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Guingona v. City Fiscal of Manila
Facts:
From March 1979 to March 1981, Clement David made several investments
with the National Savings and Loan Association. On March 21, 1981, the
bank was placed under receivership by the Bangko Sentral. Upon Davids
request, petitioners Guingona and Martin issued a joint promissory note,
absorbing the obligations of the bank. On July 17, 1981, they divided the
indebtedness. David filed a complaint for estafa and violation of Central
Bank Circular No. 364 and related regulations regarding foreign exchange
transactions before the Office of the City Fiscal of Manila. Petitioners filed
the herein petition for prohibition and injunction with a prayer for immediate
issuance of restraining order and/or writ of preliminary injunction to enjoin
the public respondents to proceed with the preliminary investigation on the
ground that the petitioners obligation is civil in nature.
Issue:
(1) Whether the contract between NSLA and David is a contract of depositor
a contract of loan, which answer determines whether the City Fiscal has the
jurisdiction to file a case for estafa
(2) Whether there was a violation of Central Bank Circular No. 364
Held:
(1) When private respondent David invested his money on nine. and savings
deposits with the aforesaid bank, the contract that was perfected was a
contract of simple loan or mutuum and not a contract of deposit. Hence, the
relationship between the private respondent and the Nation Savings and
Loan Association is that of creditor and debtor; consequently, the ownership
of the amount deposited was transmitted to the Bank upon the perfection of
the contract and it can make use of the amount deposited for its banking
operations, such as to pay interests on deposits and to pay withdrawals.
While the Bank has the obligation to return the amount deposited, it has,
however, no obligation to return or deliver the same money that was
deposited. And, the failure of the Bank to return the amount deposited will
not constitute estafa through misappropriation punishable under Article 315,
par. l(b) of the Revised Penal Code, but it will only give rise to civil liability
over which the public respondents have no jurisdiction.
But even granting that the failure of the bank to pay the time and savings
deposits of private respondent David would constitute a violation of
paragraph 1(b) of Article 315 of the Revised Penal Code, nevertheless any
incipient criminal liability was deemed avoided, because when the aforesaid
bank was placed under receivership by the Central Bank, petitioners
Guingona and Martin assumed the obligation of the bank to private
respondent David, thereby resulting in the novation of the original
contractual obligation arising from deposit into a contract of loan and
converting the original trust relation between the bank and private
respondent David into an ordinary debtor-creditor relation between the
petitioners and private respondent. Consequently, the failure of the bank or
petitioners Guingona and Martin to pay the deposits of private respondent
would not constitute a breach of trust but would merely be a failure to pay
the obligation as a debtor. Moreover, while it is true that novation does not
extinguish criminal liability, it may however, prevent the rise of criminal
liability as long as it occurs prior to the filing of the criminal information in
court. In the case at bar, there is no dispute that petitioners Guingona and
Martin executed a promissory note on June 17, 1981 assuming the
obligation of the bank to private respondent David; while the criminal
complaint for estafa was filed on December 23, 1981 with the Office of the
City Fiscal. Hence, it is clear that novation occurred long before the filing of
the criminal complaint with the Office of the City Fiscal. Consequently, as
aforestated, any incipient criminal liability would be avoided but there will still
be a civil liability on the part of petitioners Guingona and Martin to pay the
assumed obligation.
(2) Petitioner Guingona merely accommodated the request of the Nation
Savings and loan Association in order to clear the bank draft through his
dollar account because the bank did not have a dollar account. Immediately
after the bank draft was cleared, petitioner Guingona authorized Nation
Savings and Loan Association to withdraw the same in order to be utilized
by the bank for its operations. It is safe to assume that the U.S. dollars were
converted first into Philippine pesos before they were accepted and
deposited in Nation Savings and Loan Association, because the bank is
presumed to have followed the ordinary course of the business which is to
accept deposits in Philippine currency only, and that the transaction was
regular and fair, in the absence of a clear and convincing evidence to the
contrary.
In conclusion, considering that the liability of the petitioners is purely civil in
nature and that there is no clear showing that they engaged in foreign
exchange transactions, We hold that the public respondents acted without
jurisdiction when they investigated the charges against the petitioners.
Consequently, public respondents should be restrained from further
proceeding with the criminal case for to allow the case to continue, even if
the petitioners could have appealed to the Ministry of Justice, would work
great injustice to petitioners and would render meaningless the proper
administration of justice.
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BPI v. Franco
FACTS:
On August 15, 1989, Tevesteco opened a savings and current account
with BPI-FB. Soon thereafter, FMIC also opened a time deposit account with
the same branch of BPI-FB
On August 31, 1989, Franco opened three accounts, namely, a current,
savings, and time deposit, with BPI-FB. The total amount of P2,000,000.00
used to open these accounts is traceable to a check issued by Tevesteco
allegedly in consideration of Francos introduction of Eladio Teves, to Jaime
Sebastian, who was then BPI-FB SFDMs Branch Manager. In turn, the
funding for the P2,000,000.00 check was part of the P80,000,000.00 debited
by BPI-FB from FMICs time deposit account and credited to Tevestecos
current account pursuant to an Authority to Debit purportedly signed by
FMICs officers.
simple loan or mutuum. As there is a debtor-creditor relationship between a
bank and its depositor, BPI-FB ultimately acquired ownership of Francos
deposits, but such ownership is coupled with a corresponding obligation to
pay him an equal amount on demand. Although BPI-FB owns the deposits in
Francos accounts, it cannot prevent him from demanding payment of BPI-
FBs obligation by drawing checks against his current account, or asking for
the release of the funds in his savings account. Thus, when Franco issued
checks drawn against his current account, he had every right as creditor to
expect that those checks would be honored by BPI-FB as debtor.
More importantly, BPI-FB does not have a unilateral right to freeze the
accounts of Franco based on its mere suspicion that the funds therein were
proceeds of the multi-million peso scam Franco was allegedly involved in. To
grant BPI-FB, or any bank for that matter, the right to take whatever action it
pleases on deposits which it supposes are derived from shady transactions,
would open the floodgates of public distrust in the banking industry.

