G.R. No. L-59096 - Reformina vs. Tomol, Jr.

The Reforminas filed an action for recovery of damages for injury to person and loss of property against Shell Refining Company (Phils.), Inc. and Michael, Incorporated.
The Court of First Instance of Cebu rendered a judgment on June 7, 1972, awarding Pacita F. Reformina and heirs of Francisco Reformina P131,084.00 representing the value of the boat FB Pacita III (less insurance recovered), monthly losses of P10,000.00 until full payment, legal interest from filing of complaint until paid, attorney’s fees, and costs against defendants.
Upon appeal, the Court of Appeals modified the judgment to order defendants to pay P100,000.00 with legal interest from filing of complaint until paid as moral and compensatory damages, plus P41,000.00 for the boat value with legal interest, jointly and severally, and costs. The rest of the judgment was affirmed.
The decision became final on October 24, 1980 and the case was remanded for execution.

The petitioners claimed the judgment should bear legal interest at 12% per annum pursuant to Central Bank Circular No. 416 dated July 29, 1974.
Respondents contended the legal interest should be only 6% per annum, referring to Article 2209 of the New Civil Code and related provisions.
The lower court ruled for 6% per annum interest pursuant to Article 2209 of the Civil Code.
Petitioners’ motion for reconsideration was denied, prompting the present petition for review on certiorari.

Central Bank Circular No. 416, issued under authority granted by P.D. No. 116 amending Act No. 2655 (Usury Law), prescribes a 12% rate of interest for loans, forbearance of money, goods or credits, and judgments in absence of an express contract specifying rate of interest.
Petitioners argued that the judgment falls within the scope of the Circular’s phrase “rate allowed in judgments in the absence of express contract,” thus the 12% rate applies.

The judgment involves damages for injury to person and loss of property, not loans or forbearance, thus falls under Article 2209 of the Civil Code prescribing 6% legal interest.
Central Bank Circular No. 416 applies only to judgments involving loans or forbearance of money, goods or credits, based on the scope of authority under Usury Law.

Whether Central Bank Circular No. 416, prescribing a 12% rate of interest on judgments, applies to a monetary judgment involving damages for injury to person and loss of property, or merely to judgments involving loans or forbearance of money, goods or credits.
What is the proper legal interest rate that a judgment debtor must pay to the judgment creditor in a case of recovery of damages for injury to person and loss of property?