Macalinao v BPI

G.R. No. 175490, September 17, 2009 

Parties: ILEANA DR. MACALINAO, petitioner, vs. BANK OF THE PHILIPPINE ISLANDS,
respondent.
Cause of Action: Complaint for a sum of money

Doctrine: Article 1229 of the Civil Code states that the judge shall equitably reduce the penalty
when the principal obligation has been partly or irregularly complied with by the debtor. Even if
there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable.

FACTS:
Macalinao was an approved cardholder of BPI Mastercard. She made some purchases through
the use of the said credit card and defaulted in paying for said purchases. She subsequently received a
letter dated January 5, 2004 from BPI, demanding payment of the amount of PhP 141,518.34.

Under the Terms and Conditions Governing the Issuance and Use of the BPI Credit and BPI
Mastercard, the charges or balance thereof remaining unpaid after the payment due date indicated on the
monthly Statement of Accounts shall bear interest at the rate of 3% per month and an additional penalty
fee equivalent to another 3% of the amount due for every month or a fraction of a month’s delay.

For failure of Macalinao to settle her obligations, BPI filed with the MeTC of Makati City a
complaint for a sum of money against her and her husband, Danilo SJ. Macalinao, and BPI prayed for the
payment of the amount of PhP 154,608.78 plus 3.25% finance charges and late payment charges
equivalent to 6% of the amount due from February 29, 2004 and an amount equivalent to 25% of the total
amount due as attorney’s fees, and of the cost of suit. The Macalinao’s failed to file an Answer.

MeTC Decision: ruled for BPI and ordered the Macalinaos to pay the amount of P141,518.34 plus
interest and penalty charges of 2% per month. Macalinao appealed to the RTC.

RTC Decision: affirmed the decision in toto. The Macalinaos filed a petition for review with the CA.

CA Decision: affirmed with modifications the RTC Decision by ordering the payment of the principal
amount of P126, 706.70 plus interest and penalty charges of 3% per month from date of demand until
fully paid. The Motion for Reconsideration was denied, hence this case that was filed by Macalinao.
 
ISSUE:
            WoN the 3% per month interest charge and penalty by a credit card company is usurious?
            In corollary, WoN the court has the power to reduce such usurious rates for interest and penalty
into a more reasonable and equitable one?
 
HELD: YES on both issues.

            The Interest Rate and Penalty Charge of 3% Per Month or 36% Per Annum Should Be
Reduced to 2% Per Month or 24% Per Annum.

            In its Complaint, respondent BPI originally imposed the interest and penalty charges at the rate of
9.25% per month or 111% per annum. This was declared as unconscionable by the lower courts for being
clearly excessive, and was thus reduced to 2% per month or 24% per annum.

            On appeal, the CA modified the rate of interest and penalty charge and increased them to 3% per
month or 36% per annum based on the Terms and Conditions Governing the Issuance and Use of
the BPI Credit Card, which governs the transaction between petitioner Macalinao and respondent BPI.
Nevertheless, it should be noted that this is not the first time that this Court has considered the interest
rate of 36% per annum as excessive and unconscionable as held in Chua vs. Timan. Since the
stipulation on the interest rate is void, it is as if there was no express contract thereon. Hence, courts may
reduce the interest rate as reason and equity demand.

            The same is true with respect to the penalty charge. Notably, under the Terms and Conditions
Governing the Issuance and Use of the BPI Credit Card, it was also stated therein that respondent BPI
shall impose an additional penalty charge of 3% per month. Pertinently, Article 1229 of the Civil Code
states that the judge shall equitably reduce the penalty when the principal obligation has been
partly or irregularly complied with by the debtor.

Even if there has been no performance, the penalty may also be reduced by the courts if it
is iniquitous or unconscionable. In exercising this power to determine what is iniquitous and
unconscionable, courts must consider the circumstances of each case since what may be iniquitous and
unconscionable in one may be totally just and equitable in another.

Thus, under the circumstances, the Court finds it equitable to reduce the interest rate pegged by
the CA at 1.5% monthly to 1% monthly and penalty charge fixed by the CA at 1.5% monthly to 1%
monthly or a total of 2% per month or 24% per annum in line with the prevailing jurisprudence and in
accordance with Art. 1229 of the Civil Code.

Significantly, the CA correctly used the beginning balance of PhP 94,843.70 as basis for the re-
computation of the interest considering that this was the first amount which appeared on the Statement of
Account of petitioner Macalinao. There is no other amount on which the recomputation could be based,
as can be gathered from the evidence on record. The principal amount to be paid should be P112,
309,52.

