STATE INVESTMENT HOUSE INC., PETITIONER, VS. THE HONORABLE COURT OF APPEALS, HON. JUDGE PERLITA J. TRIA TIRONA, PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF QUEZON CITY, BRANC…

On 5 April 1982,
respondent spouses Rafael and Refugio Aquino pledged certain shares of
stock to petitioner State
Investment House, Inc. (“State”) in order to secure a loan of P120,000.00 designated as
Account No. IF-82-0631-AA.  Prior to the
execution of the pledge, respondent spouses, as an accommodation to and together with the spouses Jose and Marcelina Aquino, signed an
agreement (Account No. IF-82-­1379-AA) with petitioner
State for the latter’s purchase of
receivables amounting to P375,000.00. When Account No. IF-82-0631-AA fell due,
respondent spouses paid the same partly
with their own funds and partly from the proceeds of another loan which they
obtained also from petitioner State
designated as
Account No. IF-82-0904-AA.  This
new loan was secured by the same pledge agreement executed in relation to
Account No. IF-82-0631-AA.  When the new
loan matured, State demanded payment. 
Respondents expressed willingness to pay, requesting that upon payment,
the shares of stock pledged be released. 
Petitioner State
denied the request on the ground that the loan which it had extended to the
spouses Jose and Marcelina Aquino
(Account No. IF-82-1379-AA) had remained unpaid.

On 29 June 1984,
Atty. Rolando Salonga sent to respondent spouses a Notice of
Notarial Sale stating that upon request of State and
by virtue of the pledge agreement, he would sell at public auction the shares
of stock pledged to State.  This prompted
respondents to file a case before the Regional Trial Court of Quezon City alleging that the intended foreclosure sale was
illegal because from the time the obligation under Account No. IF-82-0904-AA
became due, they had been able and willing to pay the same, but petitioner had
insisted that respondents pay even the loan account of Jose and Marcelina
Aquino which had not been secured by the pledge.  It was further alleged that their failure to
pay their loan (Account No. IF-82-0904-AA) was excused because the petitioner
State itself had prevented the
satisfaction of the obligation.

The trial court, in a decision dated 14 December 1984 rendered by Judge Willelmo Fortun, initially
dismissed the complaint.  Respondent
spouses filed a
motion for reconsideration praying for a new decision ordering petitioner
State to release the shares upon
payment of respondents’ loan “without
interest,” as the latter had not been in delay in the
performance of their obligation.  State
countered that the pledge executed by respondent spouses also covered the loan extended
to Jose and Marcelina Aquino,
which too should be paid before the shares may be released.

Acting on the motion for reconsideration, Judge Fortun set aside his original decision and rendered a new
judgment dated 29 January 1985,
ordering State to immediately release the pledge and to deliver to respondents
the shares of stock “upon payment of the loan under Code No.
82-0904-AA.”

On appeal, the Court of Appeals affirmed in toto the new decision of the trial court, holding
that the loan extended to Jose and Marcelina Aquino, having been executed prior to the pledge was not
covered by the pledge which secured only loans executed subsequently.  Thus, upon payment of the loan under Code No.
IF-82-0904-AA, the shares of stock should be released.  The decisions of the Court of Appeals and of
Judge Fortun became final and executory.

Upon remand of the records of the case to the trial court for
execution, there developed disagreement over the amount which respondent
spouses Rafael and Refugio Aquino should pay to
secure the release of the shares of stock — petitioner
State contending that respondents
should also pay interest and respondents arguing they should not.  Respondent spouses then filed a motion with
the trial court to clarify the Fortun decision praying
that an order issue clarifying the phrase “upon payment of plaintiffs’
loan” to mean upon payment of plaintiffs’ loan in the principal amount of P110.000.00 alone, “without interest, penalties and
other charges.”

On 17 February 1989, the trial court, speaking this time through
Judge Perlita Tria Tirona, rendered a decision purporting to clarify the
decision of Judge Fortun and ruling that petitioner
State shall release
respondents’ shares of stock upon payment by respondents of the
principal of the loan as set forth in PN No. 82-0904-AA in the amount of
P110,000.00, without interest, penalties and other charges.

Petitioner State appealed Judge Tirona’s
decision to the Court of Appeals; the appeal was dismissed.  The Court of Appeals agreed with Judge Tirona that no interest need be paid and added that the clarificatory (Tirona) decision
of the trial court merely restated what had been provided for in the earlier (Fortun) decision; that the Tirona
decision did not go beyond what
had been adjudged in the earlier decision. 
The motion for reconsideration filed by petitioner was accordingly
denied.

