G.R. No.

160545 March 9, 2010

PRISMA CONSTRUCTION & DEVEOPMENT CORPORATION a!" ROGEIO S.
PANTAEON, Petitioners,
vs.
ART#UR $. MENC#AVE%, Respondent.
D E C I S I O N
&RION, J.:
We resolve in this Decision the petition for review on certiorari
1
fled ! petitioners Pris"a Constr#ction $
Develop"ent Corporation %PRIS&'( and Ro)elio S. Pantaleon %Pantaleon( %collectivel!, petitioners( who
see* to reverse and set aside the Decision
+
dated &a! ,, +--. and the Resol#tion
.
dated Octoer ++, +--.
of the /or"er Ninth Division of the Co#rt of 'ppeals %C'( in C'01.R. C2 No. 343+5. 6he assailed C'
Decision a7r"ed the Decision of the Re)ional 6rial Co#rt %R6C(, 8ranch 5., 'ntipolo Cit! in Civil Case No.
4509,,+ that held the petitioners liale for pa!"ent of P.,,+3,115.-- to respondent 'rth#r /. &enchave:
%respondent(, #t "odifed the interest rate fro" 9; per "onth to 1+; per ann#", co"p#ted fro" the
flin) of the co"plaint to f#ll pa!"ent. 6he assailed C' Resol#tion denied the petitioners< &otion for
Reconsideration.
/'C6='> 8'C?1RO=ND
6he facts of the case, )athered fro" the records, are rie@! s#""ari:ed elow.
On Dece"er A, 144., Pantaleon, the President and Chair"an of the 8oard of PRIS&', otained
aP1,---,---.--
9
loan fro" the respondent, with a "onthl! interest of P9-,---.-- pa!ale for siB "onths,
or a total oli)ation of P1,+9-,---.-- to e paid within siB %3( "onths,
,
#nder the followin) sched#le of
pa!"entsC
Dan#ar! A, 1449
EEEEEEE.
P9-,---.--
/er#ar! A, 1449
EEEEEE...
P9-,---.--
&arch A, 1449
EEEEEEE...
P9-,---.--
'pril A, 1449
EEEEEEEE.
P9-,---.--
&a! A, 1449
EEEEEEEE..
P9-,---.--
D#ne A, 1449 EEEEEEE
P1,-9-,---.
--
3
6otal
P1,+9-,---.
--
6o sec#re the pa!"ent of the loan, Pantaleon iss#ed a pro"issor! note
5
that statesC
I, Ro)elio S. Pantaleon, here! ac*nowled)e the receipt of ONE &I>>ION 6WO F=NDRED /OR6G 6FO=S'ND
PESOS %P1,+9-,---(, Philippine C#rrenc!, fro" &r. 'rth#r /. &enchave:, representin) a siB0"onth loan
pa!ale accordin) to the followin) sched#leC
Dan#ar! A, 1449
EEEEEEE.
P9-,---.--
/er#ar! A, 1449
EEEEEE...
P9-,---.--
&arch A, 1449
EEEEEEE...
P9-,---.--
'pril A, 1449
EEEEEEEE.
P9-,---.--
&a! A, 1449
EEEEEEEE..
P9-,---.--
D#ne A, 1449 EEEEEEE
P1,-9-,---.
--
6he chec*s correspondin) to the aove a"o#nts are here! ac*nowled)ed.
A
and siB %3( postdated chec*s correspondin) to the sched#le of pa!"ents. Pantaleon si)ned the pro"issor!
note in his personal capacit!,
4
and as d#l! a#thori:ed ! the 8oard of Directors of PRIS&'.
1-
6he
petitioners failed to co"pletel! pa! the loan within the stip#lated siB %3(0"onth period.
/ro" Septe"er A, 1449 to Dan#ar! 9, 1445, the petitioners paid the followin) a"o#nts to the respondentC
Septe"er A, 1449
EEEEEE
P.+-,---.
--
Octoer A,
144,EEEEEEE.
P3--,---.
--
Nove"er A,
144,EEEEE.
P1,A,55+.
--
Dan#ar! 9, 1445
EEEEEEE.
P.-,---.-
-
11
's of Dan#ar! 9, 1445, the petitioners had alread! paid a total of P1,1-A,55+.--. Fowever, the respondent
fo#nd that the petitioners still had an o#tstandin) alance of P1,.39,1,1.-- as of Dan#ar! 9, 1445, to which
it applied a 9; "onthl! interest.
