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    Republic of the PhilippinesSUPREME COURT

    Manila

    THIRD DIVISION

    G.R. No. 173227 January 20, 2009

    SEBASTIAN SIGA-AN,Petitioner,vs.AICIA !IANUE!A,Respondent.

    D ! I S I O N

    C"ICO-NA#ARIO, J.:

    "efore #s is a Petition$for Revie% on Certiorariunder Rule &' of theRules of !ourt see(in) to set aside the Decision,*dated $+Deceber *--', and Resolution,dated $/ 0une *--+ of the !ourt of

    1ppeals in !123.R. !V No. 4$5$&, %hich affired in tototheDecision,&dated *+ 0anuar6 *--$, of the 7as Pinas !it6 Re)ionalTrial !ourt, "ranch *'', in !ivil !ase No. 7P2/52--+5.

    The facts )athered fro the records are as follo%s8

    On - March $//5, respondent 1licia Villanueva filed a coplaint'forsu of one6 a)ainst petitioner Sebastian Si)a2an before the 7asPinas !it6 Re)ional Trial !ourt 9RT!:, "ranch *'', doc(eted as !ivil!ase No. 7P2/52--+5. Respondent alle)ed that she %as abusiness%oan en)a)ed in suppl6in) office aterials ande;uipents to the Philippine Nav6 Office 9PNO: located at

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    On $ 1u)ust $//, respondent issued a chec( %orth P'--,---.-- topetitioner as partial pa6ent of the loan. On $ October $//, sheissued another chec( in the aount of P*--,---.-- to petitioner aspa6ent of the reainin) balance of the loan. Petitioner told her thatsince she paid a total aount of P4--,---.-- for theP'&-,---.--%orth of loan, the e>cess aount of P$+-,---.-- %ould be applied asinterest for the loan. Not satisfied %ith the aount applied as interest,petitioner pestered her to pa6 additional interest. Petitionerthreatened to bloc( or disapprove her transactions %ith the PNO ifshe %ould not copl6 %ith his deand. 1s all her transactions %iththe PNO %ere sub?ect to the approval of petitioner as coptroller ofthe PNO, and fearin) that petitioner i)ht bloc( or undul6 influencethe pa6ent of her vouchers in the PNO, she conceded. Thus, shepaid additional aounts in cash and chec(s as interests for the loan.

    She as(ed petitioner for receipt for the pa6ents but petitioner toldher that it %as not necessar6 as there %as utual trust andconfidence bet%een the. 1ccordin) to her coputation, the totalaount she paid to petitioner for the loan and interest accuulatedtoP$,*--,---.--.4

    Thereafter, respondent consulted a la%6er re)ardin) the propriet6 ofpa6in) interest on the loan despite absence of a)reeent to thateffect. Her la%6er told her that petitioner could not validl6 collectinterest on the loan because there %as no a)reeent bet%een herand petitioner re)ardin) pa6ent of interest. Since she paid petitionera total aount of P$,*--,---.-- for the P'&-,---.-- %orth of loan,and upon bein) advised b6 her la%6er that she ade overpa6ent topetitioner, she sent a deand letter to petitioner as(in) for the returnof the e>cess aount of P++-,---.--. Petitioner, despite receipt ofthe deand letter, i)nored her clai for reiburseent.5

    Respondent pra6ed that the RT! render ?ud)ent orderin) petitionerto pa6 respondent 9$: P++-,---.-- plus le)al interest fro the tie of

    deand@ 9*: P--,---.-- as oral daa)es@ 9: P'-,---.-- ase>eplar6 daa)es@ and 9&: an aount e;uivalent to *'Aof P++-,---.-- as attorne6=s fees./

    In his ans%er$-to the coplaint, petitioner denied that he offered aloan to respondent. He averred that in $//*, respondent approachedand as(ed hi if he could )rant her a loan, as she needed one6 to

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    finance her business venture %ith the PNO. 1t first, he %as reluctantto deal %ith respondent, because the latter had a spott6 record as asupplier of the PNO. Ho%ever, since respondent %as anac;uaintance of his officeate, he a)reed to )rant her a loan.Respondent paid the loan in full.$$