Hence, this Petition for Review contending that no manifest
ambiguity existed in the decision penned by Judge Fortun;
that the trial court, through Judge Tirona, erred in
clarifying the decision of Judge Fortun; and that the
amendment sought to be introduced in the Fortun
decision by respondents may not be made
as the same was substantial in nature and the Fortun
decision had become final.

We
begin by noting that the trial court has asserted authority to issue the
clarificatory order in respect of the decision of
Judge Fortun, even though that judgment had become
final and executory. 
In Reinsurance Company of the Orient, Inc. v. Court of Appeals,^[1]
this Court had occasion to deal with the applicable doctrine to some extent:

“- – – (E)ven a judgment which has
become final and executory may be clarified under
certain circumstances.  The dispositive portion of the judgment may, for instance,
contain an error clearly clerical in nature (perhaps best illustrated by an
error in arithmetical computation) or an ambiguity arising from inadvertent
omission, which error may be
rectified or ambiguity clarified and the omission supplied by reference
primarily to the body of the decision itself. 
Supplementary reference to the pleadings previously filed in the case
may also be resorted to by way of corroboration of the existence of the error
or of the ambiguity in the dispositive part of the
judgment.  In Locsin,
et al. v. Paredes, et al., this Court allowed a
judgment which had become final and executory to be
clarified by supplying a word which had been inadvertently omitted and which,
when supplied, in effect changed the literal import of the original
phraseology:

‘x x x
it clearly appears from the allegations
of the complaint, the promissory note reproduced therein and made a part
thereof, the prayer and the conclusions of fact and of law contained in the
decision of the respondent judge, that the obligation contracted by the petitioners
is joint
and several and that the parties as well as the trial judge so understood
it.  Under the juridical rule that the
judgment should be in accordance with the allegations, the evidence and the
conclusions of fact and law, the dispositive part of
the judgment under consideration should have ordered that the debt be paid
‘several­ly’ and in omitting the word or adverb ‘severally’ inadvertently, said
judgment became ambiguous.  This
ambiguity may be clarified at any time after the decision is rendered and even after it had
become  final (34 Corpus Juris, 235, 326). 
This respondent judge did not, therefore, exceed his jurisdiction in
clarifying the dispositive part of the judgment by
supplying the omission.’ (Underscoring supplied)

In Filipino Legion Corporation vs. Court of Appeals, et al.,
the applicable principle was set out in the following terms:

‘[W]here there is ambiguity caused by an omission or mistake in
the dispositive portion of a decision, the court may clarify
such ambiguity by an amendment even after the judgment had become final,
and for this purpose it may resort to the pleadings filed by the parties, the
court’s findings of facts and conclusions of law as expressed in the body of the decision.’ (Underscoring
supplied)

In Republic Surety and Insurance Company, Inc. v. Intermediate
Appellate Court, the Court, in applying the above doctrine, said:

‘x x x
We clarify, in other words, what we did affirm.  What is involved here is not what is
ordinarily regarded as a clerical
error in the dispositive part of the decision of the
Court of First Instance, x x x.  At the
same time, what is involved
here is not a correction of an erroneous judgment or dispositive
portion of a judgment.  What we believe
is involved here is in the nature of an inadvertent omission on the part of the
Court of First Instance (which should have been noticed by private respondents’ counsel who had prepared the complaint),
of what might be described as a logical follow-through of something set forth
both in the body of the decision and in the dispositive
portion thereof:  the inevitable
follow-through, or translation into, operational or behavioral terms, of the
annulment of the Deed of Sale with Assumption of Mortgage, from which
petitioners’ title or claim of title embodied in TCT 133153 flows.  (Under­scoring supplied)’ “^[2]
(Underscoring in the original; citations omitted)

The question we must resolve is thus whether or not there is an
ambiguity or clerical error or inadvertent omission in the dispositive
portion of the decision of Judge Fortun which may be
legitimately clarified by referring to the body of the decision and perhaps
even the pleadings filed before him.  The
decision of Judge Fortun disposing of the motion for
reconsideration filed by respondent spouses Rafael and Refugio Aquino consisted basically of quoting practically the whole
motion for reconsideration.  In its dispositive portion, Judge Fortun’s
decision stated:

