counsel. Thus, no terms or conditions could be appended to
the Agreement other than those specified therein. 71
Third, the 12-page General Conditions offered and
admitted in evidence had no probative value. There was no
reference to it in the Acknowledgment of the Agreement;
neither was respondent’s signature on any of the pages
thereof. Thus, the 72General Conditions’ stipulations on
interest adjustment, whether on a fixed or a floating
scheme, had no effect whatsoever on the 73
Agreement.
Contrary to the trial court’s findings, the General 74
Condition were correctly objected to by petitioners. The
rate of 21.5 percent agreed upon in the second Note thus
continued to apply to the second availment, until its
automatic conversion into a medium-term
75
loan.
The third Credit Agreement dated September 5, 1989,
provided for the same rate of interest as that in the second
Agreement. This rate was to be applied to availments of an
unadvised line of P300,000. Since there was no mention in
the third Agreement,
76
either, of any stipulation on increases
or decreases in interest, there would be no basis for
imposing amounts higher than the prime rate plus spread.
Again, the 21.5 percent rate agreed upon would continue to
apply to the third availment indicated in the third Note,
until such amount was automatically converted into a
medium-term loan.
The Court also finds that, 77first, although this document
was admitted by petitioners, it was the credit line that
expired one
_______________
588
78
year from the implementation of the Agreement. The
terms and conditions therein continued to apply, even if
availments could no longer be drawn after expiry. 79
Second, there was again no 7-page80 annex offered that
contained the General Conditions, regardless of the
Acknowledgment by the same respondent’s counsel
affirming its existence. Thus, the terms and conditions in
this Agreement relating to interest cannot be expanded
beyond that which was already laid down by the parties.
Disclosure Statements.81
In the present case, the
Disclosure Statements furnished by respondent set forth
the same interest rates as those respectively indicated in
the Promissory Notes. Although no method of computation
was provided showing how such rates were arrived at, we
will nevertheless take up the Statements seriatim in order
to determine the applicable rates clearly.
As to the 82
first Disclosure Statement on Loan/Credit
Transaction dated June 13, 1989, we hold 83
that the 19.5
percent effective interest rate per annum would indeed
apply to the first availment or drawdown evidenced by the
first Promissory Note. Not only was this Statement issued
prior to the consummation of such availment or drawdown,
but the rate shown therein can also be considered
equivalent to 3 percent over and above respondent’s prime
rate in effect. Besides, respondent mentioned no other rate
that it considered to be the prime rate chargeable to
petitioners. Even if we disregarded the related Credit
Agreement, we assume that this private 84
transaction
between the parties was fair and regular, 85
and that the
ordinary course of business was followed.
As to the86 second Disclosure Statement on Loan/Credit
Transaction dated September 2, 1989, we hold that the
21.5 percent effec-
_______________
589
87
tive interest rate per annum would definitely apply to the
second availment or drawdown evidenced by the second
Promissory Note. Incidentally, this Statement was issued
only after the consummation of its related availment or
drawdown, yet such rate can be deemed equivalent to the
prime rate plus spread, as stipulated in the corresponding
Credit Agreement. Again, we presume that this private
transaction was fair and regular, and that the ordinary
course of business was followed. That the related
Promissory Note was pre-signed would also bolster
petitioners’ claim although, under cross-examination
88
Efren
Pozon—Assistant Department Manager I of PNB,
Dagupan Branch—testified that the Disclosure
89
Statements
were the basis for preparing the Notes.
As to the 90
third Disclosure Statement on Loan/Credit
Transaction dated September 6, 1989, we hold that 91
the
same 21.5 percent effective interest rate per annum would
apply to the third availment or drawdown evidenced by the
third Promissory Note. This Statement was made available
to petitioner-spouses, only after the related Credit
Agreement had been executed, but simultaneously with the
consummation of the Statement’s related availment or
drawdown. Nonetheless, the rate herein should still be
regarded as equivalent to the prime rate plus spread,
under the similar presumption that this private
transaction was fair and regular and that the ordinary
course of business was followed.
In sum, the three disclosure statements, as well as the
two credit agreements considered by this Court, did not
provide for any increase in the specified interest rates.
