GR L 63398; (June, 1983) (Digest)
G.R. No. L-63398 June 29, 1983
LEONCIO P. VILORIA, petitioner, vs. HONORABLE COURT OF APPEALS AND SERVICE CENTER OF THE PHILIPPINES, respondents.
FACTS
Petitioner Leoncio P. Viloria, former manager of private respondent Service Center of the Philippines, resigned on December 31, 1971. He subsequently filed a complaint in the Court of First Instance of Davao to collect a portion of the company’s net profits, alleging a profit-sharing agreement. The company denied the existence of such an agreement and counterclaimed for the recovery of unliquidated cash advances given to Viloria amounting to P7,252.00.
The trial court dismissed Viloria’s complaint for failure to prove the alleged profit-sharing agreement. However, it sustained the counterclaim, ordering Viloria to pay P7,251.80 representing his cash advances, with 12% interest per annum from June 7, 1972, the date of demand. The Court of Appeals affirmed this decision in its entirety.
ISSUE
The primary issues are: (1) whether the factual finding on the non-existence of the profit-sharing agreement should be reviewed; and (2) whether the imposition of 12% interest on the awarded sum from the date of demand in 1972 was correct.
RULING
The Supreme Court denied the petition for review regarding the first issue. The existence of the profit-sharing agreement is a factual matter, and the consistent findings of the lower court and the Court of Appeals are conclusive and binding on the Supreme Court.
On the second issue, the Court ruled in favor of the petitioner regarding the applicable interest rate. Central Bank Circular No. 416, which increased the legal rate of interest from 6% to 12% per annum for loans or forbearances of money and in judgments, took effect only on July 29, 1974. The obligation to repay the advances arose when Viloria left the company in 1971, and demand was made in June 1972—both dates preceding the effectivity of the Circular. Laws and circulars are generally prospective in application unless expressly stated otherwise. Therefore, applying the 12% rate from the 1972 date of demand constituted an erroneous retroactive application.
Consequently, the Supreme Court modified the interest award. The amount of P7,251.80 shall earn legal interest at the rate of 6% per annum from June 7, 1972, until July 28, 1974. Thereafter, from July 29, 1974, the effective date of Central Bank Circular No. 416, the interest rate shall be 12% per annum until full payment. The petition was granted partial due course.