    Subse;uentl6, respondent a)ain as(ed hi to )ive her a loan. 1srespondent had been able to pa6 the previous loan in full, he a)reedto )rant her another loan. 7ater, respondent re;uested hi torestructure the pa6ent of the loan because she could not )ive fullpa6ent on the due date. He acceded to her re;uest. Thereafter,respondent pleaded for another restructurin) of the pa6ent of theloan. This tie he re?ected her plea. Thus, respondent proposed toe>ecute a proissor6 note %herein she %ould ac(no%led)e her

    obli)ation to hi, inclusive of interest, and that she %ould issueseveral postdated chec(s to )uarantee the pa6ent of her obli)ation.#pon his approval of respondent=s re;uest for restructurin) of theloan, respondent e>ecuted a proissor6 note dated $* Septeber$//& %herein she aditted havin) borro%ed an aountof P$,*&-,---.--, inclusive of interest, fro petitioner and that she%ould pa6 said aount in March $//'. Respondent also issued tohi si> postdated chec(s aountin) to P$,*&-,---.-- as )uaranteeof copliance %ith her obli)ation. Subse;uentl6, he presented the si>chec(s for encashent but onl6 one chec( %as honored. Hedeanded that respondent settle her obli)ation, but the latter failed todo so. Hence, he filed criinal cases for Violation of the "ouncin)!hec(s 7a% 9"atas Pabansa "l). **: a)ainst respondent. Thecases %ere assi)ned to the Metropolitan Trial !ourt of Ma(ati !it6,"ranch +' 9MeT!:.$*

    Petitioner insisted that there %as no overpa6ent becauserespondent aditted in the latter=s proissor6 note that her onetar6obli)ation as of $* Septeber $//& aounted to P$,*&-,---.--

    inclusive of interests. He ar)ued that respondent %as alread6estopped fro coplainin) that she should not have paid an6interest, because she %as )iven several ties to settle her obli)ationbut failed to do so. He aintained that to rule in favor of respondent istantaount to concludin) that the loan %as )iven interest2free. "asedon the fore)oin) averents, he as(ed the RT! to disissrespondent=s coplaint.

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    1fter trial, the RT! rendered a Decision on *+ 0anuar6 *--$ holdin)that respondent ade an overpa6ent of her loan obli)ation topetitioner and that the latter should refund the e>cess aount to theforer. It ratiocinated that respondent=s obli)ation %as onl6 to pa6 theloaned aount of P'&-,---.--, and that the alle)ed interests dueshould not be included in the coputation of respondent=s totalonetar6 debt because there %as no a)reeent bet%een there)ardin) pa6ent of interest. It concluded that since respondentade an e>cess pa6ent to petitioner in the aount of P++-,---.--throu)h ista(e, petitioner should return the said aount torespondent pursuant to the principle of solutio indebiti.$

    The RT! also ruled that petitioner should pa6 oral daa)es for thesleepless ni)hts and %ounded feelin)s e>perienced b6 respondent.

    eplar6 daa)es b6 %a6 of e>apleor correction for the public )ood, plus attorne6=s fees and costs ofsuit.

    The dispositive portion of the RT! Decision reads8

    BHR

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    Petitioner appealed to the !ourt of 1ppeals. On $+ Deceber *--',the appellate court proul)ated its Decision affirin) in totothe RT!Decision, thus8

    BHRpressl6 stipulated in %ritin). 1s can be )leaned fro thefore)oin) provision, pa6ent of onetar6 interest is allo%ed onl6 if89$: there %as an e>press stipulation for the pa6ent of interest@ and

    9*: the a)reeent for the pa6ent of interest %as reduced in %ritin).The concurrence of the t%o conditions is re;uired for the pa6ent ofonetar6 interest. Thus, %e have held that collection of interest%ithout an6 stipulation therefor in %ritin) is prohibited b6 la%. *$

    It appears that petitioner and respondent did not a)ree on thepa6ent of interest for the loan. Neither %as there convincin) proof of

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    %ritten a)reeent bet%een the t%o re)ardin) the pa6ent of interest.Respondent testified that althou)h she accepted petitioner=s offer ofloan aountin) to P'&-,---.--, there %as, nonetheless, no verbal or%ritten a)reeent for her to pa6 interest on the loan.**