Thus, none would now be permitted. When cross-examined,
Julia Ang-Lopez, Finance Account Analyst II of PNB,
Dagupan Branch, even testified that the bases for
computing such rates were those sent by the head office
from time to time, and92 not those indicated in the notes or
disclosure statements.
_______________
590
Penalty, or Increases
Thereof, Unjustified
No penalty charges or increases
96
thereof appear either in
the Disclosure Statements or in any of97the clauses in the
second and the third Credit Agreements earlier discussed.
While a standard penalty charge of 6 percent per annum
has been imposed on the amounts stated in all three
Promissory Notes still98
remaining unpaid or unrenewed
when they fell due, there is no stipulation therein that
would justify any increase in that charges. The effect,
therefore, when the borrower is not clearly informed of the
Disclosure Statements—prior to the consummation of the
availment or drawdown—is that 99
the lender will have no
right to collect upon such charge or increases thereof, even
if stipulated in the Notes. The time is now ripe to give teeth
to the100
often ignored forty-one-year old “Truth in Lending
Act” and thus transform it from a snivelling paper tiger
to a growling financial watchdog of hapless borrowers.
_______________
591
_______________
See Palmares v. Court of Appeals, 351 Phil. 664, 677; 288 SCRA 422, 432, March
31, 1998; and Garcia v. Court of Appeals, 327 Phil. 1097, 1111; 258 SCRA 446, 456,
July 5, 1996.
592
_______________
593
_______________
594
_______________
The amount, tenor or maturity of the loan must comport with the actual
requirements of the borrower. The purpose of the loan or credit accommodation
must be stated in the application and documentation. Any deviation may cause
acceleration, immediate repayment, foreign currency blacklisting, or conversion
from a term loan to a demand loan. Morales, The Philippine General Banking Law
Annotated (2002), pp. 105-106.
595
_______________
596
_______________
597
141
lower than the property’s fair market value. In fact, the 142
loan value itself is only 70 percent of the appraised value.
As correctly emphasized by 143 the appellate court, a low bid
price will 144make it easier for the owner to effect
redemption by subsequently reacquiring the property or
by selling the right to redeem and thus recover alleged
losses. Besides, the public
145
auction sale has been regularly
and fairly conducted,
146
there has been ample authority to
effect the sale, and the 147 Certificates of Title148can be relied
upon. No personal notice is even required, because an
extrajudicial foreclosure is an action in rem, requiring only
notice by publication and posting, in149order to bind parties
interested in the foreclosed
150
property.
As no redemption was exercised within one year after
the date of registration of the Certificate of Sale with the
Registry of
_______________
598
151
Deeds, respondent—being the highest bidder—has the
right to a writ of possession, the final process that will
consummate the extrajudicial foreclosure. On the other
hand, petitioner-spouses, who are mortgagors
152
herein, shall
lose all their rights to the property.
_______________
599
600
Add:
Interest at 19.5% p.a.
6/30/90-12/31/90 ([5,000,000- 383,014.64
(356,821.30+821.33+767,087.92)]x
19.5% x [185/365])
1/1/91-6/29/91 ([5,000,000- 372,662.90
(356,821.30+821.33+767,087.92)]
x 19.5% x [180/365])
Interest at 12% p.a. upon automatic conversion
6/30/91-8/8/91 ([5,000,000- 50,962.45 806,639.99 806,639.99
(36,821.30+821.33+767,087.92)] x
12% x [40/365])
Amount due as of 8/8/91 4,681,909.43
Less: Payment on 8/8/91 (pro-rated upon 493,906.31 493,906.31
interest)
Balance 312,733.68 4,188,003.13
Add:
Interest at 12% p.a.
8/9/91-8/15/91 ([5,000,000- 8,918.43 8,918.43
(356,821.30+821.33+767,087.92)] x 12% x
[7/365])
Amount due as of 8/15/91 321,652.11 4,196,921.55
Less: Payment on 8/15/91 (pro-rated upon 86,593.37 86,593.37
interest)
Balance 235,058.74 4,110,328.18
Add:
Interest at 12% p.a.