1+
6h#s, on '#)#st +A, 1445, the respondent fled a co"plaint for s#" of
"one! with the R6C to enforce the #npaid alance, pl#s 9; "onthl! interest, P.-,---.-- in attorne!<s
fees, P1,---.-- per co#rt appearance and costs of s#it.
1.
In their 'nswer dated Octoer 3, 144A, the petitioners ad"itted the loan of P1,+9-,---.--, #t denied the
stip#lation on the 9; "onthl! interest, ar)#in) that the interest was not provided in the pro"issor! note.
Pantaleon also denied that he "ade hi"self personall! liale and that he "ade representations that the
loan wo#ld e repaid within siB %3( "onths.
19
6FE R6C R=>IN1
6he R6C rendered a Decision on Octoer +5, +--- fndin) that the respondent iss#ed a chec*
for P1,---,---.-- in favor of the petitioners for a loan that wo#ld earn an interest of 9; or P9-,---.-- per
"onth, or a total ofP+9-,---.-- for a 30"onth period. It noted that the petitioners "ade several pa!"ents
a"o#ntin) toP1,++A,55+.--, #t the! were still indeted to the respondent for P.,,+3,115.-- as of
/er#ar! 11,
1,
1444 after considerin) the 9; "onthl! interest. 6he R6C oserved that PRIS&' was a one0
"an corporation of Pantaleon and #sed this circ#"stance to H#stif! the piercin) of the veil of corporate
fction. 6h#s, the R6C ordered the petitioners to Hointl! and severall! pa! the respondent the a"o#nt
of P.,,+3,115.-- pl#s 9; per "onth interest fro" /er#ar! 11, 1444 #ntil f#ll! paid.
13
6he petitioners elevated the case to the C' via an ordinar! appeal #nder R#le 91 of the R#les of Co#rt,
insistin) that there was no eBpress stip#lation on the 9; "onthl! interest.
6FE C' R=>IN1
6he C' decided the appeal on &a! ,, +--.. 6he C' fo#nd that the parties a)reed to a 9; "onthl! interest
principall! ased on the oard resol#tion that a#thori:ed Pantaleon to transact a loan with an approved
interest of not "ore than 9; per "onth. 6he appellate co#rt, however, noted that the interest of 9; per
"onth, or 9A; per ann#", was #nreasonale and sho#ld e red#ced to 1+; per ann#". 6he C' a7r"ed
the R6C<s fndin) that PRIS&' was a "ere instr#"entalit! of Pantaleon that H#stifed the piercin) of the veil
of corporate fction. 6h#s, the C' "odifed the R6C Decision ! i"posin) a 1+; per ann#" interest,
co"p#ted fro" the flin) of the co"plaint #ntil fnalit! of H#d)"ent, and thereafter, 1+; fro" fnalit! #ntil
f#ll! paid.
15
'fter the C'Is denial
1A
of their "otion for reconsideration,
14
the petitioners fled the present petition for
review on certiorari #nder R#le 9, of the R#les of Co#rt.
6FE PE6I6ION
6he petitioners s#"it that the C' "ista*enl! relied on their oard resol#tion to concl#de that the parties
a)reed to a 9; "onthl! interest eca#se the oard resol#tion was not an evidence of a loan or
forearance of "one!, #t "erel! an a#thori:ation for Pantaleon to perfor" certain acts, incl#din) the
power to enter into a contract of loan. 6he eBpressed "andate of 'rticle 14,3 of the Civil Code is that
interest d#e sho#ld e stip#lated in writin), and no s#ch stip#lation eBists. Even ass#"in) that the loan is
s#Hect to 9; "onthl! interest, the interest covers the siB %3(0"onth period onl! and cannot e interpreted
to appl! e!ond it. 6he petitioners also point o#t the )larin) inconsistenc! in the C' Decision, which
red#ced the interest fro" 9; per "onth or 9A; per ann#" to 1+; per ann#", #t failed to consider that
the a"o#nt of P.,,+3,115.-- that the R6C ordered the" to pa! incl#des the co"po#nded 9; "onthl!
interest.
6FE C'SE /OR 6FE RESPONDEN6
6he respondent co#nters that the C' correctl! r#led that the loan is s#Hect to a 9; "onthl! interest
eca#se the oard resol#tion is attached to, and an inte)ral part of, the pro"issor! note ased on which
the petitioners otained the loan. 6he respondent f#rther contends that the petitioners are estopped fro"
assailin) the 9; "onthl! interest, since the! a)reed to pa! the 9; "onthl! interest on the principal
a"o#nt #nder the pro"issor! note and the oard resol#tion.