“WHEREFORE, plaintiffs’ ‘Motion for Reconsi­deration’ dated
January 3, 1985, is granted and the decision of this Court dated December 14,
1984 is hereby revoked and set aside and another judgment is hereby rendered in
favor of plaintiffs as follows:

(1)  
Ordering defendants to immediately release the pledge on, and to deliver to plaintiffs,
the shares of stocks enumerated and described in paragraph 4 of plaintiffs’
complaint dated July 17, 1984, upon payment of plaintiff’s loan under Code No.
82-0904-AA to defendants;

(2)  
Ordering defendant State Investment House, Inc.
to pay to plaintiffs P10,000.00 as moral
damages, P5,000.00 as exemplary
damages, P6,000.00 as attorney’s fees, plus costs;

(3)  
Dismissing defendants’ counterclaim, for lack of
merit and making the preliminary injunction permanent.

SO ORDERED.”^[3]

Judge Fortun evidently meant to act
favorably on the motion for reconsideration of the respondent Aquino spouses and in effect accepted respondent spouses’
argument that they had not incurred mora
considering that their failure to pay PN No. IF-82-0904-AA on time had been due
to petitioner State’s unjustified refusal to release the shares pledged to
it.  It is not, however, clear to what
precise extent Judge Fortun meant to grant the motion
for reconsideration.  The promissory note
in Account No. IF-82-0904-AA had
three (3) components:  (a) principal of the loan in the
amount of P110,000.00; (b) regular interest in the amount of seventeen percent
(17%) per annum; and (c) additional or penalty interest in case of non-payment
at maturity, at the rate of two percent (2%) per month or twenty-four percent (24%)
per annum.  In the dispositive
part of his resolution, Judge Fortun did not
specify which of these components of the loan he was ordering respondent
spouses to pay and which component or components he was in effect
deleting.  We cannot assume that Judge Fortun meant to grant the relief prayed for by respondent
spouses in all its parts.  For one thing,
respondent spouses in their motion for reconsideration asked for “at least
P50,000.00” for moral damages and “at least P50,000.00” for
exemplary damages, as well as P20,000.00
by way of attorney’s fees and litigation expenses.  Judge Fortun
granted respondent spouses only P10,000.00 as moral damages and P5,000.00 as
exemplary damages, plus P6,000.00 as attorney’s fees and costs.  For another, respondent spouses asked Judge Fortun to order the release of the shares pledged
“upon payment of [respondent spouses’] loan under Code No. 82-0904-AA without
interest, as plaintiffs were not in delay in accordance with Article 69 of
the New Civil Code —” (Emphasis supplied).  In other words, respondent spouses did not
themselves become very clear what they were asking Judge Fortun
to grant them; they did not apparently distinguish between regular interest or
“monetary interest” in the amount of seventeen percent (17%) per
annum and penalty charges or “compensatory interest” in the amount of
two percent (2%) per month or twenty-four percent (24%) per annum.

It thus appears that the Fortun
decision was ambiguous in the sense that it was cryptic.  We believe that in these circumstances, we
must assume that Judge Fortun meant to decide in
accordance with law, that we cannot fairly assume that Judge Fortun
was grossly ignorant of the law, or that he intended to grant the respondent
spouses relief to which they were not entitled under law.  Thus, the ultimate question which arises
is:  if respondent Aquino
spouses were not in delay, what should they have been held liable for in
accordance with law?

We believe and so hold that since respondent Aquino
spouses were held not to have been in delay, they were properly liable only
for:  (a) the principal of the loan or
P110,000.00; and (b) regular or monetary interest in the amount of seventeen
percent (17%) per annum.  They were not
liable for penalty or compensatory interest, fixed by the promissory note in
Account No. IF-82-0904-AA at two percent (2%) per month or twenty-four (24%)
per annum.  It must be stressed in this
connection that under Article 2209 of the Civil Code which provides that

“x x
x [I]f the obligation consists in the payment
of a sum of money, and the
debtor incurs in delay, the indemnity for damages, there being no stipulation
to the contrary, shall be the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is six per cent per
annum.”

the appropriate measure for damages in
case of delay in discharging an obligation consisting of the payment of a sum
of money, is the payment of penalty interest at the rate agreed upon; and in
the absence of a stipulation of
a particular rate of penalty interest, then the payment of additional interest
at a rate equal to the regular monetary interest; and if no regular interest
had been agreed upon, then payment of legal interest or six percent (6%) per
annum.^[4]

