789 Phil. 440
BERSAMIN, J.:
Sometime in 1987, Tarcisio S. Calilung, herein respondent, commissioned Renato Punzalan, President of the RP Technical Services, Inc. (RPTSI), a domestic corporation, also impleaded as respondent, of his desire to buy shares of stocks (sic) worth P1,000,000.00 from RPTSI.
During the consultation meeting among the officers and stockholders of RPTSI, they did not agree with Calilung's proposal because he will be in complete control of the corporation. Instead, he allowed to buy P2,820.00 worth of shares with the understanding that the remaining balance of P718,750.00 would be invested to finance Shell Station Project in Batangas then being undertaken by respondent RPTSI.
On October 9, 1987, respondent Punzalan, on behalf of RPTSI, executed a promissory note in favor of Calilung in the amount of P718,750 with 14% interest per annum, payable on or before April 9, 1988. The payment of this promissory note was guaranteed by petitioner Paramount Insurance Corporation (Paramount) under Surety Bond No. G (16) 7003 dated October 27, 1987. On the same date, Punzalan and Jose Manalo, Jr., another officer of RPTSI, executed an indemnity agreement to the effect that Paramount would be reimbursed of all expenses it will incur under the surety bond.
However, RPTSI failed to pay Calilung the amount stated in the promissory note when it fell due, prompting him to file with the Regional Trial Court (RTC), Branch 154, Pasig City, a complaint for sum of money against RPTSI and Paramount, docketed as Civil Case No. 56194. For its part, Paramount filed a third party complaint against RPTSI and its corporate officers, Punzalan and Manalo, Jr., seeking reimbursement for all expenses it may incur under the surety bond.
In its answer, RPTSI denied that it authorized Punzalan and Manalo, Jr. to execute the promissory note and claimed that it did not profit from the loan obtained from Calilung.
Paramount, in its answer, alleged that the terms and conditions of the surety bond have been novated when Calilung, without its consent, extended an extension to RPTSI to pay its obligation. Hence, Paramount has no obligation to pay the amount of the promissory note.
In their answer to the third party complaint, both Punzalan and Manalo, Jr. denied any liability in the indemnity agreement because they contracted it as officers of the corporation, not in their personal capacities.
Paramount, RPTSI and its officers, Punzalan and Manalo, Jr., jointly challenged the validity of the promissory note on the ground that the contract is simulated. RPTSI did not intend to be bound by the promissory note. Paramount insisted that since no money was actually involved, the contract is entirely fictitious.
After trial, the RTC rendered its Decision, the dispositive portion which reads:WHEREFORE, judgment is hereby rendered in favor of the plaintiff (now respondent) and against the defendants RP Technical Services, Incorporated (now respondent) and Paramount Insurance Corporation (now petitioner), jointly and severally, to pay plaintiff the following sums:Paramount, Punzalan and Manalo, Jr., interposed an appeal to the Court of Appeals. In its Decision dated August 14, 1998, the Appellate Court affirmed in toto the judgment of the trial court. Their motion for reconsideration was likewise denied in a Resolution dated November 13, 1998.(1) P718,750.00 with interest at 14% per annum from October 7, 1987, until fully paid;and in favor of defendant-third party plaintiff, Paramount Insurance Corporation against the defendant RP Technical Services, Incorporated and third party defendants, Messrs. Renato Punzalan and Jose M. Manalo, Jr. jointly and severally, to pay the former whatever sum it shall pay to the plaintiff as above ordered.
(2) 5% of the amount due above as attorney's fees; plus
(3) costs.
SO ORDERED.
Hence, this petition for review on certiorari.
Paramount, herein petitioner, contends that the Court of Appeals erred in holding that the promissory note is valid. Petitioner insists that the note was simulated and that respondents committed fraud in introducing it to execute a surety bond to secure payment of the said note.
Here, the issues of whether the promissory note is simulated or not is whether its execution was attended with fraud evidently involved questions of fact and evidentiary matters which are not proper in a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended. It is basic that factual issues are beyond the province of this Court, for it is not its function to weigh the evidence all [over] again. Factual findings of the trial court, when adopted and affirmed by the Court of Appeals, as in this case, are binding and conclusive upon this Court and generally will not be reviewed on appeal. There are exceptions to this general rule, but petitioner failed to show that this case is one of them.
WHEREFORE, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 43870 are AFFIRMED. Costs against petitioner.
SO ORDERED.
After evaluating the respective submissions of the parties, the court hereby holds in favor of the defendant. Indeed, the decision sought to be implemented awarded plaintiff the amount of P718,750.00 with interest at 14% per annum from October 7, 1987 until fully paid. There is nothing in the dispositive portion of the decision that would justify the conclusion that the 14% interest imposed by the court should further earn interest of 12% per annum. As correctly pointed out by the defendant, where the decision is clear there is no room for further interpretation or adding to or subtracting therefrom.
x x x x
In this particular case, since the judgment or decision to be executed did not provide for any compounding of interest, it is clear that the interest should be the simple interest of 14% per annum counted from October 7, 1987.
