MUTUUM CASES Solicitor General this Court, in a resolution of May 13, 1963,

required Manuel Lagtapon, Jacinto Lagtapon, Ruben Lagtapon and

Anita L. Aguilar, who are the legal heirs of Jose Grijaldo to appear
and be substituted as appellants in accordance with Section 17 of
1. REPUBLIC OF THE PHILIPPINES vs. JOSE GRIJALDO
Rule 3 of the Rules of Court.
G.R. No. L-20240 December 31, 1965
The appellant likewise maintains, in support of his contention that
the appellee has no cause of action, that because the loans were
secured by a chattel mortgage on the standing crops on a land
FACTS: In the year 1943 appellant Jose Grijaldo obtained five loans owned by him and these crops were lost or destroyed through enemy
from the branch office of the Bank of Taiwan, Ltd. in Bacolod City, in action his obligation to pay the loans was thereby extinguished.
the total sum of P1, 281.97 with interest at the rate of 6% per
ISSUE: Whether or not the obligation to pay is extinguished.
annum, compounded quarterly. These loans are evidenced by five
promissory notes executed by the appellant in favor of the Bank of
Ruling: NO. This appellant’s argument is untenable. The terms of the
Taiwan, Ltd., as follows: On June 1, 1943, P600.00; on June 3, 1943,
promissory notes and the chattel mortgage that the appellant
P159.11; on June 18, 1943, P22.86; on August 9, 1943,P300.00; on
executed in favor of the Bank of Taiwan, Ltd. do not support the
August 13, 1943, P200.00, all notes without due dates, but because
claim of appellant. The obligation of the appellant under the five
the loans were due one year after they were incurred. To secure the
promissory notes was not to deliver a determinate thing namely, the
payment of the loans the appellant executed a chattel mortgage on
crops to be harvested from his land, or the value of the crops that
the standing crops on his land, Lot No. 1494 known as Hacienda
would be harvested from his land. Rather, his obligation was to pay
Campugas in Hinigiran, Negros Occidental.
a generic thing — the amount of money representing the total sum
of the five loans, with interest. The transaction between the
By virtue of Vesting Order No. P-4, dated January 21, 1946, and
appellant and the Bank of Taiwan, Ltd. was a series of five contracts
under the authority provided for in the Trading with the Enemy Act,
of simple loan of sums of money. "By a contract of (simple) loan, one
as amended, the assets in the Philippines of the Bank of Taiwan, Ltd.
of the parties delivers to another ... money or other consumable
were vested in the Government of the United States. Pursuant to
thing upon the condition that the same amount of the same kind
the Philippine Property Act of 1946 of the United States, these
and quality shall be paid." (Article 1933, Civil Code) The obligation of
assets, including the loans in question, were subsequently
the appellant under the five promissory notes evidencing the loans
transferred to the Republic of the Philippines by the Government of
in questions is to pay the value thereof; that is, to deliver a sum of
the United States under Transfer Agreement dated July 20, 1954.
money — a clear case of an obligation to deliver, a generic thing.
These assets were among the properties that were placed under the
Article 1263 of the Civil Code provides:
administration of the Board of Liquidators created under Executive
Order No. 372, dated November 24, 1950, and in accordance with
In an obligation to deliver a generic thing, the loss or destruction of
Republic Acts Nos. 8 and 477 and other pertinent laws.
anything of the same kind does not extinguish the obligation.
On September 29, 1954 the appellee, Republic of the Philippines,
The chattel mortgage on the crops growing on appellant's land
represented by the Chairman of the Board of Liquidators, made a
simply stood as a security for the fulfilment of appellant's obligation
written extrajudicial demand upon the appellant for the payment of
covered by the five promissory notes, and the loss of the crops did
the account in question. The record shows that the appellant had
not extinguish his obligation to pay, because the account could still
actually received the written demand for payment, but he failed to
be paid from other sources aside from the mortgaged crops.
pay.
2. G.R. No. L-9417 December 4, 1914
On January 17, 1961 the appellee filed a complaint in the Justice of
the Peace Court of Hinigaran, Negros Occidental, to collect from the PEDRO MARTINEZ, plaintiff-appellee,
appellant the unpaid account in question. The Justice of the Peace vs.
Of Hinigaran, after hearing, dismissed the case on the ground that ANTONINO RAMOS, in his own behalf and as administrator of the
the action had prescribed. The appellee appealed to the Court of estate of his father Julian Ramos, defendant-appellant and
First Instance of Negros Occidental and on March 26, 1962 the ALEJANDRA RAMOS, defendant-appellee.
court a quo rendered a decision ordering the appellant to pay the
appellee the sum of P2, 377.23 as of December 31, 1959, plus
interest at the rate of 6% per annum compounded quarterly from
the date of the filing of the complaint until full payment was made. Facts:
The appellant was also ordered to pay the sum equivalent to 10% of
Antonino Ramos signed an obligation in favor of Pedro Martinez:
the amount due as attorney's fees and costs.
I hereby declare to be a fact that by order of my father, Julian
The appellant appealed directly to this Court. During the pendency
Ramos, I have received from Pedro Martinez one thousand nine
of this appeal the appellant Jose Grijaldo died. Upon motion by the
hundred pesos ($1,900) as a loan without interest, which I will return
within three years, and I sign. — Manila, May 2, 1900. — (Sgd.)
Antonino Ramos.
Ramos was appointed judicial administrator of the estate of his
deceased father, Julian. Martinez filed suit for the fulfillment of the
obligation. The committee of appraisal of the estate, decided that
this was not a debt against the estate, but against the heirs. CFI
Batangas ordered payment of the sum. Ramos appealed from the
judgment.
Issue: Is the obligation signed by Ramos his own personal loan?
Held: Yes.
The contract consists in that Antonino, and nobody else, will return
to Pedro Martinez in the time stipulated the 1,900 pesos; and the
allegations set up are of no avail against the wording of the contents
of the instrument.
Obligation arising from contracts have legal force between the
contracting parties and must be fullfilled in accordance with their
stipulations. (Civil Code, art. 1091.) (Art. 1159 in the New Civil Code)
Art. 1159. Obligations arising from contracts have the force of law
between the contracting parties and should be complied with in
good faith. (1091a)
Contracts that may have been made subsequent to the one under
consideration, either between Antonio Ramos and his parents or
between himself and his coheirs, wherein the lender Pedro Martinez
has not intervened, cannot be alleged against the plaintiff Pedro
Martinez, on the principle that the force of the law of contrast
cannot be extended to parties who do not intervene therein.
The judgment appealed from is affirmed.
3. Tan v. Valdehueza
Facts: Arador and Valdehuesa executed two documents of deed of
pacto de retro sale with right to repurchase in favor of Tan of two
portions of a parcel of land. This was not registered in the Register
of Deeds. After the execution of the Deed of Sale, Arador and
Valdehueza remained in the possession of the land, taxes were
paid by them. Tan filed an action against Valdehueza and Arador as
to enjoin them from entering the parcel of land and gathering nuts
but this was dismissed for failure to seek immediate trial.
Issue: was there a pacto de retro sale?
Ruling: No. Even if the mortgage was not duly registered, it is still
binding on the parties. Since Valdehueza remained in possession of
the land, the contract which purported to be pacto de retro is
presumed to be an equitable mortgage.
Issue: should interest be charged?
Ruling: No. the imposition of legal interest on the equitable
mortgage is without legal basis since there was no express
stipulation to that effect.
4. Jardenil v. Solas
July 24, 1942
Facts: This is an action for foreclosure of mortgage. Solas agreed to
pay interest only up to the date of maturity. The contract is silent as
to whether after the date of maturity, in the event of non-payment,
the debtor would continue to pay interest.
Issue: Is solas bound to pay the stipulated interest only up to the
date of maturity as fixed in the promissory note, or up to the date
payment is effected?
Ruling: Only up to the date of maturity. A writing must be
interpreted according to the legal meaning of its language and only
when the wording of the written instrument appears to be contrary
to the evident intention of the parties that such intention must
prevail. The act of the mortgagee in granting to the mortgagor on
the same date of execution of the deed of mortgage, an extension of
one year from the date of maturity within which to make payment,
without making any mention of any interest which the mortgagor
should pay during the additional period indicates that the true
intention of the parties was that no interest should be paid during
the period of grace.
5. Frias vs Diego-Sison
Facts: Frias (petitioner) owns a house and lot which she
previously purchased and is covered with a certificate of title.
Petitioner and Diego-Sison (defendant) entered into an agreement
wherein the property is priced at 6.4 million pesos and that
defendant will give initial amount of 3 million pesos to petitioner.
Defendant then will be given 6 months to decide whether to pursue
buying the property. If defendant chooses not to buy, petitioner is
given 6 months then to return the 3 million initially given by
defendant which will be considered as a loan and the property as
security for the mortgage. Furthermore, it is stipulated in the
agreement that for the first six months if there are no other buyers,
no interest will accrue on the 3 million. But interests will accrue on
the “last six months only”.
