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SUPREME COURT
Manila
SECOND DIVISION
Separate Opinions
MORELAND, J.:
This is an appeal by the defendant from a judgment of the Court of First Instance
of Iloilo, awarding to the plaintiff the sum of P6,641, with interest at the legal
rate from the beginning of the action.
It is established in this case that the plaintiff is the trustee of a charitable
bequest made for the construction of a leper hospital and that father Agustin de
la Peña was the duly authorized representative of the plaintiff to receive the
legacy. The defendant is the administrator of the estate of Father De la Peña.
In the year 1898 the books Father De la Peña, as trustee, showed that he had on
hand as such trustee the sum of P6,641, collected by him for the charitable purposes
aforesaid. In the same year he deposited in his personal account P19,000 in the
Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the war of the
revolution, Father De la Peña was arrested by the military authorities as a political
prisoner, and while thus detained made an order on said bank in favor of the United
States Army officer under whose charge he then was for the sum thus deposited in
said bank. The arrest of Father De la Peña and the confiscation of the funds in the
bank were the result of the claim of the military authorities that he was an
insurgent and that the funds thus deposited had been collected by him for
revolutionary purposes. The money was taken from the bank by the military
authorities by virtue of such order, was confiscated and turned over to the
Government.
While there is considerable dispute in the case over the question whether the P6,641
of trust funds was included in the P19,000 deposited as aforesaid, nevertheless, a
careful examination of the case leads us to the conclusion that said trust funds
were a part of the funds deposited and which were removed and confiscated by the
military authorities of the United States.
That branch of the law known in England and America as the law of trusts had no
exact counterpart in the Roman law and has none under the Spanish law. In this
jurisdiction, therefore, Father De la Peña's liability is determined by those
portions of the Civil Code which relate to obligations. (Book 4, Title 1.)
Although the Civil Code states that "a person obliged to give something is also
bound to preserve it with the diligence pertaining to a good father of a family"
(art. 1094), it also provides, following the principle of the Roman law, major
casus est, cui humana infirmitas resistere non potest, that "no one shall be liable
for events which could not be foreseen, or which having been foreseen were
inevitable, with the exception of the cases expressly mentioned in the law or those
in which the obligation so declares." (Art. 1105.)
By placing the money in the bank and mixing it with his personal funds De la Peña
did not thereby assume an obligation different from that under which he would have
lain if such deposit had not been made, nor did he thereby make himself liable to
repay the money at all hazards. If the had been forcibly taken from his pocket or
from his house by the military forces of one of the combatants during a state of
war, it is clear that under the provisions of the Civil Code he would have been
exempt from responsibility. The fact that he placed the trust fund in the bank in
his personal account does not add to his responsibility. Such deposit did not make
him a debtor who must respond at all hazards.
We do not enter into a discussion for the purpose of determining whether he acted
more or less negligently by depositing the money in the bank than he would if he
had left it in his home; or whether he was more or less negligent by depositing the
money in his personal account than he would have been if he had deposited it in a
separate account as trustee. We regard such discussion as substantially fruitless,
inasmuch as the precise question is not one of negligence. There was no law
prohibiting him from depositing it as he did and there was no law which changed his
responsibility be reason of the deposit. While it may be true that one who is under
obligation to do or give a thing is in duty bound, when he sees events approaching
the results of which will be dangerous to his trust, to take all reasonable means
and measures to escape or, if unavoidable, to temper the effects of those events,
we do not feel constrained to hold that, in choosing between two means equally
legal, he is culpably negligent in selecting one whereas he would not have been if
he had selected the other.
The court, therefore, finds and declares that the money which is the subject matter
of this action was deposited by Father De la Peña in the Hongkong and Shanghai
Banking Corporation of Iloilo; that said money was forcibly taken from the bank by
the armed forces of the United States during the war of the insurrection; and that
said Father De la Peña was not responsible for its loss.
The judgment is therefore reversed, and it is decreed that the plaintiff shall take
nothing by his complaint.
Arellano, C.J., Torres and Carson, JJ., concur.
Separate Opinions
TRENT, J., dissenting:
I dissent. Technically speaking, whether Father De la Peña was a trustee or an
agent of the plaintiff his books showed that in 1898 he had in his possession as
trustee or agent the sum of P6,641 belonging to the plaintiff as the head of the
church. This money was then clothed with all the immunities and protection with
which the law seeks to invest trust funds. But when De la Peña mixed this trust
fund with his own and deposited the whole in the bank to hispersonal account or
credit, he by this act stamped on the said fund his own private marks and unclothed
it of all the protection it had. If this money had been deposited in the name of
De la Peña as trustee or agent of the plaintiff, I think that it may be presumed
that the military authorities would not have confiscated it for the reason that
they were looking for insurgent funds only. Again, the plaintiff had no reason to
suppose that De la Peña would attempt to strip the fund of its identity, nor had
he said or done anything which tended to relieve De la Peña from the legal
reponsibility which pertains to the care and custody of trust funds.
The Supreme Court of the United States in the United State vs. Thomas (82 U. S.,
337), at page 343, said: "Trustees are only bound to exercise the same care and
solicitude with regard to the trust property which they would exercise with regard
to their own. Equity will not exact more of them. They are not liable for a loss
by theft without their fault. But this exemption ceases when they mix the trust-
money with their own, whereby it loses its identity, and they become mere debtors."
If this proposition is sound and is applicable to cases arising in this jurisdiction,
and I entertain no doubt on this point, the liability of the estate of De la Peña
cannot be doubted. But this court in the majority opinion says: "The fact that he
(Agustin de la Peña) placed the trust fund in the bank in his personal account does
not add to his responsibility. Such deposit did not make him a debtor who must
respond at all hazards. . . . There was no law prohibiting him from depositing it
as he did, and there was no law which changed his responsibility, by reason of the
deposit."
I assume that the court in using the language which appears in the latter part of
the above quotation meant to say that there was no statutory law regulating the
question. Questions of this character are not usually governed by statutory law.
The law is to be found in the very nature of the trust itself, and, as a general
rule, the courts say what facts are necessary to hold the trustee as a debtor.
If De la Peña, after depositing the trust fund in his personal account, had used
this money for speculative purposes, such as the buying and selling of sugar or
other products of the country, thereby becoming a debtor, there would have been no
doubt as to the liability of his estate. Whether he used this money for that purpose
the record is silent, but it will be noted that a considerable length of time
intervened from the time of the deposit until the funds were confiscated by the
military authorities. In fact the record shows that De la Peña deposited on June
27, 1898, P5,259, on June 28 of that year P3,280, and on August 5 of the same year
P6,000. The record also shows that these funds were withdrawn and again deposited
all together on the 29th of May, 1900, this last deposit amounting to P18,970.
