Crismina Garments Vs CA

26.
Crismina Garments v CA
Facts:
 During the period from February 1979 to April 1979, the [herein petitioner], whichWas
engaged in the export of girls' denim pants, contracted the services of the [respondent], the
sole proprietress of the D' Wilmar Garments, for the sewing of20,762 pieces of assorted
girls['] denims supplied by the [petitioner]
 The [petitioner] was obliged to pay the [respondent], for her services, in the total amount of
P76, 410.00. The [respondent] sew[ed] the materials and delivered the same to the
[petitioner] which acknowledged the same per Delivery Receipts.
 At first, the [respondent] was told that the sewing of some of the pants w[as] defective. She
offered to take delivery of the defective pants. However, she was later told by [petitioner]'s
representative that the goods were already good. She was told to just return for her check of
P76, 410.00. However, the [petitioner] failed to pay her the aforesaid amount.
 This prompted her to hire the services of counsel who, on November 12, 1979, wrote a
letter to the [petitioner] demanding payment of the aforesaid amount within ten (10) days
from receipt thereof.
 On February 7, 1990, the [petitioner]'s [v]ice-[p]resident-[c]omptroller, wrote a letter to
[respondent]'s counsel, averring, inter alia, that the pairs of jeans sewn by her, numbering
6,164 pairs, were defective and that she was liable to the [petitioner] for the amount of P49,
925.51 which was the value of the damaged pairs of denim pants and demanded refund of
the aforesaid amount.
 On January 8, 1981, the [respondent] filed her complaint against the [petitioner] with the
[trial court] for the collection of the principal amount of P76,410.00
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?
Held:
 The interest rate for obligation not involving a loan or forbearance of money is 6%.
Guidelines for the application of the proper interest rates
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on ‘Damages’ of the Civil Code govern
in determining the measure of recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e.,
a loan or forbearance of money, the interest due should be that which may have been
stipulated in writing. Furthermore, the interest due shall itself earn legal interest from
the time it judicial or extrajudicial demand under and subject to the provisions
of Article 1169 of the Civil Code.
2. 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 xxx the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit. 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 filed, the six
percent (6%) interest should be computed from the filing 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

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