Case Summary (G.R. No. 174838)
Antecedents of the Case
The dispute arises from a sum of money action wherein Pamana and Flowtech sought claims against Stronghold through a Contractor’s All Risk Bond amounting to P9,047,960.14 following a fire incident on January 27, 1992, which destroyed construction works. The Regional Trial Court (RTC) of Makati City ruled on this matter in a decision dated October 14, 1999, holding Stronghold liable and ordering compensation for damages, legal fees, and double interest for delay in payment in violation of Section 243 of the Insurance Code.
Initial RTC Judgment
The RTC found Stronghold liable to pay Flowtech and Pamana a total amount that included principal awards, exemplary damages, attorney's fees, and imposed a double interest rate on the insurance proceeds due to the delayed response in processing the claim. Following the issuance of a writ of execution on May 12, 2005, Stronghold sought to suspend this execution through a motion arguing the interest penalties imposed were excessive.
RTC's Order and Subsequent Actions
In a subsequent order dated November 22, 2005, the RTC modified the initial judgment by recalculating the interest, limiting it to a period from the date of its October 14, 1999 decision until its finality, rather than from the date of demand. The recalculated total amount, including interest and fees, was adjusted downwards, prompting Pamana to appeal against this modification.
Ruling of the Court of Appeals (CA)
The CA, in its decision dated July 20, 2006, annulled the RTC's November order, reaffirming that the original judgment had become final and should not have been altered. The CA found that the RTC's changes constituted unlawful deviations from the final judgment, which established the parameters under which execution could be pursued.
Supreme Court's Ruling on Immutaibility of Judgments
The Supreme Court upheld the CA's decision, emphasizing the inviolability of final judgments and the impermissibility of post-judgment alterations that change essential aspects of the ruling. Such modifications, including alterations in interest rates and computation dates, must adhere strictly to the original judgment's express terms.
Applicable Rate of Interest
Determining the applicable interest rate became a point of contention, with the RTC applying a 6% rate, while the CA affirmed the need for a 12% interest under the Insurance Code's provisions. The Supreme Court sided with the CA, clarifying that the statutory provision warranted applying the higher double rate of 12% per annum on the insurance proceeds.
Effect of BSP Circular on Interest Rate
The Court highlighted that any changes regarding interest rates would adhere to BSP re
...continue readingCase Syllabus (G.R. No. 174838)
Background of the Case
- The case revolves around a Petition for Review filed by Stronghold Insurance Company, Inc. (Stronghold) contesting the Decision dated July 20, 2006, and Resolution dated September 26, 2006, of the Court of Appeals (CA) in CA-G.R. SP No. 94313.
- The action for sum of money was initiated by Pamana Island Resort Hotel and Marina Club, Inc. (Pamana) and Flowtech Construction Corporation (Flowtech) against Stronghold, based on a Contractor's All Risk Bond amounting to P9,047,960.14 secured by Flowtech for Pamana's construction project at Pamana Island, Subic Bay.
- A fire incident on January 27, 1992, caused significant damages to the project, resulting in losses claimed by Pamana.
Regional Trial Court (RTC) Decision
- On October 14, 1999, the RTC of Makati City, Branch 135, found Stronghold liable for the claim.
- The court awarded Pamana the insurance proceeds, exemplary damages, and attorney's fees, along with an interest payment at double the applicable rate as stipulated in Section 243 of the Insurance Code.
- The RTC’s ruling included:
- Payment of P4,728,297.82 as insurance proceeds.
- P500,000 as exemplary damages.
- P100,000 for attorney's fees.
- Interest calculated at double the applicable rate from the date of demand until fully paid.
Motion for Execution and Subsequent Orders
- Flowtech filed a motion for execution