CATUNGAL VS.

HAO

FACTS:

On December 28, 1972, the original owner, Aniana Galang, leased a three-storey building situated at Quirino Avenue, Baclaran,
Paraaque, Metro Manila, to the Bank of the Philippine Islands (BPI) for a period of about fifteen (15) years, to expire on June
20, 1986. During the existence of the lease, BPI subleased the ground floor of said building to respondent Doris Hao.
On August 24,1984, Galang and respondent executed a contract of lease on the second and third floors of the building. The lease
was for a term of four (4) years commencing on August 15, 1984 and ending on August 15, 1988. On August 15, 1986, petitioner
spouses Emesto and Mina Catungal bought the property from Aniana Galang.
Invoking her "right of first refusal" purportedly based on the lease contract between her and Aniana Galang, respondent filed a
complaint for Annulment of Sale with Damages docketed as Civil Case No. 88-491 of the Regional Trial Court (RTC) of Makati,
Metro Manila.
Meanwhile, the lease agreement between BPI and Galang expired.
Petitioner spouses sent demand letters to respondent for her to vacate the building. The demand letters were unheeded by
respondent causing petitioners to file two complaints for ejectment
The institution of the ejectment cases prompted respondent to file an action for injunction docketed as Civil Case No. 90-758 of
the RTC of Makati, to stop the MeTC of Parafiaque from proceeding therewith pending the settlement of the issue of ownership
raised in Civil Case No. 88-491. These two cases for annulment of sale and for injunction were also consolidated before Branch
63 of the RTC of Makati which rendered a Decision dated September 19, 1991, granting the injunction and annulling the
contract of sale between Aniana Galang and petitioners.
Court of Appeals reversed and set aside the decision of the RTC and the complaints in Civil Cases Nos. 88-491 and 90-758 were
accordingly dismissed.
Respondent elevated the above decision of the CA before this Court. SC, however, denied respondent's petition on April 10,
1996.
The MeTC of Paraaque, after the reversal of the decision in Civil Case No.90-758 for injunction, proceeded with the trial of the
ejectment cases.
MeTCs Decision:
IN VIEW OF THE FOREGOING, judgment is hereby rendered ordering the defendant Doris T. Hao who is in actual possession of
the property and all persons claiming rights under her to vacate the premises in question and to pay the plaintiffs the amount
of P20,000.00 a month from June 28, 1988, until she finally vacates the premises and to pay attorney's fees of P20,000.00.
With costs against the defendant.
Petitioners filed a motion for clarificatory or amended judgment on the ground that although MeTC " ordered the defendant to
vacate the entire subject property, it only awarded rent or compensation for the use of said property and attorney's fees for said
ground floor and not the entire subject property. Compensation for the use of the subject property's second and third floors and
attorney's fees as prayed for in Civil Case No. 7767 were not awarded."
MeTC: the Decision of this Court is hereby clarified in such a way that the dispositive portion would read as follows: "IN VIEW OF
THE FOREGOING, judgment is hereby rendered ordering the defendant Doris T. Hao who is in actual possession of the property
and all persons claiming rights under her to vacate the premises and to pay the plaintiffs the amount of P8.000.00 a month in
Civil Case No. 7666 for the use and occupancy of the first floor of the premises in question from June 28. 1998 until she finally
vacates the premises and to pay the plaintiff a rental of P5,000.00 a month in Civil Case No. 7667 from June 28 1988, until she
finally vacates the premises and to pay attorney's fees of P20,000.00. With costs against defendant.
Petitioners sought reconsideration of the above order, praying that respondent be ordered to pay P20,000.00 monthly for the
use and occupancy of the ground floor and P10,000.00 each monthly for the second and third floors Respondent, on the other
hand, filed a notice of appeal.
On May 7, 1997, the MeTC of Paraaque issued an Order, elevating the case to the Regional Trial Court,
RTC ruled in favor of the Petitioner. Respondent filed a motion for reconsideration. It was denied by RTC.
CA modified the decision of RTC reducing monthly rental from 20,000 to 10,000 for both the 2nd and 3rd floors. Alll other aspects
were affirmed.
The parties filed their respective motions for reconsideration to the Court of Appeals.
Petitioners asked that the decision of the Regional Trial Court fixing the total monthly rentals at P40,000.00 be sustained. On the
other hand, respondent sought a revival of the decision of the MeTC on the ground that since petitioners did not interpose an
 appeal from the amended judgment of the MeTC, the RTC could not validly increase the amount of rentals awarded by the
former.
The Court of Appeals resolved the parties' motions for reconsideration in favor of the respondent.
It ruled that the motion for reconsideration filed by the petitioners before the MeTC was a prohibited pleading under the Rules
of Summary Procedure. Such being the case, said motion for reconsideration did not produce any legal effect and thus the
amended judgment of the MeTC had become final and executory insofar as the petitioners are concerned
CA: WHEREFORE, the decision appealed from is hereby MODIFIED by reducing the monthly rentals for the first/ground floor
from P20,000.00 to P8,000.00 and for the second and third floors from P10,000.00 each to P5,000.00 for both floors. With this
modification the judgment below is AFFIRMED in all other respects.

ISSUE: W/N INTEREST CAN BE APPLIED TO BACK RENTALS DUE TO THE PETITIONERS.

DECISION:

WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners by REINSTATING the decision of the RTC, with
modifications, and ordering respondent to further PAY:

1. The sum of Twenty Seven Thousand Pesos (P27,000.00), corresponding to the difference between the P40,000.00 awarded by the
Regional Trial Court and the P13,000.00 awarded by the Metropolitan Trial Court, as monthly arrears, computed from respondent's
unlawful detainer, 20 June 1988 (for the ground floor) and 15 August 1988 (for the second and third floors) of the subject property
until the time she vacated the premises on 7 January 1998;

2. Legal interest of twelve percent (12%) per annum on the foregoing sum from the date of notice of demand on 27 September 1988
until fully paid;

3. The sum of Twenty Thousand Pesos (p20,000.00) as and for attorney's fees and;

4. The costs of suit.

HELD:

YES.

In Eastern Shipping Lines, Inc. vs. Court of Appeals, we gave the following guidelines in the award of interest:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the
interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to
be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of
the Civil Code.

The back rentals in this case being equivalent to a loan or forbearance of money, the interest due thereon in twelve percent (12%)
per annum from the time of extra-judicial demand on September 27, 1988.