GR 41421; (August, 1934) (Digest)
G.R. No. 41421; August 31, 1934
ROSENDO R. LLAMAS, ET AL., plaintiffs-appellees, vs. GONZALO ABAYA, ET AL., defendants. JOAQUIN A. ELEAZAR, appellant.
FACTS
In a prior case (G.R. No. 37824), the Supreme Court reversed a lower court decision and held that the plaintiffs-appellees (Llamas brothers) had a preferential mortgage credit over defendant-appellant Joaquin Eleazar only for the amount of P5,933.30, plus stipulated interest and penalty. Prior to that Supreme Court decision, Eleazar sent a letter to the plaintiffs tendering payment of P5,933.30 with accrued interest to avoid further interest. The plaintiffs ignored it. After the Supreme Court decision, Eleazar deposited that principal amount with the clerk of court. The plaintiffs received the deposit but moved for a writ of execution for a larger sum (P12,066.60), claiming additional interest. The trial court granted their computation, ordering compound interest at 9% per annum from March 6, 1929, until December 18, 1933 (date of deposit), and further interest until full payment, plus a 10% penalty on the principal and compound interest. Eleazar appealed.
ISSUE
Whether the trial court correctly computed the interest and penalty owed by Eleazar, specifically: (1) if interest should stop accruing from the date of his tender of payment; (2) if he was entitled to a liquidation of payments made by the original debtor; and (3) if the penalty was limited to amounts unpaid at the filing of the complaint.
RULING
The Supreme Court affirmed the trial court’s resolution.
1. Interest continued to accrue until the principal was actually paid. Eleazar’s prior tender of payment did not suspend the accrual of interest under Article 1176 of the Civil Code, as it was not a valid tender under Section 347 of the Code of Civil Procedure for failing to specify a definite sum for interest and penalty.
2. Eleazar was not entitled to a further liquidation. The record, including the complaint and a prior decision, already showed that the original debtor (Abaya) had failed to pay any interest from January 1, 1930.
3. The contractual penalty of 10% was not limited to amounts unpaid at the complaint’s filing. The term “then unpaid” referred to the principal and interest, and its application was not confined to the date of judicial demand.
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