These facts strongly indicate that De la Peña had as a matter of fact been using
the money in violation of the trust imposed in him. lawph!1.net
If the doctrine announced in the majority opinion be followed in cases hereafter
arising in this jurisdiction trust funds will be placed in precarious condition.
The position of the trustee will cease to be one of trust.
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TORRES, J.:
The attorney for the plaintiff, Angel Javellana, file a complaint on the 30th of
October, 1906, with the Court of First Instance of Iloilo, praying that the
defendants, Jose Lim and Ceferino Domingo Lim, he sentenced to jointly and severally
pay the sum of P2,686.58, with interest thereon at the rate of 15 per cent per
annum from the 20th of January, 1898, until full payment should be made, deducting
from the amount of interest due the sum of P1,102.16, and to pay the costs of the
proceedings.
Authority from the court having been previously obtained, the complaint was amended
on the 10th of January, 1907; it was then alleged, on the 26th of May, 1897, the
defendants executed and subscribed a document in favor of the plaintiff reading as
follows:
We have received from Angel Javellana, as a deposit without interest, the sum of
two thousand six hundred and eighty-six cents of pesos fuertes, which we will return
to the said gentleman, jointly and severally, on the 20th of January, 1898. — Jaro,
26th of May, 1897. — Signed Jose Lim. — Signed: Ceferino Domingo Lim.
That, when the obligation became due, the defendants begged the plaintiff for an
extension of time for the payment thereof, building themselves to pay interest at
the rate of 15 per cent on the amount of their indebtedness, to which the plaintiff
acceded; that on the 15th of May, 1902, the debtors paid on account of interest due
the sum of P1,000 pesos, with the exception of either capital or interest, had
thereby been subjected to loss and damages.
A demurrer to the original complaint was overruled, and on the 4th of January,
1907, the defendants answered the original complaint before its amendment, setting
forth that they acknowledged the facts stated in Nos. 1 and 2 of the complaint;
that they admitted the statements of the plaintiff relative to the payment of
1,102.16 pesos made on the 15th of November, 1902, not, however, as payment of
interest on the amount stated in the foregoing document, but on account of the
principal, and denied that there had been any agreement as to an extension of the
time for payment and the payment of interest at the rate of 15 per cent per annum
as alleged in paragraph 3 of the complaint, and also denied all the other statements
contained therein.
As a counterclaim, the defendants alleged that they had paid to the plaintiff sums
which, together with the P1,102.16 acknowledged in the complaint, aggregated the
total sum of P5,602.16, and that, deducting therefrom the total sum of P2,686.58
stated in the document transcribed in the complaint, the plaintiff still owed the
defendants P2,915.58; therefore, they asked that judgment be entered absolving
them, and sentencing the plaintiff to pay them the sum of P2,915.58 with the costs.
Evidence was adduced by both parties and, upon their exhibits, together with an
account book having been made of record, the court below rendered judgment on the
15th of January, 1907, in favor of the plaintiff for the recovery of the sum of
P5,714.44 and costs.
The defendants excepted to the above decision and moved for a new trial. This motion
was overruled and was also excepted to by them; the bill of exceptions presented
by the appellants having been approved, the same was in due course submitted to
this court.
The document of indebtedness inserted in the complaint states that the plaintiff
left on deposit with the defendants a given sum of money which they were jointly
and severally obliged to return on a certain date fixed in the document; but that,
nevertheless, when the document appearing as Exhibits 2, written in the Visayan
dialect and followed by a translation into Spanish was executed, it was
acknowledged, at the date thereof, the 15th of November, 1902, that the amount
deposited had not yet been returned to the creditor, whereby he was subjected to
losses and damages amounting to 830 pesos since the 20th of January, 1898, when the
return was again stipulated with the further agreement that the amount deposited
should bear interest at the rate of 15 per cent per annum, from the aforesaid date
of January 20, and that the 1,000 pesos paid to the depositor on the 15th of May,
1900, according to the receipt issued by him to the debtors, would be included, and
that the said rate of interest would obtain until the debtors on the 20th of May,
1897, it is called a deposit consisted, and they could have accomplished the return
agreed upon by the delivery of a sum equal to the one received by them. For this
reason it must be understood that the debtors were lawfully authorized to make use
of the amount deposited, which they have done, as subsequent shown when asking for
an extension of the time for the return thereof, inasmuch as, acknowledging that
they have subjected the letter, their creditor, to losses and damages for not
complying with what had been stipulated, and being conscious that they had used,
for their own profit and gain, the money that they received apparently as a deposit,
they engaged to pay interest to the creditor from the date named until the time
when the refund should be made. Such conduct on the part of the debtors is
unquestionable evidence that the transaction entered into between the interested
parties was not a deposit, but a real contract of loan.
Article 1767 of the Civil Code provides that —
The depository can not make use of the thing deposited without the express permission
of the depositor.
Otherwise he shall be liable for losses and damages.
Article 1768 also provides that —
When the depository has permission to make use of the thing deposited, the contract
loses the character of a deposit and becomes a loan or bailment.
The permission shall not be presumed, and its existence must be proven.
When on one of the latter days of January, 1898, Jose Lim went to the office of the
creditor asking for an extension of one year, in view of the fact the money was
scare, and because neither himself nor the other defendant were able to return the
amount deposited, for which reason he agreed to pay interest at the rate of 15 per
cent per annum, it was because, as a matter of fact, he did not have in his
possession the amount deposited, he having made use of the same in his business and
for his own profit; and the creditor, by granting them the extension, evidently
confirmed the express permission previously given to use and dispose of the amount
stated as having bee deposited, which, in accordance with the loan, to all intents
and purposes gratuitously, until the 20th of January, 1898, and from that dated
with interest at 15 per cent per annum until its full payment, deducting from the
total amount of interest the sum of 1,000 pesos, in accordance with the provisions
of article 1173 of the Civil Code.
Notwithstanding that it does not appear that Jose Lim signed the document (Exhibit
2) executed in the presence of three witnesses on the 15th of November, 1902, by
Ceferino Domingo Lim on behalf of himself and the former, nevertheless, the said
document has not been contested as false, either by a criminal or by a civil
proceeding, nor has any doubt been cast upon the authenticity of the signatures of
the witnesses who attested the execution of the same; and from the evidence in the
case one is sufficiently convinced that the said Jose Lim was perfectly aware of
and authorized his joint codebtor to liquidate the interest, to pay the sum of
1,000 pesos, on account thereof, and to execute the aforesaid document No. 2. A
true ratification of the original document of deposit was thus made, and not the
least proof is shown in the record that Jose Lim had ever paid the whole or any
part of the capital stated in the original document, Exhibit 1.
