Development Bank of the Philippines v. Arcilla Arcilla Petition for certiorari June 30, 2005 Ponente: Calleo, !r. ! r.,, J.
FA FACTS: Att". #elipe P. Arcilla, Jr. $as emplo"e% &" the Development Bank of the Philippines 'DBP( in )cto&er *+*. -e availe% of an n%ivi%ual -ousin/ Proect loan sometime in *+2. n *+3, DBP an% Arcilla eecute% a Dee% of Con%itional !a le over a parcel of lan%, inclu%in/ the house to &e constructe% on the propert", for P*10,000.00. Arcilla &orro$e% the amount from DBP for the purchase of the lot an% the construction of the house. he loan $as pa"a&le in 25 "ears, $ith a P*,*4.+* amortiation a mortiation per month, at +6 interest per annum. DBP /ave Arcilla Arcilla the option of convertin/ his loan into a re/ular loan if he retire% earl". B" *+5, the amortiation amount increase% to P*,1+*.5*. Arcilla opte% for earl" retirement in *+1, an% so the loan $as converte% into a re/ular loan. n *+4, Arcilla si/ne% three promissor" notes amountin/ to P*1,31.*5, an% $as o&li/e% to pa" service char/es an% interest. DBP reserve% the ri/ht to increase or %ecrease the interest rate of the loan as $ell as other char/es an% fees, $ith prior notice to Arcilla. DBP later /rante% Arcilla a cash a%vance of P32,000.00, at +6 per annum, $hich $as consoli%ate% to the oustan%in/ &alance of Arcilla7s Arcilla7s ori/inal &alance. Arcilla later %efaulte% on pa"ments. As of )cto&er 3*, *++0, the outstan%in/ &alance $as P2*,+0.+3, inclu%in/ interest, fees, an% penalties. DBP rescin%e% the Con%itional !ale A/reement in *++0, &ut in Januar" *++2 DBP offere% Arcilla the opportunit" to repurchase the lot upon full pa"ment of o f the current appraisal or the up%ate% total, $hichever $as hi/her. his offer $as reiterate% in )cto&er 4, *++2. Arcilla %i% not respon%. DBP place% the propert" up for sale at pu&lic &i%%in/ on #e&ruar" *, *++. Arcilla file% a case a/ainst DBP, alle/in/ that DBP faile% to furnish him $ith the %isclosure statement re8uire% &" 9epu&lic Act '9.A.( o. 3415* an% Central Bank 'CB( *
#rom the case: !ection * of 9.A. o. 3415 provi%es that prior to the consummation of a
loan transaction, the &ank, as cre%itor, is o&li/e% to furnish a client $ith a clear statement, in $ritin/, settin/ forth, to the etent applica&le an% in accor%ance $ith the rules an% re/ulations prescri&e% &" the ;onetar" Boar% of the Central Bank of the Philippines, the follo$in/ information: '*( the cash price or %elivere% price of the propert" or service to &e ac8uire%< '2( the amounts, if an", to &e cre%ite% as %o$n pa"ment an% =or tra%e>in< '3( the %ifference &et$een the amounts set forth un%er clau ses '*( an% '2(
Circular o. *52 prior to the eecution of the %ee% of con%itional sale an% the conversion of his loan account $ith the &ank into a re/ular housin/ loan account. DBP countere% that it su&stantiall" complie% $ith 9.A. o. 3415 an% CB Circular o. *5 &ecause the %etails re8uire% $ere %isclose% in the promissor" notes, %ee% of con%itional sale an% the re8uire% notices sent to Arcilla. DBP further ar/ue% that its failure to co mpl" strictl" $ith 9.A. o. 3415 %i% not affect the vali%it" an% enforcea&ilit" of the loan a/reement. DBP interpose% a counterclaim for the possession of the propert". he 9C rule% in Arcilla7s favor, or%erin/ DBP to furnish Arcilla $ith the re8uire% %isclosures, an% ren%ere% DBP7s rescission null an% voi%. )n appeal, ho$ever, the Court of Appeals reverse% the 9C, rulin/ that DBP su&stantiall" complie% $ith 9.A. o. 3415 an% CB Circular o. *5. Both parties appeale% to