In Solid Homes, Inc., et al. v. IAC, et al., G.R. No. 74269; Solid Homes, Inc., et al. v. CA, et al., G.R. No. 92137, November 27, 2006, (Tinga, J), there was an action for rescission of a contract due to the failure to reserve lots intended to be purchased. The trial court ordered the defendant to return the amount of P16, 938.00 with interest and damages. The CA affirmed and awarded 12% interest per annum, but did not provide an explanation why it imposed 12% interest.
This precise issue was subsequently addressed by the Court in Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78. Although the filing of petition in G.R. No. 74269 preceded Eastern Shipping, the guidelines laid down therein are applicable to this case as they implemented and clarified laws that were already in existence even before this petition was filed.
Eastern Shipping teaches that, with respect to an award of interest in the concept of actual and compensatory damages, interest on the amount of damages awarded may be imposed at the discretion of the Court at the rate of 6% per annum for a breach of an obligation not constituting a loan or forbearance of money. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially. But when such certainty cannot be 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. (Eastern Shipping Lines, Inc. v. Court of Appeals, supra note 22 at 96, see also Biesterbos v. Court of Appeals, G.R. no. 152529, 22 September 2003, 411 SCRA 396, 406-407; Heirs of Ignacia Aguilar-Reyes v. Spouses Mijares, 457 Phil. 120, 140 (2003)).
The ruling of the appellate court imposing the interest rate of 12% is incompatible with the consistently reiterated doctrine in Eastern Shipping. In this case, an interest of only 6% should be imposed on the obligation of petitioners as such obligation did not constitute a loan or forbearance of credit. The 6% interest imposed on the principal obligation of P16, 438.00 shall commence on the date of first demand as determined by the lower court which is 11 May 1976.
As aforestated, petitioners did not challenged their liability for the principal obligation, damages and attorney’s fees as found by the trial court. Thus, petitioner’s liability for the judgment amount, save for the interest, has become final and executory.
In Eastern Shipping, the Court went on to state that when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the obligation was in the form of a loan or forbearance of money or otherwise, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. (Eastern Shipping Lines, Inc. v. Court of Appeals, supra note 22. Reiterated in Almeda v. Cariño, 443 Phil. 182, 192 (2003); Biesterbos v. Court of Appeals, supra.; Vicente v. Planters Development Bank, 444 Phil. 309, 323-324 (2003); Solid Homes, Inc. v. IAC, et al., G.R. No. 74269; November 27, 2006).