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9 - Sebastian Siga-An vs. Alicia Villlanueva G.R. No. 173227, January 20, 2009

Respondent Villanueva borrowed P540,000 from petitioner Siga-an without a written agreement stipulating interest. Villanueva paid over P700,000 total but requested receipts, which Siga-an refused to provide. Villanueva sued for repayment of excess amounts. The RTC ruled interest could not be charged without a written agreement. On appeal, the court affirmed, stating that Article 1956 of the Civil Code requires any interest stipulation to be in writing. As there was no written agreement for interest, none was due to the petitioner.

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68 views1 page

9 - Sebastian Siga-An vs. Alicia Villlanueva G.R. No. 173227, January 20, 2009

Respondent Villanueva borrowed P540,000 from petitioner Siga-an without a written agreement stipulating interest. Villanueva paid over P700,000 total but requested receipts, which Siga-an refused to provide. Villanueva sued for repayment of excess amounts. The RTC ruled interest could not be charged without a written agreement. On appeal, the court affirmed, stating that Article 1956 of the Civil Code requires any interest stipulation to be in writing. As there was no written agreement for interest, none was due to the petitioner.

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Julie Anne Garcia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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SIGA-AN VS VILLANUEVA

Facts:
Respondent Villanueva claimed that petitioner Siga-an approached her inside the Philippine Navy Office
(PNO) and offered to loan her the amount of P540,000.00 of which the loan agreement was not reduced
in writing and there was no stipulation as to the payment of interest for the loan. Respondent issued a
check worth P500,000.00 to petitioner as partial payment of the loan. She then issued another check in
the amount of P200,000.00 to petitioner as payment of the remaining balance of the loan of which the
excess amount of P160,000.00 would be applied as interest for the loan.

Respondent paid additional amounts in cash and checks as interests for the loan after she was pestered
by the petitioner to pay additional interest. She then asked petitioner for receipt for the payments but
was told that it was not necessary as there was mutual trust and confidence between them.

Respondent filed a complaint for sum of money against petitioner. The RTC ruled that respondent’s
obligation was only to pay the loaned amount of P540,000.00, and that the alleged interests due should
not be included in the computation of respondent’s total monetary debt because there was no agreement
between them regarding payment of interest.

Issue: Whether or not interest was due to petitioner.

Ruling:
No. Compensatory interest is not chargeable in the instant case because it was not duly proven that
respondent defaulted in paying the loan and no interest was due on the loan because there was no written
agreement as regards payment of interest.

Article 1956 of the Civil Code, which refers to monetary interest, specifically mandates that no interest
shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing
provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the
payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The
concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held
that collection of interest without any stipulation therefor in writing is prohibited by law.

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