    Petitioner presented a hand%ritten proissor6 note dated $*Septeber $//&*%herein respondent purportedl6 aditted o%in)petitioner Fcapital and interest.F Respondent, ho%ever, e>plained thatit %as petitioner %ho ade a proissor6 note and she %as told tocop6 it in her o%n hand%ritin)@ that all her transactions %ith the PNO%ere sub?ect to the approval of petitioner as coptroller of the PNO@that petitioner threatened to disapprove her transactions %ith thePNO if she %ould not pa6 interest@ that bein) una%are of the la% oninterest and fearin) that petitioner %ould a(e )ood of his threats if

    she %ould not obe6 his instruction to cop6 the proissor6 note, shecopied the proissor6 note in her o%n hand%ritin)@ and that such%as the sae proissor6 note presented b6 petitioner as alle)edproof of their %ritten a)reeent on interest.*&Petitioner did not rebutthe fore)oin) testion6. It is evident that respondent did not reall6consent to the pa6ent of interest for the loan and that she %aserel6 tric(ed and coerced b6 petitioner to pa6 interest. Hence, itcannot be )ainfull6 said that such proissor6 note pertains to ane>press stipulation of interest or %ritten a)reeent of interest on theloan bet%een petitioner and respondent.

    Petitioner, nevertheless, clais that both the RT! and the !ourt of1ppeals found that he and respondent a)reed on the pa6ent of 4Arate of interest on the loan@ that the a)reed 4A rate of interest %asdul6 aditted b6 respondent in her testion6 in the "atas Pabansa"l). ** cases he filed a)ainst respondent@ that despite such ?udicialadission b6 respondent, the RT! and the !ourt of 1ppeals, citin)

    1rticle $/'+ of the !ivil !ode, still held that no interest %as due hisince the a)reeent on interest %as not reduced in %ritin)@ that the

    application of 1rticle $/'+ of the !ivil !ode should not be absolute,and an e>ception to the application of such provision should be ade%hen the borro%er adits that a specific rate of interest %as a)reedupon as in the present case@ and that it %ould be unfair to allo%respondent to pa6 onl6 the loan %hen the latter ver6 %ell (ne% andeven aditted in the "atas Pabansa "l). ** cases that there %asan a)reed 4A rate of interest on the loan.*'

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    Be have carefull6 e>ained the RT! Decision and found that theRT! did not a(e a rulin) therein that petitioner and respondenta)reed on the pa6ent of interest at the rate of 4A for the loan. TheRT! clearl6 stated that althou)h petitioner and respondent enteredinto a valid oral contract of loan aountin) to P'&-,---.--, the6,nonetheless, never intended the pa6ent of interest thereon.*+Bhilethe !ourt of 1ppeals entioned in its Decision that it concurred in theRT!=s rulin) that petitioner and respondent a)reed on a certain rateof interest as re)ards the loan, %e consider this as erel6 aninadvertence because, as earlier elucidated, both the RT! and the!ourt of 1ppeals ruled that petitioner is not entitled to the pa6ent ofinterest on the loan. The rule is that factual findin)s of the trial courtdeserve )reat %ei)ht and respect especiall6 %hen affired b6 theappellate court.*4Be found no copellin) reason to disturb the rulin)

    of both courts.

    Petitioner=s reliance on respondent=s alle)ed adission in the "atasPabansa "l). ** cases that the6 had a)reed on the pa6ent ofinterest at the rate of 4A deserves scant consideration. In the saidcase, respondent erel6 testified that after pa6in) the total aount ofloan, petitioner ordered her to pa6 interest.*5Respondent did notcate)oricall6 declare in the sae case that she and respondent adean expressstipulation in %ritin) as re)ards pa6ent of interest at therate of 4A. 1s earlier discussed, onetar6 interest is due onl6 if there%as anexpressstipulation in %ritin) for the pa6ent of interest.

