GR 225562; (March, 2017) (Digest)
G.R. No. 225562 March 8, 2017
WILLIAM C. LOUH, JR. and IRENE L. LOUH, Petitioners, vs. BANK OF THE PHILIPPINE ISLANDS, Respondent.
FACTS
The respondent Bank of the Philippine Islands (BPI) issued a credit card to petitioner William Louh, Jr., with Irene Louh as an extension cardholder. The spouses incurred charges but became delinquent starting October 2009. After repeated demands for payment of the outstanding balance, BPI filed a collection suit. The Spouses Louh failed to file their Answer within the reglementary period, despite being granted an extension. The Regional Trial Court (RTC) declared them in default and, based on BPI’s ex-parte evidence, ordered them to solidarily pay the claimed amount with reduced interest rates and attorney’s fees.
The Court of Appeals (CA) affirmed the RTC’s judgment. It held that the default declaration was proper due to the spouses’ procedural lapse and that BPI had sufficiently proven its case through delivery receipts, signed terms and conditions, statements of account, and demand letters. The Spouses Louh filed this petition, arguing for a relaxation of procedural rules due to William’s medical condition and contesting the sufficiency of BPI’s evidence, particularly the computation of the debt.
ISSUE
Whether the Court of Appeals erred in sustaining the complaint for collection and affirming the judgment against the petitioners.
RULING
The Supreme Court denied the petition but modified the monetary awards. On procedure, the Court found no compelling reason to relax the rules. The Spouses Louh were properly declared in default for failing to file a timely Answer, and they did not file a verified motion to lift the order of default as required by the Rules of Court. Their claim of William’s illness was not substantiated with competent evidence to justify their prolonged inaction.
On the merits, the Court affirmed that BPI established its claim by preponderance of evidence. The signed documents and statements of account sufficiently proved the existence and terms of the credit agreement and the resulting obligation. However, the Court modified the RTC and CA decisions regarding the applicable interest. Citing precedent, the stipulated 3.5% monthly finance charge (42% per annum) and 6% monthly late payment charge (72% per annum) were declared iniquitous and unconscionable. The Court imposed legal interest at 12% per annum on the principal from judicial demand until June 30, 2013, and 6% per annum from July 1, 2013, until full payment. Furthermore, the award of attorney’s fees was reduced from 25% to 10% of the principal obligation, as the original rate was deemed excessive. The principal sum of P533,836.27 was upheld.