Petitioner received 2 million in cash and a 1 million pesos post-dated
check dated February 28, 1990, instead of 1991, which rendered
said check stale. Defendant decided not to buy the property and
informed petitioner of their agreement, hence, the 2 million initial
payment treated as a loan. Petitioner failed to pay respondent.
Furthermore, petitioner executed an affidavit of loss of owner’s
copy of certificate title and filed for issuance of new certificate in the
RTC. Defendant filed a suit to stop petitioner from obtaining a new
certificate and also for the recovery of the 2 million plus interest.
RTC ruled in favor of defendant. CA affirmed and modified the
interest from 32% to 25%. CA concluded that there was no basis for
petitioner to say that the interest should be charged for six months
only and no more; that a loan always bears interest otherwise it is
not a loan.
Issue: Is the petitioner correct in saying that the agreement “last six
months only” means interests shall be paid for six months only and
no more?
Ruling: No, petitioner is incorrect. While the CA’s conclusion, that a
loan always bears interest otherwise it is not a loan, is flawed since a
simple loan may be gratuitous or with a stipulation to pay interest,
we find no error committed by the CA in awarding a 25% interest
per annum on the two-million peso loan even beyond the second six
months stipulated period.
The general rule is that if the terms of an agreement are clear and
leave no doubt as to the intention of the contracting parties, the
literal meaning of its stipulations shall prevail. It is further required
that the various stipulations of a contract shall be interpreted
together, attributing to the doubtful ones that sense which may
result from all of them taken jointly.
Their agreement speaks of two (2) periods of six months each. The
first six-month period was given to plaintiff-appellee (respondent) to
make up her mind whether or not to purchase defendant-
appellant’s (petitioner's) property.
The second six-month period was given to defendant-appellant to
pay the P2 million loan in the event that plaintiff-appellee decided
not to buy the subject property in which case interest will be
charged "for the last six months only", referring to the second six-
month period. This means that no interest will be charged for the
first six-month period while appellee was making up her mind
whether to buy the property, but only for the second period of six
months after appellee had decided not to buy the property.
This is the meaning of the phrase "for the last six months only".
Certainly, there is nothing in their agreement that suggests that
interest will be charged for six months only even if it takes
defendant-appellant an eternity to pay the loan.
The agreement that the amount given shall bear interest for the last
six months only, i.e., referring to the second six-month period, does
not mean that interest will no longer be charged after the second
six-month period since such stipulation was made on the logical and
reasonable expectation that such amount would be paid within the
date stipulated. Considering that petitioner failed to pay the amount
given which under the Memorandum of Agreement shall be
considered as a loan, the monetary interest for the last six months
continued to accrue until actual payment of the loaned amount.
The payment of regular interest constitutes the price or cost of the
use of money and thus, until the principal sum due is returned to the
creditor, regular interest continues to accrue since the debtor
continues to use such principal amount. Otherwise, it would
constitute unjust enrichment on the part of the debtor.
6. Arwood Industries vs. DM Consunji
394 SCRA 11 (2002)
Galllo
Facts: Arwood and Consunji, as owner and contractor, respectively,
entered into a Civil, Structural and Architectural Works
Agreement for the construction of petitioner's Westwood
Condominium. The contract price for the condominium project
aggregated P20,800,000.00. Despite the completion of the
condominium project, the amount of P962,434.78 remained unpaid
by Arwood. Repeated demands by Consunji for petitioner to pay
went unheeded. Thus, Consunji filed its complaint for the recovery
of the balance of the contract price and for damages.
Respondent specifically prayed for the payment of the (a) amount
of P962,434.78 with interest of 2% per month or a fraction thereof,
from November 1990 up to the time of payment. The trial court
ruled in favor of the respondent.
Arwood appealed to the CA, particularly opposing the finding of the
trial court with regard to the imposition of the monetary interest of
2% per month on the adjudicated amount.
The CA upheld the trial court finding basis in Article 6.03 of the
Agreement concerning the imposition of the 2% interest, which
reads:
"Payment shall be made by the OWNER to the CONTRACTOR within
fifteen (15) calendar days after receipt of the Construction
Manager's Certificate. In the event OWNER delays the
payments (i.e. beyond the stipulated time) to the CONTRACTOR of
monthly progress billings, the CONTRACTOR shall have the option
to either suspend the works on the Project until such payments
have been remitted by the OWNER or continue the work but the
OWNER shall be required to pay the interest at a rate of two (2%)
percent per month or the fraction thereof in days of the amount
due for payment by the OWNER. The same interest shall be added
to the billing of the following month. Furthermore, the progress
payments shall be reduced by a portion of the downpayment made
by the OWNER corresponding to the value of the work completed."
ISSUE: Is the imposition of a 2% per month interest on the balance
of contract price correct?
RULING: Yes. The Agreement or the contract between the parties is
the formal expression of the parties’ rights, duties and obligations. It
is the best evidence of the intention of the parties. Thus, "when the
terms of an agreement have been reduced to writing, it is
considered as containing all the terms agreed upon and there can
be, between the parties and their successors in interest, no evidence
of such terms other than the contents of the written agreement."
Consequently, upon the fulfillment by respondent of its obligation to
complete the construction project, petitioner had the correlative
duty to pay for respondent’s services. However, petitioner refused
to pay the balance of the contract price. From the moment
respondent completed the construction of the condominium project
and petitioner refused to pay in full, there was delay on the part of
petitioner. Since the Agreement stands as the law between the
parties, this Court cannot ignore the existence of such provision
providing for a penalty for every month’s delay. Neither can
petitioner impugn the Agreement to which it willingly gave its
consent. From the moment petitioner gave its consent, it was bound
not only to fulfill what was expressly stipulated in the Agreement
but also all the consequences which, according to their nature, may
be in keeping with good faith, usage and law.
7. Overseas v. Cordero
Facts:
Private respondent opened a 1-year time deposit with petitioner
bank amounting to P80,000, with interest of 6% p.a. Due to its
distressed financial condition, the bank was unable to pay. Cordero
instituted an action before the CFI Manila. Petitioner raised the
defenses of insolvency and prejudice to other depositors. The lower
court, and the Court of Appeals, ruled in favor of Cordero. Hence,
the instant petition for review on certiorari.
Certain supervening events rendered the issue moot and academic.
Respondent’s brother and attorney-in-fact sent a letter to the
Commercial Bank of Manila (petitioner’s successor-in-interest),
acknowledging receipt of P10,000, and another manifestation for
P73,840, with waiver of damages. Upon further examination, it was
found that the respondent’s brother has no SPA. Respondent’s
brother submitted the SPA, with explanatory comment that the
waiver applies only to third party claims, suits and damages, not to
interest and attorney’s fees.
Issue:
Whether respondent is entitled to interest and attorney’s fees
Held:
The obligation to pay interest on the deposit ceases the moment the
operation of the bank is completely suspended by the Central Bank.
Neither can respondent Cordero recover attorney’s fees. Petitioner’s
refusal to pay was not due to a willful and dishonest refusal to
comply with its obligation but to restrictions imposed by Central
Bank.
8. RAMOS vs. CENTRAL BANK OF THE PHILIPPINES
Facts: This involves question as to applicability of Tapia ruling
wherein the Court held that "the obligation to pay interest on the
deposit ceases the moment the operation of the bank is completely
suspended by the duly constituted authority, the Central Bank," to
loans and advances by the Central Bank
Held: Respondents have failed to adduce any cogent argument to
persuade the Court to reconsider its Resolution at bar that the Tapia
ruling is fully applicable to the non-payment of interest, during the
period of the bank's forcible closure, on loans and advances made by
respondent Central Bank.
Respondent Central Bank itself when it was then managing the
Overseas Bank of Manila (now Commercial Bank of Manila) under a
holding trust agreement, held the same position in Idelfonso D. Yap
vs. OBM wherein it argued that "(I)n a suit against the receiver of a
national bank for money loaned to the Bank while it was a going
concern, it was error to permit plaintiff to recover interest on the
loan after the bank's suspension"
A significant development of the case, the Government Service
Insurance System (GSIS) has acquired ownership of 99.93% of the
outstanding capital stock of COMBANK. The Court's Resolution
manifestly redounds to the benefit of another government
institution, the GSIS, and to the preservation of the banking system.
9. Lirag vs. SSS, GR No. L-33205, August 31, 1987
Facts: Lirag Textile Mills(Lirag) is a fabric company. They entered into
a “Purchase Agreement” with SSS. In the agreement, SSS will buy
preferred shares worth P1,000,000 from Lirag. Certificate No. 128
and 139 will be repurchased by Lirag after four years from the
issuing of the stocks. To ensure that Lirag will repurchase, their
president, Basilio Lirag, signed as surety. If they failed to repurchase,
the entire obligation shall be due and demandable and the Lirag
Textile Mills shall be shall be liable for 12% of the outstanding
obligation as liquidated damages. Lirag also agreed to pay a dividend
of 8% on the net proceeds of the P1,000,000. Lirag failed to
repurchase. Lirag argued that it was not able to do so because of a
series of events(smuggling of foreign fabric, labor strikes,and so on).
