1. Reformina v.

Tomol
No. L-59096
11 October 1985
Usury Law (Act. 2655)

FACTS: On June 7, 1972, the CFI of Cebu held that Shell and Michael, Incorporated
should jointly and severally pay Pacita and Francisco Reformina the sum of Php 131,
084 (computed as the value of the boat FB Pacita III together with its accessories, fishing
gear, and equipment minus the value of the insurance recovered), with legal interest from
the filing of the complaint until paid. Upon appeal, the CA modified the judgment to
Php100, 000 with legal interests from the filing of the complaint until paid as
compensatory and moral damages and Php41, 000 compensation for the value of the lost
boat with legal interest from the filing of the complaint until fully paid to Pacita and the
heirs of Francisco.
The Reforminas insist that the legal interest decreed in the judgment should be
at the rate of 12% per annum, invoking Central Bank Circular No. 416. Private
respondents contrarily contend that said legal interest should be at the rate of 6% per
annum only, pursuant to Art. 2209 of the New Civil Code in relation to Articles 2210 and
2211 thereof.
Judge Valeriano Tomol, Jr of the CFI of Cebu held that it was a case of recovery
of damages for injury to person and loss of property and that consequently, the rate of
legal interest should be 6% per annum. Thus, this case.

ISSUE: W/N the rate of legal interest should be 6% per annum pursuant to Art. 2209

HELD/RATIO: YES, the applicable legal interest rate is 6% per annum. Central
Bank Circular No. 416 which took effect on July 29, 1974 was issued and promulgated
by the Monetary Board pursuant to the authority granted to the Central Bank by P.D. No.
116, which amended Act No. 2655, otherwise known as the Usury Law. It provides that
in the absence of stipulation, the legal interest rate of 12% per annum shall be applied in
cases involving (1) loans, (2) forbearances of any money, goods, or credits, and (3)
rate allowed in judgments. HOWEVER, the decision sought to be executed is one
rendered in an Action for Damages for injury to persons and loss of property and does
NOT involve any loan, forbearances of money, goods, or credits. The law applicable is
Art. 2209 which imposes that in the absence of express stipulation, a legal interest of 6%
per annum in obligations not constituting a loan or forbearance of money.
The petition of the Reforminas is hereby dismissed.