Interest; legal interest; proper rate.
InEastern Shipping, it wasobserved that the
commencement of whenthe legal interest should start torunvariesdepending onthe
factual circumstances obtaining ineach case. As aruleof thumb, it wassuggested
that wherethe demand isestablished withreasonable certainty, the interest shall
begin torunfromthetimethe claimismadejudiciallyor extrajudicially (Art. 1169, Civil
Code) but when suchcertainty cannot besoreasonably established at the timethe
demand ismade, theinterest shall begin torunonlyfromthedate thejudgment of the
court ismade(at whichtimethequantification ofdamages maybedeemed tohave
been reasonably ascertained).
During the pendency of this case, however, theMonetary BoardissuedResolutionNo.
796 dated May 16, 2013, stating that in the absence of express stipulation between
the parties, the rate of interest in loan or forbearance of any money, goods or credits
and the rate allowed in judgments shall be 6% per annum. Said Resolution is
embodied in Bangko Sentral ng Pilipinas Circular No. 799, Series of2013, whichtook
effect on July 1, 2013. Hence, the 12%annual interest mentioned above shall apply
only up to June 30, 2013. Thereafter, or starting July 1, 2013, the applicable rate of
interest for both the debited amount and undocumented withdrawals shall be 6%per
annum compounded annually, until fully paid. Land Bank of the Philippines v.
Emmanuel C. Oate, G.R. No. 192371, January 15, 2014.
CASE2015-0006: REPUBLICOFTHEPHILIPPINES, REPRESENTED BYTHE
DEPARTMENTOFPUBLICWORKSANDHIGHWAYS, PETITIONERS, -VERSUS
ARLENER. SORIANO, RESPONDENT(G.R.NO. 211666, 25FEBRUARY2015,
PERALTA, J.) SUBJECTS: EXPROPRIATION; INTERESTRATE; CAPITALGAINS
TAX; DOCUMENTARYSTAMPTAX; CONSEQUENTIALDAMAGES(BRIEFTITLE:
REPUBLICVS. SORIANO)
DISPOSITIVE:
WHEREFORE, premises considered, the instant pet1t10n 1s PARTIALLY
GRANTED. The Decision and Order, dated November 15, 2013 and March 10,
2014, respectively, of the Regional Trial Court, Valenzuela City, Branch 270, in
Civil Case No. 140-V-10 are herebyMODIFIED, inthat theimpositionof interest
on the payment of just compensation as well as the award of consequential
damages are deleted. Inaddition, respondent ArleneR. SorianoisORDEREDto
pay for the capital gains tax due on the transfer of theexpropriatedproperty,
while the documentary stamp tax, transfer tax, andregistrationfeeshall befor
theaccount of petitioner.
SOORDERED.
SUBJECTS/DOCTRINES/DIGEST:
PETITIONERCONTENDSTHATTHEPAYMENTTORESPONDENTISNOT
FOREBEARANCEOFMONEYORCREDITBUTPAYMENTOFJUST
COMPENSATIONFOREXPROPRIATEDPROPERTY. THEREFORETHE
IMPOSITIONOF12%INTERESTHASNOBASIS. RATHERART.2209OFTHE
CIVILCODEAPPLIESWHICHFIXESTHEINTERESTAT6%PERANNUM.IS
THISCONTENTIONCORRECT?
NO.
THERULINGONNATIONALPOWERCORPORATIONV.ANGASHASALREADY
BEENOVERTURNEDBYTHERULINGINREPUBLICV. COURTOFAPPEALS,
WHEREINTHESUPREMECOURTHELDTHATTHEPAYMENTOFJUST
COMPENSATIONFORTHEEXPROPRIATEDPROPERTYAMOUNTSTOAN
EFFECTIVEFORBEARANCEONTHEPARTOFTHESTATE.
IFPAYMENTOFJUSTCOMPENSATIONISFORBEARANCEWHATISTHE
APPLICABLEINTEREST?
6%PERANNUM.
INLINEWITHTHERECENTCIRCULAROFTHEMONETARYBOARDOFTHE
BANGKOSENTRALNGPILIPINAS(BSP-MB) NO.799, SERIESOF2013,
EFFECTIVEJULY1, 2013, THEPREVAILINGRATEOFINTERESTFORLOANS
ORFORBEARANCEOFMONEYISSIXPERCENT(6%) PERANNUM,INTHE
ABSENCEOFANEXPRESSCONTRACTASTOSUCHRATEOFINTEREST.
ISTHEIMPOSITIONOFINTERESTWARRANTEDINTHISCASE?
NOBECAUSEPETITIONERINCURREDNODELAYINTHEPAYMENTOFJUST
COMPENSATION.
ASEVIDENCEDBYTHEACKNOWLEDGMENTRECEIPTSIGNEDBYTHE
BRANCHCLERKOFCOURT,PETITIONERWASABLETODEPOSIT WITHTHE
TRIALCOURTTHEAMOUNTREPRESENTINGTHEZONALVALUEOFTHE
PROPERTYBEFOREITSTAKING.
ARECONSEQUENTIALDAMAGESPROPERINTHISCASE?
NOBECAUSETHEENTIREAREAOFTHESUBJECTPROPERTYANDNOT
ONLYAPORTIONTHEREOFISEXPROPRIATED.
CONSEQUENTIALDAMAGESAREAWARDEDIFASARESULTOFTHE
EXPROPRIATION, THEREMAININGPROPERTYOFTHEOWNERSUFFERS
FROMANIMPAIRMENTORDECREASEINVALUE.
PETITIONERCONTENDSTHATITISTHEPROPERTYOWNERTHATISLIABLE
FORCAPITALGAINSTAXANDDOCUMENTARYSTAMPTAX.ISTHIS
CONTENTIONCORRECT.
RESPONDENTLANDOWNERISLIABLEFORCAPITALGAINSTAXBECAUSE
ITHASBEENHELDTHATSINCECAPITALGAINSISATAXONPASSIVE
INCOME,ITISTHESELLER, NOTTHEBUYER, WHOGENERALLYWOULD
SHOULDERTHETAX. ALSO,THEBIR, INITSBIRRULINGNO.476-2013, DATED
DECEMBER18, 2013, CONSTITUTEDTHEDPWHASAWITHHOLDINGAGENT
TOWITHHOLDTHESIXPERCENT(6%) FINALWITHHOLDINGTAXINTHE
EXPROPRIATIONOFREALPROPERTYFORINFRASTRUCTUREPROJECTS.
