Commonwealth Insurance Corporation vs.

RCBC – January 29, 2004

Fatcs:
RCBC granted 2 export loan lines to Jigs Manufacturings and Elba
Industries (sister company) P2.5M and 1M. promssory notes and
surety bonds by Commonwealth Insurance Corp 1984
JIGS and ELBA defaulted in payment P2,464,128;
RCBC demanded payment form CIC
1985-1988 CIC only paid P2M

Issue: surety is liable to interest on the delay notwithstanding the law

that it is only liable up to the extent of the principal debt

RTC: granted but only principal; MR: denied

CA: granted interest

Held: affirmed
interest paid is based on the surety failure to pay obligation; it’s
liability in the surety contract is different from its liability under the law
legal interest is 12%
Eastern Shipping Line Inc vs CA:
-interst due shall earn interest from the time it is judicially demanded.
In the absence of stipulation, 12% pa to be computed at default such
as from judicial or extrajudicial demand
-when judgment becomes final, 12% legal interest from finality until
its satisfaction