Date: September 31, 1988

Facts:
Catholic Vicar Apostolic of the Mountain Province (VICAR for brevity) filed an application for registration
of title over Lots 1, 2, 3, and 4, said Lots being the sites of the Catholic Church building, convents, high
school building, school gymnasium, school dormitories, social hall, stonewalls, etc. The Heirs of Juan
Valdez and the Heirs of Egmidio Octaviano filed their Answer/Opposition on Lots Nos. 2 and 3,
respectively, asserting ownership and title thereto since their predecessors’ house was borrowed by
petitioner Vicar after the church and the convent were destroyed.. After trial on the merits, the land
registration court promulgated its Decision confirming the registrable title of VICAR to Lots 1, 2, 3, and 4.

The Heirs of Juan Valdez appealed the decision of the land registration court to the then Court of
Appeals, The Court of Appeals reversed the decision. Thereupon, the VICAR filed with the Supreme
Court a petition for review on certiorari of the decision of the Court of Appeals dismissing his application
for registration of Lots 2 and 3.

Issue: WON Vicar had been in possession of lots 2 and 3 merely as bailee borrower in commodatum, a
gratuitous loan for use.

Held: YES. 

There is evidence that petitioner Vicar occupied Lots 1 and 4, which are not in question, but not Lots 2
and 3, because the buildings standing thereon were only constructed after liberation in 1945. Petitioner
Vicar only declared Lots 2 and 3 for taxation purposes in 1951. The improvements oil Lots 1, 2, 3, 4 were
paid for by the Bishop but said Bishop was appointed only in 1947, the church was constructed only in
1951 and the new convent only 2 years before the trial in 1963.

When petitioner Vicar was notified of the oppositor's claims, the parish priest offered to buy the lot from
Fructuoso Valdez. Lots 2 and 3 were surveyed by request of petitioner Vicar only in 1962.

Private respondents were able to prove that their predecessors' house was borrowed by petitioner Vicar
after the church and the convent were destroyed. They never asked for the return of the house, but when
they allowed its free use, they became bailors in commodatum and the petitioner the bailee. The bailees'
failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the
part of the borrower. The bailee held in trust the property subject matter of commodatum. The adverse
claim of petitioner came only in 1951 when it declared the lots for taxation purposes. The action of
petitioner Vicar by such adverse claim could not ripen into title by way of ordinary acquisitive prescription
because of the absence of just title.

The Court of Appeals found that the predecessors-in-interest and private respondents were possessors
under claim of ownership in good faith from 1906; that petitioner Vicar was only a bailee in commodatum;
and that the adverse claim and repudiation of trust came only in 1951.

Quintos v. Beck

G.R. No. L-46240, November 3, 1939

FACTS: Beck is a tenant of  defendant Margarita Quintos. Quintos granted gratuitously Beck
the use of the furniture found on the leased house, among these were three gas heaters  and 4
electric lamps, subject to the condition that the defendant would return them to the plaintiff upon
the latter's demand .Quintos sold the pieces of furniture to Maria Lopez and Rosario Lopez and
thereafter notified Beck of the conveyance, giving him sixty days to vacate the premises under one of the
clauses of the contract of lease. On November 5, 1936, Beck informed Quintos that the latter can get the
furniture at the ground floor of the house. However, at a later date,

Beck told Quintos that he will return only the other furniture but not the gas heaters and the
electric lamps as he is to return them only after the expiration of the lease contract

Quintos refused to get the furniture in view of the fact that thedefendant had declined to make
delivery of all of them.When the lease contract expires, Beck deposited all of the furniture to the sheriff’s
warehouse.

Consequently, Quintos brought an action to compel Beck to return her certain furniture which she lenthim
for his use. The trial court ruled in favor of Beck, holding that Quintos failed to comply with herobligation to
get the furniture when they were offered to her. On appeal of the case, the Court of First

Instance of Manila affirmed the lower court’s decision

Issue:

Held: The contract entered into between the parties is one of commadatum, because under it the plaintiff
gratuitously granted the use of the furniture to the defendant, reserving for herself the ownership thereof;
by this contract the defendant bound himself to return the furniture to the plaintiff, upon the latters demand
(clause 7 of the contract, Exhibit A; articles 1740, paragraph 1, and 1741 of the Civil Code). The
obligation voluntarily assumed by the defendant to return the furniture upon the plaintiff's demand, means
that he should return all of them to the plaintiff at the latter's residence or house. The defendant did not
comply with this obligation when he merely placed them at the disposal of the plaintiff, retaining for his
benefit the three gas heaters and the four eletric lamps. The provisions of article 1169 of the Civil Code
cited by counsel for the parties are not squarely applicable. The trial court, therefore, erred when it came
to the legal conclusion that the plaintiff failed to comply with her obligation to get the furniture when they
were offered to her.