BUTPETITIONERISLIABLEFOR DOCUMENTARYSTAMPTAX.UNDERTHE
NIRCBOTHBUYERANDSELLERAREHELDLIABLEUNLESSTHEREISAN
AGREEMENT. BUTACCORDINGTOPETITIONERSCITIZENSCHARTER,28
WHICHFUNCTIONSASAGUIDEFORTHEPROCEDURETOBETAKENBYTHE
DPWHINACQUIRINGREALPROPERTYTHROUGHEXPROPRIATIONUNDER
RA8974 ISSUEDBYPETITIONERDPWHITSELFONDECEMBER4, 2013,
EXPLICITLYPROVIDESTHATTHEDOCUMENTARYSTAMPTAX,TRANSFER
TAX,ANDREGISTRATIONFEEDUEONTHETRANSFEROFTHETITLEOF
LANDINTHENAMEOFTHEREPUBLICSHALLBESHOULDEREDBYTHE
IMPLEMENTINGAGENCYOFTHEDPWH.
G.R. No. 183290* July9,2014
DEPARTMENTOFAGRARIANREFORM,representedbySECRETARYNASSERC.
PANGANDAMAN, Petitioner,
vs.
SPOUSESDIOSDADOSTA.ROMANAandRESURRECCIONO.RAMOS,represented
byAURORASTA. ROMANA, PURIFICACIONC. DAEZ, representedbyEFREND.
VILLALUZandROSAUROD.VILLALUZ,andSPOUSESLEANDROC. SEVILLAand
MILAGROSC. DAEZ, Respondents.
RESOLUTI ON
PERLAS-BERNABE,J.:
Assailedinthis3petitionfor reviewoncertiorari1aretheDecision2 datedMarch27, 2008and
theResolution datedJune12, 2008renderedbyth4eCourt of Appeals(CA) inCA-G.R. SP
Nos. 93132and93240whichaffirmedtheDecision datedOctober 18, 2005of the5 Regional
Trial Court of Guimba,NuevaEcija,Branch33(RTC) inAGR. CaseNo. 1163-G, fixingthe
just compensation for respondents 21.2192-hectare (ha.) land at P2,576,829.94
or P121,438.60/ha., and ordering the Land Bank of thePhilippines (LBP) topay thesaid
amount inthemanner providedbylaw.
TheFacts
Respondents, spouses DiosdadoSta. RomanaandResurreccionO.Ramos, represented
byAuroraSta. Romana,PurificacionC.Daez,representedbyEfrenD. VillaluzandRosauro
D. Villaluz, andspouses LeandroC. SevillaandMilagros C. Daez, aretheowners of a
27.5307-ha. agricultural landsituate dinSanJoseCity, NuevaEcija, coveredbyTransfer
Certificateof TitleNo. NT-66211.6 Petitioner, theDepartment of AgrarianReform(DAR),
compulsorily acquired a 21.2192-ha. portion (subject land)7 of respondents property
pursuant toth8egovernmentsOperationLandTransfer Program under Presidential Decree
No. (PD) 27, otherwiseknownas the"Tenants EmancipationDecree," as amended. On
November 29, 1995,theDAR causedthegenerationof emancipationpatents(EPs) infavor
of the farmer-b e neficiaries,9 and, in 1996, the LBP fixed the value of the subject land
atP12361,181.8710 (LBP valuation) using the formula11 under Execu tive Order No. (EO)
228 andDARAdm inistrativeOrder No. (AO) 13, series of 1994,13 i.e., LV=(2.5xAGP
xP35.00) x (1.06)n .Under this formula, thegovernment support price(GSP) for one(1)
14
cavanof palay was peggedat15P35.00, whichis theGSPpriceset onthedateof PD27s
effectivityonOctober 21,1972.
DissatisfiedwiththeLBPvaluation, respondentsfiledaPetitionfor Approval andAppraisal
of Just CompensationbeforetheRTC,docketedasAGR. CaseNo. 1163-G,averringthat:
(a) theLBPvaluationwas grossly inadequateconsideringthesubject lands proximity to
subdivisionlotsandcommercial establishments;and(b) thefair market valueof thesubject
landshouldbefixedintheamount of at least P300,000.00/ha. assomebeneficia16rieswere
evensellingtheir landstosubdivisiondevelopersatthepriceof P1,000,000.00/ha.
On the other hand, the LBPinsisted on the correctness of the valuation, having been
computedinaccordancewiththeformulaunder EO228whichgovernsthedeterminationof
just compensationduealandowner whoseproperty wasseizedunder PD27. For itspart,
theDARmaintainedthattheproper procedurerelevant tothedeterminationof thevaluation
was followed, hence , theamount of P361,181.87or P4,719.77/ha. was inkeepingwiththe
mandateof PD27.17 18
The RTC appointed two (2) commissioners for thepurpose. OnAugust 27, 2004, the
commissioners submitted their report, reco19 mmendingtheamount of P300,000.00/ha. as
reasonablecompensationfor thesubjectland.
TheRTCRuling
OnOctober 18, 2005,theRTCrenderedaDecision20 rejectingtheLBPvaluationandfixing
thejust compensationof thesubject landat P2,576,829.94or P121,438.60/ha. It explained
that while respondents land21was acquired pursuant to PD27, thesameis coveredby
Republic Act No. (RA) 6657, otherwiseknownasthe"ComprehensiveAgrarianReform
Law of 1988," as amended, which provides that in determining just compensation, the
factors under Section 17 of RA6657, as amended, should beco nsidered.22 It likewise
pointed out that the Court, inthecaseof LBPv. Spouses Banal,23 haddeclaredthat the
abovementione24dfactors havealready beentranslatedintoa25basic formulainDARAO6,
series of 1992, as26amendedbyDARAO11, seriesof 1994, i.e ., LV=(CNI +0.6) +(CS
x0.3) +(MVx0.1). Consideringtheavailabilityof onlytheCS27 andMV28 factors, theRTC
appliedthefo rmulaLV=(CSx 0.9) + (MVx 0.1) infixingthejust compensationfor the
subject land.29
The DAR and theLBPfiledseparatemotions for reconsiderationwhichwere, however,
denied by the RTC. Hence, they filed separate appeals before the CA, respectively
docketedas CA-G.R. S PNos. 93132and93240, that were, thereafter, consolidatedbythe
CAonAugust 31, 2006.30
TheCARuling
InaDecision31 datedMarch27, 2008, theCAaffirmedtheRTCDecision, explainingthat
theexpropriationof alandholdingcoveredbyPD27, suchasthat of thesubject land, isnot
consideredtohavetakenplaceontheeffectivityof thesaiddecree, or onOctober 21, 1972,
but at thetimepayment of just compensationis made, as judicially determined. Thus, it
wouldbeinequitabletobasetheamount of just compensationontheguidelinesprovidedby
PD27an32dEO228whentheseizureof thesubject landtook placeafter theenactment of
RA6657 onJune15, 1988. Theacquisitionof thesubject landhavingbeeninitiatedonly
in 1995, the LBPvaluation using the formula under EO228was confiscatory , as just
compensationshouldconstitutethefull andfair equivalent of thepropertywhenit istaken.
