Eastern Shipping Lines v CA AUTHOR: Joseph Lorenz Asuncion

[G.R. No. 97412; July 12, 1994]

TOPIC: Interest CASE NUMBER: 33
LAW/ S INVOLVED:
DOCTRINE/S: Guidelines in imposing legal interest.
FACTS:
 CARRIERS:
a. CARRIER 1 (carrier): Eastern Shipping Lines
b. CARRIER 2 (arrestre operator): Metro Port Service
c. CARRIER 3 (broker): Allied Brokerage Corp
 CONSIGNEE: Name was not specifically mentioned in the case
 INSURER: Mercantile Insurance Company
 GOODS: Two drums of Riboflavin

HOW THE CASE STARTED:

 Two fiber drums of riboflavin were shipped from Yokohama, Japan for
delivery to the consignee.
- The shipment was transported by delivery vessel "SS EASTERN
COMET" owned by Carrier 1 Eastern Shipping Lines.
- The said shipment was insured by a marine insurance policy by
Mercantile Insurance Company.
 Upon arrival to Manila, the shipment was transferred to Carrier 2
Metro Port Service. However, Metro Port Service noted that one drum
that was damaged.
 On the next transfer, Carrier 3 Allied Brokerage Corp. received the
shipment from Metro Port Service where it found one drum to be
opened without seal
 On the last transfer, Carrier 3 Allied Brokerage Corp. then delivered
the shipment to the consignee wherein the consignee found that one
drum contained spillages and that the contents thereof were
adulterated or fake.
- With such findings, consignee suffered damages amounting to
19,032.95
 As the carriers refused to pay damages, Mercantile Insurance
Company, as insurer, was compelled to pay for the damages. Now,
Mercantile Insurance seeks reimbursement from the carriers for the
damages paid to the consignee.
RULING OF RTC:
 The 3 carriers are solidarily liable to pay Mercantile Insurance an
amount of 19,032.95 with legal interest of 12% per annum from
October 1, 1982 (date of filing of complaint) until fully paid
RULING OF CA: It AFFIRMED RTC
ISSUE:
 WON the payment of legal interest on award for loss or damage be
computed from the time the complaint is filed or from the date the
decision appealed from is rendered.
 WON the applicable interest is 12% or 6%.

HELD: The legal interest of 6% per annum shall be imposed from the time
the RTC rendered its decision. Further, a 12% interest, in lieu of 6% interest
imposed on such amount upon finality of this SC decision until the payment
thereof.
RATIO:

GUIDELINES IN IMPOSING LEGAL INTEREST:

 When an obligation is breached, the contravenor is liable for damages
under the Civil Code
 In case interest is awarded as ACTUAL OR COMPENSATORY DAMAGE,
the rate of interest, as well as the accrual thereof, in imposed as
follows:
WHEN AN OBLIGATION CONSISTS IN THE PAYMENT OF SUM
OF MONEY SUCH AS LOAN OR FOREBEARANCE OF MONEY
Basis of  DEFAULT: Based on what is STIPULATED
Interest by parties
- NOTE: Interest stipulated by parties
shall earn interest when there is judicial
demand (In other words, there is legal
interest on the interest itself)
 IF NO STIPULATION: 12% per annum
from the time of judicial or extrajudicial
demand
 FURTHER: an interest of 12% per annum
shall likewise be imposed from the time the
court rendered its final judgment until its
satisfaction
WHEN AN OBLIGATION DOES NOT CONSISTS OF PAYMENT OF
A SUM OF MONEY
Basis of  DEFAULT: Based on what is STIPULATED
Interest by parties
 IF NO STIPULATION: 6% per annum
shall be imposed. However the reckoning
period of imposing such interest depends
on:
a. If there is REASONABLE CERTAINTY OF
DEMAND:
 It shall run from judicial or
 extrajudicial demand

b. If there is NO REASONABLE CERTAINTY

OF DEMAND
 It runs from the time judgment is
made
NOTE: In the event the losing party FAILS TO PAY the award
stipulated in the final judgment, such unpaid award shall be
considered as LOAN OR FOREBEARANCE which would incur a 12%
per annum interest.

IN THIS CASE: What is involved is an obligation which DOES NOT consists

of payment of sum of money as the obligation arises from the failure
to deliver two fiber drums of riboflavin
 WITH THIS, the 3 carriers are liable to pay 19,032.95 with legal
interest of 6% per annum from the time the RTC rendered its decision.
Further, a 12% interest, in lieu of 6% interest imposed on such
amount upon finality of this SC decision until the payment thereof.