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[ G.R. No. 136110. April 7, 1999]

DIOGENES P. VILLAREAL, JR. vs. CA & LCL CAPITAL. INC.

FIRST DIVISION

Gentlemen:

Quoted hereunder, for your information, is a resolution of this Court dated APR 7, 1999.

G.R. No. 136110 (Diogenes P. Villareal, Jr. vs. Court of Appeals and LCL CApital. Inc.)

This is a petition for review on certiorari of the Court of Appeals' decision1 [promulgated on August 12, 1998, Justice B.A. Adefuin-De LA Cruz, ponente, and concurred in by Justices Angelina Sandoval Gutierrez and Presbitero j. Velasco, Jr.] affirming in toto the decision of the Regional Trial Court, Branch 138, Makati City.2 [Dated October 12, 1995, presided by Judge Sixto Marella, Jr.]

On January 17, 1990, for value received, petitioner Diogenes P. ,Vilareal, Jr. issued a promissory note to respondent LCL Capital, Inc., in the sum of P368,666.67, payable in two installments, on February 15, 1990 for P184,334.00 and on March 17, 1990 for P184332.67, with a 32% per annum interest until fully paid3 [CA-G.R. No. 51956, Rollo, p.38.]. On February 20, 1999, petitioner executed a deed of chattel mortgage over his 1988 Mitsubishi Gallant car, with serial no. E32ASN-2873, motor no. 4G37GJ-3233 and plate no. PNB 235, to secure the said loan. The chattel mortgage was registered with the appropriate Register of Deeds and Land Transportation Office.

Petitioner failed to settle his obligation when a demand for payment was made. Respondent filed an action for replevin with the Regional Trial Court, Branch 138, Makati City, to recover possession of the mortgaged property. In case manual delivery of the car cannot be effected, respondent prayed for the payment of the entire loan, amounting to P368,666.67, plus the interest at the rate of 32% per annum, until fully paid. Respondent prayed for the grant of attorney's fees amounting to 25%.

In the Pre-Trial order, respondents presented the promissory note, with the attached schedule of payments, and the deed of chattel mortgage. Petitioner admitted the due execution and the authenticity of the above documents. Petitioner denied liability but presented no evidence to support his contentions.

On October 12, 1995, the trial court ruled for the respondents and ordered the petitioner to pay respondent the amount of P368,666.67, with interest at the rate of 32% per annum, from March 17, 1990 until full payment, and to reimburse respondent the amount of P15,000.00 as attorney's fees.4 [Rollo, pp. 130-132.]

Petitioner appealed the decision to the Court of Appeals. On August 12, 1998, the Court of Appeals affirmed in toto the Regional Trial Court's decision. On August 26, 1998, petitioner filed a motion for reconsideration which, on October 29, 1998, was denied for lack of merit.

Hence, this petition for review on certiorari.

Petitioner avers that he never defaulted in his obligation to respondent. He claims to have tendered payment twice, but respondent refused to accept payment. He did not consign in court the supposed payment allegedly relying in good faith on the respondent's advice to wait until amortization fell due. Petitioner maintains that respondent unjustly refused to accept payment.

Petitioner does not deny the existence of his obligation. By his own admission, the loan remained unpaid since the respondent allegedly refused to accept payment. Petitioner claims that respondent refused payment due to "petitioner's vehement refusal to apply his payment first to other more onerous transactions between respondent and petitioner's wife," wherein petitioner stood as guarantor. On the other hand, the Court of Appeals found that petitioner tendered an amount less the payments made by his wife as guarantor of LCL in separate transactions. The factual findings of the appellate court are given great weight and respect. Petitioner has no right to impose on the respondent to apply the payments made by his wife to settle his own obligations, without the consent of the respondent. The provision on application of payment can not be applied since there is no concurrence of a debtor-creditor relationship in all the obligations under consideration.

At any rate, whatever the reason for the refusal to accept payment, mere tender of payment without proper consignation in court does not release petitioner from his liability.5 [Article 1256, Civil Code of the Philippines.]

Petitioner challenges the imposition of 32% interest rate as having neither factual nor legal basis. He avers that the promissory note does not provide for the imposition of interest rate, hence, no interest can be claimed pursuant to Article 1956, Civil Code of the Philipppines.6 [Article 1956 - No interest shall be due unless it has been expressly stipulated in writing] Furthermore, petitioner insinuates that the imposition of interest is contrary to law, morals, good customs and public order, and must be invalidated.

The above contention is not tenable. The Court of Appeals rules that the promissory note issued by petitioner stated a 32% per annum interest rate. Findings of fact of lower courts are deemed conclusive and binding upon the Supreme Court.7 [Solid Homes, Inc. v. Court of Appeals, 275 SCRA 267.] The Court should not disturb the interest rate previously agreed upon by the parties. Neither is there any merit to petitioner's claim that the imposition of interest is contrary to law, morals, good customs, public morals and public order.

Petitioner also questions the grant of attorney's fees as being excessive and unreasonable under the circumstances, notwithstanding the agreement to pay the attorney's fees. He claims that the trial court failed to justify the award of attorney's fees in its decision, thus it cannot be allowed.

The contention is without merit. As correctly ruled by the Court of Appeals, attorney's fees is demandable when claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought.8 [Solid Homes, Inc. v. Court of Appeals, 275 SCRA 267.] The Court finds the P15,000 attorney's fees as reasonable.

WHEREFORE, this Court resolves to DENY the question for certiorari for failure of the petitioners to sufficiently show that the Court of Appeals had committed any reversible error in rendering the questioned judgement.

Very truly yours,

VIRGINIA ANCHETA-SORIANO
Clerk of Court

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