Eastern Shipping Lines v. CA GR No. 97412, Jul 12, 1994 !a"ts# Petitioner-defendant was consigned to deliver a cargo. Upon embarkment, the cargo was found to be damaged while on transit. Private respondent-plainti, Mercantile Insurance, paid the consignee the amount of damage based on a marine insurance policy. Mercantile conseuently sued the petitioner for recovery of damages it paid to the consignee. !he court a uo decided in favor of the plainti and further stressing the amount paid by the insurance company to the consignee be paid and with the present legal interest of "#$ per annum commencing on the date of %ling of the complaint, until fully paid. !he petitioner now constests the ruling particularly on the issue of interest. $ssue# &hen should the reckoning period be for the computation of the payment of legal interest on an award for loss or damage' &hat is the applicable rate of interest' %el&# !he (ourt laid down down the following rules rules of thumb for guidance guidance in cases like like that of of the above) I. &hen an obl obligation, reg regardless of it its s source, i.e., law, contracts, uasi-contracts, uasi-contracts, delicts or uasi-delicts is breached, the contravenor can be held liable for damages. !he provisi provisions ons under !itle !itle *+III on amages amages of the (ivil (ode govern govern in determinin determining g the measure of recoverable damages. II. II. &ith rega regarrd partic rticul ular arly ly to an award of inte interrest in the the con concept ept of actua tual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows) ". 'hen the o(ligation o(ligation is (rea"he& (rea"he&,, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that )hi"h *a have (een stipulate& in )riting. urthermor urthermore, e, the interest interest due shall shall itself itself earn earn legal legal interest from the time it is /udicially demanded. In the absence of stipulation, the rate of inte interrest est shal shalll be "#$ "#$ per annum to be comp comput uted ed +ro* &e+ault &e+ault,, i.e., from from /udici /udicial al or e0tra/udicial e0tra/udicial demand under and sub/ect to the provisions of 1rticle ""23 of the (ivil (ode. #. &hen an obligation, not constituting a loan or forbearance of money, is breached, an interest interest on the amount of damages damages awarded awarded may be imposed imposed at the discretion of the court at at the rate of 2$ per 2$ per annum. annum. 4o interest, however, shall be ad/udged on unliuidated claims or damages e0cept when or until the demand can be established with reasonable certainty. 1ccordingly, )here the &e*an& is esta(lishe& )ith reasona(le "ertaint, the interest interest shall (egin (egin to run +ro* the ti*e ti*e the "lai* is *a&e *a&e u&i"i u&i"iall all or e-trau&i"iall 51rt. e-trau&i"iall 51rt. ""23, (ivil (ode6 but when such certainty cannot be so reasonably establis established hed at the time the demand demand is made, made, the interest interest shall begin to run only from the date the /udgment of the court is made 5at which time the uanti%cation of damages may be deemed to have been reasonably ascertained6. ascertained6. !he actual base for the computation of legal interest shall, in any case, be on the amount %nally ad/udged. 7. &hen the /udgment of the court awarding a sum of money becomes %nal and e0ecutory, the rate of legal interest, whether the case falls under paragraph " or paragraph #, above, shall be "#$ per "#$ per annum from annum from such %nality until its satisfaction, this interim period being deemed to be by then an euivalent to a forbearance of credit.
The petition is, in part, granted.
The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman Accordingly, the liability imposed on Eastern Shipping Lines, Inc., the sole petitioner in this case, is inevitable regardless of whether there are others solidarily liable with it. The cases can perhaps be classified into two groups according to the similarity of the issues involved and the corresponding rulings rendered by the court. In the first group, the basic issue focuses on the application of either the !" #under the $ivil $ode% or &'" #under the $entral (ank $ircular% interest per annum &'" interest per annum applies only to loans or forbearance 16 of money, goods or credits, as well as to )udgments involving such loan or forbearance of money, goods or credits, and that the !" interest under the $ivil $ode governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general. The second group, did not alter the pronounced rule on the application of the !" or &'" interest per annum, 17 depending on whether or not the amount involved is a loan or forbearance, on the one hand, or one of indemnity for damage, on the other hand. the second group varied on the commencement of the running of the legal interest. *hen an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court 24 at the rate of !" per annum. where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made )udicially or e+tra)udicially the interest shall begin to run only from the date the )udgment of the court is made the petition is partly -ATE/ lawphil.net
G.R. No. 97412
-epublic of the 0hilippines SUPREME COURT 1anila E (A$ G.R. No. 97412 July 12, 1994
EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF APPEALS AND MERCANTILE INSURANCE COMPAN, INC., respondents.
