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iga-an v.

Villanueva, 576 SCRA 696 (2009) - Em DOCTRINES: If the borrower of loan pays interest
when there has been no stipulation therefore, the provisions of the Civil Code concerning Solution
indebiti shall be applied. The principle of solutio indebiti applies where: (1) a payment is made when
there exists no binding relation between the payor, who has no duty to pay, and the person who
received the payment; and (2) the payment is made through mistake, and not through liberality or
some other cause. FACTS: On March 3, 1998, respondent Alicia Villanueva filed a complaint for a
sum of money against petitioner Sebastian Siga-an. Respondent alleged that she was a business
woman engaged in supplying office materials and equipments to the PNO; while petitioner was a
military officer and comptroller of the PNO from 1991-1996. Sometime in 1992, respondent claimed
that the petitioner approached her inside the PNO office and offered to loan her the amount of
P540,000. She accepted the offer since she needed capital for her business. The loan agreement was
not reduced in writing and there was no stipulation as to the payment of interest for the loan. On
August 31, 1993, respondent issued a check worth P500,000 to petitioner as partial payment of the
loan. Two months later she issued another check in the amount of P200,000 as payment of the
remaining balance. Petitioner told her that she since she paid a total amount of P700,000 for the
P540,000 worth of loan, the excess amount of P160,000 would be applied as interest for the loan. Not
satisfied with the amount applied as interest, the petitioner pestered her to pay additional interest. He
threatened to block her transactions with the PNO if she won't comply. The respondent conceded since
all her transactions with the PNO need the approval of the petitioner. Thus, she paid additional
amounts in cash and checks as interest for the loan. She asked the petitioner to give her receipts but
he told her that there's no need for a receipt because there's mutual trust and understanding between
them. Thereafter, the respondent consulted a lawyer regarding propriety of paying interest on the
loan despite the absence of agreement to that effect. Her lawyer told her that petitioner could not
validly collect interest on the loan because there was no agreement between her and petitioner. Upon
being advised by her lawyer that she made an over payment, she sent a demand letter to petitioner
asking for the return of the excess amount. But the petitioner just ignored the demand letter.
Respondent prayed that the RTC render judgment ordering petitioner to pay respondent(1)
P660,000.00 plus legal interest from the time of demand; (2) P300,000.00 as moral damages; (3)
P50,000.00 as exemplary damages; and (4) an amount equivalent to 25% of P660,000.00 as
attorneys fees. In his answer to the complaint, the petitioner denied that he offered a loan to
respondent and mentioned the mistakes committed by the respondent regarding the payment of the
loan and that there was no overpayment. After the trial, the RTC rendered a decision holding that
respondent made an over payment of her loan obligation to petitioner and that the latter should
refund the excess amount to the former. The alleged interest should not be included because there
was no agreement between them regarding the payment of interest. It concluded that since
respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake,
petitioner should return the said amount to respondent pursuant to the principle of solution indebiti.
Petitioner appealed to the CA but the CA affirmed the ruling of the RTC. Petitioner filed a motion for
reconsideration to the appellate court, hence this petition. ISSUES: (1) Whether or not no interest was
due to petitioner. (2) Whether or not applying the principle of solution indebiti is proper. HELD: (1) No
interest was due to the petitioner. In this case, the parties did not agree for the payment of interest. As
explained by Villanueva, the presented promissory note was in her hand writing because Sigaan told
her to copy it and she did because she feared the threats of Sigaan to block her deals with the
Philippine Navy. 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 therefore in writing is prohibited
by law. Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no
stipulation therefore, the provisions of the Civil Code concerning Solution indebiti shall be applied.
Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision provides that if
something is received when there is no right to demand it, and it was unduly delivered through
mistake, the obligation to return it arises. (2) YES. The principle of solutio indebiti applies where: (1) a
payment is made when there exists no binding relation between the payor, who has no duty to pay,
and the person who received the payment; and (2) the payment is made through mistake, and not
through liberality or some other cause. In the present case, petitioner s obligation arose from a
quasi-contract of solutio indebiti and not from a loan or forbearance of money. Thus, an interest of 6%
per annum should be imposed on the amount to be refunded as well as on the damages awarded and
on the attorneys fees, to be computed from the time of the extra-judicial demand on 3 March1998,
up to the finality of this Decision. In addition, the interest shall become 12% per annum from the
finality of this Decision up to its satisfaction Estores v. Spouses Supangan , 670 SCRA 95 (2012) - Jez
Doctrine: Interest may be imposed even in the absence of stipulation in the contract. Petitioner s
unwarranted withholding of the money which rightfully pertains to respondent-spouses amounts to
forbearance of money which can be considered as an involuntary loan. Facts: Petitioner Estores
entered into a Conditional Deed of sale with the respondents Arturo and Laura Supangan where
petitioner offered to sell and respondents to buy a parcel of land located in Naic Cavite for the price of
4.7 million pesos. 4. Vendee shall be informed as to the status of DAR clearance within 10 days upon
signing of the documents. x x x x 6. Regarding the house located within the perimeter of the subject
[lot] owned by spouses [Magbago], said house shall be moved outside the perimeter of this subject
property to the 300 sq. m. area allocated for [it]. Vendor hereby accepts the responsibility of seeing to
it that such agreement is carried out before full payment of the sale is made by vendee. 7. If and after
the vendor has completed all necessary documents for registration of the title and the vendee fails to
complete payment as per agreement, a forfeiture fee of 25% or downpayment, shall be applied.

