Credit Transactions Case Digest Antonio Tan vs. Court of Appeals/CCP GR No. 11628 !ACT"# TAN OBTAI OBTAINED NED 2 LOANS, EACH FOR P2,000,000 FROM CCP. Executed a pro!""or# $ote !$ aou$t o% P&,'((,'2(.&2) pa#a*+e !$ !$"ta++e$t". TAN %a!+ed %a!+ed to pa# a$# !$"ta++e$t o$ o$ t-e "a!d re"tructured re"tructured +oa. I$ a +etter, TAN reue"ted a$d propo"ed to re"po$de$t CCP a ode o% pa#!$/ t-e re"tructured re"tructured +oa$ !. 20 o% t-e pr!$c!pa+ aou$t o% t-e +oa$ upo$ t-e re"po$de$t /!1!$/ !t" co$%or!t# to -!" propo"a+ !!. Ba+a$ce o$ t-e pr!$c!pa+ o*+!/at!o$ pa#a*+e & o$t-+# !$"ta++e$t" u$t!+ %u++# pa!d. TAN reue"ted reue"ted %or a orator!u orator!u o$ -!" +oa$ o*+!/at!o$ o*+!/at!o$ u$t!+ t-e %o++o3!$/ #ear a++e/ed+# due to a "u*"ta$t!a+ deduct!o$ !$ t-e 1o+ue o% -!" *u"!$e"" a$d o$ accou$t o% t-e pe"o de1a+uat!o$. !.
No %a1ora*+e re"po$"e 3a"
ade to "a!d +etter". !!. CCP dea$ded %u++ pa#e$t, 3!t-!$ te$ 4(05 da#" %ro rece!pt o% "a!d +etter P,066,7&.0&. CCP FILED COMPLAINT co++ect!o$ o% a "u o% o$e# TAN !$terpo"ed !$terpo"ed t-e de%e$"e de%e$"e t-at -e accoodated accoodated a %r!e$d 3-o a"8ed %or -e+p to o*ta!$ a +oa$ %ro CCP.
!.
C+a!ed t-at ca$$ot 9$d
t-e %r!e$d. TAN 9+ed a Ma$!%e"tat!o$ 3-ere!$ 3-ere!$ -e propo"ed propo"ed to "ett+e "ett+e -!" !$de*ted$e"" to CCP *# do3$ pa#e$t o% P('0,000.00 a$d to !""ue( 2 c-ec8" e1er# *e/!$$!$/ o% t-e #ear to co1er !$"ta++e$t pa#e$t" %or o$e #ear, a$d e1er# #ear t-erea%ter u$t!+ t-e *a+a$ce !" %u++# pa!d. !. CCP d!d $ot a/ree to t-e pet!t!o$er:" propo"a+" propo"a+" a$d "o t-e tr!a+ o% t-e ca"e e$"ued. TRIAL CO;RT CO;RT ORDERED TAN TAN TO PA< PA< CCP P7,==,&('.7, repre"e$t!$/ repre"e$t!$/ de%e$da$t:" out"ta$d!$/ accou$t a" o% Au/u"t 26, (=6, 3!t- t-e corre"po$d!$/ corre"po$d!$/ "t!pu+ated !$tere"t a$d c-ar/e" t-ereo%, t-ereo%, u$t!+ % u++# pa!d, p+u" attor$e#:" %ee" !$ a$ aou$t eu!1a+e$t to 2 o% "a!d out"ta$d!$/ accou$t, p+u" P0,000.00, a" exep+ar# daa/e", p+u" co"t". REASONS> !. Rea"o$ o% +oa$ %or accoodat!o$ o% %r!e$d 3a" $ot cred!*+e. !!. A""u!$/, ar/ue$do, t-at t-e TAN d!d $ot per"o$a++# *e$e9t %ro +oa$, -e "-ou+d -a1e 9+ed a &rd?part# cop+a!$t a/a!$"t @!+"o$ Luce$ !!!. & t!e" t-e pet!t!o$er oered to "ett+e -!" +oa$ o*+!/at!o$ 3!t- CCP. !1. TAN a# $ot a1o!d -!" +!a*!+!t# to pa# -!" o*+!/at!o$ u$der t-e pro!""or# $ote 3-!c-e u"t cop+# 3!t- !$ /ood %a!t-. 1. TAN !" e"topped %ro de$#!$/ -!" +!a*!+!t# or +oa$ o*+!/at!o$ to t-e pr!1ate re"po$de$t.
TAN APPEALED APPEALED TO CA, a"8ed a"8ed %or t-e reduct!o$ reduct!o$ o% t-e pe$a+t!e" a$d c-ar/e" o$ -!" + oa$ o*+!/at!o$. ud/e$t appea+ed %ro !" -ere*# AFFIRMED.
!po"!t!o$ o% !$tere"t o$ o$etar# !$tere"t *ut $ot t-e c-ar/!$/ o% !$tere"t o$ pe$a+t#. Pe$a+t!e" "-ou+d $ot ear$ !$tere"t.
(. No a++e/ed a++e/ed part!a+ part!a+ or !rre/u+ar per%ora$ce. 2. Ho3e1er, t-e t-e appe++ate court od!9ed od!9ed t-e dec!"!o$ o% t-e tr!a+ court *# de+et!$/ exep+ar# daa/e" *ecau"e $ot proport!o$ate proport!o$ate to actua+ daa/e cau"ed *# t-e $o$? per%ora$ce o% t-e co$tract
$""%&"# @ON t-ere are co$tractua+ a$d +e/a+ *a"e" %or t-e !po"!t!o$ o% t-e pe$a+t#, !$tere"t o$ t-e pe$a+t# a$d attor$e#:" %ee". TAN !pute" !pute" error o$ o$ CA !$ $ot %u++# e+!!$at!$/ attor$e# attor$e# %ee" a$d !$ $ot reduc!$/ t-e pe$a+t!e" co$"!der!$/ t-at -e ade part!a+ pa#e$t" o$ t-e +oa$. A$d !% pe$a+t# !" to *e a3arded, TAN TAN a"8!$/ %or $o$? !po"!t!o$ o% !$tere"t o$ t-e "urc-ar/e" *ecau"e copou$d!$/ o% t-e"e are $ot !$c+uded ! $ pro!""or# $ote. No *a"!" !$ +a3 %or t-e c-ar/!$/ o% !$tere"t o$ t-e "urc-ar/e" %or t-e rea"o$ t-at t-e Ne3 C!1!+ Code !" de1o!d o% a$# pro1!"!o$ a++o3!$/ t-e !po"!t!o$ o% !$tere"t o$ "urc-ar/e". "urc-ar/e".
@ON !$tere"t a# accrue o$ t-e pe$a+t# or cope$"ator# !$tere"t 3!t-out 1!o+at!$/ ART (==> @!t-out preud!ce to t-e pro1!"!o$" o% Art!c+e 22(2, !$tere"t due a$d u$pa!d "-a++ $ot ear$ !$tere"t. !$tere"t. Ho3e1er, t-e co$tract!$/ co$tract!$/ part!e" a# a# *# "t!pu+at!o$ cap!ta+!e t-e !$tere"t due a$d u$pa!d, 3-!c- a" added pr!$c!pa+, "-a++ ear$ $e3 !$tere"t. TAN? No No +e/a+ *a"!" %or t-e !po"!t!o$ !po"!t!o$ o% !$tere"t o$ t-e pe$a+t# c-ar/e %or t-e rea"o$ t-at t-e + a3 o$+# a++o3"
@ON TAN ca$ 9+e reduct!o$ o% pe$a+t# due to ade part!a+ pa#e$t". Pet!t!o$er co$te$d" t-at reduct!o$ reduct!o$ o% t-e pe$a+t# !" u"t!9a*+e u$der ART (22=> T-e ud/e "-a++ eu!ta*+# reduce t-e pe$a+t# 3-e$ t-e pr!$c!pa+ o*+!/at!o$ -a" *ee$ part+# or !rre/u+ar+# cop+!ed 3!t- *# t-e de*tor de*tor.. E1e$ !% t-ere -a" *ee$ $o per%ora$ce, t-e pe$a+t# a# a+"o *e reduced *# t-e court" !% !t !" ! $!u!tou" or u$co$"c!o$a*+e.
'&(D CA DECISION AFFIRMED 3!t- MODIFICATION !$ t-at t-e pe$a+t# c-ar/e o% t3o perce$t 425 per o$t- o$ t-e tota+ aou$t due, copou$ded o$t-+#, !" -ere*# reduced to a "tra!/-t t3e+1e perce$t 4(25 per a$$u "tart!$/ %ro Au/u"t 26, (=6. @!t- co"t" a/a!$"t t-e pet!t!o$er pet!t!o$er..
@ON t-ere are co$tractua+ a$d +e/a+ *a"e" %or t-e !po"!t!o$ o% t-e pe$a+t#, !$tere"t o$ t-e pe$a+t# a$d attor$e#:" %ee". G
I$ o*+!/at!o$" 3!t- a pe$a+ c+au"e, t-e pe$a+t# "-a++ "u*"t!tute t-e !$de$!t# %or daa/e" a$d t-e pa#e$t o% !$tere"t" !$ ca"e o% $o$?cop+!a$ce, !% t-ere !" $o "t!pu+at!o$ to t-e co$trar# co$trar#.. Ne1ert-e+e"", daa/e" "-a++ "-a++ *e pa!d !% t-e o*+!/or re%u"e" to pa# t-e pe$a+t# or ! " /u!+t# o% %raud !$ t-e %u+9++e$t o% t-e o*+!/at!o$.
TAN APPEALED APPEALED TO CA, a"8ed a"8ed %or t-e reduct!o$ reduct!o$ o% t-e pe$a+t!e" a$d c-ar/e" o$ -!" + oa$ o*+!/at!o$. ud/e$t appea+ed %ro !" -ere*# AFFIRMED.
!po"!t!o$ o% !$tere"t o$ o$etar# !$tere"t *ut $ot t-e c-ar/!$/ o% !$tere"t o$ pe$a+t#. Pe$a+t!e" "-ou+d $ot ear$ !$tere"t.
(. No a++e/ed a++e/ed part!a+ part!a+ or !rre/u+ar per%ora$ce. 2. Ho3e1er, t-e t-e appe++ate court od!9ed od!9ed t-e dec!"!o$ o% t-e tr!a+ court *# de+et!$/ exep+ar# daa/e" *ecau"e $ot proport!o$ate proport!o$ate to actua+ daa/e cau"ed *# t-e $o$? per%ora$ce o% t-e co$tract
$""%&"# @ON t-ere are co$tractua+ a$d +e/a+ *a"e" %or t-e !po"!t!o$ o% t-e pe$a+t#, !$tere"t o$ t-e pe$a+t# a$d attor$e#:" %ee". TAN !pute" !pute" error o$ o$ CA !$ $ot %u++# e+!!$at!$/ attor$e# attor$e# %ee" a$d !$ $ot reduc!$/ t-e pe$a+t!e" co$"!der!$/ t-at -e ade part!a+ pa#e$t" o$ t-e +oa$. A$d !% pe$a+t# !" to *e a3arded, TAN TAN a"8!$/ %or $o$? !po"!t!o$ o% !$tere"t o$ t-e "urc-ar/e" *ecau"e copou$d!$/ o% t-e"e are $ot !$c+uded ! $ pro!""or# $ote. No *a"!" !$ +a3 %or t-e c-ar/!$/ o% !$tere"t o$ t-e "urc-ar/e" %or t-e rea"o$ t-at t-e Ne3 C!1!+ Code !" de1o!d o% a$# pro1!"!o$ a++o3!$/ t-e !po"!t!o$ o% !$tere"t o$ "urc-ar/e". "urc-ar/e".
@ON !$tere"t a# accrue o$ t-e pe$a+t# or cope$"ator# !$tere"t 3!t-out 1!o+at!$/ ART (==> @!t-out preud!ce to t-e pro1!"!o$" o% Art!c+e 22(2, !$tere"t due a$d u$pa!d "-a++ $ot ear$ !$tere"t. !$tere"t. Ho3e1er, t-e co$tract!$/ co$tract!$/ part!e" a# a# *# "t!pu+at!o$ cap!ta+!e t-e !$tere"t due a$d u$pa!d, 3-!c- a" added pr!$c!pa+, "-a++ ear$ $e3 !$tere"t. TAN? No No +e/a+ *a"!" %or t-e !po"!t!o$ !po"!t!o$ o% !$tere"t o$ t-e pe$a+t# c-ar/e %or t-e rea"o$ t-at t-e + a3 o$+# a++o3"
@ON TAN ca$ 9+e reduct!o$ o% pe$a+t# due to ade part!a+ pa#e$t". Pet!t!o$er co$te$d" t-at reduct!o$ reduct!o$ o% t-e pe$a+t# !" u"t!9a*+e u$der ART (22=> T-e ud/e "-a++ eu!ta*+# reduce t-e pe$a+t# 3-e$ t-e pr!$c!pa+ o*+!/at!o$ -a" *ee$ part+# or !rre/u+ar+# cop+!ed 3!t- *# t-e de*tor de*tor.. E1e$ !% t-ere -a" *ee$ $o per%ora$ce, t-e pe$a+t# a# a+"o *e reduced *# t-e court" !% !t !" ! $!u!tou" or u$co$"c!o$a*+e.
'&(D CA DECISION AFFIRMED 3!t- MODIFICATION !$ t-at t-e pe$a+t# c-ar/e o% t3o perce$t 425 per o$t- o$ t-e tota+ aou$t due, copou$ded o$t-+#, !" -ere*# reduced to a "tra!/-t t3e+1e perce$t 4(25 per a$$u "tart!$/ %ro Au/u"t 26, (=6. @!t- co"t" a/a!$"t t-e pet!t!o$er pet!t!o$er..
@ON t-ere are co$tractua+ a$d +e/a+ *a"e" %or t-e !po"!t!o$ o% t-e pe$a+t#, !$tere"t o$ t-e pe$a+t# a$d attor$e#:" %ee". G I$ o*+!/at!o$" 3!t- a pe$a+ c+au"e, t-e pe$a+t# "-a++ "u*"t!tute t-e !$de$!t# %or daa/e" a$d t-e pa#e$t o% !$tere"t" !$ ca"e o% $o$?cop+!a$ce, !% t-ere !" $o "t!pu+at!o$ to t-e co$trar# co$trar#.. Ne1ert-e+e"", daa/e" "-a++ "-a++ *e pa!d !% t-e o*+!/or re%u"e" to pa# t-e pe$a+t# or ! " /u!+t# o% %raud !$ t-e %u+9++e$t o% t-e o*+!/at!o$.
!. T-e pe$a+t# a# *e e$%orced o$+# 3-e$ !t !" dea$da*+e !$ accorda$ce 3!t- t-e pro1!"!o$" o% t-!" Code. CASE AT BAR> pro!""or# $ote expre""ed t-e !po"!t!o$ o% *ot- !$tere"t a$d pe$a+t!e" !$ ca"e o% de%au+t o$ t-e part o% t-e pet!t!o$er !$ t-e t-e pa#e$t pa#e$t o% t-e "u*ect re"tructured re"tructured +oa$. PENALT< IN MAN< FORMS> !. I% t-e part!e" "t!pu+ate pe$a+t# apart o$etar# !$tere"t, t3o are d!ere$t a$d d!"t!$ct %ro eac- ot-er a$d a# *e dea$ded "eparate+#. !!. I% "t!pu+at!o$ a*out pa#e$t o% a$ add!t!o$a+ ! $tere"t rate parta8e" parta8e" o% t-e $ature o% a pe$a+t# c+au"e 3-!c- !" "a$ct!o$ed *# +a3>
Pe$a+t# c+au"e" ca$ *e !$ t-e %or o% pe$a+t# or cope$"ator# !$tere"t. !. T-u", t-e copou$d!$/ o% t-e pe$a+t# or cope$"ator# !$tere"t !" "a$ct!o$ed *# a$d a++o3ed pur"ua$t to t-e a*o1e?uoted pro1!"!o$ o% Art!c+e (== o% t-e Ne3 C!1!+ Code co$"!der!$/ t-at> (. T-ere !" a$ expre"" expre"" "t!pu+at!o$ !$ t-e pro!""or# $ote 4Ex-!*!t A5 per!tt!$/ t-e copou$d!$/ o% !$tere"t. a. t- para/rappara/rap- o% t-e t-e "a!d pro!""or# $ote pro1!de" t-at> A$# !$tere"t 3-!c- a# *e due !% $ot pa!d "-a++ *e added to t-e tota+ aou$t 3-e$ due a$d "-a++ *ecoe part t-ereo%, t-e 3-o+e aou$t to *ear !$tere"t at t-e ax!u rate a++o3ed *# +a3.. 2. T-ere%ore, a$# pe$a+t# pe$a+t# !$tere"t !$tere"t $ot pa!d, pa!d, 3-e$ 3-e$ due, due, "-a++ "-a++ ear$ t-e +e/a+ !$tere"t o% t3e+1e perce$t 4(25 per a$$u, !$ t-e a*"e$ce o% expre"" "t!pu+at!o$ o$ t-e "pec!9c rate o% !$tere"t, a" !$ t-e ca"e at *ar.
(. ART 220=> I% t-e o*+!/at!o$ co$"!"t" co$"!"t" !$ t-e pa#e$t pa#e$t o% a "u o% o$e#, a$d t-e de*tor !$cur" !$ de+a#, t-e !$de$!t# %or daa/e", t-ere *e!$/ $o "t!pu+at!o$ to t-e co$trar#, "-a++ *e t-e pa#e$t o% t-e !$tere"t a/reed upo$, a$d !$ t-e a*"e$ce o% "t!pu+at!o$, t-e +e/a+ !$tere"t, 3-!c- !" "!x per ce$t per a$$u.
ART 22(2> I$tere"t due "-a++ ear$ +e/a+ !$tere"t %ro t-e t!e !t !" ud!c!a++# dea$ded, a+t-ou/- t-e o*+!/at!o$ a# *e "!+e$t upo$ t-!" po!$t.
CASE AT BAR> Pe$a+t# c-ar/e o% 2 per o$t- *e/a$ to accrue %ro t-e t!e o% de%au+t *# t-e pet!t!o$er.
CASE AT BAR> !$tere"t *e/a$ to ru$ o$ t-e pe$a+t# !$tere"t upo$ t-e 9+!$/ o% t-e cop+a!$t !$ court *# CCP. CCP.
!. No dou*t pet!t!o$er !" +!a*+e %or *ot- t-e "t!pu+ated o$etar# ! $tere"t a$d t-e "t!pu+ated pe$a+t# c-ar/e.
!. He$ce, t-e court" d!d $ot err !$ ru+!$/ t-at t-e pet!t!o$er !" *ou$d to pa# t-e !$tere"t o$ t-e tota+ aou$t o% t-e pr!$c!pa+, t-e o$etar# !$tere"t a$d t-e pe$a+t# !$tere"t.
(. PENALT< PENALT< CHARE pe$a+t# or cope$"ator# cope$"ator# !$tere"t. !$tere"t.
@ON !$tere"t a# accrue o$ t-e pe$a+t# or cope$"ator# !$tere"t 3!t-out 1!o+at!$/ ART (==.
@ON TAN ca$ 9+e reduct!o$ o% pe$a+t# due to ade part!a+ pa#e$t". G
RED;CED TO 2 RED;CTION> !. PARTIAL PA !. "urc-ar/e 3a" $ot "u"pe$ded.
Ru$$!$/ o% t-e !$tere"t a$d
!!. CCP correct+# a""erted t-at !t 3a" t-e pr!ar# re"po$"!*!+!t# o% pet!t!o$er to !$%or t-e Co!""!o$ o$ Aud!t o% -!" app+!cat!o$ %or co$do$at!o$ o% !$tere"t a$d "urc-ar/e.
Ar)ood $ndustries vs. Consun*i
Art. 1+6. No interest s,all -e due ),en not epressl stipulated in )riting. AR0D $ND%"TR$&" $NC. vs. D.3. Consun*i $nc. !ACT"# Pet!t!o$er a$d re"po$de$t, a" o3$er a$d co$tractor, re"pect!1e+# e$tered !$to a$ A/reee$t %or t-e co$"truct!o$ o% pet!t!o$er:" co$do!$!u. De"p!te t-e cop+et!o$ o% t-e proect, pet!t!o$er 3a" $ot a*+e to pa# re"po$de$t t-e %u++ aou$t a$d +e%t a *a+a$ce. Repeated dea$d" 3ere +e%t u$-eeded propt!$/ re"po$de$t to 9+e a c!1!+ ca"e a/a!$"t pet!t!o$er, 3!t- a pra#er ao$/ ot-er" t-at t-e %u++ aou$t *e pa!d 3!t- !$tere"t o% 2 per o$t-, %ro No1. (==0 up to t-e t!e o% pa#e$t. RTC ru+ed !$ %a1or o% re"po$de$t. Pet!t!o$er appea+ed to t-e CA, part!cu+ar+# oppo"!$/ t-e !po"!t!o$ o% t-e 2 !$tere"t. T-e CA ru+ed !$ %a1or o% t-e 2 !$tere"t. Pet!t!o$er:" co$te$t!o$? T-e !po"!t!o$ o% t-e !$tere"t !" 3!t-out *a"!" *ecau"e 4(5 a+t-ou/- !t 3a" 3r!tte$ !$ t-e A/reee$t, !t 3a" $ot e$t!o$ed *# t-e RTC !$ t-e d!"po"!t!1e port!o$ a$d 425 t-e !$tere"t doe" $ot app+# to t-e re"po$de$t:" c+a! *ut to t-e o$t-+# pro/re"" *!++!$/.
$""%&# @ON t-e RTC a$d Ca !" correct !$ !po"!$/ a 2 per o$t- !$tere"t o$ t-e o$etar# a3ard or t-e *a+a$ce o% t-e co$tract pr!ce. '&(D#
re%u"ed to pa# !$ %u++, t-ere 3a" de+a# o$ t-e part o% pet!t!o$er. De+a# !$ t-e per%ora$ce o% a$ o*+!/at!o$ !" +oo8ed upo$ 3!td!"%a1or *ecau"e, 3-e$ a part# to a co$tract !$cur" de+a#, t-e ot-er part# 3-o per%or" -!" part o% t-e co$tract "uer" daa/e" t-ere*#. O*1!ou"+#, re"po$de$t "uered daa/e" *rou/-t a*out *# t-e %a!+ure o% pet!t!o$er to cop+# 3!t- !t" o*+!/at!o$ o$ t!e. A$d, "a$" e+a*orat!o$ o% t-e atter at -a$d, daa/e" ta8e t-e %or o% !$tere"t. Accord!$/+#, t-e appropr!ate ea"ure o% daa/e" !$ t-!" ca"e !" t-e pa#e$t o% !$tere"t at t-e rate a/reed upo$, 3-!c- !" 2 !$tere"t %or e1er# o$t- o% de+a#. It u"t *e $oted t-at t-e A/reee$t pro1!ded t-e co$tractor, re"po$de$t !$ t-!" ca"e, t3o opt!o$" !$ ca"e o% de+a# !$ o$t-+# pa#e$t", to 3!t> a5 "u"pe$d 3or8 o$ t-e proect u$t!+ pa#e$t !" re!tted *# t-e o3$er or *5 co$t!$ue t-e 3or8 *ut t-e o3$er "-a++ *e reu!red to pa# !$tere"t at a rate o% t3o perce$t 425 per o$t- or a %ract!o$ t-ereo%. E1!de$t+#, re"po$de$t c-o"e t-e +atter opt!o$, a" t-e co$do!$!u proect 3a" !$ %act a+read# cop+eted. T-e pa#e$t o% t-e 2 o$t-+# !$tere"t, t-ere%ore, ca$$ot *e ett!"o$ed o1er*oard. S!$ce t-e A/reee$t "ta$d" a" t-e + a3 *et3ee$ t-e part!e", t-!" Court ca$$ot !/$ore t-e ex!"te$ce o% "uc- pro1!"!o$ pro1!d!$/ %or a pe$a+t# %or e1er# o$t-:" de+a#. Facta +e/e %acu$t !$ter parte". Ne!t-er ca$ pet!t!o$er !pu/$ t-e A/reee$t to 3-!c- !t 3!++!$/+# /a1e !t" co$"e$t. Fro t-e oe$t pet!t!o$er /a1e !t" co$"e$t, !t 3a" *ou$d $ot o$+# to %u+9++ 3-at 3a" expre""+# "t!pu+ated !$ t-e A/reee$t *ut a+"o a++ t-e co$"eue$ce" 3-!c-, accord!$/ to t-e!r $ature, a# *e !$ 8eep!$/ 3!t- /ood %a!t-, u"a/e a$d + a3. Pet!t!o$er:" attept to !t!/ate !t" +!a*!+!t# to re"po$de$t "-ou+d t-u" %a!+.
