First Fil-In Lending Corp. vs Padillo Credit Digest

First Fil-In Lending Corp. vs Padillo

GR No. 160533, 12 January 2005

448 SCRA 71

FACTS

            Gloria Padillo obtained a P500,000 loan from petitioner First-Fil Lending Corp. She also obtained another loan from petitioner in the same amount. In both loans, Padillo executed a promissory note and disclosure agreement. Padillo filed an action for sum of money before the RTC of Manila seeking to recover the amounts she allegedly paid in excess of her obligation, alleging that she only agreed to pay interest at the rates of 4.5% and 5% per annum for the two loans and not 4.5% and 5% per month. The trial court dismissed the complaint ordering her to pay her obligation. the court also ruled that by issuing checks representing interest payment sat 4.5% and 5% monthly interest rates, Padillo is stopped from questioning the provisions of the PNs.

            On appeal , the CA reversed the trial court ruling that, based on disclosure statements, the interest rates should be imposed on a monthly basis but only for the 3-month term of the loan. legal interest rate will apply thereafter. The CA also found that the penaty harges of 1% per day of delay as highly unconscionable. Thus, it was reduced to 1% per month or 12% per annum.

ISSUE

            Whether or not the CA erred in finding that the applicable interest should be the legal interest of 12% PA despite the clear agreement of the parties.

HELD

            The Court held in the negative. When the terms of the agreement are clear and explicit that they do not justify an attempt to reas into it any alleged intention of the paies, the terms are to be understood literally just as they appear on the face pf the contract. Perusal of the PNs and the disclosure statements, loan obligations of respondent clearly and unambiguously provide interest rates of 4.5% per annum and 5% PA. Nowhere was it stated that the interest rates shall be applied on a monthly basis.

            The same PN provides that “xxx any and all remaining amount due on the principal upon maturity shall earn interest at the rate of _____ from date of maturity until fully paid”. The CA thus properly imposed the legal interest of 12%PA from the time the loans matured until the same has been fully paid. As held in Eastern Shipping Lines vs CA, “In the absence of stipulation, the interest due shall be 12% PA to be computed fro default”.