331 Phil. 787
HERMOSISIMA, JR., J.:
1) PN No. TL/74/748/83 P16,665.00 as of September 1983.Upon the failure and refusal of respondent Eusebio to pay the aforestated balance payable, a collectible case was filed in court by petitioner SBTC.[5] On March 30, 1993, the court a quo rendered a judgment in favor of petitioner SBTC, the dispositive portion which reads:
2) PN No. TL/74/1296/83 P83,333.00 as of August 1983
3) PN No. TL/74/1991/83 P65,000.00 as of August 1983.
"WHEREFORE, premises above-considered, and plaintiff’s claim having been duly proven, judgment is hereby rendered in favor of plaintiff and as against defendant Eusebio who is hereby ordered to:On August 6, 1993, a motion for partial reconsideration was filed by petitioner SBTC contending that:
1. Pay the sum of P16,665.00, plus interest of 12% per annum starting 27 September 1983, until fully paid;
2. Pay the sum of P83,333.00, plus interest of 12% per annum starting 28 August 1983, until fully paid;
3. Pay the sum of P65,000.00, plus interest of 12% per annum starting 31 August 1983, until fully paid;
4. Pay the sum equivalent to 20% of the total amount due and payable to plaintiff as and by way of attorney’s fees; and to
5. Pay the cost of this suit.
SO ORDERED."[6]
(1) the interest rate agreed upon by the parties during the signing of the promissory notes was 23% per annum;Consequently, an Order was issued by the court a quo denying the motion to grant the rates of interest beyond 12% per annum; and holding defendant Leila Ventura jointly and severally liable with co-defendant Eusebio.
(2) the interests awarded should be compounded quarterly from due date as provided in three (3) promissory notes;
(3) defendant Leila Ventura should likewise be held liable to pay the balance on the promissory notes since she has signed as co-maker and as such, is liable jointly and severally with defendant Eusebio without a need for demand upon her.[7]
"Sec. 1. The rate of interest, including commissions, premiums, fees and other charges, on a loan or forbearance of any money, goods or credits, regardless of maturity and whether secured or unsecured, that may be charged or collected by any person, whether natural or judicial, shall not be subject to any ceiling prescribed under or pursuant to the Usury Law, as amended.CB Circular 905 was issued by the Central Bank’s Monetary Board pursuant to P.D. 1684 empowering them to prescribe the maximum rates of interest for loans and certain forbearances, to wit:
Sec. 2. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall continue to be twelve per cent (12%) per annum."
‘SECTION 1. Section 1-a of Act No. 2655, as amended, is hereby amended to read as follows:This court has ruled in the case of Philippine National Bank v. Court of Appeals[11] that:
"SEC. 1-a The Monetary Board is hereby authorized to prescribed the maximum rate or rates of interest for the loan or renewal thereof or the forbearance of any money, goods or credits, and to change such rate or rates whenever warranted by prevailing economic and social conditions: Provided, That changes in such rates or rates may be effected gradually on scheduled dates announced in advance.
"In the exercise of the authority herein granted, the Monetary Board may prescribed higher maximum rates for loans of low priority, such as consumer loans or renewals thereof as well as such loans made by pawnshops, finance companies and other similar credit institutions although the rates prescribed for these institutions need not necessarily be uniform. The Monetary Board is also authorized to prescribed different maximum rate or rates for different types of borrowings, including deposits and deposit substitutes, or loans of financial intermediaries."[10]
"P.D. No. 1684 and C.B. Circular No. 905 no more than allow contracting parties to stipulate freely regarding any subsequent adjustment in the interest rate that shall accrue on a loan or forbearance of money, goods or credits. In fine, they can agree to adjust, upward or downward, the interest previously stipulated."All the promissory notes were signed in 1983 and, therefore, were already covered by CB Circular No. 905. Contrary to the claim of respondent court, this circular did not repeal nor in anyway amend the Usury Law but simply suspended the latter’s effectivity.
"xxx We cannot see any room for interpretation or construction in the clear and unambiguous language of the above-quoted provision of law. This Court had steadfastly adhered to the doctrine that its first and fundamental duty is the application of the law according to its express terms, interpretation being called for only when such literal application is impossible. No process of interpretation or construction need be resorted to where a provision of law peremptorily calls for application. Where a requirement or condition is made in explicit and unambiguous terms, no discretion is left to the judiciary. It must see to it that its mandate is obeyed."The rate of interest was agreed upon by the parties freely. Significantly, respondent did not question that rate. It is not for respondent court a quo to change the stipulations in the contract where it is not illegal. Furthermore, Article 1306 of the New Civil code provides that contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. We find no valid reason for the respondent court a quo to impose a 12% rate of interest on the principal balance owing to petitioner by respondent in the presence of a valid stipulation. In a loan or forbearance of money, the interest due should be that stipulated in writing, and in the absence thereof, the rate shall be 12% per annum.[13] Hence, only in the absence of a stipulation can the court impose the 12% rate of interest.