THIRD DIVISION
G.R. No. 225562, March 08, 2017
WILLIAM C. LOUH, JR. AND IRENE L. LOUH, Petitioners, v. BANK OF THE PHILIPPINE ISLANDS, Respondent.
R E S O L U T I O N
REYES, J.:
Before the Court is the instant petition for review on certiorari1 filed by William C. Louh, Jr. (William) and Irene L. Louh (Irene) (collectively, the Spouses Louh) to assail the Decision2 and Resolution,3 dated August 11, 2015 and May 23, 2016, respectively, of the Court of Appeals (CA) in CA-G.R. CV No. 100754.
In the case at bar, the CA aptly pointed out that the Spouses Louh filed their Answer with the RTC only on July 20, 2012 or more than three months after the prescribed period, which expired on March 4, 2012. When they were thereafter declared in default, they filed no motion to set aside the RTC's order, a remedy which is allowed under Rule 9, Section 332 of the Rules of Civil Procedure. The Spouses Louh failed to show that they exerted due diligence in timely pursuing their cause so as to entitle them to a liberal construction of the rules, which can only be made m exceptional cases.The rules were instituted to be faithfully complied with, and allowing them to be ignored or lightly dismissed to suit the convenience of a party like the petitioner was impermissible. Such rules, often derided as merely technical, are to be relaxed only in the furtherance of justice and to benefit the deserving. Their liberal construction in exceptional situations should then rest on a showing of justifiable reasons and of at least a reasonable attempt at compliance with them. x x x.31 (Citations omitted and emphasis and italics ours)Procedural rules are tools designed to facilitate the adjudication of cases. Courts and litigants alike are thus enjoined to abide strictly by the rules. And while the Court, in some instances, allows a relaxation in the application of the rules, this, we stress, was never intended to forge a bastion for erring litigants to violate the rules with impunity. The liberality in the interpretation and application of the rules applies only in proper cases and under justifiable causes and circumstances. While it is true that litigation is not a game of technicalities, it is equally true that every case must be prosecuted in accordance with the prescribed procedure to insure an orderly and speedy administration of justice.Like all rules, procedural rules should be followed except only when, for the most persuasive of reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the prescribed procedure.
Considering the foregoing rule, respondent BPI should not be made to suffer for petitioner Macalinao's failure to file an answer and concomitantly, to allow the latter to submit additional evidence by dismissing or remanding the case for further reception of evidence. Significantly, petitioner Macalinao herself admitted the existence of her obligation to respondent BPI, albeit with reservation as to the principal amount. Thus, a dismissal of the case would cause great injustice to respondent BPI. Similarly, a remand of the case for further reception of evidence would unduly prolong the proceedings of the instant case and render inutile the proceedings conducted before the lower courts.34chanroblesvirtuallawlibraryBPI had offered as evidence the (1) testimony of Account Specialist Carlito M. Igos, who executed a Judicial Affidavit in connection with the case, and (2) documentary exhibits, which included the (a) delivery receipts pertaining to the credit cards and the terms and conditions governing the use thereof signed by the Spouses Louh, (b) computer-generated authentic copies of the SOAs,35 and (c) demand letters sent by BPI, which the Spouses Louh received.36 The Clerk of Court subsequently prepared a Commissioner's Report, from which the RTC based its judgment.
[T]his is not the first time that this Court has considered the interest rate of 36% per annum as excessive and unconscionable. We held in Chua vs. Timan:ChanRoblesVirtualawlibraryThus, in Macalinao, the Court reduced both the interest and penalty charges to 12% each, and the attorney's fees to P10,000.00.The stipulated interest rates of 7% and 5% per month imposed on respondents' loans must be equitably reduced to 1% per month or 12% per annum. We need not unsettle the principle we had affirmed in a plethora of cases that stipulated interest rates of 3% per month and higher are excessive, iniquitous, unconscionable and exorbitant. Such stipulations are void for being contrary to morals, if not against the law. While C.B. Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets. x x xSince the stipulation on the interest rate 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 same is true with respect to the penalty charge. x x x Pertinently, Article 1229 of the Civil Code states:ChanRoblesVirtualawlibraryArt. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no perfom1ance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable.x x x [T]he stipulated penalty charge of 31% per month or 36% per annum, in addition to regular interests, is indeed iniquitous and unconscionable.39 (Citations and emphasis in the original omitted, and emphasis ours)
x x x x
(1) | the principal amount due is P113,756.83 as indicated in the Statement of Account dated October 14, 2009; |
(2) | finance and late payment charges of twelve percent (12%) each per annum shall be computed from October 14, 2009 until full payment; and |
(3) | five percent (5%) of the total amount due is to be paid as attorney's fees. |
Endnotes:
* Additional Member per Raffle dated February 20, 2017 vice Associate Justice Francis H. Jardeleza.
** Designated Fifth Member of the Third Division per Special Order No. 2417 dated January 4, 2017.
1Rollo, pp. 5-15.
2 Penned by Associate Justice Marlene Gonzales-Sison, with Associate Justices Ramon A. Cruz and Melchor Quirino C. Sadang concurring; id. at 17-27.
3 Id. at 34-35.
4 RTC records, p. 000112.
5 Id. at 000108-000109.
6 Id. at 000112.
7 Docketed as Civil Case No. 11-753, id. at 000001-000005.
8 Id. at 000029-000030.
9 Issued by Presiding Judge Eugene C. Paras; id. at 000036.
10Rollo, pp. 19, 22.
11 RTC records, pp. 000037-000039.
12 Id. at 000044-000046.
13 Id. at 000047-000048.
14 Id. at 000108-000109.
15 Id. at 000110.
16 Id. at 000111-000113.
17 Id. at 000113.
18 42% and 72% per annum, respectively.
19 RTC records, pp. 000112-000113.
20 Id. at 000114-000118.
21 Id. at 000123.
22 Id. at 000127-000128.
23Rollo, pp. 22-26.
24 Id. at 34-35.
25 Id. at 28-32.
26 Id. at 9.
27 Id. at 10.
28 Id. at 11.
29 Id. at 12.
30 G.R. No. 166944, August 18, 2014, 733 SCRA 202.
31 Id. at 219-220, citing Republic of the Philippines v. Kenrick Development Corp., 529 Phil. 876, 885-886 (2006).
32 Section 3. Default; declaration of. - If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.
(a) Effect of order of default. - A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial.
(b) Relief from order of default. - A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.
x x x x
33 616 Phil. 60 (2009).
34 Id. at 71.
35 RTC records, pp. 000060-000097.
36 Id. at 000111; rollo, p. 25.
37 Supra note 33.
38 111% per annum.
39Macalinao v. BPI, supra note 33, at 69-70.
40 G.R. No. 201001, November 10, 2014, 739 SCRA 432.
41 Id. at 440-443.
42 RTC records, pp. 000060-000063.
43 Supra note 40.