Facts:

The case involves Purificacion BuAing and Romeo BuAing (the Petitioners) against Cecilio Santos (the Respondent). The events leading to the case began when Respondent Santos filed a complaint for a sum of money against the BuAing petitioners before the Regional Trial Court (RTC) in Malolos, Bulacan, which was docketed as Civil Case No. 23-M-96. The complaint included a prayer for the issuance of a preliminary attachment. The trial court eventually declared the petitioners in default for failing to file a responsive pleading. An ex-parte hearing took place, ultimately resulting in a decision dated January 30, 1997, where the RTC found in favor of the plaintiff, Santos. The court ordered the BuAings to pay Santos a total of P557,000.00, representing the principal amount of their loan, with an interest rate of 18% per annum as stipulated in their loan agreement. Additionally, the petitioners were ordered to pay attorney's fees amounting to P30,000, plus 20% of the total award.

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Facts:

Background and Procedural History

• Respondent Cecilio Santos filed a complaint before the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 18 (Civil Case No. 23-M-96) seeking a sum of money with a prayer for issuance of a preliminary attachment against petitioners Purificacion BuAing and Romeo BuAing.
• The petitioners failed to file a responsive pleading, which led the trial court to declare them in default upon the respondent’s motion.

Trial Court Decision

• Following an ex-parte hearing, the RTC rendered a decision that:
• Awarded the respondent the sum of P557,000.00 representing the principal loan, computed with an interest rate of 18% per annum pursuant to the parties’ loan agreement.
• Ordered the petitioners to pay an additional sum of P30,000.00 plus 20% of the awarded amount by way of attorney’s fees.
• The trial court’s award was rendered without the petitioners’s participation because of their default.

Court of Appeals Modification

• The petitioners, objecting solely to the award of attorney’s fees, appealed the trial court’s decision.
• On January 31, 2002, the Court of Appeals modified the trial court’s decision as follows:
• Affirmed the award of P557,000.00 as the principal loan with 18% per annum interest.
• Imposed interest on the award as actual and compensatory damages at 6% per annum, computed from the filing of the complaint until the judgment became final.
• Stipulated that in the event the principal and interest remain unpaid, an additional interest rate of 12% per annum would be applied from the time the judgment becomes final and executory until fully satisfied.
• Reduced the attorney’s fees to 10% of the total award less the interest, in consonance with Article 2208 of the New Civil Code.

Petition for Review and Alleged Error

• The petitioners challenged the CA’s modification, asserting that the appellate court:
• Erroneously granted interest (6% and subsequently 12% per annum) on the awarded sums, issues that were not raised on appeal.
• Improperly maintained the award of attorney’s fees without sufficient factual or legal justification in the decision’s reasoning.
• The petition was tainted by a procedural defect as it should have been filed under Rule 65 (for certiorari) rather than under Rule 45, given the nature of the alleged abuse of discretion.
• Despite this defect, the Court treated the petition as filed under Rule 45 and proceeded to address the assigned error regarding the imposition of interest rates and the award of attorney’s fees.

Issue:

Whether the Court of Appeals committed grave abuse of discretion by:

• Imposing interest at 6% per annum as actual and compensatory damages and an additional 12% per annum on any unpaid amounts, despite these issues not being raised in the appeal.

• Whether the appellate court exceeded its jurisdiction by deciding on the matter of attorney’s fees when such issue was not explicitly assigned in the appeal.

• Whether the trial court provided the requisite factual, legal, and equitable justification for the award of attorney’s fees under Article 2208 of the Civil Code.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)