Toledo v. Hyden (G.R. No. 172139; December 8, 2010)


FACTS: Petitioner Jocelyn M. Toledo (Jocelyn), who was then the Vice-President of the College Assurance Plan (CAP) Phils., Inc., obtained several loans from respondent Marilou M. Hyden (Marilou). From August 15, 1993 up to December 31, 1997, Jocelyn had been religiously paying Marilou the stipulated monthly interest by issuing checks and depositing sums of money in the bank account of the latter. However, the total principal amount of P290,000.00 remained unpaid.

Thus, in April 1998, Marilou visited Jocelyn in her office at CAP in Cebu City and asked Jocelyn and the other employees who were likewise indebted to her to acknowledge their debts. A document entitled "Acknowledgment of Debt for the amount of P290,000.00 was signed by Jocelyn with two of her subordinates as witnesses.

Also on said occasion, Jocelyn issued five checks to Marilou representing renewal payment of her five previous loans. After honoring Check Nos. 0010494, 0010495 and 0010496, Jocelyn ordered the stop payment on the remaining checks and filed with the RTC of Cebu City a complaint against Marilou for Declaration of Nullity and Payment, Annulment, Sum of Money, Injunction and Damages.

Jocelyn averred that Marilou forced, threatened and intimidated her into signing the "Acknowledgment of Debt" and at the same time forced her to issue the seven postdated checks. Marilou filed an Answer with Special Affirmative Defenses and Counterclaim alleging that Jocelyn voluntarily obtained the said loans knowing fully well that the interest rate was at 6% to 7% per month. In fact, a 6% to 7% advance interest was already deducted from the loan amount given to Jocelyn.

The RTC ruled in favor of Marilou, finding no showing that Jocelyn was forced, threatened, or intimidated in signing the document. On appeal, Jocelyn asserts that she had made payments in the total amount of P778,000.00 for a principal amount of loan of only P290,000.00. What is appalling, according to Jocelyn, was that such payments covered only the interest because of the excessive, iniquitous, unconscionable and exorbitant imposition of the 6% to 7% monthly interest.

The CA affirmed the decision. Jocelyn filed a motion for reconsideration but the same was denied. Hence, the present petition.

ISSUE: Did the CA gravely err when it held that the imposition of interest at the rate of six percent (6%) to seven percent (7%) is not contrary to law, morals, good customs, public order or public policy?

HELD: The imposition of an unconscionable rate of interest on a money debt is immoral and unjust and the court may come to the aid of the aggrieved party to that contract. However, before doing so, courts have to consider the settled principle that the law will not relieve a party from the effects of an unwise, foolish or disastrous contract if such party had full awareness of what she was doing.

We cannot consider the disputed 6% to 7% monthly interest rate to be iniquitous or unconscionable vis-vis the principle laid down in Medel. Noteworthy is the fact that in Medel, the defendant-spouses were never able to pay their indebtedness from the very beginning and when their obligations ballooned into a staggering sum, the creditors filed a collection case against them.

In this case, there was no urgency of the need for money on the part of Jocelyn, the debtor, which compelled her to enter into said loan transactions. She used the money from the loans to make advance payments for prospective clients of educational plans offered by her employer. In this way, her sales production would increase, thereby entitling her to 50% rebate on her sales. This is the reason why she did not mind the 6% to 7% monthly interest.It was clearly shown that before Jocelyn availed of said loans, she knew fully well that the same carried with it an interest rate of 6% to 7% per month, yet she did not complain. In fact, when she availed of said loans, an advance interest of 6% to 7% was already deducted from the loan amount, yet she never uttered a word of protest.

After years of benefiting from the proceeds of the loans bearing an interest rate of 6% to 7% per month and paying for the same, Jocelyn cannot now go to court to have the said interest rate annulled on the ground that it is excessive, iniquitous, unconscionable, exorbitant, and absolutely revolting to the conscience of man.

We are convinced that Jocelyn did not come to court for equitable relief with equity or with clean hands. It is patently clear from the above summary of the facts that the conduct of Jocelyn can by no means be characterized as nobly fair, just, and reasonable.

A threat to enforce one's claim through competent authority, if the claim is just or legal, does not vitiate consent.

As can be seen from the records of the case, Jocelyn has failed to prove her claim that she was made to sign the document "Acknowledgment of Debt" and draw the seven Bank of Commerce checks through force, threat and intimidation. As earlier stressed, said document was signed in the office of Jocelyn, a high ranking executive of CAP, and it was Jocelyn herself who went to the table of her two subordinates to procure their signatures as witnesses to the execution of said document. If indeed, she was forced to sign said document, then Jocelyn should have immediately taken the proper legal remedy. But she did not. Furthermore, it must be noted that after the execution of said document, Jocelyn honored the first three checks before filing the complaint with the RTC. If indeed she was forced she would never have made good on the first three checks.

Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it."

Here, it is uncontested that Jocelyn had in fact signed the "Acknowledgment of Debt" in April 1998 and two of her subordinates served as witnesses to its execution, knowing fully well the nature of the contract she was entering into. Next, Jocelyn issued five checks in favor of Marilou representing renewal payment of her loans amounting to P290,000.00. In June 1998, she asked to recall Check No. 0010761 in the amount of P30,000.00 and replaced the same with six checks, in staggered amounts. All these are indicia that Jocelyn treated the "Acknowledgment of Debt" as a valid and binding contract. Clearly, by her own acts, Jocelyn is estopped from impugning the validity of the "Acknowledgment of Debt." DENIED.