A" a +a"t?d!tc- eort to e1ade +!a*!+!t#, pet!t!o$er ar/ue" t-at t-e aou$t o% P=2,'&'.76 c+a!ed *# re"po$de$t a$d +ater a3arded *# t-e +o3er court" doe" $ot re%er to o$t-+# pro/re"" *!++!$/", t-e de+a#ed pa#e$t o% 3-!c- 3ou+d ear$ !$tere"t at 2 per o$t-. Pet!t!o$er appear" co$%u"ed *# a "ea$t!c" pro*+e. Mo$t-+# pro/re"" *!++!$/" certa!$+# %or part o% t-e co$tract pr!ce. I% t-e aou$t c+a!ed *# re"po$de$t !" $ot t-e o$t-+# pro/re"" *!++!$/" pro1!ded !$ t-e co$tract, 3-at t-e$ doe" "uc- aou$t repre"e$tK Pet!t!o$er -a" $ot !$ po!$t o% %act co$1!$c!$/+# "upp+!ed a$ a$"3er to t-!" uer#. Ne!t-er -a" pet!t!o$er "-o3$ a$# eort to c+ar!%# t-e ea$!$/ o% o$t-+# pro/re"" *!++!$/" to "upport !t" po"!t!o$. T-!" +ea1e" u" $o c-o!ce *ut to a/ree 3!t- re"po$de$t t-at t-e p-ra"e o$t-+# pro/re"" *!++!$/" re%er" to a port!o$ o% t-e co$tract pr!ce pa#a*+e *# t-e o3$er 4pet!t!o$er5 o% t-e proect to t-e co$tractor 4re"po$de$t5 *a"ed o$ t-e perce$ta/e o% cop+et!o$ o% t-e proect or o$ 3or8 accop+!"-ed at a part!cu+ar "ta/e. It re%er" to t-at port!o$ o% t-e co$tract pr!ce "t!++ to *e pa!d a" 3or8 pro/re""e", a%ter t-e do3$pa#e$t !" ade. T-!" de9$!t!o$ !", !$deed, $ot 3!t-out *a"!". Art!c+e" .02 a$d .0& o% t-e A/reee$t, 3-!c- re"pect!1e+# pro1!de" t-at t-e 4*5a+a$ce "-a++ *e pa!d !$ o$t-+# pro/re"" pa#e$t" *a"ed o$ actua+ 1a+ue o% t-e 3or8 accop+!"-ed a$d t-at t-e pro/re"" pa#e$t" "-a++ *e reduced *# a port!o$ o% t-e do3$pa#e$t ade *# t-e O@NER corre"po$d!$/ to t-e 1a+ue o% t-e 3or8 cop+eted /!1e "e$"e to re"po$de$t:" !$terpretat!o$ o% o$t-+# pro/re"" *!++!$/".
4o-ie Rose vs. !rias vs. Diego5"ison !rias vs "an Diego5"ison
G.R. No. 122
April 7 29
!acts Pet!t!o$er !" t-e o3$er o% a -ou"e a$d +ot !$ A#a+a A+a*a$/. Pet!t!o$er a$d Dra. F+ora Sa$ D!e/o?S!"o$ 4Re"po$de$t5 e$tered !$to a Meora$du o% A/reee$t 4MOA5 o1er t-e c!ted propert# 3!t- t-e %o++o3!$/ ter"> T-e +a$d !" to *e "o+d %or P .' !++!o$. Pet!t!o$er 3!++ rece!1e P& !++!o$ %ro re"po$de$t a" do3$pa#e$t. I$ +!/-t o% t-e do3$pa#e$t, re"po$de$t -ad o$t-" 4("t5 to $ot!%# t-e Pet!t!o$er o% -er !$te$t!o$ to purc-a"e t-e +a$d. Ho3e1er, t-e *a+a$ce !" to *e pa!d 3!t-!$ a$ot-er o$t-". Pr!or to t-e 9r"t "!x o$t-", t-e Pet!t!o$er a# "t!++ oer t-e c!ted +a$d to ot-er per"o$" pro1!ded t-at t-e P& !++!o$ do3$pa#e$t "-a++ *e retur$ed to t-e Re"po$de$t !$c+ud!$/ !$tere"t *a"ed o$ pre1a!+!$/ copou$ded *a$8 !$tere"t. Ne1ert-e+e"", !$ ca"e t-ere are $o ot-er *u#er" 3!t-!$ t-e 9r"t o$t-", $o !$tere"t "-a++ *e c-ar/ed o$ t-e P& !++!o$. Ho3e1er, !$ t-e e1e$t t-at o$ t-e t- o$t- t-e Re"po$de$t doe" $ot purc-a"e t-e +a$d, t-e Pet!t!o$er -a" a per!od o% a$ot-er o$t-" 42$d5 3!t-!$ 3-!c- to pa# t-e "u o% P& !++!o$ 3!t- ! $tere"t %or t-e +a"t "!x o$t-" o$+#. T-e do3$pa#e$t "-a++ *e treated a" +oa$ /ra$ted *# t-e Re"po$de$t. Pet!t!o$er rece!1ed %ro Re"po$de$t P2 !++!o$ ! $ ca"- a$d P( !++!o$ !$ a po"t?dated c-ec8 3-!c- 3a" "u*"eue$t+# co$"!dered a" "ta+e. T-ere%ore, o$+# P2 !++!o$ 3a" rece!1ed a" do3$pa#e$t.
Be%ore t-e c-ec8 *ecae "ta+e, Pet!t!o$er /a1e Re"po$de$t t-e TCT a$d t-e Deed o% A*"o+ute Sa+e o% t-e +a$d. Su*"eue$t+#, Re"po$de$t dec!ded $ot to purc-a"e t-e propert# a$d $ot!9ed Pet!t!o$er o% t-!" re!$d!$/ t-e +atter t-at t-e aou$t o% P2 !++!o$ "-ou+d *e co$"!dered a" a +oa$ pa#a*+e 3!t-!$ "!x o$t-" a" "t!pu+ated !$ t-e MOA 3!t!$tere"t coputed %ro "uc- $ot!9cat!o$. Pet!t!o$er "u*"eue$t+# %a!+ed to retur$ t-e P2 !++!o$ pe"o". CA ru+ed t-at t-e P2 !++!o$ do3$pa#e$t "-a++ !$c+ude !$tere"t coputed at t-e t!e t-e d!"puted aou$t 3a" co$"!dered a +oa$. T-u", t-!" pet!t!o$.
$ssue# @-et-er or $ot t-e !$tere"t "-ou+d *e +!!ted to t-e ("t "!x o$t-" a" co$ta!$ed !$ t-e MOAK
Ruling# No. SC ru+ed !$ %a1our o% Re"po$de$t. T-e SC op!$ed t-at !% t-e ter" o% a$ a/reee$t are c+ear a$d +ea1e $o dou*t a" to t-e !$te$t!o$ o% t-e co$tract!$/ part!e", t-e +!tera+ ea$!$/ o% !t" "t!pu+at!o$" "-a++ pre1a!+. It !" %urt-er reu!red t-at t-e 1ar!ou" "t!pu+at!o$" o% a co$tract "-a++ *e !$terpreted to/et-er. I$ t-!" ca"e, t-e p-ra"e %or t-e +a"t "!x o$t-" o$+# "-ou+d *e ta8e$ !$ t-e co$text o% t-e e$t!re a/reee$t. T-e MOA "pea8" o% 2 per!od" o% "!x o$t-" eac-. T-e ("t "!x?o$t-" 3a" /!1e$ to Re"po$de$t to a8e up -er !$d 3-et-er or $ot to purc-a"e Pet!t!o$er" propert#. T-e 2$d "!x?o$t-" 3a" /!1e$ to Pet!t!o$er to pa# t-e P2 !++!o$ +oa$ 4do3$pa#e$t5 !$ t-e e1e$t t-at Re"po$de$t
dec!ded $ot to *u# t-e propert# !$ 3-!c- ca"e !$tere"t 3!++ *e c-ar/ed %or t-e +a"t "!x o$t-" o$+#, re%err!$/ to t-e 2$d "!x?o$t- per!od. T-!" ea$" t-at $o !$tere"t 3!++ *e c-ar/ed %or t-e ("t "!x? o$t-" 3-!+e Re"po$de$t co$tep+at!$/ o$ 3-et-er to *u# t-e propert#, *ut o$+# %or t-e 2$d "!x?o$t-" a%ter Re"po$de$t -ad dec!ded $ot to *u# t-e propert#. T-!" !" t-e ea$!$/ o% t-e p-ra"e %or t-e +a"t "!x o$t-" o$+#. Certa!$+#, t-ere !" $ot-!$/ !$ t-e!r a/reee$t t-at "u//e"t" t-at !$tere"t 3!++ *e c-ar/ed %or o$t-" o$+# e1e$ !% !t ta8e" de%e$da$t?appe++a$t a$ eter$!t# to pa# t-e +oa$ T-!" doe" NOT ea$ t-at !$tere"t 3!++ $o +o$/er *e c-ar/ed a%ter t-e 2$d "!x?o$t- per!od "!$ce "uc- "t!pu+at!o$ 3a" ade o$ t-e + o/!ca+ a$d rea"o$a*+e expectat!o$ t-at "ucaou$t 3ou+d *e pa!d 3!t-!$ t-e date "t!pu+ated. T-ere%ore, t-e o$etar# !$tere"t %or t-e +a"t o$t-" co$t!$ued to accrue u$t!+ actua+ pa#e$t o% t-e +oa$ed aou$t. It -a" *ee$ -e+d t-at %or a de*tor to co$t!$ue !$ po""e""!o$ o% t-e pr!$c!pa+ o% t-e +oa$ a$d to co$t!$ue to u"e t-e "ae a%ter atur!t# o% t-e +oa$ 3!t-out pa#e$t o% t-e o$etar# !$tere"t, 3ou+d co$"t!tute u$u"t e$r!c-e$t o$ t-e part o% t-e de*tor at t-e expe$"e o% t-e cred!tor.
Cu un*ieng vs. 3a-alacat C%5%N:$&NG ;. 3A4A(ACAT
!acts# Cu ;$!e$/ e H! o" +oa$ed Ma*a+acat (& 8, %or "ecur!t#, Ma*a+acat ort/a/ed !t" propert#. Ma*a+acat %a!+ed to pa#, *ut Cu ;$!e$/ exte$ded t-e pa#e$t. Cu ;$!e$/ 9+ed a ca"e a/a!$"t Ma*a+acat %or %orec+o"ure o% propert# a$d pa#e$t o% attor$e#" %ee". It
a+"o c+a!" !$tere"t o1er !$tere"t. Ma*a+acat !$"!"ted t-at t-e a/reee$t %or t-e exte$"!o$ o% t-e t!e o% pa#e$t -ad t-e eect o% a*ro/at!$/ t-e "t!pu+at!o$ o% t-e or!/!$a+ co$tract 3!t- re"pect to t-e acce+erat!o$ o% t-e atur!t# o% t-e de*t *# $o$?cop+!a$ce 3!t- t-e ter" o% t-e ort/a/e. T-e !""ue re+ated o$ t-!" ca"e !" t-e !$tere"t o1er !$tere"t.
$ssue# @oN Cu?;$!e$/ !" e$t!t+ed to !$tere"t o1er !$tere"t. Ru+!$/> It !" 3e++ "ett+ed t-at, u$der art!c+e ((0= o% t-e C!1!+ Code, a" 3e++ a" u$der "ect!o$ o% t-e ;"ur# La3 4Act No. 25, t-e part!e" a# "t!pu+ate t-at !$tere"t "-a++ *e copou$ded) a$d re"t" %or t-e coputat!o$ o% copou$d !$tere"t ca$ certa!$+# *e ade o$t-+#, a" 3e++ a" uarter+#, "e!a$$ua++#, or a$$ua++#. But !$ t-e a*"e$ce o% expre"" "t!pu+at!o$ %or t-e accuu+at!o$ o% copou$d !$tere"t, $o !$tere"t ca$ *e co++ected upo$ !$tere"t u$t!+ t-e de*t !" ud!c!a++# c+a!ed, a$d t-e$ t-e rate at 3-!c- !$tere"t upo$ accrued !$tere"t u"t *e coputed !" 9xed at per ce$t per a$$u. I$ t-!" ca"e, t-ere 3a" $o copou$d !$tere"t !$ t-e a/reee$t.
Nacar vs. Galler !ra
A%ter t-e 9$a+!t# o% t-e SC dec!"!o$, Nacar 9+ed a ot!o$ *e%ore t-e LA %or recoputat!o$ a" -e a++e/ed t-at -!" *ac83a/e" "-ou+d *e coputed %ro t-e t!e o% -!" !++e/a+ d!"!""a+ 4a$uar# 2', (==75 u$t!+ t-e 9$a+!t# o% t-e SC dec!"!o$ 4Ma# 27, 20025 3!t- !$tere"t. T-e LA de$!ed t-e ot!o$ a" -e ru+ed t-at t-e rec8o$!$/ po!$t o% t-e coputat!o$ "-ou+d o$+# *e %ro t-e t!e Nacar 3a" !++e/a++# d!"!""ed 4a$uar# 2', (==75 u$t!+ t-e dec!"!o$ o% t-e L A 4Octo*er (, (==65. T-e LA rea"o$ed t-at t-e "a!d date "-ou+d *e t-e rec8o$!$/ po!$t *ecau"e Nacar d!d $ot appea+ -e$ce a" to -!, t-at dec!"!o$ *ecae 9$a+ a$d executor#.
$""%&# @-et-er or $ot t-e La*or Ar*!ter !" correct. '&(D# No. T-ere are t3o part" o% a dec!"!o$ 3-e$ !t coe" to !++e/a+ d!"!""a+ ca"e" 4re%err!$/ to ca"e" 3-ere t-e d!"!""ed ep+o#ee 3!$", or +o"e" *ut 3!$" o$ appea+5. T-e 9r"t part !" t-e ru+!$/ t-at t-e ep+o#ee 3a" !++ e/a++# d!"!""ed. T-!" !" !ed!ate+# 9$a+ e1e$ !% t-e ep+o#er appea+" G *ut 3!++ *e re1er"ed !% ep+o#er 3!$" o$ appea+. T-e "eco$d part !" t-e ru+!$/ o$ t-e a3ard o% *ac83a/e" a$dor "eparat!o$ pa#. For *ac83a/e", !t 3!++ *e coputed %ro t-e date o% !++e/a+ d!"!""a+ u$t!+ t-e date o% t-e dec!"!o$ o% t-e La*or Ar*!ter. But !% t-e ep+o#er appea+", t-e$ t-e e$d date "-a++ *e exte$ded u$t!+ t-e da# 3-e$ t-e appe++ate court:" dec!"!o$ "-a++ *ecoe 9$a+. He$ce, a" a co$"eue$ce, t-e +!a*!+!t# o% t-e ep+o#er, !% -e +o"e" o$ appea+, 3!++ !$crea"e G t-!" !" u"t *ut a r!"8 t-at t-e ep+o#er ca$$ot a1o!d 3-e$ !t co$t!$ued to "ee8 recour"e" a/a!$"t t-e La*or Ar*!ter:" dec!"!o$. T-!" !" a+"o !$ accorda$ce 3!tArt!c+e 27= o% t-e La*or Code. A$e$t t-e !""ue o% a3ard o% !$tere"t !$ t-e %or o% actua+ or cope$"ator# daa/e", t-e Supree Court ru+ed t-at t-e o+d ca"e o% Ea"ter$ S-!pp!$/ L!$e" 1" CA !" a+read# od!9ed *# t-e prou+/at!o$ o% t-e Ba$/8o Se$tra+ $/ P!+!p!$a" Mo$etar# Board Re"o+ut!o$ No. 7= 3-!c- +o3ered t-e +e/a+
rate o% !$tere"t %ro (2 to . Spec!9ca++#, t-e ru+e" o$ !$tere"t are $o3 a" %o++o3"> (. Mo$etar# O*+!/at!o$" ex. Loa$"> a. I% "t!pu+ated !$ 3r!t!$/> a.(. "-a++ ru$ %ro date o% ud!c!a+ dea$d 49+!$/ o% t-e ca"e5 a.2. rate o% !$tere"t "-a++ *e t-at aou$t "t!pu+ated *. I% $ot "t!pu+ated !$ 3r!t!$/ *.(. "-a++ ru$ %ro date o% de%au+t 4e!t-er %a!+ure to pa# upo$ extra?ud!c!a+ dea$d or upo$ ud!c!a+ dea$d 3-!c-e1er !" appropr!ate a$d "u*ect to t-e pro1!"!o$" o% Art!c+e ((= o% t-e C!1!+ Code5 *.2. rate o% !$tere"t "-a++ *e per a$$u 2.
No$?Mo$etar# O*+!/at!o$" 4"uc- a" t-e ca"e at *ar5
a. I% a+read# +!u!dated, rate o% !$tere"t "-a++ *e per a$$u, dea$da*+e %ro date o% ud!c!a+ or extra?ud!c!a+ dea$d 4Art. ((=, C!1!+ Code5 *. I% u$+!u!dated, $o !$tere"t Except> @-e$ +ater o$ e"ta*+!"-ed 3!t- certa!$t#. I$tere"t "-a++ "t!++ *e per a$$u dea$da*+e %ro t-e date o% ud/e$t *ecau"e "uc- o$ "uc- date, !t !" a+read# deeed t-at t-e aou$t o% daa/e" ! " a+read# a"certa!$ed. &. Copou$ded I$tere"t G T-!" !" app+!ca*+e to *ot- o$etar# a$d $o$?o$etar# o*+!/at!o$" G per a$$u coputed a/a!$"t a3ard o% daa/e" 4!$tere"t5 /ra$ted *# t-e court. To *e coputed %ro t-e
date 3-e$ t-e court:" dec!"!o$ *ecoe" 9$a+ a$d executor# u$t!+ t-e a3ard !" %u++# "at!"9ed *# t-e +o"!$/ part#. '. T-e per a$$u rate o% +e/a+ !$tere"t "-a++ *e app+!ed pro"pect!1e+#> G F!$a+ a$d executor# ud/e$t" a3ard!$/ daa/e" pr!or to u+# (, 20(& "-a++ app+# t-e (2 rate) G F!$a+ a$d executor# ud/e$t" a3ard!$/ daa/e" o$ or a%ter u+# (, 20(& "-a++ app+# t-e (2 rate %or u$pa!d o*+!/at!o$" u$t!+ u$e &0, 20(&) u$pa!d o*+!/at!o$" 3!tre"pect to "a!d ud/e$t" o$ or a%ter u+# (, 20(& "-a++ "t!++ !$cur t-e rate.
&A"T&RN A""%RANC& AND "%R&T= CRPRAT$N >&A"C? vs. Court of Appeals
!acts# O$ Apr!+ =, (=6(, pr!1ate re"po$de$t !ce$te Ta$ !$"ured -!" *u!+d!$/ !$ Dua/uete C!t# a/a!$"t 9re 3!t- pet!t!o$er Ea"ter$ A""ura$ce a$d Suret# Corporat!o$ 4EASCO5 %or P20,000.00. O$ u$e 2, (=6(, t-e *u!+d!$/ 3a" de"tro#ed *# 9re. A" -!" c+a! %or !$de$!t# 3a" re%u"ed, pr!1ate re"po$de$t 9+ed a cop+a!$t %or *reac- o% co$tract 3!t- daa/e" a/a!$"t pet!t!o$er. T-e RTC Court, dec!ded !$ %a1our o% !ce$te Ta$. I$ !t" ru+!$/, t-e RTC court !po"ed t-e rate o% !$tere"t at (2 per a$$u, a$d dec!ded t-at EASCO to pa# !ed!ate+# to !ce$te Ta$ t-e u$pa!d *a+a$ce o% !$tere"t o% t-e pr!$c!pa+ aou$t o% P20,000.00 eu!1a+e$t to per a$$u %ro u$e 2, (=6( to Septe*er &0,(=='.
Pet!t!o$er EASCO appea+ed to t-e Court o% Appea+", 3-!c-, o$ u+# &0, (==&, aJred t-e dec!"!o$ o% t-e tr!a+ court. T-e CA, o$ t-e aut-or!t# o% pr!or ca"e, Ea"ter$ S-!pp!$/ L!$e", I$c. 1. Court o% Appea+",t-at t-e !$tere"t rate o$ t-e aou$t due "-ou+d *e per a$$u %ro u$e 2, (=6( to Au/u"t 2', (==&, a$d (2 per a$$u *e/!$$!$/ Au/u"t 2, (==& u$t!+ t-e o$e# ud/e$t !" pa!d. T-erea%ter, pet!t!o$er EASCO te$dered pa#e$t o% t-e o$e# ud/e$t !$ t-e aou$t o% P20,000.00 p+u" !$tere"t o% per a$$u %ro u$e 2, (=6( to u+# &0, (==&. Ho3e1er, pr!1ate re"po$de$t re%u"ed to accept pa#e$t o$ t-e /rou$d t-at t-e app+!ca*+e +e/a+ rate o% !$tere"t 3a" (2 per a$$u. Su*"eue$t+#, pr!1ate re"po$de$t *rou/-t t-e atter to t-e I$"ura$ce Co!""!o$. T-e$ !$, (==, t-e part!e" a/reed *e%ore t-e -ear!$/ oJcer o% t-e co!""!o$ t-at t-e !$tere"t "-ou+d *e coputed %ro u$e 2, (=6( to Septe*er &0, (=='. Pet!t!o$er 3ou+d 9+e 3!t- t-e tr!a+ court a ot!o$ to 9x t-e +e/a+ rate o% !$tere"t attac-!$/ t-ereto a c-ec8 !$ t-e aou$t o% P20,000.00 3!t !$tere"t per a$$u. I$ !t" appea+ EASCO to t-e SC, !t co$te$ded t-at t-e CA 3ro$/%u++# app+!ed t-e a%orec!ted para/rap- & o% t-e "u//e"ted ru+e" o% t-u* %or %uture /u!da$ce a" %oru+ated !$ Ea"ter$ S-!pp!$/ L!$e", I$c. 1. Court o% Appea+", a$d u$+a3%u++# !/$ored or d!"re/arded t-e a/reed cut?o date %or t-e pa#e$t o% t-e +e/a+ rate.
$ssue# @-e$ t-e ud/e$t o% t-e court a3ard!$/ a "u o% o$e# *ecoe" 9$a+ a$d executor#3-at !" t-e rate to *e !po"edK 'eld# Pet!t!o$er" co$te$t!o$" are 3!t-out er!t. T-e pr!or Ea"ter$ S-!pp!$/ L!$e", I$c. 1. Court o% Appea+", 3a" -e+d>
I. @-e$ a$ o*+!/at!o$, re/ard+e"" o% !t" "ource, !.e., +a3, co$tract", ua"!?co$tract", de+!ct" or ua"!?de+!ct", !" *reac-ed, t-e co$tra1e$er ca$ *e -e+d +!a*+e %or daa/e". T-e pro1!"!o$" u$der Daa/e" o% t-e C!1!+ Code /o1er$ !$ deter!$!$/ t-e ea"ure o% reco1era*+e daa/e". II. @!t- re/ard part!cu+ar+# to a$ a3ard o% !$tere"t !$ t-e co$cept o% actua+ a$d cope$"ator# daa/e", t-e rate o% !$tere"t, a" 3e++ a" t-e accrua+ t-ereo%, !" !po"ed, a" %o++o3"> Par. &> @-e$ t-e ud/e$t o% t-e court a3ard!$/ a "u o% o$e# *ecoe" 9$a+ a$d executor#, t-e rate o% +e/a+ !$tere"t, 3-et-er t-e ca"e %a++" u$der para/rap- ( or para/rap- 2, a*o1e, "-a++ *e (2 per a$$u %ro "uc9$a+!t# u$t!+ !t" "at!"%act!o$, t-!" !$ter! per!od *e!$/ deeed to *e *# t-e$ a$ eu!1a+e$t to a %or*eara$ce o% cred!t. ;$ue"t!o$a*+#, t-!" ca"e %a++" u$der t-e ru+e "tated !$ para/rap- &. T-e ue"t!o$ !" 3-et-er t-!" ru+e ca$ *e app+!ed to t-!" ca"e. T-e pr!or Ea"ter$ S-!pp!$/ L!$e", ca"e. d!d $ot +a# do3$ a$# $e3 ru+e" *ecau"e !t 3a" u"t a a copre-e$"!1e "uar# o% ex!"t!$/ ru+e" o$ t-e coputat!o$ o% +e/a+ !$tere"t. A" to t-e cut?o date %or t-e pa#e$t o% +e/a+ !$tere"t> T-e tr!a+ court" 9$d!$/ o$ t-!" po!$t !" *!$d!$/. He$ce, t-e pa#e$t o% (2 +e/a+ !$tere"t per a$$u "-ou+d coe$ce %ro Au/u"t 2, (==&, t-e date t-e dec!"!o$ o% t-e tr!a+ court *ecae 9$a+, up to Septe*er &0, (==', t-e a/reed cut?o? date %or t-e pa#e$t o% +e/a+ !$tere"t. T-e dec!"!o$ o% t-e CA !" aJred.
