7/1/2017 Frias v.

San Diego-Sison | The Lost Student

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November 18, 2012 Frias v. San Diego-Sison

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BOBIE ROSE FRIAS v. FLORA SAN DIEGO-SISON
Leave a comment 2007 / Austria-Martinez

On 7 Dec 1990, Bobie Rose Frias and Dr. Flora San-Diego Sison entered into a MOA over
Friasproperty

MOA consideration is 3M
Sison has 6 months from the date of contracts execution to notify Frias of her intention to
purchase the property with the improvements at 6.4M
Prior to this 6 month period, Frias may still offer the property to other persons, provided that 3M
shall be paid to Sison including interest based on prevailing compounded bank interest + amount
of sale in excess of 7M [should the property be sold at a price greater than 7M]
In case Frias has no other buyer within 6 months from the contracts execution, no interest shall
be charged by Sison on the 3M
In the event that on the 6th month, Sison would decide not to purchase the property, Frias has 6
months to pay 3M (amount shall earn compounded bank interest for the last 6 months only)
3M treated as a loan and the property considered as the security for the mortgage
Upon notice of intention to purchase, Sison has 6 months to pay the balance of 3.4M (6.4M less
3M MOA consideration)

Frias received from Sison 3M (2M in cash; 1M post-dated check dated February 28, 1990, instead of
1991, which rendered the check stale). Frias gave Sison the TCT and the Deed of Absolute Sale over
the property. Sison decided not to purchase the property, so shenotified Frias through a letter dated
March 20, 1991 [Frias received it only on June 11, 1991],and Sison reminded Frias of their agreement
that the 2M Sison paid should be considered as a loan payable within 6 months. Frias failed to pay this
amount.

Sison filed a complaintfor sum of money with preliminary attachment. Sison averred that Frias tried to
deprive her of the security for the loan by making a false report of the loss of her owners copy of TCT,
executing an affidavit of loss and by filing a petition[1] for the issuance of a new owners duplicate
copy. RTC issued a writ of preliminary attachment upon the filing of a 2M bond.

RTC found that Frias was under obligation to pay Sison 2M with compounded interest pursuant to their
MOA. RTC ordered Frias to pay Sison:

2M + 32% annual interest beginning December 7, 1991 until fully paid

70k representing premiums paid by Sison on the attachment bond with legal interest counted
from the date of this decision until fully paid
100k moral, corrective, exemplary damages [liable for moral damages because of Frias
fraudulent scheme]
100k attorneys fees + cost of litigation

CA affirmed RTC with modification32% reduced to 25%. CA said that there was no basis for Frias to
say that the interest should be charged for 6 months only. It said that a loan always bears interest;
otherwise, it is not a loan. The interest should commence on June 7, 1991 until fully paid, with
compounded bank interest prevailing at the time [June 1991] the 2M was considered as a loan (as
certified by the bank).

ISSUES & HOLDING Ratio only discusses topic of INTEREST (as per syllabus)

WON compounded bank interest should be limited to 6 months as contained in the MOA. NO
WON Sison is entitled to moral damages. YES
WON the grant of attorneys fees is proper, even if not mentioned in the body of the decision. NO

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7/1/2017 Frias v. San Diego-Sison | The Lost Student
CA committed no error in awarding an annual 25% interest on the 2M even beyond the 6-month
stipulated period. In this case, the phrase for the last six months only should be taken in the context
of the entire agreement.

SC notes that the agreement speaks of two (2) periods of 6 months each (see FACTSwords in bold
& underline). No interest will be charged for the 1st 6-month period [while Sison was making up her
mind], but only for the 2nd 6-month period after Sison decided not to buy the property. There is nothing
in the MOA that suggests that interest will be charged for 6 months only even if it takes forever for
Frias to pay the loan.

The payment of regular interest constitutes the price or cost of the use of money, and until the principal
sum due is returned to the creditor, regular interest continues to accrue since the debtor continues to
use such principal amount. For a debtor to continue in possession of the principal of the loan and to
continue to use the same after maturity of the loan without payment of the monetary interest
constitutes unjust enrichment on the part of the debtor at the expense of the creditor.

CA DECISION AND RESOLUTION AFFIRMED WITH MODIFICATIONAward of attorneys fees

deleted

[1] At first, Frias petition was granted, but it was eventually set aside, since RTC granted Sisons
petition for relief from judgment (as Sison was in possession of the owners duplicate copy).

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