If the amount, together with interest claimed in the complaint, less 1,000 pesos
appears as fully established, such is not the case with the defendant's counterclaim
for P5,602.16, because the existence and certainty of said indebtedness imputed to
the plaintiff has not been proven, and the defendants, who call themselves creditors
for the said amount have not proven in a satisfactory manner that the plaintiff had
received partial payments on account of the same; the latter alleges with good
reason, that they should produce the receipts which he may have issued, and which
he did issue whenever they paid him any money on account. The plaintiffs allegation
that the two amounts of 400 and 1,200 pesos, referred to in documents marked "C"
and "D" offered in evidence by the defendants, had been received from Ceferino
Domingo Lim on account of other debts of his, has not been contradicted, and the
fact that in the original complaint the sum of 1,102.16 pesos, was expressed in
lieu of 1,000 pesos, the only payment made on account of interest on the amount
deposited according to documents No. 2 and letter "B" above referred to, was due
to a mistake.
Moreover, for the reason above set forth it may, as a matter of course, be inferred
that there was no renewal of the contract deposited converted into a loan, because,
as has already been stated, the defendants received said amount by virtue of real
loan contract under the name of a deposit, since the so-called bailees were forthwith
authorized to dispose of the amount deposited. This they have done, as has been
clearly shown.
The original joint obligation contracted by the defendant debtor still exists, and
it has not been shown or proven in the proceedings that the creditor had released
Joe Lim from complying with his obligation in order that he should not be sued for
or sentenced to pay the amount of capital and interest together with his codebtor,
Ceferino Domingo Lim, because the record offers satisfactory evidence against the
pretension of Jose Lim, and it further appears that document No. 2 was executed by
the other debtor, Ceferino Domingo Lim, for himself and on behalf of Jose Lim; and
it has also been proven that Jose Lim, being fully aware that his debt had not yet
been settled, took steps to secure an extension of the time for payment, and
consented to pay interest in return for the concession requested from the creditor.
In view of the foregoing, and adopting the findings in the judgment appealed from,
it is our opinion that the same should be and is hereby affirmed with the costs of
this instance against the appellant, provided that the interest agreed upon shall
be paid until the complete liquidation of the debt. So ordered.
Arellano, C.J., Carson, Willard and Tracey, JJ., concur.
STREET, J.:
These two actions were instituted in the Court of First Instance of the Province
of Pampanga by the respective plaintiffs, Silvestra Baron and Guillermo Baron, for
the purpose of recovering from the defendant, Pablo David, the value of palay
alleged to have been sold by the plaintiffs to the defendant in the year 1920.
Owing to the fact that the defendant is the same in both cases and that the two
cases depend in part upon the same facts, the cases were heard together in the
trial court and determined in a single opinion. The same course will accordingly
be followed here.
In the first case, i. e., that which Silvestra Baron is plaintiff, the court gave
judgment for her to recover of the defendant the sum of P5,238.51, with costs. From
this judgment both the plaintiff and the defendant appealed.
In the second case, i. e., that in which Guillermo Baron, is plaintiff, the court
gave judgment for him to recover of the defendant the sum of P5,734.60, with costs,
from which judgment both the plaintiff and the defendant also appealed. In the same
case the defendant interposed a counterclaim in which he asked credit for the sum
of P2,800 which he had advanced to the plaintiff Guillermo Baron on various
occasions. This credit was admitted by the plaintiff and allowed by the trial court.
But the defendant also interposed a cross-action against Guillermo Baron in which
the defendant claimed compensation for damages alleged to have Ben suffered by him
by reason of the alleged malicious and false statements made by the plaintiff
against the defendant in suing out an attachment against the defendant's property
soon after the institution of the action. In the same cross-action the defendant
also sought compensation for damages incident to the shutting down of the
defendant's rice mill for the period of one hundred seventy days during which the
above-mentioned attachment was in force. The trial judge disallowed these claims
for damages, and from this feature of the decision the defendant appealed. We are
therefore confronted with five distinct appeals in this record.
Prior to January 17, 1921, the defendant Pablo David has been engaged in running a
rice mill in the municipality of Magalang, in the Province of Pampanga, a mill
which was well patronized by the rice growers of the vicinity and almost constantly
running. On the date stated a fire occurred that destroyed the mill and its contents,
and it was some time before the mill could be rebuilt and put in operation again.
Silvestra Baron, the plaintiff in the first of the actions before us, is an aunt
of the defendant; while Guillermo Baron, the plaintiff in the other action; is his
uncle. In the months of March, April, and May, 1920, Silvestra Baron placed a
quantity of palay in the defendant's mill; and this, in connection with some that
she took over from Guillermo Baron, amounted to 1,012 cavans and 24 kilos. During
approximately the same period Guillermo Baron placed other 1,865 cavans and 43
kilos of palay in the mill. No compensation has ever been received by Silvestra
Baron upon account of the palay delivered by Guillermo Baron, he has received from
the defendant advancements amounting to P2,800; but apart from this he has not been
compensated. Both the plaintiffs claim that the palay which was delivered by them
to the defendant was sold to the defendant; while the defendant, on the other hand,
claims that the palay was deposited subject to future withdrawal by the depositors
or subject to some future sale which was never effected. He therefore supposes
himself to be relieved from all responsibility by virtue of the fire of January 17,
1921, already mentioned.
The plaintiff further say that their palay was delivered to the defendant at his
special request, coupled with a promise on his part to pay for the same at the
highest price per cavan at which palay would sell during the year 1920; and they
say that in August of that year the defendant promised to pay them severally the
price of P8.40 per cavan, which was about the top of the market for the season,
provided they would wait for payment until December. The trial judge found that no
such promise had been given; and the incredulity of the court upon this point seems
to us to be justified. A careful examination of the proof, however, leads us to the
conclusion that the plaintiffs did, some time in the early part of August, 1920,
make demand upon the defendant for a settlement, which he evaded or postponed
leaving the exact amount due to the plaintiffs undetermined.