&astern ",ipping (ines $nc. v CA >Credit Transactions? G.R. No. +9712 :ul 12 1++7
!ACT"# T-!" !" a$ act!o$ a/a!$"t de%e$da$t" "-!pp!$/ copa$#, arra"tre operator a$d *ro8er?%or3arder %or daa/e" "u"ta!$ed *# a "-!pe$t 3-!+e !$ de%e$da$t" cu"tod#, 9+ed *# t-e !$"urer?"u*ro/ee 3-o pa!d t-e co$"!/$ee t-e 1a+ue o% "uc- + o""e"daa/e". t-e +o""e"daa/e" 3ere "u"ta!$ed 3-!+e !$ t-e re"pect!1e a$dor "ucce""!1e cu"tod# a$d po""e""!o$ o% de%e$da$t" carr!er 4Ea"ter$5, arra"tre operator 4Metro Port5 a$d *ro8er 4A++!ed Bro8era/e5. A" a co$"eue$ce o% t-e +o""e" "u"ta!$ed, p+a!$t! 3a" cope++ed to pa# t-e co$"!/$ee P(=,0&2.= u$der t-e a%ore"tated ar!$e !$"ura$ce po+!c#, "o t-at !t *ecae "u*ro/ated to a++ t-e r!/-t" o% act!o$ o% "a!d co$"!/$ee a/a!$"t de%e$da$t". DECISION OF LO@ER CO;RTS> Q tr!a+ court> ordered pa#e$t o% daa/e", o!$t+# a$d "e1era++# Q CA> aJred tr!a+ court.
$""%&" AND R%($NG# 4a5 3-et-er or $ot a c+a! %or daa/e "u"ta!$ed o$ a "-!pe$t o% /ood" ca$ *e a "o+!dar#, or o!$t a$d "e1era+, +!a*!+!t# o% t-e coo$ carr!er, t-e arra"tre operator a$d t-e cu"to" *ro8er)
T-e coo$ carr!er" dut# to o*"er1e t-e reu!"!te d!+!/e$ce !$ t-e "-!pe$t o% /ood" +a"t" %ro t-e t!e t-e art!c+e" are "urre$dered to or u$co$d!t!o$a++# p+aced !$ t-e po""e""!o$ o%, a$d rece!1ed *#, t-e carr!er %or tra$"portat!o$ u$t!+ de+!1ered to, or u$t!+ t-e +ap"e o% a rea"o$a*+e t!e %or t-e!r accepta$ce *#, t-e per"o$ e$t!t+ed to rece!1e t-e 4Art". (7&?(7&6, C!1!+ Code) a$o$ 1". Court o% Appea+", (( SCRA ') u! Ba! 1". Do++ar Stea"-!p L!$e", 2 P-!+. 6&5. @-e$ t-e /ood" "-!pped e!t-er are +o"t or arr!1e !$ daa/ed co$d!t!o$, a pre"upt!o$ ar!"e" a/a!$"t t-e carr!er o% !t" %a!+ure to o*"er1e t-at d!+!/e$ce, a$d t-ere $eed $ot *e a$ expre"" 9$d!$/ o% $e/+!/e$ce to -o+d !t +!a*+e. 4*5 3-et-er t-e pa#e$t o% +e/a+ !$tere"t o$ a$ a3ard %or +o"" or daa/e !" to *e coputed %ro t-e t!e t-e cop+a!$t !" 9+ed or %ro t-e date t-e dec!"!o$ appea+ed %ro !" re$dered) a$d FOLLO@ THESE ER< IMPORTANT R;LES 4;IDANCE B< THE S;PREME CO;RT5 I. @-e$ a$ o*+!/at!o$, re/ard+e"" o% !t" "ource, !.e., +a3, co$tract", ua"!?co$tract", de+!ct" or ua"!?de+!ct" !" *reac-ed, t-e co$tra1e$or ca$ *e -e+d +!a*+e %or daa/e". T-e pro1!"!o$" u$der T!t+e III o$ Daa/e" o% t-e C!1!+ Code /o1er$ !$ deter!$!$/ t-e ea"ure o% reco1era*+e daa/e".
II. @!t- re/ard part!cu+ar+# to a$ a3ard o% !$tere"t !$ t-e co$cept o% actua+ a$d cope$"ator# daa/e", t-e rate o% !$tere"t, a" 3e++ a" t-e accrua+ t-ereo%, !" !po"ed, a" %o++o3"> (. @-e$ t-e o*+!/at!o$ !" *reac-ed, a$d !t co$"!"t" !$ t-e pa#e$t o% a "u o% o$e#, !.e., a +oa$ or %or*eara$ce o% o$e#, t-e !$tere"t due "-ou+d *e t-at 3-!c- a# -a1e *ee$
"t!pu+ated !$ 3r!t!$/. Furt-erore, t-e !$tere"t due "-a++ !t"e+% ear$ +e/a+ !$tere"t %ro t-e t!e !t !" ud!c!a++# dea$ded. I$ t-e a*"e$ce o% "t!pu+at!o$, t-e rate o% !$tere"t "-a++ *e (2 per a$$u to *e coputed %ro de%au+t, !.e., %ro ud!c!a+ or extraud!c!a+ dea$d u$der a$d "u*ect to t-e pro1!"!o$" o% Art!c+e ((= o% t-e C!1!+ Code. 2. @-e$ a$ o*+! /at!o$, $ot co$"t!tut!$/ a +oa$ or %or*eara$ce o% o$e#, !" *reac-ed, a$ !$tere"t o$ t-e aou$t o% daa/e" a3arded a# *e !po"ed at t-e d!"cret!o$ o% t-e court at t-e rate o% per a$$u. No !$tere"t, -o3e1er, "-a++ *e adud/ed o$ u$+!u!dated c+a!" or daa/e" except 3-e$ or u$t!+ t-e dea$d ca$ *e e"ta*+!"-ed 3!t- rea"o$a*+e certa!$t#. Accord!$/+#, 3-ere t-e dea$d !" e"ta*+!"-ed 3!trea"o$a*+e certa!$t#, t-e !$tere"t "-a++ *e/!$ to ru$ %ro t-e t!e t-e c+a! !" ade ud!c!a++# or extraud!c!a++# 4Art. ((=, C!1!+ Code5 *ut 3-e$ "uc- certa!$t# ca$$ot *e "o rea"o$a*+# e"ta*+!"-ed at t-e t!e t-e dea$d !" ade, t-e !$tere"t "-a++ *e/!$ to ru$ o$+# %ro t-e date t-e ud/e$t o% t-e court !" ade 4at 3-!c- t!e t-e ua$t!9cat!o$ o% daa/e" a# *e deeed to -a1e *ee$ rea"o$a*+# a"certa!$ed5. T-e actua+ *a"e %or t-e coputat!o$ o% +e/a+ !$tere"t "-a++, !$ a$# ca"e, *e o$ t-e aou$t 9$a++# adud/ed. &. @-e$ t-e ud/e$t o% t-e court a3ard!$/ a "u o% o$e# *ecoe" 9$a+ a$d executor#, t-e rate o% +e/a+ !$tere"t, 3-et-er t-e ca"e %a++" u$der para/rap- ( or para/rap- 2, a*o1e, "-a++ *e (2 per a$$u %ro "uc- 9$a+!t# u$t!+ !t" "at!"%act!o$, t-!" !$ter! per!od *e!$/ deeed to *e *# t-e$ a$ eu!1a+e$t to a %or*eara$ce o% cred!t.
4c5 3-et-er t-e app+!ca*+e rate o% !$tere"t, re%erred to a*o1e, !" t3e+1e perce$t 4(25 or "!x perce$t 45. SI PERCENT 45 o$ t-e aou$t due coputed %ro t-e dec!"!o$, dated 0& Fe*ruar# (=66, o% t-e court a uo 4Court
o% Appea+"5 AND A T@ELE PERCENT 4(25 !$tere"t, !$ +!eu o% SI PERCENT 45, "-a++ *e ! po"ed o$ "uc- aou$t upo$ 9$a+!t# o% t-e Supree Court dec!"!o$ u$t!+ t-e pa#e$t t-ereo% .
RAT$# 3-e$ t-e ud/e$t a3ard!$/ a "u o% o$e# *ecoe" 9$a+ a$d executor#, t-e o$etar# a3ard "-a++ ear$ !$tere"t at (2 per a$$u %ro t-e date o% "uc- 9$a+!t# u$t!+ !t" "at!"%act!o$, re/ard+e"" o% 3-et-er t-e ca"e !$1o+1e" a +oa$ or %or*eara$ce o% o$e#. T-e rea"o$ !" t-at t-!" !$ter! per!od !" deeed to *e *# t-e$ eu!1a+e$t to a %or*eara$ce o% cred!t. NOTES> t-e Ce$tra+ Ba$8 C!rcu+ar !po"!$/ t-e (2 ! $tere"t per a$$u app+!e" o$+# to +oa$" or %or*eara$ce o% o$e#, /ood" or cred!t", a" 3e++ a" to ud/e$t" !$1o+1!$/ "uc- +oa$ or %or*eara$ce o% o$e#, /ood" or cred!t", a$d t-at t-e !$tere"t u$der t-e C!1!+ Code /o1er$" 3-e$ t-e tra$"act!o$ !$1o+1e" t-e pa#e$t o% !$de$!t!e" !$ t-e co$cept o% daa/e ar!"!$/ %ro t-e *reac- or a de+a# !$ t-e per%ora$ce o% o*+!/at!o$" !$ /e$era+. O*"er1e, too, t-at !$ t-e"e ca"e", a coo$ t!e %rae !$ t-e coputat!o$ o% t-e !$tere"t per a$$u -a" *ee$ app+!ed, !.e., %ro t-e t!e t-e cop+a!$t !" 9+ed u$t!+ t-e adud/ed aou$t !" %u++# pa!d.
&3&R$T 3. RA3" et al. petitioners vs. C&NTRA( 4AN@ ! T'& P'$($PP$N&" respondents C33&RC$A( 4AN@ ! 3AN$(A intervenor. !acts# T-!" ! $1o+1e" ue"t!o$ a" to app+!ca*!+!t# o% Tap!a ru+!$/ 3-ere!$ t-e Court -e+d t-at t-e o*+!/at!o$ to pa# !$tere"t o$ t-e depo"!t cea"e" t-e oe$t t-e operat!o$ o% t-e *a$8 !" cop+ete+# "u"pe$ded *# t-e du+# co$"t!tuted aut-or!t#, t-e Ce$tra+ Ba$8, to +oa$" a$d ad1a$ce" *# t-e Ce$tra+ Ba$8
'eld# Re"po$de$t" -a1e %a!+ed to adduce a$# co/e$t ar/ue$t to per"uade t-e Court to reco$"!der !t" Re"o+ut!o$ at *ar t-at t-e Tap!a ru+!$/ ! " %u++# app+!ca*+e to t-e $o$? pa#e$t o% !$tere"t, dur!$/ t-e per!od o% t-e *a$8" %orc!*+e c+o"ure, o$ +oa$" a$d ad1a$ce" ade *# re"po$de$t Ce$tra+ Ba$8. Re"po$de$t Ce$tra+ Ba$8 !t"e+% 3-e$ !t 3a" t-e$ a$a/!$/ t-e O1er"ea" Ba$8 o% Ma$!+a 4$o3 Coerc!a+ Ba$8 o% Ma$!+a5 u$der a -o+d!$/ tru"t a/reee$t, -e+d t-e "ae po"!t!o$ !$ Ide+%o$"o D.
G$( :ARD&N$( plaintiB5appellant vs. '&!T$ "(A" >alias '&PT$ "(A" :&PT$ "(A"? defendant5appellee. &leuterio :. Gustilo for appellant. :ose C. Ro-les for appellee. MORAN, .> T-!" !" a$ act!o$ %or %orec+o"ure o% ort/a/e. T-e o$+# ue"t!o$ ra!"ed !$ t-!" appea+ !"> I" de%e$da$t?appe++ee *ou$d to pa# t-e "t!pu+ated !$tere"t o$+# up to t-e date o% atur!t# a" 9xed !$ t-e pro!""or# $ote, or up to t-e date pa#e$t !"
eectedK T-!" ue"t!o$ !", !$ our op!$!o$ co$tro++ed *# t-e expre"" "t!pu+at!o$ o% t-e part!e". Para/rap- ' o% t-e ort/a/e deed rec!te"> ue e$ co$"!derac!o$ a d!c-a "ua au$ por pa/ar de DOS MIL C;ATROCIENTOS PESOS 4P2,'000.005, o$eda 9+!p!$a, ue e+ Sr. Hept! So+a" "e coproete a pa/ar a+ Sr. arde$!+ e$ o a$te" de+ d!a tre!$ta!u$o 4&(5 de aro de !+ $o1ec!e$to" tre!$ta!cuarto 4(=&'5, co$ +o" !$tere"e" de d!c-a "ua a+ t!po de doce por c!e$to 4(25 a$ua+ a part!r de"de %ec-a -a"ta e+ d!a de "u 1e$c!!e$to o "ea tre!$ta!u$o 4&(5 de aro de ! + $o1ec!e$to" tre!$ta!cuatro 4(=&'5, por +a pre"e$te, e+ Sr. Hept! So+a" cede # tra"pa"a, por 1!a de pr!era -!poteca, a %a1or de+ Sr. arde$!+, "u" -eredero" # cau"a-a*!e$te", +a parce+a de terre$o de"cr!ta e$ e+ parra%o pr!ero 4(.U5 de e"ta e"cr!tura. De%e$da$t?appe++ee -a", t-ere%ore, c+ear+# a/reed to pa# !$tere"t o$+# up to t-e date o% atur!t#, or u$t!+ Marc- &(, (=&'. A" t-e co$tract !" "!+e$t a" to 3-et-er a%ter t-at date, !$ t-e e1e$t o% $o$?pa#e$t, t-e de*tor 3ou+d co$t!$ue to pa# !$tere"t, 3e ca$$ot !$ +a3, !$du+/e !$ a$# pre"upt!o$ a" to "uc- !$tere"t) ot-er3!"e, 3e 3ou+d *e !po"!$/ upo$ t-e de*tor a$ o*+!/at!o$ t-at t-e part!e" -a1e $ot c-o"e$ to a/ree upo$. Art!c+e (7 o% t-e C!1!+ Code pro1!de" t-at !$tere"t "-a++ *e due o$+# 3-e$ !t -a" *ee$ expre""+# "t!pu+ated. 4Ep-a"!" "upp+!ed.5 A 3r!t!$/ u"t *e !$terpreted accord!$/ to t-e +e/a+ ea$!$/ o% !t" +a$/ua/e 4"ect!o$ 26, Act No. (=0, $o3 "ect!o$ 6, Ru+e (2&5, a$d o$+# 3-e$ t-e 3ord!$/ o% t-e 3r!tte$ !$"true$t appear" to *e co$trar# to t-e e1!de$t !$te$t!o$ o% t-e part!e" t-at "uc- !$te$t!o$ u"t pre1a!+. 4Art!c+e (26(, C!1!+ Code.5 T-ere !" $ot-!$/ !$ t-e ort/a/e deed to "-o3 t-at t-e ter" ep+o#ed *# t-e part!e" t-ereto are at 3ar 3!t- t-e!r e1!de$t !$te$t. O$ t-e co$trar# t-e act o% t-e ort/a/e o% /ra$t!$/ to t-e ort/a/or o$ t-e "ae date o%
execut!o$ o% t-e deed o% ort/a/e, a$ exte$"!o$ o% o$e #ear %ro t-e date o% atur!t# 3!t-!$ 3-!c- to a8e pa#e$t, 3!t-out a8!$/ a$# e$t!o$ o% a$# !$tere"t 3-!c- t-e ort/a/or "-ou+d pa# dur!$/ t-e add!t!o$a+ per!od 4"ee Ex-!*!t B attac-ed to t-e cop+a!$t5, !$d!cate" t-at t-e true !$te$t!o$ o% t-e part!e" 3a" t-at $o !$tere"t "-ou+d *e pa!d dur!$/ t-e per!od o% /race. @-at rea"o$ t-e part!e" a# -a1e t-ere%or, 3e $eed $ot -ere "ee8 to exp+ore. Ne!t-er -a" e!t-er o% t-e part!e" "-o3$ t-at, *# utua+ !"ta8e, t-e deed o% ort/a/e %a!+" to expre"" t-e!r a/reee$t, %or !% "uc- !"ta8e ex!"ted, p+a!$t! 3ou+d -a1e u$dou*ted+# adduced e1!de$ce to e"ta*+!"- !t a$d a"8ed t-at t-e deed *e re%ored accord!$/+#, u$der t-e parce+?e1!de$ce ru+e. @e -o+d t-ere%ore, t-at a" t-e co$tract !" c+ear a$d u$!"ta8a*+e a$d t-e ter" ep+o#ed t-ere!$ -a1e $ot *ee$ "-o3$ to *e+!e or ot-er3!"e %a!+ to expre"" t-e true !$te$t!o$ o% t-e part!e" a$d t-at t-e deed -a" $ot *ee$ a""a!+ed o$ t-e /rou$d o% utua+ !"ta8e 3-!c- 3ou+d reu!re !t" re%orat!o$, "ae "-ou+d *e /!1e$ !t" %u++ %orce a$d eect. @-e$ a part# "ue" o$ a 3r!tte$ co$tract a$d $o attept !" ade to "-o3 a$# 1!ce t-ere!$, -e ca$$ot *e a++o3ed to +a# a$# c+a! ore t-a$ 3-at !t" c+ear "t!pu+at!o$" accord. H!" o!""!o$, to 3-!c- t-e + a3 attac-e" a de9$!te 3ar$!$/ a" a$ !$ t-e !$"ta$t ca"e, ca$$ot *# t-e court" *e ar*!trar!+# "upp+!ed *# 3-at t-e!r o3$ $ot!o$" o% u"t!ce or eu!t# a# d!ctate. P+a!$t! !", t-ere%ore, e$t!t+ed o$+# to t-e "t!pu+ated !$tere"t o% (2 per ce$t o$ t-e +oa$ o% P2, '00 %ro No1e*er 6, (=&2 to Marc- &(, (=&'. A$d !t *e!$/ a %act t-at extra ud!c!a+ dea$d" -a1e *ee$ ade 3-!c- 3e a# a""ue to -a1e *ee$ "o ade o$ t-e exp!rat!o$ o% t-e #ear o% /race, -e "-a++ *e e$t!t+ed to +e/a+ !$tere"t upo$ t-e pr!$c!pa+ a$d t-e accrued !$tere"t %ro Apr!+ (, (=&, u$t!+ %u++ pa#e$t.
T-u" od!9ed ud/e$t !" aJred, 3!t- co"t" a/a!$"t appe++a$t.
"eparate pinions PARA" :. dissenting# ;$der t-e %act" "tated !$ t-e dec!"!o$ o% t-e aor!t#, I coe to t-e co$c+u"!o$ t-at !$tere"t at t-e rate o% (2 per ce$t per a$$u "-ou+d *e pa!d up to t-e date o% pa#e$t o% t-e 3-o+e !$de*ted$e"" !" ade. Pa#e$t o% "uc- ! $tere"t !" expre""+# "t!pu+ated. True, !t !" "tated !$ t-e ort/a/e co$tract t-at !$tere"t 3a" to *e pa!d up to Marc- &(, (=&', *ut t-!" date 3a" !$"erted ere+# *ecau"e !t 3a" t-e date o% atur!t#. T-e exte$"!o$ $ote !" "!+e$t a" re/ard" !$tere"t, *ut !t" pa#e$t !" c+ear+# !p+!ed %ro t-e $ature o% t-e tra$"act!o$ 3-!c- !" o$+# a re$e3a+ o% t-e o*+!/at!o$. I$ # op!$!o$, t-e ru+!$/ o% t-e aor!t# !" a$oa+ou" a$d at 3ar 3!t- coo$ pract!ce a$d e1er#da# *u"!$e"" u"a/e.
G.R. No. +927 cto-er 16 1++2 :&"%" T. DA;$D petitioner vs. T'& C%RT ! APP&A(" and ;A(&NT$N A!A4(& :R. respondents. DAIDE, R., .> Ca$ t-e Court o% Appea+", !$ a ud/e$t "u"ta!$!$/ t-e tr!a+ court" de$!a+ o% t-e pet!t!o$ %or re+!e% %ro ud/e$t, 1a+!d+# ae$d or od!%# t-e dec!"!o$ "ou/-t to *e o1ertur$ed *# "uc- pet!t!o$K T-!" !" t-e *a"!c !""ue 3-!c- co$%ro$t" t-!" Court !$ t-e !$"ta$t ca"e. Str!pped o% u$$ece""ar# deta!+", t-e %act" o% t-!" ca"e, a" /at-ered %ro p+ead!$/", are a" %o++o3">
Due to d!"-o$or o% 91e 45 c-ec8" 3!t- a tota+ 1a+ue o% P2,600.00 3-!c- pr!1ate re"po$de$t !""ued !$ %a1or o% t-e pet!t!o$er a%ter t-e %orer %a!+ed to de+!1er 2,00 ca1a$" o% pa+a# depo"!ted 3!t- -! *# t-e +atter or pa# t-e aou$t o% P',000.00 repre"e$t!$/ t-e 1a+ue t-ereo%, a$d to cop+# 3!t- t-e o*+!/at!o$ !$ re"pect to t-e "et o% ear$!$/" a$d a d!ao$d r!$/ de+!1ered *# pet!t!o$er" 3!%e o$ 20 Ma# (=', pet!t!o$er !$"t!tuted t3o 425 cr!!$a+ ca"e" %or e"ta%a a$d 9+ed a$ !$depe$de$t c!1!+ act!o$ %or a "u o% o$e# 3!tpre+!!$ar# attac-e$t a/a!$"t t-e pr!1ate re"po$de$t *e%ore t-e t-e$ Court o% F!r"t I$"ta$ce 4$o3 Re/!o$a+ Tr!a+ Court5 o% Ma$!+a. T-e +atter 3a" doc8eted a" C!1!+ Ca"e No. ='76( a$d 3a" a""!/$ed to Bra$c- 2 t-ereo%. O$ 6 Dece*er (=, pr!1ate re"po$de$t executed a docue$t e$t!t+ed Copro!"e A/reee$t 3-!c- read"> COMPROMISE AREEMENT I$ co$"!derat!o$ o% Mr. e"u" T. Da1!d co$"e$t!$/ to a$ot-er po"tpo$ee$t o% our cr!!$a+ ca"e" 4e"ta%a5 $o3 pe$d!$/ tr!a+ *e%ore t-e Court o% F!r"t I$"ta$ce o% Ma$!+a, I -ere*# pro!"e to pa# -! t-e "u o% SIT< SI THO;SAND FIE H;NDRED 4P,00.005 PESOS o$ or *e%ore a$uar# 't-, (=) a$d %or t-e purpo"e o% 9$a++# "ett+!$/ a!ca*+# t-!" ca"e. Ma$!+a, Dece*er (6, (=. ( O$ 27 Ma# (=7, pet!t!o$er 9+ed a$ Ae$ded Cop+a!$t 3-!c- a8e" "pec!9c re%ere$ce to t-!" "o?ca++ed Copro!"e A/reee$t. O$ (' Au/u"t (=7=, t-e tr!a+ court !""ued a$ order dec+ar!$/ t-e pr!1ate re"po$de$t a" !$ de%au+t %or -!" %a!+ure to appear at t-e pre?tr!a+ a$d a++o3!$/ t-e pet!t!o$er to pre"e$t -!" e1!de$ce ex?parte. T-e +atter oered !$ e1!de$ce t-e Copro!"e A/reee$t, 3-!c- 3a" ar8ed a" Ex-!*!t L.