Consideringthat theagrarianreformprocess remainedincompleteas thepayment of the
just compensationfor thesubject landhasyet tobemade, andinviewof thepassageof RA
6657 in the interim, the CA upheld the RTC valu ation as having been computed in
accordancewithSection17of RA6657, as amended.33
The motio34ns for reconsideration filed by the DAR and the LBP were denied in a
Resolution dated June 1 2, 2008, hence, the instant petition by the DAR which was
subsequentlyconsolidated35 withtheLBPspetitioninG.R. Nos. 183298-99.
TheIssueBeforetheCourt
Theessential issuefor theCourtsresolutioniswhether or not thesubject landwasproperly
valuedinaccordancewiththefactors set forthinSection17of RA6657, asamended. The
ProceedingsBe36foretheCourt
InaResolution datedOctober 12, 2009, theparties weredirectedtofiletheir respective
memora nda. In lieu of a memorandum, however, the LBPfiled a manifestation and
motion37 (motiontowithdrawandtoremand) inG.R. Nos. 183298-99(a) averringthat the
matter of computation38of just compensationhadbeenrenderedmoot andacademicbythe
enactment of RA9700, whichordainsthat whenthevaluationof previouslyacquiredlands
is challengedby thelandowner, thesam eshall becompletedandfinallyresolvedpursuant
toSection17of RA6657, as amended;39 and(b) prayingthat it beallowedtowithdrawits
petition and that the case be re manded to the RTC for re-computation of the just
compensationof thesubject land40 based41onthefactors set forthunder Section17of RA
6657, asamended, inrelationtoSection5 of RA9700.
Therespondents inthesaidcases, whoarethesamerespondentsintheinstant case, did
not oppose the motion to withdraw and to remand, which the Court granted in a
Resolution42 dated January 18, 2010. Neither didthey fileany motionfor reconsideration
therefrom.
On the other hand, theDARfiledamemorandum,43 prayingfor theadoptionof theLBP
valuationfor thesubject land, or inthealternative, for asimilar remandof thecasetothe
RTCfor further proceedings todeterminethevalueof thelandinaccordancewithexisting
provisionsof lawandapplicableadministrativeissuances.
TheCourtsRuling
Settledis therulethat whentheagrarianreformprocessisstill incomplete, asinthiscase
wherethejust compensationfor thesubject landacquiredunder PD27hasyet tobe paid,
just compensationshouldbedeterminedandtheprocessconcludedunder RA6657,44 with
PD27andEO228havingmeresuppletoryeffects.Thismeansthat PD27andEO228only
apply when45therearegapsinRA6657;whereRA6657issufficient, PD27andEO228are
superseded.
For purposes of determiningjust compensation, thefair market valueof46anexpropriated
property is determinedby its character andits price at thetimeof taking. Inaddition, the
factors enumeratedunder Section17of RA6657,47 i.e., (a) theacquisitioncost of theland,
(b) thecurrent valueoflikeproperties,(c) thenatureandactual useof theproperty, andthe
income therefrom, (d) the owner's sworn valuation, (e) the tax declarations, (f) the
assessment made by government assessors, (g) the social and economic benefits
contributedbythefarmersandthefarmworkers,andbythegovernment totheproperty, and
(h) thenon-paymentoftaxesor loanssecuredfromanygovernment financinginstitutionon
thesaidland, if any,mustbeequallyconsidered.1wphi1
TheCourt has goneover therecords andobservedthat theonlyfactorsconsideredbythe
RTCindeterminingthejust compensationfor thesubject landwere(a) theacquisitionprice
of a548.5825-ha. landholdingsituatedinthesamelocalitypaidtotheowner onNovember 17,
1997, and(b) themarket valueof thesubjectlanddeclaredbytherespondents, without a
showingthat theother factors under Section17ofRA6657, asamended, wereeventaken
into account or, otherwise, found to beinapplicable, contrary towhat thelawrequires.
Consequently, the CAerred in upholding the RTCs valuationas havingbeenmadein
accordancewithSection17ofRA6657,as amended.
This, considering too that the records of AGR. Case No. 1163-GonLBPs petitionfor
review, docketed as G.R. Nos. 183298-99, hadalready beenremandedtotheRTC, the
Court finds that thereis aneedtomakeasimilar remandof DAR spresent petitioninthis
casealsostemmingfromAGR.CaseNo.1163-GtothesameRTCfor thedeterminationof
just compensationinaccordancewithSection17ofRA6657, asamended. Asidefromthe
requirement andneedtoapply thefactors under Section17of RA6657, asamended, this
courseof actionis alsomeant toavoidthepossibilityof anyconflict or inconsistencywith
any eventual rulinginAGR. CaseNo. 1163-G. Tothisend, theRTCisherebydirectedto
observethefollowingguidelinesintheremandofthecase:
1. Just compensationmust bevaluedatthetimeoftaking, or thetimewhenthelandowner
was deprivedof theuseandbenefit of his49property,suchaswhentitleistransferredinthe
name of the Republic of the Philippines. Hence, the evidence to bepresentedby the
parties before the trial court for the valuation of thesubject la50ndmust bebasedonthe
valuesprevalentonsuchtimeoftakingfor likeagricultural lands.
2. The evidence must conformwith Section 17 of RA6657, as amended, prior toits
amendment by RA9700. ItbearspointingoutthatwhileCongresspassedRA9700onJuly
1, 2009, amendingcertainprovisions of RA6657, as amended, amongthem, Section17,
anddeclaring"(t)hat all previouslyacquiredlandswhereinvaluationissubject tochallenge
by landowners51shall becompletedandfinallyresolvedpursuant toSection17of [RA6657],
as amended," thelawshould52notberetroactivelyappliedtopendingclaims/cases. Infact,
DAR AO 2, series of 2009, implementing RA 9700, expressly excepted from the
applicationof theamendedSection17all claimfoldersreceivedbyLBPprior toJuly1, 20
09, whichshall bevaluedinaccord ancewithSection17of RA6657, asamended, prior to
itsfurther amendmentbyRA9700.53
With this in mind, the Court, cogniza nt of thefact that theinstant petitionfor reviewon
certiorari was filedonJuly 21, 2008,54 or longbeforethepassageof RA9700, finds that
Section 17of RA6657, as amended, prior toits further amendment by RA9700, should
control thechallengedvaluation. Intheevent that therespondents hadalready withdrawn
theamount depositedby theLB55P,thewithdrawnamount shouldbedeductedfromthefinal
landvaluationtobepaidbyLBP.
