Case No. 17

SEBASTIAN SIGA-AN,Petitioner,vs.ALICIA VILLANUEVA,Respondent.

G.R. No. 173227 January 20, 2009

No interest was due on the loan because there was no written agreement as regards payment of interest

Facts:

Respondent Alicia Villanueva filed a complaintfor sum of money against petitioner Sebastian Siga-an before the Las Pinas City Regional Trial Court (RTC), Branch 255. Respondent alleged that she was a businesswoman engaged in supplying office materials and equipments to the (PNO) located at Fort Bonifacio, Taguig City, while petitioner was a military officer and comptroller of the PNO from 1991 to 1996.

Respondent claimed that sometime in 1992, petitioner approached her inside the Philippine Navy Office PNO and offered to loan her the amount ofP540,000.00 which she accepted since she needed money for a capital, which however was not reduced to writing, nor a stipulation as to the payment of interest for the loan.

On 31 August 1993, respondent issued a check worthP500,000.00 to petitioner as partial payment of the loan which was followed by another check in the amount ofP200,000.00 as payment of the remaining balance. Petitioner told her the excess amount ofP160,000.00 would be applied as interest for the loan.

Wanting for payment of an additional interest, petitioner pestered her and threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. Fearing that her transactions with the PNO would be affected, respondent conceded and paid additional interests in cash and checks which petitioner refused to issue receipts. The total payment she made accumulated to P1,200,000. 00.

Respondent consulted a lawyer and there, she was told that petitioner could not validly collect interest on the loan since there was no agreement between them. Petitioner, despite receipt of the demand letter, ignored her claim for reimbursement. RTC rendered its decision in favor of respondent which was affirmed by the Court of Appeals.

Issue: Whether or not interest was due to the petitioner.Ruling:No.

Interest is a compensation fixed by the parties for the use or forbearance of money. This is referred to as monetary interest. Interest may also be imposed by law or by courts as penalty or indemnity for damages. This is called compensatory interest.The right to interest arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest is demanded.

Article 1956 of the Civil Code, which refers to monetary interest,specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.

It appears that petitioner and respondent did not agree on the payment of interest for the loan. Neither was there convincing proof of written agreement between the two regarding the payment of interest. Respondent testified that although she accepted petitioners offer of loan amounting toP540,000.00, there was, nonetheless, no verbal or written agreement for her to pay interest on the loan.

WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated 16 December 2005, is herebyAFFIRMEDwith the followingMODIFICATIONS: (1) the amount ofP660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY FIVE THOUSAND PESOS (P335,000.00); (2) the amount ofP300,000.00 imposed as moral damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00); (3) an interest of 6% per annum is imposed on theP335,000.00, on the damages awarded and on the attorneys fees to be computed from the time of the extra-judicial demand on 3 March 1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. Costs against petitioner.Case No. 18

NACAR v GALLERY FRAMES

Principle: When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

Facts

Petitioner Dario Nacar filed a complaint for constructive dismissal before the Arbitration Branch of the National Labor Relations Commission (NLRC) against respondents Gallery Frames (GF) and/or Felipe Bordey, Jr.,

On October 15, 1998, the Labor Arbiter rendered a Decision in favor of petitioner and was awarded backwages and separation pay in lieu of reinstatement in the amount of P158,919.92.

Respondents appealed to the NLRC, but it was dismissed for lack of merit in the Resolution5 dated February 29, 2000.

Respondents then sought relief before the Supreme Court but were denied in the Resolution dated April 17, 2002.

An Entry of Judgment was later issued certifying that the resolution became final and executory on May 27, 2002.

On November 5, 2002, petitioner filed a Motion for Correct Computation, praying that his back wages be computed from the date of his dismissal on January 24, 1997 up to the finality of the Resolution of the Supreme Court on May 27, 2002.

The monetary award was recomputed to P471,320.31; upon appeal of the respondents it was reduced to P147,560.19. The P147,560.19 was paid and later on additional P11,459.73 was granted for a total of P158,919.92 (Oct. 15, 1998 decision).

Petitioner then appealed for recomputation of his back wages until it reached the Supreme Court.

Petitioner maintains that considering that the October 15, 1998 decision of the Labor Arbiter did not become final and executory until the April 17, 2002 Resolution of the Supreme Court in G.R. No. 151332 was entered in the Book of Entries on May 27, 2002, the reckoning point for the computation of the back wages and separation pay should be on May 27, 2002 and not when the decision of the Labor Arbiter was rendered on October 15, 1998. Further, petitioner posits that he is also entitled to the payment of interest from the finality of thedecision until full payment by the respondents.

On their part, respondents assert that since only separation pay and limited back wages were awarded to petitioner by the October 15, 1998 decision of the Labor Arbiter, no more recomputation is required to be made of said awards. Respondents insist that the decision clearly stated that the separation pay and back wages are computed only up to [the] promulgation of this decision, Respondents contend that to allow the further recomputation of the back wages to be awarded to petitioner at this point of the proceedings would substantially vary the decision of the Labor Arbiter as it violates the rule on immutability of judgments.

Issue:WON the back wages should be computed until May 27, 2002 and legal interest be allowed thereafter without violation of the principle of immutability of judgment.

Held:Yes

The labor arbiter's decision is composed of two parts: the first part contains the finding of illegality and its monetary consequences; the second part is the computation of the awards or monetary consequences of the illegal dismissal.

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, and this is not a violation of the principle of immutability of final judgments.

The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the following revisions governing the rate of interest in the absence of stipulation in loan contracts.

Section 1. The rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be six percent (6%) per annum (previously it was 12% per annum according to Art. 1169 of the Civil Code).

WHEREFORE, premises considered, the Decision dated September 23, 2008 of the Court of Appeals in CA-G.R. SP No. 98591, and the Resolution dated October 9, 2009 are REVERSED and SET ASIDE. Respondents are ORDERED to PAY petitioner: (

1) Back wages computed from the time petioner was illegally dismissed on January 24, 1997 up to May 27, 2002, when the Resolution of this Court in G.R. No. 151332 became final and executory;

(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one month pay per year of service; and

(3) Interest of twelve percent (12%) per annum of the total monetary awards, computed from May 27, 2002 to June 30, 2013 and six percent (6%) per annum from July 1, 2013 (effectivity of 6% as legal rate of interest) full satisfaction. The Labor Arbiter is hereby ORDERED to make another recomputation of the total monetary benefits awarded and due to petitioner in accordance with this Decision.