As the defendant had voluntarily undertaken to return all the furniture to the plaintiff, upon the latter's
demand, the Court could not legally compel her to bear the expenses occasioned by the deposit of the
furniture at the defendant's request. The latter, as bailee, was not entitled to place the furniture on
deposit; nor was the plaintiff under a duty to accept the offer to return the furniture, because the
defendant wanted to retain the three gas heaters and the four electric lamps.

As to the value of the furniture, we do not believe that the plaintiff is entitled to the payment thereof by the
defendant in case of his inability to return some of the furniture because under paragraph 6 of the
stipulation of facts, the defendant has neither agreed to nor admitted the correctness of the said value.
Should the defendant fail to deliver some of the furniture, the value thereof should be latter determined by
the trial Court through evidence which the parties may desire to present.

The costs in both instances should be borne by the defendant because the plaintiff is the prevailing party
(section 487 of the Code of Civil Procedure). The defendant was the one who breached the contract
of commodatum, and without any reason he refused to return and deliver all the furniture upon the
plaintiff's demand. In these circumstances, it is just and equitable that he pay the legal expenses and
other judicial costs which the plaintiff would not have otherwise defrayed.

The appealed judgment is modified and the defendant is ordered to return and deliver to the plaintiff, in
the residence to return and deliver to the plaintiff, in the residence or house of the latter, all the furniture
described in paragraph 3 of the stipulation of facts Exhibit A. The expenses which may be occasioned by
the delivery to and deposit of the furniture with the Sheriff shall be for the account of the defendant. the
defendant shall pay the costs in both instances. So ordered.

Consolidated Bank and Trust Corp v CA

Facts: Solidbank is a domestic banking corporation while private respondent L.C. Diaz and Company,
CPA’s  (“L.C. Diaz”), is a professional partnership engaged in the practice of accounting and which
opened a savings account with Solidbank. Diaz through its cashier, Mercedes Macaraya , filled up a
savings cash deposit slip and a savings checks deposit slip.  Macaraya instructed the messenger of L.C.
Diaz, Ismael Calapre, to deposit the money with Solidbank and give him the Solidbank passbook. 
Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the passbook.  The
teller acknowledged receipt of the deposit by returning to Calapre the duplicate copies of the two deposit
slips.  Since the transaction took time and Calapre had to make another deposit for L.C. Diaz with Allied
Bank, he left the passbook with Solidbank.  When Calapre returned to Solidbank to retrieve the passbook,
Teller No. 6 informed him that somebody got the passbook. Calapre went back to L.C. Diaz and reported
the incident to Macaraya. The following day,, L.C. Diaz through its Chief Executive Officer, Luis C. Diaz,
called up Solidbank to stop any transaction using the same passbook until L.C. Diaz could open a new
account followed by a formal written request later that day. It was also on the same day that L.C. Diaz
learned of the unauthorized withdrawal the day before of P300,000 from its savings account.  The
withdrawal slip bore the signatures of the authorized signatories of L.C. Diaz, namely Diaz and Rustico L.
Murillo. The signatories, however, denied signing the withdrawal slip. A certain Noel Tamayo received
the P300,000.

L.C. Diaz demanded from Solidbank the return of its money but to no avail.   Hence, L.C. Diaz filed a
Complaint for Recovery of a Sum of Money against Solidbank with the Regional Trial Court. After trial, the
trial court rendered a decision absolving Solidbank and dismissing the complaint.  Court of Appeals
reversed the decision of the trial court.

Issue:    Whether or not Solidbank must be held liable for the fraudulent withdrawal on private
respondent’s account.

