2016 (Civil Law) Bar Exam Questions: Question 2

[Answer/discuss the question below, or see 2016 bar exam Civil Law Instructions; 2016 Labor Law Questions:   12345678910111213141516171819 and 20; See also 2016 Bar Exam: Information, Discussions, Tips, Questions and Results]

-II-

With regard to an award of interest in the concept of actual and compensatory damages, please state the guidelines regarding the manner of computing legal interest in the following situations:

[a) when the obligation is breached and it consists in the payment of a sum of money like a loan or forbearance of money; (2.5%)

[b] when the obligation does not constitute a loan or forbearance of money. (2.5%)

Consider the issuance of BSP-MB Circular No. 799, which became effective on July 1, 2013.

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  1. (a) In consideration of the issuance of BSP-MB circular No. 799, in computing the legal interest in a breached obligation consisting with a payment of a sum of money in a loan or forbearance of money thereof, the legal interest of six (6) per cent per annum shall be imdenified if there being no stipulation to the contrary.

    Moreover, if there would be a stipulated interest in the financial obligation, the interest stipulated by the parties shall be chargeable as long as the following requisites are present:

    (1) The payment of interest must be expressly stipulated;
    (2) The agreement must be in writing; and
    (3) The interest must be lawful.

    (b) In a case of computing the interest if the obligation arises from other sources like sale or by way of damages arising from other sources and not from a loan or forbearance of money, as provided by BSP-MB Circular No. 799, the applicable rate of six (6) per cent per annum shall be the legal interest rate thereof.

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