Lirag’s argument was that SSS was a stockholder of the corporation
and so the redemption of the stocks depended on Lirag’s financial
capability. SSS argued that the Purchase Agreement was a debt
instrument.
Issue: Is a contract to buy stocks a debt instrument when there are
clear sanctions if the corporation fails to comply with its obligations?
Ruling: Yes. It is a debt instrument. A debt is defined as an obligation
to pay money at some fixed future time, or at a time which
becomes definite and fixed by acts of either party and which they
expressly or impliedly, agree to perform in the contract. There was
an absolute obligation on the part of the corporation to repurchase
the stocks and pay the dividends. The 12% liquidated damages
clearly shows the intent of the parties to be bound as creditor and
debtor, not as stockholder and corporation. (In a corporation, the
stockholder has no right to demand repurchase and dividends; the
stockholder only waits for what income, if any, is realized by the
corporation.) In this case, it was clear that Lirag loaned money from
SSS and coursed it through stocks. The 8% cumulative dividend were
evidently interests. They did not depend on whether the corporation
gained profits or not. The 12% liquidated damages also stands since
Lirag failed to comply with the obligation. Since these involve sums
of money which are overdue, they are bound to earn legal interest
from the time of demand, in this case, judicial (the time of filing the
action in the trial court).
10. SONCUYA VS. AZZARAGA (R-U, Glenna)
Facts:
By reason of court proceedings “Testate Estate of the Deceased Juan
Azarraga y Galvez”, defendants all Azarraga became indebted to
Atty. Leodegario Azarraga who represented them, for Atty’s fees at
Php3,000.
Defendants Azarraga agreed to pay Atty. Azarraga in this manner:
 The parcels of land in Bay-ang, New Washington, Capiz
which are enumerated in the inventory are specially
mortgaged and subject to payment of the fees of said
attorney. (By 5 years, if the parties still are not able to pay
in full the attorney’s fees, these lands shall definitely be
adjudicated to said attorney as his property in payment of
his fees. If in 5 years, the parties are able to pay in full the
fees, these lands will still continue to be in possession of
the attorney for an additional 3 years from the date of last
payment in the event that the attorney may have kept
livestock in the said lands).
9 months after the court approved the payment scheme, Atty
decided to sell and did sell to plaintiff his credit against the
defendants for the sum of Php2,500.
Plaintiff became the creditor of defendant Azarraga because of the
sale of credit, he allowed defendants an extension of a few years
over 5 years or up to Feb. 16, 1926, within which they would have to
pay him his credit, but with the express condition of the 12% per
annum interest, from August 30, 1924. The term was later extended
up to April 26, 1926 at the request of the defendants, with the same
interest. Plaintiff granted another extension to expire on Oct. 31,
1928, but subject to the condition that instead of Php7,000 (12%)
charged to defendant, they should pay him Php12,000. In said
Php7,000 and Php12,000, Php4,000 which the plaintiff already gave
to defendant Joaquin Azarraga.
Joaquin Azarraga also executed in favor of the plaintiff a deed by
which he sold to plaintiff Php4,000 (a portion of the inheritance in
the estate of Juan Azzaraga y Galvez, consisting of an undivided tract
of land containing an area of 63 hectares in Bay-ang Chico, New
Washington, Capiz. The period of redemption would be 5 years from
Feb. 16, 1921, extended to April 26, 1926 at an interest of 12% from
the expiration of the first term. A second extension was granted,
with a condition that instead of the payment of Php7,000,
Php12,000 will be paid. The deed referred to was never annotated
or inscribed in any register in the Office of the Register of Deeds.
Plaintiff then took possession of the whole land, placing livestock
therein, build sheepfolds and erected wire fences. Coconut trees
were also planted by Azarraga. Some of the animals brought by the
plaintiff were wounded, but it is not known if these were caused by
the men of Azarraga, and if these animals were also the ones who
destroyed the coconut trees planted on the land by Azarraga.
In May 1928, plaintiff went to the house of Azarraga to collect his
credit against all the defendants, and the special credit against
Joaquin Azarraga. On October 9, 1928, plaintiff wrote a letter
addressed to all the defendants telling tem of the failure of
defendants to include in the Torrens Title of the property the two
encumbrances in favor of plaintiff, that if they wish to redeem said
land, payment of Php12,000 until October 31 should be given to
him. If they do not wish to redeem it then have the portion of the
land segregated and transferred in his favor.
Plaintiff secured on February 5, 1929 a preliminary attachment of
the properties, and the same was annotated in the registry of the
property. Seven months, this attachment was lifted because of the
filing of the bond required by the court. Defendants filed the bond,
and so they also ordered the cancellation of the notice of lis
pendens.
On Sept. 20, 1929, defendant Hijos de la Rama entered into a
contract with co-defendants Azarraga for the purpose of granting
them the credit of Php25,000, of which Php16,000 has already been
delivered to them. This was for the Azarragas to carry on its
business.
Issues:
1. Was the contract entered into by the Azarraga brothers
(defendants) with Atty. Leodegario Azarraga from whom
the plaintiff derived his right, a sale with pacto de retro, or
an assignment in payment of a debt, or was it an
antichresis partaking of the nature of what was anciently
known as pacto comisorio or a mortgage, or was it merely
a loan with real estate security?
2. Was the contract executed by Joaquin Azarraga and the
plaintiff a sale with pacto de retro or simply a loan with
real estate security?
Ruling:
1. It could be considered as an antichresis or pacto comisorio
– not an assignment in payment of a debt, or a sale with
pacto de retro because there is nothing to indicated that
such was the intention of the defendants Azarraga, or at
least, they bound themselves to deliver the land in
question to the plaintiff and that the latter should pay
 them the value thereof; there was what may be
considered the resolutory condition of 5 years – and it was
converted to a SIMPLE LOAN by the fact that plaintiff
chose to collect 12% annual interest. It is only in contracts
of loan, with or without guaranty that interest may be
demanded. It was a simple loan with security.
2. Plaintiff never considered the contract entered into by him
with Joaquin as a sale with pacto de retro. If he ever considered it as
such, he novated it on Feb. 1926 to a simple loan, as he began to
charge the 12% interest. The plaintiff never claimed rights of
dominion over the lands. For tax declaration purposes, he did not
declare the lands as his property. Plaintiff has no right to the various
sums, as he never became the owner of the lands in question. He
also has no reason to complain that his lien was not annotated in the
Certificate of Title, as he also did not ask that it be stated that the
lands were charged with his credit against them.
Plaintiff alone has the right to (1) recover from defendants Azarraga
by virtue of the sale and assignment made to him by Atty.
Leodegario Azarraga of the credit of Php2,700 against the
defendants, plus interest at the rate of 12% per annum from Aug.
30, 1924; and (2) to recover from defendant Joaquin Azarraga the
sum of Php4,000 plus interest at the rate of 12% per annum from
April 26, 1926.
11. Royal Shirt Factory vs Co Bon Tic
Duron
Facts:
An action for the recovery of money by Royal Shirt Factory from Co
Bon Tic the sum of P1,422 to represent the balance of the price of
350 pairs of “Balleteenas” shoes at P7 a pair with interest at 12% per
annum
Issue: Whether it was an outright sale or a sale merely on
consignment ?
Municipal court held that it was a sale on consignment while CFI
held that it was an outright sale.
Ruling: It was an outright sale.
In Exhibit A, an order slip contained a condition in the sale.
According to the testimony of Mr. Chebat it means that Co could
either consider the sale as 1) one on consignment, sell as many
shoes as he could for any price and pay for it at P8 a pair and at the
end of 9 days, return the shoes unsold; or 2) an absolute sale at P7 a
pair. Since he was not able to return any of the shoes at the end of
nine days, he must have chosen the second alternative. But since
this was a self serving evidence, it was not admitted.
The court looked at the conduct of the parties. Exhibit B was an
invoice of the same 350 shoes including sales tax listed as P2,450. It
was noted down in his own handwriting the different partial
payments of P500, P528 and lastly the P420 by check. It was obvious
that he accepted the outright sale since in making the partial
payments, he made no mention of the number of shoes sold by him
and the number of shoes remaining unsold which he should have
done if the sale was on consignment.
Issue: Should the interest rate be at 12% or 6% per annum?
Ruling: It should only be at 6% per annum.
There was an absence of stipulation as to the rate of interest so he
would be paying only 6% per annum. Exhibit A does not have any
stipulation as to the rate of interest. Exhibit B was not signed by him.
If the court would hold Co bound by Exhibit B, it was only because of
his tacit acceptance of the total value of 350 pairs of shoes.
