ROLANDO C. DE LA PAZ VS.

L & J DEVELOPMENT COMPANY

G.R. NO. 183360
SEPTEMBER 08, 2014
DEL CASTILLO, J.
FACTS:
This case was under the writ of certiorari from decisions came from Metropolitan Trial
Court, Regional Trial Court, and Court of Appeals. Rolando C. De La Paz in relation to Nilo
who happen to be living in the same neighborhood as the respondents which Atty. Salonga
the owner of L&J Company. Nilo told the petitioner that the respondents needed money to
finish its projects, Mr. Rolando without knowing the Atty. Salonga agreed, they have officially
met to converse about the transaction, it went smoothly. The transaction dated December
27, 2000, Rolando lend 350,000.00 pesos to L&J Company, and the transaction has no
specified maturity date and carried 6% monthly interest. From December 2000 to August
2003, L7J have paid Rolando a total of 576,000.00 with inclusion of interest. On January
2005. Rolando filed a complaint for collection of Sum Money with Damages against L&J and
Atty. Salonga in Metropolitan Trial Court. He added that the debt of respondents had spike at
772,000.00 pesos, and that the 6% interest was suggested through Arlene in behalf of L&J
and Atty. Salonga. In the argument of respondents they claimed that the loan was a
corporate debt, and that the failure of payments was intervened by unforeseen
circumstances brought by economic crisis, also they claimed that 6% interest monthly is
unacceptable and shocking to morals. Hence, the provided payments should be charge to
the principal loan, 350,000.00.
In the ruling of MeTC, it favors to Mr. Rolando. It order the defendant L & J
Development Co., Inc. to pay plaintiff the amount of Three Hundred Fifty Thousand Pesos
(₱350,000.00) representing the principal obligation, plus interest at the legal rate of 12% per
annum to be computed from January 20, 2005, the date of the filing of the complaint, until
the whole obligation is fully paid.
In line of the decision of MeTC, the respondents appealed to Regional Trial Court,
but its decision line of the MeTC’s. This didn’t fazed the respondents, and passed their
arguments to Court of appeals. The CA held that the 6% interest is unacceptable, it applied
the legal compensation under Article 1279 of civil code. The petitioner needs to return the
interest payments out of the paid amount of petitioners. CA reversed the decision of MeTC
and RTC. They have remove the 350,000.00 principal loan to 576,000.00 total paid interest
of the petitioners, leaving an excess of 226,000.00, which the CA ordered Rolando to return
with interest.
Mr. Rolando filed a motion for reconsideration, claiming that he is not the one who
ordered the 6% interest, it was included to the contention of the borrowers as part of their
offer, and Mr. Salonga by being a lawyer have framed him to not have a written stipulation to
pay interest. It was denied.
ISSUE:
- Whether or not despite of having no written stipulation to pay interest, the petitioner
can collect the 6% interest impose by the borrower themselves.
FACTS:
 - THE SUPREME COURT HELD IN OPPOSITION. It is indicated to the Article 1956 of
the Civil Code that “no interest shall be due unless it has been expressly stipulated in
writing.” The collection of interest without; a) expressed stipulation for the payment of
interest, and b) the agreement to pay interest is reduced in writing, is prohibited by
law. There is also has no proof of deception as per claimed by the petitioner. The
petitioner as a lender have put in mind that jr could actually ask for a written form as
it could safeguard his role as a lender, but he failed. Also, even if the 6% monthly
interest has been out in writing, and been agreed by both parties is still unacceptable.
It’s in line of bunch of cases that an interest rate of 3% per month and higher are
unacceptable. As per the cited case of SC, in Asian Cathay Finance and Leasing
Corporation v. Gravador, "the imposition of an unconscionable rate of interest on a
money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It is
tantamount to a repugnant spoliation and an iniquitous deprivation of property,
repulsive to the common sense of man.” Even if voluntary conjuncture of putting 6%
interest is present, it doesn’t make it the stipulation on interest valid.
The court ruled that the decision from court of appeals is hereby AFFIRIMED, that
petitioner Rolando C. De La Paz is ordered to pay respondent L&J Development Company
the amount of, ₱226,000.00, plus interest of 6o/o per annum from the finality of this Decision
until fully paid.
 JACINTO TANGUILIG VS. COURT OF APPEALS AND VICENTE HERCE JR.
G.R. NO. 117190
JANUARY 02, 1997
BELLOSILLO, J.
FACTS:
Jacinto Tanguilig the owner of J.M.T Engineering and General Merchandising,
proposed the respondent Vicente Herce Jr. a project to construct a windmill system for him.
After some negotiations they shred to the project of windmill with a cost of 60,000.00
included a one year warranty starting from the date of completion. Respondent gave a down
payment of 30,000.00 to the petitioner, and followed with installment of 15,000.00, leaving a
balance of 15,000.00. The petitioner filed this complaint to trial court, when the petitioner
rejects to pay the balance. The answer of respondents claimed that they already have pay
the balance to the SPGMI who constructed the deep well, they added that, it is the petitioner
who owed them, as the windmill collapse, his obligation under the contract which subsumed
the warranty is needed to be obliged. The petitioners argued that the construction of deep
well is not included to the approved contract, and thus the destruction of windmill is due to
the typhoon which produce a strong wind.
The trial court ruled that the construction of deep well is not included to the contract,
but it oppose the claim of the petitioner that it has no obligation to the destruction of the
windmill, in addition, "there is no clear and convincing proof that the windmill system fell
down due to the defect of the construction." The case was once again raised in the court of
appeals, which reversed the findings of trial court, it is cited that the CA that the construction
of dep well was included to the contract. It also raises the testimony of Mr. Pili a proprietor of
SPGMI, which said that the petitioner and he have agreed on constructing a deep well, and
the cost should be deducted in the 60,000.00. In the other hand, it ruled that the petitioner
should reconstruct the windmill.
ISSUE:
- Whether or not the deep well is included top the construction obligation of the
petitioner.
- Whether or not the petitioner should not reconstruct the windmill as it was rooted
from unforeseeable circumstances.
RULING:
- NO. It was never included to the contract that the deep well is indeed included to the
obligation of the petitioner. The testimony of Mr. Pili has never been proved genuine,
they have not shown any proof proving that agreement between the two have
occurred. Also, the respondent can’t hand the balance of payment to the SPGMI as
they are not included to the contract, the law is clear that "payment shall be made to
the person in whose favor the obligation has been constituted, or his successor in
interest, or any person authorized to receive it." The proprietor had never proved that
he enter an agreement with the petitioner to construct the deep well.
The proposed contract has a 2 version, which both have never indicated any
obligation of the petitioner to construct a deep well. There is an existence of deep
 well in the contract but it was allotted type of deep well pump which the windmill is
suitable. If the petitioners intent is to construct a deep well he should have put
conjunctions such are “and deep well”, or “with deep well”, instead of “for deep well”
and “suitable for deep well.”