3.TheRegional Trial Courtmayimposeintere stonthejust compensationawardasmaybe
warrantedby thecircumstancesofthecase.56 Inpreviouscases, theCourt hasallowedthe
grant of legal interest inexpropriationcases wherethereisdelayinthepayment sincethe
just compensationduetothelandownerswasdeemedtobeaneffectiveforbearanceonthe
part of the State.57 Legal interest shall bepeggedat therateof 12%interest per annum
(p.a.). fromthe time of taking until June30, 2013only. Thereafter, or beginningJuly 1,
2013, until fully paid, thejust compensationduethelandowners shall earninterest at the
new legal rate o58 f 6%interest p.a. in line with the amendment introducedby BSP-MB
Circular No. 799, seriesof 2013.59
4. TheRegional Trial Court isreminded, however, that whileit shouldtakeintoaccount the
different formulacreatedby theDARinarrivingat itsjust compensationvaluation, it isnot
strictly boundtheretoif thesitu60ations beforeit donot warrant their application. Asheldin
LBPv. Heirsof MaximoPuyat:
[T]he determination of just compensation is a judicial function; hence, courts cannot be
unduly restrictedintheir determinationthereof. Todosowoulddeprivethecourtsof their
judicial prerogatives and reduce themto the bureaucratic functionof inputtingdataand
arrivingat thevaluation. Whilethecourtsshouldbemindful of thedifferent formulaecreated
by theDARinarrivingat just compensation, theyarenot strictlyboundtoadheretheretoif
the situations before themdonot warrant it. ApoFruits Corporationv. Court of Appeals
thoroughlydiscussesthisissue, towit:
"xxx[T]hebasicformulaanditsalternativesadministrativelydetermined(asit isnot found
inRepublic Act No. 6657, but merely set forthinDARAONo. 5, Seriesof 1998)although
referredtoandevenappliedby thecourtsincertaininstances, doesnot andcannot strictly
bindthecourts. Toinsist that theformulamust beappliedwithutmost rigiditywherebythe
valuationis drawnfollowingastrict mathematical computationgoesbeyondtheintent and
spirit of thelaw. Thesuggestedinterpretationis strainedandwouldrender thelawinutile.
Statutory construction should not kill but givelifetothelaw. As wehaveestablishedin
earlier jurisprudence, thevaluationof property ineminent domainis essentiallyajudicial
functionwhichisvestedintheregional trial court actingasaSAC, andnot inadministrative
agencies. TheSAC, therefore, must still beabletoreasonablyexerciseitsjudicial discretion
intheevaluationof thefactors for just compensation, whichcannot bearbitrarilyrestricted
by aformuladictatedbytheDAR, anadministrativeagency. Surely, DARAONo. 5didnot
intendtostraightjacket thehandsof thecourt inthecomputationof thelandvaluation. While
it provides aformula, it couldnot havebeenitsintentiontoshacklethecourtsintoapplying
theformulainevery instance. Thecourt shall apply theformulaafter anevaluationof the
threefactors, or it may proceedtomakeitsowncomputationbasedonth61eextendedlist in
Section17of RepublicAct No. 6657, whichincludesother factors[.] xxx."
WHEREFORE, thepetitionis DENIEDinsofar as it seeks tosustainthevaluationof the
21.2192-hectareportionof respondents' propertymadebytheLandBankof thePhilippines.
TheDecisiondatedMarch27, 2008andtheResolutiondatedJune12, 2008renderedby
the Court of Appeals in CAG.R. SPNos. 93132and93240upholdingthesaidvaluation
whichdidnot consider thefactors enumeratedunder Section17of RepublicAct No. 6657,
as amended, are hereby REVERSED and SET ASIDE. The Department of Agrarian
Reform's petitionstemmingfromAGR. CaseNo. 1163-GisREMANDEDtotheRegional
Trial Court of Guimba, NuevaEcija, Branch33for receptionof evidenceontheissueof just
compensation in accordance with the guidelines set in this Decision. Thetrial court is
directedtoconduct theproceedings insaidcasewithreasonabledispatchandtosubmit to
theCourt areport onitsfindingsandrecommendedconclusionswithinsixty(60) daysfrom
noticeof thisDecision.
SOORDERED.
ESTELAM.PERLAS-BERNABE
AssociateJustice
G.R. No. 186332 October23,2013
PLANTERSDEVELOPMENTBANK,Petitioner,
vs.
SPOUSESERNESTOLOPEZandFLORENTINALOPEZsubstitutedbyJOSEPH
WILFREDJOVENJOSEPHGILBERTJOVENandMARLYNJOVEN, Respondents.
DECI SI ON
BRION,J.:
Weresolvethepetitionfor reviewoncertiorari1 filedby petitioner Pla nters Development
Bank Planters Ba nk) tochallengetheJuly30, 2007amended d ecision2 andtheFebruary5,
2009resolution3 oftheCourtofAppealsCA) inCA-G.R. CVNo. 61358.
TheFactual Antecedents
Sometime in1983, thespouses EmestoandFlorentinaLopez appliedfor andobtaineda
real estateloanintheamount of 3,000,000.00fromPlanters Bank. Theloanwasintended4
tofinancetheconstructionofafour-storyconcretedormitorybuilding. Theloanagreement
datedMay 18, 1983providedthat theloanispayablefor fourteen(14) yearsandshall bear
a monetary interest at twenty-onepercent (21%) per annum(p.a.). Furthermore, partial
drawdowns ontheloanshall bebasedonproject completion, andshall beallowedupon
submissionof jobaccomplishment reportsbytheproject engineer. Tosecurethepayment
of theloan, thespou5ses Lopez mortgagedaparcel of landcoveredbyTransfer Certificate
of TitleNo. T-16233.
OnJuly 21, 1983,thepartiessignedanamendmenttotheloanagreement. Accordingly, the
interest ratewas increase dtotwenty-threepercent(23%) p.a. andthetermof theloanwas
shortenedtothreeyears.6 OnMarch9,1984,thepartiesexecutedasecondamendment to
theloanagreement. Theinterest ratewas further increasedtotwenty-fivepercent (25%)
p.a. Thecontract also providedthatreleasesontheloanshall besubject toPlantersBanks
availabilityof funds.7
Meanwhile, thePhilippineeconomydeterioratedasthepolitical developmentsinthecountry
worsened.8Thevalueof thepesoplunged. Thepriceof thematerialsandthecost of labor
escalated. Eager tofinishtheproject, thespousesLopezobtainedanadditional loaninthe
amount of P1,200,000.00 fromPlantersBank.