O$ &( Octo*er (=7=, t-e tr!a+ court -a$ded do3$ a Dec!"!o$ 2 !$ %a1or o% t-e pet!t!o$er t-e d!"po"!t!1e port!o$ o% 3-!c- read"> @HEREFORE, ud/e$t !" -ere*# re$dered a/a!$"t t-e de%e$da$t, a+e$t!$ A%a*+e, r., order!$/ -! to pa# to t-e p+a!$t! t-e "u o% P,00.00 p+u" t-e +e/a+ rate o% !$tere"t t-ereo$ %ro u+# 2', (=7' up to t-e t!e t-e "ae !" %u++# pa!d p+u" t-e aou$t o% P,000.00 a" %or attor$e#" %ee" a$d to pa# t-e co"t" o% t-e "u!t. & ;po$ pet!t!o$er" ot!o$ %or reco$"!derat!o$ ue"t!o$!$/ t-e date 3-e$ !$tere"t "-ou+d *e/!$ to ru$, t-e tr!a+ court !""ued a$ Order ' o$ 20 u$e (=60 ae$d!$/ t-e d!"po"!t!1e port!o$ o% t-e dec!"!o$ *# dec+ar!$/ t-at t-e !$tere"t "-a++ *e rec8o$ed %ro ' a$uar# (= pur"ua$t to t-e "o?ca++ed Copro!"e A/reee$t. O$ (0 Octo*er (=60, t-e tr!a+ court !""ued a 3r!t o% execut!o$. Pr!1ate re"po$de$t 9+ed a pet!t!o$ % or re+!e% %ro ud/e$t 3-!c-, -o3e1er, 3a" de$!ed. He t-e$ 9+ed a ot!o$ to reco$"!der t-e "a!d de$!a+ order 3-!c- 3a" a+"o "u*"eue$t+# de$!ed. A cop# o% t-!" +a"t de$!a+ order 3a" rece!1ed *# t-e pr!1ate re"po$de$t o$ ( Marc- (=6&. T-e %o++o3!$/ da#, pr!1ate re"po$de$t 9+ed a $ot!ce o% appea+. O$ 2 Au/u"t (=6', t-e tr!a+ court e+e1ated t-e record" o% t-e ca"e to t-e re"po$de$t Court o% Appea+". T-e ca"e 3a" doc8eted t-ere!$ a" CA?.R. C No. 0&2. A" "uar!ed *# t-e re"po$de$t Court o% Appea+" !$ !t" 26 u+# (=6= dec!"!o$, t-e !""ue" ra!"ed *# t-e pr!1ate re"po$de$t *e%ore !t 3ere> (. @-et-er or $ot t-e de%e$da$t?appe++a$t 3a" correct+# dec+ared !$ de%au+t correct+# re$dered *e+o3) 2. @-et-er or $ot a Pet!t!o$ %or Re+!e% Fro ud/e$t !" a1a!+a*+e to t-e de%e$da$t?appe++a$t)
&. @-et-er or $ot t-e execut!o$ o% t-e Dec!"!o$ appea+ed %ro 3a" 1a+!d+# ordered) '. @-et-er or $ot t-e Ae$ded Cop+a!$t dated Ma# 2', (=7 "-ou+d -a1e *ee$ d!"!""ed o$ t-e /rou$d" o% +ac8 o% cau"e o% act!o$, pre"cr!pt!o$, a$d re" ud!cata) a$d . @-et-er or $ot /ra$t!$/ ex /rat!a ar/ue$t! t-e 1a+!d!t# o% t-e Dec!"!o$ !$ ue"t!o$, t-e "ae correct+# a3arded daa/e" a$d attor$e#" %ee" !$ %a1or o% t-e p+a!$t!? appe++ee. Re"po$de$t Court correct+# re"o+1ed t-e 9r"t %our 4'5 !""ue" exp+!c!t+# a/a!$"t re"po$de$t. More "pec!9ca++#, a$e$t t-e "eco$d !""ue, !t dec+ared> T-!" *r!$/" u" to t-e "eco$d !""ue> 3-et-er or $ot a Pet!t!o$ %or Re+!e% !" a$ a1a!+a*+e reed#. ;$der Ru+e &6 o% t-e Ru+e" o% Court, a pet!t!o$ %or re+!e% %ro ud/e$t u"t *e accopa$!ed 3!t- aJda1!t "-o3!$/ t-e %raud, acc!de$t, !"ta8e or excu"a*+e $e/+!/e$ce re+!ed upo$, a$d t-e %act" co$"t!tut!$/ t-e pet!t!o$er" /ood a$d "u*"ta$t!a+ cau"e o% act!o$ or de%e$"e, a" t-e ca"e a# *e. Sa!d /rou$d" u"t *e e"ta*+!"-ed !$ order to *e co$1!$c!$/. T-e a++e/ed excu"a*+e $e/+!/e$ce, acc!de$t or ! "ta8e re+!ed upo$ *# de%e$da$t?appe++a$t cou+d -a1e *ee$ a1o!ded 3!t- ord!$ar# prude$ce. T-e a++e/ed %raud cou+d $ot -a1e *ee$ co!tted *# p+a!$t!?appe++ee t-rou/- ere !$act!o$ "!$ce -e ! " $ot dut# *ou$d to per"o$a++# $ot!%# t-e de%e$da$t o% court proce""e". It !" $ot !$cu*e$t upo$ -! to "earc- %or t-e addre"" o% de%e$da$t "o t-at t-e +atter a# *e proper+# $ot!9ed *# t-e Court. T-!" !" $ot t-e 8 !$d o% %raud co$tep+ated *# +a3. Bad %a!t- ca$$ot *e pre"ued %ro !$act!o$ 3-ere t-ere !" $o dut# to act. T-e /rou$d" $ot -a1!$/ *ee$ c+ear+# e"ta*+!"-ed, pet!t!o$ %or re+!e% 3!++ $ot +!e. 7
A" to t-e 9%t- !""ue, t-e appe++ate court, ae$ded t-e d!"po"!t!1e port!o$ o% t-e dec!"!o$ appea+ed %ro *# dec+ar!$/ t-at t-e !$tere"t "-ou+d ru$ o$+# %ro t-e date o% t-e 9+!$/ o% t-e Ae$ded Cop+a!$t. I$ "upport t-ereo%, !t ade t-e %o++o3!$/ d!"u!"!t!o$"> F!$a++#, o$ t-e ue"t!o$ o% t-e 1a+!d!t# o% t-e a3ard o% daa/e" a$d attor$e#" %ee", de%e$da$t?appe++a$t %urt-er c-a++e$/ed t-e ae$de$t o% t-e dec!"!o$ o% Octo*er &(, (=7= adu"t!$/ t-e date %or coput!$/ t-e +e/a+ !$tere"t to "tart %ro a$uar# ', (= !$"tead o% u+# 2', (=7', a" per or!/!$a+ dec!"!o$. T-e ru+e !", 3-ere a part# -a" *ee$ dec+ared !$ de%au+t, t-e aou$t o% daa/e" t-at "-ou+d *e adud/ed a/a!$"t -! ca$$ot exceed t-e aou$t a++e/ed ! $ t-e cop+a!$t e1e$ !% t-e cop+a!$a$t" are a*+e to pro1e dur!$/ t-e recept!o$ o% e1!de$ce a -!/-er aou$t o% daa/e". 4Mar!o 1". add!, L?&060, Marc- 2=, (=725. It appear" !$ t-!" ca"e t-at t-e aou$t o% daa/e" a3arded !" !$ accorda$ce 3!t- t-e re+!e% pra#ed %or !$ t-e Ae$ded Cop+a!$t except t-at t-e +e/a+ !$tere"t "-ou+d *e coputed %ro t-e date o% t-e 9+!$/ o% t-e cop+a!$t, 3-!c- !" %ro Ma# 27, (=7. It 3ou+d *e d!ere$t !% t-e de%e$da$t !" $ot !$ de%au+t, p+a!$t! a# *e /ra$ted a$# re+!e% t-at !" "upported *# t-e e1!de$ce, a+t-ou/- $ot "pec!9ed !$ -!" p+ead!$/". A" to t-e propr!et# o% t-e a3ard o% attor$e#" %ee", "!$ce p+a!$t!?appe++ee 3a" cope++ed to +!t!/ate ! $ order to protect -!" !$tere"t, t-e Court a uocorrect+# /ra$ted t-e re+!e% a" pra#ed %or. 6 Accord!$/+# t-e Court o% Appea+" decreed a" %o++o3"> @HEREFORE, !$ 1!e3 o% a++ t-e %ore/o!$/ co$"!derat!o$", t-e dec!"!o$ o% t-e Court a uo, *e!$/ "u*"ta$t!a++# !$ accorda$ce 3!t- +a3, !" -ere*# aJred 3!t- "+!/-t od!9cat!o$ to reVect t-e date o% coput!$/ t-e +e/a+ !$tere"t to *e %ro Ma# 27, (=7, t-e date o% 9+!$/ t-e ae$ded cop+a!$t. Co"t" a/a!$"t de%e$da$t?appe++a$t. =
O$ & Octo*er (=6=, pet!t!o$er 9+ed a pet!t!o$er %or re+!e% 43-!c- "-ou+d -a1e *ee$, ore appropr!ate+#, a ot!o$ %or reco$"!derat!o$5 %ro ud/e$t to "et a"!de t-e a%oree$t!o$ed od!9cat!o$ decreed *# t-e re"po$de$t Court o% Appea+" o$ t-e /rou$d t-at "!$ce t-e tr!a+ court" dec!"!o$ 3a" a+read# 9$a+, !t cou+d $o +o$/er *e ae$ded. It 3a" o$+# o$ (6 Apr!+ (==0 t-at t-e re"po$de$t Court prou+/ated a Re"o+ut!o$ (0 de$#!$/ t-e "a!d pet!t!o$ o$ t-e /rou$d t-at t-e !$tere"t cou+d $ot ru$ %ro ' a$uar# (= *ecau"e t-e pr!1ate re"po$de$t -ad $ot !$curred !$ de+a#, t-ere *e!$/ $o proo% o% extraud!c!a++# dea$d. ;$der t-e 9r"t para/rap- o% Art!c+e ((= o% t-e C!1!+ Code, t-e de*tor !$cur" !$ de+a# %ro t-e t!e t-e cred!tor ud!c!a++# or extraud!c!a++# dea$d" t-e %u+9++e$t o% t-e o*+!/at!o$. I$ t-e a*"e$ce o% proo% o% extraud!c!a+ dea$d, t-e date o% t-e 9+!$/ o% t-e ae$ded cop+a!$t *a"ed o$ t-e "o?ca++ed Copro!"e A/reee$t, 3-!c- 3a" 27 Ma# (=7, "-a++ *e t-e date 3-ere%ro coputat!o$ o% ! $tere"t "-a++ coe$ce. Pet!t!o$er 9+ed a ot!o$ to reco$"!der t-!" re"o+ut!o$ (( 3-!c- t-e re"po$de$t Court o% Appea+" de$!ed o$ ' Fe*ruar# (==(. (2 He$ce, t-!" pet!t!o$ %or re1!e3 u$der Ru+e ' o% t-e Ru+e" o% Court 3-ere!$ pet!t!o$er "u*!t" t-e %o++o3!$/ a""!/$e$t o% error"> A. THE RESPONDENT CO;RT OF APPEALS ERRED IN MODIF
C. THE RESPONDENT CO;RT OF APPEALS ERRED IN AMENDIN THE LO@ER CO;RTS DECISION @ITHO;T ITS HAIN BEEN THE S;BECT OF AN< ASSINMENT OR ERROR B< THE APPELLANT IN THE CASE. D. THE RESPONDENT CO;RT OF APPEALS ERRED IN COMMITTIN A IRT;AL B;T ROSS IOLATION OF LA@ B< REF;SIN TO ENFORCE A ;DICIAL COMPROMISE AREEMENT @HICH IS THE LA@ BET@EEN THE PARTIES THERETO. (& T-ere !" "o uc- c!rcu!tr# !$ t-e"e a""!/$ed error". It !" o*1!ou" t-at t-e pet!t!o$er doe" $ot -a1e a %u++ u$der"ta$d!$/ o% a copro!"e a/reee$t a$d a ud/e$t *a"ed t-ereo$. @-at t-e pr!1ate re"po$de$t "!/$ed o$ (6 Dece*er (=7 !" $ot a copro!"e a/reee$t a+t-ou/- !t !" capt!o$ed a" "uc-. A copro!"e !" a co$tract 3-ere*# t-e part!e", *# a8!$/ rec!proca+ co$ce""!o$", a1o!d a + !t!/at!o$ or put a$ e$d to o$e a+read# coe$ced. (' It !" a$ a/reee$t *et3ee$ t3o or ore per"o$", 3-o, %or pre1e$t!$/ or putt!$/ a$ e$d to a +a3"u!t, adu"t t-e!r d!Jcu+t!e" *# utua+ co$"e$t !$ t-e a$$er 3-!c- t-e# a/ree o$, a$d 3-!c- e1er#o$e o% t-e pre%er" to t-e -ope o% /a!$!$/, *a+a$ced *# t-e da$/er o% +o"!$/. ( T-e "o?ca++ed Copro!"e A/reee$t "ou/-t $e!t-er to a1o!d +!t!/at!o$ $or exp+!c!t+# put a$ e$d to t-e ca"e" a+read# coe$ced *et3ee$ t-e part!e". S!$ce !t 3a" o$+# t-e pr!1ate re"po$de$t 3-o "!/$ed t-e a/reee$t, !t a# $ot *e co$"!dered a *!+atera+ co$tract. Rat-er, !t !" *ut a ere pro!"e to pa# P,00.00 o$ or *e%ore ' a$uar# (= a" a "tep to3ard" t-e a!ca*+e "ett+ee$t o% t-e ca"e. It doe" $ot, *# !t"e+%, "ett+e t-e ca"e or put a$ e$d to !t. It co$tep+ate" t-e execut!o$ o% a %ora+ act a%ter pa#e$t "-a++ -a1e *ee$ ade.
T-e part!e" d!d $ot "u*!t a$# "eparate copro!"e a/reee$t %or appro1a+ *# t-e court. @-at t-e court rece!1ed 3a" t-e e1!de$ce %or t-e pet!t!o$er 3-!c- !$c+uded t-e "o? ca++ed copro!"e a/reee$t 4ar8ed a" Ex-!*!t L5) ud/e$t 3a" re$dered o$ t-e *a"!" o% "uc- e1!de$ce a" t-u" adduced. It !" prec!"e+# %or t-!" rea"o$ t-at t-e tr!a+ court a3arded attor$e#" %ee" a$d ordered t-e pr!1ate re"po$de$t to pa# !$tere"t p+u" t-e co"t" o% t-e "u!t. C+ear+#, $o ud/e$t *a"ed o$ copro!"e a/reee$t 3a" re$dered *# t-e tr!a+ court. T-e doctr!$e re+!ed o$ *# t-e pet!t!o$er a$d u$der"cored *# $uerou" ca"e c!tat!o$" W t-at a copro!"e a/reee$t co$"t!tute" t-e +a3 *et3ee$ t-e part!e" a$d t-at a ud/e$t *a"ed t-ereo$ !" !ed!ate+# 9$a+ a$d executor# W !" u$%ortu$ate+# !$app+!ca*+e !$ t-!" pet!t!o$. To t-e !$d o% t-!" Court, t-e rea+ !""ue !" 3-et-er or $ot t-e re"po$de$t Court, -a1!$/ "u"ta!$ed W a$d correct+# W t-e tr!a+ court" de$!a+ o% t-e pr!1ate re"po$de$t" pet!t!o$ %or re+!e% %ro ud/e$t, cou+d, at t-e "ae t!e od!%# t-e dec!"!o$ "ou/-t to *e o1ertur$ed *# "uc- a pet!t!o$. T-e a$"3er !" !$ $e/at!1e. T-e 9+!$/ o% t-e pet!t!o$ %or re+!e% %ro ud/e$t 3!t- t-e tr!a+ court 3a" a$ eu!1oca+ ad!""!o$ o$ t-e pr!1ate re"po$de$t" part t-at -!" per!od to appea+ %ro t-e dec!"!o$ -ad a+read# exp!red. Suc- 3a" t-e !$co$tro1ert!*+e %act) *e"!de" a pet!t!o$ %or re+!e% %ro ud/e$t ( or +o"" o% t-e r!/-t to appea+, t-e aJra$ce *# t-e re"po$de$t Court o% t-e de$!a+ o% t-e pet!t!o$ !" a co$9rat!o$ o% t-e ex!"te$ce o% a 9$a+ a$d executor# ud/e$t. It ca$ $e!t-er ae$d $or od!%# !t. NXot-!$/ !" ore "ett+ed !$ t-e +a3 t-a$ t-at 3-e$ a 9$a+ ud/e$t *ecoe" executor#, !t ! " t-ere*# *ecoe" !uta*+e a$d u$a+tera*+e. T-e ud/e$t a# $o +o$/er *e od!9ed !$ a$# re"pect, e1e$ !% t-e od!9cat!o$ !" ea$t to correct 3-at !" perce!1ed to *e a$ erro$eou" co$c+u"!o$ o% %act or +a3, a$d re/ard+e"" o% 3-et-er t-e od!9cat!o$ !" attepted to *e
ade *# t-e court re$der!$/ !t or *# t-e -!/-e"t Court o% t-e +a$d. T-e o$+# reco/$!ed except!o$" are t-e correct!o$" o% c+er!ca+ error" or t-e a8!$/ o% t-e "o?ca++ed $u$c pro tu$c e$tr!e" 3-!c- cau"e $o preud!ce to a$# part#, a$d, o% cour"e, 3-ere t-e ud/e$t !" 1o!d. (7 Re"po$de$t Court a# -a1e -ad !$ !$d t-e "eco$d para/rap- o% Sect!o$ 2 o% Ru+e '( 3-!c- a++o3" a part# 3-o appea+" %ro a$ order de$#!$/ a pet!t!o$ %or re+!e% to a""a!+ t-e ud/e$t o$ t-e er!t" o$ t-e /rou$d t-at t-e "ae !" $ot "upported *# t-e e1!de$ce or !" co$trar# to +a3. Sa!d dec!"!o$ pro1!de" a" %o++o3"> Sec. 2 ud/e$t" or order" "u*ect to appea+. xxx xxx xxx A ud/e$t de$#!$/ re+!e% u$der Ru+e &6 !" "u*ect to appea+, a$d !$ t-e cour"e t-ereo%, a part# a# a+"o a""a!+ t-e ud/e$t o$ t-e er!t", upo$ t-e /rou$d t-at !t !" $ot "upported *# t-e e1!de$ce or !t !" co$trar# to +a3. T-!" pro1!"!o$, -o3e1er, ca$$ot *e co$"trued a" a++o3!$/ t-e re1!e3 o% t-e dec!"!o$ o$ t-e "pec!9c /rou$d t-ere!$ !$d!cated !% t-e de$!a+ o% t-e pet!t!o$ %or re+!e% *# t-e tr!a+ court !" "u"ta!$ed *# t-e appe++ate court. It a# o$+# *e do$e !% t-e appe++ate court o1ertur$" "uc- de$!a+. T-e re"po$de$t Court t-e$ erred !$ od!%#!$/ t-e dec!"!o$ o% t-e tr!a+ court. Ha1!$/ "u"ta!$ed t-e tr!a+ court" de$!a+ o% t-e pet!t!o$ %or re+!e% 9+ed u$der Ru+e &6 o% t-e ru+e" o% Court, !t -ad $ot-!$/ ore to do "a1e to d!"!"" t-e appea+ a$d a8e pro$ou$cee$t t-at t-e dec!"!o$ o% t-e tr!a+ court -ad +o$/ *ecoe 9r, 9$a+ a$d executor#. @HEREFORE, %or t-e rea"o$ a*o1e"tated, t-e pet!t!o$ !" RANTED. T-at port!o$ o% t-e c-a++e$/ed dec!"!o$ o% t-e re"po$de$t Court o% Appea+" !$ C.A.?.R. C No. 0&2 o% 2= u+# (=6= od!%#!$/ t-e dec!"!o$ o% t-e tr!a+ court 3!t-
re"pect to t-e date 3-e$ !$tere"t "-ou+d coe$ce to ru$ !" -ere*# SET ASIDE a$d N;LLIFIED. Co"t" a/a!$"t t-e pr!1ate re"po$de$t. SO ORDERED.
"NC%=A ;. AARRAGA R=A( "'$RT !ACTR= $NC. v C !ACT"# T-e part!e" e$tered !$to a co$tract 3-ere!$ !t !" "t!pu+ated t-at &0 pa!r" o% *a++et "-oe" 3!++ *e "o+d *# Co a$d t-at Co -ad = da#" %ro de+!1er# o% t-e "-oe" to a8e -!" c-o!ce o% 2 a+ter$at!1e"> a5 co$"!der t-e "a+e %or t-e "-oe" c+o"ed at a Vat rate, or *5 retur$ t-e rea!$!$/ u$"o+d o$e" to Ro#a+. Co %a!+ed to retur$ t-e u$"o+d pa!r" a%ter = da#" a$d actua++# *e/a$ a8!$/ part!a+ pa#e$t" o$ accou$t o% t-e purc-a"e pr!ce a/reed upo$. Co t-e$ co$te$ded t-at t-ere 3a" ere+# a co$"!/$e$t o% t-e /ood" a$d -e 3a$ted to retur$ t-e u$"o+d "-oe". Ro#a+ re%u"ed co$te$d!$/ t-at !t 3a" a$ outr!/-t "a+e.
$""%&# @oN t-e "a+e 3a" a$ outr!/-t "a+e @oN Co !" *ou$d *# t-e !$tere"t "t!pu+ated !$ t-e !$1o!ce. "C# =&" / N O;TRIHT SALE Co accepted t-e !$1o!ce o% t-e *a++et "-oe" a$d -e e1e$ $oted do3$ !$ -!" o3$ -a$d3r!t!$/ t-e part!a+ pa#e$t" t-at -e ade. I% t-e "a+e -a" *ee$ o$ co$"!/$e$t, a "t!pu+at!o$ a" to t-e per!od o% t!e %or t-e retur$ o% t-e u$"o+d "-oe" "-ou+d -a1e *ee$ ade, -o3e1er, t-!" 3a" $ot do$e
NOT BO;ND B< THE INTEREST He d!d $ot "!/$ t-e ! $1o!ce "+!p t-e "t!pu+ated !$tere"t 3a" 20, -e$ce, $ot *!$d!$/ Ho3e1er, -e !" *ou$d *# t-e +e/a+ ! $tere"t o% He$ce, Co 3a" ordered to pa# t-e *a+a$ce o% t-e purc-a"e pr!ce %or t-e *a++et "-oe" Y +e/a+ !$tere"t
($RAG T&ET$(& 3$((" $NC. ;". """ 1 "CRA 8 !acts# SSS 4re"po$de$t5 a$d L!ra/ Text!+e M!++" 4Pet!t!o$er5 e$tered !$to a Purc-a"ed A/reee$t 3-!c- Re"po$de$t a/reed to purc-a"e pre%erred "toc8" o% Pet!t!o$er 3ort- P( !++! o$ "u*ect to co$d!t!o$"> For Pet!t!o$er to repurc-a"e t-e "-are" o% "toc8" at a re/u+ar !$ter1a+ o% o$e #ear a$d to pa# d!1!de$d". Fa!+ure to redee a$d pa# t-e d!1!de$d, t-e e$t!re o*+!/at!o$ "-a++ *ecoe due a$d dea$da*+e a$d !t "-a++ *e + !a*+e %or a$ aou$t eu!1a+e$t to (2 o% t-e aou$t t-e$ out"ta$d!$/ a" +!u!dated daa/e". Ba"!+!o L!ra/ 4Ba"!+!o5 a" Pre"!de$t o% L!ra/ Text!+e M!++" "!/$ed t-e A/reee$t a" a "uret# to /uara$tee t-e redept!o$ o% t-e "toc8", t-e pa#e$t o% d!1!de$d" a$d ot-er o*+!/at!o$". Pur"ua$t to t-e A/reee$t, Re"po$de$t pa!d Pet!t!o$er P00,000 o$ t3o occa"!o$" a$d t-e +atter !""ued ,000 pre%erred "toc8" 3!t- a par 1a+ue o% P(00 a" e1!de$ced *# Stoc8 Cert!9cate No". (26 a$d (&=.
A%ter "e$d!$/ Re"po$de$t "e$t dea$d +etter", Pet!t!o$er a$d Ba"!+!o "t!++ ade $o redept!o$ $or ade d!1!de$d pa#e$t". Re"po$de$t 9+ed a$ act!o$ %or "pec!9c per%ora$ce a$d daa/e" a/a!$"t Pet!t!o$er> Pet!t!o$er co$te$d" t-at t-ere !" $o o*+!/at!o$ o$ t-e!r part to redee t-e "toc8 cert!9cate" "!$ce Re"po$de$t !" "t!++ a pre%erred "toc8 -o+der o% t-e copa$# a$d "uc- redept!o$ !" depe$de$t upo$ t-e 9$a$c!a+ a*!+!t# o% t-e copa$#. O$ t-e part o% Ba"!+!o, -e co$te$d" t-at -!" +!a*!+!t# o$+# ar!"e" o$+# !% t-e copa$# !" +! a*+e a$d doe" $ot per%or !t" o*+!/at!o$" u$der t-e A/reee$t.
$ssue# @-et-er or $ot t-e Purc-a"e A/reee$t e$tered !$to *# t-e Part!e" !" a de*t !$"true$tK I% "o, I" Ba"!+!o +!a*+e a" "uret#K @-et-er or $ot L!ra/ !" +!a*+e %or t-e !$tere"t a" +!u!dated daa/e"K
'eld#
It ca$$ot *e "a!d t-at SSS !" a pre%erred "toc8-o+der. T-e r!/-t" /!1e$ *# t-e Purc-a"e A/reee$t to SSS are $ot r!/-t" e$o#ed *# ord!$ar# "toc8-o+der". S!$ce t-ere 3a" a co$d!t!o$ t-at %a!+ure to repurc-a"e t-e "toc8" o$ t-e "c-edu+ed date" re$der" t-e e$t!re o*+!/at!o$ due a$d dea$da*+e 3!t- !$tere"t. T-e"e %eature" c+ear+# "-o3 t-at !$te$t o% t-e part!e" to *e *ou$d t-ere!$ a" de*tor a$d cred!tor a$d $ot a" a corporat!o$ a$d "toc8-o+der.
