PHILIPPLNE COMMERCLAL AND INDUSTRIAL BANK, ADMINISTRATOR OF THE TESTATE ESTATE OF THE DECEASED PLAINTIFF C. N. HODGES, PLAINTIFF AND APPELLANT, VS. JUN GRIÑO, DEFENDANT AND APPE…

The
decision rendered by the Court of First Instance of Iloilo in Civil Case
No. 3926 states the issue raised therein as follows:

“The
pivotal question to be determined in this case is whether the true
contract between plaintiff and defendant is that embodied in the ‘contract to
sell’ (Exh. A) wherein it appears that plaintiff agreed to sell, and defendant agreed to
buy, Lots Nos. 1368 and 1536-, for the sum of P13,200 payable by
defendant to plaintiff in installments with 1% monthly interest until fully
paid, as claimed by plain­tiff,
or that of loan of P11,000 secured by an equitable mortgage on the aforesaid
lots with 20% interest, or the sum of
P2,200, immediately added to the capital plus 1% monthly interest until the whole amount of P13,200 is fully paid
by defendant to plaintiff, as claimed by de­fendant and intervenors.”

After an exhaustive
review of the evidence the Court held that the transaction involved was
usurious, and that the document marked as Exhibit A was a mere subterfuge conceived by the original plaintiff the now
deceased C. N. Hodges; to conceal the true
nature thereof.  As a result it
rendered judgment as follows:

“(a) Declaring that the contracts evidenced by Annex A of the
complaint and Annexes 3, 4 & 5 of the answer (Exhs. A of
plaintiff and Exhs. 1, 2, & 4 of
defendant, respectively) were all re­latively simulated to conceal a usurious
loan of P11,000 with equitable mortgage on the two lots above mentioned;

“(b) Declaring that plaintiff
is not entitled to recover from defendant the stipulated usurious interest;

“(c) Declaring that
plaintiff has been fully paid by defendant the total sum of P11,000
loaned to the latter;

“(d) Ordering defendant to pay plaintiff the sum of P79.07 representing real estate taxes paid by
plaintiff for end in behalf of defendant on Lot No. 1536-A for the years
1953 to 1956, in­clusive, and on Lot No. 1368 for part of the year 1958, with
the legal interest thereon from the filing
of the complaint until fully paid;

“(e) Ordering plaintiff to
forthwith re-convey the aforesaid Lots Nos. 1536 A and 1368 of the
Cadastral Survey of Sta. Barbara, Iloilo, to defendant and his wife,
Anunciacion C. Griño, upon full payment by them of the said sum of P79.07 with
the corresponding legal interest thereon.

“Without pronouncement as to costs.”

On appeal, while the
Court of Appeals also held that the contract Exhibit A was “fictitious and simulated to conceal
the usurious transaction of the parties”, it modified the above decision
as follows:

“It has been admitted
that at the time complaint was presented by the plaintiff to the court,
defendant had already paid the former sum of P1,997.10 (p. 14 t.s.n. I).  On January 13,1959, defendant further paid
the plaintiff, who accepted such payment with­out prejudice to his claim,
another sum of P9,002.90.  Thus, the full
amount of the prin­cipal obligation, P11,000.00, has now been fully paid.

“However, we do not agree with the trial court that plaintiff
is entitled to recover from the defendant only the amount loaned with­out
interest.  In the case of Sajo V. Gustilo (supra)
the Supreme Court held:

‘The Usury Law, as construed by this court, permits the creditor to
recover the principal but not the stipulated usurious interest.  This could well be taken to mean forefeiture
of the right to any interest so as not to arrive at a contradiction in
terms.  Nevertheless, the court has
fallen into the habit in cases of this
character of allowing the creditor the legal rate of interest on the
judgment from the date of the filing of the complaint.’

Consequently, defendant should be ordered
to pay interest at the legal rate, on the amount of P9,002.90 to be computed
from the filing of the complaint up to the time the same had been paid.

“WHEREFORE, with the modification that defendant should be
ordered to pay interest to the plaintiff at a legal rate on the amount of P9,002.90 from the filing of the complaint up to the time the same
had been paid, the appealed judgment is hereby af­firmed in all other respects,
with costs against plaintiff-appellant.”

After the decision of the Court of Appeals had become final and
executory the record f the case
was remanded below where on August 23, 1965, the appellee Juan Griño filed a motion for entry of
satisfaction of judgment and for conveyance of Lots 1536-A and 1368,
alleging, among other things, that on December 14, 1965 the lower court in Special
Proceedings No. 1307 and 1672,
involving the settlement of the Testate Estate of Mr. and Mrs. C. N. Hodges
issued an order directing the Philippine Commercial and Industrial Bank –
hereinafter referred to as PCIB administrator of the Testate Estate of C. N. Hodges – to reconvey
the abovementioned parcels of
land to the spouses Juan Griño and Anunciacion
C. Griño upon payment by them of the sum of P79.07, with legal interest
from the filing of the complaint in Civil Case No. 3926 of the Court of First
Instance of Iloilo, until fully paid, and the legal interest an the amount of
P9,002.90 from the filing of the complaint in thee same civil case until the
date of payment of the said sum of P9,002.90; that on August 8, 1966 appellant had tendered to the
PCIB, in its capacity as Administrator of the Hodges Estate, the sum of P1,556.27 in full satisfaction of the
amount due to said estate under the final judgment rendered in this
case, with a request for the conveyance
of the parcels of land already mentioned, but that the PCIB refused to accept said
payment and to make the conveyance,
alleging that the amount due from the defendant to the Hodges estate was P2,549.67 as of
August 8, 1966, end no the sum tendered; that the sum of P1,556.27 was deposited by said defendant with the
Clerk of Court in satisfaction of said judgment.