OnApril 25, 1984, they enteredintoathirdamendment totheloanagreement. Theamount
of theloanandtheinterestratewereincreasedtoP4,200,000.00andtwenty-sevenpercent
(27%) p.a., respectively. Furthermore, thetermoftheloanwasshortenedtooneyear. The
contract alsoprovid9edthat theremainingloanshall onlybeavailabletothespousesLopez
until June30, 1984. Onthesameda te, thespousesLopezincreasedtheamount secured
by the mortgage to P4,200,000.00.10 On August 15, 11 1984, Planters Bank unilaterally
increasedtheinterestratetothirty-twopercent(32%) p.a.
The spouses Lopez failed to avail the full amount of the loan because Planters Bank
refused to release the remaining amount of P700,000.00. On October 13, 1984, the
spouses Lopez filedagainst PlantersBankcomplaint for rescissionof th12eloanagreements
andfor damages withtheRegional Trial Court (RTC) of Makati City. Theyallegedthat
they couldnot continuetheconstructionof thedormitory buildingbecausePlanters Bank
hadrefusedtoreleasetheremainingloanbalance.
Indefense, Planters Bank arguedthat thespouses Lopezhadnocauseof action. It pointed
out that its refusal toreleasetheloanwastheresult of thespousesLopezsviolationsof the
loan agreement, namely: (1) non-submission of the accomplishment reports; and (2)
construction of a six-story building. As a counterclaim, Planters Bank prayed for the
payment o f the overdue released loanintheamount of P3,500,000.00, withinterest and
damages.13
OnNovember 16, 1984, PlantersBankforeclosedthem ortgagedpropertiesinfavor of third
partiesafter thespousesLopez defaultedontheir loan.14
TheRTCRuling
Inadecision15 datedAugust 18, 1997, theRTCruledinPlantersBanksfavor. It heldthat
thespouses Lopez hadnoright torescindtheloanagreementsbecausetheywerenot the
injuredparties. It maintainedthat thespouses Lopezviolatedtheloanagreement byfailing
tosubmit accomplishment reports andby deviatingfromtheconstructionproject plans. It
further declaredthat rescissioncouldnot becarriedout becausethemortgagedproperties
hadalready beensoldinfavor of thirdparties. Thedispositiveportionof theRTCdecision
provides:
INVIEWOFTHEFOREGOING,judgment isherebyrenderedorderingtheplaintiffstopay
the defendant-bank the amount of Three Million Five Hundred Thousand Pesos
(P3,500,000.00) plus the27%stipulatedinterest per annumcommencingonJune22, 1994
until 16fully paid minus the proceeds of the foreclosedmortg agedproperty intheauction
sale. (emphasis ours) Subsequently, the RTC amended17 its decision, uponPlanters
Banks filing of a Motio nfor Partial Reconsiderationand/or Amendment of theDecision
datedAugust 18, 1997.18 It clarifiedthat theinterest rateshall commenceonJune22, 1984,
asprovenduringtrial, thus:
INVIEWOFTHEFOREGOING,judgment isherebyrenderedorderingtheplaintiffstopay
the defendant-bank the amount of Three Million Five Hundred Thousand Pesos
(P3,500,000.00) plus the27%stipulatedinterest per annumcommencingonJune22, 1984
until 19fully paid minus the proceeds of the foreclosedmortgagedproperty intheauction
sale. (emphasisours)
CARuling
Thespouses Lopez diedduringthependencyof thecase. Onappeal tothe20 CA,compulsory
heirs Joseph Wilfred, Joseph Gilbert and Marlyn, all surnamed Joven (respondents)
substitutedfor thedeceasedFlorentinaLopez.
On November 27, 2006, theCAreversedtheRTCruling.21 It heldthat Planters Banks
refusal to release the loan was a substantial breach of the contract. It found that the
spouses Lopez submitted accomplishment reports. It gave weight to Engineer Edgard
Fianzas testimony that he prepared accomplishment reports prior tothereleaseof the
funds. Moreover, Planters Banks appraisal department head, RenatoMarayag, testified
that accomplishmentreportswereaprerequisitefor thereleaseof theloan.
It also declared that Planters Bank was estoppedfromraisingtheissueof thespouses
Lopezs deviation fromtheconstructionproject. Planters Bank conductedseveral ocular
inspections of thebuildingfrom1983to1987. Planters Bankcontinuouslyreleasedpartial
amountsof theloandespiteitsknowledgeoftheconstructionof asix-storybuilding.
It further concludedthat Planters Bank didnot releasetheloanbecausetheDevelopment
Bank of thePhilippines (DBP) lackedfunds. Ma. Agnes JopsonAngeles, PlantersBanks
senior accountant for themarketinggroup, testifiedthat PlantersBankssourceof fundsin
real estateloanswasDBP.AccordingtotheCA,AngelesadmittedDBPsnon-availabilityof
fundsinher testimony.ThedispositiverulingoftheCAdecisionprovides:
WHEREFORE, theappealedDecisionis MODIFIEDinthat theloaninterest tobepaidby
plaintiff-appellant to defendant-appellee is hereby reduced to12%per annumcomputed
fromfinality of this Decisionuntil full payment of theamoun22t of P3.5million, minus the
proceedsof auctionsaleoftheforeclosedmortgagedproperty.
Subsequently, therespondents filedamotionfor reconsideration. Theysought clarification
of thedispositiveportionwhichdoes not declaretherescissionof theloanandaccessory
contracts. Ontheother hand,PlantersBankfiledaComment onMarch2, 2007, prayingfor
thereinstatementoftheRTCruling.TheCAre-examinedthecaseandtreatedthecomment
asamotionfor reconsideration.Itaffirmeditspreviousdecisionbut modifiedthedispositive
portion, thus:
ACCORDINGLY, defendant-appellees motion for reconsideration is DENIED while
plaintiffs-appellants motionfor reconsiderationisPARTLYGRANTED. Thedispositivepart
of Our Decision dated November 27, 2006is hereby clarifiedandcorrectedtoreadas
follows:
WHEREFORE,theappealedDecisionisREVERSEDandSETASIDE.Theloanagreement
betweentheparties,includingall itsaccessorycontracts, isdeclaredRESCINDED.
Plaintiffs-appellants are ordered to return to defendant-appellee bank the amount of
P2,885,830.56withinterest oftwelvepercent(12%) per annumfromthetimethisDecision
becomesfinal andexecutoryuntil itisfullypaid.
Defendant-appellee23bank is ordered to convey and restore to plaintiffs-appellants the
foreclosedproperty. (emphasesandunderscoressupplied)
The CAalso deniedPlanters Banks Motionfor ReconsiderationdatedAugust 22, 2007,
promptingit tofilethepresentpetition.