the !upreme Court: Arcilla, for a reversal of the CA rulin/ an% reversion to the 9C rulin/, an% DBP for partial reconsi%eration in askin/ the CA to or%er Arcilla to vacate the propert". Issues: *. ?as DBP compliant $ith 9.A. o. 3415 an% CB Circular o. *5@ 2. ?as Arcilla lia&le to vacate the propert" an% pa" rentals for his occupation of the propert" from the time of the notarial rescission@ Ratio: If the borrower is not duly informed of the data required by the law rior to the consummation of the a!ailment or drawdown" the lender will ha!e no ri#ht to collect such char#e or increases thereof" e!en if stiulated in the romissory note. $owe!er" such failure shall not affect the !alidity or enforceability of any contract or transaction. $eld : *. es, DBP su&stantiall" complie% $ith 9.A. o. 3415 an% CB Circular o. *5. he Court foun% that DBP faile% to %isclose the re8uisite information in the %isclosure '( the char/es, in%ivi%uall" itemie%, $hich are pai% or to &e pai% &" such person in connection $ith the transaction &ut $hich are not inci%ent to the etension of cre%it< '5( the total amount to &e finance%< '1( the finance char/es epresse% in terms of pesos an% centavos< an% '4( the percenta/e that the finance char/e &ears to the total amount to &e finance% epresse% as a simple annual rate on the outstan%in/ unpai% &alance of the o&li/ation. 2
Also from the case: n%er Circular o. *5 o f the Central Bank, the information re8uire% &" 9.A. o. 3415 shall &e inclu%e% in the contract coverin/ the cre%it transaction or an" other %ocument to &e ackno$le%/e% an% si/ne% &" the %e&tor, thus: he contract coverin/ the cre%it transaction, or an" other %ocument to &e ackno$le%/e% an% si/ne% &" the %e&tor, shall in%icate the a&ove seven items of information. n a%%ition, the contract or %ocument shall specif" a%%itional char/es, if an", $hich $ill &e collecte% in case certain stipulations in the contract are not met &" the %e&tor. #urthermore, the contract or %ocument shall specif" a%%itional char/es, if an", $hich $ill &e collecte% in case certain stipulations in the contract are not met &" the %e&tor.
statement form. )r%inaril", the len%er has no ri/ht to collect an " interest, char/es, or fees $ithout %ue notice to the &orro$er. -o$ever, DBP , %i% inclu%e such information on interests, char/es, fees, an% penalties in the loan transaction %ocuments &et$een it an% Arcilla. he Court consi%ere% this as su&tantial compliance. A%%itionall", there $as no evi%ence that DBP sou/ht to collect interest, char/es, or fees &e"on% $hat $as containe% in the %ocuments provi%e% to Arcilla. 2. es, Arcilla is lia&le to vacate the propert", &ut the Court ma%e no rulin/ on the issue of rentals. he Court a%opte% the fin%in/s of the CA, statin/ that ha% Arcilla &een an or%inar" &orro$er, it $oul% have &een incline% to & e stricter in the application of the ruth in en%in/ Act, insistin/ that the &orro$er &e full" informe% of $hat h e is enterin/ into. -o$ever, the Court note% that Arcilla $as a la$"er, an% so presume% tha t Arcilla $oul% not &e so ne/li/ent as to si/n papers he ha% not carefull" stu%ie%. A%%itionall", as an emplo"ee of DBP, Arcilla ou/ht to have kno$n the terms of the loan he $as appl"in/ for. he Court reman%e% the matter of the %etermination of rental pa"ments to the 9C, as no evi%ence $as a%%uce% &" DBP $ith respect to such rentals. %isosition: Arcilla7s appeal is DD, CA rulin/ is P-D< case reman%e% to 9C for %etermination of reasona&le rental pa"ments.
Prepare% &": Juan E. ;. 9a/ra/io