It should be stated that the palay in question was place by the plaintiffs in the
defendant's mill with the understanding that the defendant was at liberty to convert
it into rice and dispose of it at his pleasure. The mill was actively running during
the entire season, and as palay was daily coming in from many customers and as rice
was being constantly shipped by the defendant to Manila, or other rice markets, it
was impossible to keep the plaintiffs' palay segregated. In fact the defendant
admits that the plaintiffs' palay was mixed with that of others. In view of the
nature of the defendant's activities and the way in which the palay was handled in
the defendant's mill, it is quite certain that all of the plaintiffs' palay, which
was put in before June 1, 1920, been milled and disposed of long prior to the fire
of January 17, 1921. Furthermore, the proof shows that when the fire occurred there
could not have been more than about 360 cavans of palay in the mill, none of which
by any reasonable probability could have been any part of the palay delivered by
the plaintiffs. Considering the fact that the defendant had thus milled and
doubtless sold the plaintiffs' palay prior to the date of the fire, it result that
he is bound to account for its value, and his liability was not extinguished by the
occurence of the fire. In the briefs before us it seems to have been assumed by the
opposing attorneys that in order for the plaintiffs to recover, it is necessary
that they should be able to establish that the plaintiffs' palay was delivered in
the character of a sale, and that if, on the contrary, the defendant should prove
that the delivery was made in the character of deposit, the defendant should be
absolved. But the case does not depend precisely upon this explicit alternative;
for even supposing that the palay may have been delivered in the character of
deposit, subject to future sale or withdrawal at plaintiffs' election, nevertheless
if it was understood that the defendant might mill the palay and he has in fact
appropriated it to his own use, he is of course bound to account for its value.
Under article 1768 of the Civil Code, when the depository has permission to make
use of the thing deposited, the contract loses the character of mere deposit and
becomes a loan or a commodatum; and of course by appropriating the thing, the bailee
becomes responsible for its value. In this connection we wholly reject the
defendant's pretense that the palay delivered by the plaintiffs or any part of it
was actually consumed in the fire of January, 1921. Nor is the liability of the
defendant in any wise affected by the circumstance that, by a custom prevailing
among rice millers in this country, persons placing palay with them without special
agreement as to price are at liberty to withdraw it later, proper allowance being
made for storage and shrinkage, a thing that is sometimes done, though rarely.
In view of what has been said it becomes necessary to discover the price which the
defendant should be required to pay for the plaintiffs' palay. Upon this point the
trial judge fixed upon P6.15 per cavan; and although we are not exactly in agreement
with him as to the propriety of the method by which he arrived at this figure, we
are nevertheless of the opinion that, all things considered, the result is
approximately correct. It appears that the price of palay during the months of
April, May, and June, 1920, had been excessively high in the Philippine Islands and
even prior to that period the Government of the Philippine Islands had been
attempting to hold the price in check by executive regulation. The highest point
was touched in this season was apparently about P8.50 per cavan, but the market
began to sag in May or June and presently entered upon a precipitate decline. As
we have already stated, the plaintiffs made demand upon the defendant for settlement
in the early part of August; and, so far as we are able to judge from the proof,
the price of P6.15 per cavan, fixed by the trial court, is about the price at which
the defendant should be required to settle as of that date. It was the date of the
demand of the plaintiffs for settlement that determined the price to be paid by the
defendant, and this is true whether the palay was delivered in the character of
sale with price undetermined or in the character of deposit subject to use by the
defendant. It results that the plaintiffs are respectively entitle to recover the
value of the palay which they had placed with the defendant during the period
referred to, with interest from the date of the filing of their several complaints.
As already stated, the trial court found that at the time of the fire there were
about 360 cavans of palay in the mill and that this palay was destroyed. His Honor
assumed that this was part of the palay delivered by the plaintiffs, and he held
that the defendant should be credited with said amount. His Honor therefore deducted
from the claims of the plaintiffs their respective proportionate shares of this
amount of palay. We are unable to see the propriety of this feature of the decision.
There were many customers of the defendant's rice mill who had placed their palay
with the defendant under the same conditions as the plaintiffs, and nothing can be
more certain than that the palay which was burned did not belong to the plaintiffs.
That palay without a doubt had long been sold and marketed. The assignments of
error of each of the plaintiffs-appellants in which this feature of the decision
is attacked are therefore well taken; and the appealed judgments must be modified
by eliminating the deductions which the trial court allowed from the plaintiffs'
claims.
The trial judge also allowed a deduction from the claim of the plaintiff Guillermo
Baron of 167 cavans of palay, as indicated in Exhibit 12, 13, 14, and 16. This was
also erroneous. These exhibits relate to transactions that occurred nearly two
years after the transactions with which we are here concerned, and they were offered
in evidence merely to show the character of subsequent transactions between the
parties, it appearing that at the time said exhibits came into existence the
defendant had reconstructed his mill and that business relations with Guillermo
Baron had been resumed. The transactions shown by these exhibits (which relate to
palay withdrawn by the plaintiff from the defendant's mill) were not made the
subject of controversy in either the complaint or the cross-complaint of the
defendant in the second case. They therefore should not have been taken into account
as a credit in favor of the defendant. Said credit must therefore be likewise of
course be without prejudice to any proper adjustment of the rights of the parties
with respect to these subsequent transactions that they have heretofore or may
hereafter effect.
The preceding discussion disposes of all vital contentions relative to the liability
of the defendant upon the causes of action stated in the complaints. We proceed
therefore now to consider the question of the liability of the plaintiff Guillermo
Baron upon the cross-complaint of Pablo David in case R. G. No. 26949. In this
cross-action the defendant seek, as the stated in the third paragraph of this
opinion, to recover damages for the wrongful suing out of an attachment by the
plaintiff and the levy of the same upon the defendant's rice mill. It appears that
about two and one-half months after said action was begun, the plaintiff, Guillermo
Baron, asked for an attachment to be issued against the property of the defendant;
and to procure the issuance of said writ the plaintiff made affidavit to the effect
that the defendant was disposing, or attempting the plaintiff. Upon this affidavit
an attachment was issued as prayed, and on March 27, 1924, it was levied upon the
defendant's rice mill, and other property, real and personal. 1awph!l.net
Upon attaching the property the sheriff closed the mill and placed it in the care
of a deputy. Operations were not resumed until September 13, 1924, when the
attachment was dissolved by an order of the court and the defendant was permitted
to resume control. At the time the attachment was levied there were, in the bodega,
more than 20,000 cavans of palay belonging to persons who held receipts therefor;
and in order to get this grain away from the sheriff, twenty-four of the depositors
found it necessary to submit third-party claims to the sheriff. When these claims
were put in the sheriff notified the plaintiff that a bond in the amount of P50,000
must be given, otherwise the grain would be released. The plaintiff, being unable
or unwilling to give this bond, the sheriff surrendered the palay to the claimants;
but the attachment on the rice mill was maintained until September 13, as above
stated, covering a period of one hundred seventy days during which the mill was
idle. The ground upon which the attachment was based, as set forth in the plaintiff's
affidavit was that the defendant was disposing or attempting to dispose of his
property for the purpose of defrauding the plaintiff. That this allegation was
false is clearly apparent, and not a word of proof has been submitted in support
of the assertion. On the contrary, the defendant testified that at the time this
attachment was secured he was solvent and could have paid his indebtedness to the
plaintiff if judgment had been rendered against him in ordinary course. His
financial conditions was of course well known to the plaintiff, who is his uncle.