ThePetitionersPosition
Planters Bank reiterates inits petitionbeforethis Court that therespondentshadnocause
of action. It posits that thespouses Lopez violatedtheloanagreements for their failureto
submit accomplishment reports andby constructingasix-story buildinginsteadof afour-
story building. It maintains that therewas noestoppel becauseonly oneyear andtwenty
days haveelapsedfromtheviolationof thecontract until thespousesLopezsfilingof the
complaint. It argues that theremust beanunjustifiableneglect for anunreasonableperiod
of timefor estoppel toapply. It alsoaversthat evenassumingthat it breachedthecontract,
it was only aslight breachbecauseonly P700,000.00of theP4,200,000.00loanwas not
released. Moreover, it highlights that24it cannot convey theforeclosedproperties because
theywerealreadysoldtothirdparties.
Planters Bank also clarifies its da25te of receipt of the CA amended decision in a
Manifestation dated March13, 2009. It states that it receivedtheamendeddecisionon
August 7, 2007, as evidenced by theattachedcertifications fromtheMakati andManila
Central Post Offices.
TheRespondents Position
Intheir Comments,26 therespondents reiteratetheCAsarguments. Theyalsoassert that
the amended decision has already become final and executory duetoPlanters Banks
belated filing of a motion for reconsideration on August 22, 2007. They point out that
Planters Bank unequivocably statedinthepleadingsthat it receivedacopyof theamended
decision on August 2, 2007. Furthermore, they aver that Planters Banks motion for
reconsiderationis asecondmotionfor reconsiderationdisallowedby theRules of Court.
They highlight that PlantersBankscomment totherespondents motionfor reconsideration
sought thereinstatement of theRTCruling. Consequently, thecomment isPlantersBanks
first motionfor reconsideration.
TheIssues
Thiscasepresentstousthefollowingissues:
1) Whether the CAs amended decision dated July 30, 2007 is final and
executory;
2) Whether thespousesLopezviolatedtheloanagreement;
a) Whether thespousesLopezsubmittedaccomplishment reports, and
b) Whether thespousesLopezdeviatedfromtheconstructionproject;
3) Whether PlantersBanksubstantiallybreachedtheloanagreement; and
4) Whether theamount of awardsrenderedbytheCAisproper.
TheCourtsRuling
WereversetheCAsdecision.
TheCAsamendeddecisiondatedJuly30,2007isnotyet final andexecutory
Section13, Rule13oftheRulesofCourtprovidesthat if serviceismadebyregisteredmail,
proof shall bemadeby anaffidavit ofthepersonmailingof factsshowingcompliancewith
Section7, Rule13of theRulesofCourt andtheregistryreceipt issuedbythemailingoffice.
However, the presentation of an affidavit and a registry receipt is not indispensablein
proving serviceby registeredmail. Other competent evidence, suchas thecertifications
fromthePhilippinePost Office, may establishthefact anddateof actual service . These
certificationsaredirectandprimarypiecesofevidenceof completionof service.27
WebelievePlanters Banks assertionthat its motionfor reconsiderationdatedAugust 22,
2007 was filed on time. The Manila Central Post Offices certification states that the
amendeddecisionwas only dispatche28dfromtheManilaCentral Post OfficetotheMakati
Central Post OfficeonAugust2,2007. Ontheother hand, theMakati Central Post Offices
certificationprovides that Planters Banks actual receipt of thedecisionwas onAugust 7,
2007.29 Thesecertifications conclusively showthat Planters Banks counsel receivedthe
amendeddecisiononAugust 7,2007andnotonAugust 2, 2007.
There is also no merit to the respondents argument that Planters Banks motion for
reconsiderationis disallowedunder Section2,Rule52of theRulesof Court.30 Wepoint out
inthis respect that thereisadifferencebetweenanamendedjudgment andasupplemental
judgment. Inanamendedjudgment, thelower courtmakesathoroughstudyof theoriginal
judgment and renders the amendedandclarifiedjudgment only after consideringall the
factual andlegal issues. Theamendedandclarifieddecisionis anentirely newdecision
which supersedes or takes the place of the original decision. On the other hand, a
supplemental decisio ndoes not taketheplaceof theoriginal; it only serves toaddtothe
original decision.31
Inthepresent case, theCApromulgatedanamendeddecisionbecauseit re-examinedits
factual andlegal findings inits original decision.Thus, PlantersBankmayfileamotionfor
reconsideration.TheamendeddecisionisanentirelynewdecisionwhichreplacedtheCAs
decisiondatedNovember 27,2006.
Insum, theamendeddecisionis not yet final andexecutorybecausePlantersBankfileda
motionfor reconsiderationontime;itsfilingisallowedbytheRulesof Court.
ThespousesLopez submittedaccomplishmentreports
WeseenoreasontodisturbtheCAs findingthatth32espousesLopezreligiouslysubmitted
accomplishment reports. The evidence on record shows that Engr. Fianzasubmitted
accomplishment reports fromNovember 19, 1983until33June9, 1984. Engr. Fianzaalso
testifiedthat hepreparedtheseaccomplishmentreports. Histestimonyiscorroboratedby
thetestimonyofMarayag,PlantersBanksappraisal department head.
This latter testimony shows that the spouses Lopez indeedsubmittedaccomplishment
reports.
Planters Bank is estopped from opposing the spouses Lopezs deviation from the
constructionproject
WealsoaffirmtheCAs findingthat PlantersBankisestoppedfromopposingthespouses
Lopezs construction of a six-story building. Section 2, Rule 131of theRules of Court
provides that whenever aparty has, by his owndeclaration, act, or omission, intentionally
anddeliberately ledanother tobelievethat aparticular thingis true, andtoact uponsuch
belief, he cannot, in any litigation arising out of such declaration, act or omission, be
permittedtofalsifyit.
The concurrence of the following requisites is necessary for the principle of equitable
estoppel toapply: (a) conduct amountingtofalserepresentationor concealment of material
facts or at least calculatedtoconvey theimpressionthat thefactsareotherwisethan, and
inconsistent with, thosewhichtheparty subsequently attempts toassert; (b) intent, or at
least expectationthat this conduct shall beactedupon, or at least influencedby theother
party; and(c) knowledge, actual or constructive, of theactual facts.
Inactionor silencemayunder somecircumstancesamount toamisrepresentation, soasto
raise an equitable estoppel. When the silence is of such a character and under such
circumstances that it wouldbecomeafraudontheother partytopermit thepartywhohas
kept silent to deny what his silence has inducedtheother tobelieveandact on, it will
operateas anestoppel. This doctrinerests ontheprinciplethat if onemaintains silence,
when in conscience he ought to speak, equity will debar himfromspeaking when in
conscienceheought toremainsilent.