G.R. No. (5897 August 6 1+9 (%C$A TAN plaintiB5appellee vs. ARADR ;A(D&'%&A and R&D$C%( ;A(D&'%&A defendants5appellants. Alaric P. Acosta for plaintiB5appellee. (orenFo P. de GuF
T-e dec!"!o$ a uo 3a" re$dered *# t-e Court o% F!r"t I$"ta$ce o% M!"a!" Occ!de$ta+ 4Bra$c- I5 !$ a$ act!o$ !$"t!tuted *# t-e p+a!$t!?appe++ee Luc!a Ta$ a/a!$"t t-e de%e$da$t"?appe++a$t" Arador a+de-uea a$d Red!cu+o a+de-uea 4doc8eted a" c!1!+ ca"e 27'5 %or 4a5 dec+arat!o$ o% o3$er"-!p a$d reco1er# o% po""e""!o$ o% t-e parce+ o% +a$d de"cr!*ed !$ t-e 9r"t cau"e o% act!o$ o% t-e cop+a!$t, a$d 4*5 co$"o+!dat!o$ o% o3$er"-!p o% t3o port!o$" o% a$ot-er parce+ o% 4u$re/!"tered5 +a$d de"cr!*ed !$ t-e "eco$d cau"e o% act!o$ o% t-e cop+a!$t, purported+# "o+d to t-e p+a!$t! !$ t3o "eparate deed" o% pacto de retro. A%ter t-e !""ue" 3ere o!$ed, t-e part!e" "u*!tted t-e %o++o3!$/ "t!pu+at!o$ o% %act"> (. T-at part!e" ad!t t-e +e/a+ capac!t# o% p+a!$t! to "ue) t-at de%e$da$t" -ere!$, Arador, Red!cu+o, Pac!ta, Co$cepc!o$ a$d Ro"ar!o, a++ "ur$aed a+de-uea, are *rot-er" a$d "!"ter") t-at t-e a$"3er 9+ed *# Arador a$d Red!cu+o "ta$d a" t-e a$"3er o% Pac!ta, Co$cepc!o$ a$d Ro"ar!o. 2. T-at t-e part!e" ad!t t-e !de$t!t# o% t-e +a$d !$ t-e 9r"t cau"e o% act!o$. &. T-at t-e parce+ o% +a$d de"cr!*ed !$ t-e 9r"t cau"e o% act!o$ 3a" t-e "u*ect atter o% t-e pu*+!c auct!o$ "a+e -e+d o$ Ma# , (= at t-e Cap!to+ Bu!+d!$/ !$ Orou!eta, M!"a!" Occ!de$ta+, 3-ere!$ t-e p+a!$t! 3a" t-e -!/-e"t *!dder a$d a" "uc- a Cert!9cate o% Sa+e 3a" executed *# MR. ICENTE D. ROA 3-o 3a" t-e$ t-e Ex?OJc!o Pro1!$c!a+ S-er! !$ %a1or o% L;CIA TAN t-e -ere!$ p+a!$t!. Due to t-e %a!+ure o% de%e$da$t Arador a+de-uea to redee t-e "a!d + a$d 3!t-!$ t-e per!od o% o$e #ear a" *e!$/ pro1!ded *# +a3, MR. ICENTE D. ROA 3-o 3a" t-e$ t-e Ex?OJc!o Pro1!$c!a+ S-er! executed a$ ABSOL;TE DEED OF SALE !$ %a1or o% t-e p+a!$t! L;CIA TAN. A cop# o% t-e NOTICE OF SHERIFFS SALE ! " -ere*# ar8ed a" A$$ex A, t-e CERTIFICATE OF S ALE !" ar8ed a" A$$ex B
a$d t-e ABSOL;TE DEED OF SALE !" -ere*# ar8ed a" A$$ex C a$d a++ o% 3-!c- are ade a" !$te/ra+ part" o% t-!" "t!pu+at!o$ o% %act". '. T-at t-e part#?p+a!$t! !" t-e "ae p+a!$t! ! $ C!1!+ Ca"e No. 2002) t-at t-e part!e" de%e$da$t" Arador, Red!cu+o a$d Pac!ta, a++ a+de-uea 3ere t-e "ae part!e"?de%e$da$t" !$ t-e "ae "a!d C!1!+ Ca"e No. 2002) t-e cop+a!$t !$ C!1!+ Ca"e No. 2002 to *e ar8ed a" Ex-!*!t () t-e a$"3er a" Ex-!*!t 2 a$d t-e order dated Ma# 22, (=& a" Ex-!*!t &, a$d "a!d ex-!*!t" are ade !$te/ra+ part o% t-!" "t!pu+at!o$. . T-at de%e$da$t" ARADOR ALDEH;EZA a$d REDIC;LO ALDEH;EZA -a1e executed t3o docue$t" o% DEED OF PACTO DE RETRO SALE !$ %a1or o% t-e p+a!$t! -ere!$, L;CIA TAN o% t3o port!o$" o% a parce+ o% +a$d 3-!c- !" de"cr!*ed !$ t-e "eco$d cau"e o% act!o$ 3!t- t-e tota+ aou$t o% ONE THO;SAND FIE H;NDRED PESOS 4P(,00.005, P-!+!pp!$e Curre$c#, cop!e" o% "a!d docue$t" are ar8ed a" A$$ex D a$d A$$ex E, re"pect!1e+# a$d ade a" !$te/ra+ part" o% t-!" "t!pu+at!o$ o% %act". . T-at %ro t-e execut!o$ o% t-e Deed o% Sa+e 3!t- r!/-t to repurc-a"e e$t!o$ed !$ t-e "eco$d cau"e o% act!o$, de%e$da$t" Arador a+de-uea a$d Red!cu+o a+de-uea rea!$ed !$ t-e po""e""!o$ o% t-e +a$d) t-at +a$d taxe" to t-e "a!d +a$d 3ere pa!d *# t-e "ae "a!d de%e$da$t". C!1!+ ca"e 2002 re%erred to !$ "t!pu+at!o$ o% %act $o. ' 3a" a cop+a!$t %or !$u$ct!o$ 9+ed *# Ta$ o$ u+# 2', (=7 a/a!$"t t-e a+de-uea", to e$o!$ t-e %ro e$ter!$/ t-e a*o1e? de"cr!*ed parce+ o% +a$d a$d /at-er!$/ t-e $ut" t-ere!$ .... T-!" cop+a!$t a$d t-e cou$terc+a! 3ere "u*"eue$t+# d!"!""ed %or %a!+ure o% t-e part!e" to "ee8 %or t-e ! ed!ate tr!a+ t-ereo%, t-u" e1!$c!$/ +ac8 o% !$tere"t o$ t-e!r part to proceed 3!t- t-e ca"e. (
T-e Deed o% Pacto de Retro re%erred to !$ "t!pu+at!o$ o% %act $o. a" A$$ex D 4dated Au/u"t , (=5 3a" $ot re/!"tered !$ t-e Re/!"tr# o% Deed", 3-!+e t-e Deed o% Pacto de Retro re%erred to a" A$$ex E 4dated Marc- (, (=5 3a" re/!"tered. O$ t-e *a"!" o% t-e "t!pu+at!o$ o% %act" a$d t-e a$$exe", t-e tr!a+ court re$dered ud/e$t, a" %o++o3"> @HEREFORE, ud/e$t !" -ere*# re$dered !$ %a1or o% t-e p+a!$t!> (. Dec+ar!$/ Luc!a Ta$ t-e a*"o+ute o3$er o% t-e propert# de"cr!*ed !$ t-e 9r"t cau"e o% act!o$ o% t-e ae$ded cop+a!$t) a$d order!$/ t-e -ere!$ de%e$da$t" $ot to e$croac- a$d o+e"t -er !$ t-e exerc!"e o% -er propr!etar# r!/-t") a$d, %ro 3-!c- propert# t-e# u"t *e d!"po""e""ed) 2. Order!$/ t-e de%e$da$t", Arador a+de-uea a$d Red!cu+o a+de-uea o!$t+# a$d "e1era++# to pa# to t-e p+a!$t!, Luc!a Ta$, o$ A$$ex E t-e aou$t o% P(,200, 3!t- +e/a+ !$tere"t o% a" o% Au/u"t (, (=, 3!t-!$ =0 da#" to *e depo"!ted 3!t- t-e OJce o% t-e Court 3!t-!$ =0 da#" %ro t-e date o% "er1!ce o% t-!" dec!"!o$, a$d t-at !$ de%au+t o% "uc- pa#e$t t-e propert# "-a++ *e "o+d !$ accorda$ce 3!t- t-e Ru+e" o% Court %or t-e re+ea"e o% t-e ort/a/e de*t, p+u" co"t") &. A$d a" re/ard" t-e +a$d co1ered *# deed o% pacto de retro a$$ex D, t-e -ere!$ de%e$da$t" Arador a+de-uea a$d Red!cu+o a+de-uea are -ere*# ordered to pa# t-e p+a!$t! t-e aou$t o% P&00 3!t- +e/a+ !$tere"t o% %ro Au/u"t (, (=, t-e "a!d +a$d "er1!$/ a" /uara$t# o% t-e "a!d aou$t o% pa#e$t) '. Se$te$c!$/ t-e de%e$da$t" Arador a+de-uea a$d Red!cu+o a+de-uea to pa# o!$t+# a$d "e1era++# to t-e -ere!$ p+a!$t! Luc!a Ta$ t-e aou$t o% (,000.00 a" attor$e#" %ee") a$d .
. To pa# t-e co"t" o% t-e proceed!$/". T-e a+de-uea" appea+ed, a""!/$!$/ t-e %o++o3!$/ error"> T-at t-e +o3er court erred !$ %a!+!$/ to adud/e o$ t-e 9r"t cau"e o% act!o$ t-at t-ere ex!"t" re" ud!cata) a$d T-at t-e +o3er court erred !$ a8!$/ a 9$d!$/ o$ t-e "eco$d cau"e o% act!o$ t-at t-e tra$"act!o$" *et3ee$ t-e part!e" 3ere "!p+e +oa$, !$"tead, !t "-ou+d *e dec+ared a" eu!ta*+e ort/a/e. @e aJr !$ part a$d od!%# !$ part. (. Re+#!$/ o$ Sect!o$ & o% Ru+e (7 o% t-e Ru+e" o% Court 3-!cpert!$e$t+# pro1!de" t-at a d!"!""a+ %or %a!+ure to pro"ecute "-a++ -a1e t-e eect o% a$ adud!cat!o$ upo$ t-e er!t", t-e a+de-uea" "u*!t t-at t-e d!"!""a+ o% c!1!+ ca"e 2002 operated, upo$ t-e pr!$c!p+e o% re" ud!cata, a" a *ar to t-e 9r"t cau"e o% act!o$ !$ c!1!+ ca"e 27'. @e ru+e t-at t-!" co$te$t!o$ !" u$te$a*+e a" t-e cau"e" o% act!o$ !$ t-e t3o ca"e" are $ot !de$t!ca+. Ca"e 2002 3a" %or !$u$ct!o$ a/a!$"t t-e e$tr# !$to a$d t-e /at-er!$/ o% $ut" %ro t-e +a$d, 3-!+e ca"e 27' "ee8" to reo1e a$# dou*t or c+oud o% t-e p+a!$t!" o3$er"-!p ... 4Ae$ded cop+a!$t, Rec. o$ App., p. 275, 3!t- a pra#er %or dec+arat!o$ o% o3$er"-!p a$d reco1er# o% po""e""!o$. App+#!$/ t-e te"t o% a*"e$ce o% !$co$"!"te$c# *et3ee$ pr!or a$d "u*"eue$t ud/e$t", 2 3e -o+d t-at t-e %a!+ure o% Ta$, !$ ca"e 2002, to "ecure a$ !$u$ct!o$ a/a!$"t t-e a+de-uea" to pre1e$t t-e %ro e$ter!$/ t-e +a$d a$d /at-er!$/ $ut" !" $ot !$co$"!"te$t 3!t- -er *e!$/ adud/ed, !$ ca"e 27', a" o3$er o% t-e +a$d 3!t- r!/-t to reco1er po""e""!o$ t-ereo%. Ca"e 2002 !$1o+1ed o$+# t-e po""e""!o$ o% t-e +a$d a$d t-e %ru!t" t-ereo%, 3-!+e ca"e 27' !$1o+1e" o3$er"-!p o% t-e +a$d, 3!t- po""e""!o$ a" a ere attr!*ute o% o3$er"-!p. T-e ud/e$t !$ t-e 9r"t ca"e cou+d $ot a$d d!d $ot e$copa""
t-e ud/e$t !$ t-e "eco$d, a+t-ou/- t-e "eco$d ud/e$t 3ou+d e$copa"" t-e 9r"t. Moreo1er, t-e $e3 C!1!+ Code pro1!de" t-at "u!tor" !$ act!o$" to u!et t!t+e $eed $ot *e !$ po""e""!o$ o% "a!d propert#. & 2. T-e tr!a+ court treated t-e re/!"tered deed o% pacto de retro a" a$ eu!ta*+e ort/a/e *ut co$"!dered t-e u$re/!"tered deed o% pacto de retro a" a ere ca"e o% "!p+e +oa$, "ecured *# t-e propert# t-u" "o+d u$derpacto de retro, o$ t-e /rou$d t-at $o "u!t +!e" to %orec+o"e a$ u$re/!"tered ort/a/e. It 3ou+d appear t-at t-e tr!a+ ud/e -ad $ot updated -!"e+% o$ +a3 a$d ur!"prude$ce) -e c!ted, !$ "upport o% -!" ru+!$/, art!c+e (67 o% t-e o+d C!1!+ Code a$d dec!"!o$" o% t-!" Court c!rca (=(0 a$d (=(2. ;$der art!c+e (67 o% t-e C!1!+ Code o% (66=, re/!"trat!o$ 3a" a $ece""ar# reu!"!te %or t-e 1a+!d!t# o% a ort/a/e e1e$ a" *et3ee$ t-e part!e", *ut u$der art!c+e 2(2 o% t-e $e3 C!1!+ Code 4!$ eect "!$ce Au/u"t &0,(=05, t-!" !" $o + o$/er "o. ' I% t-e !$"true$t !" $ot recorded, t-e ort/a/e !" $o$et-e+e"" *!$d!$/ *et3ee$ t-e part!e". 4Art!c+e 2(2, 2$d "e$te$ce5. T-e a+de-uea" -a1!$/ rea!$ed !$ po""e""!o$ o% t-e +a$d a$d t-e rea+t# taxe" -a1!$/ *ee$ pa!d *# t-e, t-e co$tract" 3-!c- purported to *e pacto de retro tra$"act!o$" are pre"ued to *e eu!ta*+e ort/a/e", 3-et-er re/!"tered or $ot, t-ere *e!$/ $o t-!rd part!e" !$1o+1ed. &. T-e a+de-uea" c+a! t-at t-e!r a$"3er to t-e cop+a!$t o% t-e p+a!$t! aJred t-at t-e# rea!$ed !$ po""e""!o$ o% t-e +a$d a$d /a1e t-e proceed" o% t-e -ar1e"t to t-e p+a!$t!) !t !" t-u" ar/ued t-at t-e# 3ou+d "uer dou*+e preud!ce !% t-e# are to pa# +e/a+ !$tere"t o$ t-e aou$t" "tated !$ t-e pacto de retro co$tract", a" t-e +o3er court -a" d!rected, a$d t-at t-ere%ore t-e court "-ou+d -a1e ordered e1!de$ce to *e adduced o$ t-e -ar1e"t.
T-e record doe" $ot "upport t-!" c+a!. No3-ere !$ t-e or!/!$a+ a$d t-e ae$ded cop+a!$t" !" a$ a++e/at!o$ o% de+!1er# to t-e p+a!$t! o% t-e -ar1e"t %ro t-e +a$d !$1o+1ed !$ t-e "eco$d cau"e o% act!o$. He$ce, t-e de%e$da$t" a$"3er -ad $o$e to aJr. I$ "u*!tt!$/ t-e!r "t!pu+at!o$ o% %act", t-e part!e" pra#ed %or !t" appro1a+ a$d a#*e ade t-e *a"!" o% t-e dec!"!o$ o% t-!" Ho$ora*+e Court. 4ep-a"!" "upp+!ed5 T-!", t-e court d!d. It ca$$ot t-ere%ore *e %au+ted %or $ot rece!1!$/ e1!de$ce o$ 3-o pro9ted %ro t-e -ar1e"t. '. T-e !po"!t!o$ o% +e/a+ !$tere"t o$ t-e aou$t" "u*ect o% t-e eu!ta*+e ort/a/e", P(,200 a$d P&00, re"pect!1e+#, !" 3!t-out +e/a+ *a"!", %or, No !$tere"t "-a++ *e due u$+e"" !t -a" *ee$ expre""+# "t!pu+ated !$ 3r!t!$/. 4Art!c+e (=, $e3 C!1!+ Code5 Furt-erore, t-e p+a!$t! d!d $ot pra# %or "uc- !$tere"t) -er t-e"!" 3a" a co$"o+!dat!o$ o% o3$er"-!p, 3-!c- 3a" proper+# reected, t-e co$tract" *e!$/ eu!ta*+e ort/a/e". @!t- t-e de9$!t!1e re"o+ut!o$ o% t-e r!/-t" o% t-e part!e" a" d!"cu""ed a*o1e, 3e 9$d !t $eed+e"" to pa"" upo$ t-e p+a!$t!" pet!t!o$ %or rece!1er"-!p. S-ou+d t-e c!rcu"ta$ce" "o 3arra$t, "-e a# addre"" t-e "a!d pet!t!o$ to t-e court a uo. ACCORDINL<, t-e ud/e$t a uo !" -ere*# od!9ed, a" %o++o3"> 4a5 t-e aou$t" o% P(,200 a$d P&00 e$t!o$ed !$ A$$exe" E a$d D "-a++ *ear !$tere"t at "!x perce$t per a$$u %ro t-e 9$a+!t# o% t-!" dec!"!o$) a$d 4*5 t-e parce+ o% +a$d co1ered *# A$$ex D "-a++ *e treated !$ t-e "ae a$$er a" t-at co1ered *# A$$ex E, "-ou+d t-e de%e$da$t" %a!+ to pa# to t-e p+a!$t! t-e "u o% P&00 3!t-!$ =0 da#" %ro t-e 9$a+!t# o% t-!" dec!"!o$. I$ a++ ot-er re"pect" t-e ud/e$t !" aJred. No co"t".
G.R. No. (5897 August 6 1+9 (%C$A TAN plaintiB5appellee vs. ARADR ;A(D&'%&A and R&D$C%( ;A(D&'%&A defendants5appellants. Alaric P. Acosta for plaintiB5appellee. (orenFo P. de GuF
CASTRO, .> T-!" appea+ 3a" cert!9ed to t-!" Court *# t-e Court o% Appea+" a" !$1o+1!$/ ue"t!o$" pure+# o% +a3. T-e dec!"!o$ a uo 3a" re$dered *# t-e Court o% F!r"t I$"ta$ce o% M!"a!" Occ!de$ta+ 4Bra$c- I5 !$ a$ act!o$ !$"t!tuted *# t-e p+a!$t!?appe++ee Luc!a Ta$ a/a!$"t t-e de%e$da$t"?appe++a$t" Arador a+de-uea a$d Red!cu+o a+de-uea 4doc8eted a" c!1!+ ca"e 27'5 %or 4a5 dec+arat!o$ o% o3$er"-!p a$d reco1er# o% po""e""!o$ o% t-e parce+ o% +a$d de"cr!*ed !$ t-e 9r"t cau"e o% act!o$ o% t-e cop+a!$t, a$d 4*5 co$"o+!dat!o$ o% o3$er"-!p o% t3o port!o$" o% a$ot-er parce+ o% 4u$re/!"tered5 +a$d de"cr!*ed !$ t-e "eco$d cau"e o% act!o$ o% t-e cop+a!$t, purported+# "o+d to t-e p+a!$t! !$ t3o "eparate deed" o% pacto de retro. A%ter t-e !""ue" 3ere o!$ed, t-e part!e" "u*!tted t-e %o++o3!$/ "t!pu+at!o$ o% %act"> (. T-at part!e" ad!t t-e +e/a+ capac!t# o% p+a!$t! to "ue) t-at de%e$da$t" -ere!$, Arador, Red!cu+o, Pac!ta, Co$cepc!o$ a$d Ro"ar!o, a++ "ur$aed a+de-uea, are *rot-er" a$d "!"ter") t-at t-e a$"3er 9+ed *# Arador a$d Red!cu+o "ta$d a" t-e a$"3er o% Pac!ta, Co$cepc!o$ a$d Ro"ar!o.
2. T-at t-e part!e" ad!t t-e !de$t!t# o% t-e +a$d !$ t-e 9r"t cau"e o% act!o$.
. T-at %ro t-e execut!o$ o% t-e Deed o% Sa+e 3!t- r!/-t to repurc-a"e e$t!o$ed !$ t-e "eco$d cau"e o% act!o$, de%e$da$t" Arador a+de-uea a$d Red!cu+o a+de-uea rea!$ed !$ t-e po""e""!o$ o% t-e +a$d) t-at +a$d taxe" to t-e "a!d +a$d 3ere pa!d *# t-e "ae "a!d de%e$da$t".
&. T-at t-e parce+ o% +a$d de"cr!*ed !$ t-e 9r"t cau"e o% act!o$ 3a" t-e "u*ect atter o% t-e pu*+!c auct!o$ "a+e -e+d o$ Ma# , (= at t-e Cap!to+ Bu!+d!$/ !$ Orou!eta, M!"a!" Occ!de$ta+, 3-ere!$ t-e p+a!$t! 3a" t-e -!/-e"t *!dder a$d a" "uc- a Cert!9cate o% Sa+e 3a" executed *# MR. ICENTE D. ROA 3-o 3a" t-e$ t-e Ex?OJc!o Pro1!$c!a+ S-er! !$ %a1or o% L;CIA TAN t-e -ere!$ p+a!$t!. Due to t-e %a!+ure o% de%e$da$t Arador a+de-uea to redee t-e "a!d +a$d 3!t-!$ t-e per!od o% o$e #ear a" *e!$/ pro1!ded *# +a3, MR. ICENTE D. ROA 3-o 3a" t-e$ t-e Ex? OJc!o Pro1!$c!a+ S-er! executed a$ ABSOL;TE DEED OF SALE !$ %a1or o% t-e p+a!$t! L;CIA TAN.
C!1!+ ca"e 2002 re%erred to !$ "t!pu+at!o$ o% %act $o. ' 3a" a cop+a!$t %or !$u$ct!o$ 9+ed *# Ta$ o$ u+# 2', (=7 a/a!$"t t-e a+de-uea", to e$o!$ t-e %ro e$ter!$/ t-e a*o1e? de"cr!*ed parce+ o% +a$d a$d /at-er!$/ t-e $ut" t-ere!$ .... T-!" cop+a!$t a$d t-e cou$terc+a! 3ere "u*"eue$t+# d!"!""ed %or %a!+ure o% t-e part!e" to "ee8 %or t-e !ed!ate tr!a+ t-ereo%, t-u" e1!$c!$/ +ac8 o% !$tere"t o$ t-e!r part to proceed 3!t- t-e ca"e. (
A cop# o% t-e NOTICE OF SHERIFFS SALE !" -ere*# ar8ed a" A$$ex A, t-e CERTIFICATE OF SALE !" ar8ed a" A$$ex B a$d t-e ABSOL;TE DEED OF SALE !" -ere*# ar8ed a" A$$ex C a$d a++ o% 3-!c- are ade a" !$te/ra+ part" o% t-!" "t!pu+at!o$ o% %act".
T-e Deed o% Pacto de Retro re%erred to !$ "t!pu+at!o$ o% %act $o. a" A$$ex D 4dated Au/u"t , (=5 3a" $ot re/!"tered !$ t-e Re/!"tr# o% Deed", 3-!+e t-e Deed o% Pacto de Retro re%erred to a" A$$ex E 4dated Marc- (, (=5 3a" re/!"tered.
'. T-at t-e part#?p+a!$t! !" t-e "ae p+a!$t! ! $ C!1!+ Ca"e No. 2002) t-at t-e part!e" de%e$da$t" Arador, Red!cu+o a$d Pac!ta, a++ a+de-uea 3ere t-e "ae part!e"?de%e$da$t" !$ t-e "ae "a!d C!1!+ Ca"e No. 2002) t-e cop+a!$t !$ C!1!+ Ca"e No. 2002 to *e ar8ed a" Ex-!*!t () t-e a$"3er a" Ex-!*!t 2 a$d t-e order dated Ma# 22, (=& a" Ex-!*!t &, a$d "a!d ex-!*!t" are ade !$te/ra+ part o% t-!" "t!pu+at!o$. . T-at de%e$da$t" ARADOR ALDEH;EZA a$d REDIC;LO ALDEH;EZA -a1e executed t3o docue$t" o% DEED OF PACTO DE RETRO SALE !$ %a1or o% t-e p+a!$t! -ere!$, L;CIA TAN o% t3o port!o$" o% a parce+ o% +a$d 3-!c- !" de"cr!*ed !$ t-e "eco$d cau"e o% act!o$ 3!t- t-e tota+ aou$t o% ONE THO;SAND FIE H;NDRED PESOS 4P(,00.005, P-!+!pp!$e Curre$c#, cop!e" o% "a!d docue$t" are ar8ed a" A$$ex D a$d A$$ex E, re"pect!1e+# a$d ade a" !$te/ra+ part" o% t-!" "t!pu+at!o$ o% %act".
