Bataan Seedling vs Republic
GR No. 141009, 2 July 2002
383 SCRA 590
FACTS
Petitioner entered
into a contract with respondent, represented by the DENR for the reforestation
of a forest land within a period of 3 years. Petitioner undertook to report to
DENR any event or condition which delays or may delay the project. With the
contract was the release of mobilization fund but the fund was to be returned
upon completion or deducted from periodic release of moneys to petitioner.
Believing that petitioners failed to comply with their obligations, respondent
sent a notice of cancellation. Petitioners failed to respond to the notice,
thus, respondent filed a complaint for damages against petitioners. The RTC
held that respondent had sufficient grounds to cancel the contract but saw no
reason why the mobilization fund and the cash advances should be refunded or
that petitioners are liable for liquidated damages. Both parties appealed to
the CA, which affirmed the trial court and that the balnce of the fund should be
returned with 12% interest.
ISSUE
Whether the order to
refund the balance of the fund with 12% interest pa is proper
HELD
No. Interest at the rate
of 12% pa is impossible if there is no stipulation in the contract. Herein
subject contract does not contain any stipulation as to interest. However, the
amount due to respondent does not represent a loan or forbearance of money. The
word “forbearance” is defined, within, the context of usury law, as a
contractual obligation of lender or creditor to refrain, during given period of
time, from requiring borrower or debtor to repay loan or debt then due and
payable. In the absence of stipulation, the legal interest is 6% pa on the
amount finally adjudged by the Court.
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