Llamas v. Abaya
REITERATIONFacts
The Antecedents: Rosendo R. Llamas, et al. (plaintiffs-appellees) had a credit against Gonzalo Abaya. Joaquin A. Eleazar (appellant) also had a credit against Abaya, which was declared preferential only to the extent of P5,933.30 by the Court of First Instance of Laguna in Civil Case No. 5872. Procedural History: The Court of First Instance rendered judgment giving preference to the entire credit of the plaintiffs and ordering Abaya to pay P14,457.38 plus interest and attorney's fees, with a directive for the sale of mortgaged property upon default. Eleazar appealed the part of the judgment declaring the plaintiffs' entire credit preferential. This Court, in G.R. No. 37824, reversed that part and declared the preference only for P5,933.30. The Appeal: Joaquin Eleazar appealed from the resolution dated January 24, 1934, of the Court of First Instance. Eleazar contended that the plaintiffs were entitled to interest only up to November 28, 1932, the date he made a written tender of payment. He also argued that the court should have required the plaintiffs to disclose information regarding interest payments Abaya might have made, and that the stipulated penalty should only cover the principal and accrued interest up to the filing of the complaint.
Issue(s)
Whether the written tender of payment made by appellant Eleazar on November 28, 1932, suspended the accrual of stipulated interest and penalties. Whether appellant Eleazar was entitled to a liquidation of interest payments made by Abaya to the plaintiffs. Whether the stipulated penalty should be confined to the principal and accrued interest up to the date of the filing of the complaint.
Ruling
The Supreme Court affirmed the resolution of the Court of First Instance dated January 24, 1934, in all its parts. The Court ruled that the stipulated interest and penalties continued to accrue until the principal was paid, and that Eleazar's tender of payment did not legally suspend such accrual. The appeal was dismissed with costs against the appellant.
Ratio Decidendi
On Issue 1: The Court held that the written tender of payment made by appellant Eleazar on November 28, 1932, did not have the effect of suspending the interest and its accumulation in accordance with Article 1176 of the Civil Code. Furthermore, the tender did not produce the effects stated in Section 347 of the Code of Civil Procedure, as Eleazar failed to tender any definite sum by way of interest or penalty. Therefore, stipulated interest continued to accrue until the principal was paid. On Issue 2: The Court found Eleazar's contention that he was entitled to a liquidation of interest payments made by Abaya to be unfounded. The complaint had already alleged that Abaya failed to pay accrued interest from January 1, 1930, to November 30, 1931. The previous judgment also ordered Abaya to pay the unpaid interest up to November 30, 1931, plus accrued interest thereafter. These facts provided Eleazar with sufficient information to know that Abaya had not paid any stipulated interest from January 1, 1930. On Issue 3: The Court rejected Eleazar's argument that the stipulated penalty should be confined to the principal and accrued interest up to the date of the filing of the complaint. The Court stated that the verbal adjective "unpaid" in the phrase "then unpaid" referred to the principal and unpaid interest thereon and could not be construed to limit the penalty to the date on which the action was brought. The penalty was thus applicable until full payment.
Main Doctrine
A written tender of payment of a debt, without a definite sum being offered and without proper consignation, does not legally suspend the accrual of stipulated interest and penalties. The debtor remains liable for interest and penalties until the principal obligation is fully satisfied, as per Article 1176 of the Civil Code and relevant procedural rules.