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Estores Vs Spouses Supangan

The Supreme Court ruled that interest may be imposed even without stipulation in the contract. In this case, Estores failed to fulfill her obligations under the conditional deed of sale to transfer ownership of land to the Supangan spouses, despite receiving partial payment of 3.5 million pesos. While the deed did not mention interest, Estores benefited from using the money over several years. The spouses are thus entitled not only to return of the principal but also compensation in the form of interest for Estores' use of their money during the delay.

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172 views2 pages

Estores Vs Spouses Supangan

The Supreme Court ruled that interest may be imposed even without stipulation in the contract. In this case, Estores failed to fulfill her obligations under the conditional deed of sale to transfer ownership of land to the Supangan spouses, despite receiving partial payment of 3.5 million pesos. While the deed did not mention interest, Estores benefited from using the money over several years. The spouses are thus entitled not only to return of the principal but also compensation in the form of interest for Estores' use of their money during the delay.

Uploaded by

Kate Hizon
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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ESTORES V.

SPOUSES SUPANGAN, (2012)

Facts:

In Oct. 1993, Hermojina Estores and Spouses Supangan entered into a Conditional
Deed of Sale where Estores offered to sell, and Spouses offered to buy a parcel of land
in Cavite for P4.7M. After almost 7 years and despite the payment of P3.5M by the
Spouses, Estores still failed to comply with her obligation to handle the peaceful
transfer of ownership as stated in 5 provisions in the contract.

In a letter in 2000, Spouses demanded the return of the amount within 15 days from
receipt. In reply, Estores promised to return the same within 120 days. Spouses agreed
but imposed an interest of 12% annually. Estores still failed despite demands. Spouses
filed a complaint with the RTC against Estores and Roberto Arias (allegedly acted as
Estores’ agent). In Answer, Estores said they were willing to pay the principal amount
but without the interest as it was not agreed upon:
That since the Conditional Deed of Sale provided only for the return of the
downpayment in case of breach, they cant be liable for legal interest as well

Estores contends:
 Not bound to pay interest because the deed only provided for the return of the
downpayment in case of failure to comply with her obligations
 That atty fees not proper because both RTC and CA sustained her contention
that 12% interest was uncalled for so it showed that Spouses did not win
Spouses contend:
 It is only fair that interest be imposed because Estores failed to return the
amount upon demand and used the money for her benefit
 Estores failed to relocate the house outside the perimeter of the subject lot and
complete the necessary documents
 As to the fees, they claim that they were forced to litigate when Estores unjustly
held the amount

ISSUE: Whether it is proper to impose interest for an obligation that does not involve a loan
or forbearance of money in the absence of stipulation of the parties.

HELD:

YES. Interest may be imposed even in the absence of stipulation in the contract.
Article 2210 of the Civil Code expressly provides that “[i]nterest may, in the discretion of the
court, be allowed upon damages awarded for breach of contract.”   In this case, there is no
question that petitioner is legally obligated to return the P3.5 million because of her failure to
fulfill the obligation under the Conditional Deed of Sale, despite demand.  Petitioner enjoyed
the use of the money from the time it was given to her until now.   Thus, she is already in default
of her obligation from the date of demand.

Forbearance is defined as a “contractual obligation of lender or creditor to refrain during a


given period of time, from requiring the borrower or debtor to repay a loan or debt then due
and payable.”  This definition describes a loan where a debtor is given a period within which to
pay a loan or debt.  In such case, “forbearance of money, goods or credits” will have no distinct
definition from a loan.  We believe however, that the phrase “forbearance of money, goods or
credits” is meant to have a separate meaning from a loan, otherwise there would have been no
need to add that phrase as a loan is already sufficiently defined in the Civil Code.  

Forbearance of money, goods or credits should therefore refer to arrangements other


than loan agreements, where a person acquiesces to the temporary use of his money, goods or
credits pending happening of certain events or fulfillment of certain conditions.  

In this case, the respondent-spouses parted with their money even before the conditions were
fulfilled.  They have therefore allowed or granted forbearance to the seller (petitioner) to use
their money pending fulfillment of the conditions.  They were deprived of the use of their
money for the period pending fulfillment of the conditions and when those conditions were
breached, they are entitled not only to the return of the principal amount paid, but also to
compensation for the use of their money.  And the compensation for the use of their money,
absent any stipulation, should be the same rate of legal interest applicable to a loan since the use
or deprivation of funds is similar to a loan.

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