Alojada & Garcia and Jimenea, Dala & Zaragoza for petitoner. Zapa Law Office for priate respondent. !ITUG, J.:
The issues, al!eit not completely novel, are2 #a% whether or not a claim for damage sustained on a shipment of goods can be a solidary, or )oint and several, liability of the common carrier, the arrastre operator and the customs broker3 #b% whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered3 and #c% whether the applicable rate of interest, referred to above, is twelve percent #&'"% or si+ percent #!"%. The findings of the court a "uo, adopted by the $ourt of Appeals, on the antecedent and undisputed facts that have led to the controversy are hereunder reproduced2 This is an action against defendants shipping company, arrastre operator and broker4forwarder for damages sustained by a shipment while in defendants5 custody, filed by the insurer4subrogee who paid the consignee the value of such losses6damages. 7n /ecember 8, &9:&, two fiber drums of riboflavin were shipped from ;okohama,
> for 0?!,?:',8!!.?:. @pon arrival of the shipment in 1anila on /ecember &', &9:&, it was discharged unto the custody of defendant 1etro 0ort Service, Inc. The latter e+cepted to one drum, said to be in bad order, which damage was unknown to plaintiff. 7n , &9:' defendant Allied (rokerage $orporation received the shipment from defendant 1etro 0ort Service, Inc., one drum opened and without seal #per -euest for (ad 7rder Survey. E+h. /%. 7n
0laintiff contended that due to the losses6damage sustained by said drum, the consignee suffered losses totaling 0&9,=?'.9B, due to the fault and negligence of defendants. $laims were presented against defendants who failed and refused to pay the same #E+hs. C, I, <, D, L%. As a conseuence of the losses sustained, plaintiff was compelled to pay the consignee 0&9,=?'.9B under the aforestated marine insurance policy, so that it became "u#$o%&'() to all the rights of action of said consignee against defendants #per orm of Subrogation, -elease and 0hilbanking check, E+hs. 1, , and 7%. #pp. :B4:!, #ollo.% There were, to be sure, other factual issues that confronted both courts. Cere, the appellate court said2 /efendants filed their respective answers, traversing the material allegations of the complaint contending that2 As for defendant Eastern Shipping it alleged that the shipment was discharged in good order from the vessel unto the custody of 1etro 0ort Service so that any damage6losses incurred after the shipment was incurred after the shipment was turned over to the latter, is no longer its liability #p. &>, -ecord%3 1etroport averred that although sub)ect shipment was discharged unto its custody, portion of the same was already in bad order #p. &&, -ecord%3 Allied (rokerage alleged that plaintiff has no cause of action against it, not having negligent or at fault for the shipment was already in damage and bad order condition when received by it, but nonetheless, it still e+ercised e+tra ordinary care and diligence in the handling6delivery of the cargo to consignee in the same condition shipment was received by it. rom the evidence the court found the following2 The issues are2 &. *hether or not the shipment sustained losses6damages3 '. *hether or not these losses6damages were sustained while in the custody of defendants #in whose respective custody, if determinable%3 ?. *hether or not defendant#s% should be held liable for the losses6damages #see plaintiff5s pre4Trial (rief, -ecords, p. ?83 Allied5s pre4Trial (rief, adopting plaintiff5s -ecords, p. ?:%. As to the first issue, there can be no doubt that the shipment sustained losses6damages. The two drums were shipped in good order and condition, as clearly shown by the (ill of
