G.R. No. L-7 - Tiamco vs. Diaz

On November 17, 1993, petitioner Arthur F. Menchavez and respondent Marlyn M. Bermudez entered into a loan agreement for Php 500,000 with an interest rate fixed at 5% per month.
Respondent executed a promissory note stating her promise to pay the principal along with the stipulated interest, and acknowledged receipt of a bank check from BPI.

Initially, respondent issued a Prudential Bank Check No. 031994 maturing on December 17, 1993, with instructions not to present it on its maturity date.
Subsequently, the original check was replaced with five postdated Prudential Bank checks amounting to a total of Php 565,000, with each check bearing different maturity dates from April to August 1994.
Four of these checks were cleared upon presentment, while one (specifically the July 17, 1994 check) was dishonored but later partly cured by a replacement check issued on June 12, 1995.

Petitioner alleged a verbal compromise arrangement with respondent to address delays in payment and accumulated interest; under this agreement, respondent was to pay with 11 postdated checks.
When these checks were presented for payment, eight were dishonored due to insufficient funds.

Nine criminal informations were instituted against respondent before the Metropolitan Trial Court (MeTC) in Makati City, under the charge of violating Batas Pambansa Blg. 22 (the Bouncing Checks Law).
The charges included eight counts covering the compromise agreement checks and a ninth count concerning the July 17, 1994 check.
Despite the allegations, respondent raised a defense of payment, producing evidence that she had paid a total sum of Php 925,000.
The MeTC acquitted respondent on all counts, noting that the payment made more than satisfied the original loan and interest obligations.

Dissatisfied with the criminal acquittal, petitioner moved the matter to civil courts, filing his claim before the Regional Trial Court (RTC), where he contended that despite the excess payment, an outstanding amount of Php 165,000 remained unpaid.
The RTC held that the excess payment of Php 425,000 did not settle respondent’s obligations fully under the compromise agreement, and applied a legal interest rate of 12% per annum (citing the lack of written agreement for the 5% per month rate).
On appeal, the Court of Appeals (CA) reversed the RTC ruling, finding that petitioner’s own Statement of Account indicated that respondent’s payments had already fully satisfied the principal loan and its related interest.
The CA further reasoned that the compromise agreement was not separable from the principal loan agreement, and that enforcing both would result in unjust enrichment for petitioner.

The compromise agreement was an independent obligation, separate from the original loan.
Despite the payment received, respondent had not fully met her obligations.
The voluntary agreement to pay 5% interest per month should be enforced.

Whether the compromise agreement creating a payment obligation on postdated checks is separate and independent from the original loan contract.
Whether the total payment made by respondent (Php 925,000) extinguished the original obligation of Php 500,000 and its associated claims.
Whether petitioner is entitled to enforce the clause providing for 5% per month (60% per annum) interest despite evidence of full payment of the principal and additional amounts.
Whether the dual claim—enforcing both the compromise agreement and the original loan—is permissible or amounts to unjust enrichment.
Whether the high interest rate agreed upon by the parties, although voluntarily stipulated, is legally enforceable given its iniquitous, unconscionable, and exorbitant character.