6FE ISS=E
6he core iss#e oils down to whether the parties a)reed to the 9; "onthl! interest on the loan. If so, does
the rate of interest appl! to the 30"onth pa!"ent period onl! or #ntil f#ll pa!"ent of the loanJ
O=R R=>IN1
We fnd the petition "eritorio#s.
Interest d#e sho#ld e stip#lated in writin)K otherwise, 1+; per ann#"
Oli)ations arisin) fro" contracts have the force of law etween the contractin) parties and sho#ld e
co"plied with in )ood faith.
+-
When the ter"s of a contract are clear and leave no do#t as to the intention
of the contractin) parties, the literal "eanin) of its stip#lations )overns.
+1
In s#ch cases, co#rts have no
a#thorit! to alter the contract ! constr#ction or to "a*e a new contract for the partiesK a co#rtIs d#t! is
confned to the interpretation of the contract the parties "ade for the"selves witho#t re)ard to its wisdo"
or foll!, as the co#rt cannot s#ppl! "aterial stip#lations or read into the contract words the contract does
not contain.
++
It is onl! when the contract is va)#e and a"i)#o#s that co#rts are per"itted to resort to
the interpretation of its ter"s to deter"ine the parties< intent.
In the present case, the respondent iss#ed a chec* for P1,---,---.--.
+.
In t#rn, Pantaleon, in his personal
capacit! and as a#thori:ed ! the 8oard, eBec#ted the pro"issor! note L#oted aove. 6h#s,
the P1,---,---.-- loan shall e pa!ale within siB %3( "onths, or fro" Dan#ar! A, 1449 #p to D#ne A, 1449.
D#rin) this period, the loan shall earn an interest of P9-,---.-- per "onth, for a total oli)ation
of P1,+9-,---.-- for the siB0"onth period. '( !o)( )ha) )h*+ a,r((" +-. ca! /( co.0-)(" a) 41
*!)(r(+) 0(r .o!)h, /-) !o +-ch ra)( o2 *!)(r(+) 3a+ +)*0-4a)(" *! )h( 0ro.*++or5 !o)(6 ra)h(r
a 78(" +-. (9-*:a4(!) )o )h*+ ra)( 3a+ a,r((" -0o!.
'rticle 14,3 of the Civil Code specifcall! "andates that Mno interest shall e d#e #nless it has een
eBpressl! stip#lated in writin).M =nder this provision, the pa!"ent of interest in loans or forearance of
"one! is allowed onl! ifC %1( there was an eBpress stip#lation for the pa!"ent of interestK and %+( the
a)ree"ent for the pa!"ent of interest was red#ced in writin). 6he conc#rrence of the two conditions is
reL#ired for the pa!"ent of interest at a stip#lated rate. 6h#s, we held in Tan v. Valdehueza
+9
and Ching v.
Nicdao
+,
that collection of interest witho#t an! stip#lation in writin) is prohiited ! law.1avvphi1
'ppl!in) this provision, we fnd that the interest of P9-,---.-- per "onth corresponds onl! to the siB %3(0
"onth period of the loan, or fro" Dan#ar! A, 1449 to D#ne A, 1449, as a)reed #pon ! the parties in the
pro"issor! note. 6hereafter, the interest on the loan sho#ld e at the le)al interest rate of
1+; per annum, consistent with o#r r#lin) in Eastern Shipping Lines, Inc. v. Court of ppealsC
+3
When the oli)ation is reached, and it consists in the pa!"ent of a s#" of "one!, i.e., a loan or
forearance of "one!, the interest d#e sho#ld e that which "a! have een stip#lated in writin).
/#rther"ore, the interest d#e shall itself earn le)al interest fro" the ti"e it is H#diciall! de"anded. I! )h(
a/+(!c( o2 +)*0-4a)*o!, )h( ra)( o2 *!)(r(+) +ha44 /( 121 0(r a!!-. )o /( co.0-)(" 2ro.
"(2a-4), i.e., fro" H#dicial or eBtraH#dicial de"and #nder and s#Hect to the provisions of 'rticle 1134 of
the Civil Code.M %E"phasis s#pplied(
We reiterated this r#lin) in Securit! "an# and Trust Co. v. $TC%&a#ati, "r. '1,
+5
Sulit v. Court of
ppeals,
+A
Cris"ina 1ar"ents, Inc. v. Co#rt of 'ppeals,
+4
Eastern 'ss#rance and S#ret! Corporation v.
