Case Summary (G.R. No. L-61356-57)
Procedural History
- RTC Decision awarded respondent P1,400,000.00 plus attorney’s fees, litigation expenses, and costs.
- CA Decision (March 16, 2012) affirmed liability, modified balance due to P1,010,049.00.
- CA Resolution (July 14, 2014) denied reconsideration.
- Supreme Court Decision (June 28, 2016) affirmed CA Decision with modification on interest.
- Respondent’s Motion for Reconsideration (September 1, 2016) sought (a) imposition of legal interest; and (b) up-rating the principal to P2,100,000.00.
Applicable Law
Constitution
1987 Philippine Constitution (decision rendered September 12, 2018).
Civil Code Provisions
Article 1169 (judicial demand and accrual of interest); Article 1956 (requirement of written stipulation for monetary interest).
Jurisprudence
Nacar v. Gallery Frames, 716 Phil. 267 (2013) – guidelines on compensatory interest.
Eastern Shipping Lines, Inc. v. CA, 234 SCRA 78 (1994) – prior 12% rate.
Bangko Sentral regulations – BSP-MB Circular No. 799, reducing legal interest from 12% to 6% per annum effective July 1, 2013 (prospective application).
Distinction Between Monetary and Compensatory Interest
Monetary Interest
– Contractual; arises only upon an express written stipulation.
Compensatory Interest
– Imposed by law or courts as indemnity for delay; arises upon breach or non-payment after demand.
Guidelines on Compensatory Interest
In the absence of a written stipulation:
- From judicial or extrajudicial demand, interest accrues at the legal rate.
- Rate was 12% per annum until June 30, 2013; thereafter 6% per annum.
- Once a money-judgment becomes final and executory, interest continues at 6% per annum until full satisfaction.
These principles modify Eastern Shipping Lines in light of BSP-MB Circular No. 799.
Application to the Present Case
- No written stipulation for monetary interest, thus only compensatory interest applies.
- Judicial demand occurred on August 20, 2003.
- Legal interest at 12% per annum from August 20, 2003 to June 30, 2013.
- Legal interest at 6% per annum from July 1, 2013 until finality of the Supreme Court ruling.
- From finality until full payment, all monetary awards (including P1,010,049.00 balance, attorney’s fees, litigation expenses, and costs) earn 6% per annum.
- Respondent’s assertion that the loan obligation was P2,100,000.00 was merely a reiteration of previously rejected grounds.
Court’s Ruling
The Motion for Reconsideration is PARTLY GRANTED. The June 28, 2
Case Syllabus (G.R. No. L-61356-57)
Background
- The parties are Nympha S. Odiamar (petitioner) and Linda Odiamar Valencia (respondent).
- Petitioner borrowed P1,400,000.00 from respondent; the Regional Trial Court of San Jose, Camarines Sur, Branch 58 awarded respondent the unpaid balance plus attorney’s fees (P10,000.00), litigation expenses (P19,662.78), and costs of suit.
- The outstanding principal balance was determined to be P1,010,049.00.
Procedural Posture
- RTC decision in favor of respondent, as detailed above.
- Court of Appeals Decision dated March 16, 2012 and Resolution dated July 14, 2014 in CA G.R. CV No. 93624 affirmed the RTC ruling with modifications.
- Supreme Court Decision dated June 28, 2016 (G.R. No. 213582) affirmed the CA Decision with modification, ordering petitioner to pay P1,010,049.00.
- Respondent filed a Motion for Reconsideration on September 1, 2016, praying for legal interest on the award and contending that the true loan obligation was P2,100,000.00.
Contentions of the Parties
- Respondent seeks imposition of legal interest on the monetary award due her.
- Respondent insists that the total loan obligation is P2,100,000.00, not merely the P1,400,000.00 principal recognized by the courts below.
- Petitioner maintains that the debt is limited to P1,400,000.00 and that no written stipulation for interest exists.
Issue
- Whether interest may be imposed on the loan obligation in the absence of an express written stipulation.
- What rate and period of interest should apply to the unpaid loan balance and related monetary awards.
- Wh