CASE DIGEST: Toledo vs. Hyden

G.R. No. 17213 : December 8, 2010

JOCELYN M. TOLEDO , Petitioner, v. MARILOU M. HYDEN, Respondent.



Petitioner Jocelyn M. Toledo, who was then the Vice-President of the College Assurance Plan (CAP) Phils., Inc., obtained several loans from respondent Marilou M. Hyden.

Jocelyn had been religiously paying Marilou the stipulated monthly interest. However, the total principal amount ofP290,000.00 remained unpaid. A document entitled "Acknowledgment of Debt" for the amount ofP290,000.00 was signed by Jocelyn with two of her subordinates as witnesses. Also on said occasion, Jocelyn issued checks to Marilou representing renewal payment of her five previous loans.

Jocelyn ordered the stop payment on the remaining checks and filed with the RTC of Cebu City a complaintagainst 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 postdated checks.She further claimed that the application of her total payment ofP528,550.00 to interest alone is illegal, unfounded, unjust, oppressive and contrary to law because there was no written agreement to pay interest. Marilou filed an Answer 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 trial court ruled in favor of Marilou which was affirmed by the CA.


I. Whether or not the imposition of interest at the rate of six percent (6%) to seven percent (7%) is contrary to law, morals, good customs, public order or public policy.

II. Whether or not the "Acknowledgment of Debt" is an inexistent contract that is void from the very beginning pursuant to Article 1409 of the New Civil Code.

HELD: The petition is without merit.


First Issue: The 6% to 7% interest per month paid by Jocelyn is not excessive under the circumstances of this case. 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."This is so because among the maxims of equity are (1) he who seeks equity must do equity, and (2) he who comes into equity must come with clean hands.The latter is a frequently stated maxim which is also expressed in the principle that he who has done inequity shall not have equity.It signifies that a litigant may be denied relief by a court of equity on the ground that his conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful as to the controversy in issue."


Second Issue: The document "Acknowledgment of Debt" is valid and binding. It is provided, as one of the conclusive presumptions under Rule 131, Section 2(a), of the Rules of Court that, "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."This is known as the principle ofestoppel.

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. More significantly, Jocelyn already availed herself of the benefits of the "Acknowledgment of Debt," the validity of which she now impugns.

Clearly, by her own acts, Jocelyn isestoppedfrom impugning the validity of the "Acknowledgment of Debt." Courts have no power to relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be disastrous or unwise investments."

The Petition is DENIED.