Case 26: Security Bank & Trust Company v. RTC Magtanggol Eusbio & Leila Ventura.

3 PNs balance - collection - rtc 12% - SBTC dapat 23 agreed sa PN, Only in absence of stipulation can RTC impose 12% interest rate, stipulated interest prevails.
● 4/27/83, Magtanggol executed P100K PN#1 in favor of SBTC payable in 6 monthly installments with 23% stipulated interest/annum up to the fifth installment.
○ 7/28 Executed P100K PN#2 in favor of SBTC 6mos installment + 23% interest/annum.
■ 8/31/83 P65K PN#3 in 6mos. installments + 23% interest/annum.
○ Leila signed as co-maker on the 3 PNs
● Upon maturity the principal balance remaining on the notes stood at:
○ PN#1 P16,665 as of 9/83 | PN#2 P83,333 as of 8/83 | PN#3 65,000 as of 8/83.
● Upon failure & refusal of Magtanggol to pay the balance, SBTC filed a collection case.
○ 3/30/93 RTC: Magtanggol to bay balances + 12%/annum from due date
● 8/6/93 SBTC MR: interest rate agreed during the signing of PNs was 23% per annum;
○ interest should be compounded quarterly from due date as provided in PNs
ISSUE: Stipulated interest rate in a contract of loan or forbearance of money, goods, or credit, in excess of the Usury Law prescribed ceiling, prevails over Sec 2 CBC905.
● CB Monetary board issued CBC905: "SEC. 1-a. Monetary Board authorized to prescribe max interest rate for loan or renewal thereof or the forbearance of any money, goods or credits, & to change such
rate whenever warranted by prevailing economic & social conditions:
○ changes may be effected gradually on scheduled dates announced in advance.
■ "In exercise of authority granted, Monetary Board may prescribe higher max rates for low priority loans, such as consumer loans/renewals thereof & such loans made by pawnshops, finance
companies & other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform.
○ Monetary Board is authorized to prescribed different max rate/s for different types of borrowings, including deposits & deposit substitutes, or loans of financial intermediaries
● All the PNs were signed in 1983 &, therefore, were already covered by CB905.
○ Contrary to the claim of RTC, this circular didn’t repeal nor in anyway amend the Usury Law but simply suspended the latter’s effectivity.
● When the law is clear & unambiguous, the court is left with no alternative but to apply the same according to its clear language.
○ The rate of interest was agreed upon by the parties freely.
■ Significantly, Magtanggol did not question that rate.
● It is not for RTC to change the stipulations in the contract where it is not illegal.
○ Article 1306: contracting parties may establish such stipulations, clauses, terms & conditions as they may deem convenient, provided they are not contrary to law, morals, good customs,
public order, or public policy.
● No valid reason for RTC to impose a 12% interest rate on the principal balance owing to petitioner by Magtanggol in the presence of a valid stipulation.
○ In a loan or forbearance of money, the interest due should be that stipulated in writing, & in the absence thereof, the rate shall be 12%/annum.
■ Only in absence of stipulation can the court impose 12% interest rate
● The PNs were signed by both parties voluntarily.
○ stipulations therein are binding between them.
● Magtanggol, likewise, did not question any of the stipulations therein.
○ he chose not to question the decision & instead expressed his desire to negotiate with the petitioner bank for "terms within which to settle his obligation."
DISPOSITION: Modified interest at 23%