The fact that the respondent Aquino
spouses were not in default did not mean that they, as a matter of law, were relieved from the payment not
only of penalty or compensatory interest at the rate of twenty-four percent
(24%) per annum but also of regular or monetary interest of seventeen percent
(17%) per annum.  The regular or monetary
interest continued to accrue under the terms of the relevant promissory note
until actual payment is effected.  The payment
of regular interest constitutes the price or cost of the use of money and thus,
until the principal sum due is returned to the creditor, regular interest
continues to accrue since the debtor continues to use such principal
amount.  The relevant rule is set out in
Article 1256 of the Civil Code which provides as follows:

“Art. 1256.  If the
creditor to whom tender of payment has been made refuses without just cause to
accept it, the debtor shall be released from responsibility by the
consignation of the thing or sum due.

Consignation alone shall produce the same effect in the following
cases:

(1)  
When the creditor is absent or unknown, or does
not appear at the place of payment;

(2)  
When he is incapacitated to receive the payment
at the time it is due;

(3)  
When, without just cause, he refuses to give a
receipt;

(4)  
When two or more persons claim the same right to
collect;

(5)  
When the title of the obligation has been
lost.” (Emphasis supplied)

Where the creditor unjustly refuses to
accept payment, the debtor desirous of being released from his obligation must
comply with two (2) conditions:  (a) tender
of payment; and (b) consignation of the sum due.  Tender of payment must be accompanied or
followed by consignation in order that the effects of payment may be
produced.  Thus, in Llamas v. Abaya,^[5] the Supreme Court stressed that a written tender of payment alone,
without consignation in court of the sum due, does not suspend the accruing of
regular or monetary interest.

In the instant case, respondent spouses Aquino,
while they are properly regarded as having made a written tender of payment
to petitioner State, failed to consign in court the amount due at the time of
the maturity of Account No. IF-82-0904-AA. 
It follows that their obligation to pay principal-cum-regular or
monetary interest under the terms and conditions of Account No. IF-82-0904-AA
was not extinguished by such tender of payment alone.

For the respondent spouses to continue in possession of the
principal of the loan amounting to P110,000.00 and to continue to use the same
after maturity of the loan without payment of regular or monetary interest,
would constitute unjust enrichment on the part of the respondent spouses at the
expense of petitioner State even though the spouses had not been guilty of mora.  It is
precisely this unjust enrichment which Article 1256 of the Civil Code prevents
by requiring, in addition to tender of payment, the consigna­tion of the amount
due in court which amount would thereafter be deposited by the Clerk of Court
in a bank and earn interest to which the creditor would be entitled.

WHEREFORE, the Petition for Review is hereby GRANTED DUE
COURSE.  The Decision of the Court of
Appeals dated 30 August 1989 in C.A.-G.R. No. 17954 and the Decision of the
Regional Trial Court dated 17 February 1989 in Civil Case No. Q-42188 are
hereby REVERSED and SET ASIDE.  The dispositive portion of the decision of Judge Fortun is hereby clarified so as to read as follows:

“(1) 
Ordering defendants to immediately release the pledge and to
deliver to the plaintiff spouses Rafael and Refugio Aquino
the shares of stock enumerated and described in paragraph 4 of said spouses’
complaint dated 17 July 1984, upon full payment of the amount of P10,000.00,
plus seventeen percent (17%) per annum regular interest computed from the time
of maturity of the plaintiffs’ loan (Account No. IF-82-0904-AA) and until full
payment of such principal and interest to defendants;

 (2) 
Ordering defendant State Investment House, Inc. to pay to the plaintiff
spouses Rafael and Refugio Aquino P10,000.00 as moral damages, P5,000.00 as exemplary
damages, P6,000.00 as attorney’s fees, plus costs; and

 (3) 
Dismissing defendants’ counterclaim for lack of merit and making the
preliminary injunction permanent.”

No pronouncement as to costs.

SO ORDERED.

Fernan, C.J., (Chairman), Gutierrez,
Jr., Bidin, and
Davide, Jr., JJ., concur.

^[1]
G.R. No. 61250, 3 June 1991.

^[2]
See also Campillo v. Margolles, G.R. No. 67388, 17 April 1991.

^[3]
Annex “A-6”, Comment Petitioners’ Petition for Review, Rollo, p. 78.

^[4]
Reinsurance Company of the Orient, Inc. v. Court of Appeals, G.R. No.
61250, 3 June 1991.

^[5]
60 Phil. 502 (1934).