It appears, however, that the signatures of FMICs officers on the Ineluctably, BPI-FB, as the trustee in the fiduciary relationship, is duty
Authority to Debit were forged. BPI-FB, debited Francos savings and current bound to know the signatures of its customers. Having failed to detect the
accounts for the amounts remaining therein. In the meantime, two checks forgery in the Authority to Debit and in the process inadvertently facilitate the
drawn by Franco against his BPI-FB current account were dishonored and FMIC-Tevesteco transfer, BPI-FB cannot now shift liability thereon to Franco
stamped with a notation account under garnishment. Apparently, Francos and the other payees of checks issued by Tevesteco, or prevent withdrawals
current account was garnished by virtue of an Order of from their respective accounts without the appropriate court writ or a
favorable final judgment.
Notably, the dishonored checks were issued by Franco and presented for
payment at BPI-FB prior to Francos receipt of notice that his accounts were
under garnishment. It was only on May 15, 1990, that Franco was impleaded
in the Makati case. Immediately, upon receipt of such copy, Franco filed a
Motion to Discharge Attachment. On May 17, 1990, Franco pre-terminated
his time deposit account.

BPI-FB deducted the amount of P63,189.00 from the remaining balance of

the time deposit account representing advance interest paid to him.
Consequently, in light of BPI-FBs refusal to heed Francos demands to
unfreeze his accounts and release his deposits therein, Franco filed on June
4, 1990 with the Manila RTC the subject suit.

ISSUE: WON Respondent had better right to the deposits in the subject
accounts which are part of the proceeds of a forged Authority to Debit.