Lading and $ommercial Invoice which do not indicate any damages drum that was shipped #E+hs. ( and $%. (ut when on /ecember &', &9:& the shipment was delivered to defendant 1etro 0ort Service, Inc., it e+cepted to one drum in bad order. $orrespondingly, as to the second issue, it follows that the losses6damages were sustained while in the respective and6or successive custody and possession of defendants carrier #Eastern%, arrastre operator #1etro 0ort% and broker #Allied (rokerage%. This becomes evident when the 1arine $argo Survey -eport #E+h. %, with its Additional Survey otes, are considered. In the latter notes, it is stated that when the shipment was landed on vessel to dock of 0ier F &B, South Carbor, 1anila on /ecember &', &9:&, it was observed that one $% fi!er drum $was in damaged condition, coered !' the essel(s Agent(s )ad Order *all' +heet o. -/01 . The report further states that when defendant Allied (rokerage withdrew the shipment from defendant arrastre operator5s custody on , &9:', one drum was found opened without seal, cello bag partly torn but contents intact. et unrecovered spillages was &B kgs. The report went on to state that when the drums reached the consignee, one drum was found with adulterated6faked contents. It is obvious, therefore, that these losses6damages occurred before the shipment reached the consignee while under the successive custodies of defendants. @nder Art. &>?> of the ew $ivil $ode, the common carrier5s duty to observe e+traordinary diligence in the vigilance of goods remains in full force and effect even if the goods are temporarily unloaded and stored in transit in the warehouse of the carrier at the place of destination, until the consignee has been advised and has had reasonable opportunity to remove or dispose of the goods #Art. &>?:, $$%. /efendant Eastern Shipping5s own e+hibit, the Turn47ver Survey of (ad 7rder $argoes #E+hs. ?4Eastern% states that on /ecember &', &9:& one drum was found open. and thus held2 *CE-E7-E, 0-E1ISES $7SI/E-E/, )udgment is hereby rendered2 A. 7rdering defendants to pay plaintiff, )ointly and severally2
&. The amount of 0&9,=?'.9B, with the present legal interest of &'" per annum from 7ctober &, &9:', the date of filing of this complaints, until fully paid #the liability of defendant Eastern Shipping, Inc. shall not e+ceed @SGB== per case or the $I value of the loss, whichever is lesser, while the liability of defendant 1etro 0ort Service, Inc. shall be to the e+tent of the actual invoice value of each package, crate bo+ or container in no case to e+ceed 0B,===.== each, pursuant to Section !.=& of the 1anagement $ontract%3 '. 0?,===.== as attorney5s fees, and ?. $osts. (. /ismissing the counterclaims and crossclaim of defendant6cross4claimant Allied (rokerage $orporation. S7 7-/E-E/. #p. '=>, -ecord%. /issatisfied, defendant5s recourse to @S. The appeal is devoid of merit. After a careful scrutiny of the evidence on record. *e find that the conclusion drawn therefrom is correct. As there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants, and therefore they are liable to the appellee, as subrogee for the amount it paid to the consignee. #pp. :>4:9, #ollo.% The $ourt of Appeals thus affirmed in toto the )udgment of the court a "uo. In this petition, Eastern Shipping Lines, Inc., the common carrier, attributes error and grave abuse of discretion on the part of the appellate court when H I. IT CEL/ 0ETITI7E- $A--IE- <7ITL; A/ SEE-ALL; LIA(LE *ITC TCE A--AST-E 70E-AT7- A/ $@ST71S (-7DE- 7- TCE $LAI1 7 0-IATE -ES07/ET AS -ATE/ I TCE J@ESTI7E/ /E$ISI73 II. IT CEL/ TCAT TCE -AT 7 ITE-EST 7 TCE $LAI1 7 0-IATE -ES07/ET SC7@L/ $711E$E -71 TCE /ATE 7 TCE ILI 7 TCE $710LAIT AT TCE -ATE 7 T*ELE 0E-$ET 23# A45 ISTEA/ 7 -71 TCE /ATE 7 TCE
/E$ISI7 7 TCE T-IAL $7@-T A/ 7L; AT TCE -ATE 7 SIK 0E-$ET 23# A45 , 0-IATE -ES07/ET5S $LAI1 (EI I/IS0@TA(L; @LIJ@I/ATE/. The petition is, in part, granted. In this decision, we have begun by saying that the uestions raised by petitioner carrier are not all that novel. Indeed, we do have a fairly good number of previous decisions this $ourt can merely tack to. The common carrier5s duty to observe the reuisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation until delivered to, or until the lapse of a reasonable time for their acceptance by, the person entitled to receive them #Arts. &>?!4&>?:, $ivil $ode3 anon vs. $ourt of Appeals, &!& S$-A !8!3 Dui (ai vs. /ollar Steamship Lines, B' 0hil. :!?%. *hen the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an e+press finding of negligence to hold it liable #Art. &>?B, $ivil $ode3 0hilippine ational -ailways vs. $ourt of Appeals, &?9 S$-A :>3 1etro 0ort Service vs. $ourt of Appeals, &?