ESTORES V. SPOUSES SUPANGAN, SUPANGAN , (2012) (Compensatory,, Penalty or Indemnity Interest) (Compensatory *Forbearance of money ISSUE: Whet ISSUE: Wh ethe herr it it is is pro prope perr to to imp impos osee inte intere rest st fo forr an an obl oblig igat atio ion n tha thatt doe doess not not in invo volv lvee a loa loan n or forbearance of money in the absence of stipulation of the parties. HELD: YES. In YES. Inte tere rest st ma may y be im imp pse se! ! e" e"en en in t# t#e e ab abse sen$ n$e e % st stip ip&' &'at ati in n in t# t#e e $ $nt ntra ra$t $t.. Arti Ar ti$' $'e e (() (() of the Civil Code epressly provides that !"i#nterest may, in the discretion of the court, cour t, be allo$ed upon upon damages damages a$arded a$arded for breach breach of contract.% contract.% &n this case, there there is no 'uestion that petitioner is legally obligated to return the .* million because of her failure to fulfill ful fill the obligation obligation under the Conditional Conditional +eed of ale, despite demand. demand. etit etitioner ioner en-oyed en-oyed the use of of the money from from the time it $as given to her her until no$. hus, she is already already in default default of her obligation from the date of demand. Forbea Forb eara ranc nce e is defined as a !contractual obligation of lender or creditor to refrain during a given period of time, from re'uiring the borro$er or debtor to repay a loan or debt then due and payable.% his definition describes describes a loan $here a debtor is given a period $ithin $hich to pay a loan or debt. debt. &n such case, !forbearance !forbearance of money, goods goods or credits% $ill have no distinct definition defin ition from a loan. We believe ho$ever, ho$ever, that the phrase !forbear !forbearance ance of money, goods or credits% is meant to have a separate meaning from a loan, other$ise there $ould have been no need to add that phrase as a loan is already sufficiently defined in the Civil Code. Forbea Forb eara ranc nce e of mon money ey,, good goods s or cre credi dits ts should should therefore refer to arrangements other than loan agreements, $here a person ac'uiesces to the temporary use of his money, goods or credits pending happening of certain events or fulfillment of certain conditions. &n this case, the respondent/spouses parted $ith their money even before the conditions $ere fulfilled ful filled.. hey have ther therefor eforee allo$ allo$ed ed or gran granted ted forbearance forbearance to the seller (petitioner) (petitioner) to use their the ir mon money ey pen pendin ding g ful fulfil fillme lment nt of the con condit dition ions. s. he hey y $er $eree dep depriv rived ed of the use of the their ir money for the period pending fulfillment of the conditions and $hen those conditions $ere brea br each ched ed,, th they ey ar aree en enti titl tled ed not only only to the ret etur urn n of the princ princip ipal al amoun amountt pa paid id,, bu butt al also so to compensati comp ensation on for the use of their money. money. nd the compensatio compensation n for the use of their money, absent any stipulation, should be the same rate of legal interest applicable to a loan since the use or deprivation of funds is similar to a loan. +a$ts +a$ts 1. &n ct. 133, 133, 4ermo-ina 4ermo-ina 5stores 5stores and pouse pousess upangan upangan entered entered into a Condition Conditional al +eed of ale $here 5stores offered to sell, and pouses offered to buy a parcel of land in Cavite for 6.78. 2. fter almost almost 7 years and despite the payment payment of .*8 by the pouses, pouses, 5stores still failed to comply $ith her obligation to handle the peaceful transfer of o$nership as stated in * provisions in the contract.
. &n a letter in 2000, pouses demanded the return of the amount $ithin 1* days from receipt 6. &n reply, 5stores promised to return the same $ithin 120 days *. pouses agreed but imposed an interest of 129 annually :. 5stores still failed despite demands 7. pouses filed a complaint $ith the ;C against 5stores and ;oberto rias (allegedly acted as 5stores< agent) =. &n ns$er, 5stores said they $ere $illing to pay the principal amount but $ithout the interest as it $as not agreed upon a. hat since the Conditional +eed of ale provided only for the return of the do$npayment in case of breach, they cant be liable for legal interest as $ell 3. ;C ruled saying that the pouses are entitled to the interest but only at :9 per annum and also entitled to attyot bound to pay interest because the deed only provided for the return of the do$npayment in case of failure to comply $ith her obligations b. hat atty fees not proper because both ;C and C sustained her contention that 129 interest $as uncalled for so it sho$ed that pouses did not $in 1.pouses contend a. &t is only fair that interest be imposed because 5stores failed to return the amount upon demand and used the money for her benefit b. 5stores failed to relocate the house outside the perimeter of the sub-ect lot and complete the necessary documents c. s to the fees, they claim that they $ere forced to litigate $hen 5stores un-ustly held the amount Iss&e &s the imposition of interest and attorney
•
he admitted that the conditions $ere not fulfilled and $as $illing to return the full amount of .*8 but hasn
•
•
• • •
•
•
•
•
