Philippine Rabbit vs. Cruz

Facts:

In a civil case, private respondent Pedro Manabat obtained judgment against Philippine Rabbit, amounting to P72,500 with legal interest. The judgment having become final and executory at the Court of Appeals, the deputy sheriff garnished funds amounting to P155,150, which is the amount of damages plus 12% interest. Philippine Rabbit moved to dissolve the garnishment, asserting that it was willing to pay, but only at 6% interest.

Issue:

Whether the 12% interest is the correct rate to be applied

Held:

Central Bank Circular No. 416, which amended Act No. 2655 (Usury Law), increased the rate of legal interest from 6% to 12%. Act No. 2655 deals with interest on: (1) loans; (2) forbearance of any money, goods, or credits; and (3) rate allowed in judgments. The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgment is not within the ambit of the authority granted to the Central Bank. Action for damages for injury to persons and loss of property does not involve any loan, much less forbearance of any money, goods or credits. The applicable law is Art. 2209 of the New Civil Code, which prescribes legal interest at 6%.