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CREDIT TRANSACTIONS: INTEREST filing of the complaint until paid as

compensatory and moral damages and


P41,000.00 compensation for the value of
G.R. No. L-59096 October 11, 1985 the lost boat with legal interest from the
filing of the complaint until fully paid to
PACITA F. REFORMINA and HEIRS OF Pacita F.Reformina and the heirs of
FRANCISCO REFORMINA, petitioners, Francisco Reformina. The liability of the
vs. two defendants for an the awards is
THE HONORABLE VALERIANO solidary.
P. TOMOL, JR., as Judge of the Court of
First Instance, Branch XI, CEBU CITY, Petitioners' motion for the reconsideration
SHELL REFINING COMPANY (PHILS.), of the questioned Resolution having been
INC., and MICHAEL, denied, they now come before Us through
INCORPORATED, respondents. the instant petition praying for the setting
aside of the said Resolution and for a
FACTS declaration that the judgment in their favor
should bear legal interest at the rate of
This is a a Petition for Review on certiorari twelve (12%) percent per annum pursuant
of the Resolution of CFI-Cebu Judge Tomol to Central Bank Circular No. 416 dated July
for an action for Recovery of Damages for 29, 1974.
injury to Person and Loss of Property.
ISSUE
On June 7, 1972, judgment was rendered
by the Court of First instance of Cebu in How much, by way of legal interest, should
Civil Case No. R-11279, 2 the dispositive a judgment debtor pay the judgment
portion of which reads creditor?

WHEREFORE, judgment is hereby rendered WON legal interest meant 6% as provided


in favor of the plaintiffs and third party for under Article 2209 of the Civil Code .
defendants and against the defendants
and third party plaintiffs as follows: What kind of judgment is covered under
USURY Law?
Ordering defendants and third party RULING
plaintiffs Shell and Michael, Incorporated to
pay jointly and severally the following
persons: Article 2209 of the Civil Code is applicable
in case at bar. It must be noted that the
decision herein sought to be executed is
(g) Plaintiffs Pacita and one rendered in an Action for Damages for
Francisco Reformina the sum of injury to persons and loss of property and
P131,084.00 which is the value of the boat does not involve any loan, much less
F B Pacita Ill together with its accessories, forbearances of any money, goods or
fishing gear and equipment minus credits. As correctly argued by the private
P80,000.00 which is the value of the respondents, the law applicable to the said
insurance recovered and the amount of case is Article 2209 of the New Civil Code
P10,000.00 a month as the estimated which reads
monthly loss suffered by them as a result
of the fire of May 6, 1969 up to the time
they are actually paid or already the total Art. 2209. If the obligation consists in the
sum of P370,000.00 as of June 4, payment of a sum of money, and the
1972 with legal interest from the filing of debtor incurs in delay, the indemnity for
the complaint until paid and to pay damages, there being no stipulation to the
attorney's fees of P5,000.00 with costs contrary, shall be the payment of interest
against defendants and third party agreed upon, and in the absence of
plaintiffs. stipulation, the legal interest which is six
percent per annum.
On appeal to the then Court of Appeals, the
trial court's judgment was modified to The above provision remains untouched
reads as follows despite the grant of authority to the
Central Bank by Act No. 2655, as amended.
To make Central Bank Circular No. 416
WHEREFORE. the judgment appealed from applicable to any case other than those
is modified such that defendants- specifically provided for by the Usury Law
appellants Shell Refining Co. (Phils.), Inc. will make the same of doubtful
and Michael, Incorporated are hereby constitutionality since the Monetary Board
ordered to pay ... The two (2) defendants- will be exercising legislative functions
appellants are also directed to pay
P100,000.00 with legal interests from the
which was beyond the intendment of P.D.
No. 116.

Central Bank Circular No. 416 which


provides

By virtue of the authority granted to it


under Section 1 of Act 2655, as amended,
otherwise known as the "Usury Law" the
Monetary Board in its Resolution No. 1622
dated July 29, 1974, has prescribed that
the rate of interest for the loan or
forbearance of any money, goods, or
credits and the rate allowed in
judgments, in the absence of express
contract as to such rate of interest,
shall be twelve (12%) per cent per
annum. This Circular shall take effect
immediately. (Italics supplied)

The judgments spoken of and referred to


are Judgments in litigations involving loans
or forbearance of any 'money, goods or
credits. Any other kind of monetary
judgment which has nothing to do with, nor
involving loans or forbearance of any
money, goods or credits does not fall
within the coverage of the said law for it is
not within the ambit of the authority
granted to the Central Bank.

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