Francisco v. Gorgonio
REITERATIONFacts
The Antecedents: A contract of lease was entered into on July 5, 1977, for a 135-square-meter lot. The contract stipulated a P150,000.00 deposit, with P30,000.00 for goodwill and the remainder to cover rentals. The lessor was to construct a building within six months. Paragraph 6 of the contract stated that if the parties could not agree on the final contract terms, the lessor would refund the P150,000.00 with legal interest, rendering the agreement null and void. If the lessee backed out, the P30,000.00 would be forfeited. Procedural History: Private respondents (lessees) filed a complaint for specific performance and damages against Zenaida F. Boiser, attorney-in-fact for the lessors (spouses Luis F. Francisco and Adela Francisco), alleging failure to deliver the leased premises despite payment of P120,000.00 in advanced rentals and P30,000.00 for goodwill. Defendant Boiser alleged that no agreement was reached on the specific area to be leased and that she tendered the P150,000.00 with legal interest, which was refused. She prayed for the declaration of nullity of the agreement and acceptance of her consignation. The trial court initially issued a restraining order, which was later lifted. Defendant Boiser was authorized to deposit the P150,000.00. Subsequently, Adela B. Francisco, one of the principals, moved to have the deposit made in her name in a bank, earning 14% per annum interest, which the court granted. The lessees later moved to withdraw the deposit with legal interest. The respondent judge ordered the withdrawal of the P150,000.00 plus legal interests. A dispute arose over the rate and period of interest. The respondent judge issued orders fixing the interest rates at 12% and later 9% and 12% for different periods. Petitioner Adela B. Francisco filed a motion to quash the writ of execution, arguing she was not a party. The respondent judge denied this, finding she had submitted to the court's jurisdiction. The Petition: Petitioner Adela B. Francisco sought a certiorari to set aside the orders requiring her to pay interest on the P150,000.00, which had already been paid to the private respondents.
Issue(s)
Whether the respondent court acquired jurisdiction over the person of petitioner Adela B. Francisco. Whether the respondents are entitled to claim interest on the P150,000.00 deposit.
Ruling
The petition is granted. The petitioner is absolved from the payment of interests claimed by the respondents beyond the date when defendant Boiser made her tender of payment. The respondents are entitled to interest only from January 5, 1978, up to May 30, 1978.
Ratio Decidendi
On the issue of jurisdiction over petitioner Adela B. Francisco: While technically petitioner Adela B. Francisco was not a party to the case below, she voluntarily submitted herself to the jurisdiction of the court. She gave her express conformity to the motion filed by defendant Boiser dated August 22, 1978. In this motion, she stated her willingness to keep the deposit made in her name and make it subject to the disposition of the court as provided in the decision. By this act, her being a party or not became immaterial, as she bound herself to an obligation with the court and the respondents. However, this obligation was premised exclusively on the "decision to be rendered in this case," which did not materialize as respondents opted to get their money back instead of insisting on possession. On the entitlement to interest: The respondents are not entitled to claim interest beyond the date of the tender of payment by defendant Boiser. According to the answer filed by defendant Boiser, she tendered the sum of P150,000.00 with legal interest prior to the filing of the complaint, but this tender was refused by the respondents. The award for interest on a monetary obligation attaches only when the obligor incurs delay, which occurs from the time the creditor demands fulfillment of the obligation, judicially or extrajudicially. In this case, no such demand was made by the respondents for the return of the P150,000.00. Instead, they filed an action for specific performance. Therefore, there was no delay on the part of Boiser. On the contrary, the respondents were in mora accipiendi (delay in acceptance) from the time Boiser tendered and consigned the amount. Article 1256 of the Civil Code provides that if a creditor refuses to accept a tender of payment without just cause, the debtor shall be released from responsibility by the consignation of the sum. The tender of payment alone suspends the running of interest on the obligation. Thus, defendant Boiser and/or petitioner should pay 12% interest only from January 5, 1978 (six months after the signing of the contract, when the obligation to return the deposit began to accrue interest per paragraph 6 of the contract) up to May 30, 1978 (when the respondents' complaint was filed), which is a period of less than four months. The Court noted that the amount of interest petitioner would have to pay under this judgment is small, and terminating the case with this arrangement serves public interest by helping unclog court dockets.
Main Doctrine
A party who tenders payment of the principal amount due, with legal interest, and whose tender is refused without just cause, is released from the obligation to pay further interest from the date of tender and consignation, as the creditor incurs in mora accipiendi.