Dispositive: WHEREFORE, the petition is PARTLY GRANTED. The CA Decision dated June 30, 2006 in
CA-G.R. SP No. 92031 is hereby MODIFIED with respect to the total amount due, interest rate, and
penalty charge. Accordingly, petitioner Macalinao is ordered to pay respondent BPI the following: DSAEIT

(1) The amount ofone hundred twelve thousand three hundred nine pesos and fty-two centavos
(PhP112,309.52) plus interest and penalty charges of 2% per month from January 5, 2004 until fully paid;

(2) PhP10,000 as and by way of attorney's fees; and

(3) Cost of suit.

SO ORDERED.

Elcox v. Hill, 98 U.S. 218 (1878)

Parties: Elcox and Larter plaintiff vs. Hill defendant

Cause of Action: Action to recover the value of a quantity of jewelry lost by Hill, proprietor of a publc

hotel in the city of Chicago

Doctrine: In the absence of proof that the loss was occasioned by the hand or through the negligence of

the hotelkeeper, or by a clerk or servant employed by him in the hotel. Plaintiff is not entitled to recover

FACTS:

Elcox and Larter were manufacturing jewelers, doing business at Newark, New Jersey. Larter left

home for a tour through several Western cities, with some $6,300 worth of jewelry which was contained in
2 bags or satchels – one a large leather bag containing $5,300 worth of solid gold jewelry and the other a

small satchel containing $1,000 worth of jewelry. The smaller bag was not locked and had no key.

On arriving at the hotel, Larter asked for a room, but one could not be assigned to him for some

3- 4 hours. During the time he was waiting, he placed his bags in the coat room and received a check

therefore. Between 12-2, a room was assigned to him, and his baggage was taken from the coat room

and carried up to the room.

When coming down for dinner, Larter gave the key to his room to the bellboy and directed him to

go up and bring down his bags to the coat room again. He then received a coat room check after dinner.

He saw the bags in the coat room 2 or 3 times after that before he went to bed around 10pm. The boy in

charge of the coat room, William Drum, voluntarily told him that his bags were perfectly safe.

The next day, Larter asked for his bags, but only the small one could be found. The jewelry inside

had been stolen. Larter did not inform the hotel of the contents of the bags, and he did not ask to have the

bags placed in the safe. At the top of the page of the register where he wrote his name on entering the

hotel were printed the words:

“Money, jewels, and valuable property must be placed in the safe in the office, otherwise

the proprietor will not be responsible for any loss.” 

On the door of his room and every other room were a printed notice saying that

“All guests of the house are cautioned against leaving money, jewels, or valuables of any

description in their rooms, as the proprietor will not be responsible for them if stolen.

Money or valuables, properly labelled, must be deposited in the safe at the office.”

Furthermore, the statute of the State of Illinois entitled “An Act for the protection of

innkeepers” provides that hotels shall keep notices posted at conspicuous places in the hotel that guests

and customers must leave their money, jewelry, and other valuables with the landlord, agent or clerk for

safekeeping and that hotels that comply with these requirements shall not be liable for the loss of such

money, jewelry or valuables, unless such loss shall occur by the hand or through the negligence of the

landlord, clerk or servant employed by him.

 For purpose of safekeeping the valuables of guests, the hotel had a very large vault which was in

plain sight at the counter. The coat room was only intended for the reception of ordinary valises, coats,

umbrellas, and not for valuables or jewelry.

Evidence showing that hotel employee William Drum had stolen the jewelries was objected to and

excluded during the trial.

ISSUE:

WoN a hotel is liable for the loss of valuables which were not made known to it and which were

not properly deposited to it as stated in the notices posted in conspicuous places?

HELD: No.

There can be but little doubt that the goods of the plaintiffs were stolen from them while one of

them was at the hotel of the defendant, in the city of Chicago. They insist thereupon that their loss shall

be made good; but it does not follow, because they met with a loss, that they can recover the amount

from him.

The defendant contends that he is exempt from liability for money, jewels, and the like, unless his

guest who lost them complied with the statute of Illinois on that subject. Where a safe for the keeping of

such articles is provided by the hotelkeeper, and the notice given as required by the statute, a loser failing

to take the benefit of the protection thus furnished him must bear his own loss. To this rule the statute

makes one exception. If the loss occurs 'by the hand or through the negligence of the landlord, or by a

clerk or servant employed by him in such hotel or inn,' the liability remains.

It is settled by the authorities that where the loss is occasioned by the personal negligence of the

guest himself, the liability of the innkeeper does not exist. The court refused to receive evidence that

William Drum had admitted that he had stolen the jewelry in question. If he was guilty of the offence, the

fact should have been established by due proof. If he were on trial himself, his admission would be

competent, but upon no principle could he admit away the rights of another person.

Dispositive: Judgment Affirmed