G.R. No.
123643 October 30, 1996
PHILIPPINE NATIONAL BANK, petitioner,
vs.
COURT OF APPEALS and DR. ERLINDA G. IBARROLA, respondents.
RESOLUTION
FRANCISCO, J.:p
As payments for the purchase of medicines, the Province of Isabela issued
several checks drawn against its account with petitioner Philippine National
Bank (PNB) in favor of the seller, Lyndon Pharmaceuticals Laboratories, a
business operated by private respondent Ibarrola. The checks were delivered
to the seller's agents 1 who turned them over to Ibarrola, except 23 checks
amounting to P98,691.90, which the agents appropriated after negotiating
them with PNB. For her failure to receive the full payment for the medicines,
Ibarrola filed on November 6, 1974 before the Regional Trial Court (RTC) an
"action for a sum of money and damages," docketed as Civil Case 4226-
p, 2 against the Province of Isabela, its Treasurer, the two agents and PNB.
In its decision dated September 29, 1987, the trial court ordered all the
defendants in said civil case, except the treasurer who died in the meantime,
to "jointly and solidarily" pay Ibarrola several amounts, among which is:
(1) P98,691.90 with interest thereon at the legal rate from the date of the
filing of the complaint until the entire amount is fully paid; 3 (Emphasis
supplied.)
PNB's appeal to the Court of Appeals (CA) 4 and later to the Supreme
Court 5 were denied and dismissed, respectively. All the three courts,
however, did not specify whether the legal rate of interest referred to in the
judgment is 6% or 12%. The judgment in Civil Case 4226-P became final and
executory on November 26, 1993. At the execution stage, the sheriff
computed the interest mentioned in the judgment at the rate of 12% which
PNB opposed insisting that the rate should only be 6%. Ibarrola sought
clarification from the same RTC which promulgated the decision. On August
4, 1994 said court issued an order clarifying that the rate is 12%. PNB's
direct appeal to this court from that order was referred to the CA which
affirmed the RTC order. Hence, this petition for review under Rule 45 where
two legal issues are raised: (1) whether in an action for damages, the legal
rate of interest is 6% as provided by Article 2209 6 of the New Civil Code or
12% as provided by CB Circular 416 series of 1974, 7 and (2) whether such
rate shall be computed from the filing of the complaint until fully paid?
The issues are not new. In the case of Estern Shipping Lines, Inc. v.
CA, 8 this Court had provided a rule "of thumb for future guidance," 9
to wit:
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.
Accordingly, 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 on the amount finally adjudged. 10 (Emphasis ours.)
The case at bench does not involve a loan, forbearance of money or
judgment involving a loan or forbearance of money as it arose from a
contract of sale whereby Ibarrola did not receive full payment for her
merchandise. When an obligation arises "from a contract of purchase and
sale and not from a contract of loan or mutuum," the applicable rate is
"6% per annum as provided in Article 2209 of the NCC and not the rate of
12% per annum as provided in (CB) Cir. No. 416." 11 Indeed, PNB's liability is
based only on the RTC's judgment where it was held solidarily liable with the
other defendants due to its negligence when it "failed to assure itself" if the
Provincial Treasurer was "properly authorized" by Ibarrola to "make
endorsements" of said checks. 12
The rate of 12% interest referred to in Cir. 416 applies only to:
[L]oan or forbearance of money, or to cases where money is transferred from
one person to another and the obligation to return the same or a portion
thereof is adjudged. Any other monetary judgment which does not involve or
which has nothing to do with loans or forbearance of any money, goods or
credit does not fall within its coverage for such imposition is not within the
ambit of the authority granted to the Central Bank. When an obligation not
constituting a loan or forbearance of money is breached then an interest on
the amount of damages awarded may be imposed at the discretion of the
court at the rate of 6% per annum in accordance with Art. 2209 of the Civil
Code. Indeed, the monetary judgment in favor of private respondent does
not involve a loan or forbearance of money, hence the proper imposable rate
of interest is six (6%) per cent. 13 (Emphasis ours.)
Applying the aforequoted rule, therefore, the proper rate of interest referred
to in the judgment under execution is only 6%. This interest according to
Eastern Shipping shall be computed from the time of the filing of the
complaint considering that the amount adjudged (P98,691.90) can be
established with reasonable certainty. Said amount being merely the
uncollected balance of the purchase price covered by the 23 checks
encashed and appropriated by Ibarrola's agents. However, once the
judgment becomes final and executory, the "interim period from the finality
of judgment awarding a monetary claim and until payment thereof, is
deemed to be equivalent to a forbearance of credit." 14 Thus, in accordance
with the pronouncement in Eastern Shipping the rate of 12% p.a. should be
imposed, and to be computed from the time the judgment became final and
executory until fully satisfied. The actual base for the computation of this
12% interest after the judgment in this damage suit became final shall be
the amount adjudged (P98,691.90).
ACCORDINGLY, the appealed decision is REVERSED. The rate of interest shall
be 6% p.a. computed from the time of the filing of the complaint until its full
payment before finality of judgment. Thereafter, if the amount adjudged
remains unpaid, the interest rate shall be 12% p.a. computed from the time
the judgment became final and executory on November 26, 1993 until fully
satisfied.
SO ORDERED.
Narvasa, C.J., Davide, Jr., Melo and Panganiban, JJ., concur.
Footnotes
1 Manuel Flores and Demetrio Perez.
2 Rollo, p. 13.
3 RTC Decision, p. 6; Rollo, p. 39.
4 CA Decision promulgated June 25, 1993, Annex "C".
5 SC Resolution dated October 18, 1993, Annex "D".
6 "If the obligation consist in the payment of a sum 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 six percent per annum."
7 "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."
8 234 SCRA 78.
9 Id., at p. 96.
10 Eastern Shipping Lines, Inc. v. Court of Appeals, 234 SCRA 88.
11 Pilipinas Bank v. CA, 225 SCRA 268.
12 Rollo, p. 38.
13 Food Terminal, Inc. v. CA and TAO Development, Inc., G.R. 120097,
September 23, 1996.
14 Ibid.