& S$-A ?!B%. There are, of course, e+ceptional cases when such presumption of fault is not observed but these cases, enumerated in Article &>?8 1 of the $ivil $ode, are e+clusive, not one of which can be applied to this case. The uestion of charging both the carrier and the arrastre operator with the obligation of properly delivering the goods to the consignee has, too, been passed upon by the $ourt. In 6ireman(s 6und 7nsurance s. 5etro 2ort +erices #&:' S$-A 8BB%, we have e+plained, in holding the carrier and the arrastre operator liable in solidum, thus2 The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman #Lua Dian v. 1anila -ailroad $o., &9 S$-A B M&9!>N. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator #orthern 1otors, Inc. v. 0rince Line, et al., &=> 0hil. 'B? M&9!=N%. Since it is the duty of the A--AST-E to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the $A--IE-. (oth the A--AST-E and the $A--IE- are therefore charged with the obligation to deliver the goods in good condition to the consignee. *e do not, of course, imply by the above pronouncement that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier, or ice8 ersa, nor that attendant facts in a given case may not vary the rule. The instant petition has been brought solely by Eastern Shipping Lines, which, being the carrier and not having been able to rebut the presumption of fault, is, in any event, to be held liable in this particular case. A factual finding of both the court a "uo and the appellate court, we take note, is that there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants
#the herein petitioner among them%. Accordingly, the liability imposed on Eastern Shipping Lines, Inc., the sole petitioner in this case, is inevitable regardless of whether there are others solidarily liable with it. It is over the issue of legal interest ad)udged by the appellate court that deserves more than )ust a passing remark. Let us first see a chronological recitation of the ma)or rulings of this $ourt2 The early case of 5ala'an 7nsurance 9o. , 7nc. , s. 5anila 2ort +erice, 2 decided * on &B 1ay &9!9, involved a suit for recoer' of mone' arising out of short delieries and pilferage of goods. In this case, appellee 1alayan Insurance #the plaintiff in the lower court% averred in its complaint that the total amount of its claim for the value of the undelivered goods amounted to 0?,98>.'=. This demand, however, was neither established in its totality nor definitely ascertained. In the stipulation of facts later entered into b y the parties, in lieu of proof, the amount of 0&,88>.B& was agreed upon. The trial court rendered )udgment ordering the appellants #defendants% 1anila 0ort Service and 1anila -ailroad $ompany to pay appellee 1alayan Insurance the sum of 0&,88>.B& with legal interest thereon from the date the complaint was filed on 0- Decem!er %:0 until full pa'ment thereof. The appellants then assailed, inter alia, the award of legal interest. In sustaining the appellants, this $ourt ruled2 Interest upon an obligation which calls for the payment of money, absent a stipulation, is the legal rate. Such interest normally is allowable from the date of demand, )udicial or e+tra)udicial. The trial court opted for )udicial demand as the starting point. (ut then upon the provisions of Article ''&? of the $ivil $ode, interest cannot be recovered upon unliuidated claims or damages, e+cept when the demand can be established with reasonable certainty. And as was held by this $ourt in #iera s. 2erez, 4 L4!99:, ebruary '9, &9B!, if the suit were for damages, unli"uidated and not ;nown until definitel' ascertained, assessed and determined !' the cou rts after proof $5ontilla c. 9orporacion de 2 . 2 . Agustinos, 0< 2hil . //1= Lichauco . Guzman, >- 2hil . >?0, then, interest should !e from the date of the decision. #Emphasis supplied% The case of #eformina s. *omol, + rendered on && 7ctober &9:B, was for #ecoer' of Damages for 7njur' to 2erson and Loss of 2ropert'. After trial, the lower court decreed2 *CE-E7-E, )udgment is hereby rendered in favor of the plaintiffs and third party defendants and against the defendants and third party plaintiffs as follows2 7rdering defendants and third party plaintiffs Shell and 1ichael, Incorporated to pay )ointly and severally the following persons2
