GR 101240; (December, 1998) (Digest)
G.R. No. 101240 December 16, 1998
QUEZON DEVELOPMENT BANK, petitioner, vs. THE COURT OF APPEALS, CONSTRUCTION SERVICES OF AUSTRALIA-PHILIPPINES, INC. (CONSAPHIL), LEOCADIO J. DOMINGUEZ, ISIDRO D. CARIÑO, and MELCHOR D. ELEGADO, respondents.
FACTS
On April 22, 1983, petitioner Quezon Development Bank and private respondent CONSAPHIL entered into a loan agreement. Petitioner granted CONSAPHIL loans amounting to P490,000.00 and P415,163.00, for which CONSAPHIL, through its individual private respondent officers, executed two promissory notes on April 27, 1982 and June 15, 1982, respectively. The loans were payable in lump sum on August 25, 1982. On April 9, 1986, petitioner filed an action for recovery of the amounts in the promissory notes plus interest, penalties, and attorney’s fees. The Regional Trial Court of Makati rendered judgment ordering respondents to pay petitioner P859,545.72 with interest at 48% per annum from July 1, 1986, plus attorney’s fees and costs. Private respondents appealed to the Court of Appeals, which modified the decision. The Court of Appeals initially ordered respondents to pay P905,163.00 with 14% interest and 7% service fee per annum, plus a 36% per annum penalty. However, upon private respondents’ motion, the appellate court modified its judgment and absolved them from paying the 36% penalty. Petitioner’s motion for reconsideration was denied.
ISSUE
1. Whether the question of applicability of the penalty charges was an issue before the trial court and could properly be decided by the Court of Appeals.
2. Whether petitioner can appeal from the resolution of the Court of Appeals denying recovery of penalty charges considering petitioner did not appeal from the trial court’s judgment.
3. Whether the penalty charges are applicable to the amounts stated in the promissory notes.
RULING
1. Yes. The applicability of the penalty clause was squarely raised before the trial court. The trial court’s pre-trial order stated the first issue as whether private respondents had paid the promissory notes in full, which was raised precisely because private respondents contended penalty charges applied only to arrears in amortizations and not to defaults in lump sum payments.
2. Yes. Petitioner is not barred. The trial court’s award of P859,545.72 was “inclusive of interest, penalty and other charges.” Since the amount awarded included the 36% penalty charge, there was no reason for petitioner to appeal. It is only after the Court of Appeals disallowed the penalty that petitioner appealed.
3. No. The penalty charges are not applicable. The promissory notes stipulated penalty charges of 24% per annum based on loan amortization in arrears for sixty days or less and 36% per annum based on loan amortization in arrears for more than sixty days. However, the loans in this case were payable in lump sum, not by amortization. The loan agreement itself did not provide for any penalty charges, only interest and service fees. The promissory notes were prepared by petitioner on a standard form, making them contracts of adhesion with respect to the borrowers. Any ambiguity must be construed against the author. Private respondents’ prior request for a waiver of penalty charges was a mistake of law and cannot be the basis for finding liability. The Court of Appeals’ decision, as modified, was affirmed.