O$ t-e *a"!" o% t-e "t!pu+at!o$ o% %act" a$d t-e a$$exe", t-e tr!a+ court re$dered ud/e$t, a" %o++o3"> @HEREFORE, ud/e$t !" -ere*# re$dered !$ %a1or o% t-e p+a!$t!> (. Dec+ar!$/ Luc!a Ta$ t-e a*"o+ute o3$er o% t-e propert# de"cr!*ed !$ t-e 9r"t cau"e o% act!o$ o% t-e ae$ded cop+a!$t) a$d order!$/ t-e -ere!$ de%e$da$t" $ot to e$croac- a$d o+e"t -er !$ t-e exerc!"e o% -er propr!etar# r!/-t") a$d, %ro 3-!c- propert# t-e# u"t *e d!"po""e""ed) 2. Order!$/ t-e de%e$da$t", Arador a+de-uea a$d Red!cu+o a+de-uea o!$t+# a$d "e1era++# to pa# to t-e p+a!$t!, Luc!a Ta$, o$ A$$ex E t-e aou$t o% P(,200, 3!t- +e/a+ !$tere"t o% a" o% Au/u"t (, (=, 3!t-!$ =0 da#" to *e depo"!ted 3!t- t-e OJce o% t-e Court 3!t-!$ =0 da#" %ro t-e date o%
"er1!ce o% t-!" dec!"!o$, a$d t-at !$ de%au+t o% "uc- pa#e$t t-e propert# "-a++ *e "o+d !$ accorda$ce 3!t- t-e Ru+e" o% Court %or t-e re+ea"e o% t-e ort/a/e de*t, p+u" co"t") &. A$d a" re/ard" t-e +a$d co1ered *# deed o% pacto de retro a$$ex D, t-e -ere!$ de%e$da$t" Arador a+de-uea a$d Red!cu+o a+de-uea are -ere*# ordered to pa# t-e p+a!$t! t-e aou$t o% P&00 3!t- +e/a+ !$tere"t o% %ro Au/u"t (, (=, t-e "a!d +a$d "er1!$/ a" /uara$t# o% t-e "a!d aou$t o% pa#e$t) '. Se$te$c!$/ t-e de%e$da$t" Arador a+de-uea a$d Red!cu+o a+de-uea to pa# o!$t+# a$d "e1era++# to t-e -ere!$ p+a!$t! Luc!a Ta$ t-e aou$t o% (,000.00 a" attor$e#" %ee") a$d . . To pa# t-e co"t" o% t-e proceed!$/". T-e a+de-uea" appea+ed, a""!/$!$/ t-e %o++o3!$/ error"> T-at t-e +o3er court erred !$ %a!+!$/ to adud/e o$ t-e 9r"t cau"e o% act!o$ t-at t-ere ex!"t" re" ud!cata) a$d T-at t-e +o3er court erred !$ a8!$/ a 9$d!$/ o$ t-e "eco$d cau"e o% act!o$ t-at t-e tra$"act!o$" *et3ee$ t-e part!e" 3ere "!p+e +oa$, !$"tead, !t "-ou+d *e dec+ared a" eu!ta*+e ort/a/e. @e aJr !$ part a$d od!%# !$ part. (. Re+#!$/ o$ Sect!o$ & o% Ru+e (7 o% t-e Ru+e" o% Court 3-!cpert!$e$t+# pro1!de" t-at a d!"!""a+ %or %a!+ure to pro"ecute "-a++ -a1e t-e eect o% a$ adud!cat!o$ upo$ t-e er!t", t-e a+de-uea" "u*!t t-at t-e d!"!""a+ o% c!1!+ ca"e 2002 operated, upo$ t-e pr!$c!p+e o% re" ud!cata, a" a *ar to t-e 9r"t cau"e o% act!o$ !$ c!1!+ ca"e 27'. @e ru+e t-at t-!" co$te$t!o$ !" u$te$a*+e a" t-e cau"e" o% act!o$ !$ t-e t3o ca"e" are $ot !de$t!ca+. Ca"e 2002 3a" %or !$u$ct!o$ a/a!$"t t-e e$tr# !$to a$d t-e /at-er!$/ o% $ut" %ro t-e +a$d, 3-!+e
ca"e 27' "ee8" to reo1e a$# dou*t or c+oud o% t-e p+a!$t!" o3$er"-!p ... 4Ae$ded cop+a!$t, Rec. o$ App., p. 275, 3!t- a pra#er %or dec+arat!o$ o% o3$er"-!p a$d reco1er# o% po""e""!o$. App+#!$/ t-e te"t o% a*"e$ce o% !$co$"!"te$c# *et3ee$ pr!or a$d "u*"eue$t ud/e$t", 2 3e -o+d t-at t-e %a!+ure o% Ta$, !$ ca"e 2002, to "ecure a$ !$u$ct!o$ a/a!$"t t-e a+de-uea" to pre1e$t t-e %ro e$ter!$/ t-e +a$d a$d /at-er!$/ $ut" !" $ot !$co$"!"te$t 3!t- -er *e!$/ adud/ed, !$ ca"e 27', a" o3$er o% t-e +a$d 3!t- r!/-t to reco1er po""e""!o$ t-ereo%. Ca"e 2002 !$1o+1ed o$+# t-e po""e""!o$ o% t-e +a$d a$d t-e %ru!t" t-ereo%, 3-!+e ca"e 27' !$1o+1e" o3$er"-!p o% t-e +a$d, 3!t- po""e""!o$ a" a ere attr!*ute o% o3$er"-!p. T-e ud/e$t !$ t-e 9r"t ca"e cou+d $ot a$d d!d $ot e$copa"" t-e ud/e$t !$ t-e "eco$d, a+t-ou/- t-e "eco$d ud/e$t 3ou+d e$copa"" t-e 9r"t. Moreo1er, t-e $e3 C!1!+ Code pro1!de" t-at "u!tor" !$ act!o$" to u!et t!t+e $eed $ot *e !$ po""e""!o$ o% "a!d propert#. & 2. T-e tr!a+ court treated t-e re/!"tered deed o% pacto de retro a" a$ eu!ta*+e ort/a/e *ut co$"!dered t-e u$re/!"tered deed o% pacto de retro a" a ere ca"e o% "!p+e +oa$, "ecured *# t-e propert# t-u" "o+d u$derpacto de retro, o$ t-e /rou$d t-at $o "u!t +!e" to %orec+o"e a$ u$re/!"tered ort/a/e. It 3ou+d appear t-at t-e tr!a+ ud/e -ad $ot updated -!"e+% o$ +a3 a$d ur!"prude$ce) -e c!ted, !$ "upport o% -!" ru+!$/, art!c+e (67 o% t-e o+d C!1!+ Code a$d dec!"!o$" o% t-!" Court c!rca (=(0 a$d (=(2. ;$der art!c+e (67 o% t-e C!1!+ Code o% (66=, re/!"trat!o$ 3a" a $ece""ar# reu!"!te %or t-e 1a+!d!t# o% a ort/a/e e1e$ a" *et3ee$ t-e part!e", *ut u$der art!c+e 2(2 o% t-e $e3 C!1!+ Code 4!$ eect "!$ce Au/u"t &0,(=05, t-!" !" $o + o$/er "o. ' I% t-e !$"true$t !" $ot recorded, t-e ort/a/e !" $o$et-e+e"" *!$d!$/ *et3ee$ t-e part!e". 4Art!c+e 2(2, 2$d "e$te$ce5.
T-e a+de-uea" -a1!$/ rea!$ed !$ po""e""!o$ o% t-e +a$d a$d t-e rea+t# taxe" -a1!$/ *ee$ pa!d *# t-e, t-e co$tract" 3-!c- purported to *e pacto de retro tra$"act!o$" are pre"ued to *e eu!ta*+e ort/a/e", 3-et-er re/!"tered or $ot, t-ere *e!$/ $o t-!rd part!e" !$1o+1ed. &. T-e a+de-uea" c+a! t-at t-e!r a$"3er to t-e cop+a!$t o% t-e p+a!$t! aJred t-at t-e# rea!$ed !$ po""e""!o$ o% t-e +a$d a$d /a1e t-e proceed" o% t-e -ar1e"t to t-e p+a!$t!) !t !" t-u" ar/ued t-at t-e# 3ou+d "uer dou*+e preud!ce !% t-e# are to pa# +e/a+ !$tere"t o$ t-e aou$t" "tated !$ t-e pacto de retro co$tract", a" t-e +o3er court -a" d!rected, a$d t-at t-ere%ore t-e court "-ou+d -a1e ordered e1!de$ce to *e adduced o$ t-e -ar1e"t. T-e record doe" $ot "upport t-!" c+a!. No3-ere !$ t-e or!/!$a+ a$d t-e ae$ded cop+a!$t" !" a$ a++e/at!o$ o% de+!1er# to t-e p+a!$t! o% t-e -ar1e"t %ro t-e +a$d !$1o+1ed !$ t-e "eco$d cau"e o% act!o$. He$ce, t-e de%e$da$t" a$"3er -ad $o$e to aJr. I$ "u*!tt!$/ t-e!r "t!pu+at!o$ o% %act", t-e part!e" pra#ed %or !t" appro1a+ a$d a#*e ade t-e *a"!" o% t-e dec!"!o$ o% t-!" Ho$ora*+e Court. 4ep-a"!" "upp+!ed5 T-!", t-e court d!d. It ca$$ot t-ere%ore *e %au+ted %or $ot rece!1!$/ e1!de$ce o$ 3-o pro9ted %ro t-e -ar1e"t. '. T-e !po"!t!o$ o% +e/a+ !$tere"t o$ t-e aou$t" "u*ect o% t-e eu!ta*+e ort/a/e", P(,200 a$d P&00, re"pect!1e+#, !" 3!t-out +e/a+ *a"!", %or, No !$tere"t "-a++ *e due u$+e"" !t -a" *ee$ expre""+# "t!pu+ated !$ 3r!t!$/. 4Art!c+e (=, $e3 C!1!+ Code5 Furt-erore, t-e p+a!$t! d!d $ot pra# %or "uc- !$tere"t) -er t-e"!" 3a" a co$"o+!dat!o$ o% o3$er"-!p, 3-!c- 3a" proper+# reected, t-e co$tract" *e!$/ eu!ta*+e ort/a/e". @!t- t-e de9$!t!1e re"o+ut!o$ o% t-e r!/-t" o% t-e part!e" a" d!"cu""ed a*o1e, 3e 9$d !t $eed+e"" to pa"" upo$ t-e p+a!$t!" pet!t!o$ %or rece!1er"-!p. S-ou+d t-e c!rcu"ta$ce"
"o 3arra$t, "-e a# addre"" t-e "a!d pet!t!o$ to t-e court a uo. ACCORDINL<, t-e ud/e$t a uo !" -ere*# od!9ed, a" %o++o3"> 4a5 t-e aou$t" o% P(,200 a$d P&00 e$t!o$ed !$ A$$exe" E a$d D "-a++ *ear !$tere"t at "!x perce$t per a$$u %ro t-e 9$a+!t# o% t-!" dec!"!o$) a$d 4*5 t-e parce+ o% +a$d co1ered *# A$$ex D "-a++ *e treated !$ t-e "ae a$$er a" t-at co1ered *# A$$ex E, "-ou+d t-e de%e$da$t" %a!+ to pa# to t-e p+a!$t! t-e "u o% P&00 3!t-!$ =0 da#" %ro t-e 9$a+!t# o% t-!" dec!"!o$. I$ a++ ot-er re"pect" t-e ud/e$t !" aJred. No co"t".
P'$($PP$N& NAT$NA( 4AN@ petitioner vs. C%RT ! APP&A(" and DR. &R($NDA G. $4ARR(A respondents. R&"(%T$N !RANC$"C :.# A" pa#e$t" %or t-e purc-a"e o% ed!c!$e", t-e Pro1!$ce o% I"a*e+a !""ued "e1era+ c-ec8" dra3$ a/a!$"t !t" accou$t" 3!t- pet!t!o$er P-!+!pp!$e Nat!o$a+ Ba$8 4PNB5 !$ %a1or o% t-e "e++er, L#$do$ P-araceut!ca+" La*orator!e", a *u"!$e"" operated *# pr!1ate re"po$de$t I*arro+a. T-e c-ec8" 3ere de+!1ered to t-e "e++er" a/e$t" (X 3-o tur$ed t-e o1er to I*arro+a, except 2& c-ec8" aou$t!$/ to P=6,=(.=0, 3-!c- t-e a/e$t" appropr!ated a%ter $e/ot!at!$/ t-e 3!tPNB. For -er %a!+ure to rece!1e t-e %u++ pa#e$t %or t-e ed!c!$e", I*arro+a 9+ed o$ No1e*er , (=7' *e%ore t-e Re/!o$a+ Tr!a+ Court 4RTC5 a$ act!o$ %or a "u o% o$e# a$d daa/e", doc8eted a" C!1!+ Ca"e '22?P, 2X a/a!$"t t-e Pro1!$ce o% I"a*e+a, !t" Trea"urer, t-e t3o a/e$t" a$d PNB. I$ !t" dec!"!o$ dated Septe*er 2=, (=67, t-e tr!a+ court ordered a++ t-e de%e$da$t" !$ "a!d c!1!+ ca"e, except t-e
trea"urer 3-o d!ed !$ t-e ea$t!e, to o!$t+# a$d "o+!dar!+# pa# I*arro+a "e1era+ aou$t", ao$/ 3-!c- !"> 4(5 P=6,=(.=0 3!t- !$tere"t t-ereo$ at t-e +e/a+ rate %ro t-e date o% t-e 9+!$/ o% t-e cop+a!$t u$t!+ t-e e$t!re aou$t !" %u++# pa!d)&X 4Ita+!c" "upp+!ed.5 PNB" appea+ to t-e Court o% Appea+" 4CA5 'X a$d +ater to t-e Supree CourtX 3ere de$!ed a$d d!"!""ed, re"pect!1e+#. A++ t-e t-ree court", -o3e1er, d!d $ot "pec!%# 3-et-er t-e +e/a+ rate o% !$tere"t re%erred to !$ t-e ud/e$t !" or (2. T-e ud/e$t !$ C!1!+ Ca"e '22?P *ecae 9$a+ a$d executor# o$ No1e*er 2, (==&. At t-e execut!o$ "ta/e, t-e "-er! coputed t-e !$tere"t e$t!o$ed !$ t-e ud/e$t at t-e rate o% (2 3-!c- PNB oppo"ed !$"!"t!$/ t-at t-e rate "-ou+d o$+# *e . I*arro+a "ou/-t c+ar!9cat!o$ %ro t-e "ae RTC 3-!c- prou+/ated t-e dec!"!o$. O$ Au/u"t ', (==' "a!d court ! ""ued a$ order c+ar!%#!$/ t-at t-e rate !" (2. PNB" d!rect appea+ to t-!" court %ro t-at order 3a" re%erred to t-e CA 3-!c- aJred t-e RTC order. He$ce, t-!" pet!t!o$ %or re1!e3 u$der Ru+e ' 3-ere t3o +e/a+ !""ue" are ra!"ed> 4(5 3-et-er !$ a$ act!o$ %or daa/e", t-e +e/a+ rate o% !$tere"t !" a" pro1!ded *# Art!c+e 220=X o% t-e Ne3 C!1!+ Code or (2 a" pro1!ded *# CB C!rcu+ar '( "er!e" o% (=7',7X a$d 425 3-et-er "uc- rate "-a++ *e coputed %ro t-e 9+!$/ o% t-e cop+a!$t u$t!+ %u++# pa!dK T-e !""ue" are $ot $e3. I$ t-e ca"e o% Ea"ter$ S-!pp!$/ L!$e", I$c. 1. CA,6X t-!" Court -ad pro1!ded a ru+e o% t-u* %or %uture /u!da$ce,=X to 3!t> @-e$ a$ o*+!/at!o$, $ot co$"t!tut!$/ a +oa$ or %or*eara$ce o% o$e#, !" *reac-ed, a$ !$tere"t o$ t-e aou$t o% daa/e" a3arded a# *e !po"ed at t-e d!"cret!o$ o% t-e court at t-e rate o% per a$$u. No ! $tere"t, -o3e1er, "-a++ *e adud/ed o$ u$+!u!dated c+a!" or daa/e" except 3-e$ or u$t!+ t-e dea$d ca$ *e e"ta*+!"-ed 3!t- rea"o$a*+e
certa!$t#. Accord!$/+#, 3-ere t-e dea$d !" e"ta*+!"-ed 3!trea"o$a*+e certa!$t#, t-e !$tere"t "-a++ *e/!$ to ru$ %ro t-e t!e t-e c+a! !" ade ud!c!a++# or extraud!c!a++# 4Art. ((=, C!1!+ Code5 *ut 3-e$ "uc- certa!$t# ca$$ot *e "o rea"o$a*+# e"ta*+!"-ed at t-e t!e t-e dea$d !" ade, t-e !$tere"t "-a++ *e/!$ to ru$ o$+# %ro t-e date t-e ud/e$t o% t-e court !" ade 4at 3-!c- t!e t-e ua$t!9cat!o$ o% daa/e" a# *e deeed to -a1e *ee$ rea"o$a*+# a"certa!$ed5. T-e actua+ *a"e %or t-e coputat!o$ o% +e/a+ !$tere"t "-a++, !$ a$# ca"e, *e o$ t-e aou$t 9$a++# adud/ed. (0X 4Ita+!c" our".5 T-e ca"e at *e$c- doe" $ot !$1o+1e a +oa$. For*eara$ce o% o$e# or ud/e$t !$1o+1!$/ a +oa$ or %or*eara$ce o% o$e# a" !t aro"e %ro a co$tract o% "a+e 3-ere*# I*arro+a d!d $ot rece!1e %u++ pa#e$t %or -er erc-a$d!"e. @-e$ a$ o*+!/at!o$ ar!"e" %ro a co$tract o% purc-a"e a$d "a+e a$d $ot %ro a co$tract o% +oa$ or utuu, t-e app+!ca*+e rate !" per a$$u a" pro1!ded !$ Art!c+e 220= o% t-e NCC a$d $ot t-e rate o% (2 per a$$u a" pro1!ded !$ 4CB5 C! r. No. '(. ((X I$deed, PNB" +!a*!+!t# !" *a"ed o$+# o$ t-e RTC" ud/e$t 3-ere !t 3a" -e+d "o+!dar!+# +!a*+e 3!t- t-e ot-er de%e$da$t" due to !t" $e/+!/e$ce 3-e$ !t %a!+ed to a""ure !t"e+% !% t-e Pro1!$c!a+ Trea"urer 3a" proper+# aut-or!ed *# I*arro+a to a8e e$dor"ee$t" o% "a!d c-ec8". (2X T-e rate o% (2 !$tere"t re%erred to !$ C!r. '( app+!e" o$+# to> LXoa$ or %or*eara$ce o% o$e#, or to ca"e" 3-ere o$e# !" tra$"%erred %ro o$e per"o$ to a$ot-er a$d t-e o*+!/at!o$ to retur$ t-e "ae or a port!o$ t-ereo% !" adud/ed. A$# ot-er o$etar# ud/e$t 3-!c- doe" $ot !$1o+1e or 3-!c- -a" $ot-!$/ to do 3!t- +oa$" or %or*eara$ce o% a$# o$e#, /ood" or cred!t doe" $ot %a++ 3!t-!$ !t" co1era/e %or "uc- ! po"!t!o$ !" $ot 3!t-!$ t-e a*!t o% t-e aut-or!t# /ra$ted to t-e Ce$tra+ Ba$8. @-e$ a$ o*+!/at!o$ $ot co$"t!tut!$/ a +oa$ or %or*eara$ce o% o$e# !" *reac-ed t-e$ a$ ! $tere"t o$ t-e
aou$t o% daa/e" a3arded a# *e ! po"ed at t-e d!"cret!o$ o% t-e court at t-e rate o% per a$$u !$ accorda$ce 3!t- Art. 220= o% t-e C!1!+ Code. I$deed, t-e o$etar# ud/e$t !$ %a1or o% pr!1ate re"po$de$t doe" $ot !$1o+1e a +oa$ or %or*eara$ce o% o$e#, -e$ce t-e proper !po"a*+e rate o% !$tere"t !" "!x 45 per ce$t. (&X 4Ita+!c" our".5
P'$($PP$N& NAT$NA( 4AN@
App+#!$/ t-e a%oreuoted ru+e, t-ere%ore , t-e proper rate o% !$tere"t re%erred to !$ t-e ud/e$t u$der execut!o$ !" o$+# . T-!" !$tere"t accord!$/ to Ea"ter$ S-!pp!$/ "-a++ *e coputed %ro t-e t!e o% t-e 9+!$/ o% t-e cop+a!$t co$"!der!$/ t-at t-e aou$t adud/ed 4P=6,=(.=05 ca$ *e e"ta*+!"-ed 3!t- rea"o$a*+e certa!$t#. Sa!d aou$t *e!$/ ere+# t-e u$co++ected *a+a$ce o% t-e purc-a"e pr!ce co1ered *# t-e 2& c-ec8" e$ca"-ed a$d appropr!ated *# I*arro+a" a/e$t". Ho3e1er, o$ce t-e ud/e$t *ecoe" 9$a+ a$d executor#, t-e !$ter! per!od %ro t-e 9$a+!t# o% ud/e$t a3ard!$/ a o$etar# c+a! a$d u$t!+ pa#e$t t-ereo%, !" deeed to *e eu!1a+e$t to a %or*eara$ce o% cred!t. ('X T-u", !$ accorda$ce 3!t- t-e pro$ou$cee$t !$ Ea"ter$ S-!pp!$/ t-e rate o% (2 p.a. "-ou+d *e !po"ed, a$d to *e coputed %ro t-e t!e t-e ud/e$t *ecae 9$a+ a$d executor# u$t!+ %u++# "at!"9ed. T-e actua+ *a"e %or t-e coputat!o$ o% t-!" (2 !$tere"t a%ter t-e ud/e$t !$ t-!" daa/e "u!t *ecae 9$a+ "-a++ *e t-e aou$t adud/ed 4P=6,=(.=05.
!ACT"#
ACCORDINL<, t-e appea+ed dec!"!o$ !" REERSED. T-e rate o% !$tere"t "-a++ *e p.a. coputed %ro t-e t!e o% t-e 9+!$/ o% t-e cop+a!$t u$t!+ !t" %u++ pa#e$t *e%ore 9$a+!t# o% ud/e$t. T-erea%ter, !% t-e aou$t adud/ed rea!$" u$pa!d, t-e !$tere"t rate "-a++ *e (2 p.a. coputed %ro t-e t!e t-e ud/e$t *ecae 9$a+ a$d executor# o$ No1e*er 2, (==& u$t!+ %u++# "at!"9ed. SO ORDERED.
petitioner vs T'& 'N. C%RT ! P&A(" and A34R"$PAD$((A respondents GRH 8888. April 1++1. GR$R5AI%$N :
Pr!1ate re"po$de$t 4PR5 A*ro"!o Pad!++a, app+!ed %or a$d 3a" /ra$ted a cred!t +!$e o% &2(.6!++!o$, *# pet!t!o$er PNB. T-!" 3a" %or a ter o% 2 #ear" at (6 !$tere"t per a$$u a$d 3a" "ecured *#rea+ e"tate ort/a/e a$d 2 pro!""or# $ote" executed !$ % a1or o% Pet!t!o$er *# PR. T-e cred!t a/reee$ta$d t-e pro!""or# $ote", !$ eect, pro1!de t-at PR a/ree" to *e *ou$d *# !$crea"e" to t-e !$tere"t rate"t!pu+ated, pro1!ded !t !" 3!t-!$ t-e +!!t" pro1!ded %or *# +a3.Co$V!ct !$ t-!" ca"e aro"e 3-e$ Pet!t!o$er u$!+atera++# !$crea"ed t-e !$tere"t rate %ro (6 to> 4(5 &2u+# (=6'X) 425 '( Octo*er (=6'X) a$d 4&5 '6 No1e*er (=6'X, or & t!e" 3!t-!$ t-e "pa$ o% a "!$/+e#ear. T-!" 3a" do$e de"p!te t-e $uerou" +etter" o% reue"t ade *# PR t-at t-e !$tere"t rate *e!$crea"ed o$+# to 2( or 2'.PR 9+ed a cop+a!$t a/a!$"t Pet!t!o$er 3!t- t-e RTC. T-e +atter d!"!""ed t-e ca"e %or +ac8 o% er!t. Appea+ *# PR to CA re"u+ted !$ -!" %a1or. He$ce t-e pet!t!o$ %or cert!orar! u$der Ru+e ' o% ROC 9+ed *#PNB 3!t- SC.