HELD: NO
There is no doubt that BPI-FB owns the deposited monies in the accounts of
Franco, but not as a legal consequence of its unauthorized transfer of
FMICs deposits to Tevestecos account. BPI-FB conveniently forgets that
the deposit of money in banks is governed by the Civil Code provisions on
CredTrans Online Digest Compilation
RCAP
Liwanag v. CA ISSUE:

FACTS:
Petitioner Carmen Liwanag and a certain Thelma Tabligan went to the
house of complainant Isidora Rosales (Rosales) and asked her to join them
in the business of buying and selling cigarettes. Convinced of the feasibility
of the venture, Rosales readily agreed. Under their agreement, Rosales
would give the money needed to buy the cigarettes while Liwanag and
Tabligan would act as her agents, with a corresponding 40% commission to
her if the goods are sold; otherwise the money would be returned to
Rosales. Consequently, Rosales gave several cash advances to Liwanag
and Tabligan amounting to P633,650.00
Whether Liwanag can be acquitted from the crime of estafa because
she and Rosales formed a partnership
HELD:
No, Liwanag could not be acquitted from the crime of estafa.
The Supreme Court held that Estafa is a crime committed by a person
who defrauds another causing him to suffer damages, by means of
unfaithfulness or abuse of confidence, or of false pretenses or fraudulent
acts.

Alarmed that Liwanag was no longer visiting her regarding their business In the case at hand, even assuming that a contract of partnership was
and believing that the amounts she advanced were being misappropriated, indeed entered into by and between the parties, we have ruled that when
Rosales filed a case of estafa against Liwanag. money or property have been received by a partner for a specific purpose
(such as that obtaining in the instant case) and he later misappropriated it,
Liwanag advances the theory that the intention of the parties was to enter such partner is guilty of estafa.
into a contract of partnership, wherein Rosales would contribute the funds
while she would buy and sell the cigarettes, and later divide the profits
between them. She also argues that the transaction can also be interpreted
as a simple loan, with Rosales lending to her the amount stated on an
installment basis. RTC found Liwanag guilty for the crime of estafa. The
Court of Appeals affirmed the lower courts decision.

Issue:
1. WON the parties entered into a partnership agreement;
2. if in the negative, WON the transaction is a simple loan

