Crismina Garments v. Court of Appeals

Summary

Crismina Garments contracted Norma Siapno to sew denim pants for P76,410 but failed to pay despite completed delivery. The case centered on whether delayed payment should bear 6% or 12% annual interest. The trial court and Court of Appeals imposed 12% interest under Central Bank Circular 416. The Supreme Court modified this, ruling that since the obligation arose from a service contract (not a loan or forbearance of money), Article 2209 of the Civil Code applies, requiring only 6% interest from complaint filing until judgment finality. However, 12% interest applies from judgment finality until full payment, as this period constitutes forbearance of credit. The decision clarifies the distinction between loan obligations and other contractual obligations in computing legal interest rates.