Theprincipleof equitableestoppel preventsPlantersBankfromraisingthespousesLopezs
violationof theloanagreement. Planters Bank was already awarethat thespousesLopez
werebuildingsix floors as early as September 30, 1983. Records disclosethat Planters
Bank alsoconductedaseries of ocular inspections.35 Despitesuchknowledge, thebank
kept silent ontheviolationof theloanagreement asPlantersBankstill continuedtorelease
theloaninpartial amounts tothespousesLopez. AstheCAcorrectlypointedout, Planters
Bank only raised this argument during trial a move that highly appears to be an
afterthought.
PlantersBankonlycommittedaslight or casual breachof thecontract
Despiteour affirmationof theCAs factual findings, wedisagreewiththeCAsconclusion
that rescissionis proper. Planters Bank in36deedincurredindelaybynot complyingwithits
obligation to make further loan releases. Its refusal toreleasetheremainingbalance,
however, was merely aslight or casual breachasshownbelow. Inother words, itsbreach
was not sufficiently fundamental todefeat theobject of theparties inenteringintotheloan
agreement. Thewell-settledruleisthat rescissionwill not bepermittedfor aslight or casual
breachof thecontract. Thequestio nof whether abreachof contract issubstantial depends
upontheattendingcircumstances.37
The factual circumstances of this case lead us to the conclusion that Planters Bank
substantially complied with its obligation. To reiterate, Planters Bank released
P3,500,000.00 of the P4,200,000.00 loan. Only the amount of P700,000.00 was not
released. This constitutes 16.66%of theentireloan. Moreover, theprogress report dated
May 30, 1984 sta tes that 85%of the six-story building was already completedby the
spouses Lopez.38 It is alsoerroneoustosolelyimputethenon-completionof thebuildingto
Planters Bank. Planters Bank is not an insurer of the buildings construction. External
factors, suchas thesteeppriceof thematerialsandthecost of labor, affectedtheerection
of thebuilding. Moreimportantly,thespousesLopeztooktheriskthat theproject wouldnot
befinishedwhenthey constructedasix-storybuildinginsteadof four-storystructure.
Even assuming that Planters Bank substantially breached its obligation, the fourth
paragraphof Article1191of theCivil Codeexpressly provides that rescissionis without
prejudice to the rights of thirdpersons whohaveacquiredthething, inaccordancewith
Article1385of theCivil Code. Inturn,Article1385statesthat rescissioncannot takeplace
whenthethings whicharetheobject of thecontract arelegally inthepossessionof third
personswhodidnotactinbadfaith.
In the present case, the mortgaged properties hadalready beenforeclosed. They were
already sold to the highest bidder at a public auction. We recognize that transferees
pendenteliteareproper, but not indispensable, parties in39this case, as theywould, inany
event, be boundby thejudgment against Planters Bank. However, therespondents did
not o40vercome the presumption that the buyers bought theforeclosedproperties ingood
faith. Thespouses Lopez didn ot causetheannotationof noticeof lispendensat theback
of thetitleof themortgagedlot.41 Moreover, therespondents didnot adduceanyevidence
that wouldshowthat thebuyersboughtthepropertywithactual knowledgeof thependency
of thepresent case.Furthermore,thespousesLopezsfailuretopaytheoverdueloanmade
thempartiesindefault,notentitledtorescissionunder Article1191of theCivil Code.
Theestateof FlorentinaLopez shall pay Planters Bank theamount of P3,500,000.00with
12%monetaryinterestp.a.fromJune22,1984until full payment of theobligation
Planters Bank andthespouses Lopez undertook reciprocal obligations whentheyentered
intoaloanagreement. Inreciprocal obligations, theobligationor promiseof eachpartyis
theconsiderationfor that of theother.Themerepecuniaryinabilityof onecontractingparty
tofulfill anengagement does not dischargetheother contractingparty of theobligationin
the contract.42 Planters Banks slight breach does not excuse thespouses Lopez from
payingtheoverdueloanintheamount of P3,500,000.00. Despitethisfinding, however, we
cannot sustaintheimpositionoftheinterestrateintheloancontract.
We are aware that theparties didnot raisethis issueinthepleadings. However, it is a
settled rule that anappeal throws theentirecaseopenfor reviewonceacceptedby this
Court. ThisCourthasthustheauthoritytoreviewmattersnot specificallyraisedor assigned
as error b y theparties, if their considerationisnecessaryinarrivingat ajust resolutionof
thecase.43
Inthepresent case, Planters Bankunilaterallyincreasedthemonetaryinterest rateto32%
p.a. after the execution of the third amendment to theloanagreement. This is patently
violativeof theelement of mutuality of contracts. Our Civil Codehaslongentrenchedthe
basic principlethat thevalidity of or compliancetothecontract cannot beleft tothewill of
oneparty.44
Even if we disregard the 32%p.a., the interest rate of 27%p.a. inthethirdamended
agreement is still excessive45
. In Trade &Investment Devt Corp. of thePhil. v. Roblett
Industrial ConstructionCorp., weloweredtheinterest resultingchargefor beingexcessive
inthecontext of its computationperiod. Weequitably reducedtheinterest ratefrom18%
p.a. to12%p.a. becausethecasewas decidedwithfinalitysixteenyearsafter thefilingof
the complaint. We noted that the amount of the loan swelled to a considerably
disproportionatesum,far exceedingtheprincipal debt.
Aparallel situationprevails inthepresent case. Almost 29years haveelapsedsincethe
filing of the complaint in1984. Theamount of theprincipal loanalready balloonedtoan
exorbitant amount unwarrantedinfact andinoperation. WhiletheCourt recognizestheright
of the parties toenter intocontracts, this ruleis not absolute. Weareallowedtotemper
interest rates whennecessary. Wehavethus ruledinseveral casesthat whentheagreed
rate is iniquitous,46it is considered as contrary to morals, if not against the law. Such
stipulationisvoid.
Themanifest unfairness causedtotherespondents by this rulingandour senseof justice
dictatethat wejudiciously reducethemonetary interest rate. Our impositionof thelower
interest rateis basedonthedemandsof substantial justiceandintheexerciseof our equity
jurisdiction.
We thus equitably reduce the monetary interest rate to 12%p.a. on the amount due
computed fromJune 22, 1984 until full payment of the obligation. We point out inthis
respect that the monetary47interest accrues under theterms of theloanagreement until
actual paym ent is effected for thereasonthat itsimpositionisbasedonthestipulationof
theparties.48
Inthepresent case, thelower courts foundthat themonetaryinterest accruedonJune22,
1984. Incidentally, the lower courts also found that June 22, 1984 is alsothespouses
Lopezsdateof default.
