G.R. No. L-12973; April 25, 1960
VICENTE BARENG, petitioner, vs. THE HONORABLE COURT OF APPEALS, PATROCINIO ALEGRIA and AGUSTIN RUIZ, respondents.

FACTS

Petitioner Vicente Bareng purchased cinematographic equipment from respondent Patrocinio Alegria for P15,000, paying P10,000 upfront and issuing four promissory notes for the balance. After paying the first note, Bareng was informed by respondent Agustin Ruiz that Ruiz was a co-owner of the equipment and was not agreeable to the sale. Ruiz instructed Bareng to suspend payments to Alegria. Consequently, Bareng refused further payments to Alegria until Alegria settled the dispute with Ruiz, paying only P400 on the second note. Ruiz filed a suit (Civil Case No. 1527) against Alegria and Bareng for his share in the price. Alegria and Ruiz later reached a compromise, wherein Alegria recognized Ruiz’s co-ownership and agreed to pay him two-thirds of any amount recovered from Bareng. Alegria then sued Bareng (Civil Case No. 1554) for the unpaid balance. The lower court dismissed Civil Case No. 1554 without prejudice. On appeal, the Court of Appeals reversed the decision, ordering Bareng to pay Alegria P3,600 plus legal interest from the filing of the complaint. Bareng appealed to the Supreme Court, contesting only the imposition of legal interest.

ISSUE

Whether petitioner Vicente Bareng is liable to pay legal interest on the unpaid balance of P3,600 from the date of the filing of the complaint.

RULING

Yes, the Supreme Court affirmed the Court of Appeals’ decision, holding Bareng liable for legal interest from the filing of the complaint. The Court ruled that while Bareng had the right under Article 1590 of the New Civil Code to suspend payment of the price due to a disturbance in ownership (Ruiz’s claim of co-ownership), this right ceased when Alegria and Ruiz reached a compromise agreement in Civil Case No. 1527, which eliminated the threat to Bareng’s ownership. Bareng, as a party to that case, was aware of the settlement. From that point, the danger ceased, and Bareng’s obligation to pay resumed. Upon Alegria filing the complaint, Bareng admitted his indebtedness of P3,600 but neither tendered payment nor deposited it in court, instead seeking rescission based on unproven warranty violations. Thus, Bareng was in default from the date of the complaint’s filing, making him liable for legal interest under Article 2209 of the Civil Code. The Court rejected Bareng’s argument that the debt was unliquidated until determined by the Court of Appeals, stating the price was fixed under the contract and the obligation remained liquidated despite the parties’ disagreement over the amount. Other errors raised by Bareng were deemed waived for not being included in the petition for review. The decision was affirmed in toto.