The defendant also states that he had not conveyed away any of his property, nor
had intended to do so, for the purpose of defrauding the plaintiff. We have before
us therefore a case of a baseless attachment, recklessly sued out upon a false
affidavit and levied upon the defendant's property to his great and needless damage.
That the act of the plaintiff in suing out the writ was wholly unjustifiable is
perhaps also indicated in the circumstance that the attachment was finally dissolved
upon the motion of the plaintiff himself.
The defendant testified that his mill was accustomed to clean from 400 to 450 cavans
of palay per day, producing 225 cavans of rice of 57 kilos each. The price charged
for cleaning each cavan rice was 30 centavos. The defendant also stated that the
expense of running the mill per day was from P18 to P25, and that the net profit
per day on the mill was more than P40. As the mill was not accustomed to run on
Sundays and holiday, we estimate that the defendant lost the profit that would have
been earned on not less than one hundred forty work days. Figuring his profits at
P40 per day, which would appear to be a conservative estimate, the actual net loss
resulting from his failure to operate the mill during the time stated could not
have been less than P5,600. The reasonableness of these figures is also indicated
in the fact that the twenty-four customers who intervened with third-party claims
took out of the camarin 20,000 cavans of palay, practically all of which, in the
ordinary course of events, would have been milled in this plant by the defendant.
And of course other grain would have found its way to this mill if it had remained
open during the one hundred forty days when it was closed.
But this is not all. When the attachment was dissolved and the mill again opened,
the defendant found that his customers had become scattered and could not be easily
gotten back. So slow, indeed, was his patronage in returning that during the
remainder of the year 1924 the defendant was able to mill scarcely more than the
grain belonging to himself and his brothers; and even after the next season opened
many of his old customers did not return. Several of these individuals, testifying
as witnesses in this case, stated that, owing to the unpleasant experience which
they had in getting back their grain from the sheriff to the mill of the defendant,
though they had previously had much confidence in him.
As against the defendant's proof showing the facts above stated the plaintiff
submitted no evidence whatever. We are therefore constrained to hold that the
defendant was damaged by the attachment to the extent of P5,600, in profits lost
by the closure of the mill, and to the extent of P1,400 for injury to the good-will
of his business, making a total of P7,000. For this amount the defendant must
recover judgment on his cross-complaint.
The trial court, in dismissing the defendant's cross-complaint for damages resulting
from the wrongful suing out of the attachment, suggested that the closure of the
rice mill was a mere act of the sheriff for which the plaintiff was not responsible
and that the defendant might have been permitted by the sheriff to continue running
the mill if he had applied to the sheriff for permission to operate it. This
singular suggestion will not bear a moment's criticism. It was of course the duty
of the sheriff, in levying the attachment, to take the attached property into his
possession, and the closure of the mill was a natural, and even necessary,
consequence of the attachment. For the damage thus inflicted upon the defendant the
plaintiff is undoubtedly responsible.
One feature of the cross-complaint consist in the claim of the defendant (cross-
complaint) for the sum of P20,000 as damages caused to the defendant by the false
and alleged malicious statements contained in the affidavit upon which the
attachment was procured. The additional sum of P5,000 is also claimed as exemplary
damages. It is clear that with respect to these damages the cross-action cannot be
maintained, for the reason that the affidavit in question was used in course of a
legal proceeding for the purpose of obtaining a legal remedy, and it is therefore
privileged. But though the affidavit is not actionable as a libelous publication,
this fact in no obstacle to the maintenance of an action to recover the damage
resulting from the levy of the attachment.
Before closing this opinion a word should be said upon the point raised in the
first assignment of error of Pablo David as defendant in case R. G. No. 26949. In
this connection it appears that the deposition of Guillermo Baron was presented in
court as evidence and was admitted as an exhibit, without being actually read to
the court. It is supposed in the assignment of error now under consideration that
the deposition is not available as evidence to the plaintiff because it was not
actually read out in court. This connection is not well founded. It is true that
in section 364 of the Code of Civil Procedure it is said that a deposition, once
taken, may be read by either party and will then be deemed the evidence of the
party reading it. The use of the word "read" in this section finds its explanation
of course in the American practice of trying cases for the most part before juries.
When a case is thus tried the actual reading of the deposition is necessary in
order that the jurymen may become acquainted with its contents. But in courts of
equity, and in all courts where judges have the evidence before them for perusal
at their pleasure, it is not necessary that the deposition should be actually read
when presented as evidence.
From what has been said it result that judgment of the court below must be modified
with respect to the amounts recoverable by the respective plaintiffs in the two
actions R. G. Nos. 26948 and 26949 and must be reversed in respect to the disposition
of the cross-complaint interposed by the defendant in case R. G. No. 26949, with
the following result: In case R. G. No. 26948 the plaintiff Silvestra Baron will
recover of the Pablo David the sum of P6,227.24, with interest from November 21,
1923, the date of the filing of her complaint, and with costs. In case R. G. No.
26949 the plaintiff Guillermo Baron will recover of the defendant Pablo David the
sum of P8,669.75, with interest from January 9, 1924. In the same case the defendant
Pablo David, as plaintiff in the cross-complaint, will recover of Guillermo Baron
the sum of P7,000, without costs. So ordered.
Avanceña, C.J., Johnson, Malcolm, Villamor, Romualdez and Villa-Real, JJ., concur.
Separate Opinions
D E C I S I O N
PERALTA, J.:
This is a petition for review on certiorari assailing the Decision1 dated September
23, 2008 of the Court of Appeals (CA) in CA-G.R. SP No. 98591, and the
Resolution2 dated October 9, 2009 denying petitioner’s motion for reconsideration.
The factual antecedents are undisputed.
Petitioner Dario Nacar filed a complaint for constructive dismissal before the
Arbitration Branch of the National Labor Relations Commission (NLRC) against
respondents Gallery Frames (GF) and/or Felipe Bordey, Jr., docketed as NLRC NCR
Case No. 01-00519-97.
On October 15, 1998, the Labor Arbiter rendered a Decision3 in favor of petitioner
and found that he was dismissed from employment without a valid or just cause.