Held:    Solidbank’s tellers must exercise a high degree of diligence in insuring that they return the
passbook only to the depositor or his authorized representative. The tellers know, or should know, that
the rules on savings account provide that any person in possession of the passbook is presumptively its
owner.  If the tellers give the passbook to the wrong person, they would be clothing that person
presumptive ownership of the passbook, facilitating unauthorized withdrawals by that person.  For failing
to return the passbook to Calapre, the authorized representative of L.C. Diaz, Solidbank and Teller No. 6
presumptively failed to observe such high degree of diligence in safeguarding the passbook, and in
insuring its return to the party authorized to receive the same. However, L.C. Diaz was guilty of
contributory negligence in allowing a withdrawal slip signed by its authorized signatories to fall into the
hands of an impostor.  Thus, the liability of Solidbank should be reduced. Hence, the liability of Solidbank
for actual damages was reduced to only 60%, the remaining 40% was borne by private respondent.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple
loan. There is a debtor-creditor relationship between the bank and its depositor.  The bank is the debtor
and the depositor is the creditor. The law imposes on banks high standards in view of the fiduciary nature
of banking.  RA 8791 declares that the State recognizes the “fiduciary nature of banking that requires high
standards of integrity and performance.” This new provision in the general banking law, introduced in
2000, is a statutory affirmation of Supreme Court decisions holding that “the bank is under obligation to
treat the accounts of its depositors with  meticulous care, always having in mind the fiduciary nature of
their relationship.”
This fiduciary relationship means that the banks obligation to observe high standards of integrity and
performance is deemed written into every deposit agreement between a bank and its depositor. The
fiduciary nature of banking requires banks to assume a degree of diligence higher than that of a good
father of a family. Article 1172 of the Civil Code states that the degree of diligence required of an obligor
is that prescribed by law or contract, and absent such stipulation then the diligence of a good father of a
family. Section 2 of RA 8791 prescribes the statutory diligence required from banks that banks must
observe high standards of integrity and performance in servicing their depositors. Although RA 8791 took
effect almost nine years after the unauthorized withdrawal of the P300,000 from L.C. Diazs savings
account, jurisprudence at the time of the withdrawal already imposed on banks the same high standard of
diligence required under RA No. 8791.

However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the
bank and its depositors from a simple loan to a trust agreement, whether express or implied.  Failure by
the bank to pay the depositor is failure to pay a simple loan, and not a breach of trust.  The law simply
imposes on the bank a higher standard of integrity and performance in complying with its obligations
under the contract of simple loan, beyond those required of non-bank debtors under a similar contract of
simple loan.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple
loan. Article 1980 of the Civil Code expressly provides that x x x savings x x x deposits of money in
banks and similar institutions shall be governed by the provisions concerning simple loan. There is a
debtor-creditor relationship between the bank and its depositor. The bank is the debtor and the depositor
is the creditor. The depositor lends the bank money and the bank agrees to pay the depositor on
demand. The savings deposit agreement between the bank and the depositor is the contract that
determines the rights and obligations of the parties.

Republic v Grijaldo
[G.R. No. L-20240. December 31, 1965.]
Art 1953: A person who receives a loan of money or any other fungible thing acquires the
ownership thereof, and is bound to pay to the creditor an equal amount of the same kind
and quality.

FACTS: Jose Grijaldo obtained five crop loans from the branch office of the Bank of
Taiwan, Ltd. in Bacolod City, in the total sum of P1,281.97 with interest at the rate of 6%
per annum, compounded quarterly. These loans are evidenced by five promissory notes
executed by the appellant in favor of the Bank. All notes without due dates, but because
the loans were crop loans it was considered that the loans were due one year after they
were incurred. To secure the payment of the loans the appellant executed a chattel
mortgage on the standing crops on his land known as Hacienda Campugas.
By virtue of “Trading with the Enemy Act” the assets in the Philippines of the Bank of
Taiwan, Ltd. were vested in the Government of the United States which were
subsequently transferred to the Republic of the Philippines.

Grijaldo failed to pay the crop loans despite the extra-judicial demand of the Government
of the Philippines. He argued that the Government has no cause of action, that because
the loans were secured by a chattel mortgage on the standing crops on a land owned by
him and those crops were lost or destroyed through enemy action his obligation to pay
the loans was thereby extinguished.

ISSUE: Whether or not Grijaldo’s obligation to pay the crop loans had extinguished due to the crops that
were lost or destroyed through enemy action.