Held:
1. No. Even assuming that a contract of partnership was indeed entered into
by andbetween the parties, when money or property have been received by
a partner for a specificpurpose and he later misappropriated it, such partner
is guilty of estafa.
2. No. In a contract of loan once the money is received by the debtor,
ownership over thesame is transferred. Being the owner, the borrower can
dispose of it for whatever purposehe may deem proper.
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RCAP
Republic v. Unimex
Frias v. San Diego-Sison
Facts:
In 7 Dec 1990, Bobie Rose Frias and Dr. Flora San-Diego Sison entered into
a MOA over Friasproperty
MOA consideration is 3M
Sison has 6 months from the date of contracts execution to notify
Frias of her intention to purchase the property with the
improvements at 6.4M
Prior to this 6 month period, Frias may still offer the property to
other persons, provided that 3M shall be paid to Sison including
interest based on prevailing compounded bank interest + amount of
sale in excess of 7M [should the property be sold at a price greater
than 7M]
In case Frias has no other buyer within 6 months from the
contracts execution, no interest shall be charged by Sison on the
3M
In the event that on the 6th month, Sison would decide not to
purchase the property, Frias has 6 months to pay 3M (amount shall
earn compounded bank interest for the last 6 months only)
3M treated as a loan and the property considered as the security
for the mortgage
Upon notice of intention to purchase, Sison has 6 months to pay
the balance of 3.4M (6.4M less 3M MOA consideration)
Frias received from Sison 3M (2M in cash; 1M post-dated check
dated February 28, 1990, instead of 1991, which rendered the
check stale). Frias gave Sison the TCT and the Deed of Absolute
Sale over the property. Sison decided not to purchase the property,
so shenotified Frias through a letter dated March 20, 1991 [Frias
received it only on June 11, 1991],and Sison reminded Frias of their
agreement that the 2M Sison paid should be considered as a loan
payable within 6 months. Frias failed to pay this amount.
Sison filed a complaintfor sum of money with preliminary attachment. Sison
averred that Frias tried to deprive her of the security for the loan by making a
false report of the loss of her owners copy of TCT, executing an affidavit of
loss and by filing a petition[1] for the issuance of a new owners duplicate
copy. RTC issued a writ of preliminary attachment upon the filing of a 2M
bond.
RTC found that Frias was under obligation to pay Sison 2M with
compounded interest pursuant to their MOA. RTC ordered Frias to pay
Sison:
2M + 32% annual interest beginning December 7, 1991 until fully paid
70k representing premiums paid by Sison on the attachment bond with legal
interest counted from the date of this decision until fully paid
100k moral, corrective, exemplary damages [liable for moral damages
because of Frias fraudulent scheme]
100k attorneys fees + cost of litigation
CA affirmed RTC with modification32% reduced to 25%. CA said that
there was no basis for Frias to say that the interest should be charged for 6
months only. It said that a loan always bears interest; otherwise, it is not a
loan. The interest should commence on June 7, 1991 until fully paid, with
compounded bank interest prevailing at the time [June 1991] the 2M was
considered as a loan (as certified by the bank).
ISSUES & HOLDING Ratio only discusses topic of INTEREST (as per
syllabus)
WON compounded bank interest should be limited to 6 months as contained
in the MOA. NO
WON Sison is entitled to moral damages. YES
WON the grant of attorneys fees is proper, even if not mentioned in the
body of the decision. NO
CA committed no error in awarding an annual 25% interest on the 2M even
beyond the 6-month stipulated period. In this case, the phrase for the last
six months only should be taken in the context of the entire agreement.
SC notes that the agreement speaks of two (2) periods of 6 months each
(see FACTSwords in bold & underline). No interest will be charged for the
1st 6-month period [while Sison was making up her mind], but only for the
2nd 6-month period after Sison decided not to buy the property. There is
nothing in the MOA that suggests that interest will be charged for 6 months
only even if it takes forever for Frias to pay the loan.
The payment of regular interest constitutes the price or cost of the use of
money, and until the principal sum due is returned to the creditor, regular
interest continues to accrue since the debtor continues to use such principal
amount. For a debtor to continue in possession of the principal of the loan
and to continue to use the same after maturity of the loan without payment of
the monetary interest constitutes unjust enrichment on the part of the debtor
at the expense of the creditor.
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RCAP
Calderon v. People An accused who is acquitted of Estafa may nevertheless be held civilly liable
where the facts established by the evidence so warrant. Petitioner Elizabeth
Facts: Calderon is clearly liable to the private respondents for the amount
Elizabeth Eusebio-Calderon was charged by her aunt Teresita Eusebio, borrowed. The Court of Appeals found that the former did not employ
Amelia Casanova and cousin Manolito Eusebio with three count Estafa. trickery or deceit in obtaining money from the private complainants, instead,