Thus, petitioner was awarded backwages and separation pay in lieu of reinstatement
in the amount of ₱158,919.92. The dispositive portion of the decision, reads:
With the foregoing, we find and so rule that respondents failed to discharge the
burden of showing that complainant was dismissed from employment for a just or
valid cause. All the more, it is clear from the records that complainant was never
afforded due process before he was terminated. As such, we are perforce constrained
to grant complainant’s prayer for the payments of separation pay in lieu of
reinstatement to his former position, considering the strained relationship between
the parties, and his apparent reluctance to be reinstated, computed only up to
promulgation of this decision as follows:
SEPARATION PAY
Rate = ₱198/day
BACKWAGES
T O T A L = ₱95.933.76
x x x x
WHEREFORE, premises considered, judgment is hereby rendered finding respondents
guilty of constructive dismissal and are therefore, ordered:
To pay jointly and severally the complainant the amount of sixty-two thousand nine
hundred eighty-six pesos and 56/100 (₱62,986.56) Pesos representing his separation
pay;
To pay jointly and severally the complainant the amount of nine (sic) five thousand
nine hundred thirty-three and 36/100 (₱95,933.36) representing his backwages; and
All other claims are hereby dismissed for lack of merit.
SO ORDERED.4
Respondents appealed to the NLRC, but it was dismissed for lack of merit in the
Resolution5 dated February 29, 2000. Accordingly, the NLRC sustained the decision
of the Labor Arbiter. Respondents filed a motion for reconsideration, but it was
denied.6
Dissatisfied, respondents filed a Petition for Review on Certiorari before the CA.
On August 24, 2000, the CA issued a Resolution dismissing the petition. Respondents
filed a Motion for Reconsideration, but it was likewise denied in a Resolution
dated May 8, 2001.7
Respondents then sought relief before the Supreme Court, docketed as G.R. No.
151332. Finding no reversible error on the part of the CA, this Court denied the
petition in the Resolution dated April 17, 2002.8
An Entry of Judgment was later issued certifying that the resolution became final
and executory on May 27, 2002.9The case was, thereafter, referred back to the Labor
Arbiter. A pre-execution conference was consequently scheduled, but respondents
failed to appear.10
On November 5, 2002, petitioner filed a Motion for Correct Computation, praying
that his backwages be computed from the date of his dismissal on January 24, 1997
up to the finality of the Resolution of the Supreme Court on May 27, 2002.11 Upon
recomputation, the Computation and Examination Unit of the NLRC arrived at an
updated amount in the sum of ₱471,320.31.12
On December 2, 2002, a Writ of Execution13 was issued by the Labor Arbiter ordering
the Sheriff to collect from respondents the total amount of ₱471,320.31. Respondents
filed a Motion to Quash Writ of Execution, arguing, among other things, that since
the Labor Arbiter awarded separation pay of ₱62,986.56 and limited backwages of
₱95,933.36, no more recomputation is required to be made of the said awards. They
claimed that after the decision becomes final and executory, the same cannot be
altered or amended anymore.14 On January 13, 2003, the Labor Arbiter issued an
Order15 denying the motion. Thus, an Alias Writ of Execution16 was issued on January
14, 2003.
Respondents again appealed before the NLRC, which on June 30, 2003 issued a
Resolution17 granting the appeal in favor of the respondents and ordered the
recomputation of the judgment award.
On August 20, 2003, an Entry of Judgment was issued declaring the Resolution of the
NLRC to be final and executory. Consequently, another pre-execution conference was
held, but respondents failed to appear on time. Meanwhile, petitioner moved that
an Alias Writ of Execution be issued to enforce the earlier recomputed judgment
award in the sum of ₱471,320.31.18
The records of the case were again forwarded to the Computation and Examination
Unit for recomputation, where the judgment award of petitioner was reassessed to
be in the total amount of only ₱147,560.19.
Petitioner then moved that a writ of execution be issued ordering respondents to
pay him the original amount as determined by the Labor Arbiter in his Decision
dated October 15, 1998, pending the final computation of his backwages and
separation pay.
On January 14, 2003, the Labor Arbiter issued an Alias Writ of Execution to satisfy
the judgment award that was due to petitioner in the amount of ₱147,560.19, which
petitioner eventually received.
Petitioner then filed a Manifestation and Motion praying for the re-computation of
the monetary award to include the appropriate interests.19
On May 10, 2005, the Labor Arbiter issued an Order20 granting the motion, but only
up to the amount of ₱11,459.73. The Labor Arbiter reasoned that it is the October
15, 1998 Decision that should be enforced considering that it was the one that
became final and executory. However, the Labor Arbiter reasoned that since the
decision states that the separation pay and backwages are computed only up to the
promulgation of the said decision, it is the amount of ₱158,919.92 that should be
executed. Thus, since petitioner already received ₱147,560.19, he is only entitled
to the balance of ₱11,459.73.
Petitioner then appealed before the NLRC,21 which appeal was denied by the NLRC in
its Resolution22 dated September 27, 2006. Petitioner filed a Motion for
Reconsideration, but it was likewise denied in the Resolution23dated January 31,
2007.
Aggrieved, petitioner then sought recourse before the CA, docketed as CA-G.R. SP
No. 98591.
On September 23, 2008, the CA rendered a Decision24 denying the petition. The CA
opined that since petitioner no longer appealed the October 15, 1998 Decision of
the Labor Arbiter, which already became final and executory, a belated correction
thereof is no longer allowed. The CA stated that there is nothing left to be done
except to enforce the said judgment. Consequently, it can no longer be modified in
any respect, except to correct clerical errors or mistakes.
Petitioner filed a Motion for Reconsideration, but it was denied in the
Resolution25 dated October 9, 2009.
Hence, the petition assigning the lone error:
I
WITH DUE RESPECT, THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED, COMMITTED GRAVE
ABUSE OF DISCRETION AND DECIDED CONTRARY TO LAW IN UPHOLDING THE QUESTIONED
RESOLUTIONS OF THE NLRC WHICH, IN TURN, SUSTAINED THE MAY 10, 2005 ORDER OF LABOR
ARBITER MAGAT MAKING THE DISPOSITIVE PORTION OF THE OCTOBER 15, 1998 DECISION OF
LABOR ARBITER LUSTRIA SUBSERVIENT TO AN OPINION EXPRESSED IN THE BODY OF THE SAME
DECISION.26
Petitioner argues that notwithstanding the fact that there was a computation of
backwages in the Labor Arbiter’s decision, the same is not final until reinstatement
is made or until finality of the decision, in case of an award of separation pay.
Petitioner maintains that considering that the October 15, 1998 decision of the
Labor Arbiter did not become final and executory until the April 17, 2002 Resolution
of the Supreme Court in G.R. No. 151332 was entered in the Book of Entries on May
27, 2002, the reckoning point for the computation of the backwages and separation
pay should be on May 27, 2002 and not when the decision of the Labor Arbiter was
rendered on October 15, 1998. Further, petitioner posits that he is also entitled
to the payment of interest from the finality of the decision until full payment by
the respondents.