Co#rt of 'ppeals,
.-
Sps. Cat#n)al v. Fao,
.1
Gon) v. 6i#,
.+
and Sps. "arrera v. Sps. Lorenzo.
..
6h#s, the R6C
and the C' "isappreciated the facts of the caseK the! erred in fndin) that the parties a)reed to a 9;
interest, co"po#nded ! the application of this interest e!ond the pro"issor! note<s siB %3(0"onth
period. 6he facts show that the parties a)reed to the pa!"ent of a +0(c*7c +-. o2 .o!(5 of P9-,---.--
per "onth for siB "onths, not to a 9; rate of interest pa!ale within a siB %3(0"onth period.
M("(4 :. Co-r) o2 A00(a4+ !o) a004*ca/4(
6he C' "isapplied &edel v. Co#rt of 'ppeals
.9
in fndin) that a 9; interest per "onth was #nconscionale.
In &edel, the detors in a P,--,---.-- loan were reL#ired to pa! an interest of ,.,; per "onth, a service
char)e of +; per ann#", and a penalt! char)e of 1; per "onth, pl#s attorne!<s fee eL#ivalent to +,; of
the a"o#nt d#e, #ntil the loan is f#ll! paid. 6a*en in conH#nction with the stip#lated service char)e and
penalt!, we fo#nd the interest rate of ,.,; to e eBcessive, iniL#ito#s, #nconscionale, eBoritant and
hence, contrar! to "orals, there! renderin) the stip#lation n#ll and void.
'ppl!in) &edel, we invalidated and red#ced the stip#lated interest in Spo#ses Solan)on v. Sala:ar
.,
of 3;
per "onth or 5+; per ann#" interest on a P3-,---.-- loanK in R#i: v. Co#rt of 'ppeals,
.3
of .; per "onth
or .3; per ann#" interest on a P.,---,---.-- loanK in I"perial v. Da#cian,
.5
of 13; per "onth or 14+;
per ann#" interest on a P.+-,---.-- loanK in rrofo v. (ui)o,
.A
of 5; interest per "onth or A9; per
ann#" interest on aP1,,---.-- loanK in "ulos, *r. v. +asuma,
.4
of 9; per "onth or 9A; per ann#" interest
on a P+,,--,---.-- loanK and in Chua v. Timan,
9-
of 5; and ,; per "onth for loans totallin) P439,---.--.
We note that in all these cases, the ter"s of the loans were open0endedK the stip#lated interest rates were
applied for an indefnite period.
&edel fnds no application in the present case where no other stip#lation eBists for the pa!"ent of an!
eBtra a"o#nt eBcept a +0(c*7c +-. o2 P40,000.00 0(r .o!)h on the principal of a loan pa!ale within
siB "onths. 'dditionall!, no iss#e on the eBcessiveness of the stip#lated a"o#nt of P9-,---.-- per "onth
was ever p#t in iss#e ! the petitionersK
91
the! onl! assailed the application of a 9; interest rate, since it
was not a)reed #pon.
It is a fa"iliar doctrine in oli)ations and contracts that the parties are o#nd ! the stip#lations, cla#ses,
ter"s and conditions the! have a)reed to, which is the law etween the", the onl! li"itation ein) that
these stip#lations, cla#ses, ter"s and conditions are not contrar! to law, "orals, p#lic order or p#lic
polic!.
9+
6he pa!"ent of the specifc s#" of "one! of P9-,---.-- per "onth was vol#ntaril! a)reed #pon
! the petitioners and the respondent. 6here is nothin) fro" the records and, in fact, there is no alle)ation
showin) that petitioners were victi"s of fra#d when the! entered into the a)ree"ent with the respondent.
6herefore, as a)reed ! the parties, the loan of P1,---,---.-- shall earn P9-,---.-- per "onth for a
period of siB %3( "onths, or fro" Dece"er A, 144. to D#ne A, 1449, for a total principal and interest
a"o#nt ofP1,+9-,---.--. 6hereafter, interest at the rate of 1+; per ann#" shall appl!. 6he a"o#nts
alread! paid ! the petitioners d#rin) the pendenc! of the s#it, a"o#ntin) to P1,++A,55+.-- as of
/er#ar! 12, 1444,
9.
sho#ld e ded#cted fro" the total a"o#nt d#e, co"p#ted as indicated aove. We
re"and the case to the trial co#rt for the act#al co"p#tation of the total a"o#nt d#e.
