Bulos Jr.

v Yasuma, 527 SCRA 727

Facts:
In 1988, Bulos, Atty. Tabalingcos and Dr. Lim incurred a P2.5M loan from Yasuma, a
Japanese national. The terms of the loan provide that it is payable in 3 months at
4% interest rate; that in case of nonpayment, it shall continue at that rate until paid
(48% per annum). And in case of litigation, plus 10% of principal balance for attys
fees (no less than P10,000). Dr. Lim signed the promissory note in behalf of the
others as agreed upon. Each of them mortgaged their respective properties in favor
of Yasuma.
The three failed to pay upon maturity in 1989. Loan then was already at P2.7M.
Yasuma foreclosed the mortgaged properties. The sale amounted to P1.6M leaving a
balance of P1.06M. Interest also accrued and other penalties ballooning the balance
to P2.4M.
Yasuma won a subsequent collection suit filed at the RTC of Makati City in 1996 in
which he was a defendant on along with Bede Tabalingcos. Bulos appealed. The
Court of Appeals, in 2004, denied the motion for reconsideration and affirmed the
lower courts decision. It ruled that Yasuma is entitled to the 20% principal balance
for attys fees as per contract. The CA however reduced the interest rate to 21% per
annum, thus this SC case with the petitioners prayer that the CA and RTC decision
be declared null and void under Rule 45 of the Revised Rules of Civil Procedure with
a petition for review on Certiorari.
Issue:
Whether the interest of 41% per annum and 21% per annum are usurious interests.
Held:
The 48% per annum interest rate is excessive as well as the reduced amount of
21% per annum. Though the ceiling of interest rate has been removed by CB
Circular 905, in no way shall interest rates be excessive as to enslave borrowers.
Interest rates of 3% per month or higher is already excessive. Hence, the interest is
reduced to the legal rate which is at 12% per annum.

Almeda v Court of Appeals