On their part, respondents assert that since only separation pay and limited
backwages were awarded to petitioner by the October 15, 1998 decision of the Labor
Arbiter, no more recomputation is required to be made of said awards. Respondents
insist that since the decision clearly stated that the separation pay and backwages
are "computed only up to [the] promulgation of this decision," and considering that
petitioner no longer appealed the decision, petitioner is only entitled to the
award as computed by the Labor Arbiter in the total amount of ₱158,919.92.
Respondents added that it was only during the execution proceedings that the
petitioner questioned the award, long after the decision had become final and
executory. Respondents contend that to allow the further recomputation of the
backwages to be awarded to petitioner at this point of the proceedings would
substantially vary the decision of the Labor Arbiter as it violates the rule on
immutability of judgments.
The petition is meritorious.
The instant case is similar to the case of Session Delights Ice Cream and Fast
Foods v. Court of Appeals (Sixth Division),27 wherein the issue submitted to the
Court for resolution was the propriety of the computation of the awards made, and
whether this violated the principle of immutability of judgment. Like in the present
case, it was a distinct feature of the judgment of the Labor Arbiter in the above-
cited case that the decision already provided for the computation of the payable
separation pay and backwages due and did not further order the computation of the
monetary awards up to the time of the finality of the judgment. Also in Session
Delights, the dismissed employee failed to appeal the decision of the labor arbiter.
The Court clarified, thus:
In concrete terms, the question is whether a re-computation in the course of
execution of the labor arbiter's original computation of the awards made, pegged
as of the time the decision was rendered and confirmed with modification by a final
CA decision, is legally proper. The question is posed, given that the petitioner
did not immediately pay the awards stated in the original labor arbiter's decision;
it delayed payment because it continued with the litigation until final judgment
at the CA level.
A source of misunderstanding in implementing the final decision in this case
proceeds from the way the original labor arbiter framed his decision. The decision
consists essentially of two parts.
The first is that part of the decision that cannot now be disputed because it has
been confirmed with finality. This is the finding of the illegality of the dismissal
and the awards of separation pay in lieu of reinstatement, backwages, attorney's
fees, and legal interests.
The second part is the computation of the awards made. On its face, the computation
the labor arbiter made shows that it was time-bound as can be seen from the figures
used in the computation. This part, being merely a computation of what the first
part of the decision established and declared, can, by its nature, be re-computed.
This is the part, too, that the petitioner now posits should no longer be re-
computed because the computation is already in the labor arbiter's decision that
the CA had affirmed. The public and private respondents, on the other hand, posit
that a re-computation is necessary because the relief in an illegal dismissal
decision goes all the way up to reinstatement if reinstatement is to be made, or
up to the finality of the decision, if separation pay is to be given in lieu
reinstatement.
That the labor arbiter's decision, at the same time that it found that an illegal
dismissal had taken place, also made a computation of the award, is understandable
in light of Section 3, Rule VIII of the then NLRC Rules of Procedure which requires
that a computation be made. This Section in part states:
[T]he Labor Arbiter of origin, in cases involving monetary awards and at all events,
as far as practicable, shall embody in any such decision or order the detailed and
full amount awarded.
Clearly implied from this original computation is its currency up to the finality
of the labor arbiter's decision. As we noted above, this implication is apparent
from the terms of the computation itself, and no question would have arisen had the
parties terminated the case and implemented the decision at that point.
However, the petitioner disagreed with the labor arbiter's findings on all counts
- i.e., on the finding of illegality as well as on all the consequent awards made.
Hence, the petitioner appealed the case to the NLRC which, in turn, affirmed the
labor arbiter's decision. By law, the NLRC decision is final, reviewable only by
the CA on jurisdictional grounds.
The petitioner appropriately sought to nullify the NLRC decision on jurisdictional
grounds through a timely filed Rule 65 petition for certiorari. The CA decision,
finding that NLRC exceeded its authority in affirming the payment of 13th month pay
and indemnity, lapsed to finality and was subsequently returned to the labor arbiter
of origin for execution.
It was at this point that the present case arose. Focusing on the core illegal
dismissal portion of the original labor arbiter's decision, the implementing labor
arbiter ordered the award re-computed; he apparently read the figures originally
ordered to be paid to be the computation due had the case been terminated and
implemented at the labor arbiter's level. Thus, the labor arbiter re-computed the
award to include the separation pay and the backwages due up to the finality of the
CA decision that fully terminated the case on the merits. Unfortunately, the labor
arbiter's approved computation went beyond the finality of the CA decision (July
29, 2003) and included as well the payment for awards the final CA decision had
deleted - specifically, the proportionate 13th month pay and the indemnity awards.
Hence, the CA issued the decision now questioned in the present petition.
We see no error in the CA decision confirming that a re-computation is necessary
as it essentially considered the labor arbiter's original decision in accordance
with its basic component parts as we discussed above. To reiterate, the first part
contains the finding of illegality and its monetary consequences; the second part
is the computation of the awards or monetary consequences of the illegal dismissal,
computed as of the time of the labor arbiter's original decision.28
Consequently, from the above disquisitions, under the terms of the decision which
is sought to be executed by the petitioner, no essential change is made by a
recomputation as this step is a necessary consequence that flows from the nature
of the illegality of dismissal declared by the Labor Arbiter in that decision. 29 A
recomputation (or an original computation, if no previous computation has been
made) is a part of the law – specifically, Article 279 of the Labor Code and the
established jurisprudence on this provision – that is read into the decision. By
the nature of an illegal dismissal case, the reliefs continue to add up until full
satisfaction, as expressed under Article 279 of the Labor Code. The recomputation
of the consequences of illegal dismissal upon execution of the decision does not
constitute an alteration or amendment of the final decision being implemented. The
illegal dismissal ruling stands; only the computation of monetary consequences of
this dismissal is affected, and this is not a violation of the principle of
immutability of final judgments.30
That the amount respondents shall now pay has greatly increased is a consequence
that it cannot avoid as it is the risk that it ran when it continued to seek
recourses against the Labor Arbiter's decision. Article 279 provides for the
consequences of illegal dismissal in no uncertain terms, qualified only by
jurisprudence in its interpretation of when separation pay in lieu of reinstatement
is allowed. When that happens, the finality of the illegal dismissal decision
becomes the reckoning point instead of the reinstatement that the law decrees. In
allowing separation pay, the final decision effectively declares that the employment
relationship ended so that separation pay and backwages are to be computed up to
that point.31
Finally, anent the payment of legal interest. In the landmark case of Eastern
Shipping Lines, Inc. v. Court of Appeals,32 the Court laid down the guidelines
regarding the manner of computing legal interest, to wit:
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself
earn legal interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is
made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty
cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date the judgment 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. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.33
Recently, however, the Bangko Sentral ng Pilipinas Monetary Board (BSP-MB), in its
Resolution No. 796 dated May 16, 2013, approved the amendment of Section 234 of
Circular No. 905, Series of 1982 and, accordingly, issued Circular No. 799,35 Series
of 2013, effective July 1, 2013, the pertinent portion of which reads:
The Monetary Board, in its Resolution No. 796 dated 16 May 2013, approved the
following revisions governing the rate of interest in the absence of stipulation
in loan contracts, thereby amending Section 2 of Circular No. 905, Series of 1982:
Section 1. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of an express contract
as to such rate of interest, shall be six percent (6%) per annum.
