REFORMINA v TOMOL, JR

FACTS:
A fire occurred burning the boat FB Pacita III and fishing gear of the
Reforminas.
Consequently, they filed an action for recovery of damages for injury to
persons and loss of property.
Judge Tomol, Jr awarded the Reforminas damages with legal interest
from the filing of the complaint until paid. He further rendered that by legal
interest meant 6% as provided for by Art 2209 CC.
Reforminas contend that it should be 12% by virtue of Central Bank
Circular No. 416.
ISSUE: WON the legal interest is 6%
HELD:
YES
RATIO: C.B. Circular 416 which took effect July 29, 1974 pursuant to PD 116
which amended Act 2655 (Usury Law) which raised the legal interest fro 6%
to 12% applies only to forbearances of money, goods or credit and court
judgments. Such court judgment refers only to judgments in litigations
involving loans or forbearance of any money, goods or credit.
Any other kind of monetary judgment does not fall under the coverage
of said law for it is not within the ambit of authority granted to the central
Bank. Only the legislature can change the laws.
In this case, the the decision of the judge is one rendered in an action
for damages arising from injury to persons and loss of property and does not
involve a loan much less forbearance of any money, goods or credit. The law
applicable is thus ART 2209 CC which states 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 interest agreed upon, and in the
absence of stipulation, the legal interest which is 6% per annum.

Plana Concurring and Dissenting:

Under Sec 1 a of Act 2655 as amended by PD 116, the authority of CB
is to fix a maximum rate of interest on loans and not to prescribe a fixed
interest rate.

Such authority given to CB is absolute and unqualified and therefore

the delegation of power to it is void.

Extent and scope of actual damages

1. contracts and quasi-contracts
Art. 2201. In contracts and quasi-contracts, the damages for which the
obligor who acted in good faith is liable shall be those that are the natural
and probable consequences of the breach of the obligation, and which the
parties have foreseen or could have reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for all damages which may be reasonably attributed to the nonperformance of the obligation. (1107a)
Art. 2215. In contracts, quasi-contracts, and quasi-delicts, the court may
equitably mitigate the damages under circumstances other than the case
referred to in the preceding article, as in the following instances:
(1) That the plaintiff himself has contravened the terms of the contract;
(2) That the plaintiff has derived some benefit as a result of the contract;
(3) In cases where exemplary damages are to be awarded, that the
defendant acted upon the advice of counsel;
(4) That the loss would have resulted in any event;
(5) That since the filing of the action, the defendant has done his best to
lessen the plaintiff's loss or injury.
In Reformina v. Tomol, Jr., 139 SCRA 260 (1985), we made clear that the
award of legal interest at 12% per annum under said Central Bank Circular
shall be adjudged only in cases involving the loan or forbearance of money.