8/16/91-11/29/91 ([5,000,000- 135,050.49 135,050.49
(356,821.30+821.33+767,087.92)]x 12% x
[106/365])
Amount due as of 11/29/91 370,109.22 4,245,378.67
Less: Payment on 11/29/91 (pro-rated upon 161,096.81 161,096.81
interest)
Balance 209,012.41 4,084,281.86
Add:
Interest at 12% p.a.
11/30/91-12/20/91 ([5,000,000- 26,755.28 26,755.28
(356,821.30+821.33+767,087.92)] x12% x
[21/365])
Amount due as of 12/20/91 235,767.70 4,111,037.14
Less: Payment on 12/20/91 (pro-rated upon 162,115.78 162,115.78
interest)
Balance 73,651.92 3,948,921.3
Add:
Interest at 12% p.a.
12/21/91-12/31/91 ([5,000,000- 14,281.03
(356,821.30+821.33+767,087.92)]
x12% x [11/365])
1/1/92-2/26/92 ([5,000,000- 74,001.70 88,282.74 88,282.74
(356,821.30+821.33+767,087.92)]
x 12% x [57/365])
Amount due on PN (1) asof 2/26/92 161,934.66 P4,037,204.10
601
602
Add:
Interest at 21.5% p.a.
6/30/90-12/31/90 ([2,700,000- 238,953.28
(18,209.65+523.04+488,484.22)]
x 21.5%x [185/365])
1/1/91-8/8/91 ([2,700,000- 284,160.66 523,113.94 523,113.94
(18,209.65+523.04+488,484.22)]
x 21.5%x [220/365])
Amount due as of 8/8/91 2,715,897.04
Less: Paymenton 8/8/91 (pro-rated upon 320,303.08 320,303.08
interest)
Balance 202,810.86 2,395,593.95
Add:
Interest at 21.5% p.a.
8/9/91-8/15/91 ([2,700,000- 9,041.48 9,041.48
(18,209.65+523.04+488,484.22)] x 21.5% x
[7/365])
Amount due as of 8/15/91 211,852.33 2,404,635.43
Less: Payment on 8/15/91 (pro-rated upon 57,033.69 57,033.69
interest)
Balance 154,818.64 2,347,601.74
Add:
Interest at 21.5% p.a.
8/16/91-9/1/91 ([2,700,000- 21,957.87
(18,209.65+523.04+488,484.22)]
x 21.5% x [17/365])
Interest at 12% p.a. upon automatic conversion
9/2/91-11/29/91 ([2,700,000- 64,161.43 86,119.30 86,119.30
(18,209.65+523.04+488,484.22)]
x 12% x [89/365])
Amount due as of 11/29/91 240,937.94 2,433,721.04
Less: Payment on 11/29/91 (pro-rated upon 104,872.65 104,872.65
interest)
Balance 136,065.30 2,328,848.39
Add:
Interest at 12% p.a.
11/30/91-12/20/91 ([2,700,000- 15,139.21 15,139.21
(18,209.65+523.04+488,484.22)]x 12% x
[21/365])
Amount due as of 12/20/91 151,204.51 2,343,987.61
Less: Payment on 12/20/91 (pro-rated upon 103,969.45 103,969.45
interest)
Balance 47,235.07 2,240,018.16
Add:
Interest at 12% p.a.
12/21/91-12/31/91 ([2,700,000- 7,930.06
(18,209.65+523.04+488,484.22)]x
12% x [11/365])
1/1/92-2/26/92 ([2,700,000- 41,092.15 49,022.22 49,022.22
(18,209.65+523.04+488,484.22)]
x 12%x [57/365])
Amount dueon PN (2) asof 2/26/92 96,257.28 P2,289,040.38
603
604
Add:
Interest at 21.5% p.a.
6/30/90-12/31/90 ([300,000- 26,700.60
(337.22+58.44+54,583.14)]
x 21.5% x [185/365])
1/1/91-8/8/91 ([300,000- 31,752.06 58,452.66 58,452.66
(337.22+58.44+54,583.14)]]
x 21.5% x [220/365])
Amount due as of 8/8/91 303,473.86
Less:Payment on 8/8/91 (pro-rated 35,790.61 35,790.61
upon interest)
Balance 22,662.05 267,683.25
Add:
Interest at 21.5% p.a.