12. ANGEL JOSE WAREHOUSING CO., INC., vs. CHELDA ENTERPRISES
and DAVID SYJUECO
FACTS
Plaintiff corporation filed suit in the Court of First Instance of Manila
on May 29, 1964 against the partnership Chelda Enterprises and
David Syjueco, its capitalist partner, for recovery of alleged unpaid
loans in the total amount of P20,880.00, with legal interest from the
filing of the complaint, plus attorney’s fees of P5,000.00. Alleging
that post dated checks issued by defendants to pay said account
were dishonored, that defendants’ industrial partner, Chellaram I.
Mohinani, had left the country, and that defendants have removed
or disposed of their property, or are about to do so, with intent to
defraud their creditors, preliminary attachment was also sought.
Answering, defendants averred that they obtained four loans from
plaintiff in the total amount of P26,500.00, of which P5,620.00 had
been paid, leaving a balance of P20,880.00; that plaintiff charged
and deducted from the loan usurious interests thereon, at rates of
2% and 2.5% per month, and, consequently, plaintiff has no cause of
action against defendants and should not be permitted to recover
under the law. A counterclaim for P2,000.00 attorney’s fees was
interposed. Great reliance is made by appellants on Art. 1411 of the
New Civil Code. Since, according to the appellants, a usurious loan is
void due to illegality of cause dor object, the rule of pari
delicto expressed in Article 1411, supra, applies, so that neither
party can bring action against each other. Said rule, however,
appellants add, is modified as to the borrower, by express provision
of the law (Art. 1413, New Civil Code), allowing the borrower to
recover interest paid in excess of the interest allowed by the Usury
Law. As to the lender, no exception is made to the rule; hence, he
cannot recover on the contract. So — they continue — the New Civil
Code provisions must be upheld as against the Usury Law, under
which a loan with usurious interest is not totally void, because of
Article 1961 of the New Civil Code, that: “Usurious contracts shall be
governed by the Usury Law and other special laws, so far as they are
not inconsistent with this Code.”
ISSUE
Whether or not the illegal terms as to payment of interest likewise
renders a nullity the legal terms as to payments of the principal
debt.
HELD
Article 1420 of the New Civil Code provides in this regard: “In case of
a divisible contract, if the illegal terms can be separated from the
legal ones, the latter may be enforced.”
In simple loan with stipulation of usurious interest, the prestation of
the debtor to pay the principal debt, which is the cause of the
contract (Article 1350, Civil Code), is not illegal. The illegality lies
only as to the prestation to pay the stipulated interest; hence, being
separable, the latter only should be deemed void, since it is the only
one that is illegal.
13. CU-UNJIENG V. MABALACAT
Facts: Cu Unjieng e Hijos loaned Mabalacat 163 k, for security,
Mabalacat mortgaged its property.
Mabalacat failed to pay, but Cu Unjieng extended the payment. Cu
Unjieng filed a case against Mabalacat for foreclosure of property
and payment of attorney's fees. It also claims interest over interest.
Mabalacat insisted that the agreement for the extension of the time
of payment had the effect of abrogating the stipulation of the
original contract with respect to the acceleration of the maturity of
the debt by non-compliance with the terms of the mortgage.
NOTE : Under the second clause of the mortgage, interest should be
calculated upon the indebtedness at the rate of 12 per cent per
annum. In the same clause, but in a separate paragraph, there is
another provision with respect to the payment of interest expressed
in Spanish in the following words:
Los intereses seran pagados mensualmente a fin de cada mes,
computados teniendo en cuenta el capital del prestamo aun no
pagado.
Translated into English this provision reads substantially as follows:
"Interest, to be computed upon the still unpaid capital of the loan,
shall be paid monthly, at the end of each month."
Issue: WoN Cu-Unjieng is entitled to interest over interest?
Ruling: No. It is well settled that, under article 1109 of the Civil Code,
as well as under section 5 of the Usury Law (Act No. 2655), the
parties may stipulate that interest shall be compounded; and rests
for the computation of compound interest can certainly be made
monthly, as well as quarterly, semiannually, or annually. But in the
absence of express stipulation for the accumulation of compound
interest, no interest can be collected upon interest until the debt is
judicially claimed, and then the rate at which interest upon accrued
interest must be computed is fixed at 6 per cent per annum.
The languageof the mortgage (the onenoted above) does not justify
the charging of interest upon interest, so far as interest on the
capital is concerned. The provisio merely requires the debtor to pay
interest monthly at the end of each month, such interest to be
computed upon the capital of the loan not already paid. Clearly this
provision does not justify the charging of compound interest upon
the interest accruing upon the capital monthly. It is true that in
subsections (a), (b) and (c) of article IV of the mortgage, it is
stipulated that the interest can be thus computed upon sums which
the creditor would have to pay out (a) to maintain insurance upon
the mortgaged property, (b) to pay the land tax upon the same
property, and (c) upon disbursements that might be made by the
mortgagee to maintain the property in good condition. But the chief
thing is that interest cannot be thus accumulated on unpaid interest
accruing upon the capital of the debt
14. David vs. Court of Appeals
G.R. No. 115821, October 13, 1999
Facts: RTC Manila Judge Diaz issued a writ of attachment over the
real properties of private respondent. Judge Diaz ordered private
respondent to pay petitioner P 66, 500.00 with interest from July 24,
1974, until fully paid. However, Judge Diaz amended said Decision,
so that the legal rate of interest should be computed from January 4,
1966, instead of from July 24, 1974. Private respondent appealed to
CA and SC, which both affirmed the decision of the lower court.
Subsequently, entries of judgment were made and the record of the
case was remanded to RTC Branch 27, presided by respondent Judge
Cruz, for the final execution of the decision as amended.
Upon petitioner’s motion, Judge Cruz issued an alias writ of
execution by virtue of which respondent Sheriff Pena conducted a
public auction. Sheriff Pena informed the petitioner that the total
amount of the judgment is P 270, 940.52. The amount included a
computation of simple interest. Petitioner, however, claimed that
the judgment award should be P 3,027,238.50, because the amount
due ought tot be based on compounded interest. Although the
auctioned properties were sold to the petitioner, Sheriff Pena did
not issue Certificate of Sale because there was excess in the bid
price in the amount of P 2,941,524.47, which the petitioner failed to
pay despite notice.
Petitioner filed a motion praying that respondent Judge Cruz issue
an order directing respondent Sheriff Pena to prepare and execute a
certificate of sale in favor of the petitioner, placing therein the
amount of the judgment as P 3,027,238.50, the amount he bid
during the auction, which he won. His reason is that compound
interest, which is allowed by Article 2212 of the Civil Code, should
apply in this case.
RTC and Ca did not favor petitioner. Petitioner argued that the CA
erred in ruling that Article 2212 of the Civil Code applies only where
the parties to an obligation stipulated or agreed to pay compounded
interest.
Issue: WON respondent appellate court erred in affirming
respondent Judge’s order for the payment of simple interest only
rather than the compounded interest
Ruling: Petitioner insists that in computing the interest due of the P
66,500.00, interest should be computed at 6% on the principal sum
of P 66,500.00 pursuant to Article 2209 and then “interest on the
legal interest” should also be computed in accordance with the
language of Article 2212 of the Civil Code. In his view, said article
meant “compound interest.” However, Article 2212 contemplates
the presence of stipulated or conventional interest, which has
accrued when demand was judicially made. In cases where no
interest had been stipulated by the parties, no accrued conventional
interest could further earn interest upon judicial demand.
Furthermore, “when the judgment sought to be executed ordered
the payment of simple “legal interest” only and said nothing about
payment of compound interest, but the respondent judge orders
payment of compound interest, then, he goes beyond the confines
of a judgment which had become final.” Note that in this case, the
CA made the finding that “…no interest was stipulated by the
parties.”
15. G.R. No. L-48389 July 27, 1942
CLEOFE VELEZ, plaintiff-appellant,
vs.
MAXIMO BALZARSA and FLAVIA MABILIN, defendants-appellees.
Facts:
On November 16, 1937, plaintiff in an amended complaint prayed
for the return of certain parcels of land which she alleged had been
sold by the defendants to her deceased husband Neri, with right of
repurchase. She further alleged that defendants had remained in
possession of said land under a contract of lease, but had not paid
the agreed rentals for over two years. In their amended answer,
defendants alleged that the real agreement was loan secured by a
mortgage of those lands; and that the amount borrowed was only
P2,400, and that they had however already paid P4,420.88.
Defendants thus prayed for the return of the excess, or P2,029.88.
The trial court found that the total amount loaned on various dates
by the deceased husband to the defendants, was P3,067; that
defendants paid P4,429.88, of which P3,997.25 was received by her
husband and P432.63 by plaintiff; that these payments were not
made by way of interests or rents, but as payment for the principal;
that defendants overpaid the amount of P1,362.88. As for the
amount received by deceased Neri, the court held that not having
been presented it before the committee on appraisal and claims
during the administration of the estate of said Neri, defendants are
not entitled to its return. Plaintiff appealed from the judgment.