Held: The appellant maintains, in support of his contention that the appellee has no cause of action, that
because the loans were secured by a chattel mortgage on the standing crops on a land owned by him
and these crops were lost or destroyed through enemy action his obligation to pay the loans was thereby
extinguished. This argument is untenable. The terms of the promissory notes and the chattel mortgage
that the appellant executed in favor of the Bank of Taiwan, Ltd. do not support the claim of appellant. The
obligation of the appellant under the five promissory notes was not to deliver a determinate thing namely,
the crops to be harvested from his land, or the value of the crops that would be harvested from his land.
Rather, his obligation was to pay a generic thing — the amount of money representing the total sum of
the five loans, with interest. The transaction between the appellant and the Bank of Taiwan, Ltd. was a
series of five contracts of simple loan of sums of money. "By a contract of (simple) loan, one of the parties
delivers to another ... money or other consumable thing upon the condition that the same amount of the
same kind and quality shall be paid." (Article 1933, Civil Code) The obligation of the appellant under the
five promissory notes evidencing the loans in questions is to pay the value thereof; that is, to deliver a
sum of money — a clear case of an obligation to deliver, a generic thing. Article 1263 of the Civil Code
provides:

In an obligation to deliver a generic thing, the loss or destruction of anything of the same kind does not
extinguish the obligation.

The chattel mortgage on the crops growing on appellant's land simply stood as a security for the
fulfillment of appellant's obligation covered by the five promissory notes, and the loss of the crops did not
extinguish his obligation to pay, because the account could still be paid from other sources aside from the
mortgaged crops.

CASA FILIPINA DEVELOPMENT CORPORATION

VS. THE DEPUTY EXECUTIVE SECRETARY,  MAY 28, 1992

ACTION: PETITION OF REVIEW ON CERTIORARI (treated as petition for certiorari), seeking to reverse
the Office of the President’s Decision
FACTS:

Jose Valenzuela Jr( Valenzuela for brevity) entered into a contract to sell with Casa Filipina Development
(CFD for brevity). However, despite full payment by Valenzuela and his offer to pay the transfer
expenses, CFD refused to execute the deed of absolute sale and deliver the property. So Valenzuela filed
a complaint before the Office of Appeals (OAALA) of the Human Settlements Regulatory Commission
(now HLURB). CFD on the other hand contends that Valnezuela’s action is premature since Valenzuela
has yet to comply with the other conditional requierments of their contract: i.e. payment of certain fees
and expenses.

OOALA ruled in favor of Valenzuela, ordering that CFD must execute the deed of absolute sale, bill
Valenzuela of the transfer expenses, and deliver the property free from liens and encumbrances. In case
CFD is unable to do so, CFD must refund Valenzuela P76,180.82 (80/100) plus 24% per annum until fully
paid.

CFD appealed the decision and reasoned that due to succeeding events (CFD’s new mortgagee bank
prohibits the release of individual title until CFD’s prior obligations be paid first) and the failure of the past
administration to put up a viable and progressive economic program precludes CFD from making the
transfer. This reason was not well-taken by HLURB since no proof was shown to substantiate CFD’s
claim. HLURB emphasized the six  (6) month period from full payment within which the developer must
deliver the property sold (PD 957,Sec 25). It is also within such time that redemption may be had. In the
present case, it has been more than one (1) year already.

CFD appealed then again appealed the decision before the Office of the President.

ISSUES (as raised by CFD)

3. Whether or not the 24% interest was with basis.
4. Whether ot not the 6-month period provided by PD 947 for the purpose of redemption had not began to
run since the title had not yet been issued in view of the takeoverof the new mortgagee bank.

3. The ruling in Reformina v.  Tomol, it must be underscored, deals exclusively with cases where
damages in the form of interest is due but no specific rate has been previously set by the parties. In such
cases, the legal interest of 12%  per annum must be applied. In the present case, however, the interest
rate of 24% per annum was mutually agreed upon by petitioner and private respondent in their
contract to sell — this was the interest rate imposed on private respondent for the payment of the
installments on the contract price and there is no reason why this same interest rate should not
be equally applied to petitioner which is guilty of violating the reciprocal obligation. Therefore,
except where the action involves forbearance of money or loan, interest which courts may award is only
up to 12% (should be 6%) without a stipulation to the contrary.

It is, thus, evident that if a particular rate of interest has been expressly stipulated by the parties, that
interest, not the legal rate of interest, shall be applied.

RULING:

4. Whether ot not the 6-month period provided by PD 947 for the purpose of redemption had not began to
run since the title had not yet been issued in view of the takeover of the new mortgagee bank.

The Court has the following to say: “The argument of petitioner that the issuance of the title is a
prerequisite to the running of the six month period of redemption, fails to convince Us. Otherwise, the
owner or developer can readily concoct a thousand and one reasons as justifications for its failure to
issue the title and in the process, prolong the period within which to deliver the title to the buyer free from
any liens or encumbrances. Additionally, by not issuing/delivering the title of the lot to private respondent
upon full payment thereof, petitioner has already violated the explicit mandate of the first sentence of
Section 25 of P.D. No. 957. If We were to count the six month period of redemption from the belated
issuance of the title, petitioner will have a lot to gain from its own non-observance of said provision. We
shall not countenance such absurdity.