According to private complainants, petitioner assured them that the checks it concluded that the money obtained was undoubtedly loans for which
will be honored upon maturity. They gave her the money because she petitioner paid interest. The checks issued by petitioner as payment for the
showed them her pieces of jewelry which convinced them that she has the principal loan constitute evidence of her civil liability which was deemed
ability to pay the loans. instituted with the criminal action.
In her defense, petitioner admits that she issued the checks but alleges that The civil liability of petitioner includes only the principal amount of the loan.
it was not done to defraud her creditors. With respect to the interest checks she issued, the same are void. There
After trial, the lower court rendered a joint decision finding petitioner guilty was no written proof of the payable interest except for the verbal agreement
beyond reasonable doubt, but ruled that her liability for the interest checks that the loan shall earn 5% interest per month. Under Article 1956 of the
was only civil, thereby acquitting the accused but indemnify to pay. Civil Code, an agreement as to payment of interest must be in writing,
The Decision of the Court of Appeals which reversed and set aside the otherwise it cannot be valid. Consequently, no interest is due and the
Decision of the Regional Trial Court acquitting the accused but ordering her interest checks she issued should be eliminated from the computation of her
to pay civil liability. civil liability.
However, while there can be no stipulated interest, there can be legal
Issues: (1) Did the Court of Appeals err in finding the appellant civilly liable interest pursuant to Article 2209 of the Civil Code. It is elementary that in the
to complainants with respect to the interest in the principal loan despite the absence of a stipulation as to interest, the loan due will now earn interest at
dismissal of the interest checks by the Regional Trial Court? the legal rate of 12% per annum.
(2) Is the interest agreed upon by the parties usurious? In view of our ruling that there can be no stipulated interest in this case,
(3) Should the private respondents file a separate civil complaint for the there is no need to pass upon the second issue of whether or not the
claim of Sum of Money? interests were usurious.
The Decision of the Court of Appeals is AFFIRMED with the
Ruling: MODIFICATION that petitioner is ordered to pay Amelia Casanova,Teresita
The court finds the petition meritorious. Eusebio, and Manolito Eusebio as civil liability with legal interest of twelve
When petitioner appealed her conviction, the dismissal of the interest checks percent (12%) per annum until its satisfaction.
by the lower court did not preclude the Court of Appeals from reviewing such
decision and modifying her civil liability. The appeal conferred upon the
appellate court full jurisdiction and rendered it competent to examine the
records, revise the judgment appealed from, increase the penalty and cite
the proper provision of the penal law.
Under Article 29 of the Civil Code, when the accused in a criminal
prosecution is acquitted on the ground that his guilt has not been proven
beyond reasonable doubt, a civil action for damages for the same act or
omission may be instituted. The judgment of acquittal extinguishes the
liability of the accused for damages only when it includes a declaration that
the fact from which the civil liability might arise did not exist. Thus, Section 1,
paragraph (a) of Rule 111 of the Rules of Court provides:
SECTION 1. Institution of criminal and civil actions. (a) When a criminal
action is instituted, the civil action for the recovery of civil liability arising from
the offense charged shall be deemed instituted with the criminal action
unless the offended party waives the civil action, reserves the right to
institute it separately or institutes the civil action prior to the criminal action.
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RCAP
Barrera v. Lorenzo
Nacar v. Gallery Frames
Dario Nacar filed a labor case against Gallery Frames and its owner Felipe
Bordey, Jr. Nacar alleged that he was dismissed without cause by Gallery
Frames on January 24, 1997. On October 15, 1998, the Labor Arbiter (LA)
found Gallery Frames guilty of illegal dismissal hence the Arbiter awarded
Nacar P158,919.92 in damages consisting of backwages and separation
pay.
Gallery Frames appealed all the way to the Supreme Court (SC). The
Supreme Court affirmed the decision of the Labor Arbiter and the decision
became final on May 27, 2002.
After the finality of the SC decision, Nacar filed a motion before the LA for
recomputation as he alleged that his backwages should be computed from
the time of his illegal dismissal (January 24, 1997) until the finality of the SC
decision (May 27, 2002) with interest. The LA denied the motion as he ruled
that the reckoning point of the computation should only be from the time
Nacar was illegally dismissed (January 24, 1997) until the decision of the LA
(October 15, 1998). The LA reasoned that the said date should be the
reckoning point because Nacar did not appeal hence as to him, that decision
became final and executory.
ISSUE: Whether or not the Labor Arbiter is correct.
HELD: No. There are two parts of a decision when it comes to illegal
dismissal cases (referring to cases where the dismissed employee wins, or