+++ +++ +++ #g% 0laintiffs 0acita . -eformina and rancisco -eformina the sum of 0&?&,=:8.== which is the value of the boat ( 0acita III together with its accessories, fishing gear and euipment minus 0:=,===.== which is the value of the insurance recovered and the amount of 0&=,===.== a month as the estimated monthly loss suffered by them as a result of the fire of 1a y !, &9!9 up to the time they are actually paid or already the total sum of 2>1?,???.?? as of June /, %:10 with legal interest from the filing of the complaint until paid and to pay attorney5s fees of 0B,===.== with costs against defendants and third party plaintiffs. #Emphasis supplied.% 7n appeal to the $ourt of Appeals, the latter modified the amount of damages awarded but sustained the trial court in ad)udging legal interest from the filing of the complaint until full' paid . *hen the appellate court5s decision became final, the case was remanded to the lower court for e+ecution, and this was when the trial court issued its assailed resolution which applied the !" interest per annum prescribed in Article ''=9 of the $ivil $ode. In their petition for review on certiorari, the petitioners contended that $entral (ank $ircular o. 8&!, providing thus H (y virtue of the authority granted to it under Section & of Act '!BB, as amended, 1onetary (oard in its -esolution o. &!'' dated 8, has prescribed that the rate of interest for the loan, or forbearance of any money, goods, or credits and the rate allowed in )udgments, in the absence of e+press contract as to such rate of interest, shall be twelve #&'"% percent per annum. This $ircular shall take effect immediately. #Emphasis found in the te+t% H should have, instead, been applied. This $ourt 6 ruled2 The )udgments spoken of and referred to are )udgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary )udgment which has nothing to do with, nor involving loans or forbearance of any money, goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the $entral (ank. +++ +++ +++ $oming to the case at bar, the decision herein sought to be e+ecuted is one rendered in an Action for /amages for in)ury to persons and loss of property and does not involve any loan, much less forbearances of any money, goods or credits. As correctly argued by the private respondents, the law applicable to the said case is Article ''=9 of the ew $ivil $ode which reads H
Art. ''=9. H If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of interest agreed upon, and in the absence of stipulation, the legal interest which is si+ percent per annum. The above rule was reiterated in 2hilippine #a!!it )us Lines, 7nc. , . 9ruz, 7 promulgated on ': ',B==.== with legal interest thereon from the filing of the complaint until full' paid . -elying on the #eformina . *omol case, this $ourt modified the interest award from %0@ to @ interest per annum !ut sustained the time computation thereof, i.e. , from the filing of the complaint until full' paid . In a;pil and +ons s. 9ourt of Appeals, 9 the trial court, in an action for the recovery of damages arising from the collapse of a building, ordered, inter alia, the defendant @nited $onstruction $o., Inc. #one of the petitioners% . . . to pay the plaintiff, . . . , the sum of 09:9,??B.!: with interest at the legal rate from oem!er 0:, %:-, the date of the filing of the complaint until full pa'ment . . . . Save from the modification of the amount granted by the lower court, the $ourt of Appeals sustained the trial court5s decision. *hen taken to this $ourt for review, the case, on =? 7ctober &9:!, was decided, thus2 *CE-E7-E, the decision appealed from is hereby 17/IIE/ and considering the special and environmental circumstances of this case, we deem it reasonable to render a decision imposing, as *e do hereby impose, upon the defendant and the third4party defendants #with the e+ception of -oman 7aeta% a solidary #Art. &>'?, $ivil $ode, +upra. p. &=% indemnity in favor of the 0hilippine (ar Association of IE 1ILLI7 #0B,===,===.==% 0esos to cover all damages #with the e+ception to attorney5s fees% occasioned by the loss of the building #including interest charges and lost rentals% and an additional 7E C@/-E/ TC7@SA/ #0&==,===.==% 0esos as and for attorney5s fees, the total sum being payable upon the finality of this decision. 4pon failure to pa' on such finalit', twele $%0@ per cent interest per annum shall !e imposed upon aforementioned amounts from finalit' until paid . Solidary costs against the defendant and third4party defendants #E+cept -oman 7aeta%. #Emphasis supplied% A motion for reconsideration was filed by @nited $onstruction, contending that the interest of twelve #&'"% per cent per annum imposed on the total amount of the monetary award was in contravention of law. The $ourt 1- ruled out the applicability of the -eformina and 0hilippine -abbit (us Lines cases and, in its resolution of &B April &9::, it e+plained2
