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  • J. Estores Vs Supangan

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    The Supreme Court ruled that the Court of Appeals held the correct interest rate of 12% rather than the trial court's 6%. While the contract was for a conditional deed of sale and not explicitly a loan, the petitioner was obligated to return the $3.5 million payment after failing to fulfill the conditions. As the petitioner admitted the conditions were not met but did not return the money despite demand, she was in default from September 27, 2000, the date of demand. For obligations arising from a forbearance of money where no interest rate is stipulated, the legal rate is 12% per annum according to Central Bank regulations. Therefore, 12% interest applied from the date of demand.

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    j. Estores vs Supangan

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    The Supreme Court ruled that the Court of Appeals held the correct interest rate of 12% rather than the trial court's 6%. While the contract was for a conditional deed of sale and not explicitly a loan, the petitioner was obligated to return the $3.5 million payment after failing to fulfill the conditions. As the petitioner admitted the conditions were not met but did not return the money despite demand, she was in default from September 27, 2000, the date of demand. For obligations arising from a forbearance of money where no interest rate is stipulated, the legal rate is 12% per annum according to Central Bank regulations. Therefore, 12% interest applied from the date of demand.

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    66 views1 page

    J. Estores Vs Supangan

    Uploaded by

    CJ Fa
    The Supreme Court ruled that the Court of Appeals held the correct interest rate of 12% rather than the trial court's 6%. While the contract was for a conditional deed of sale and not explicitly a loan, the petitioner was obligated to return the $3.5 million payment after failing to fulfill the conditions. As the petitioner admitted the conditions were not met but did not return the money despite demand, she was in default from September 27, 2000, the date of demand. For obligations arising from a forbearance of money where no interest rate is stipulated, the legal rate is 12% per annum according to Central Bank regulations. Therefore, 12% interest applied from the date of demand.

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    © All Rights Reserved
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    of 1

    G.R. No.

    175139               April 18, 2012

    HERMOJINA ESTORES, Petitioner,
    vs.
    SPOUSES ARTURO and LAURA SUPANGAN, Respondents.

    Facts:
     October 3, 1993, petitioner Hermojina Estores and respondent-spouses
    Arturo and Laura Supangan entered into a Conditional Deed of Sale.Estores
    failed to comply with the sale and Sps demanded their money back and was
    agreed to impose 12% interest. Estores still failed to pay which led to
    complaint.
     A pre trial order was held that respondents are entitled to legal interest. RTC
    rendered its decision at the rate of 6% not 12%. CA held 12 % since the Sps
    formally demanded the return of money on sept.27,2000 not in October 1993
    when the contract was executed.

    Issue:
    Whether or not C.A. held the correct interest?

    Ruling:

    The Court sustain the ruling of both the RTC and the CA that it is proper to
    impose interest notwithstanding the absence of stipulation in the contract. Article 2210
    of the Civil Code expressly provides that "[i]nterest may, in the discretion of the court,
    be allowed upon damages awarded for breach of contract." In this case, there is no
    question that petitioner is legally obligated to return the ₱3.5 million because of her
    failure to fulfill the obligation under the Conditional Deed of Sale, despite demand. She
    has in fact admitted that the conditions were not fulfilled and that she was willing to
    return the full amount of ₱3.5 million but has not actually done so. Petitioner enjoyed
    the use of the money from the time it was given to her until now. Thus, she is already in
    default of her obligation from the date of demand, i.e., on September 27, 2000.
    The interest at the rate of 12% is applicable in the instant case.

    Anent the interest rate, the general rule is that the applicable rate of interest
    "shall be computed in accordance with the stipulation of the parties." Absent any
    stipulation, the applicable rate of interest shall be 12% per annum "when the obligation
    arises out of a loan or a forbearance of money, goods or credits. In other cases, it shall
    be six percent (6%)."In this case, the parties did not stipulate as to the applicable rate of
    interest. The only question remaining therefore is whether the 6% as provided under
    Article 2209 of the Civil Code, or 12% under Central Bank Circular No. 416, is due.

    The contract involved in this case is admittedly not a loan but a Conditional Deed
    of Sale. However, the contract provides that the seller (petitioner) must return the
    payment made by the buyer (respondent-spouses) if the conditions are not fulfilled.
    There is no question that they have in fact, not been fulfilled as the seller (petitioner)
    has admitted this. Notwithstanding demand by the buyer (respondent-spouses), the
    seller (petitioner) has failed to return the money and should be considered in default
    from the time that demand was made on September 27, 2000.

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