Consolidated Bank v. CA

G.R. No.
91494 July 14, 1995

THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK), petitioner,
vs.
THE HONORABLE COURT OF APPEALS, GEORGE AND GEORGE TRADE, INC., GEORGE
KING TIM PUA and PUA KE SENG, respondents.

QUIASON, J .:
George King Tim Pua, applied for, and was granted, by plaintiff bank several loans for which
he executed promissory notes.George and George Trade Inc., through defendant George
King Tim Pua, obtained several loans from the plaintiff, for which defendant George King Tim
Pua executed a promissory note on behalf of defendant corporation, with defendants George
King Tim Pua and Pua Ke Seng as co-makers, which loans bear an interest of 13.23%, 14%
and 14% per annumrespectively.
The three promissory notes (Exhibits A, B and C) covering loans in the corporate account of
defendant George and George Trade Inc. provides (sic) also that in case of default of
payment, the defendants agree to pay interest at an increased rate of 14% per annum on the
amount due, compounded monthly, until fully paid, as well as an additional sum equivalent to
10% of the total amount due as and for attorney's fees in addition to expenses and costs of
suit, such amount to bear interest at the rate of 1% per month until paid.
Under the two promissory notes (Exhibits B and C), the defendants further bound
themselves to pay a penalty at the rate of 3% per annum on the amount due until fully paid.
In order to secure the payment of defendant George King Tim Pua's obligation with the
plaintiff, he assigned unto the latter the proceeds of a fire insurance.The proceeds of the
insurance policy were subsequently paid to the plaintiff which applied the same to the
personal account of defendant George King Tim Pua. The personal account of defendant
George King Tim Pua was fully satisfied through the remittances of the fire insurance
proceeds.
After applying the proceeds of the fire insurance on Tim Puas personal account there remained a
balance in the loans of George and George Trade, Inc. Petitioner instituted an action against private
respondents before the then Court of First Instance of Manila for the recovery of the unpaid balances
on the three promissory notes, including attorney's fees equivalent to 10% of the amount
recoverable.
the trial court rendered judgment, finding for petitioner.
On appeal by private respondents, the Court of Appeals reversed the decision of the trial court.
Failing to secure a reconsideration of said decision, petitioner is now before the Court on a petition
for review oncertiorari.
WON private respondents are indebted to petitioners in the amount of P288,469.80 as held by the
then Court of First Instance of Manila or whether said private respondents are entitled to
reimbursement from petitioner in the amount of P466,182.39 as decreed by the Court of Appeals.
The issues raised are factual. As a general rule, the findings of the Court of Appeals upon factual
questions are conclusive and ought not to be disturbed. There are, however, exceptions to the rule.
One of the exceptions is when the findings of fact of the Court of Appeals are contrary to those of the
trial court (Massive Construction, Inc. v. Intermediate Appellate Court, 223 SCRA 1 [1993]).
In the instant case, the findings of fact of the Court of Appeals are contrary to the findings of the trial
court. Under such circumstance, this Court may review the findings of fact of the Court of Appeals
and may scrutinize the evidence on record.
George King Tim Pua had two sets of accounts with petitioner bank: his personal account
and his account for George and George Trade, Inc. The 14% interest rate charged by
petitioner was within the limits set by Section 3 of the Usury Law, as amended.
As to handling charges, banks are authorized under Central Bank Circular
No. 504 to collect such charges on loans over P500,000.00 with a maturity of 730 days or
less at the rate of 2% per annum, on the principal or the outstanding balance thereof,
whichever is lower; 1.75% on loans over P500,000.00 but not over P1,000,000.00; 1.50% on
loans over P1,000,000.00 but not over 2,000,000.00, etc. Section 7 of the same Circular,
however, provides that all banks and non-bank financial intermediaries authorized to engage
in quasi-banking functions are required to strictly adhere to the provisions of Republic Act
No. 3765 otherwise known as the "Truth in Lending Act" and shall make the true and
effective cost of borrowing an integral part of every loan contract. The promissory notes
signed by private respondents do not contain any stipulation on the payment of handling
charges. Petitioner bank cannot, therefore, charge private respondents such handling
charges.
In this case, the Court of Appeals strictly followed the above-stated standard set by this
Court. The award of P10,000.00 as attorney's fees to private respondents was reasonable
and justified as they were compelled to litigate and incur expenses to protect their interest.
WHEREFORE, the Decision of the Court of Appeals is AFFIRMED with the MODIFICATION
that the amount SO ORDERED.

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G.R. No.

91494 July 14, 1995

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