7/28/2019 Frias v. San Diego-Sison

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BOBIE ROSE FRIAS v. FLORA SAN DIEGO-SISON2007 / Austria-Martinez

On 7 Dec 1990, Bobie Rose Frias and Dr. Flora San-Diego Sison entered into a MOAover Frias property- MOA consideration is 3M- Sison has 6 months from the date of contracts execution to notify Frias of her intention to purchase the

property with the improvements at 6.4Mo Prior to this 6 month period, Frias may still offer the property to other persons, provided that 3M

shall be paid to Sison including interest based on prevailing compounded bank interest +amount of sale in excess of 7M [should the property be sold at a price greater than 7M]o In case Frias has no other buyer within 6 monthsfrom the contracts execution, no interest shall

be charged by Sison on the 3Mo In the event that on the 6th month, Sison would decidenot to purchase the property, Frias has

6 months to pay 3M (amount shall earn compounded bank interest for the last 6 months only) 3M treated as a loan and the property considered as the security for the mortgage

- Upon notice of intention to purchase, Sison has 6 months to pay the balance of 3.4M (6.4M less 3M MOAconsideration)Frias received from Sison3M (2M in cash; 1M post-dated check dated February 28, 1990, instead of 1991,

which rendered the check stale). Frias gave Sison the TCT and the Deed of Absolute Sale over the property. Sisondecided not to purchase the property, so she notified Frias through a letter dated March 20, 1991 [Frias received itonly on June 11, 1991],

and Sison reminded Frias of their agreement that the 2M Sison paid should be considered as

a loan payable within 6 months. Frias failed to pay this amount.Sison filed a complaint

for sum of money with preliminary attachment. Sison averred that Frias tried to

deprive her of the security for the loan by making a false report of the loss of her owners copy of TCT, executing anaffidavit of loss and by filing a petition

1for the issuance of a new owners duplicate copy. RTC issued a writ of

preliminary attachment upon the filing of a 2M bond.RTC found that Frias was under obligation to pay Sison 2M with compounded interest pursuant to their

MOA. RTC ordered Frias to pay Sison 2M + 32% annual interest beginning December 7, 1991until fully paidCA affirmed RTC with modification32% reduced to 25%. CA said that there was no basis for Frias to

say that the interest should be charged for 6 months only. It said that a loan always bears interest; otherwise, it is not aloan. The interest should commence on June 7, 1991 until fully paid, with compounded bank interest prevailing at thetime [June 1991] the 2M was considered as a loan (as certified by the bank).

ISSUE & HOLDINGWhether or not compounded bank interest should be limited to 6 months as contained in the MOA. NO

RATIO:CA committed no error in awarding an annual 25% interest on the 2M even beyond the 6-month stipulated

period. In this case, the phrase "for the last six months only" should be taken in the context of the entireagreement.

SC notes that the agreement speaks of two (2) periods of 6 months each (see FACTSwords in bold &underline). No interest will be charged for the 1

st6-month period [while Sison was making up her mind], but only for

the 2nd

6-month period after Sison decided not to buy the property. There is nothing in the MOA that suggeststhat interest will be charged for 6 months only even if it takes forever for Frias to pay the loan .

The agreement that the amount given shall bear compounded interest for the last six months does not meanthat interest will no longer be charged after the second six-month period since such stipulation was made on logicaland reasonable expectation that such amount would be paid within the date stipulated. Considering thatpetitioner failed to pay the amount given which under the MOA shall be considered as a loan, the monetary interestfor the last six months continued to accrue until actual payments of the loan amount.

The payment of regular interest constitutes the price or cost of the use of money, and until the principalsum due is returned to the creditor, regular interest continues to accrue since the debtor continues to use suchprincipal amount. For a debtor to continue in possession of the principal of the loan and to continue to use thesame after maturity of the loan without payment of the monetary interest constitutes unjust enrichment on the partof the debtor at the expense of the creditor.

CA DECISION AND RESOLUTION AFFIRMED WITH MODIFICATION

1At first, Frias petition was granted, but it was eventually set aside, since RTC granted Sisons petition for relief from

judgment (as Sison was in possession of the owners duplicate copy).