Sps. Salvador Abella v. Sps. Romeo Abellla: Issue

Sps. Salvador Abella v. Sps.
Romeo Abellla
FACTS:
On July 31, 2002, petitioners Spouses Salvador and Alma Abella filed a Complaint for
sum of money and damages with prayer for preliminary attachment against respondents Spouses
Romeo and Annie Abella before the Regional Trial Court, Branch 8, Kalibo, Aklan. In their
Complaint, petitioners alleged that respondents obtained a loan from them in the amount of
P500,000.00. The loan was evidenced by an acknowledgment receipt dated March 22, 1999 and
was payable within one (1) year. Petitioners added that respondents were able to pay a total of
P200,000.00— P100,000.00 paid on two separate occasions—leaving an unpaid balance of
P300,000.00. In their Answer (with counterclaim and motion to dismiss), respondents alleged
that the amount involved did not pertain to a loan they obtained from petitioners but was part of
the capital for a joint venture involving the lending of money. In the Decision dated December
28, 2005, the Regional Trial Court ruled in favor of petitioners. It noted that the terms of the
acknowledgment receipt executed by respondents clearly showed that: (a) respondents were
indebted to the extent of P500,000.00; (b) this indebtedness was to be paid within one (1) year;
and (c) the indebtedness was subject to interest. Thus, the trial court concluded that respondents
obtained a simple loan, although they later invested its proceeds in a lending enterprise. The
Regional Trial Court adjudged respondents solidarily liable to petitioners. The Court of Appeals
noted that while the acknowledgement receipt showed that interest was to be charged, no
particular interest rate was specified. Thus, at the time respondents were making interest
payments of 2.5% per month, these interest payments were invalid for not being properly
stipulated by the parties.
ISSUE:
Whether or not interest accrued on respondents’ loan from petitioners. If so, at what rate?
RULING:
Yes, interest accrued on respondents’ loan. Article 1956 of the Civil Code spells out the
basic rule that "no interest shall be due unless it has been expressly stipulated in writing." The
controversy, however, stems from the acknowledgment receipt’s failure to state the exact rate of
interest. Jurisprudence is clear about the applicable interest rate if a written instrument fails to
specify a rate. In Spouses Toring v. Spouses Olan, this court clarified the effect of Article 1956
of the Civil Code and noted that the legal rate of interest (then at 12%) is to apply: "In a loan or
forbearance of money, according to the Civil Code, the interest due should be that stipulated in
writing, and in the absence thereof, the rate shall be 12% per annum." 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, thereby amending Section 2 of Circular
No. 905, Series of 1982. Thus, from the foregoing, in the absence of an express stipulation as to
the rate of interest that would govern the parties, the rate of legal interest for loans or forbearance
of any money, goods or credits and the rate allowed in judgments shall no longer be twelve
percent (12%) per but will now be six percent (6%) per annum effective July 1, 2013
Eastern Shipping Lines, Inc. v. Hon. Court of Appeals

FACTS:
Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as
insured with a marine policy. Upon arrival in Manila unto the custody of metro Port Service,
which excepted to one drum, said to be in bad order and which damage was unknown the
Mercantile Insurance Company. Allied Brokerage Corporation received the shipment from
Metro, one drum opened and without seal. Allied delivered the shipment to the consignee’s
warehouse. The latter excepted to one drum which contained spillages while the rest of the
contents was adulterated/fake. As consequence of the loss, the insurance company paid the
consignee, so that it became subrogated to all the rights of action of consignee against the
defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance company filed
before the trial court. The trial court ruled in favor of plaintiff an ordered defendants to pay the
former with present legal interest of 12% per annum from the date of the filing of the complaint.
On appeal by defendants, the appellate court denied the same and affirmed in toto the decision of
the trial court.
ISSUES:
(1) Whether the applicable rate of legal interest is 12% or 6%.
(2) Whether the payment of legal interest on the award for loss or damage is to be computed from
the time the complaint is filed from the date the decision appealed from is rendered.
HELD
1. The Court held that the legal interest is 6% computed from the decision of the court a
quo. When an obligation, not constituting a loan or forbearance of money, is breached, an
interest on the amount of damaes awarded may be imposed at the discretion of the court at the
rate of 6% per annum. No interest shall be adjudged on unliquidated claims or damages except
when or until the demand can be established with reasonable certainty.
When the judgment of the court awarding a sum of money becomes final and
executor, the rate of legal interest shall be 12% per annum from such finality until satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of money.
The interest due shall be 12% PA to be computed fro default, J or EJD.

2. From the date the judgment is made. Where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or EJ but when
such certainty cannot be so reasonably established at the time the demand is made, the interest
shll begin to run only from the date of judgment of the court is made.
The Court held that it should be computed from the decision rendered by the court a quo.
Dario Nacar v. Gallery Frames and/or Felipe Bordey, Jr.

FACTS:
On January 24, 1997, Dario Nacar got dismissed by his employer, Gallery Frames. He
filed a complaint; the Labor Arbiter ruled that petitioner was dismissed without just cause. A
computation for the separation pay and back wages were made it amounted to Php 158,919.92.
The respondent sought appeal to the NLRC, CA and Supreme Court, but they were all dismissed,
thus the judgment became final on April 17, 2002. During the execution of the final judgment,
the petitioner filed a motion for the re-computation of the damages. The amount previously
computed includes the separation pay and back wages up to the time of his dismissal. The
petitioner argued that the damages should cover the period until the date of final judgment. A re-
computation was made and the damages was increased to 471,320.31. Respondent prayed for the
quashal of such motion on the ground that the judgment made by the SC is already final
and the amount should not be further altered. Petitioner also filed another motion asking the
court to order the respondent to pay the appropriate legal interest of the damages from the date of
final judgment until full payment.
ISSUES:
Whether or not appropriate interests may be claimed by the petitioner.
RULING:
The Supreme Court ruled that the petitioner shall be entitled to interest. In the case of
Eastern Shipping Lines, Inc. v. Court of Appeals, among the guidelines laid down by the
Supreme Court regarding the manner of computing legal interest is - when the judgment of the
court awarding a sum of money becomes final and executory, the rate of legal interest shall be
12% per annum from such finality until its satisfaction. In addition to this, the Bangko Sentral ng
Pilipinas Monetary Board (BSP-MB), in its Resolution No. 796 dated May 16, 2013 declared
that 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. Consequently, the twelve percent (12%) per legal interest shall apply
until June 30, 2013. Afterwards, the new rate of six percent (6%) pe rannum shall be the
prevailing rate of interest when applicable. The respondent was ordered to pay 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 until their full satisfaction.

Sps. Salvador Abella v. Sps. Romeo Abellla: Issue

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Sps. Salvador Abella v. Sps. Romeo Abellla: Issue

Uploaded by

Copyright:

Available Formats

Sps. Salvador Abella v. Sps.

Eastern Shipping Lines, Inc. v. Hon. Court of Appeals

The interest due shall be 12% PA to be computed fro default, J or EJD.

Dario Nacar v. Gallery Frames and/or Felipe Bordey, Jr.

You might also like