    There are instances in %hich an interest a6 be iposed even in theabsence of e>press stipulation, verbal or %ritten, re)ardin) pa6entof interest. 1rticle **-/ of the !ivil !ode states that if the obli)ationconsists in the pa6ent of a su of one6, and the debtor incursdela6, a le)al interest of $*A per annu a6 be iposed asindenit6 for daa)es if no stipulation on the pa6ent of interest%as a)reed upon. 7i(e%ise, 1rticle **$* of the !ivil !ode provides

    that interest due shall earn le)al interest fro the tie it is ?udiciall6deanded, althou)h the obli)ation a6 be silent on this point.

    1ll the sae, the interest under these t%o instances a6 be iposedonl6 as a penalt6 or daa)es for breach of contractual obli)ations. Itcannot be char)ed as a copensation for the use or forbearance ofone6. In other %ords, the t%o instances appl6 onl6 to copensator6

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    interest and not to onetar6 interest.*/The case at bar involvespetitioner=s clai for onetar6 interest.

    cess aount paid b6respondent as interest.-

    #nder 1rticle $/+- of the !ivil !ode, if the borro%er of loan pa6sinterest %hen there has been no stipulation therefor, the provisions ofthe !ivil !ode concernin) solutioindebitishall be applied. 1rticle*$'& of the !ivil !ode e>plains the principle of solutio indebiti. Saidprovision provides that if soethin) is received %hen there is no ri)htto deand it, and it %as undul6 delivered throu)h ista(e, theobli)ation to return it arises. In such a case, a creditor2debtorrelationship is created under a ;uasi2contract %hereb6 the pa6orbecoes the creditor %ho then has the ri)ht to deand the return ofpa6ent ade b6 ista(e, and the person %ho has no ri)ht to

    receive such pa6ent becoes obli)ated to return the sae. The;uasi2contract of solutio indebitihar(s bac( to the ancient principlethat no one shall enrich hiself un?ustl6 at the e>pense ofanother.$The principle of solutio indebitiapplies %here 9$: a pa6entis ade %hen there e>ists no bindin) relation bet%een the pa6or,%ho has no dut6 to pa6, and the person %ho received the pa6ent@and 9*: the pa6ent is ade throu)h ista(e, and not throu)hliberalit6 or soe other cause.*Be have held that the principleof solutio indebitiapplies in case of erroneous pa6ent of undue

    interest.

    It %as dul6 established that respondent paid interest to petitioner.Respondent %as under no dut6 to a(e such pa6ent because there%as no e>press stipulation in %ritin) to that effect. There %as nobindin) relation bet%een petitioner and respondent as re)ards thepa6ent of interest. The pa6ent %as clearl6 a ista(e. Since

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    petitioner received soethin) %hen there %as no ri)ht to deand it,he has an obli)ation to return it.

    Be shall no% deterine the propriet6 of the onetar6 a%ard anddaa)es iposed b6 the RT! and the !ourt of 1ppeals.

    Records sho% that respondent received a loan aountin)to P'&-,---.-- fro petitioner.&Respondent issued t%o chec(s %itha total %orth of P4--,---.-- in favor of petitioner as pa6ent of theloan.'These chec(s %ere subse;uentl6 encashed b6petitioner.+Obviousl6, there %as an e>cess of P$+-,---.-- in thepa6ent for the loan. Petitioner clais that the e>cessof P$+-,---.-- serves as interest on the loan to %hich he %asentitled. 1side fro issuin) the said t%o chec(s, respondent also paid

    cash in the total aount of P$4',---.-- to petitioner asinterest.41lthou)h no receipts reflectin) the sae %ere presentedbecause petitioner refused to issue such to respondent, petitioner,nonetheless, aditted in his Repl621ffidavit5in the "atas Pabansa"l). ** cases that respondent paid hi a total aountof P$4',---.-- cash in addition to the t%o chec(s. Section *+ Rule$- of the Rules of vidence provides that the declaration of a part6as to a relevant fact a6 be )iven in evidence a)ainst hi. 1sidefro the aounts of P$+-,---.-- and P$4',---.-- paid as interest,no other proof of additional pa6ent as interest %as presented b6

    respondent. Since %e have previousl6 found that petitioner is notentitled to pa6ent of interest and that the principle of solutioindebitiapplies to the instant case, petitioner should return torespondent the e>cess aount of P$+-,---.-- and P$4',---.-- orthe total aount of P',---.--. 1ccordin)l6, the reibursableaount to respondent fi>ed b6 the RT! and the !ourt of 1ppealsshould be reduced froP++-,---.-- to P',---.--.

