Philippine Virginia Tobacco Administration v. Hon. Ricardo P. Tensuan

Summary

This Supreme Court case resolved a dispute over the proper interest rate applicable to a judgment debt arising from a tobacco sale contract. When tobacco delivered by farmers' cooperatives was destroyed by fire in 1963 at a redrying facility, the tobacco administration was ordered to pay damages plus interest. The key legal issue was whether Central Bank Circular No. 416 (prescribing 12% interest) or Civil Code Article 2209 (prescribing 6% interest) should apply. The Supreme Court held that the Central Bank Circular applies only to loans or forbearance of money, not to all monetary judgments arising from commercial transactions. Since the underlying transaction was a contract of sale rather than a loan, the Court applied the 6% interest rate under the Civil Code, modifying the lower court's order that had applied the 12% rate.