Doc)r*!( o2 E+)o00(4 !o) a004*ca/4(
6he respondent s#"its that the petitioners are estopped fro" disp#tin) the 9; "onthl! interest e!ond
the siB0"onth stip#lated period, since the! a)reed to pa! this interest on the principal a"o#nt #nder the
pro"issor! note and the oard resol#tion.
We disa)ree with the respondent<s contention.
We cannot appl! the doctrine of estoppel in the present case since the facts and circ#"stances, as
estalished ! the record, ne)ate its application. =nder the pro"issor! note,
99
what the petitioners a)reed
to was the pa!"ent of a +0(c*7c +-. o2 P40,000.00 0(r .o!)h 2or +*8 .o!)h+ ; !o) a 41 ra)( o2
*!)(r(+) 0(r .o!)h 2or +*8 <6= .o!)h+ ; o! a 4oa! 3ho+( 0r*!c*0a4 *+ P1,000,000.00, 2or )h(
)o)a4 a.o-!) o2 P1,240,000.00. 6h#s, no reason eBists to place the petitioners in estoppel, arrin)
the" fro" raisin) their present defenses a)ainst a 9; per "onth interest after the siB0"onth period of the
a)ree"ent. 6he oard resol#tion,
9,
on the other hand, si"pl! a#thori:es Pantaleon to contract for a loan
with a "onthl! interest of not "ore than 9;. 6his resol#tion "erel! e"odies the eBtent of Pantaleon<s
a#thorit! to contract and does not create an! ri)ht or oli)ation eBcept as etween Pantaleon and the
oard. ')ain, no ca#se eBists to place the petitioners in estoppel.
P*(rc*!, )h( cor0ora)( :(*4 -!2o-!"("
We fnd it #nfo#nded and #nwarranted for the lower co#rts to pierce the corporate veil of PRIS&'.
6he doctrine of piercin) the corporate veil applies onl! in three %.( asic instances, na"el!C a( when the
separate and distinct corporate personalit! defeats p#lic convenience, as when the corporate fction is
#sed as a vehicle for the evasion of an eBistin) oli)ationK ( in fra#d cases, or when the corporate entit!
is #sed to H#stif! a wron), protect a fra#d, or defend a cri"eK or c( is #sed in alter e)o cases, i.e., where a
corporation is essentiall! a farce, since it is a "ere alter e)o or #siness cond#it of a person, or where the
corporation is so or)ani:ed and controlled and its aNairs so cond#cted as to "a*e it "erel! an
instr#"entalit!, a)enc!, cond#it or adH#nct of another corporation.
93
In the asence of "alice, ad faith, or
a specifc provision of law "a*in) a corporate o7cer liale, s#ch corporate o7cer cannot e "ade
personall! liale for corporate liailities.
95
In the present case, we see no co"petent and convincin) evidence of an! wron)f#l, fra#d#lent or #nlawf#l
act on the part of PRIS&' to H#stif! piercin) its corporate veil. While Pantaleon denied personal liailit! in
his 'nswer, he "ade hi"self acco#ntale in the pro"issor! note Min his personal capacit! and as
authorized ,! the "oard $esolutionM of PRIS&'.
9A
With this state"ent of personal liailit! and in the
asence of an! representation on the part of PRIS&' that the oli)ation is all its own eca#se of its
separate corporate identit!, we see no occasion to consider piercin) the corporate veil as "aterial to the
case.
'#ERE$ORE, in li)ht of all the fore)oin), we here! REVERSE and SET ASIDE the Decision dated &a! ,,
+--. of the Co#rt of 'ppeals in C'01.R. C2 No. 343+5. 6he petitioners< loan of P1,---,---.-- shall ear
interest ofP9-,---.-- per "onth for siB %3( "onths fro" Dece"er A, 144. as indicated in the pro"issor!
note. 'n! portion of this loan, #npaid as of the end of the siB0"onth pa!"ent period, shall thereafter ear
interest at 1+; per ann#". 6he total a"o#nt d#e and #npaid, incl#din) accr#ed interests, shall ear
interest at 1+; per ann#" fro" the fnalit! of this Decision. >et this case e REMANDED to the Re)ional
6rial Co#rt, 8ranch 5., 'ntipolo Cit! for the proper co"p#tation of the a"o#nt d#e as herein directed, with
d#e re)ard to the pa!"ents the petitioners have alread! re"itted. Costs a)ainst the respondent.
SO ORDERED.