$""%&# De"p!te t-e reo1a+ o% t-e ;"ur# La3 ce!+!$/ o$ !$tere"t, a# t-e *a$8 1a+!d+# !$crea"e t-e"t!pu+ated !$tere"t rate o$ +oa$" co$tracted 3!t- t-!rd per"o$" a" o%te$ a" $ece""ar# a$d a/a!$"t t-eprote"t o% "uc- per"o$".
'&(D#
N RAT$# A+t-ou/- u$der Sec. 2 o% PD ((, t-e Mo$etar# Board !" aut-or!ed to pre"cr!*e t-e ax!urate o% !$tere"t %or +oa$" a$d to c-a$/e "uc- rate" 3-e$e1er 3arra$ted *# pre1a!+!$/ eco$o!c a$d "oc!a+co$d!t!o$", *# expre"" pro1!"!o$, !t a# $ot do "o o%te$er t-a$ o$ce e1er# (2 o$t-". I% t-e Mo$etar#Board ca$$ot, uc- +e"" ca$ PNB, eect !$crea"e" o$ t-e !$tere"t rate" ore t-a$ o$ce a #ear.Ba"ed o$ t-e cred!t a/reee$t a$d pro!""or# $ote" executed *et3ee$ t-e part!e", a+t-ou/- PR d!da/ree to !$crea"e o$ t-e !$tere"t rate" a++o3ed *# + a3, $o +a3 3a" pa""ed 3arra$t!$/ Pet!t!o$er to eect!$crea"e o$ t-e !$tere"t rate" o$ t-e ex!"t!$/ +oa$ o% PR %or t-e o$t-" o% u+# to No1e*er o% (=6'.Ne!t-er t-ere *e!$/ a$# docue$t executed a$d de+!1ered *# PR to eect "uc- !$crea"e.For e"ca+at!o$ c+au"e" to *e 1a+!d a$d 3arra$t t-e !$crea"e o% t-e !$tere"t rate" o$ +oa$", t-ere u"t *e>4(5 !$crea"e 3a" ade *# +a3 or *# t-e Mo$etar# Board) 425 "t!pu+at!o$ u"t !$c+ude a c+au"e %or t-ereduct!o$ o% t-e "t!pu+ated !$tere"t rate !$ t-e e1e$t t-at t-e ax!u !$tere"t !" +o3ered *# +a3 or *# t-eMo$etar# *oard. I$ t-!" ca"e, PNB ere+# re+!ed o$ !t" o3$ Board Re"o+ut!o$", 3-!c- are $ot + a3" $or re"o+ut!o$" o% t-e Mo$etar# Board.De"p!te t-e "u"pe$"!o$ o% t-e ;"ur# La3, !po"!$/ a ce!+!$/ o$ !$tere"t rate", t-!" doe" $ot aut-or!e*a$8" to u$!+atera++# a$d "ucce""!1e+# !$crea"e !$tere"t rate" !$ 1!o+at!o$ o% Sec. 2 PD ((.I$crea"e" u$!+atera++# eected *# PNB 3a" !$ 1!o+at!o$ o% t-e Mutua+!t# o% Co$tract" u$der Art. (&06. T-!"pro1!de" t-at t-e 1a+!d!t# a$d cop+!a$ce o% t-e part!e" to t-e co$tract ca$$ot *e +e%t to t-e 3!++ o% o$e o% t-e co$tract!$/ part!e". I$crea"e" ade are t-ere%ore 1o!d.I$crea"e o$ t-e "t!pu+ated !$tere"t rate" ade *# PNB a+"o co$tra1e$e" Art. (=. It pro1!de" t-at, $o!$tere"t "-a++ *e due u$+e"" !t -a" *ee$ expre""+# "t!pu+ated !$ 3r!t!$/. PR $e1er a/reed !$ 3r!t!$/ to
pa#!$tere"t !po"ed *# PNB !$ exce"" o% 2' per a$$u. I$tere"t rate !po"ed *# PNB, a" correct+# %ou$d*# CA, !" !$du*!ta*+# exce""!1e.
RD""&N "%PP(= ;. !AR &A"T
!acts# O$ a$uar# (, (=7=, de%e$da$t Rod""e$ Supp+#, I$c. ope$ed 3!t- p+a!$t! Far Ea"t Ba$8 a$d Tru"t Co. a &0?da# doe"t!c +etter o% cred!t, !$ t-e aou$t o% P(=0,000.00 !$ %a1or o% E8a$ a$d Copa$#, I$c. 4E8a$5 %or t-e purc-a"e %ro t-e +atter o% 91e u$!t" o% -#drau+!c +oader", to exp!re o$ Fe*ruar# (, (=7=. T-e t-ree +oader" 3ere de+!1ered to de%e$da$t %or 3-!c- p+a!$t! pa!d E8a$ a$d 3-!cde%e$da$t pa!d p+a!$t! *e%ore exp!r# date o% LC. T-e rea!$!$/ t3o +oader" 3ere de+!1ered to de%e$da$t *ut t-e +atter re%u"ed to pa#. E8a$ pre""ed pa#e$t to p+a!$t!. P+a!$t! pa!d E8a$ %or t-e t3o +oader" a$d +ater dea$ded %ro de%e$da$t "uc- aou$t a" !t pa!d E8a$. De%e$da$t re%u"ed pa#e$t co$te$d!$/ t-at t-ere 3a" a *reac- o% co$tract *# p+a!$t! 3-o !$ *ad %a!t- pa!d E8a$, 8 $o3!$/ t-at t-e t3o u$!t" o% -#drau+!c +oader" -ad *ee$ de+!1ered to de%e$da$t a%ter t-e exp!r# date o% "u*ect LC. $ssue# @ON pet!t!o$er !" +!a*+e to re"po$de$t. Ruling# T-e SC a/ree" 3!t- t-e CA t-at pet!t!o$er "-ou+d pa# re"po$de$t *a$8 t-e aou$t t-e +atter expe$ded %or t-e eu!pe$t *e+ated+# de+!1ered *# E8a$ a$d 1o+u$tar!+# rece!1ed a$d 8ept *# pet!t!o$er. Eu!ta*+e co$"!derat!o$" *e-oo1e u" to a++o3 reco1er# *# re"po$de$t. True, !t erred !$ pa#!$/ E8a$, *ut pet!t!o$er !t"e+% 3a" $ot 3!t-out %au+t !$ t-e tra$"act!o$. It u"t *e $oted t-at t-e +atter -ad 1o+u$tar!+# rece!1ed a$d 8ept t-e +oader" "!$ce Octo*er (=7=. @-e$ *ot- part!e" to a tra$"act!o$ are utua++# $e/+!/e$t !$ t-e per%ora$ce o% t-e!r o*+!/at!o$", t-e %au+t o% o$e ca$ce+" t-e $e/+!/e$ce o% t-e ot-er a$d, a" !$ t-!" ca"e, t-e!r r!/-t"
a$d o*+!/at!o$" a# *e deter!$ed eu!ta*+# u$der t-e +a3 pro"cr!*!$/ u$u"t e$r!c-e$t.
Case Digest# G.R. No. 19229. :anuar 2 2+ "e-astian "iga5an petitioner vs. Alicia ;illanueva respondent.
!acts# Re"po$de$t 9+ed a cop+a!$t %or "u o% o$e# a/a!$"t pet!t!o$er. Re"po$de$t c+a!ed t-at pet!t!o$er approac-ed -er !$"!de t-e PNO a$d oered to +oa$ -er t-e aou$t o% P'0,000.00 o% 3-!c- t-e +oa$ a/reee$t 3a" $ot reduced !$ 3r!t!$/ a$d t-ere 3a" $o "t!pu+at!o$ a" to t-e pa#e$t o% !$tere"t %or t-e +oa$. Re"po$de$t !""ued a c-ec8 3ort- P00,000.00 to pet!t!o$er a" part!a+ pa#e$t o% t-e +oa$. S-e t-e$ !""ued a$ot-er c-ec8 !$ t-e aou$t o% P200,000.00 to pet!t!o$er a" pa#e$t o% t-e rea!$!$/ *a+a$ce o% t-e +oa$ o% 3-!c- t-e exce"" aou$t o% P(0,000.00 3ou+d *e app+!ed a" !$tere"t %or t-e +oa$. Not "at!"9ed 3!t- t-e aou$t app+!ed a" !$tere"t, pet!t!o$er pe"tered -er to pa# add!t!o$a+ !$tere"t a$d t-reate$ed to *+oc8 or d!"appro1e -er tra$"act!o$" 3!t- t-e PNO !% "-e 3ou+d $ot cop+# 3!t- -!" dea$d. T-u", "-e pa!d add!t!o$a+ aou$t" !$ ca"- a$d c-ec8" a" !$tere"t" %or t-e +oa$. S-e a"8ed pet!t!o$er %or rece!pt %or t-e pa#e$t" *ut 3a" to+d t-at !t 3a" $ot $ece""ar# a" t-ere 3a" utua+ tru"t a$d co$9de$ce *et3ee$ t-e. Accord!$/ to -er coputat!o$, t-e tota+ aou$t "-e pa!d to pet!t!o$er %or t-e +oa$ a$d !$tere"t accuu+ated to P(,200,000.00. T-e RTC re$dered a Dec!"!o$ -o+d!$/ t-at re"po$de$t ade a$ o1erpa#e$t o% -er +oa$ o*+!/at!o$ to pet!t!o$er a$d t-at t-e +atter "-ou+d re%u$d t-e exce"" aou$t to t-e %orer. It rat!oc!$ated t-at re"po$de$t:" o*+!/at!o$ 3a" o$+# to pa# t-e +oa$ed aou$t o% P'0,000.00, a$d t-at t-e a++e/ed !$tere"t"
due "-ou+d $ot *e !$c+uded !$ t-e coputat!o$ o% re"po$de$t:" tota+ o$etar# de*t *ecau"e t-ere 3a" $o a/reee$t *et3ee$ t-e re/ard!$/ pa#e$t o% !$tere"t. It co$c+uded t-at "!$ce re"po$de$t ade a$ exce"" pa#e$t to pet!t!o$er !$ t-e aou$t o% P0,000.00 t-rou/- !"ta8e, pet!t!o$er "-ou+d retur$ t-e "a!d aou$t to re"po$de$t pur"ua$t to t-e pr!$c!p+e o% "o+ut!o !$de*!t!. A+"o, pet!t!o$er "-ou+d pa# ora+ daa/e" %or t-e "+eep+e"" $!/-t" a$d 3ou$ded %ee+!$/" exper!e$ced *# re"po$de$t. Furt-er, pet!t!o$er "-ou+d pa# exep+ar# daa/e" *# 3a# o% exap+e or correct!o$ %or t-e pu*+!c /ood, p+u" attor$e#:" %ee" a$d co"t" o% "u!t.
$ssue# >(5 @-et-er or $ot !$tere"t 3a" due to pet!t!o$er) a$d 425 3-et-er t-e pr!$c!p+e o% "o+ut!o !$de*!t! app+!e" to t-e ca"e at *ar. Ruling# 4(5 No. Cope$"ator# !$tere"t !" $ot c-ar/ea*+e !$ t-e !$"ta$t ca"e *ecau"e !t 3a" $ot du+# pro1e$ t-at re"po$de$t de%au+ted !$ pa#!$/ t-e +oa$ a$d $o !$tere"t 3a" due o$ t-e +oa$ *ecau"e t-ere 3a" $o 3r!tte$ a/reee$t a" re/ard" pa#e$t o% !$tere"t. Art!c+e (= o% t-e C!1!+ Code, 3-!c- re%er" to o$etar# !$tere"t, "pec!9ca++# a$date" t-at $o !$tere"t "-a++ *e due u$+e"" !t -a" *ee$ expre""+# "t!pu+ated !$ 3r!t!$/. A" ca$ *e /+ea$ed %ro t-e %ore/o!$/ pro1!"!o$, pa#e$t o% o$etar# !$tere"t !" a++o3ed o$+# !%> 4(5 t-ere 3a" a$ expre"" "t!pu+at!o$ %or t-e pa#e$t o% !$tere"t) a$d 425 t-e a/reee$t %or t-e pa#e$t o% !$tere"t 3a" reduced !$ 3r!t!$/. T-e co$curre$ce o% t-e t3o co$d!t!o$" !" reu!red %or t-e pa#e$t o% o$etar# !$tere"t. T-u", 3e -a1e -e+d t-at co++ect!o$ o% !$tere"t 3!t-out a$# "t!pu+at!o$ t-ere%or !$ 3r!t!$/ !" pro-!*!ted *# +a3. 425 Pet!t!o$er ca$$ot *e cope++ed to retur$ t-e a++e/ed exce"" aou$t pa!d *# re"po$de$t a" !$tere"t. ;$der Art!c+e (=0 o% t-e C!1!+ Code, !% t-e *orro3er o% +oa$ pa#" !$tere"t
3-e$ t-ere -a" *ee$ $o "t!pu+at!o$ t-ere%or, t-e pro1!"!o$" o% t-e C!1!+ Code co$cer$!$/ "o+ut!o !$de*!t! "-a++ *e app+!ed. Art!c+e 2(' o% t-e C!1!+ Code exp+a!$" t-e pr!$c!p+e o% "o+ut!o !$de*!t!. Sa!d pro1!"!o$ pro1!de" t-at !% "oet-!$/ !" rece!1ed 3-e$ t-ere !" $o r!/-t to dea$d !t, a$d !t 3a" u$du+# de+!1ered t-rou/- !"ta8e, t-e o*+!/at!o$ to retur$ !t ar!"e". I$ "uc- a ca"e, a cred!tor?de*tor re+at!o$"-!p !" created u$der a ua"!?co$tract 3-ere*# t-e pa#or *ecoe" t-e cred!tor 3-o t-e$ -a" t-e r!/-t to dea$d t-e retur$ o% pa#e$t ade *# !"ta8e, a$d t-e per"o$ 3-o -a" $o r!/-t to rece!1e "uc- pa#e$t *ecoe" o*+!/ated to retur$ t-e "ae. T-e ua"!?co$tract o% "o+ut!o !$de*!t! -ar8" *ac8 to t-e a$c!e$t pr!$c!p+e t-at $o o$e "-a++ e$r!c- -!"e+% u$u"t+# at t-e expe$"e o% a$ot-er. T-e pr!$c!p+e o% "o+ut!o !$de*!t! app+!e" 3-ere 4(5 a pa#e$t !" ade 3-e$ t-ere ex!"t" $o *!$d!$/ re+at!o$ *et3ee$ t-e pa#or, 3-o -a" $o dut# to pa#, a$d t-e per"o$ 3-o rece!1ed t-e pa#e$t) a$d 425 t-e pa#e$t !" ade t-rou/- !"ta8e, a$d $ot t-rou/- +!*era+!t# or "oe ot-er cau"e. @e -a1e -e+d t-at t-e pr!$c!p+e o% "o+ut!o !$de*!t! app+!e" !$ ca"e o% erro$eou" pa#e$t o% u$due !$tere"t. Art!c+e 22&2 o% t-e C!1!+ Code "tate" t-at !$ a ua"!?co$tract, "uc- a" "o+ut!o !$de*!t!, exep+ar# daa/e" a# *e !po"ed !% t-e de%e$da$t acted !$ a$ oppre""!1e a$$er. Pet!t!o$er acted oppre""!1e+# 3-e$ -e pe"tered re"po$de$t to pa# !$tere"t a$d t-reate$ed to *+oc8 -er tra$"act!o$" 3!t- t-e PNO !% "-e 3ou+d $ot pa# !$tere"t. T-!" %orced re"po$de$t to pa# !$tere"t de"p!te +ac8 o% a/reee$t t-ereto. T-u", t-e a3ard o% exep+ar# daa/e" !" appropr!ate "o a" to deter pet!t!o$er a$d ot-er +e$der" %ro co!tt!$/ "!!+ ar a$d ot-er "er!ou" 3ro$/do!$/".
G.R. No. (52782 !e-ruar 2 1++ "&NT$N&( $N"%RANC& C. $NC. petitioner vs.
T'& 'NRA4(& C%RT ! APP&A(" 'N. !(R&($ANA CA"TR54ART(3& Presiding :udge Court of !irst $nstance of RiFal "event, :udicial District 4ranc, E; T'& PR;$NC$A( "'&R$!! ! R$A( and R"& $ND%"TR$&" $NC. respondents. :esus $. "antos (a) Jce for petitioner. Iuas,a Asperilla Anc,eta ;al
REALADO, .> Be%ore u" !" a pet!t!o$ "ee8!$/ t-e ae$de$t a$d od!9cat!o$ o% t-e d!"po"!t!1e port!o$ o% re"po$de$t court" dec!"!o$ !$ CA?.R. No. SP?0=&&(, ( a++e/ed+# to a8e !t co$%or 3!t- t-e 9$d!$/", ar/ue$t" a$d o*"er1at!o$" e*od!ed !$ "a!d dec!"!o$ 3-!c- re+!e% 3a" de$!ed *# re"po$de$t court !$ !t" re"o+ut!o$, dated a$uar# (, (=60, 2 reect!$/ pet!t!o$er" ex parte ot!o$ 9+ed %or t-at purpo"e. & @-!+e $ot !$1o+1!$/ t-e a!$ ! ""ue" !$ t-e ca"e t-re"-ed out !$ t-e court a uo, t-e ud/e$t ! $ 3-!c- -ad a+read# *ecoe 9$a+ a$d executor#, t-e %actua+ *ac8drop o% t-e pre"e$t pet!t!o$ !" "uar!ed *# re"po$de$t court a" %o++o3"> Pet!t!o$er Se$t!$e+ I$"ura$ce Co., I$c., 3a" t-e "uret# !$ a co$tract o% "uret#"-!p e$tered !$to o$ No1e*er (, (=7' 3!t- Nee"!o Acueta, Sr., 3-o !" do!$/ *u"!$e"" u$der t-e $ae a$d "t#+e o% Ma+a#a$ Trad!$/ a" reVected !$ SICO Bo$d No. 4(500276 3-ere *ot- o% t-e *ou$d t-e"e+1e", o!$t+# a$d "e1era++#, to %u++# a$d re+!/!ou"+# /uara$tee t-e cop+!a$ce 3!t- t-e ter" a$d "t!pu+at!o$" o% t-e cred!t +!$e /ra$ted *# pr!1ate re"po$de$t Ro"e I$du"tr!e", I$c., !$ %a1or o% Nee"!o Acueta, Sr., !$ t-e aou$t o% P(60,00.00.
Bet3ee$ No1e*er 2& to Dece*er 2&, (=7', Acueta ade 1ar!ou" purc-a"e" o% t!re", *atter!e" a$d t!re tu*e" %ro t-e pr!1ate re"po$de$t *ut %a!+ed to pa# t-ere%or, propt!$/ t-e +atter to dea$d pa#e$t *ut *ecau"e Acueta %a!+ed to "ett+e -!" accou$t", t-e ca"e 3a" re%erred to t-e I$"ura$ce Co!""!o$er 3-o !$1!ted t-e atte$t!o$ o% t-e pet!t!o$er o$ t-e atter a$d t-e + atter ca$ce++ed t-e Suret#"-!p A/reee$t o$ Ma# (&, (=7 3!t- due $ot!ce to t-e pr!1ate re"po$de$t. Mea$3-!+e, pr!1ate re"po$de$t 9+ed 3!t- t-e re"po$de$t court o% Ma8at! a cop+a!$t %or co++ect!o$ o% "u o% o$e# a/a!$"t -ere!$ pet!t!o$er a$d Acueta, doc8eted a" C!1!+ Ca"e No. 2(2'6 a++e/!$/ t-e % ore/o!$/ a$tecede$t" a$d pra#!$/ t-at "a!d de%e$da$t" *e ordered to pa# o!$t+# a$d "e1era++# u$to t-e p+a!$t!.
t-e pet!t!o$er. O$ t-e "ae da#, -o3e1er, t-e +atter 9+ed a ot!o$ %or c+ar!9cat!o$ o% t-e ud/e$t a" to !t" rea+ a$d true !port *ecau"e o$ !t" %ace, !t 3ou+d appear t-at a"!de %ro t-e (' !$tere"t !po"ed o$ t-e pr!$c!pa+ o*+!/at!o$, a$ add!t!o$a+ 2 e1er# ' da#" corre"po$d!$/ to t-e add!t!o$a+ pe$a+t# -a" *ee$ !po"ed a/a!$"t t-e pet!t!o$er 3-!c!po"!t!o$ 3ou+d *e u"ur!ou" a$d cou+d $ot -a1e *ee$ t-e !$te$t!o$ o% re"po$de$t ud/e. But t-e o1e d!d $or pro"per *ecau"e o!+ Ma# 22, (=7(, t-e ud/e de$!ed t-e ot!o$ o$ t-e t-eor# t-at t-e ud/e$t, -a1!$/ *ecoe 9$a+ a$d executor#, !t ca$ $o +o$/er *e ae$ded or corrected. '
a5 T-e aou$t o% P(=6,02.'( a" !t" pr!$c!pa+ o*+! /at!o$, !$c+ud!$/ !$tere"t a$d daa/e due" a" o% Apr!+ 2=, (=7)
Co$te$d!$/ t-at t-e order 3a" !""ued 3!t- /ra1e a*u"e o% d!"cret!o$, pet!t!o$er 3e$t to re"po$de$t court o$ a pet!t!o$ %or cert!orar! a$d a$dau" to cope+ t-e court *e+o3 to c+ar!%# !t" dec!"!o$, part!cu+ar+# Para/rap- +4a5 o% t-e d!"po"!t!1e port!o$ t-ereo%.