There should be no dispute that the imposition of &'" interest pursuant to $entral (ank $ircular o. 8&! . . . is applicable only in the following2 #&% loans3 #'% forbearance of any money, goods or credit3 and #?% rate allowed in )udgments #)udgments spoken of refer to )udgments involving loans or forbearance of any money, goods or credits. #0hilippine -abbit (us Lines Inc. v. $ru, &8? S$-A &!=4&!& M&9:!N3 -eformina v. Tomol, ebruary &9:B, of the then Intermediate Appellate $ourt reducing the amount of moral and e+emplary damages awarded by the trial court, to 0'8=,===.== and 0&==,===.==, respectively, and its resolution, dated '9 April &9:B, restoring the amount of damages awarded by the trial court, i.e., 0',===,===.== as moral damages and 08==,===.== as e+emplary damages with interest thereon at %0@ per annum from notice of judgment, plus costs of suit. In a decision of =9 ovember &9::, this $ourt, while recogniing the right of the private respondent to recover damages, held the award, however, for moral damages by the trial court, later sustained by the IA$, to be inconceivably large. The $ourt 12 thus set aside the decision of the appellate court and rendered a new one, ordering the petitioner to pay private respondent the sum of 7ne Cundred Thousand #0&==,===.==% 0esos as moral damages, with si $@ percent interest thereon computed from the finalit' of this decision until paid . #Emphasis supplied% -eformina came into fore again in the '& ebruary &9:9 case of 6lorendo . #uiz 1* which arose from a breach of employment contract. or having been illegally dismissed, the petitioner was awarded by the trial court moral and e+emplary damages without, however, providing any legal interest thereon. *hen the decision was appealed to the $ourt of Appeals, the latter held2 *CE-E7-E, e+cept as modified hereinabove the decision of the $I of egros 7riental dated 7ctober ?&, &9>' is affirmed in all respects, with the modification that defendants4appellants, e+cept defendant4appellant 1erton 1unn, are ordered to pay, )ointly and severally, the amounts stated in the dispositive portion of the decision, including the sum of 0&,8==.== in concept of compensatory damages, with interest at the legal rate from the date of the filing of the complaint until full' paid #Emphasis supplied.%
The petition for review to this $ourt was denied. The records were thereupon transmitted to the trial court, and an entry of )udgment was made. The writ of e+ecution issued by the trial court directed that only compensatory damages should earn interest at !" per annum from the date of the filing of the complaint. Ascribing grave abuse of discretion on the part of the trial )udge, a petition for certiorari assailed the said order. This $ourt said2 . . . , it is to be noted that the $ourt of Appeals ordered the payment of interest at the legal rate from the time of the filing of the complaint . . . Said circular M$entral (ank $ircular o. 8&!N does not apply to actions based on a breach of employment contract like the case at bar. #Emphasis supplied% The $ourt reiterated that the !" interest per annum on the damages should be computed from the time the complaint was filed until the amount is fully paid. Juite recently, the $ourt had another occasion to rule on the matter. ational 2ower 9orporation s. Angas, 14 decided on =: 1ay &99', involved the e+propriation of certain parcels of land. After conducting a hearing on the complaints for eminent domain, the trial court ordered the petitioner to pay the private respondents certain sums of money as )ust compensation for their lands so e+propriated with legal interest thereon . . . until full' paid . Again, in applying the !" legal interest per annum under the $ivil $ode, the $ourt 1+ declared2 . . . , #T%he transaction involved is clearly not a loan or forbearance of money, goods or credits but e+propriation of certain parcels of land for a public purpose, the payment of which is without stipulation regarding interest, and the interest ad)udged by the trial court