Issue: Are the payments to be applied to the principal or are they
rents or interests?
Held:
The trial court was right in finding that these payments were applied
to the principal.
The payments could not have been intended as rents because in
accordance with a clause in the contract, Neri took possession of the
lands, and collected its fruits. The creditor having enjoyed the
beneficial use of lands delivered as security of loan, it appears to
have been the intention of the parties that the creditor should be
compensated. Furthermore, in none of the contracts offered in
evidence is there any promise made by defendants to pay rents. It
would have been strange for such a clause to appear in Exhibits A
and D wherein it was stipulated that the creditor took possession of
the lands and would reap the fruits of the same. It is true that in the
receipts signed by Neri and by plaintiff these payments are called
rents. But these receipts have been prepared by Neri and by
plaintiff, and defendants in their ignorance did not look into the
wording, being merely satisfied that they were proofs of payment.
Neither are they interests because no interest is due unless it is
expressly stipulated. The alleged occupation of Neri, being “publicly
known as a money lender" does not appear in the stipulation of
facts or if that fact appeared in the record, it would not constitute
sufficient compliance with the requisite of article 1755 of the Civil
Code [Article 1956, NCC] that interest must be expressly stipulated.
The liability of plaintiff to return the excess payments is in keeping
with article 1895 of the Civil Code [ Art. 2154 in the NCC] which
provides that "when something is received which there is no right to
collect, and which by mistake has been unduly delivered, the
obligation to restore it arises." The two requisites are present: (1)
there is no right to collect these excess sums; as (2) the amounts
have been paid through mistake by defendants. Such mistake is
shown by the fact that the parties in their contracts never intended
that either rents or interests should be paid, and by the further fact
that when these payments were made, they were intended by
defendants to be applied to the principal, but they overpaid the
amounts loaned of them.
Article 1895 of the Civil Code [ Art. 2154 in the NCC], is therefore
applicable. This legal provision, which determines the quasi-contract
of solutio indebiti, is one of the concrete manifestations of the
ancient principle that no one shall enrich himself unjustly at the
expense of another. In the Roman Law Digest the maxim was
formulated thus: "Jure naturae acquum est, neminen cum alterius
detrimento et injuria fieri locupletiorem." And the Partidas declared:
"Ninguno non deue enriquecerse tortizeramante con daño de otro."
Such axiom has grown through the centuries in legislation, in the
science of law and in court decisions.
As for the amount to be returned by plaintiff, the trial court held
that the plaintiff should return only the excess sum she actually
received (P432.63) but not the over-payment made to the deceased
Neri. If the defendants had appealed from the latter phase of the
judgment, perhaps the application of section 749 of the Code of Civil
Procedure (now Rules 89, section 5 of the new Rules of Court) might
have been studied. Under that provision, contingent claims which
become absolute after the settlement of the estate of a deceased
person may be enforced proportionately against the distributees of
the estate, and in the instant case this claim against Neri did not
become absolute till the discovery of the mistake, after the
distribution of his estate.
USURY CASES
1. INVESTORS FINANCE CORPORATION, petitioner,
vs. AUTOWORLD SALES CORPORATION, and PIO BARRETTO REALTY
DEVELOPMENT CORPORATION, respondents.
Facts: Anthony Que, in behalf of AUTOWORLD, applied for a direct
loan with FNCB. However, since the Usury Law imposed an interest
rate ceiling at that time, FNCB informed Anthony Que that it was not
engaged in direct lending; consequently, AUTOWORLD's request for
loan was denied. But sometime thereafter, FNCBs Assistant Vice
President, Mr. Leoncio Araullo, informed Anthony Que that although
it could not grant direct loans it could extend funds to AUTOWORLD
by purchasing any of its outstanding receivables at a discount. After
a series of negotiations the parties agreed to execute an Installment
Paper Purchase ("IPP") transaction to enable AUTOWORLD to
acquire the additional capital it needed.
Issue: whether the three (3) contracts all dated 9 February 1981
were executed to implement a legitimate Installment Paper
Purchase (IPP) transaction or merely to conceal a usurious loan
Ruling: Conceal a usurious loan.
Indeed, the Usury Law recognizes the legitimate purchase of
negotiable mercantile paper by innocent purchasers. But even the
law has anticipated the potential abuse of such transactions to
conceal usurious loans. Thus, the law itself made a qualification. It
would recognize legitimate purchase of negotiable mercantile paper,
whether usurious or otherwise, only if the purchaser had no
intention of evading the provisions of the Usury Law and that the
purchase was not a part of the original usurious
transaction. Otherwise, the law would not hesitate to annul such
contracts. In the case at bar, the attending factors surrounding the
execution of the three (3) contracts on 9 February 1981 clearly
establish that the parties intended to transact a usurious loan. These
contracts should therefore be declared void.
In usurious loans, the creditor can always recover the principal debt.
However, the stipulation on the interest is considered void thus
allowing the debtor to claim the whole interest paid. In a loan
of P1,000.00 with interest at 20% per annum or P200.00 per year, if
the borrower pays P200.00, the whole P200.00 would be considered
usurious interest, not just the portion thereof in excess of the
interest allowed by law.
In the instant case, AUTOWORLD obtained a loan of P6,980,000.00.
Thereafter, it paid nineteen (19) consecutive installments
of P216,666.66 amounting to a total
of P4,116,666.54, and further paid a balance of P6,784,551.24 to
settle it. All in all, it paid the aggregate amount of P10,901,217.78
for a debt of P6,980,000.00. For the 23-month period of the
existence of the loan covering the period February 1981 to January
1982, AUTOWORLD paid a total of P3,921,217.78 in interests.
Applying the 12% interest ceiling rate mandated by the Usury Law,
AUTOWORLD should have only paid a total of P1,605,400.00 in
interests. Hence, AUTOWORLD is entitled to recover the whole
usurious interest amounting to P3, 921,217.78.
2. Solangon v. Salazar
June 29, 2001
GR 125944
Facts: On 1986, 1987, and 1990 the Solangons’ executed 3 real
estate mortgages in which they mortgaged a parcel of land situated
in Sta. Maria, Bulacan, in favor of the Salazar to secure payment of a
loan of P60, 000.00 payable within a period of four (4) months, with
interest thereon at the rate of 6% per month (72% per annum), to
secure payment of a loan of P136,512.00, payable within a period of
one (1) year, with interest thereon at the legal rate, and to secure
payment of a loan in the amount of P230, 000.00 payable within a
period of four (4) months, with interest thereon at the legal
rate. This action was initiated by the Solangons to prevent the
foreclosure of the mortgaged property. They alleged that they
obtained only one loan form the defendant-appellee, and that was
for the amount of P60, 000.00, the payment of which was secured
by the first of the above-mentioned mortgages. The subsequent
mortgages were merely continuations of the first one, which is null
and void because it provided for unconscionable rate of interest.
They have already paid the defendant-appellee P78, 000.00 and
tendered P47, 000.00 more, but the latter has initiated foreclosure
proceedings for their alleged failure to pay the loan P230, 000.00
plus interest.
Issue: Is a loan obligation that is secured by a real estate mortgage
with an interest of 72% p.a. or 6% a month unconscionable?
Ruling: Yes, although the C.B. Circular No 905 lifted the ceiling on
interest rates there is nothing in the said circular that grants lenders
carte blanche authority to raise interest rates to levels which will
either enslave their borrowers or lead to hemorrhaging of their
assets. In the case of Medel vs. C.A. the S.C. has held that 5.5% per
month was reduced for being iniquitous, unconscionable and
exorbitant hence it is contrary to morals. In this case the Solangons’
are in a worse situation than the Medel case (6% per month interest
rate) the said interest rate should be reduced equitably. In the
present case, the interest rate of 72% per annum is ordered reduced
to 12 % per annum
3. Spouses Pascual vs Ramos
Facts: Ramos lleged that on 3 June 1987, for and in consideration of
P150,000, the Pascuals executed in his favor a Deed of Absolute Sale
with Right to Repurchase over two parcels of land and the
improvements thereon located in Bambang, Bulacan, Bulacan,
covered by Transfer Certificate of Title. The Pascuals did not exercise
their right to repurchase the property within the stipulated one-year
period; hence, Ramos prayed that the title or ownership over the
subject parcels of land and improvements thereon be consolidated
in his favor. The Pascuals admitted having signed the Deed of
Absolute Sale with Right to Repurchase for a consideration
of P150,000 but averred that what the parties had actually agreed
upon and entered into was a real estate mortgage. They further
alleged that there was no agreement limiting the period within
which to exercise the right to repurchase and that they had even
overpaid Ramos.
The trial court found that the transaction between the parties was
actually a loan in the amount of P150,000, the payment of which
was secured by a mortgage of the property. It also found that the
Pascuals had made payments in the total sum of P344,000, and that
with interest at 7% per annum, the Pascuals had overpaid the loan
by P141,500.
