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    Siga-An Vs Villanueva - by ChocoLomondot

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    Ira Palle
    1) A woman borrowed money from a military officer but paid back more than the amount owed since the officer claimed additional amounts were owed as interest, despite there being no written agreement about interest. 2) A court ruled that since there was no written agreement about interest, the additional amounts paid were an overpayment based on a mistake. 3) The Supreme Court affirmed this ruling but modified some of the monetary awards, and clarified that the interest rates applied would be 6% until the decision is finalized, and 12% afterwards, based on the legal principle of undue payment or solutio indebiti.

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    Siga-An Vs Villanueva - by ChocoLomondot

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    Ira Palle
    487 views2 pages
    1) A woman borrowed money from a military officer but paid back more than the amount owed since the officer claimed additional amounts were owed as interest, despite there being no written agreement about interest. 2) A court ruled that since there was no written agreement about interest, the additional amounts paid were an overpayment based on a mistake. 3) The Supreme Court affirmed this ruling but modified some of the monetary awards, and clarified that the interest rates applied would be 6% until the decision is finalized, and 12% afterwards, based on the legal principle of undue payment or solutio indebiti.

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    6. Siga-An vs Villanueva_by ChocoLomondot

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    1) A woman borrowed money from a military officer but paid back more than the amount owed since the officer claimed additional amounts were owed as interest, despite there being no written agreement about interest. 2) A court ruled that since there was no written agreement about interest, the additional amounts paid were an overpayment based on a mistake. 3) The Supreme Court affirmed this ruling but modified some of the monetary awards, and clarified that the interest rates applied would be 6% until the decision is finalized, and 12% afterwards, based on the legal principle of undue payment or solutio indebiti.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    487 views2 pages

    Siga-An Vs Villanueva - by ChocoLomondot

    Uploaded by

    Ira Palle
    1) A woman borrowed money from a military officer but paid back more than the amount owed since the officer claimed additional amounts were owed as interest, despite there being no written agreement about interest. 2) A court ruled that since there was no written agreement about interest, the additional amounts paid were an overpayment based on a mistake. 3) The Supreme Court affirmed this ruling but modified some of the monetary awards, and clarified that the interest rates applied would be 6% until the decision is finalized, and 12% afterwards, based on the legal principle of undue payment or solutio indebiti.

    Copyright:

    Attribution Non-Commercial (BY-NC)
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    SEBASTIAN SIGA-AN vs ALICIA VILLANUEVA

    Choco Lomondot

    Facts: On March 3, 1998, respondent Alicia Villanueva filed a complaint for a sum of money against petitioner Sebastian Siga-an. Respondent alleged that she was a businesswoman engaged in supplying office materials and equipments to the PNO; while petitioner was a military officer and comptroller of the PNO from 1991-1996. Sometime in 1992, respondent claimed that the petitioner approached her inside the PNO office and offered to loan her the amount of P540,000. She accepted the offer since she needed capital for her business. The loan agreement was not reduced in writing and there was no stipulation as to the payment of interest for the loan. On August 31, 1993, respondent issued a check worth P500,000 to petitioner as partial payment of the loan. Two months later she issued another check in the amount of P200,000 as payment of the remaining balance. Petitioner told her that she since she paid a total amount of P700,000 for the P540,000 worth of loan, the excess amount of P160,000 would be applied as interest for the loan. Not satisfied with the amount applied as interest, the petitioner pestered her to pay additional interest. He threatened to block her transactions with the PNO if she won't comply. The respondent conceded since all her transactions with the PNO need the approval of the petitioner. Thus, she paid addt'l amounts in cash and checks as interest for the loan. She asked the petitioner to give her receipts but he told her that there's no need for a receipt because there's mutual trust and understanding between them. Thereafter, the respondent consulted a lawyer regarding propriety of paying interest on the loan despite the absence of agreement to that effect. Her lawyer told her that petitioner could not validly collect interest on the loan because there was no agreement between her and petitioner. Upon being advised by her lawyer that she made an overpayment, she sent a demand letter to petitioner asking for the return of the excess amount. But the petitioner just ignored the demand letter. Respondent prayed that the RTC render judgment ordering petitioner to pay respondent (1) P660,000.00 plus legal interest from the time of demand; (2) P300,000.00 as moral damages; (3) P50,000.00 as exemplary damages; and (4) an amount equivalent to 25% of P660,000.00 as attorneys fees. In his answer to the complaint, the petitioner denied that he offered a loan to respondent and mentioned the mistakes committed by the respondent regarding the payment of the loan and that there was no overpayment. After the trial, the RTC rendered a decision holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former. The alleged interest should not be included because there was no agreement between them regarding the payment of interest. It concluded that since respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti. Petitioner appealed to the CA but the CA affirmed the ruling of the RTC. Petitioner filed a motion for reconsideration to the appellate court, hence this petition.

    ISSUES: 1. WON no interest was due to petitioner.

    2. WON applying the principle of solution indebiti is proper.

    DECISION: Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated 16 December 2005, is hereby AFFIRMED with the following MODIFICATIONS: (1) the amount of P660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY FIVE THOUSAND PESOS (P335,000.00); (2) the amount of P300,000.00 imposed as moral damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00); (3) an interest of 6% per annum is imposed on the P335,000.00, on the damages awarded and on the attorneys fees to be computed from the time of the extra-judicial demand on 3 March 1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. Costs against petitioner. RULING: Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law. Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall be applied. Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. The principle of solutio indebiti applies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause. In the present case, petitioners obligation arose from a quasi-contract of solutio indebiti and not from a loan or forbearance of money. Thus, an interest of 6% per annum should be imposed on the amount to be refunded as well as on the damages awarded and on the attorneys fees, to be computed from the time of the extra-judicial demand on 3 March 1998, up to the finality of this Decision. In addition, the interest shall become 12% per annum from the finality of this Decision up to its satisfaction.

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