*5 To pa# !$tere"t at (' per a$$u a$d daa/e due" at t-e rate o% 2 e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 up to t-e t!e t-e %u++ aou$t !" %u++# pa!d>
Re"po$de$t court /ra$ted t!+e pet!t!o$ !$ !t" dec!"!o$ dated Dece*er &, (=7=, t-e d!"u!"!t!o$ a$d d!"po"!t!1e port!o$ 3-ereo% read>
xxx xxx xxx A%ter pet!t!o$er 9+ed !t" a$"3er 3!t- cou$terc+a!, t-e ca"e, upo$ a/reee$t o% t-e part!e", 3a" "u*!tted %or "uar# ud/e$t a$d o$ Dece*er 2=, (=7, re"po$de$t court re$dered !t" dec!"!o$ 3!t- t-e %o++o3!$/ d!"po"!t!1e port!o$> xxx xxx xxx a5 To pa# !$tere"t o$ t-e pr!$c!pa+ o*+!/at!o$ at t-e rate o% (' per a$$u at t-e rate o% 2 e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 u$t!+ t-e aou$t !" %u++# pa!d. T-e dec!"!o$ -a1!$/ *ecoe 9$a+ a$d executor#, t-e pre1a!+!$/ part# o1ed %or ! t" execut!o$ 3-!c- re"po$de$t ud/e /ra$ted a$d pur"ua$t t-ereto, a $ot!ce o% attac-e$t a$d +e1# 3a" "er1ed *# re"po$de$t Pro1!$c!a+ S-er! upo$
@-!+e !t !" a$ e+ee$tar# ru+e o% procedure t-at a%ter a dec!"!o$, order or ru+!$/ -a" *ecoe 9$a+, t-e court +o"e" !t" ur!"d!ct!o$ ordero1er t-e "ae a$d ca$ $o +o$/er *e "u*ected to a$# od!9cat!o$ or a+terat!o$, !t !" +!8e3!"e 3e++? "ett+ed t-at court" are epo3ered e1e$ a%ter "uc- 9$a+!t#, to correct c+er!ca+ error" or !"ta8e" !$ t-e dec!"!o$" 4Pote$c!a$o 1". CA, L?((=, O.. 26=5. A c+er!ca+ error !" o$e t-at !" 1!"!*+e to t-e e#e" or o*1!ou" to t-e u$der"ta$d!$/ 4B+ac8 1". Repu*+!c, (0' P-!+. 6'=5. T-at t-ere 3a" a !"ta8e !$ t-e d!"po"!t!1e port!o$ o% t-e dec!"!o$ ca$$ot *e de$!ed co$"!der!$/ t-at !$ t-e cop+a!$t 9+ed a/a!$"t t-e pet!t!o$er, t-e pra#er a" "pec!9ca++# "tated !$ para/rap- 4*5 3a" to order t-e +atter, to pa# !$tere"t at (' per a$$u a$d daa/e due" at t-e rate o% 2 e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 up to t-e t!e t-e
aou$t !" %u++# pa!d. But t-!" $ot3!t-"ta$d!$/ t-e re"po$de$t court !$ !t" ue"t!o$ed dec!"!o$ decreed t-e pet!t!o$er to pa# t-e !$tere"t o$ t-e pr!$c!pa+ o*+!/at!o$ at t-e rate o% (' per a$$u a$d 2 e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 u$t!+ t-e aou$t !" %u++# pa!d, "o t-at, a" pet!t!o$er correct+# o*"er1e", !t 3ou+d appear t-at o$ top o% t-e (' per a$$u o$ t-e pr!$c!pa+ o*+!/at!o$, a$ot-er 2 !$tere"t e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 u$t!+ t-e aou$t !" %u++# pa!d -a" *ee$ !po"ed a/a!$"t -! 4pet!t!o$er5. I$ ot-er 3ord", & da#" !$ o$e #ear d!1!ded *# ' da#" eua+" 6?(= 3-!c-, u+t!p+!ed *# 2 a" ordered *# re"po$de$t?ud/e 3ou+d aou$t to a +!tt+e ore t-a$ (. Add!$/ ( per a$$u to t-e (' !$tere"t !po"ed o$ t-e pr!$c!pa+ o*+!/at!o$ 3ou+d *e &0 3-!c- !" 1er!ta*+# u"ur!ou" a$d t-!" ca$$ot *e cou$te$a$ced, uc- +e"" "a$ct!o$ed *# a$# court o% u"t!ce. @e a/ree 3!t- t-!" o*"er1at!o$ a$d 3-at !" ore, !t !" +!8e3!"e a "ett+ed ru+e t-at a+t-ou/- a court a# /ra$t a$# re+!e% a++o3ed *# +a3, "uc- prero/at!1e !" de+!!ted *# t-e card!$a+ pr!$c!p+e t-at !t ca$$ot /ra$t a$#t-!$/ ore t-a$ 3-at !" pra#ed %or, %or certa!$+#, t-e re+!e% to *e d!"pe$"ed ca$$ot r!"e a*o1e !t" "ource. 4Pote$c!a$o 1". CA, "upra.5
A" ear+!er "tated, pet!t!o$er 9+ed a$ ex parte ot!o$ "ee8!$/ to ae$d t-e a*o1e?uoted decreta+ port!o$ 3-!cre"po$de$t court de$!ed, -e$ce t-e pet!t!o$ at *ar. T-e ae$de$t "ou/-t, o"te$"!*+# !$ order t-at t-e d!"po"!t!1e port!o$ o% "a!d dec!"!o$ 3ou+d co$%or 3!t- t-e *od# t-ereo%, !" t-e "o+e !""ue %or re"o+ut!o$ *# t-e Court. Pet!t!o$er !t"e+% c!te" aut-or!t!e" !$ "upport o% !t" co$te$t!o$ t-at !t !" e$t!t+ed to a correct a$d c+ear expre""!o$ o% a ud/e$t to a1o!d "u*"ta$t!a+ !$u"t!ce. I$ ap+!9cat!o$ o% !t" p+a!$t, pet!t!o$er %urt-er a""e1erate" t-at re"po$de$t court "-ou+d $ot -a1e ade a$ a3ard %or daa/e due" at "uc- +ate "ta/e o% t-e proceed!$/ "!$ce "a!d due" 3ere $ot t-e "u*ect o% t-e a3ard ade *# t-e tr!a+ court. 7 @e d!"a/ree 3!t- pet!t!o$er. To c+ar!%# a$ a*!/u!t# or correct a c+er!ca+ error !$ t-e ud/e$t, t-e court a# re"ort to t-e p+ead!$/" 9+ed *# t-e part!e", t-e 9$d!$/" o% %act a$d t-e co$c+u"!o$" o% +a3 expre""ed !$ t-e text or *od# o% t-e dec!"!o$. 6
xxx xxx xxx
I$deed, t-!" 3a" 3-at re"po$de$t court d!d !$ re"o+1!$/ t-e or!/!$a+ pet!t!o$. It exa!$ed t-e cop+a!$t 9+ed a/a!$"t t-e pet!t!o$er a$d $oted t-at t-e pra#er a" "tated !$ Para/rap4*5 t-ereo% 3a" to order de%e$da$t to pa# !$tere"t at (' per ce$tu a$d daa/e due" at t-e rate o% 2 e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 up to t-e t!e t-e %u++ aou$t !" %u++# pa!d. =
a5 to pa# !$tere"t at (' per a$$u o$ t-e pr!$c!pa+ o*+!/at!o$ a$d daa/e due" at t-e rate o% 2 e1er# ' da#" coe$c!$/ %ro Apr!+ &0, (=7 up to t-e t!e t-e %u++ aou$t !" %u++# pa!d)
I$"o%ar a" t-e 9$d!$/" a$d t-e d!"po"!t!1e port!o$ "et %ort- !$ re"po$de$t court" dec!"!o$ are co$cer$ed, t-ere !" rea++# $o !$co$"!"te$c# a" 3!tt!$/+# or u$3!tt!$/+# a""erted *# pet!t!o$er.
@HEREFORE, t-e 3r!t o% cert!orar! ! " -ere*# /ra$ted a$d t-e re"po$de$t ud/e !" ordered to c+ar!%# !t" ud/e$t cop+a!$ed o% !$ t-e %o++o3!$/ a$$er>
xxx xxx xxx
T-e 9$d!$/" ade *# re"po$de$t court d!d $ot actua++# $u++!%# t-e ud/e$t o% t-e tr!a+ court. More "pec!9ca++#, t-e "tatee$t t-at t-e !po"!t!o$ o% 2 !$tere"t e1er# ' da#"
coe$c!$/ %ro Apr!+ &0, (=7 o$ top o% t-e (' per a$$u 4a" 3ou+d *e t-e !pre""!o$ %ro a "uper9c!a+ read!$/ o% t-e d!"po"!t!1e port!o$ o% t-e tr!a+ court" dec!"!o$5 3ou+d *e u"ur!ou" !" a "ou$d o*"er1at!o$. It "-ou+d, -o3e1er, *e "tre""ed t-at "uc- o*"er1at!o$ 3a" o$ t-e t-eoret!ca+ a""upt!o$ t-at t-e rate o% 2 !" *e!$/ !po"ed a" !$tere"t, $ot a" daa/e due" 3-!c- 3a" t-e !$te$de$t o% t-e tr!a+ court. Certa!$+#, t-e daa/e due" !$ t-!" ca"e do $ot !$c+ude a$d are $ot !$c+uded !$ t-e coputat!o$ o% !$tere"t a" t-e t3o are o% d!ere$t cate/or!e" a$d are d!"t!$ct c+a!" 3-!c- a# *e dea$ded "eparate+#, !$ t-e "ae a$$er t-at co!""!o$", 9$e" a$d pe$a+t!e" are exc+uded !$ t-e coputat!o$ o% !$tere"t 3-ere t-e +oa$ or %or*eara$ce !" $ot "ecured !$ 3-o+e or !$ part *# rea+ e"tate or a$ !$tere"t t-ere!$. (0 @-!+e !$tere"t %or" part o% t-e co$"!derat!o$ o% t-e co$tract !t"e+%, daa/e due" 4pe$a+t!e", a$d "o %ort-5 are u"ua++# ade pa#a*+e o$+# !$ ca"e o% de%au+t or $o$?per%ora$ce o% t-e co$tract. (( A+"o, a+t-ou/- !$tere"t !" "u*ect to t-e pro1!"!o$" o% t-e ;"ur# La3, (2 t-ere !" $o po+!c# or pro1!"!o$ !$ "uc- +a3 pre1e$t!$/ t-e e$%orcee$t o% daa/e due" a+t-ou/- t-e eect a# *e to !$crea"e t-e "u pa#a*+e *e#o$d t-e pre"cr!*ed ce!+!$/ rate". Pet!t!o$er" a""ert!o$ t-at re"po$de$t court acted 3!t-out aut-or!t# !$ appe$d!$/ t-e a3ard o% daa/e due" to t-e ud/e$t o% t-e tr!a+ court "-ou+d *e reected. A" correct+# po!$ted out *# pr!1ate re"po$de$t, t-e ope$!$/ "e$te$ce o% Para/rap- +4a5 o% t-e d!"po"!t!1e port!o$ o% t-e +o3er court" dec!"!o$ exp+!c!t+# ordered pet!t!o$er to pa# pr!1ate re"po$de$t t-e aou$t o% P(=6,02.'( a" pr!$c!pa+ o*+!/at!o$ !$c+ud!$/ !$tere"t a$d daa/e due", 3-!c- !" a c+ear a$d u$eu!1oca+ !$d!cat!o$ o% t-e +o3er court" !$te$t to a3ard *ot- !$tere"t a$d daa/e due". (&
S!/$!9ca$t+#, !t *ear" e$t!o$ t-at o$ "e1era+ occa"!o$" *e%ore pet!t!o$er o1ed %or a c+ar!9cator# ud/e$t, !t oered to "ett+e !t" accou$t 3!t- pr!1ate re"po$de$t 3!t-out a""a!+!$/ t-e !po"!t!o$ o% t-e a%oree$t!o$ed daa/e due". (' A" ra!9ed *# pr!1ate re"po$de$t> 2. ... t-e t-e$ cou$"e+ o% record %or t-e pet!t!o$er, Att#. Por9r!o Baut!"ta, a$d Att#. Teodu+%o L. Re#e", pet!t!o$er" A""!"ta$t !ce? Pre"!de$t %or Operat!o$", -ad a co$%ere$ce 3!t- t-e u$der"!/$ed attor$e#" a" to -o3 pet!t!o$er 3!++ "ett+e !t" accou$t to a1o!d execut!o$. Dur!$/ t-e co$%ere$ce, *ot- part!e" arr!1ed at a+o"t t-e "ae coputat!o$ a$d t-e aou$t due %ro pet!t!o$er, 3-!c- !$c+ude" 2 daa/e due" e1er# ' da#" %ro &0 Apr!+ (=7 u$t!+ t-e aou$t !" %u++# pa!d, u$der t-e ud/e$t. No ue"t!o$ 3a" e1er ra!"ed a" re/ard" "ae. xxx xxx xxx . T-e 1er# %ace o% A$$ex D "-o3" t-at t-e 2 daa/e due" *e!$/ ue"t!o$ed *# t-e pre"e$t cou$"e+ o% pet!t!o$er -ad *ee$ e$t!o$ed $o +e"" t-a$ TEN 4(05 TIMES a$d 3a" c+ear+# a$d d!"t!$ct+# de9$ed *# pet!t!o$er a$d !$c+uded !$ t-e coputat!o$ o% !t" o*+!/at!o$ to -ere!$ pet!t!o$er a" 2 pe$a+t# %or e1er# ' da#". xxx xxx xxx Pet!t!o$er" prete$"e t-at !t 3a" $ot t-e !$te$t o% t-e court to a3ard t-e daa/e due" o% 2 e1er# ' da#" coe$c!$/ &0 Apr!+ (=7 !" *e+!ed *# t-e %act 4a$d t-!" !" ad!tted *# pet!t!o$er5 t-at upo$ a/reee$t o% t-e part!e", t-e ca"e *e%ore t-e +o3er court 3a" "u*!tted %or "uar# ud/e$t) !$ ot-er 3ord", t-e ca"e 3a" "u*!tted upo$ t-e %act" a" appear !$ t-e p+ead!$/" 3!t- $o ot-er e1!de$ce pre"e$ted a$d a %act t-at appear" c+ear+# !$ t-e p+ead!$/" !" t-at t-e de%e$da$t" !$ t-e ca"e *e%ore t-e +o3er court 3ere u$der co$tract to pa# pr!1ate re"po$de$t, ao$/ ot-er", t-e
daa/e due" o% 2 e1er# ' da#" coe$c!$/ o$ &0 Apr!+ (=7 u$t!+ t-e o*+!/at!o$ !" %u++# pa!d) .... ( Re"po$de$t court deo$"tra*+# d!d $ot err !$ order!$/ t-e c+ar!9cat!o$ o% t-e dec!"!o$ o% t-e tr!a+ court *# ae$d!$/ t-e ue"t!o$ed part o% !t" d! "po"!t!1e port!o$ to !$c+ude t-ere!$ t-e p-ra"e daa/e due" to od!%# t-e "tated rate o% 2, a$d t-ere*# o*1!ate a$# !"co$cept!o$ t-at !t !" *e!$/ !po"ed a" !$tere"t. ACCORDINL<, cert!orar! !" -ere*# DENIED a$d t-e dec!"!o$ o% re"po$de$t Court o% Appea+" !" -ere*# AFFIRMED. SO ORDERED.
%TR$G'T "A(& Co accepted t-e !$1o!ce o% t-e *a++et "-oe" a$d -e e1e$ $oted do3$ !$ -!" o3$ -a$d3r!t!$/ t-e part!a+ pa#e$t" t-at -e ade. I% t-e "a+e -a" *ee$ o$ co$"!/$e$t, a "t!pu+at!o$ a" to t-e per!od o% t!e %or t-e retur$ o% t-e u$"o+d "-oe" "-ou+d -a1e *ee$ ade, -o3e1er, t-!" 3a" $ot do$e NOT BO;ND B< THE INTEREST He d!d $ot "!/$ t-e !$1o!ce "+!p t-e "t!pu+ated !$tere"t 3a" 20, -e$ce, $ot *!$d!$/ Ho3e1er, -e !" *ou$d *# t-e +e/a+ !$tere"t o%
R=A( "'$RT !ACTR= $NC. v C
He$ce, Co 3a" ordered to pa# t-e *a+a$ce o% t-e purc-a"e pr!ce %or t-e *a++et "-oe" Y +e/a+ !$tere"t
!ACT"# T-e part!e" e$tered !$to a co$tract 3-ere!$ !t !" "t!pu+ated t-at &0 pa!r" o% *a++et "-oe" 3!++ *e "o+d *# Co a$d t-at Co -ad = da#" %ro de+!1er# o% t-e "-oe" to a8e -!" c-o!ce o% 2 a+ter$at!1e"> a5 co$"!der t-e "a+e %or t-e "-oe" c+o"ed at a Vat rate, or *5 retur$ t-e rea!$!$/ u$"o+d o$e" to Ro#a+. Co %a!+ed to retur$ t-e u$"o+d pa!r" a%ter = da#" a$d actua++# *e/a$ a8!$/ part!a+ pa#e$t" o$ accou$t o% t-e purc-a"e pr!ce a/reed upo$. Co t-e$ co$te$ded t-at t-ere 3a" ere+# a co$"!/$e$t o% t-e /ood" a$d -e 3a$ted to retur$ t-e u$"o+d "-oe". Ro#a+ re%u"ed co$te$d!$/ t-at !t 3a" a$ outr!/-t "a+e.
$""%&# @oN t-e "a+e 3a" a$ outr!/-t "a+e @oN Co !" *ou$d *# t-e !$tere"t "t!pu+ated !$ t-e !$1o!ce. "C# =&" / N
(igutan vs. CA G.RH18699 !acts# Pet!t!o$er" To+oeo L!/uta$ a$d Leo$!da" de+a L+a$a o *ta!$ed a +oa$ !$ t-e aou$t o% P(20,000.00 %ro re"po$de$t Secur!t# Ba$8 a$d Tru"t Copa$#. Pet!t!o$er" executed a pro!""or#$ote *!$d!$/ t-e"e+1e", o!$t+# a$d "e1era++#, 3!t- a$ !$tere"t o% (.(6= per a$$u upo$ atur!t#a$d to pa# a pe$a+t# o% e1er# o$t- o$ t-e out"ta$d!$/ pr!$c!pa+ a$d !$tere"t !$ ca"e o% de%au+t a$d a+"o a (0 attor$e#:" %ee" !% t-e atter 3ere !$dor"ed to a +a3#er %or co++ect!o$. T-e o*+!/at!o$ atured, t-e pet!t!o$er" 3ere $ot a*+e to "ett+e t-e o*+!/at!o$) T-e *a$8 /a1e a$exte$"!o$, "t!++ t-e
"ae -appe$ed. S!$ce t-e pet!t!o$er" "t!++ de%au+ted, t-e %orer 9+ed a cop+a!$t %orreco1er# o% t-e due aou$t.
$ssue# @-et-er t-e !$tere"t a$d pe$a+t# c-ar/e !po"ed *# pr!1ate re"po$de$t *a$8 o$ pet!t!o$er": +oa$ are a$!%e"t+# exor*!ta$t, !$!u!tou" a$d u$co$"c!o$a*+eKRu+!$/> T-e o*+!/or 3ou+d t-e$ *e *ou$d to pa# t-e "t!pu+ated !$de$!t# 3!t-out t-e $ece""!t# o% proo% o$ t-e ex!"te$ce a$d o$ t-e ea"ure o% daa/e" cau"ed *# t-e *reac-. A+t-ou/- a court a# $ot at+!*ert# !/$ore t-e %reedo o% t-e part!e" to a/ree o$ "uc- ter" a$d co$d!t!o$" a" t-e# "ee 9t t-atco$tra1e$e $e!t-er +a3 $or ora+", /ood cu"to", pu*+!c order or pu*+!c po+!c#, a "t!pu+ated pe$a+t#,$e1ert-e+e"", a# *e eu!ta*+# reduced *# t-e court" !% !t !" !$!u!tou" or u$co$"c!o$a*+e or !% t-epr!$c!pa+ o*+!/at!o$ -a" *ee$ part+# or !rre/u+ar+# cop+!ed 3!t-.T-e ue"t!o$ o% 3-et-er a pe$a+t# !" rea"o$a*+e or !$!u!tou" ca$ *e part+# "u*ect!1e a$d part+#o*ect!1e. It" re"o+ut!o$ 3ou+d depe$d o$ "uc%actor" a", *ut $ot $ece""ar!+# co$9$ed to, t-e t#pe,exte$t a$d purpo"e o% t-e pe$a+t#, t-e $ature o% t-e o*+!/at!o$, t-e ode o% *reac- a$d !t"co$"eue$ce", t-e "uper1e$!$/ rea+!t!e", t-e "ta$d!$/ a$d re+at!o$"-!p o% t-e part!e", a$d t-e +!8e, t-eapp+!cat!o$ o% 3-!c-, *# a$d +ar/e, !" addre""ed to t-e "ou$d d!"cret!o$ o% t-e court.T-e CA exerc!"ed /ood ud/e$t !$ reduc!$/ t-e "t!pu+ated pe$a+t# !$tere"t %ro to & a o$t-. It 3a" a+"o *ee$ -e+d t-at t-e (.(6= per a$$u "t!pu+ated !$tere"t a$d t-e (0 attor$e#:" !" rea"o$a*+e a$d $ot exce""!1e. T-e !$tere"t pre"cr!*ed !$ +oa$ 9$a$c!$/ arra$/ee$t" !" a %u$dae$ta+ part o% t-e*a$8!$/ *u"!$e"" a$d t-e core o% a *a$8" ex!"te$ce.
%CP4 vs "pouses 4eluso
GR No. 1++12 August 19 29 Ponente# C,ico5NaFario :. !acts# Pet!t!o$ %or Re1!e3 o$ Cert!orar! dec+ar!$/ 1o!d t-e !$tere"t rate pro1!ded !$ t-e pro!""or# $ote" executed *# t-e re"po$de$t" Spou"e" Saue+ a$d Odette Be+u"o 4"pou"e" Be+u"o5 !$ %a1or o% pet!t!o$er ;$!ted Coco$ut P+a$ter" Ba$8 4;CPB5 ;CPB /ra$ted t-e "pou"e" Be+u"o a Pro!""or# Note" L!$e u$der a Cred!t A/reee$t 3-ere*# t-e +atter cou+d a1a!+ %ro t-e %orer cred!t o% up to a ax!u aou$t o% P(.2 M!++!o$ pe"o" %or a ter e$d!$/ o$ &0 Apr!+ (==7. T-e "pou"e" Be+u"o co$"t!tuted, ot-er t-a$ t-e!r pro!""or# $ote", a rea+ e"tate ort/a/e o1er parce+" o% +a$d !$ Roxa" C!t#, co1ered *# Tra$"%er Cert!9cate" o% T!t+e No. T?&(&= a$d T?27626, a" add!t!o$a+ "ecur!t# %or t-e o*+!/at!o$. T-e Cred!t A/reee$t 3a" "u*"eue$t+# ae$ded to !$crea"e t-e aou$t o% t-e Pro!""or# Note" L!$e to a ax!u o% P2.& M!++! o$ pe"o" a$d to exte$d t-e ter t-ereo% to 26 Fe*ruar# (==6. O$ &0 Apr!+ (==7, t-e pa#e$t o% t-e pr!$c!pa+ a$d !$tere"t o% t-e +atter t3o pro!""or# $ote" 3ere de*!ted %ro t-e "pou"e" Be+u"o:" accou$t 3!t- ;CPB) #et, a co$"o+!dated +oa$ %or P(.& M!++!o$ 3a" a/a!$ re+ea"ed to t-e "pou"e" Be+u"o u$der o$e pro!""or# $ote 3!t- a due date o% 26 Fe*ruar# (==6. To cop+ete+# a1a!+ t-e"e+1e" o% t-e P2.& M!+ +!o$ cred!t +!$e exte$ded to t-e *# ;CPB, t-e "pou"e" Be+u"o executed t3o ore pro!""or# $ote" %or a tota+ o% P&0,000.00. Ho3e1er, t-e "pou"e" Be+u"o a++e/ed t-at t-e aou$t" co1ered *# t-e"e +a"t t3o pro!""or# $ote" 3ere $e1er re+ea"ed or cred!ted to t-e!r accou$t a$d, t-u", c+a!ed t-at t-e pr!$c!pa+ !$de*ted$e"" 3a" o$+# P2 M!++! o$.
T-e "pou"e" Be+u"o, -o3e1er, %a!+ed to a8e a$# pa#e$t o% t-e %ore/o!$/ aou$t". O$ 2 Septe*er (==6, ;CPB dea$ded t-at t-e "pou"e" Be+u"o pa# t-e!r tota+ o*+!/at!o$ o% P2,=&2,'&.00 p+u" 2 attor$e#:" %ee", *ut t-e "pou"e" Be+u"o %a!+ed to cop+# t-ere3!t-. O$ 26 Dece*er (==6, ;CPB %orec+o"ed t-e propert!e" ort/a/ed *# t-e "pou"e" Be+u"o to "ecure t-e!r cred!t +!$e, 3-!c-, *# t-at t!e, a+read# *a++oo$ed to P&,76',0&.00. O$ = Fe*ruar# (===, t-e "pou"e" Be+u"o 9+ed a Pet!t!o$ %or A$$u+e$t, Accou$t!$/ a$d Daa/e" a/a!$"t ;CPB 3!t- t-e RTC o% Ma8at! C!t#. Tr!a+ court dec+ared !$ !t" ud/e$t t-at> t-e !$tere"t rate u"ed *# ;CPBX 1o!d t-e %orec+o"ure a$d S-er!:" Cert!9cate o% Sa+e 1o!d ;CPB !" ordered to retur$ to t-e "pou"e" Be+u"oX t-e propert!e" "u*ect o% t-e %orec+o"ure ;CPB to pa# t-e "pou"e" Be+u"oX t-e aou$t o% P0,000.00 *# 3a# o% attor$e#:" %ee" ;CPB to pa# t-e co"t" o% "u!t. Spou"e" Be+u"oX are -ere*# ordered to pa# ;CPBX t-e "u o% P(,0,&06.00. 6. Court o% Appea+" aJred Tr!a+ court" dec!"!o$ "u*ect to t-e od!9cat!o$ t-at de%e$da$t?appe++a$t ;CPB !" $ot + !a*+e %or attor$e#:" %ee" or t-e co"t" o% "u!t.
$""%&"# (. @-et-er or $ot !$tere"t rate "t!pu+ated 3a" 1o!d
4(5 a rate !$d!cat!1e o% t-e DBD reta!+ rate) or 425 a rate a" deter!$ed *# t-e Bra$cHead. A" ;CPB !" /!1e$ t-!" c-o!ce, t-e rate "-ou+d *e cate/or!ca++# deter!$a*+e !$ *ot- c-o!ce". I% e!t-er o% t-e"e t3o c-o!ce" pre"e$t" a$ opportu$!t# %or ;CPB to 9x t-e rate at 3!++, t-e *a$8 ca$ ea"!+# c-oo"e "uc- a$ opt!o$, t-u" a8!$/ t-e e$t!re !$tere"t rate pro1!"!o$ 1!o+at!1e o% t-e pr!$c!p+e o% utua+!t# o% co$tract". I$ add!t!o$, t-e pro!""or# $ote", t-e cop!e" o% 3-!c- 3ere pre"e$ted to t-e "pou"e" Be+u"o a%ter execut!o$, are $ot "uJc!e$t $ot!9cat!o$ %ro ;CPB. A" ear+!er d!"cu""ed, t-e !$tere"t rate pro1!"!o$ t-ere!$ doe" $ot "uJc!e$t+# !$d!cate 3!t- part!cu+ar!t# t-e !$tere"t rate to *e app+!ed to t-e +oa$ co1ered *# "a!d pro!""or# $ote" 3-!c- !" reu!red !$ TRut!$ Le$d!$/ Act 2. @-et-er or $ot Spou"e" Be+u"o are "u*ect to (2 !$tere"t a$d copou$d!$/ !$tere"t "t!pu+at!o$" e1e$ !% dec+ared aou$t *# ;CPB 3a" exce""!1e.