loses but wins on appeal). The first part is the ruling that the employee was
illegally dismissed. This is immediately final even if the employer appeals
but will be reversed if employer wins on appeal. The second part is the ruling
on the award of backwages and/or separation pay. For backwages, it will be
computed from the date of illegal dismissal until the date of the decision of
the Labor Arbiter. But if the employer appeals, then the end date shall be
extended until the day when the appellate courts decision shall become
final. Hence, as a consequence, the liability of the employer, if he loses on
appeal, will increase this is just but a risk that the employer cannot avoid
when it continued to seek recourses against the Labor Arbiters decision.
This is also in accordance with Article 279 of the Labor Code.
Anent the issue of award of interest in the form of actual or compensatory
damages, the Supreme Court ruled that the old case of Eastern Shipping
Lines vs CA is already modified by the promulgation of the Bangko Sentral
ng Pilipinas Monetary Board Resolution No. 796 which lowered the legal rate
of interest from 12% to 6%. Specifically, the rules on interest are now as
follows:
1. Monetary Obligations ex. Loans:
a. If stipulated in writing:
a.1. shall run from date of judicial demand (filing of the case)
a.2. rate of interest shall be that amount stipulated
b. If not stipulated in writing
b.1. shall run from date of default (either failure to pay upon extra-judicial
demand or upon judicial demand whichever is appropriate and subject to the
provisions of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum
2. Non-Monetary Obligations (such as the case at bar)
a. If already liquidated, rate of interest shall be 6% per annum, demandable
from date of judicial or extra-judicial demand (Art. 1169, Civil Code)
b. If unliquidated, no interest
Except: When later on established with certainty. Interest shall still be 6%
per annum demandable from the date of judgment because such on such
date, it is already deemed that the amount of damages is already
ascertained.
3. Compounded Interest
This is applicable to both monetary and non-monetary obligations
6% per annum computed against award of damages (interest) granted by
the court. To be computed from the date when the courts decision becomes
final and executory until the award is fully satisfied by the losing party.
4. The 6% per annum rate of legal interest shall be applied prospectively:
Final and executory judgments awarding damages prior to July 1, 2013
shall apply the 12% rate;
Final and executory judgments awarding damages on or after July 1, 2013
shall apply the 12% rate for unpaid obligations until June 30, 2013; unpaid
obligations with respect to said judgments on or after July 1, 2013 shall still
incur the 6% rate.
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RCAP
money, according to the Civil Code, the interest due should be that
stipulated in writing, and in the absence thereof, the rate shall be 12% per
Abella v. Abella annum." The Monetary Board, in its Resolution No. 796 dated 16 May 2013,
approved the following revisions governing the rate of interest in the
Facts: absence of stipulation in loan contracts, thereby amending Section 2 of
On July 31, 2002, petitioners Spouses Salvador and Alma Abella Circular No. 905, Series of 1982. Thus, from the foregoing, in the absence of
filed a Complaint for sum of money and damages with prayer for preliminary an express stipulation as to the rate of interest that would govern the parties,
attachment against respondents Spouses Romeo and Annie Abella before the rate of legal interest for loans or forbearance of any money, goods or
the Regional Trial Court, Branch 8, Kalibo, Aklan. In their Complaint, credits and the rate allowed in judgments shall no longer be twelve percent
petitioners alleged that respondents obtained a loan from them in the (12%) per but will now be six percent (6%) per annum effective July 1, 2013.
amount of P500,000.00. The loan was evidenced by an acknowledgment
receipt dated March 22, 1999 and was payable within one (1) year.
Petitioners added that respondents were able to pay a total of
P200,000.00 P100,000.00 paid on two separate occasionsleaving an
unpaid balance of P300,000.00. In their Answer (with counterclaim and
motion to dismiss), respondents alleged that the amount involved did not
pertain to a loan they obtained from petitioners but was part of the capital for
a joint venture involving the lending of money. In the Decision dated
December 28, 2005, the Regional Trial Court ruled in favor of petitioners. It
noted that the terms of the acknowledgment receipt executed by
respondents clearly showed that: (a) respondents were indebted to the
extent of P500,000.00; (b) this indebtedness was to be paid within one (1)
year; and (c) the indebtedness was subject to interest. Thus, the trial court
concluded that respondents obtained a simple loan, although they later
invested its proceeds in a lending enterprise. The Regional Trial Court
adjudged respondents solidarily liable to petitioners. The Court of Appeals
noted that while the acknowledgement receipt showed that interest was to
be charged, no particular interest rate was specified. Thus, at the time
respondents were making interest payments of 2.5% per month, these
interest payments were invalid for not being properly stipulated by the
parties.