Ramos moved for the reconsideration of the decision, alleging that
the trial court erred in using an interest rate of 7% per annum in the
computation of the total amount of obligation because what was
expressly stipulated in the Sinumpaang Salaysay was 7% per month.
CA affirmed RTC and reduced interest to 5% per month.
The Pascuals argue that the 5% per month interest is excessive,
iniquitous, unconscionable and exorbitant. Moreover, respondent
should not be allowed to collect interest of more than 1% per month
because he tried to hide the real transaction between the parties by
imposing upon them to sign a Deed of Absolute Sale with Right to
Repurchase.
Issue: Is the lower court correct in awarding 5% per month interest?
Ruling: Yes. he Pascuals should not be allowed to turn their back on
the stipulation in that agreement to pay interest at the rate of 7%
per month. The Pascuals should accept not only the favorable aspect
of the courts declaration that the document is actually an equitable
mortgage but also the necessary consequence of such declaration.
The interest rate of 7% per month was voluntarily agreed upon by
Ramos and the Pascuals. There is nothing from the records and, in
fact, there is no allegation showing that petitioners were victims of
fraud when they entered into the agreement with Ramos.
With the suspension of the Usury Law and the removal of interest
ceiling, the parties are free to stipulate the interest to be imposed
on loans. Absent any evidence of fraud, undue influence, or any vice
of consent exercised by Ramos on the Pascuals, the interest agreed
upon is binding upon them. This Court is not in a position to impose
upon parties contractual stipulations different from what they have
agreed upon.
4. Reformina vs. Tomol
139 SCRA 260 (1985)
Gallo
FACTS: In the computation of the "legal interest" decreed in the
judgment sought to be executed, petitioners claim that the "legal
interest" should be at the rate of twelve (12%) percent per annum,
invoking in support of their aforesaid submission, Central Bank of
the Philippines Circular No. 416. Upon the other hand, private
respondents insist that said legal interest should be at the rate of six
(6%) percent per annum only, pursuant to and by authority of Article
2209 of the New Civil Code in relation to Articles 2210 and 2211.
ISSUE: WON legal interest meant 6% as provided for under Article
2209 of the Civil Code
RULING: Yes. The decision herein sought to be executed is one
rendered in an Action for Damages for injury to persons and loss of
property (boat FB Pacita III together with its accessories,
fishing gear and equipment) and does not involve any loan, much
less forbearances of any money, goods or credits. As correctly
argued by the private respondents, the law applicable to the said
case is Article 2209 of the New Civil Code which reads—
Art. 2209. If the obligation consists in the payment of a sum of
money, and the debtor incurs in delay, the indemnity for damages,
there being no stipulation to the contrary, shall be the payment of
interest agreed upon, and in the absence of stipulation, the legal
interest which is six percent per annum.
The above provision remains untouched despite the grant of
authority to the Central Bank by Act No. 2655, as amended. To make
Central Bank Circular No. 416 applicable to any case other than
those specifically provided for by the Usury Law will make the same
of doubtful constitutionality since the Monetary Board will be
exercising legislative functions which was beyond the intendment of
P.D. No. 116.
5. EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF
APPEALS AND MERCANTILE INSURANCE COMPANY, INC.,
respondents.
FACTS:
This is an action against defendants shipping company, arrastre
operator and broker-forwarder for damages sustained by a
shipment while in defendants' custody, filed by the insurer-subrogee
who paid the consignee the value of such losses/damages.
the losses/damages were sustained while in the respective and/or
successive custody and possession of defendants carrier (Eastern),
arrastre operator (Metro Port) and broker (Allied Brokerage).
As a consequence of the losses sustained, plaintiff was compelled to
pay the consignee P19,032.95 under the aforestated marine
insurance policy, so that it became subrogated to all the rights of
action of said consignee against defendants.
DECISION OF LOWER COURTS: * trial court: ordered payment of
damages, jointly and severally * CA: affirmed trial court.
ISSUES AND RULING:
(a) whether or not a claim for damage sustained on a shipment of
goods can be a solidary, or joint and several, liability of the common
carrier, the arrastre operator and the customs broker;
YES, it is solidary. Since it is the duty of the ARRASTRE to take good
care of the goods that are in its custody and to deliver them in good
condition to the consignee, such responsibility also devolves upon
the CARRIER. Both the ARRASTRE and the CARRIER are therefore
charged with the obligation to deliver the goods in good condition to
the consignee.
The common carrier's duty to observe the requisite diligence in the
shipment of goods lasts from the time the articles are surrendered
to or unconditionally placed in the possession of, and received by,
the carrier for transportation until delivered to, or until the lapse of
a reasonable time for their acceptance by, the person entitled to
receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of
Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil.
863). When the goods shipped either are lost or arrive in damaged
condition, a presumption arises against the carrier of its failure to
observe that diligence, and there need not be an express finding of
negligence to hold it liable.
(b) whether the payment of legal interest on an award for loss or
damage is to be computed from the time the complaint is filed or
from the date the decision appealed from is rendered; and
FOLLOW THESE VERY IMPORTANT RULES (GUIDANCE BY THE
SUPREME COURT)
I. When an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts is breached, the contravenor
can be held liable for damages. The provisions under Title XVIII on
"Damages" of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of
actual and compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of
a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from default,
i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of
credit.
(c) whether the applicable rate of interest, referred to above, is
twelve percent (12%) or six percent (6%).
SIX PERCENT (6%) on the amount due computed from the decision,
dated 03 February 1988, of the court a quo (Court of Appeals) AND A
TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%), shall
be imposed on such amount upon finality of the Supreme Court
decision until the payment thereof.
RATIO: when the judgment awarding a sum of money becomes final
and executory, the monetary award shall earn interest at 12% per
annum from the date of such finality until its satisfaction, regardless
of whether the case involves a loan or forbearance of money. The
reason is that this interim period is deemed to be by then equivalent
to a forbearance of credit.
NOTES: the Central Bank Circular imposing the 12% interest per
annum applies only to loans or forbearance of money, goods or
credits, as well as to judgments involving such loan or forbearance
of money, goods or credits, and that the 6% interest under the Civil
Code governs when the transaction involves the payment of
indemnities in the concept of damage arising from the breach or a
delay in the performance of obligations in general. Observe, too,
that in these cases, a common time frame in the computation of the
6% interest per annum has been applied, i.e., from the time the
complaint is filed until the adjudged amount is fully paid.
6. EASTERN ASSURANCE vs CA (Dungog)
FACTS: Vicente Tan insured his building in Dumaguete City against
fire with petitioner Eastern Assurance and Surety Corporation
(EASCO) for P250,000.00. On June 26, 1981, the building was
destroyed by fire. As his claim for indemnity was refused, Tan filed a
complaint for breach of contract with damages against EASCO. The
RTC rendered a judgement in favor of Tan.
Petitioner appealed to the CA, which, affirmed the decision of the
trial court with modification by disallowing the award of moral and
exemplary damages, attorneys fees and litigation expenses. As no
further appeal was taken from the decision of the CA, the same
became final and executory on August 25, 1993. EASCO tendered
payment of the money judgment in the amount of P250,000.00 plus
interest of 6% per annum from June 26, 1981 to July 30, 1993.
However, Tan refused to accept payment on the ground that the
applicable legal rate of interest was 12% per annum. Subsequently,
private respondent brought the matter to the Insurance
Commission. On February 27, 1995, the parties agreed before the
hearing officer of the commission that the interest should be
computed from June 26, 1981 to September 30, 1994.
ISSUE: WON petitioner is liable to pay the 12% interest rate?
HELD: Yes. In Eastern Shipping Lines, Inc. v. Court of Appeals,[7] it was
held:
I. When an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts, is breached, the contravenor
can be held liable for damages. The provisions under Title XVIII on
"Damages" of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of
actual and compensatory damages, the rate of interest, as well as
the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of
a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject
to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3.When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of
credit.
Unquestionably, this case falls under the rule stated in paragraph 3.
Hence, the payment of 12% legal interest per annum should
commence from August 25, 1993, the date the decision of the trial
court became final, up to September 30, 1994, the agreed "cut-off-
date" for the payment of legal interest.
7. Nacar vs. Gallery Frames, G.R. No. 189871, August 13, 2013
Facts: Nacar was found to be illegally dismissed by the Labor Arbiter
in 1998. The Labor Arbiter then ruled for backwages and separation
pay amounting to more than P150,000. Gallery Frames then
appealed to the NLRC and the case eventually reached the Supreme
Court. The Supreme Court, just like the CA, denied the petition. The
SC certified that the decision became final and executory on May 27,
2002. Nacar asked for a recomputation of the amount. The updated
amount was more than P470,000. Gallery Frames filed to quash the
writ of execution and argued that the first amount stands since that
decision has already become final and it would be against the
doctrine of immutability of judgments.