8/9/91-8/15/91 ([300,000- 1,010.29 1,010.29
(337.22+58.44+54,583.14)]] x 21.5% x
[7/365])
Amount due as of 8/15/91 23,672.34 268,693.54
Less: Payment on 8/15/91 (pro-rated 6,372.93 6,372.93
upon interest)
Balance 17,299.41 262,320.61
Add:
Interest at 21.5% p.a.
8/16/91-9/6/91 ([300,000- 3,175.21
(337.22+58.44+54,583.14)]]
x 21.5% x [22/365])
Interest at 12% p.a. upon automatic conversion
9/7/91-11/29/91 ([300,000- 6,766.61 9,941.82 9,941.82
(337.22+58.44+54,583.14)]]
x 12% x [84/365])
Amount due as of 11/29/91 27,241.23 272,262.43
Less: Payment on 11/29/91 (pro-rated 11,857.24 11,857.24
upon interest)
Balance 15,383.98 260,405.18
Add:
Interest at 12% p.a.
11/30/91-12/20/91 ([300,000- 1,691.65 1,691.65
(337.22+58.44+54,583.14)]] x 12% x
[21/365])
Amount due as of 12/20/91 17,075.64 262,096.84
Less: Payment on 12/20/91 (pro-rated 11,741.35 11,741.35
upon interest)
Balance 5,334.29 250,355.49
Add:
Interest at 12% p.a.
12/21/91-12/31/91 886.10
([300,000-
(337.22+58.44+54,583.14)]]
x 12% x [11/365])
1/1/92-2/26/92 ([300,000- 4,591.63 5,477.73 5,477.73
(337.22+58.44+54,583.14)]]
x 12% x [57/365])
Amount due on PN (3) as of 2/26/92 10,812.03 P255,833.22
605
606
157
157
burden. This legal principle was the rationale for the pro-
rated computations shown on Schedule 4.
Fourth, since there was no stipulation on capitalization,
no interests due and unpaid were added to the principal; 158
hence, such interests did not earn any additional interest.
The simple—not
159
compounded—method of interest
calculation was used on all Notes until the date of public
auction. 160
In fine,
161
under solutio indebiti or payment by
mistake, there is no deficiency receivable in 162
favor of PNB,
but rather an excess claim or surplus payable by
respondent; this excess should immediately be returned to
petitioner-spouses or their 163assign—not to mention the
buildings and improvements on and the fruits of the
_______________
607
_______________
608
168
1989, that the spouses should act as such surety. But,
their solidary liability should be carefully studied, not
sweepingly assumed to cover all availments instantly.
First, the JSA was executed on 169 August 31, 1989. As
correctly adverted to by petitioners, it covered only the
Promissory Notes of P2,700,000 and P300,000 made after
that date. The terms of a contract
170
of suretyship undeniably
determine the surety’s liability171 and cannot extend beyond
what is stipulated therein. Yet, the total amount
petitioner-spouses agreed to be held liable for was
P7,700,000; by the time the JSA was executed, the first
Promissory Note was still
172
unpaid and was thus brought
within the JSA’s ambit.
Second, while the JSA included all costs, charges and
expenses that respondent might incur 173
or sustain in
connection with the credit documents, only the interest
was imposed under the pertinent Credit Agreements.
Moreover, the relevant Promissory Notes had to be resorted
to for proper valuation of the interests charged.
Third, although the JSA, as a contract of adhesion,
should be taken contra proferentum against the party who
may have caused any ambiguity therein, no such ambiguity
was found. Petitioner-spouses,
174
who agreed to be
accommodation mortgagors, can no
_______________
609
_______________
erty. Peña, Peña Jr., and Peña, supra, p. 255. See Spouses Belo v.
Philippine National Bank, 353 SCRA 359, 371, March 1, 2001.
610
610 SUPREME COURT REPORTS ANNOTATED
People vs. Medina
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