- Petitioner
- Ignacio San Jose
- Respondent
- Pedro Ortega
- Citation
- G.R. No. 4483
- Court
- Supreme Court En Banc
- Division
- En Banc
- Ponente
- Arellano, C.J.
- Decided
- October 14, 1908
Summary
This 1908 Supreme Court case involved a debt dispute between private parties over a P1,000 loan made in 1903. Defendants Pedro Ortega and Maria P. Eusebio argued that their 35 monthly payments of P15 each (totaling P545) reduced their principal debt to P605. However, the Supreme Court affirmed the lower court's ruling that the full P1,000 remained due. Applying Article 1173 of the Civil Code, the Court held that when a debt bears interest, payments are presumed applied to interest first. Since defendant Ortega himself testified that the original obligation bore interest and he 'paid interest,' all monthly payments were properly applied to interest rather than principal. The decision established an important precedent regarding the application of payments on interest-bearing debts under Philippine civil law.