Theestateof FlorentinaLopez shall further beliablefor compensatoryinterest at therates
of 12%p.a. fromJune22, 1984until June30, 2013and6%p.a. fromJuly1, 2013until the
finalityof thisDecision
Withrespect tothecomputationof compensatory interest, Section1of BangkoSentral ng
Pilipinas (BSP) Circular No. 799, Series of 2013, which took effect on July 1, 2013,
provides:
Section1. Therateof interest for theloanor forbearanceof any money, goodsor credits
andtherateallowedinjudgments, intheabsenceof anexpresscontract astosuchrateof
interest, shall besixpercent (6%) per annum.[emphasisours]
ThisprovisionamendsSection2of Central Bank(CB) Circular No. 905-82, Seriesof 1982,
whichtookeffect onJanuary1, 1983. Notably, werecentlyupheldtheconstitutionalityof CB
Circular No. 905-82 in Advo49
cates for TruthinLending, Inc., et al. v. BangkoSentral ng
PilipinasMonetaryBoard,etc. Section2ofCBCircular No. 905-82provides:
Section2. Therateof interest for theloanor forbearanceof any money, goodsor credits
and therateallowedinjudgments, intheabsenceof express contract as tosuchrateof
interest, shall continuetobetwelvepercent(12%) per annum.[emphasisours]
Pursuant tothesechang50es, this Court modifiedtheguidelines inEasternSh51ippingLines,
Inc. v. Court of Appeals inthecaseofDarioNacar v. GalleryFrames, et al. (Nacar). In
Nacar, weestablishedthefollowingguidelines:
I. Whenanobligation, regardless ofitssource,i.e.,law, contracts, quasi- contracts, delicts
or quasi-delictsisbreached,thecontravenor canbeheldliablefor damages. Theprovisions
under Title XVIII on"Damages" of theCivil Codegovernindeterminingthemeasureof
recoverabledamages.
II. Withregardparticularlytoanawardofinterestintheconcept of actual andcompensatory
damages, therateofinterest,aswell astheaccrual thereof, isimposed, asfollows:
1. Whentheobligationis breached, andit consists inthepayment of asumof
money, i.e., a loan or forbearance of money, the interest dueshouldbethat
whichmay havebeenstipulatedinwriting. Furthermore, theinterest dueshall
itself earnlegal interestfromthetimeitisjudiciallydemanded. Intheabsenceof
stipulation, the rate of interest shall be 6%per annumtobecomputedfrom
default, i.e., from judicial or extrajudicial demand under and subject to the
provisionsofArticle1169oftheCivil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, aninterest ontheamount of damages awardedmay beimposedat
the discretion of thecourt at therateof 6%per annum. Nointerest, however,
shall beadjudgedonunliquidatedclaims or damages, except whenor until the
demand can be establishedwithreasonablecertainty. Accordingly, wherethe
demandis establishedwithreasonablecertainty, theinterest shall begintorun
fromthetimetheclaimismadejudiciallyorextrajudicially(Art. 1169, Civil Code),
but when such certainty cannot be so reasonably establishedat thetimethe
demandis made, theinterest shall begintorunonlyfromthedatethejudgment
of the court is made (at which time the quantification of damages may be
deemed to have been reasonably ascertained). The actual base for the
computation of legal interest shall, in any case, be on the amount finally
adjudged.
3. Whenthejudgment of thecourt awardingasumof moneybecomesfinal and
executory, therateof legal interest, whether thecasefallsunder paragraph1or
paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interimperiodbeingdeemedtobeby thenanequivalent toa
forbearanceof credit. And, inadditiontotheabove, judgmentsthat havebecome
final andexecutoryprior toJuly1,2013,shall not bedisturbedandshall continue
tobeimplementedapplyingtherateofinterest fixedtherein. [emphasisours]
Since we declare void the monetary interest agreed uponby theparties, weimposea
compensatory interest of 12%p.a. which accrues fromJune22, 1984until June30, 2013,
pursuant to CBCircular No. 905-82.52 As wehaveearlier stated, June22, 1984is the
spouses Lopezs establisheddateof default. Inrecognitionof theprospectiveapplicationof
BSPCircular No. 799, wereducethecompensatory interest of 12%p.a. to6%p.a. from
July 1, 2013until thefinalityof thisDecision. Furthermore, theinterest dueshall earnlegal
interest fromthetimeit isjudiciallydemanded, pursuant toArticle2212of theCivil Code.
Theestateof FlorentinaLopez shall further beliablefor interest at therateof 6%p.a. from
thefinalityof thisdecisionuntil full payment of theobligation
Also, pursuant to the above-quoted Section 1 of BSPCircular No. 799, weimposean
interest rateof 6%p.a. fromthefinalityof thisDecisionuntil theobligationisfullypaid, the
interimperiodbeingdeemedequivalent toaforbearanceof credit.
Lastly, to prevent future litigation in the enforcement of the award, we clarify that the
respondents are not personally responsible for the debts of their predecessor. The
respondents extent of liability toPlan53ters Bank is limitedtothevalueof theestatewhich
they inheritedfromFlorentinaLopez. Inour jurisdiction, "it is theestateor mass of the
property left bythedecedent, insteadof theheirsdirectly, that becomesvestedandcharged
with his rights and obligations whichsurviveafter his death."54Toruleotherwisewould
undulydeprivetherespondents of their properties.
WHEREFORE, premises considered, theassailedamendeddecisiondatedJuly30, 2007
and resolution dated February 5, 2009of theCourt of Appeals arehereby REVERSED.
Respondents JosephWilfred, JosephGilbert andMarlyn, all surnamedJoven, areordered
topay THREEMILLIONFIVEHUNDREDTHOUSANDPESOS(13,500,000.00) with12%
monetary interest per annum commencing on June 22, 1984 until fully paid; 12%
compensatory interest per annumcommencingonJune22, 1984until June30, 2013; 6%
compensatory interest per annumcommencing on July 1 2013 until thefinality of this
Decision; and6%interest rateper annumcommencingfromthefinalityof thisDecisionuntil
fully paid. Theproceeds of theforeclosedmortgagedproperty intheauctionsaleshall be
deductedfromtheprincipal of theloanfromthetimepayment wasmadetoPlantersBank
andtheremainder shall bethenewprincipal fromwhichthecomputationshall thereafter be
made. Furthermore, therespondents' liability is limitedtothevalueof theinheritancethey
receivedfromthedeceasedFlorentinaLopez.
SOORDERED.
ARTUROD. BRION
AssociateJustice