Title
Banal vs. Safont
Case
G.R. No. 5520
Decision Date
Jul 26, 1911
Mamerta Banal contested interest payments on a repurchase price, but the Supreme Court upheld her obligation to pay 15% annual interest from 1903 to 1908, based on a valid contractual agreement, despite her claims and the defendants' appeal.
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Case Digest (G.R. No. 5520)

Facts:

  1. Parties and Initial Dispute:

    • Mamerta Banal filed a case against Jose Safont and Andres Puig in the Court of First Instance for the conventional repurchase of certain property.
    • The trial court ruled in favor of Safont and Puig, ordering Banal to pay P2,727.30 plus 15% annual interest until full payment. Banal did not appeal this judgment.
  2. Appeal by Defendants:

    • Safont and Puig appealed the trial court's judgment. The Supreme Court affirmed the judgment, including the part requiring Banal to pay the repurchase price and interest.
  3. Execution of Judgment:

    • On August 18, 1908, the trial court issued an order to execute the Supreme Court's judgment.
    • On January 2, 1909, Banal deposited P2,727.30 plus P152.28 in interest (calculated from August 18, 1908).
    • Safont and Puig contested the interest calculation, claiming interest was due from July 1, 1903, amounting to P2,250.02. They argued Banal still owed P2,097.74.
  4. Interest Dispute:

    • The trial court ruled that Banal must pay the outstanding interest of P2,097.74, with a writ of execution to be issued if she failed to pay within 15 days. Banal appealed this ruling.
  5. Contractual Background:

    • The 15% interest rate was based on a contract signed on October 5, 1897, between Banal, Juana David (Banal's deceased daughter), and Safont and Puig.
    • The interest was conventional (agreed upon by the parties) and not legal (imposed by law).
  6. Key Dates for Interest Calculation:

    • July 1, 1903: Date when the balance of P2,727.30 was judicially declared.
    • February 15, 1907: Date of the trial court's judgment.
    • August 18, 1908: Date of the Supreme Court's order for execution.

Issue:

  1. Whether Mamerta Banal is obligated to pay 15% annual interest on the principal amount of P2,727.30 from July 1, 1903, to August 18, 1908.
  2. Whether the appeal by Safont and Puig interrupted the accrual of interest during the pendency of the appeal.
  3. Whether the interest obligation is valid despite Banal's claim that the amount was a repurchase price and not a loan.

Ruling:

The Supreme Court affirmed the trial court's decision, ruling that:

  1. Mamerta Banal is obligated to pay the 15% annual interest on P2,727.30 from July 1, 1903, to August 18, 1908.
  2. The appeal by Safont and Puig did not interrupt the accrual of interest.
  3. The interest obligation is valid as it was based on a contractual agreement and not merely a legal imposition.

Ratio:

  1. Conventional Interest:

    • The 15% interest rate was agreed upon in a valid contract signed on October 5, 1897. It was not a legal interest but a conventional one, freely entered into by the parties.
  2. Continuity of Interest Obligation:

    • The obligation to pay interest continued uninterrupted from the date of the contract (October 5, 1897) until the debt was fully paid. The appeal by Safont and Puig did not suspend this obligation.
  3. Finality of Judgment:

    • Banal did not appeal the trial court's judgment, which included the obligation to pay interest. By acquiescing to the judgment, she implicitly accepted the interest obligation.
  4. No Legal Basis for Interruption:

    • There is no law or doctrine that allows the interruption of interest accrual during the pendency of an appeal.
  5. Repurchase Price vs. Loan:

    • Banal's argument that the amount was a repurchase price and not a loan was rejected. She should have raised this issue in an appeal, which she did not do.
  6. Judicial Execution:

    • The trial court's order for Banal to pay the outstanding interest was within its jurisdiction and consistent with the findings of fact and law in the original judgment.

Dissent (Moreland, J.)

Justice Moreland dissented, arguing that the issue had already been litigated and decided in the original judgment, which became final on August 18, 1908. He criticized the majority for relitigating the matter, stating that it undermined the finality of judgments.


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