Issue: Should the employer pay only the amount computed at first
by the Labor Arbiter?
Ruling: NO. The employer should pay backwages and separation pay
computed from the time of illegal dismissal up to May 27, 2002 (the
date the Supreme Court ruled it was final and executory.) There ate
two parts of a decision. The first part deals with the finding of illegal
dismissal. The second deals with the computation of the award. By
its nature, the award can be recomputed. The recomputation of the
consequences of illegal dismissal upon execution of the decision
does not constitute an alteration or amendment of the final decision
being implemented. The illegal dismissal ruling stands; only the
computation of monetary consequences of this dismissal is affected.
The interest due shall itself earn interest from the time it is
extrajudicially or judicially demanded. In the absence of stipulation,
the rate is 12% per year. The Bangko Central issued Resolution No.
796 changing the rate of interest in the absence of stipulation to
6%. It was effective July 1, 2013. So aside from the separation and
backwages, Gallery Frames should pay an interest of 12% from May
27, 2002 up to June 30,2013 and 6% from July 1, 2013 until their full
satisfaction.
8. PNB VS. CA (R-U, Glenna)
Facts:
As payments for purchase of medicines, Province of Isabela issued
checks drawn against its accounts with PNB in favor of seller, Lyndon
Pharmaceuticals Laboratories, a business operated by respondent
Ibarolla. The checks were delivered to the sellers agents who turned
them over to Ibarolla except 23 checks amounting to Php98,691.90,
which the agents appropriated after negotiating them with PNB.
Ibarolla filed a case on Nov. 6, 1974 before the RTC for an action for
a sum of money and damages, against the Province of Isabela, its
Treasurer, two agents and PNB.
Trial court ordered all defendants (except the treasurer who died) to
jointly and solidarily pay Ibarolla the amount due plus interest.
PNB’s appeal to the CA was denied. At the execution stage, the
Sheriff computed the interest at 12%, which PNB opposed that it
should only be 6%. The court thereafter issued an order clarifying
that the rate is 12%.
Issue:
1) Whether in an action for damages, the legal rate of interest is 6%
as provided by Art. 2209 of the New Civil Code or 12% as provided
by CB Circular 416, series of 1974?
2) Whether such rate shall be computed from the filing of the
complaint until it is fully paid.
Ruling:
The ruling in Eastern Shipping Lines, Inc. vs. CA provided the rule of
thumb:
When an obligation, not consisting a loan or forbearance
of money, is breached, an interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand
can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially. (Article 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is
made, the interest shall begin to run only from the date of the
judgment of the court is made (at which time the quantification of
damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case,
be on the amount finally adjudged.
This case does not involve a loan. PNB’s liability is based only on the
judgment of the RTC declaring it solidarily liable due to its
negligence when it failed to assure itself if the Provincial Treasurer
was properly authorized by Ibarolla to make endorsements of said
checks.
The rate of 12% can only be applied to:
Loan or forbearance of money, or to cases where money is
transferred from one person to another and the obligation to return
the same or a portion thereof is adjudged. Any other monetary
judgment which does not involve or which has nothing to do with
loans or forbearance of any money, goods or credit does not fall
within its coverage for its imposition is not within the ambit of the
authority of the Central Bank. When an obligation constituting a
loan or forbearance of money is breached then an interest on the
amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum in accordance with Art. 2209
of the Civil Code. Monetary judgment in favor of private respondent
does not involve a loan or forbearance of money, hence, the proper
imposable rate of interest at 6%.
Applying these rules, the interest should only be 6%. The interest
according to Eastern Shipping shall be computed from the time of
the filing of the complaint considering that the amount adjudged
can be established with reasonable certainty. This amount being
merely the uncollected balance of the purchase price covered by the
23 checks. However, once the judgment becomes final and
executory, the “interim period from the finality of judgment
awarding a monetary claim and until full payment thereof, is
deemed to be equivalent to a forbearance of credit. In accordance
with Eastern Shipping, the rate of 12% should be imposed and
computed from the time the judgment became final and executory
until fully satisfied.
9. PLANTILLA vs. BALIWAG (2001)
Facts:
In a civil case, lower court rendered a decision ordering:
 Spouses Orga and Plantilla to reinstate Suiza as
share tenant
 That they pay Suiza unrealized shares from the
harvests of coconut fruits from August until
reinstated the amount of P1,000 with legal
interest until fully paid.
The decision, however, did not state the interest to be charged. A
writ of execution was issued addressed to Sheriff Baliwag. Baliwag
demanded payment from the spouses representing the share of
Suiza the amount of 480k, representing the coconut harvest from
Aug 1979 to Jan 1998 at P1,000 with 8 harvests per year with an
interest rate of 12% per annum or a total of 222% plus attorney’s
fees. Col. Plantilla, administrator of the spouses, filed an
administrative complaint against Baliwag charging him of serious
irregularities in implementation of the writ of execution alleging that
dispositive portion of the decision did not contain 8 harvest per year
and Baliwag took it upon himself to specify the number of harvests.
Issue: Whether or not Sheriff is guilty of irregularities?
Ruling:
Yes, Baliwag is guilty of malfeasance, not irregularities. The
determination of the amount due under the writ properly pertained
to the Judge. Yet, respondent assumed the task. For doing so instead
of pointing out to the court the deficiency of the writ, he should be
sanctioned. He should not have arrogated unto himself judicial
functions that were to be performed only by the judge.
The computation of the amount due under the writ is not the duty
of the sheriff. Such amount should have already been specifically
stated in the writ if execution issued by the court under Section 3
Rule 39 of the 1997 Rules of Court. All that the sheriff should do
upon receipt of that writ is the ministerial duty of enforcing it.
10. RCBC vs ALFA
Facts:
Alfa on separate instances was granted by RCBC 4 letters of credit to
facilitate the purchase of raw materials for their garments business.
Alfa executed 4 trust receipts and made comprehensive surety
agreements wherein the signatory officers of Alfa agreed in
joint/several capacity to pay RCBC in case the company defaulted.
RCBC filed a case versus Alfa for a sum of money. The CA awarded
only P3M (minimum amount) to RCBC instead of P18M as stipulated
in their contract.
Issue: W/N the CA can deviate from the provisions of the
contract between the parties?
Ruling: No. Contracting parties may establish agreements terms,
deemed advisable provided they are not contrary to law/public
policy. A contract is a law between the parties. In this case it’s valid
because it was not excessive under the Usury Law. The CA
committed an error when it ruled that only P3,060,406.25 should be
awarded to petitioner RCBC, the Appellate Court disregarded the
parties’ stipulations in their contracts of loan, more specifically,
those pertaining to the agreed (1) Interest rates, (2) service charge
and (3) penalties in case of any breach thereof. The CA failed to
apply the honoured doctrine”
Additional: (In case asked*)
In the determination and computation of interest of payment, this
court, in Eastern Shipping Lines, Inc. (234 SCRA 18, 1994) vs Court of
Appeals, through Justice Jose C. Vitug, held:
When the obligation is breached and it consist in the payment of a
sum of money (i.e., loan or forbearance of money, the interest due
should be that which may be have stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from default i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 169 of the Civil Code.
When the obligation, not constituting a loan or forbearance of
money, is breached, and interest on the amount of damages
awarded may be imposed at the discretion of the court at the rate of
6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand
can be established with reasonable certainty.
11. Rodzssen Supply Co. Inc. vs. Far East Bank & Trust Co. (357
SCRA 618)
FACTS:
Petitioner opened with respondent a domestic letter of credit (LOC)
in favor of Ekman and Company, Inc. (Ekman) for the purchase of
five hydraulic loaders. The first three hydraulic loaders were
received by the petitioner before the expiry of LOC and respondent
paid Ekman. The remaining two hydraulic loaders were received by
the petitioner after the expiry of LOC/contract but respondent still
paid Ekman. Petitioner refused to pay respondent. Respondent filed
a case. Petitioner answered by way of affirmative defense that
respondent had no cause of action being allegedly in bad faith and
breach of contract. The trial court and Court of Appeals ruled in
favor of respondent to recover from the cost of two hydraulic
loaders. CA also ordered the defendant to pay the plaintiff the sum
of P76,000.00, representing the principal amount being claimed in
this action, plus interest thereon at the rate of 12% per annum
counted from October 1979 until fully paid
ISSUE:
Whether or not the payment of 12 % interest is proper?
RULING:
No. In Eastern Shipping Lines v. CA,[14] the Court laid down the
following guidelines in the imposition of interest:
xxxxxxxxx
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period
being deemed to be by then an equivalent to a forbearance of credit.
Although the sum of money involved in this case was payable to a
bank, the present factual milieu clearly shows that it was not a loan
or forbearance of money. Thus, pursuant to established
jurisprudence and Article 2009 of the Civil Code, petitioner is bound
to pay interest at 6 percent per annum, computed from April 7,
1983, the time respondent bank demanded payment from
petitioner. From the finality of the judgment until its satisfaction,
the interest shall be 12 percent per annum.
12. Mendoza vs. Court of Appeals
G.R. No. 116710. June 25, 2001
FACTS: Respondent was granted by respondent Philippine National
Bank (PNB) credit line and Letter of Credit/Trust Receipt (LC/TR)
line. As security for the credit accommodations and for those which
may thereinafter be granted, petitioner mortgaged to respondent
PNB some of his properties. Petitioner later requested for loan
restructuring and issued promissory notes, which he failed to
comply. Respondent PNB extra-judicially foreclosed the real and
chattel mortgages, and the mortgaged properties were sold at public
auction to respondent PNB, as highest bidder. Petitioner filed a case
in the RTC contending that foreclosure is illegal invoking promissory
estoppel, and secured favorable judgment. The decision of RTC was
reversed by the Court of Appeals.
ISSUE: Whether or not the foreclosure of petitioner’s real estate and
chattel mortgages were legal and valid as opposed to promissory
estoppel.
RULING: YES. First, there was no promissory estoppel as the promise
(of respondent bank) must be plain and unambiguous and
sufficiently specific. Second, there was no meeting of the minds
leading to another contract, hence loan was not restructured. Third,
promissory notes petitioner issued were valid. Fourth, stipulation in
the mortgage, extending its scope and effect to after-acquired
property is valid and binding after the correct and valid process of
extra-judicial foreclosure. Finally, record showed that petitioner did
not even attempt to tender any redemption price during the one-
year redemption period.
13. G.R. No. L-59096 October 11, 1985
PACITA F. REFORMINA and HEIRS OF FRANCISCO REFORMINA,
petitioners,
vs.
THE HONORABLE VALERIANO P. TOMOL, JR., as Judge of the Court of
First Instance, Branch XI, CEBU CITY, SHELL REFINING COMPANY
(PHILS.), INC., and MICHAEL, INCORPORATED, respondents.
Facts:
The CFI Cebu in a civil case ordered Shell and Michael, Incorporated
to pay jointly and severally to Pacita and Francisco Reformina. CA
affirmed with modification. The case was remanded to the lower
court for execution. In the computation of the "legal interest",
petitioners claim that it should be at the rate (12%) per annum,
invoking the Central Bank of the Philippines Circular No. 416. Private
respondents insist that it should be at the rate of six (6%) per annum
only, pursuant to Article 2209 of the New Civil Code in relation to
Articles 2210 and 2211.
Issue:
How much is the legal interest should a judgment debtor pay the
judgment creditor?
Held:
6%.
The decision sought to be executed is that in an Action for Damages
for injury to persons and loss of property and does not involve any
loan, much less forbearances of any money, goods or credits. As
correctly argued by the private respondents, the law applicable to
the said case is Article 2209 of the New Civil Code.
This provision remains untouched despite the grant of authority to
the Central Bank by Act No. 2655, as amended. To make Central
Bank Circular No. 416 applicable to any case other than those
specifically provided for by the Usury Law will make the same of
doubtful constitutionality since the Monetary Board will be
exercising legislative functions which was beyond the intendment of
P.D. No. 116.
Note:
Central Bank Circular No. 416 was issued and promulgated by the
Monetary Board (MB) pursuant to the authority granted to the
Central Bank by P.D. No. 116, which amended Act No. 2655 or the
Usury Law.Acting pursuant to this grant of authority, the MB
increased the rate of legal interest from that of (6%) percent per
annum originally allowed under Section I of Act No. 2655 to twelve
(12%) percent per annum. It will be noted that Act No. 2655 deals
with interest on (1) loans; (2) forbearances of any money, goods, or
credits; and (3) rate allowed in judgments.
14. PHILIPPINE RABBIT BUS LINES, INC., petitioner,
vs.
HON. LEONARDO I. CRUZ, Presiding Judge, Branch LVI, RTC, Third
Judicial Region & PEDRO MANABAT, respondents.
Facts: In a civil case, Manabat obtained a favourable money
judgment against Philippine Rabbit, amounting to P72,500 with legal
interest. The deputy sheriff garnished bank deposits amounting to
P155,150, which is the amount of damages plus 12% interest,
computed from the filing of the complaint. Philippine Rabbit moved
to dissolve the garnishment, asserting that it was willing to pay, but
only at 6% interest.
Issue: What is the proper rate of interest to be applied?
Ruling: 6%. Central Bank Circular No. 416, which amended Act No.
2655 (Usury Law), increased the rate of legal interest from 6% to
12%. Act No. 2655 deals with interest on: (1) loans; (2) forbearance
of any money, goods, or credits; and (3) rate allowed in judgments.
The judgments spoken of and referred to are judgments in litigations
involving loans or forbearance of any money, goods or credits. Any
other kind of monetary judgment is not within the ambit of the
authority granted to the Central Bank. Action for damages for injury
to persons and loss of property does not involve any loan, much less
forbearance of any money, goods or credits. The applicable law is
Art. 2209 of the New Civil Code, which prescribes legal interest at
6%.
15. First Metro Investment v Este De Sol
Nov. 15, 2001
GR 141811
Facts: Petitioner FMIC granted respondent a loan of Seven Million
Three Hundred Eighty Five Thousand Five Hundred Pesos
(P7,385,500.00) to finance the construction of a sports complex at
Montalban, Rizal. Respondent also executed, as provided for by the
Loan Agreement, an Underwriting Agreement with underwriting fee,
annual supervision fee and consultancy fee with Consultancy
Agreement for four (4) years, coinciding with the term of the loan.
The said fees were deducted from the first release of loan.
Respondent failed to meet the schedule of repayment. Petitioner
instituted an instant collection suit. The trial court rendered its
decision in favor of petitioner. The Court of Appeals reversed the
decision of the trial court in favor of herein respondents after its
factual findings and conclusion.
Issue: Whether or not the Underwriting and Consultancy
Agreements were merely used to camouflage the usurious interest
charged by the petitioner.
Ruling: Yes. Several facts and circumstances (6 circumstances
enumerated by the SC. Refer lang to full txt kay taas) taken
altogether show that the Underwriting and Consultancy Agreements
were simply cloaks or devices to cover an illegal scheme employed
by petitioner FMIC to conceal and collect excessively usurious
interest. Art. 1957 provides that contracts and stipulations, under
any cloak or device whatever, intended to circumvent the laws
against usury shall be void.
Issue: Does a stipulation providing usurious interest invalidate the
whole loan contract?
Ruling: No. The nullity of the stipulation on the usurious interest
does not affect the lender's right to receive back the principal
amount of the loan. With respect to the debtor, the amount paid as
interest under a usurious agreement is recoverable by him, since the
payment is deemed to have been made under restraint, rather than
voluntarily. The stipulation regarding usurious interest is separable
from the contract of loan.
16. David vs CA
Facts: Judge Diaz issued a writ of attachment over the real
properties of private respondents. Judge Diaz ordered private
respondent to pay petitioner P 66,500.00 with interest from July 24,
1974, until fully paid. He amended decision so that the legal rate of
interest should be computed from January 4, 1966, instead of from
July 24, 1974. Private respondent appealed to CA and SC, which both
affirmed the decision of the lower court. Sheriff Peña conducted a
public auction. Sheriff Peña informed the petitioner that the total
amount of the judgment is P 270,940.52. The amount included a
computation of simple interest. Petitioner, however, claimed that
the judgment award should be P 3,027,238.50, because the amount
due ought to be based on compounded interest. Although the
auctioned properties were sold to the petitioner, Sheriff Peña did
not issue the Certificate of Sale because there was an excess in the
bid price in the amount of P 2,941,524.47, which the petitioner
failed to pay despite notice. RTC judge issue an order directing
respondent Sheriff Peña to prepare and execute a certificate of sale
in favor of the petitioner, placing therein the amount of the
judgment as P 3,027,238.50, the amount he bid during the auction
which he won. His reason is that compound interest, which is
allowed by Article 2212 of the Civil Code, should apply in this case.
Issue: Is the lower court wrong in ordering the payment of
simple interest only rather than compounded interest?
Ruling: Petitioners contention is that interest due of the P
66,500.00, interest should be computed at 6% on the principal sum
of P 66,500.00 pursuant to Article 2209 and then "interest on the
legal interest" should also be computed in accordance with the
language of Article 2212 of the Civil Code. In his view, said article
meant "compound interest". However, Article 2212 contemplates
the presence of stipulated or conventional interest which has
accrued when demand was judicially made. In cases where no
interest had been stipulated by the parties, no accrued conventional
interest could further earn interest upon judicial demand.
Furthermore, “when the judgment sought to be executed ordered
the payment of simple "legal interest" only and said nothing about
payment of compound interest, but the respondent judge orders
payment of compound interest, then, he goes beyond the confines
of a judgment which had become final.” In this case, no interest was
stipulated by the parties.