Pilipinas Bank vs. CA and Lilia R.

Echaus [August 12, 1993]

Quiason, J.,
FACTS:
-This is a petition for certiorari to review the resolution of CA.
-On another civil case, respondent filed a complaint against petitioner and
its president, Constantino Bautista, for collection of a sum of money. The
complaint alleges that Pilipinas Bank and Greatland Realty Corporation
executed a Dacion en Pago , wherein several parcels of land were
conveyed for the sum of 7,776,335.69. Greatland then assigned 2,300,000
out of the total consideration of the Dacion, in favour of respondent and
despite demand for payment, petitioner refused to pay the amount
assigned to her.
-Petitioner argued that its former president had no authority, and that it
never ratified the same, and assuming arguendo that the agreement was
binding, the conditions were never fulfilled.
-RTC ruled in favour of private respondent and ordered the petitioner to
pay. CA modified the decision by limiting the execution pending appeal to
5,517,707.
-Petitioner complied with the writ of execution by issuing 2 managers
checks to cover said amount, which was encashed on July 15, 1988. Later
on, the decision of the CA became final.
-Petitioner then filed a motion in the trial court to refund her the excess
payment of 1,898, 623.67 with interest, since the advanced amount fell
short of the actual awarded amount. [since the interest rate used by
petitioner was 6%]
-Respondent opposed it and argued that the legal interest was 12%. CA
again ruled in favour of respondent. Hence, this appeal.
ISSUE: WON the legal interest should be 12% [for forbearance of money,
goods and credits & loans]
HELD:
-No. The said amount was a portion of the P7,776,335.69 which petitioner
was obligated to pay Greatland as consideration for the sale of several
parcels of land by Greatland to petitioner. The amount of P2,300,000.00
was assigned by Greatland in favor of private respondent. The said
obligation therefore arose from a contract of purchase and sale and not
from a contract of loan or mutuum. Hence, what is applicable is the rate of
6% per annum as provided in Article 2209 of the Civil Code of the
Philippines and not the rate of 12% per annum as provided in Circular No.
416.
- Private respondent was paid in advance the amount of P5,517,707.00 by
petitioner to the order for the execution pending appeal of the judgment
of the trial court. On appeal, the Court of Appeals reduced the total
damages to P3,619,083.33, leaving a balance of P1,898,623.67 to be
refunded by private respondent to petitioner. In an execution pending
appeal, funds are advanced by the losing party to the prevailing party

with the implied obligation of the latter to repay former, in case the
appellate court cancels or reduces the monetary award. Hence, Circular
No. 416 applies to cases where money is transferred from one person to
another and the obligation to return the same or a portion thereof is
adjudged.