The PCIB objected to the motion as follows:

“When the complaint was filed on May 22, 1956, the principal
of the loan in the sum of P9,002.90 started to bear interest at the rate of 6%,
per annum On January 13, 1959, the accrued interest amounted to P1,426.96. 
When on this date the defendant paid P9,002.90, this payment was
applied first to the accrued in­terest and then to the principal, in accordance
with the Civil Code which provides –

‘If the debt produces interest, payment of the principal shall not
be deemed to have been made until the interests have been covered’ (Art. 1253)’

“After such application of payment on January 13, 1959, there
remained an unpaid balance of the principal in the sum of P1,426.96 which
continued to bear interest at the rate of 6% per annum.  Said remaining balance of the principal
remains unpaid up to the present time, and the decision of the Court of Appeals
holds that interest will continue to run ‘up to the time the same had been
paid’.  This amounts to P2,080.50 as of
August 27, 1966.

“The PCIB is also
entitled to col­lect additional amounts for taxes and interest thereon, and
miscellaneous ex­penses, which should be reimbursed by the defendant.

‘Necessary expenses shall be refunded to every possessor; x x x’
(Art. 546).

‘Any person who is
constrained to pay the taxes of another shall be entitled to reimbursement from
the letter’ (Art. 2175).

“The total amount due, therefore, is not only P1,556.27 as the
defendant contends but P2,562.51 as of August 27, 1966.

“The computation of the defendants is clearly erroneous
because it ignores miscellaneous expenses as
well as the land taxes
and interest thereon for part of the year 1958 up to the present.  With respect to the principal of the loan, it
computes interest only up to January 30, 1959 (?), which is clearly contrary to
Art 1253 of
the Civil Code above-cited as well as the decision of the Court of Appeals.

“It is the
defendant, contrary, to what he would make the court believe who is ‘altering
and misconstruing’ the de­cision of the Court of Appeals.  Said court did not say that the interest shall run only ‘up to January 13, 1959’,
but on the contrary it did not set a cut-off
date because it did not know when the
entire obligation (accrued interest and principal) would be finally paid by the
defendant.  Why should the PCIB are for
re­consideration of something which it believes to be correct?  Contrary to what he would make the court
believe, the PCIB does not contend that the Court of Appeals ‘deviates from the
rule on the application of
payments under Art. 1253, new Civil
Code’ but rather that said decision should be understood in the light of such
plain, obvious, and simple provision of law.  The PCIB agrees that
said judgment is final end
beyond recall; that the defendant’s (not administrator’s) attempt to revise it now is
improper; and that it should be executed strictly in accordance with its terms.”

The matter having been
submitted for resolution, the lower court, under date of September 21, 1966, issued the order appealed from, whose dispositive part
reads a follows:

“WHEREFORE, the entry of satisfaction of judgment in this ease
by defendant Juan is hereby ordered and the PCIB is hereby directed to execute the conveyance of Lots Nos. 1526-A and 1368 of the cadastral survey of Sta. Barbara,
Iloilo, in favor of defendant Juan Griño and
his
wife Anunciacion C. Griño within ten (10) days from receipt hereof and in the event of its re­fusal then the Clerk of Court shall execute the conveyance of the aforesaid lots in favor of defendant Juan
Griño end his wife Anunciacion C. Griño which instrument shall be effective and registerable as if it were a conveyance executed in due form of law by plaintiff in this case.”

As grounds for the reversal
of the above order, appellant submits that the lower court erred, firstly, in
not applying the provisions of Article 1253 of the Civil Code so that the sum of P9,002.90 paid by appellee on January 13,
1959 should be applied first to the accrued interest and then to the principal of the judgment debt; and secondly, in not
ordering appellee to pay the unpaid balance of the principal amounting to the
sum of P1,426.96,
with legal interest from January
13, 1959 until fully paid, end in not ordering appellee to pay to appellant real estate taxes and miscellaneous
expenses.

We find appellant’s
contentions unmeritorious.

We
must not lose sight of the fact that appellee’s motion of August 23, 1965
involved nothing more than the satisfaction of the decision rendered by the Court of Appeals quoted heretofore.  Indeed, after the same had become final and
executory, there was no other question left but its faithful execution.  Under its plain terms appellee was under
obligation to pay to the estate of Hodges the following amounts, and no more:

(a) 6% interest on the
sum of P9,002.90 from the filing of the complaint (May 21, 1956) up to the time
payment thereof is made;

(b) P79.07 representing
real estate taxes paid by Hodges and/or the PCIB for and on behalf of appellant
on Lot No. 1536-A for the years 1953-1956, inclusive, and on Lot No. 1368 for part
of the year 1958, with legal interest thereon from the filing of the complaint
until full payment thereof.

The record discloses that
on August 8, 1966 appellee tendered to appellant the sum of P1,556.27 representing tae 6% accrued interest on the amount of P9,002.90
from May 22, 1956 (the date when the action was commenced) up to January 13, 1959, the date of payment of the
aforesaid sum of P9,002.90, and the sum of P79.07 representing the real estate
taxes
paid by appellant for and on
behalf of appel­lee on Lot No. 1536-A for the years 1953 to 1956, inclusive, and on Lot No. 1368 for part of the year
1958, with
legal interest thereon from the filing of
the complaint until the date when the tender of payment was made.  That was all that appellee was under obligation to pay in satisfaction of the final judgment rendered in favor of appellant.  Any other amount allegedly due to, and payable to the latter are not included in the aforesaid
judgment.

WHEREFORE, the order appealed from is affirmed, with
costs.

Concepcion, C.J., Reyes, Makalintal, Zaldivar, Sanchez,
Castro, Angeles and Fernando, JJ., concur.