Spouses Salvador Abella and Alma Abella Vs. Spouses Romeo Abella and Annie Abella G.R. No. 195166. July 08, 2015

Spouses Salvador Abella and Alma Abella Vs. Spouses Romeo Abella and Annie Abella G.R. No. 195166. July 08, 2015
Leonen
https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/61010
== Issues ==
* First, whether interest accrued on respondents' loan from petitioners, If so, at what rate?
* Second, whether petitioners are liable to reimburse respondents for the Litter's supposed excess payments and for interest
Articles 1933 and 1953 of the Civil Code provide the guideposts that 
determine if a contractual relation is one of simple loan or mutuum:
Art. 1933. By the contract of loan, one of the parties delivers to another,
 either something not consumable so that the latter may use the same for
 a certain time and return it, in which case the contract is called a 
commodatum; or money or other consumable thing, upon the condition that the same amount of the same kind and quality shall be paid, in which case the contract is simply called a loan or mutuum.
On March 22, 1999, respondents executed an acknowledgment receipt to petitioners, which states:
     Batan, Aklan
     March 22, 1999
    This is to acknowledge receipt of the Amount of Five Hundred Thousand (P500,000.00) Pesos from Mrs. Alma R. Abella, payable within one (1) year from date hereof with interest.
    Annie C. Abella (sgd.)             Romeo M. Abella (sgd.)
The text of the acknowledgment receipt is uncomplicated and straightforward. It attests to: first, respondents' receipt of the sum of P500,000.00 from petitioner Alma Abella; second, respondents' duty to pay tack this amount within one (1) year from March 22, 1999; and third, respondents' duty to pay interest. Consistent with what typifies a simple loan, petitioners delivered to respondents with the corresponding condition lat respondents shall pay the same amount to petitioners within one (1) year.
Petitioners here insist upon the imposition of 2.5% monthly or 30% 
annual interest. Compounded at this rate, respondents' obligation would 
have more than doubled—increased to 219.7% of the principal—by the end 
of the third year after which the loan was contracted if the entire 
principal remained unpaid. By the end of the ninth year, it would have 
multiplied more than tenfold (or increased to 1,060.45%). In 2015, this 
would have multiplied by more than 66 times (or increased to 6,654.17%).
 Thus, from an initial loan of only P500,000.00, respondents would be 
obliged to pay more than P33 million. This is grossly unfair, especially
 since up to the fourth year from when the loan was obtained, 
respondents had been assiduously delivering payment. This reduces their 
best efforts to satisfy their obligation into a protracted servicing of a
 rapacious loan.
Here, as the contracting parties failed to make a specific stipulation, 
the legal rate must apply. Moreover, the rate that petitioners adverted 
to is unconscionable. The conventional interest due on the principal 
amount loaned by respondents from petitioners is held to be 12% per 
annum.
Apart from respondents' liability for conventional interest at the rate 
of 12% per annum, outstanding conventional interest—if any is due from 
respondents—shall itself earn legal interest from the time judicial 
demand was made by petitioners, i.e., on July 31, 2002, when they filed 
their Complaint.
Thus, by June 21, 2002, respondents had not only fully paid the 
principal and all the conventional interest that had accrued on their 
loan. By this date, they also overpaid P3,379.17. Moreover, while 
hypothetically, interest on conventional interest would not have run 
from July 31, 2002, no such interest accrued since there was no longer 
any conventional interest due from respondents by then.
The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another. It 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.
Consistent however, with our finding that the excess payment made by respondents were borne out of a mere mistake that it was due, we find it in the better interest of equity to no longer hold petitioners liable for interest arising from their quasi-contractual obligation.
== Decisions ==
WHEREFORE, the assailed September 30, 2010 Decision and the January 4, 2011 Resolution of the Court of Appeals Nineteenth Division in CA-G.R. CV No. 01388 are SET ASIDE. Petitioners Spouses Salvador and Alma Abella are DIRECTED to jointly and severally reimburse respondents Spouses Romeo and Annie Abella the amount of P3,379.17, which respondents have overpaid.
A legal interest of 6% per annum shall likewise be imposed on the total judgment award from the finality of this Decision until its full satisfaction.