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Torts and Damages Case Digest: Crismina Garments v. CA (1999)

G.R. No. 128721 March 9, 1999
Lessons Applicable: Interest (Torts and Damages)
Laws Applicable: Article 1589 on the Civil Code, Article 2209 of the Civil Code

  • February 1979 - April 1979: Crismina Garments, Inc. contracted the services of D'Wilmar Garments, for the sewing of 20,762 pieces of assorted girls denims for P76,410
  • At first, the Crismina was told that the sewing of some of the pants were defective so it offered to take them back but then she was told it was good already and asked her to return for her check.
  • Crismina failed to pay and told her that 6,164 pairs were defective and asked for actual damages of P49,925.51 
  •  RTC: favored D'Wilmar P76,140 at 12% per annum, P5,000 attorney's fees and cost of suit
  • CA: affirmed but delete the attorney's fees
ISSUE: W/N they should impose 12% interest for an obligation which is not a loan in the absence of stipulation

HELD: NO. Appealed Decision is MODIFIED. The rate of interest shall be 6%/annum, computed from the time of the filing of the Complaint in the trial court until the finality of the judgment. If the adjudged principal and the interest (or any part thereof) remain unpaid thereafter, the interest rate shall be 12% per annum computed from the time the judgment becomes final and executory until it is fully satisfied.

  • Article 1589 on the Civil Code
    • [t]he vendee [herein petitioner] shall owe interest for the period between the delivery of the thing and the payment of the price . . . should he be in default from the time of judicial or extrajudicial demand for the payment of the price.
  • Article 2209 of the Civil Code
    • If the obligation consists in the payment of money and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is 6%/annum
  • Usury Law
    • 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 per cent (12%) per annum
  • award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof
    • 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
      • 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
    • When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum.
      • No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty
      • where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). 
      • The actual base for the computation of legal interest shall, in any case, be . . . the amount finally adjudged.
    • When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to forbearance of credit
  • amount due in this case arose from a contract for a piece of work, not from a loan or forbearance of money, the legal interest of six percent (6%) per annum should be applied. 
    • Furthermore, since the amount of the demand could be established with certainty when the Complaint was filed, the six percent (6%) interest should be computed from the filing of the said Complaint. 
    • But after the judgment becomes final and exuecutory until the obligation is satisfied, the interest should be reckoned at twelve percent (%12) per year