G.R. No. L-50702 September 29, 1989
ALFREDO CABRAL, petitioner, vs. COURT OF APPEALS and CLEMENTE BARACHINA and SOCORRO ALCARAZ, respondents.

FACTS

The case originated from an action for Recovery of Sum of Money and Damages filed by respondents Clemente Barachina and Socorro Alcaraz against petitioner Alfredo Cabral, Salome Delloro-Cabral, and Policarpio Calma, Jr. The respondents purchased a parcel of land from the defendants for P36,000.00, paying P10,000.00 to the Cabrals and P1,920.00 to Calma upon signing the deed of sale. However, upon verification, it was discovered that a third party occupied the greater portion of the property, leaving only about four hectares available instead of the titled area of over 14 hectares. Consequently, the respondents demanded a refund of their total payment of P11,920.00.
The trial court ruled in favor of the respondents, ordering the defendants to refund the P11,920.00, plus P1,000.00 for survey expenses, attorney’s fees, and costs. Only the Cabrals appealed this decision to the Court of Appeals; the respondents did not appeal the judgment. The appellate court affirmed the trial court’s decision but modified it by adding an award of 12% per annum interest on the refundable amount from February 27, 1968, until fully paid.

ISSUE

Whether the Court of Appeals erred in awarding interest on the refundable sum despite the absence of such an award in the trial court’s judgment and the respondents’ failure to appeal the omission.

RULING

The Supreme Court affirmed the Court of Appeals’ power to award interest but modified the rate. The legal logic rests on the principle that an appellate court may grant affirmative relief to an appellee who did not appeal, provided the relief is grounded in law and necessary for complete justice. The Court cited Article 2210 of the Civil Code, which allows discretionary interest on damages for breach of contract. Here, the sale was void ab initio as the land, covered by a Free Patent, was sold within the prohibited five-year period. Consequently, the sellers acquired no title to the purchase money and were obligated to refund it with interest as a matter of equity and law, following precedents like Castillo vs. Abalanta.
The Court rejected the petitioner’s argument that the respondents, as non-appealing appellees, could not obtain a favorable modification. Jurisprudence permits such awards when based on legal provisions applicable to the established breach. However, the Supreme Court corrected the interest rate to 6% per annum, noting the judgment did not involve a loan or forbearance of money where a 12% rate might apply. The modification aligned with the Court’s policy to decide cases on their merits over technicalities, ensuring just and complete adjudication. Thus, the appellate decision was affirmed with the interest rate adjustment.