Issue:
Whether or not interest accrued on respondents loan from
petitioners. If so, at what rate?

Held:
Yes, interest accrued on respondents loan. Article 1956 of the Civil
Code spells out the basic rule that "no interest shall be due unless it has
been expressly stipulated in writing." The controversy, however, stems from
the acknowledgment receipts failure to state the exact rate of interest.
Jurisprudence is clear about the applicable interest rate if a written
instrument fails to specify a rate. In Spouses Toring v. Spouses Olan, this
court clarified the effect of Article 1956 of the Civil Code and noted that the
legal rate of interest (then at 12%) is to apply: "In a loan or forbearance of
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RCAP
Petitioner insists that in computing the interest due of the P 66,500.00,
interest should be computed at 6% on the principal sum of P 66,500.00
David v. CA pursuant to Article 2209 and then "interest on the legal interest" should also
be computed in accordance with the language of Article 2212 of the Civil
RTC Manila Judge Diaz issued a writ of attachment over the real properties Code. In his view, said article meant "compound interest". However, Article
of private respondents. Judge Diaz ordered private respondent to pay 2212 contemplates the presence of stipulated or conventional interest which
petitioner P 66,500.00 with interest from July 24, 1974, until fully paid. has accrued when demand was judicially made. In cases where no interest
However, Judge Diaz amended said Decision, so that the legal rate of had been stipulated by the parties, no accrued conventional interest could
interest should be computed from January 4, 1966, instead of from July 24, further earn interest upon judicial demand.
1974. Private respondent appealed to CA and SC, which both affirmed the
decision of the lower court. Subsequently, entries of judgment were made Furthermore, when the judgment sought to be executed ordered the
and the record of the case was remanded to RTC Branch 27, presided by payment of simple "legal interest" only and said nothing about payment of
respondent Judge Cruz, for the final execution of the decision as amended. compound interest, but the respondent judge orders payment of compound
interest, then, he goes beyond the confines of a judgment which had
Upon petitioner's motion, Judge Cruz issued an alias writ of execution by become final. Note that in this case, the Court of Appeals made the finding
virtue of which respondent Sheriff Pea conducted a public auction. Sheriff that "... no interest was stipulated by the parties.
Pea informed the petitioner that the total amount of the judgment is P
270,940.52. The amount included a computation of simple interest.
Petitioner, however, claimed that the judgment award should be P
3,027,238.50, because the amount due ought to be based on compounded
interest. Although the auctioned properties were sold to the petitioner, Sheriff
Pea did not issue the Certificate of Sale because there was an excess in
the bid price in the amount of P 2,941,524.47, which the petitioner failed to
pay despite notice.

Petitioner filed a motion praying that respondent Judge Cruz issue an order
directing respondent Sheriff Pea to prepare and execute a certificate of
sale in favor of the petitioner, placing therein the amount of the judgment as
P 3,027,238.50, the amount he bid during the auction which he won. His
reason is that compound interest, which is allowed by Article 2212 of the
Civil Code, should apply in this case.

RTC and CA did not favor petitioner. Petitioner argued that the Court of
Appeals erred in ruling that Article 2212 of the Civil Code applies only where
the parties to an obligation stipulated or agreed to pay compounded interest.

Issue:

Whether respondent appellate court erred in affirming respondent Judge's

order for the payment of simple interest only rather than compounded
interest?

Ruling: