G.R. No. L-59154; April 3, 1990
MERIDIAN ASSURANCE CORPORATION, petitioner, vs. HON. ABELARDO M. DAYRIT, Judge, CFI, Manila, Br. II, and FIRST WESTERN BANK & TRUST COMPANY, respondents.

FACTS

The petitioner, Meridian Assurance Corporation, was a defendant in a case where a judgment was rendered against it and others, ordering them to pay a sum of money “with interest at the legal rate from the filing of the complaint.” This judgment was affirmed by the Court of Appeals and became final. During execution, a dispute arose regarding the applicable interest rate. Meridian offered to pay with interest at 6% per annum, citing Article 2209 of the Civil Code. The private respondent, First Western Bank & Trust Company, rejected this, insisting on a 12% per annum rate pursuant to Central Bank Circular No. 416.
Meridian deposited the computed amount using the 6% rate with the trial court and moved for its acceptance as full satisfaction of the judgment. The respondent judge denied the motion, ruling that Circular No. 416 had changed the legal rate of interest to 12%. Meridian’s motion for reconsideration was also denied, prompting it to file this petition for certiorari.

ISSUE

Whether the rate of interest imposable on the monetary judgment against Meridian is 6% under the Civil Code or 12% under Central Bank Circular No. 416.

RULING

The Supreme Court granted the petition, ruling that the applicable interest rate is 6% per annum. The Court anchored its decision on the doctrine established in Reformina v. Tomol, Jr. and reiterated in Philippine Rabbit Bus Lines, Inc. v. Cruz. The legal logic is that Central Bank Circular No. 416, issued pursuant to the authority to amend the Usury Law, prescribes a 12% per annum interest rate specifically for judgments involving loans or forbearance of money, goods, or credits. The Court emphasized that the authority granted to the Monetary Board is limited to these specific transactions.
The judgment obligation in this case did not arise from a loan or forbearance of money. The underlying cause of action was not specified in the digest as a loan, but the Court’s application of the Reformina doctrine indicates it was not of that character. Therefore, the general law on interest, Article 2209 of the Civil Code, which mandates a 6% annual rate when no stipulation exists, governs. The trial court erred in broadly applying the 12% rate to all monetary judgments. Consequently, Meridian’s deposit calculated at 6% interest constituted full satisfaction of the judgment debt. The challenged orders were annulled and set aside.