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In either instance, the reckoning period for the commencement of the running

ECE REALTY and of the legal interest shall be subject to the condition "that the courts are vested
with discretion, depending on the equities of each case, on the award of
DEVELOPMENT vs. interest."

HERNANDEZ Thus, FROM THE FINALITY OF THE JUDGMENT AWARDING A


FACTS: SUM OF MONEY UNTIL IT IS SATISFIED, THE AWARD SHALL BE
HERNANDEZ filed a Complaint for specific performance, with damages, CONSIDERED A FORBEARANCE OF CREDIT, regardless of whether
against EMIR Realty and Development Corporation and ECE Realty before the award in fact pertained to one. Pursuant to Central Bank Circular No. 416,
the HLURB. in the absence of written stipulation the interest rate to be imposed in
judgments involving a forbearance of credit was 12% per annum, up from 6%
According to HERNANDEZ, ECE and EMIR sold to him a 30-square meter under Article 2209 of the Civil Code. This was reiterated in Central Bank
condominium unit described as Unit 808. HERNANDEZ was able to pay the Circular No. 905, which suspended the effectivity of the Usury Law beginning
downpayment. In the Contract to Sell, EMIR and ECE promised that Unit on January 1, 1983.
808 would be ready for occupancy by December 31, 1999.
But since July 1, 2013, the rate of 12% per annum from finality of the
However, EMIR and ECE failed to deliver Unit 808. Moreover, the judgment until satisfaction has been brought back to 6%. Section 1 of
HERNANDEZ discovered that Unit 808 contained only 26 sqm instead of 30 Resolution No. 796 of the Monetary Board of the BSP dated May 16, 2013
sqm, thus, he asked for a corresponding reduction of P120,000. Instead, provides:
EMIR and ECE demanded that he settle all his amortizations in arrears with "The rate of interest for the loan or forbearance of any money, goods or
interest. Sometime in 2005, HERNANDEZ learned that EMIR and ECE had credits and the rate allowed in judgments, in the absence of an express
sold Unit 808 to a third party. contract as to such rate of interest, shall be six percent (6%) per annum."

HERNANDEZ asked HLURB that EMIR and ECE be ordered to accept his Thus, the rate of interest to be imposed from finality of judgments is now back
payment of the balance of the price of Unit 808, less P120,000, without at 6%, the rate provided in Article 2209 of the Civil Code.
interest; and to pay him damages, attorney’s fees, and appearance fee. If Unit
808 is no longer available, HERNANDEZ asked that EMIR and ECE WHEREFORE, the decision of the CA is AFFIRMED with
reimburse him the amount of P452,551.65 he paid, plus legal interest. MODIFICATION. ECE is hereby ordered to pay HERNANDEZ P452,551.65
representing the total amount he paid to ECE, plus 6% interest per annum
EMIR and ECE sought to dismiss the complaint for lack of cause of action from September 7, 2006 until finality hereof by way of actual and
and alleged that HERNANDEZ unjustifiably refused to accept the turn-over compensatory damages. From finality until full satisfaction, the total amount
of Unit 808 and that he was in arrears in his monthly amortizations. Thus, due now compounded with interest due from September 7, 2006 up to finality,
ECE was compelled to cancel his contract to sell, shall likewise earn interest at 6% per annum until fully paid.

HLRUB: Ordered EMIR and ECE to reimburse HERNANDEZ and


damages.

HLURB Board of Commissioners and OP: Affirmed.

CA: Affirmed with modification. ECE to pay HERNADEZ P452,551.65 plus


6% interest per annum starting 07 September 2006, and 12% interest per
annum from the time the judgment becomes final and executory, until fully
paid.
 On the imposition of 6% interest: the amount to be refunded being
neither a loan nor a forbearance of money, goods or credit.

ISSUE:
What is the imposable interest rate on the damages and refund awarded
to HERNANDEZ? 6%

HELD:
Article 2209 of the New Civil Code provides that:
"If the obligation consists 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 per cent per annum."

There is no doubt that ECE incurred in delay in delivering the subject


condominium unit, for which reason the trial court was justified in awarding
interest to HERNANDEZ from the filing of his complaint. There being no
stipulation as to interest, under Article 2209 the imposable rate is six percent
(6%) by way of damages, following the guidelines laid down in the landmark
case of Eastern Shipping Lines v. Court of Appeals (See case for reference;
only a reiteration of the rules).

Eastern Shipping Lines, Inc. synthesized the rules on the imposition of


interest, if proper, and the applicable rate, as follows:
 The 12% per annum rate under CB Circular No. 416 shall apply
only to loans or forbearance of money, goods, or credits, as well as
to judgments involving such loan or forbearance of money, goods,
or credit
 The 6%per annum under Art. 2209 of the Civil Code applies
"when the transaction involves the payment of indemnities in the
concept of damage arising from the breach or a delay in the
performance of obligations in general," with the application of
both rates reckoned "from the time the complaint was filed until
the [adjudged] amount is fully paid."