Practice question
A lender sues on an interest-free loan after established legal delay. The borrower invokes Article 1956 to argue that no interest of any kind can ever be awarded, even as damages for nonpayment. Which analysis is correct?
- Article 1956 erases every form of delay damages
- Conventional interest and compensatory legal interest are distinct; established default can support legal interest despite absence of agreed conventional interest
- The borrower necessarily owes any oral rate alleged
- All principal must be doubled
- Legal interest applies only before the debt becomes due
Legal references
- Civil Code Articles 1169, 1956, 1959, 2209 and 2212: https://lawphil.net/statutes/repacts/ra1949/ra_386_1949.html
- Nacar v. Gallery Frames, GR 189871, August 13, 2013, main decision: https://lawphil.net/judjuris/juri2013/aug2013/gr_189871_2013.html
- Lara's Gifts & Decors v. Midtown Industrial Sales, GR 225433, September 20, 2022, main resolution: https://lawphil.net/judjuris/juri2022/sep2022/gr_225433_2022.html
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