ESTORES V.

SUPANGAN
FACTS: On October 3, 1993, petitioner Estore and respondent spouses Arturo and Laura Supangan entered
into a conditional deed of sale whereby petitioner offered to sell and the respondent to buy a parcel of
land located at Naic, Cavite for the sum of 4.7 million. After almost 7 years from the time of the execution
of the contract and notwithstanding payment of 3.5 million on the part of the respondent, petitioner still
failed to comply with her obligation to handle a peaceful transfer of ownership as stated in the provisions
of the contract. In a letter dated September 27, 2000, respondent spouse demanded the return of the
amount of 3.5 million within 15 days from receipt of letter. In reply petitioner promised to return the same
within 120 days. Respondent spouses agreed but imposed an interest of 12% compounded annually shall
be imposed on 3.5 million. When petitioner still failed to return the amount despite demand, respondent
spouses were constrained to file a complaint for sum of money before RTC of Malabon against the
petitioner.
In their answer with counterclaim, petitioner averred that they are willing to return the principal
amount but without the interest because it was not agreed upon and that since the conditional deed of
sale provided only for the return of the downpayment in case of breach. They cant be liable for legal
interest as well.
RTC ruled that the respondent spouses is entitled to interest but only at the rate of 6% per annum and
not 12% and also to attorneys fees as they were compelled to litigate to protect their interest.
On appeal CA said that the issue to be resolve is whether it is proper to impose interest for an
obligation that does not involve a loan or forbearance of money in the absence of stipulation of the
parties. CA affirmed the ruling of RTC and that the interest shall start to run only from the date when the
spouses formally demanded the return of their money.
Petitioner insists that she is not bound to pay interest because the deed only provided for the return of
the downpayment in case of failure to comply with her obligations and that attorneys fees not proper
because both RTC and CA sustained her contention that 12% interest was uncalled for so it showed that
spouses did not win. Respondent spouses aver that spouses that it is only fair that the interest be imposed
because petitioner failed to return the amount upon demand and used the money for her benefit.
ISSUE: WON the imposition of interest is proper
RULING: YES interest may be imposed even in the absence of stipulation in the contract. Under article
2210 it expressly provides that interest may in the discretion of the court, be allowed upon damages
awarded for breach of contract. Petitioner failed on her obligations despite demand and she admitted
that the conditions were not fulfilled and was willing to return the full amount but failed to do so therefore
she is in default.The interest at the rate of 12% is applicable in this case. The general rule is that the
applicable interest rate shall be computed in accordance with the stipulation of the parties and if none,
applicable rate shall be 12% per annum, when obligation arises out of loan or forbearance of money,
goods or credits. In other cases it shall be 6.6%. In this case theres no stipulation. The contract involved in
this case is not loan but a conditional deed of sale, Theres no question that the obligations were not met
and return of money not made. Even if transaction was a conditional deed of sale, the stipulation
governing the return of the money can be considered as forbearance of money which requires 12%
interest.Petitioners unwarranted holfding of the money amount to forbearance of mponey which can be
considered as an involuntary loan so rate is 12% starting from demand and the award of attorney;s fees of
50,000.

DARIO NACAR V. GALLERY FARMERS

Dario Nacar filed a labor case against Gallery Frames and its owner Felipe Bordey, Jr. Nacar alleged that he
was dismissed without cause by Gallery Frames on January 24, 1997. On October 15, 1998, the Labor
Arbiter (LA) found Gallery Frames guilty of illegal dismissal hence the Arbiter awarded Nacar P158,919.92
in damages consisting of backwages and separation pay.
Gallery Frames appealed all the way to the Supreme Court (SC). The Supreme Court affirmed the decision
of the Labor Arbiter and the decision became final on May 27, 2002.
After the finality of the SC decision, Nacar filed a motion before the LA for recomputation as he alleged
that his backwages should be computed from the time of his illegal dismissal (January 24, 1997) until the
finality of the SC decision (May 27, 2002) with interest. The LA denied the motion as he ruled that the
reckoning point of the computation should only be from the time Nacar was illegally dismissed (January
24, 1997) until the decision of the LA (October 15, 1998). The LA reasoned that the said date should be
the reckoning point because Nacar did not appeal hence as to him, that decision became final and
executory.
ISSUE: Whether or not the Labor Arbiter is correct.
HELD: No. There are two parts of a decision when it comes to illegal dismissal cases (referring to cases
where the dismissed employee wins, or loses but wins on appeal). The first part is the ruling that the
employee was illegally dismissed. This is immediately final even if the employer appeals but will be
reversed if employer wins on appeal. The second part is the ruling on the award of backwages and/or
separation pay. For backwages, it will be computed from the date of illegal dismissal until the date of the
decision of the Labor Arbiter. But if the employer appeals, then the end date shall be extended until the
day when the appellate courts decision shall become final. Hence, as a consequence, the liability of the
employer, if he loses on appeal, will increase this is just but a risk that the employer cannot avoid when
it continued to seek recourses against the Labor Arbiters decision. This is also in accordance with Article
279 of the Labor Code.
Anent the issue of award of interest in the form of actual or compensatory damages, the Supreme Court
ruled that the old case of Eastern Shipping Lines vs CA is already modified by the promulgation of the
Bangko Sentral ng Pilipinas Monetary Board Resolution No. 796 which lowered the legal rate of interest
from 12% to 6%. Specifically, the rules on interest are now as follows:
1. Monetary Obligations ex. Loans:
a. If stipulated in writing:
a.1. shall run from date of judicial demand (filing of the case)
a.2. rate of interest shall be that amount stipulated
b. If not stipulated in writing
b.1. shall run from date of default (either failure to pay upon extra-judicial demand or upon judicial
demand whichever is appropriate and subject to the provisions of Article 1169 of the Civil Code)
b.2. rate of interest shall be 6% per annum
2.

Non-Monetary Obligations (such as the case at bar)

a. If already liquidated, rate of interest shall be 6% per annum, demandable from date of judicial or extrajudicial
demand (Art. 1169, Civil Code)
b. If unliquidated, no interest
Except: When later on established with certainty. Interest shall still be 6% per annum demandable from
the date of judgment because such on such date, it is already deemed that the amount of damages is
already ascertained.
3. Compounded Interest
This is applicable to both monetary and non-monetary obligations
6% per annum computed against award of damages (interest) granted by the court. To be computed
from the date when the courts decision becomes final and executory until the award is fully satisfied by
the losing party.
4. The 6% per annum rate of legal interest shall be applied prospectively:
Final and executory judgments awarding damages prior to July 1, 2013 shall apply the 12% rate;
Final and executory judgments awarding damages on or after July 1, 2013 shall apply the 12% rate for
unpaid obligations until June 30, 2013; unpaid obligations with respect to said judgments on or after July 1,
2013 shall still incur the 6% rate.