Six percent (6%) per annum interest rate

As clarified in Nacar v. Gallery Frames,[1] pursuant to Bangko Sentral ng Pilipinas-Monetary Board (BSP-MB) Circular No. 799 (Series of 2013), the legal rate of interest is currently at six percent (6%) regardless of the source of obligation.[2] Such new rate should be applied prospectively,[3] and the twelve percent (12%) legal interest shall apply only until June 30, 2013. Thereafter, the new rate of six percent (6%) per annum shall be the prevailing rate of interest. Nacar, thus, modified the previous guidelines laid down in Eastern Shipping Lines, Inc. v. Court of Appeals,[4] on the imposition of interest.

With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certaintyAccordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

4. And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.[5]

Pilipinas Bank v. Court of Appeals,[6] meanwhile, ruled that the rates of interest prescribed by the MB is also applicable to restitution cases where money is transferred from one person to another and the obligation to return the same or a portion thereof is subsequently adjudged in.[7] Consequently, the interest imposed by the CA must be modified in order to conform to the prevailing rate imposed by the BSP-MB and clarified by recent jurisprudence.


[1] G.R. No. 189871, August 13, 2013, 703, SCRA 439.

[2] Fil-Estate Properties, Inc. v. Ronquillo, G.R. No. 185798, January 13, 2014, 713 SCRA 91, 102.

[3] Federal Builders, Inc. v. Foundation Specialists, Inc., G.R. No. 194507, September 8, 2014.

[4] G.R. No. 97412, July 12, 1994, 234 SCRA 78.

[5] Supra note 42, at 457-458.

[6] G.R. No. 97873, August 12, 1993, 225 SCRA 268.

[7] Id. at 276.

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