Case #3

Blessy borrowed money from Cherry, an owner of a lending company, for her small
neighborhood bar business. It was stated in their contract that she will pay the money after six (6)
months. When Blessy returned the money on the due date, she was asked to pay an additional 6%
interest. Is this valid? Support your answer.

Answer:

The article that is visible in the case is Article 1933 wherein, money or other consumable good is
exchanged for the same quantity of the same kind, and quality is referred to as a mutuum. In my
opinion, the additional interest the lender asked to pay from the debtor is invalid. For the reason of,
according to the Article 1956, which means that interest will not be charged unless it is specifically
specified in writing. And also, under Article 1959, interest due and unpaid does not gain interest, despite
the requirements of Article 2212, which means from the moment the interest is judicially demanded, it
earns legal interest. And in addition, under Article 1960, if the creditor pays interest in the absence of a
written agreement, the provisions of this Code relating to solutio indebiti, or natural obligations, will
apply.

The solutio indebti, is when something was received when there is no right to demand. This is generally
used when obligations, such as debt and interest payments, are overpaid. That is why asking for an
additional interest is invalid.

Resources:

n.a (2021) Codals, et al. [Civil Codes of the Philippines]Book IV Title XI - XVI [Credit Transactions]
https://codalsetal.tumblr.com/post/92494455073/civil-code-of-the-philippines-book-iv-title-xi-xvi

n.a (n.d) Chan Robles: Virtual Law Library

https://www.chanrobles.com/civilcodeofthephilippinesfulltext.html