RENE P. RELUCIO,  vs. ZEIDA B. BRILLANTE-GARFIN and COURT OF APPEALS,

Facts: On 22 October 1979, private respondent Zeida B. Brillante-Garfin filed a complaint in the lower
court for specific performance with damages against petitioner Irene P. Relucio, to compel the latter to:
(a) execute, in compliance with the Contract to Buy and Sell in question, a final deed of sale in favor of
the former over two (2) residential subdivision lots in the Mariano Village Subdivision, Naga City; and (b)
construct paved roads on the northern and southern sides of the lots, as "necessary facilities,
improvements, infrastructures and other forms of development of the subdivision area." Private
respondent alleged that the lots, which have a total contract price of P10,800.00, have already been paid
for, as she had already paid P200.00 as down payment, and had subsequently completed payment of
128 equal monthly installments of P89.45 each amounting to P11,450.00; that as the law allows the
charging of interest only as monetary interest or as compensatory interest, none of which have obtained
in her case, as she had never incurred in delay in the payment of installments due, the stipulated interest
of six percent (6%) per annum on the outstanding balance is null and void; and that the amount of 650.00
representing overpayment be returned to her.

Petitioner resisted the complaint, maintaining that private respondent, contrary to the latter's allegations,
is obliged to pay interest on the installment payments of the unpaid outstanding balance even if paid on
their "due dates" per schedule of payments

Issue: whether or not private respondent has fully paid the stipulated price in the contract so as to be
entitled lawfully to demand the execution of a deed of absolute sale in her favor. 

Held:
." 3 This stipulation clearly specified that an interest charge of six percent (6%) per annum was included in
the monthly installment price: private respondent could not have helped noticing that P89.45 multiplied by
180 monthly installments equals P16,101.00, and not P10,600.00. The contract price of P10,800.00 may
thus be seen to be the cash price of the subdivision lots, that is, the amount payable if the price of the lots
were to be paid in cash and in full at the execution of the contract; it is not the amount that the vendor will
have received in the aggregate after fifteen (15) years if the vendee shall have religiously paid the
monthly installments. The installment price, upon the other hand, of the subdivision lots-the sum total of
the monthly installments (i.e., P16,101.00) typically, as in the instant case, has an interest component
which compensates the vendor for waiting fifteen (15) years before receiving the total principal amount of
P10,600.00.Economically or financially, P10,600.00 delivered in full today is simply worth much more than
a long series of small payments totalling, after fifteen (15) years, P10,600.00

 To suppose, as private respondent argues, that mere prompt payment of the monthly installments as
they fell due would obviate application of the interest charge of six percent (6%) per annum, is to ignore
that simple economic fact. That economic fact is, of course, recognized by law, which authorizes the
payment of interest when contractually stipulated for by the parties 4 or when implied in recognized
commercial custom or usage.

Vendor and vendee are legally free to stipulate for the payment of either the cash price of a subdivision lot
or its installment price. Should the vendee opt to purchase a subdivision lot via the installment payment
system, he is in effect paying interest on the cash price, whether the fact and rate of such interest
payment is disclosed in the contract or not. The contract for the purchase and sale of a piece of land on
 the installment payment system in the case at bar is not only quite lawful; it also reflects a very wide
spread usage or custom in our present day commercial life.

Eastern Shipping vs CA
GR No. 97412, 12 July 1994
234 SCRA 78

FACTS
            Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment as insured
with a marine policy. Upon arrival in Manila unto the custody of metro Port Service, which excepted to one
drum, said to be in bad order and which damage was unknown the Mercantile Insurance Company. Allied
Brokerage Corporation received the shipment from Metro, one drum opened and without seal. Allied
delivered the shipment to the consignee’s warehouse. The latter excepted to one drum which contained
spillages while the rest of the contents was adulterated/fake. As consequence of the loss, the insurance
company paid the consignee, so that it became subrogated to all the rights of action of consignee against
the defendants Eastern Shipping, Metro Port and Allied Brokerage. The insurance company filed before
the trial court. The trial court ruled in favor of plaintiff an ordered defendants to pay the former with
present legal interest of 12% per annum from the date of the filing of the complaint. On appeal by
defendants, the appellate court denied the same and affirmed in toto the decision of the trial court.