is in the nature of indemnity for damages. The legal interest reuired to be paid on the amount of )ust compensation for the properties e+propriated is manifestly in the form of indemnity for damages for the delay in the payment thereof. Therefore, since the kind of interest involved in the )oint )udgment of the lower court sought to be enforced in this case is interest by way of damages, and not by way of earnings from loans, etc. Art. ''=9 of the $ivil $ode shall apply. $oncededly, there have been seeming variances in the above holdings. The cases can perhaps be classified into two groups according to the similarity of the issues involved and the corresponding rulings rendered by the court. The first group would consist of the cases of #eformina . *omol #&9:B% , 2hilippine #a!!it )us Lines . 9ruz #&9:!% , 6lorendo . #uiz #&9:9% and ational 2ower 9orporation . Angas #&99'%. In the second group would be 5ala'an 7nsurance 9ompan' . 5anila 2ort +erice #&9!9% , a;pil and +ons . 9ourt of Appeals #&9::% , and American 3press 7nternational . 7ntermediate Appellate 9ourt #&9::%. In the first group, the basic issue focuses on the application of either the !" #under the $ivil $ode% or &'" #under the $entral (ank $ircular% interest per annum. It is easily discernible in these cases that there has been a consistent holding that the $entral (ank $ircular imposing the
&'" interest per annum applies only to loans or forbearance 16 of money, goods or credits, as well as to )udgments involving such loan or forbearance of money, goods or credits, and that the 6 /0'($("' under the $ivil $ode governs when the transaction involves the payment of indemnities in the concept of )&&%( &$/"/0% $o '3( #$(&3 o$ & )(l&y /0 '3( 5($o$&0( o o#l/%&'/o0" /0 %(0($&l . 7bserve, too, that in these cases, a common time frame in the computation of the !" interest per annum has been applied, i.e., from the time the complaint is filed until the ad)udged amount is fully paid. The second group, did not alter the pronounced rule on the application of the !" or &'" interest per annum, 17 depending on whether or not the amount involved is a loan or forbearance, on the one hand, or one of indemnity for damage, on the other hand. @nlike, however, the first group which remained consistent in holding that the running of the legal interest should be from the time of the filing of the complaint until fully paid, the second group varied on the commencement of the running of the legal interest. 1alayan held that the amount awarded should !ear legal interest from the date of the decision of the court a "uo, e+plaining that if the suit were for damages, 5unliuidated and not known until definitely ascertained, assessed and determined by the courts after proof,5 then, interest 5should be from the date of the decision.5 American 3press 7nternational . 7A9, introduced a different time frame for reckoning the !" interest by ordering it to be computed from the finalit' of $the decision until paid . The akpil and Sons case ruled that &'" interest per annum should be imposed from the finality of the decision until the )udgment amount is paid. The ostensible discord is not difficult to e+plain. The factual circumstances may have called for different applications, guided by the rule that the courts are vested with discretion, depending on the euities of each case, on the award of interest. onetheless, it may not be unwise, by way of clarification and reconciliation, to suggest the following rules of thumb for future g uidance. I. *hen an obligation, regardless of its source, i.e., law, contracts, uasi4contracts, delicts or uasi4delicts 1 is breached, the contravenor can be held liable for damages. 19 The provisions under Title KIII on /amages of the $ivil $ode govern in determining the measure of recoverable damages. 2II. *ith 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 follows2 &. *hen 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. 21 urthermore, the interest due shall itself earn legal interest from the time it is )udicially demanded. 22 In the absence of stipulation, the rate of interest shall be &'" per annum to be computed from default, i.e., from )udicial or e+tra)udicial demand under and sub)ect to the provisions of Article &&!9 2* of the $ivil $ode. '. *hen 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 24 at the rate of !" per annum. 2+ o interest, however, shall be ad)udged on unliuidated claims or damages
