Case Digest (G.R. No. 7442)
Facts:
Andrea Salvador v. Basilio Palencia, G.R. No. 7442, February 27, 1913, the Supreme Court, Arellano, C.J., writing for the Court.
On August 23, 1907, Juan Palencia and Basilio Palencia executed a notarized instrument in favor of Eugenio Pardinas acknowledging indebtedness of P5,250, promising joint and several payment within three years, with interest at 25% and a mortgage as security. The same instrument contained a clause that, if judicial action were necessary, the debtors would pay attorney's fees, court costs, and other losses and damages. Pardinas died December 9, 1907, and the mortgage fell to his widow, Andrea Salvador, in the heirs' division.
After partial payments totaling P673.40 (recorded as payments "on account of interest"), Salvador sued on January 31, 1911, seeking: (1) solidary payment of the P5,250; (2) solidary payment of interest at 25% (allegedly annual) from August 23, 1907, less the P673.40 paid; (3) P100 for losses and 20% of principal and interest as attorney's fees; (4) foreclosure if unpaid; and (5) costs. The defendant Basilio admitted the instrument generally but denied that the word "annual" had been inserted; the plaintiff asserted the insertion had been made with the Palencias' knowledge and consent.
The Court of First Instance of Albay found the word "annual" had been inserted after execution but with Basilio's knowledge and consent, and therefore held Basilio liable for interest at 25% per annum; it found insufficient evidence that Juan consented to the alteration and held Juan's intestate estate liable only for a single 25% interest. The trial court awarded P5,250 jointly and severally, interest computed 25% annually against Basilio from August 23, 1907, while Juan's estate was charged only a single 25% up to August 23, 1910 and 6% thereafter; deduction of P673.40 was ordered.
Both parties appealed portions of the judgment. Basilio contested the finding that he consented to the insertion; Salvador appealed that the court did not order legal interest on interest from the filing of the complaint and contended the 20% attorney's fee award was insufficient. The defendant also argued the 20% award was premature and improperly made absolute.
The Supreme Court reviewed the record, including receipts showing interest payments in 1908 and 1909, and the quota litis contract (Exhibit C, Nov. 15, 1910) between Salvador and her attorney agreeing a 20% fee on amounts collected. The Court affirmed the trial court insofar as it conformed with its findings, modified the interest computation to award legal interest on interest from the date of complaint, and clarified the 20% attorney's fee award as payable only on amounts actually collected and at the time of collection. The case reached the Supreme Court by direct appeal from the trial court judgment.
Issues:
- Did the evidence and contract establish that Basilio Palencia owed interest at 25% per annum while Juan Palencia's intestate estate was liable only for a single 25% interest as interpreted by the trial court?
- Does interest already due (stipulated interest) earn legal interest from the time it is judicially demanded (the filing of the complaint)?
- Are the defendants liable to pay 20% of principal and interest as attorney's fees, and was it premature or improper for the trial court to order payment of that 20%?
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)