PHILIPPINE COMMERCIAL AND INDUSTRIAL BANK, Administrator of the Testate

Estate of the Deceased Plaintiff C. N. Hodges, plaintiff-appellant, vs. JUAN GRINO,

DIZON, J.:
The decision rendered by the Court of First Instance of Iloilo in Civil Case No. 3926 states the issue
raised therein as follows:
"The pivotal question to be determined in this case is whether the true contract between plaintiff and
defendant is that embodied in the 'contract to sell' (Exh. A) wherein it appears that plaintiff agreed to sell,
and defendant agreed to buy, Lots Nos. 1368 and 1536-A, for the sum of P13,200 payable by defendant
to plaintiff in installments with 1% monthly interest until fully paid, as claimed by plaintiff, or that of loan of
P11,000 secured by an equitable mortgage on the aforesaid Lots with 20% interest, or the sum of
P2,200, immediately added to the capital plus 1% monthly interest until the whole amount of P13,200 is
fully paid by defendant to plaintiff, as claimed by defendant and intervenors."
After an exhaustive review of the evidence the Court held that the transaction involved was usurious,
and that the document marked as Exhibit A was a mere subterfuge conceived by the original plaintiff, the
now deceased C. N. Hodges, to conceal the true nature thereof. As a result it rendered judgment as
follows:
"(a) Declaring that the contracts evidenced by Annex A of the complaint and Annexes 3, 4 & 5 of the
answer (Exhs. A of plaintiff and Exhs. 1, 2, & 4 of defendant, respectively) were all relatively simulated to
conceal a usurious loan of P11,000 with equitable mortgage on the two lots above mentioned;
"(b) Declaring that plaintiff is not entitled to recover from defendant the stipulated usurious interest;
"(c) Declaring that plaintiff has been fully paid by defendant the total sum of P11,000 loaned to the latter;
"(d) Ordering defendant to pay plaintiff the sum of P79.07 representing real estate taxes paid by plaintiff
for and in behalf of defendant on Lot No. 1536-A for the years 1953 to 1956, inclusive, and on Lot No.
1368 for part of the year 1958, with the legal interest thereon from the filing of the complaint until fully
paid;
"(e) Ordering plaintiff to forthwith reconvey the aforesaid Lots Nos. 1536 A and 1368 of the Cadastral
Survey of Sta. Barbara, Iloilo, to defendant and his wife, Anunciacion C. Grio, upon full payment by
them of the said sum of P79.07 with the corresponding legal interest thereon.
"Without pronouncement as to costs."
On appeal, while the Court of Appeals also held that the contract Exhibit A was "fictitious and simulated
to conceal the usurious transaction of the parties", it modified the above decision as follows:

"It has been admitted that at the time the complaint was presented by the plaintiff to the court, defendant
had already paid the former the sum of P1,997.10 (p. 14 t.s.n. I). On January 13, 1959, defendant further
paid the plaintiff, who accepted such payment without prejudice to his claim, another sum of P9,002.90.
Thus, the full amount of the principal obligation, P11,000.00, has now been fully paid.
"However, we do not agree with the trial court that plaintiff is entitled to recover from the defendant only
the amount loaned without interest. In the case of Sajo v. Gustilo (supra) the Supreme Court held:
'The Usury Law, as construed by this court, permits the creditor to recover the principal but not the
stipulated usurious interest. This could well be taken to mean a forefeiture of the right to any interest so
as not to arrive at a contradiction in terms. Nevertheless, the court has fallen into the habit in cases of
this character of allowing the creditor the legal rate of interest on the judgment from the date of the filing
of the complaint.'
Consequently, defendant should be ordered to pay interest at the legal rate, on the amount of P9,002.90
to be computed from the filing of the complaint up to the time the same had been paid.
"WHEREFORE, with the modification that defendant should be ordered to pay interest to the plaintiff at a
legal rate on the amount of f9,002.90 from the filing of the complaint up to the time the same had been
paid, the appealed judgment is hereby affirmed in all other respects, with costs against
plaintiff-appellant."
After the decision of the Court of Appeals had become final and executory the record of the case was
remanded below where on August 23, 1965, the appellee Juan Grio filed a motion for entry of
satisfaction of judgment and for conveyance of Lots 1536-A and 1368, alleging, among other things, that
on December 14, 1965 the lower court in Special Proceedings No. 1307 and 1672, involving the
settlement of the Testate Estate of Mr. and Mrs. C. N. Hodges issued an order directing the Philippine
Commercial and Industrial Bank - hereinafter referred to as PCIB, Administrator of the Testate Estate of
C.N. Hodges - to reconvey the above-mentioned parcels of land to the spouses Juan Grio and
Anunciacion C. Grio upon payment by them of the sum of P79.07, with legal interest from the filing of
the complaint in Civil Case No. 3926 of the Court of First Instance of Iloilo, until fully paid, and the legal
interest on the amount of P9,002.90 from the filing of the complaint in the same civil case until the date
of payment of the said sum of P9,002.90; that on August 8, 1966 appellant had tendered to the PCIB, in
its capacity as Administrator of the Hodges Estate, the sum of P1,556.27 in full satisfaction of the
amount due to said estate under the final judgment rendered in this case, with a request for the
conveyance of the parcels of land already mentioned, but that the PCIB refused to accept said payment
and to make the conveyance, alleging that the amount due from the defendant to the Hodges estate was
P2,549.67 as of August 8, 1966, and not the sum tendered; that the sum of P1,556.27 was deposited by
said defendant with the Clerk of Court in satisfaction of said judgment.
The PCIB objected to the motion as follows:
"When the complaint was filed on May 22, 1956, the principal of the loan in the sum of P9,002.90 started
to bear interest at the rate of 6% per annum. On January 13, 1959, the accrued interest amounted to
P1,426.96. When on this date the defendant paid P9,002.90, this payment was applied first to the
accrued interest and then to the principal, in accordance with the Civil Code which provides 'If the debt produces interest, payment of the principal shall not be deemed to have been made until the
interests have been covered (Art 1252).'
"After such application of payment on January 13, 1959, there remained an unpaid balance of the

