Siga-an v. Villanueva (2009) Chico-Nazario, J. Facts:
Alicia Villanueva filed a complaint against Sebastian Sigaan bec she wants a return of her money (the excess interest she paid). Events according to her: Sigaan, the comptroller of the Phillipine Navy, offered to loan money to her. She accepted because she needed o capital for her office supply business venture. She currently supplies office mat’l and equipment to the Phil Navy. o She agrees to the loan of P540k. Loan was not in writing and there was no stipulation as to payment of interest. o She issues a check worth P500; as partial payment. 2 months later, she issues another check worth P200k. o Sigaan (who now received P700k from Villanueva) said the excess money Villanueva paid would be applied as interest. But Sigaan still kept pestering her for additional interest and threatened to block her transactions with the Phil Navy if she won’t comply. Fearing this, she paid additional amounts totalling to P1.2m. She asked for a receipt but was told that there was no need bec they had mutual trust and confidence. o She then consulted a lawyer who t old her that Sigaan could not validly collect interest because there was no agreement of interest. She demands from Sigaan the return of the P660k. According to Sigaan, however: He did not offer to loan but was instead propositioned by Villanueva and insists that there was no overpayment, o as that there was a promissory note by Villanueva admitting to having borrowed P1.24m. o As payment, Villanueva issued 6 postdated checks. Only 1 was honoured. He filed criminal cases against Villanueva (BP 22). In this BP 22 case, Sigaan claims that Villanueva, in her testimony, admitted to having agreed to a 7% interest. This should be an exception (to the rule that interests should be in writing) because it would be unfair since Vil lanueva already admits to the interest. Also Villanueva was already estopped from complaining because she was given several times to settle her o obligation but failed. RTC says: there was overpayment. Villanu eva’s obligation only amounted to P540k because there was no interest agreement. CA affirmed.
Issue: Was there overpayment? What about interest? Held: [Yes. Sigaan should return the excess amounts.] [No interest to be paid by Villanueva. However, Sigaan should pay interest on the amounts he should refund Villanueva.] Ratio:
SC defines interest: monetary and compensatory: o Monetary interest: Interest is a COMPENSATION fixed by the PARTIES for the use or forbearance of money. o Compensatory: Interest Interest imposed by LAW or by COURTS as PENALTY or INDEMNITY. The right to interest arises only: 1. By a contract; or 2. By virtue virtue of damages for delay or failure failure to pay the the principal principal loan
RE: Interest should be stipulated in writing NCC 1956: Refers to monetary interest and mandates that no interest shall be due unless stipulated in writing. So, it is allowed only when the following concur: 1. If there was express stipulation for interest payment 2. AND if the agreement was in writing In this case, the parties did not agree. As explained by Villanueva, the presented promissory note was in her handwriting because Sigaan told her to copy it and she did because she feared the threats of Sigaan to block her deals with the Phil Navy. (this was not rebutted by Sigaan so the SC believed this explanation) Clearly, there was NO CONSENT to the payment of interest, she was coerced. o
RE: Exceptions Sigaan’s claim that Villanueva admitting to the interest should be an exception, SC says: In the BP22 case, Villanueva did not declare to have made an express stipulation in writing as to the interest. There instances in which interest may be imposed in the absence of stipulation, verbal or written, are: 1. NCC 2209: If obligation consists in payment of sum of money, no stipulation stipulation on interest, and debtor incurs delay = legal interest 12% per annum 2. NCC 2212: interest due due shall earn legal interest from from the time it is judicially demanded Under those 2 instances, interest MAY be imposed only as PENALTY or damages for breach of CONTRACTUAL obligations and NOT for compensation for the use or forbearance of money. o MEANING: those 2 are only applicable to COMPENSATORY COMPENSATORY interests and not to m onetary interest. o This case involves a claim for monetary interest. Compensatory is not chargeable because it was not proven that Villanueva defaulted in paying the loan.
RE: Solutio indebiti (NCC 2154: 1. if something is received where there is no right to demand it and 2. it was delivered through mistake, the obligation to return it arises) Principle: no one shall enrich himself unjustly at expense of another
RE: Interest payment Eastern Shipping v. CA: o when an obligation NOT constituting a loan or forbearance of money is breached, interest on amount of damages may be imposed at the rate of 6% per annum. o When judgment awarding a sum of money becomes final and executory, legal interest (whether loan/forbearance or money or not) shall be 12% per annum from finality The INTERIM period is deemed a forbearance of credit o Sigaan’s obligation arises from a quasi-contract of solutio indebitu and NOT from a loan or forbearance of money. So: o 6% per annum should be imposed on the amount to be refunded (as well as to the damages and atty fees) from time of extra judicial demand (March 3, 1998) up to finality . Amount shall become 12% per annum from finality of decision up to its satisfaction o