Anent the parties' reference to the case of Eastern Shipping, supra, the court is more inclined to subscribe to the position taken by the defendant. Indeed, the 12% per annum finds application only if the obligation breached is for the payment of a sum of money, i.e., loan or forbearance of money. The Supreme Court in the same case held that the interest due (in case the obligation breached is a loan or forbearance of money) shall itself earn interest from the time it is judicially demanded. In the instant case, it can hardly be contended that the obligation of the defendant to the plaintiff that was breached consisted in the payment of a sum of money or a loan or forbearance of money. It is very clear that the obligation of the defendant arose from its liability under a surety bond that it issued. Such obligation cannot by any stretch of imagination be considered a loan or forbearance of money.
Anent the second part of the Omnibus Motion for the consignment of the P2,993,152.65, let it be noted that a check in the same amount has been tendered by the defendant to plaintiff, Atty. Tarcisio S. Calilung, and the latter has duly received the same.
WHEREFORE, premises considered, order is hereby given fixing the amount of interest on the principal claim of P718,750.00 at fourteen percent (14%) per annum from October 7, 1987 until fully paid.
There will be no compounding of interest as this has no basis in law.
SO ORDERED.[3]
After going over the submission of the plaintiff in his Motion for Reconsideration and the opposition thereto interposed by the defendant, the court is constrained to change its former position and hold in favor of the plaintiff. A review of the facts of the case will show that while the obligation of Paramount arose from its contract of surety with defendant RP Technical Services, Inc., it is undeniable however that the obligation being secured or guaranteed by defendant Paramount is a loan obligation of the defendant RP Technical Services, Inc. to the plaintiff Calilung. As such, when the defendant RP Technical Services, Inc. defaulted in its obligation, the guaranty ripened into a loan obligation. In other words, the obligation of defendant Paramount to the plaintiff was transferred (sic) from one of suretyship agreement to an obligation for the payment of a sum of money corresponding to the unpaid obligation of defendant RP Technical Services, Inc. to the plaintiff Calilung, which obligation was guaranteed by the defendant Paramount. Be it noted that as a surety obligation, the same became due and demandable upon the default of the principal debtor (RP Technical Services, Inc.) to pay its obligation to plaintiff Calilung.
x x x x
In the instant case, since the principal debtor (RP Technical Services, Inc.) has defaulted in the payment of its obligation to the plaintiff and the latter has made a demand upon the defendant Paramount for the payment of the loan obligation of RP Technical Services, Inc., the surety (defendant Paramount Insurance Corp.) effectively stepped into the shoes of principal debtor RP Technical Services, Inc. and assumed the latter's obligation to the plaintiff which obligation is one for the payment of sum of money.
Following the ruling in Eastern Shipping, the interest due on RP Technical Services, Inc.'s obligation to plaintiff shall itself earn interest from the time demand was made for its payment. As ruled by the court, the interest shall commence to run on October 7, 1987.
WHEREFORE, premises considered, the Motion for Reconsideration is GRANTED. Compounding of interest is allowed pursuant to the Eastern Shipping Lines ruling supra.
SO ORDERED.[4]
After a careful study of the respective positions forwarded by the parties and of the applicable jurisprudence on the matter, the court is inclined to take the position of defendant Paramount Insurance Corporation. Indeed, the order of the court dated September 1, 2010 has to be reconsidered because it is not in accord with the rule on immutability of decision (sic). In a long line of cases, it has been held that:
x x x x
In the present case, the decision of Honorable Ramon R. Buenaventura which has long become final and executory and is the subject of plaintiffs Motion for Execution did not mention anything about the compounding of interest that was awarded in favor of the plaintiff. The decision only said that it will earn interest at fourteen percent (14%) per annum.
WHEREFORE, in view of the foregoing the "Motion for Reconsideration" of the Order of the court dated September 1, 2010 filed by Paramount Insurance Corporation is hereby GRANTED and the court's September 1, 2010 Order is SET ASIDE.
SO ORDERED.[5]
Interest is a compensation fixed by the parties for the use or forbearance of money. This is referred to as monetary interest. Interest may also be imposed by law or by courts as penalty or indemnity for damages. This is called compensatory interest. The right to interest arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest is demanded.
Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.
x x x x
There are instances in which an interest may be imposed even in the absence of express stipulation, verbal or written, regarding payment of interest. Article 2209 of the Civil Code states that if the obligation consists in the payment of a sum of money, and the debtor incurs delay, a legal interest of 12% per annum may be imposed as indemnity for damages if no stipulation on the payment of interest was agreed upon. Likewise, Article 2212 of the Civil Code provides that interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent on this point.
All the same, the interest under these two instances may be imposed only as a penalty or damages for breach of contractual obligations. It cannot be charged as a compensation for the use or forbearance of money. In other words, the two instances apply only to compensatory interest and not to monetary interest.[17] x x x
Article 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously. The demand made against one of them shall not be an obstacle to those which may subsequently be directed against the others, so long as the debt has not been fully collected. (1144a)