- Petitioner
- Spouses Salvador Abella
- Respondent
- Spouses Romeo Abella
- Citation
- G.R. No. 195166
- Court
- Supreme Court
- Division
- Second Division
- Ponente
- Leonen, J.
- Decided
- July 8, 2015
Summary
This case involved a loan dispute between related couples over a P500,000.00 loan made in 1999. The acknowledgment receipt stipulated interest but without specifying the rate. Petitioners claimed 30% annual interest while respondents argued it was a joint venture. The Supreme Court clarified that when parties stipulate interest in writing but fail to specify the rate, the legal rate applies (12% per annum at the time of execution). The Court rejected the 30% rate as unconscionable and conducted detailed computations showing respondents actually overpaid P3,379.17 by 2002. The decision established important precedents on interest rate application in loan agreements and the principle that legal interest rates serve as surrogates for parties' intent when specific rates are not stipulated. The Court applied solutio indebiti principles requiring reimbursement of excess payments.
Intellegal Wiki · Key Holding
Where parties stipulate interest in writing but omit the rate, the legal rate applies; a stipulated rate that is unconscionable (here 2.5% monthly, 30% per annum) is void, and overpayments are recoverable.
An editorially maintained summary of the rule this Supreme Court decision is cited for — not legal advice.