Section 2. In view of the above, Subsection X305.136 of the Manual of Regulations
for Banks and Sections 4305Q.1,37 4305S.338 and 4303P.139 of the Manual of Regulations
for Non-Bank Financial Institutions are hereby amended accordingly.
This Circular shall take effect on 1 July 2013.
Thus, from the foregoing, in the absence of an express stipulation as to the rate
of interest that would govern the parties, the rate of legal interest for loans or
forbearance of any money, goods or credits and the rate allowed in judgments shall
no longer be twelve percent (12%) per annum - as reflected in the case of Eastern
Shipping Lines40and Subsection X305.1 of the Manual of Regulations for Banks and
Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of Regulations for Non-Bank
Financial Institutions, before its amendment by BSP-MB Circular No. 799 - but will
now be six percent (6%) per annum effective July 1, 2013. It should be noted,
nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest
shall apply only until June 30, 2013. Come July 1, 2013 the new rate of six percent
(6%) per annum shall be the prevailing rate of interest when applicable.
Corollarily, in the recent case of Advocates for Truth in Lending, Inc. and Eduardo
B. Olaguer v. Bangko Sentral Monetary Board,41 this Court affirmed the authority of
the BSP-MB to set interest rates and to issue and enforce Circulars when it ruled
that "the BSP-MB may prescribe the maximum rate or rates of interest for all loans
or renewals thereof or the forbearance of any money, goods or credits, including
those for loans of low priority such as consumer loans, as well as such loans made
by pawnshops, finance companies and similar credit institutions. It even authorizes
the BSP-MB to prescribe different maximum rate or rates for different types of
borrowings, including deposits and deposit substitutes, or loans of financial
intermediaries."
Nonetheless, with regard to those judgments that have become final and executory
prior to July 1, 2013, said judgments shall not be disturbed and shall continue to
be implemented applying the rate of interest fixed therein.1awp++i1
To recapitulate and for future guidance, the guidelines laid down in the case of
Eastern Shipping Lines42 are accordingly modified to embody BSP-MB Circular No. 799,
as follows:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is breached, the contravenor can be held liable
for damages. The provisions under Title XVIII on "Damages" of the Civil Code govern
in determining the measure of recoverable damages.1âwphi1
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may
have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of
stipulation, the rate of interest shall be 6% per annum to be computed from default,
i.e., from judicial or extrajudicial demand under and subject to the provisions of
Article 1169 of the Civil Code.
When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages, except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is
made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty
cannot be so reasonably established at the time the demand is made, the interest
shall begin to run only from the date the judgment 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.
When the judgment of the court awarding a sum of money becomes final and executory,
the rate of legal interest, whether the case falls under paragraph 1 or paragraph
2, above, shall be 6% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a forbearance of credit.
And, in addition to the above, judgments that have become final and executory prior
to July 1, 2013, shall not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein.
WHEREFORE, premises considered, the Decision dated September 23, 2008 of the Court
of Appeals in CA-G.R. SP No. 98591, and the Resolution dated October 9, 2009 are
REVERSED and SET ASIDE. Respondents are Ordered to Pay petitioner:
(1) backwages computed from the time petitioner was illegally dismissed on January
24, 1997 up to May 27, 2002, when the Resolution of this Court in G.R. No. 151332
became final and executory;
(2) separation pay computed from August 1990 up to May 27, 2002 at the rate of one
month pay per year of service; and
(3) interest of twelve percent (12%) per annum of the total monetary awards,
computed from May 27, 2002 to June 30, 2013 and six percent (6%) per annum from
July 1, 2013 until their full satisfaction.
The Labor Arbiter is hereby ORDERED to make another recomputation of the total
monetary benefits awarded and due to petitioner in accordance with this Decision.
SO ORDERED.
Footnotes:
1 Penned by Associate Justice Vicente 10 Id. at 100.
S. E. Veloso, with Associate Justices 11 Id.
Rebecca De Guia-Salvador and Ricardo R. 12 Id. at 101.
Rosario, concurring; rollo, pp. 33-48. 13 Id. at 97-102.
2 Id. at 32. 14 Id. at 37.
3 Id. at 79-84. 15 Id. at 103-108.
4 Id. at 82-84. (Emphasis supplied.) 16 Id. at 109-113.
5 Id. at 85-93. 17 Id. at 114-117.
6 Resolution dated July 24, 2000, id. 18 Id. at 101.
at 94-96. 19 Id. at 40.
7 Rollo, p. 35. 20 Id. at 65-69.
8 Id. at 35-36. 21 Id. at 70-74.
9 Id. at 36. 22 Id. at 60-64.
23 Id. at 58-59. Performing Quasi-Banking Functions. It
24 Id. at 33-48. reads:
25 Id. at 32. § 4305Q.1 (2008 - 4307Q.6) Rate of
26 Id. at 27. interest in the absence of stipulation.
27 G.R. No. 172149, February 8, 2010, The rate of interest for the loan or
612 SCRA 10. forbearance of any money, goods or
28 Session Delights Ice Cream and Fast credit and the rate allowed in
Foods v. Court of Appeals (Sixth judgments, in the absence of express
Division), supra, at 21-23. contract as to such rate of interest,
29 Id. at 25. shall be twelve percent (12%) per
30 Id. at 25-26. annum.
31 Id. at 26. 38 The Section is under S Regulations or
32 G.R. No. 97412, July 12, 1994, 234 Regulations Governing Non-Stock
SCRA 78. Savings and Loan Associations. It
33 Eastern Shipping Lines, Inc. v. Court reads:
of Appeals, supra, at 95-97. (Citations § 4305S.3 Interest in the absence of
omitted; italics in the original). contract. In the absence of express
34 SECTION 2. The rate of interest for contract, the rate of interest for the
the loan or forbearance of any money, loan or forbearance of any money, goods
goods or credits and the rate allowed or credit and the rate allowed in
in judgments, in the absence of express judgment shall be twelve percent (12%)
contract as to such rate of interest, per annum.
shall continue to be twelve percent 39 The Section is under P Regulations or
37 The Section is under Q Regulations or 41 G.R. No. 192986, January 15, 2013,