e+cept when or until the demand can be established with reasonable certainty. 26 Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made )udicially or e+tra)udicially #Art. &&!9, $ivil $ode% but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the )udgment of the court is made #at which time the uantification of damages may be deemed to have been reasonably ascertained%. The actual base for the computation of legal interest shall, in any case, be on the amount finally ad)udged. ?. *hen the )udgment of the court awarding a sum of money becomes final and e+ecutory, the rate of legal interest, whether the case falls under paragraph & or paragraph ', above, shall be &'" per annum from such finality until its satisfaction, this interim period being deemed to be by then an euivalent to a forbearance of credit. *CE-E7-E, the petition is partly -ATE/. The appealed decision is AI-1E/ with the 17/II$ATI7 that the legal interest to be paid is SIK 0E-$ET #!"% on the amount due computed $o '3( )(/"/o0, dated =? ebruary &9::, of the court a "uo. A T*ELE 0E-$ET #&'"% interest, in lieu of SIK 0E-$ET #!"%, shall be imposed on such amount upon finality of this decision until the payment thereof. S7 7-/E-E/. arasa, 9.J., 9ruz, 6eliciano, 2adilla, )idin, #egalado, Daide, Jr., #omero, )ellosillo, 5elo, Buiason, 2uno and Capunan, JJ., concur. 5endoza, J., too; no part. Foo'0o'("
& Art. &>?8. $ommon carriers are responsible for the loss, destruction, or deterioration of the goods, unless the same is due to any of the following causes only2 #&% lood, storm, earthuake, lightning, or other natural disaster or calamity3 #'% Act of the public enemy in war, whether international or civil3 #?% Act or omission of the shipper or owner of the goods3 #8% The character of the goods or defects in the packing or in the containers3 #B% 7rder or act of competent public authority. ' ': S$-A !B.
? 0enned by &8? S$-A &B:. : 0enned by then S$-A '=9. &' -endered per curiam with the concurrence of then $hief = S$-A 8!&.
&8 '=: S$-A B8'. &B 0enned by :, &B! 0.'d 8=:, 8&& defines the word for!earance, within the conte+t of usury law, as a contractual obligation of lender or creditor to refrain, during given period of time, from reuiring borrower or de btor to repay loan or debt then due and payable. &> In the case of 1alayan Insurance, the application of the !" and &'" interest per annum has no bearing considering that this case was decided upon before the issuance of $ircular o. 8&! by the $entral (ank. &: Art. &&B>. 7bligations arise from. #&% Law3 #'% $ontracts3 #?% Juasi4contracts3 #8% Acts or omissions punished by law3 and #B% Jausi4delicts. &9 Art. &&>=. Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. '= Art. '&9B. The provisions of this Title #on /amages% shall be respectively applicable to all obligations mentioned in article &&B>. '& Art. &9B!. o interest shall be due unless it has been e+pressly stipulated in writing. '' Art. ''&'. Interest due shall earn legal interest from the time it is )udicially demanded, although the obligation may be silent upon this point. '? Art. &&!9. Those obliged to deliver or to do something incur in delay from the time the obligee )udicially or e+tra)udicially demands from them the fulfillment of their obligation.
Cowever, the demand by the creditor shall not be necessary in order that delay may e+ist2 #&% *hen the obligation or the law e+pressly so declare3 or #'% *hen from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract3 or #?% *hen demand would be useless, as when the obligor has rendered it beyond his power to perform. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. rom the moment one of the parties fulfills his obligation, delay by the other begins. '8 Art. ''&=. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract. Art. ''&&. In crimes and uasi4delicts, interest as a part of the damages may, in a proper case, be ad)udicated in the discretion of the court. 'B Art. ''=9. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is si+ per cent per annum. '! Art. ''&?. Interest cannot be recovered upon unliuidated claims or damages, e+cept when the demand can be established with reasonable certainty.
The Lawphil 0ro)ect 4 Arellano Law oundation