principal in the sum of P1,426.96 which continued to bear interest at the rate of 6% per annum. Said
remaining balance of the principal remains unpaid up to the present time, and the decision of the Court
of Appeals holds that interest will continue to run 'up to the time the same had been paid'. This amounts
to P2,080.50 as of August 27, 1966.
"The PCIB is also entitled to collect additional amounts for taxes and interest thereon, and miscellaneous
expenses, which should be reimbursed by the defendant.
'Necessary expenses shall be refunded to every possessor; . . .' (Art. 546).
'Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the
latter' (Art. 2175).
"The total amount due, therefore, is not only P1,556.27 as the defendant contends but P2,562.51 as of
August 27, 1966.
"The computation of the defendants is clearly erroneous because it ignores miscellaneous expenses as
well as the land taxes and interest thereon for part of the year 1958 up to the present. With respect to the
principal of the loan, it computes interest only up to January 30, 1959 (?), which is clearly contrary to Art.
1253 of the Civil Code above-cited as well as the decision of the Court of Appeals.
"It is the defendant, contrary to what he would make the court believe who is 'altering and misconstruing'
the decision of the Court of Appeals. Said court did not say that the interest shall run only 'up to January
13, 1959', but on the contrary it did not set a cut-off date because it did not know when the entire
obligation (accrued interest and principal) would be finally paid by the defendant. Why should the PCIB
ask for reconsideration of something which it believes to be correct? Contrary to what he would make the
court believe, the PCIB does not contend that the Court of Appeals 'deviates from the rule on the
application of payments under Art. 1253, new Civil Code' but rather that said decision should be
understood in the light of such plain, obvious, and simple provision of law. The PCIB agrees that said
judgment is final and beyond recall; that the defendant's (not administrator's) attempt to revise it now is
improper; and that it should be executed strictly in accordance with its terms."
The matter having been submitted for resolution, the lower court, under date of September 21, 1966,
issued the order appealed from, whose dispositive part reads as follows:
"WHEREFORE, the entry of satisfaction of judgment in this case by defendant Juan Grio is hereby
ordered and the PCIB is hereby directed to execute the conveyance of Lots Nos. 1526-A and 1368 of the
cadastral survey of Sta. Barbara, Iloilo, in favor of defendant Juan Grio and his wife Anunciacion C.
Grio within ten (10) days from receipt hereof and in the event of its refusal then the Clerk of Court shall
execute the conveyance of the aforesaid lots in favor of defendant Juan Grio and his wife Anunciacion
C. Grio which instrument shall be effective and registerable as if it were a conveyance executed in due
form of law by plaintiff in this case."
As grounds for the reversal of the above order, appellant submits that the lower court erred, firstly, in not
applying the provisions of Article 1253 of the Civil Code so that the sum of P9,002.90 paid by appellee
on January 13, 1959 should be applied first to the accrued interest and then to the principal of the
judgment debt; and secondly, in not ordering appellee to pay the unpaid balance of the principal
amounting to the sum of P1,426.96, with legal interest from January 13, 1959 until fully paid, and in not
ordering appellee to pay to appellant real estate taxes and miscellaneous expenses.
We find appellant's contentions unmeritorious.

We must not lose sight of the fact that appellee's motion of August 23, 1965 involved nothing more than
the satisfaction of the decision rendered by the Court of Appeals quoted heretofore. Indeed, after the
same had become final and executory, there was no other question left but its faithful execution. Under
its plain terms appellee was under obligation to pay to the estate of Hodges the following amounts, and
no more:
(a) 6% interest on the sum of P9,002.90 from the filing of the complaint (May 21, 1956) up to the time
payment thereof is made;
(b) P79.07 representing real estate taxes paid by Hodges and/or the PCIB for and on behalf of appellant
on Lot No. 1536-A for the years 1953-1956, inclusive, and on Lot No. 1368 for part of the year 1958, with
legal interest thereon from the filing of the complaint until full payment thereof.
The record discloses that on August 8, 1966 appellee tendered to appellant the sum of P1,556.27
representing the 6% accrued interest on the amount of P9,002.90 from May 22, 1956 (the date when the
action was commenced) up to January 13, 1959, the date of payment of the aforesaid sum of P9,002.90,
and the sum of P79.07 representing the real estate taxes paid by appellant for and on behalf of appellee
on Lot No. 1536-A for the years 1953 to 1956, inclusive, and on Lot No. 1368 for part of the year 1958,
with legal interest thereon from the filing of the complaint until the date when the tender of payment was
made. That was all that appellee was under obligation to pay in satisfaction of the final judgment
rendered in favor of appellant. Any other amount allegedly due to, and payable to the latter are not
included in the aforesaid judgment.
WHEREFORE, the order appealed from is affirmed, with costs.
Concepcion, C.J., Reyes, J.B.L., Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ.,
concur.