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Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-59096 October 11, 1985

PACITA F. REFORMINA !" #EIRS OF FRANCISCO REFORMINA, petitioners,vs.T#E #ONORA$LE %ALERIANO P. TOMOL, &R., ' &(")e o* t+e Co(rt o* Fr'tI!'t!ce, $r!c+ I, CE$U CIT, S#ELL REFINING COMPAN /P#ILS., INC., !"MIC#AEL, INCORPORATE, respondents.

Mateo Canonoy for petitioners.

Reynaldo A. Pineda, Reyes, Santayana, Tayao and Picaso Law Office for respondent

Shell.

Marcelo Fernan & Associates for respondent Michael, Inc.

CUE%AS, J.:

How much, b wa of le!al interest, should a "ud!ment debtor pa the "ud!ment creditor# isthe issue raised b the RE$%RM&NA' (herein petitioners) in this Petition for Review oncertiorari of the Resolution of the Hon. respondent *ud!e +aleriano P. omol, *r. of the then

Court of $irst &nstance of Cebu#Branch -&, issued in Civil Case No.R#/01, an action for Recover of 2ama!es for in"ur to Person and 3oss of Propert.

he dispositive portion of the assailed Resolution reads as follows4

&n li!ht (sic) of the fore!oin!, the considered view here that b le!al interest ismeant si5 (67) percent as provided for b Article //81 of the Civil Code. 3eta writ of e5ecution be issued.

'% %R2ERE2.1

Petitioners9 motion for the reconsideration of the :uestioned Resolution havin! been denied,the now come before ;s throu!h the instant petition prain! for the settin! aside of thesaid Resolution and for a declaration that the "ud!ment in their favor should bear le!alinterest at the rate of twelve (/7) percent per annum pursuant to Central Ban< CircularNo. =6 dated *ul /1, 10=.

Hereunder are the pertinent antecedents>


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%n *une 0, 10/, "ud!ment was rendered b the Court of $irst instance of Cebu in CivilCase No. R#/01, 2the dispositive portion of which reads4

?HERE$%RE, "ud!ment is hereb rendered in favor of the plaintiffs and thirdpart defendants and a!ainst the defendants and third part plaintiffs asfollows>

%rderin! defendants and third part plaintiffs 'hell and Michael, &ncorporated to pa "ointland severall the followin! persons>

(a) ...

555 555 555

(!) Plaintiffs Pacita $. Reformina and $rancisco Reformina the sum ofP@,8=.88 which is the value of the boat $ B Pacita &ll to!ether with itsaccessories, fishin! !ear and e:uipment minus P8,888.88 which is the value

of the insurance recovered and the amount of P8,888.88 a month as theestimated monthl loss suffered b them as a result of the fire of Ma 6, 161up to the time the are actuall paid or alread the total sum of P@08,888.88as of *une =, 10/with leal interest from the filin! of the complaint until paidand to pa attorne9s fees of P,888.88 with costs a!ainst defendants andthird part plaintiffs.

%n appeal to the then Court of Appeals, the trial court9s "ud!ment was modified to reads asfollows4

?HERE$%RE. the "ud!ment appealed from is modified such that

defendants#appellants 'hell Refinin! Co. (Phils.), &nc. and Michael,&ncorporated are hereb ordered to pa ... he two (/) defendants# appellantsare also directed to pa P88,888.88 with le!al interests from the filin! of thecomplaint until paid as compensator and moral dama!es and P=,888.88compensation for the value of the lost boat with le!al interest from the filin! ofthe complaint until full paid to Pacita $. Reformina and the heirs of $ranciscoReformina. he liabilit of the two defendants for an the awards is solidar.

555 555 555

E5cept as modified above, the rest of the "ud!ment appealed from is affirmed. hedefendants#appellants shall pa costs in favor of the plaintiffs. Appellants 'hell and Michaeland third part defendant Anita 3. Abellanosa shall shoulder their respective costs.

'% %R2ERE2. 3

he said decision havin! become final on %ctober /=, 18, the case was remanded to thelower court for e5ecution and this is where the controvers started. &n the computation of thele!al interest decreed in the "ud!ment sou!ht to be e5ecuted, petitioners claim that thele!al interest should be at the rate of twelve (/7) percent per annum, invo


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of their aforesaid submission, Central Ban< of the Philippines Circular No. =6. ;pon theother hand, private respondents insist that said le!al interest should be at the rate of si5(67) percent per annum onl, pursuant to and b authorit of Article //81 of the New CivilCode in relation to Articles //8 and // thereof.

&n support of their stand, petitioners contend that Central Ban< Circular No. =6 whichprovides 4

B virtue of the authorit !ranted to it under 'ection of Act /6, asamended, otherwise


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he contention is devoid of merit.

he "ud!ments spo


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&N +&E? %$ HE $%REF%&NF C%N'&2ERA&%N', and findin! the instant petition to bewithout merit, the same is hereb 2&'M&''E2 with costs a!ainst petitioners.

'% %R2ERE2.

Concepcion, %r., A!ad Santos, Melencio'errera, (scolin, Relo)a, *#tierre+, %r., e laF#ente, Ala$pay and Pata"o, %%., conc#r.

Ma-asiar, C%., with separate opinion of %#stice Plana.

A#ino, %., conc#rs in the res#lt.

Serte O!o!'

PLANA, J., concurrin! and dissentin!>

. Central Ban< Circular =6 dated *ul /1, 10= increased the rate of interest allowed in"ud!ments from 67 to /7 per annum. o m a

'ec. #a. he Monetar Board is hereb authoriDed to prescribethe $a/i$#$ rate or rates of interest for the loan or renewal thereof or theforbearance of an mone, !oods or credits, and to chan!e such rate or rateswhenever warranted b prevailin! economic and social conditions> Provided,hat such chan!es shall not be made oftener than once ever twelve months.

&n the e5ercise of the authorit herein !ranted, the Monetar Board ma

prescribe hi!her $a/i$#$rates for consumer loans or renewals thereof aswell as such loans made b pawnshops, finance companies and other similarcredit institutions althou!h the rates prescribed for these institutions need notnecessaril be uniform.

he above law does not empower the Central Ban< to fi5 the specific rate ofinterest to be char!ed for loans. &t merel !rants the power to prescribethe $a/i$#$interest rate, leavin! it to the contractin! parties to determinewithin the allowable limit what precisel the interest rate will be. &n other


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?ords, the provision presupposes that the parties to the loan a!reement arefree to fi5 the interest rate, the ceilin! prescribed b the Central Ban

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