ISSUE
(1)   Whether the applicable rate of legal interest is 12% or 6%.

(2)   Whether the payment of legal interest on the award for loss or damage is to be computed from the time
the complaint is filed from the date the decision appealed from is rendered.

HELD
whether the payment of legal interest on an award for loss or damage is to be computed from the time the
complaint is filed or from the date the decision appealed from is rendered; and 

FOLLOW THESE VERY IMPORTANT RULES (GUIDANCE BY THE SUPREME COURT)

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. 

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.

(c) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%).

SIX PERCENT (6%) on the amount due computed from the decision, dated 03 February 1988, of the
court a quo (Court of Appeals) AND A TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT (6%),
shall be imposed on such amount upon finality of the Supreme Court decision until the payment thereof.

RATIO: when the judgment awarding a sum of money becomes final and executory, the monetary award
shall earn interest at 12% per annum from the date of such finality until its satisfaction, regardless of
whether the case involves a loan or forbearance of money. The reason is that this interim period is
deemed to be by then equivalent to a forbearance of credit. 

NOTES: the Central Bank Circular imposing the 12% interest per annum applies only to loans or
forbearance of money, goods or credits, as well as to judgments involving such loan or forbearance of
money, goods or credits, and that the 6% interest under the Civil Code governs when the transaction
involves the payment of indemnities in the concept of damage arising from the breach or a delay in the
performance of obligations in general. Observe, too, that in these cases, a common time frame in the
computation of the 6% interest per annum has been applied, i.e., from the time the complaint is filed until
the adjudged amount is fully paid.

WHEREFORE, the petition is partly GRANTED. The appealed decision is AFFIRMED with the
MODIFICATION that the legal interest to be paid is SIX PERCENT (6%) on the amount due computed
from the decision, dated 
03 February 1988, of the court a quo. A TWELVE PERCENT (12%) interest, in lieu of SIX PERCENT
(6%), shall be imposed on such amount upon finality of this decision until the payment thereof.

(2)           From the date the judgment is made. Where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or EJ 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 of judgment of the court is made.

(3)   The Court held that it should be computed from the decision rendered by the court a quo

The Phil-Am v Flores

Facts: Private respondent was the plaintiff and the petitioner was the defendant in Civil Case No. 2414 of
the Court of First Instance of La Union. On January 22, 1973, the respondent judge rendered judgment in
said case, the dispositive portion of which reads: têñ.£îhqwâ£

IN VIEW OF THE FOREGOING, the Court hereby renders judgment and sentences the
defendant to pay Concordia Garcia Navalta the amount of P75,000.00 with legal interest
from October, 1968, Pl,000.00, as attorney's fees am the cost of suit.

The decision was appealed by the petitioner to the Court of Appeals in CA-G.R. No. 52675-R but was
affirmed on February 7, 1977.

The petitioner was advised by the respondent and her counsel that the payment was not in fun
satisfaction of the judgment because the former had to pay compound interest or an additional sum of
P10,375.77.

the private respondent secured a writ of execution for the same the respondent judge ordering the
payment of compound interest

Issue: whether or not the petitioner is obligated to pay compound interest under the judgment.

Held: The questioned Order cannot be sustained. The judgment which was sought to be executed
ordered the payment of simple "legal interest" only. It said nothing about the payment of compound
interest. Accordingly, when the respondent judge ordered the payment of compound interest he went
beyond the confines of his own judgment which had been affirmed by the Court of Appeals and which had
become final. Fundamental is the rule that execution must conform to that ordained or decreed in the
dispositive part of the decision. Likewise, a court can not, except for clerical errors or omissions, amend a
judgment that has become final.

Private respondent invokes Sec. 5 of the Usury Law which reads in part as follows: "In computing the
interest on any obligation, promissory note or other instrument or contract, compound interest shall not be
reckoned, except by agreement, or, in default thereof, whenever the debt is judicially claimed in which last
case it shall draw six per centum per annum interest ..." as well as Art. 2212 of the Civil Code which
stipulates: "Interest due shall earn legal interest from the time it is judicially demanded, although the
obligation may be silent upon this point." Both legal provisions are inapplicable for they contemplate the
presence of stipulated or conventional interest which had accrued when demand was judicially made. In
this case no interest had been stipulated by the parties. In other words, there was no accrued
conventional interest which could further earn interest upon judicial demand.