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Crismina Garments Inc. v. Court of Appeals

This case involves a dispute over the interest rate owed on an unpaid obligation from a contract for sewing services. The trial court ordered the petitioner to pay the principal amount owed of 76,410 pesos plus 12% annual interest. The petitioner argued on appeal that the interest rate should be 6% under Article 2209 of the Civil Code, while the respondent cited Central Bank Circular No. 416 which sets the rate at 12%. The Supreme Court ruled that the 6% rate under the Civil Code applied because the obligation did not involve a loan or forbearance of money. It also held that the 6% rate should be applied until the judgment becomes final and executory, at which point the 12% post-judgment rate takes effect

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Aianna Bianca Birao (fluffyeol)
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890 views1 page

Crismina Garments Inc. v. Court of Appeals

This case involves a dispute over the interest rate owed on an unpaid obligation from a contract for sewing services. The trial court ordered the petitioner to pay the principal amount owed of 76,410 pesos plus 12% annual interest. The petitioner argued on appeal that the interest rate should be 6% under Article 2209 of the Civil Code, while the respondent cited Central Bank Circular No. 416 which sets the rate at 12%. The Supreme Court ruled that the 6% rate under the Civil Code applied because the obligation did not involve a loan or forbearance of money. It also held that the 6% rate should be applied until the judgment becomes final and executory, at which point the 12% post-judgment rate takes effect

Uploaded by

Aianna Bianca Birao (fluffyeol)
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CRISMINA GARMENTS INC. v.

COURT OF APPEALS

FACTS
Petitioner Crismina Garments, Inc. contracted the services of respondent Norma
Siapno, for sewing assorted pieces of assorted girl's denims. Petitioner was obliged to
pay the respondent for her services, in the total amount of P76,410.00. However,
petitioner failed to pay said amount. Respondent filed a complaint with the trial court for
the collection of the principal amount of P76,410.00 to which the court rendered a decision
in favor of respondent ordering petitioner to pay respondent the amount of P76,410.00
with interest thereon at 12% per annum. On appeal to the Court of Appeals, the appellate
court armed the trial court's ruling. Hence, this petition.

Petitioner contended that the interest rate should be six percent (6%) per annum,
pursuant to Article 2209 of the Civil Code. On the other hand, private respondent
maintained that the interest rate should be twelve percent (12%) per annum, in
accordance with Central Bank Circular No. 416.

ISSUE
Whether or not it is proper to impose interest at the rate of twelve percent (12%)
per annum for an obligation that does not involve a loan or forbearance of money in the
absence of stipulation of the parties.

RULING
Petitioner is correct. Court stressed that the interest rate under CB Circular No.
416 applies to (1) loans; (2) forbearance of money, goods or credits; or (3) a judgment
involving a loan or forbearance of money, goods or credits. Cases beyond the scope of
the said circular are governed by Article 2209 of the Civil Code, 16 16 which considers
interest a form of indemnity for the delay in the performance of an obligation.

Because the 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 led, the six percent (6%) interest should be
computed from the ling of the said Complaint. But after the judgment becomes final and
executory until the obligation is satisfied, the interest should be reckoned at twelve
percent (12%) per year.

Private respondent maintains that the twelve percent (12%) interest should be
imposed, because the obligation arose from a forbearance of money. This is erroneous.
In Eastern Shipping , the Court observed that a "forbearance" in the context of the usury
law is a "contractual obligation of lender or creditor to refrain, during a given period of
time, from requiring the borrower or debtor to repay a loan or debt then due and payable."
Using this standard, the obligation in this case was obviously not a forbearance of money,
goods or credit.

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