    1s earlier stated, petitioner filed five 9': criinal cases for violation of

    "atas Pabansa "l). ** a)ainst respondent. In the said cases, theMeT! found respondent )uilt6 of violatin) "atas Pabansa "l). **for issuin) five dishonored chec(s to petitioner. Nonetheless,respondent=s conviction therein does not affect our rulin) in theinstant case. The t%o chec(s, sub?ect atter of this case,totalin) P4--,---.-- %hich respondent claied as pa6ent ofthe P'&-,---.-- %orth of loan, %ere not aon) the five chec(s found

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    to be dishonored or bounced in the five criinal cases. iet6, besirched reputation, %ounded feelin)s,oral shoc(, social huiliation and siilar in?ur6. Respondenttestified that she e>perienced sleepless ni)hts and %ounded feelin)s%hen petitioner refused to return the aount paid as interest despiteher repeated deands. Hence, the a%ard of oral daa)es is

    ?ustified. Ho%ever, its correspondin) aount of P--,---.--, as fi>edb6 the RT! and the !ourt of 1ppeals, is e>orbitant and should bee;uitabl6 reduced. 1rticle **$+ of the !ivil !ode instructs that

    assessent of daa)es is left to the discretion of the court accordin)to the circustances of each case. This discretion is liited b6 theprinciple that the aount a%arded should not be palpabl6 e>cessiveas to indicate that it %as the result of pre?udice or corruption on thepart of the trial court.&-To our ind, the aount of P$'-,---.-- asoral daa)es is fair, reasonable, and proportionate to the in?ur6suffered b6 respondent.

    1rticle *** of the !ivil !ode states that in a ;uasi2contract, suchas solutio indebiti, e>eplar6 daa)es a6 be iposed if the

    defendant acted in an oppressive anner. Petitioner actedoppressivel6 %hen he pestered respondent to pa6 interest andthreatened to bloc( her transactions %ith the PNO if she %ould notpa6 interest. This forced respondent to pa6 interest despite lac( ofa)reeent thereto. Thus, the a%ard of e>eplar6 daa)es isappropriate. The aount of P'-,---.-- iposed as e>eplar6daa)es b6 the RT! and the !ourt is fittin) so as to deter petitionerand other lenders fro coittin) siilar and other serious%ron)doin)s.&$

    0urisprudence instructs that in a%ardin) attorne6=s fees, the trial courtust state the factual, le)al or e;uitable ?ustification for a%ardin) thesae.&*In the case under consideration, the RT! stated in itsDecision that the a%ard of attorne6=s fees e;uivalent to *'A of theaount paid as interest b6 respondent to petitioner is reasonable andoderate considerin) the e>tent of %or( rendered b6 respondent=s

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    la%6er in the instant case and the fact that it dra))ed on for several6ears.&ecutor6, the rate of le)al interest, %hether it is aloanGforbearance of one6 or not, shall be $*A per annu fro suchfinalit6 until its satisfaction, this interi#period bein) deeede;uivalent to a forbearance of credit.

    In the present case, petitioner=s obli)ation arose fro a ;uasi2contract of solutio indebitiand not fro a loan or forbearance ofone6. Thus, an interest of +A per annu should be iposed on theaount to be refunded as %ell as on the daa)es a%arded and on

    the attorne6=s fees, to be coputed fro the tie of the e>tra2?udicialdeand on March $//5,&+up to the finalit6 of this Decision. Inaddition, the interest shall becoe $*A per annu fro the finalit6 ofthis Decision up to its satisfaction.

    $"ERE%ORE, the Decision of the !ourt of 1ppeals in !123.R. !VNo. 4$5$&, dated $+ Deceber *--', is hereb6 A%%IRME&%ith thefollo%in) MO&I%ICATIONS8 9$: the aount of P++-,---.-- asrefundable aount of interest is reduced to THR H#NDRDTHIRTE

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    iposed fro the finalit6 of this Decision up to its satisfaction. !ostsa)ainst petitioner.

    SO OR&ERE&.