What are the new guidelines on legal interest in view of Bangko Sentral ng Pilipinas Monetary Board Circular No. 799, Series of 2013, which provides that “the rate of interest for loan or forebearance of any money, goods or credits and the rate allowed in judgments, in the absence of an express contract as to such rate of interest, shall be 6% per annum”, and which took effect on July 1, 2013? Applying Circular 799, the Supreme Court summarized in Nacar vs. Gallery Frames and/or Felipe Bordey, Jr, G.R. No. 189871, August 13, 2013, the new guidelines on legal interest as follows: 1. when an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages and the provisions under Title XVIII on Damages of the Civil Code govern in determining the measure of recoverable damages; 2. For the award of interestin the concept of actual and compensatory damages, the rate of interest and its accrual is imposed as follows: a. For breach of obligations consisting of loan or forbearance of money, interest due shall be that stipulated in writing. Interest due shall itself earn legal interest from the time it is judicially demanded. b. In the absence of stipulation, the rate of interest shall be 6% per annum, computed from default, i.e., judicial or extrajudicial demand subject to the provisions of Article 1169, NCC; c. For breached obligations not consisting of loan or forebearance of money, interest on amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest shall be adjudged on unliquidated claims or damages, except when or until demand can be established with reasonable certainty. i. Where demand is established with reasonable certainty, interest begins to run from time claim is made judicially/extrajudicially; ii. When certainty cannot be reasonable established at the time demand is made, interest runs from date judgment of the court is made, at which time quantification of damages may be deemed to have been reasonable ascertained. The actual base for computation of legal interest shall be on the amount finally adjudged. d. When judgment of court awarding sum of money becomes final and executory, whether the case falls on forebearance or non-foreberance of money, the rate of legal interest shall be 6% per annum from such finality until its satisfaction, the interim period being an equivalent to forebearance of money. e. Effectivity of new legal rate of interest: Judgments that have become final and executory prior to July 1, 2013 shall not be disturbed. The 12% and 6% per annum legal interests shall apply until June 30, 2013.
Posted on: Wed, 13 Aug 2014 02:00:00 +0000
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