- NO. The petitioner have failed to support his claim that the destruction of windmill
was caused by the typhoon. There was indeed a typhoon who strike in the place but
its intensity is not enough to destroy. It is actually a good proof that the windmill has
its constructional defect as its purpose is to withstand strong winds, as its purpose to
sustain it and convert to energy.
The petitioner has violated the Article 1167 of the civil code which point that “if a person
obliged to do something fails to do it, the same shall be executed at his cost.” The court
saids that “petitioner's argument that private respondent was already in default in the
payment of his outstanding balance of P15, 000.00 and hence should bear his own loss, is
untenable. In reciprocal obligations, neither party incurs in delay if the other does not comply
or is not ready to comply in a proper manner with what is incumbent upon him. When the
windmill failed to function properly it became incumbent upon petitioner to institute the
proper repairs in accordance with the guaranty stated in the contract. Thus, respondent
cannot be said to have incurred in delay; instead, it is petitioner who should bear the
expenses for the reconstruction of the windmill.”
The appealed decision is MODIFIED. Respondent VICENTE HERCE JR. is directed to
pay petitioner JACINTO M. TANGUILIG the balance of P15, 000.00 with interest at the legal
rate from the date of the filing of the complaint. In return, petitioner is ordered to "reconstruct
subject defective windmill system, in accordance with the one-year guaranty" and to
complete the same within three (3) months from the finality of this decision.