However, if the vendor fails to complete necessary documents within thirty days without any sufficient
reason, or without informing the vendee of its status, vendee has the right to demand return of full
amount of down payment. x x x x 9. As to the boundaries and partition of the lots (15,018 sq. m. and
300 sq. m.) Vendee shall be informed immediately of its approval by the LRC. 10. The vendor assures
the vendee of a peaceful transfer of ownership. After almost seven years from the contracts execution
including the 3.5 million down payment made by the respondents, petitioner still failed to to comply
with her obligation as expressly provided in the above paragraphs 4, 6, 7, 9 and 10. Hence
respondent-spouses in a letter, demanded the down payment to be returned within 15 days from
receipt. Petitioner promised to return said amount within 120 days. Petitioner still failed to do so
despite demand which prompted respondents to file a complaint for sum of money before the RTC
praying that petitioner be ordered to pay the principal amount of 3.5 million plus interest starting from
October 1, 1993 estimated to be 8.5 million plus damages. Petitioners answered with counterclaim
that they are willing to pay the principal amount but without the interest as the same was not agreed
upon arguing that since the Conditional Deed of Sale provided only for the return of the downpayment
in case of breach, they cannot be held liable to pay legal interest as well. RTC ruled in favor of
respondent granting them 6% interest instead of the 12% they prayed for. The CA affirmed the RTC's
decision of imposing the 6% interest but shall start to run only from September 27, 2000 when
respondent-spouses formally demanded the return of their money and not from October 1993 when
the contract was executed as held by the RTC. Hence the case Issue: Whether petitioner is not bound
to pay interest because though there is no stipulation of such in the conditional deed of sale Whether
the 6% interest is proper Held: First issue: No, Petition lacks merit Interest may be imposed even in the
absence of stipulation in the contract. Decision of CA to impose interest is sustained. Article 2210 of
the Civil Code expressly provides that Interest may, in the discretion of the court, be allowed upon
damages awarded for breach of contract. There is no question that petitioner is legally obligated to
return the P3.5 million because of her failure to fulfill the obligation under the Conditional Deed of
Sale, despite demand. She even admitted that the conditions were not fulfilled and that she was
willing to return the full amount of P3.5 million but has not 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. Second Issue: No, the 12% interest prayed for by the
respondents are deemed proper for this 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%). There is no stipulation and admittedly the contract involved is 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. The conditions
were not fulfilled and the money was not returned notwithstanding demand. Petitioner s
unwarranted withholding of the money which rightfully pertains to respondent-spouses amounts to
forbearance of money which can be considered as an involuntary loan. As such it is the 12% interest
reserved for loans that shall apply. Since the date of demand which is September 27, 2000 was
satisfactorily established during trial, then the interest rate of 12% should be reckoned from said date
of demand until the principal amount and the interest thereon is fully satisfied. Dispositive: Petition
Denied Nacar v. Gallery Frames and/or Bordey, G. R. No. 189871, August 13, 2013 - DJ Doctrine BOLD
Facts: in brief: 1. Nicar is an employee of Gallery frames 2. Nicar was illegally dismissed 3. Labor
arbiter to SC - granted ang 95K na backwages 4. Gallery Appealed - Dismissed and reverted back to
NLRC for execution 5. NLRC recompute - naging 471K 6. Gallery Frames Appealed pagka recompute
147K 7. 147K paid and accepted by Nicar 8. Appealed for recomputation 9. Granted ng NLRC pero
hanggang interest na lang daw Issue: Magkano interest. Kasi dati 12% kaso nagrelease ang bangko
Sentral na 6% na lang daw. Ruling: Interest; legal rate beginning July 1, 2013. The guidelines laid down
in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as
follows: I. When an obligation, regardless of its source, i.e., law, contracts, quasicontracts, 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 6% 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 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. And, in addition to the above, judgments that have

become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be
implemented applying the rate of interest fixed therein.