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Eastern Shipping vs. CA 234 SCRA 78 Art.

1175 & 1176, Legal Interest Issues Whether the payment of legal interest on an award for loss or damage is to be co mputed from the time of complaint is filed or from the date the decision appeale d from is rendered? Whether the applicable rate of interest is 12% or 6%? Petiti oner Eastern Shipping made a shipment which was insured under Insurance Policy w ith Defendant Mercantile Insurance One drum of riboflavin was said to be in bad order upon receipt of the consignee (person to whom the shipment is to be delive red) Mercantile was compelled to pay the consignee There is sufficient evidence that the shipment sustained damage while in the possession of petitioner. Easter n was held liable for payment of damages Facts Held: Established rule on interest in the concept of actual/compensatory damages 1. Payment of sum of money in the form of loan/forbearance a. if stipulated in writing interest shall earn from the time it is judicially demanded b. in the ab sence of stipulation 12% per annum to be computed fron time of default (from tim e of judicial/extra-judicial demand was made under Art. 1169) 2. NOT in the form of loan/forbearance - may be imposed at the discretion of the court at 6% per a nnum NO INTEREST SHALL BE ADJUDGED ULESS THE DEMAND CAN BE ESTABLISHED WITH REAS ONABLE CERTAINTY a. When demand is established with reasonable certainty interes t begin to run from the time claim is made judicially/extra-judicially b. When d emand is not certain interest shall begin to run only from date of judgment of c ourt is made Base for Computation amount finally adjudged 3. When judgment award ing sum of money becomes final and executory legal interest both 1 & 2 shall be 12% until its satisfaction (Reason: Interim period being deemed to be by then an equivalent to a forbearance of credit) *Eastern was ordered to pay 6% on the am ount due computed from the decision dated February 3, 1988, and 12% interest, in lieu of 6%, was imposed on such amount upon finality of the SC decision until t he payment thereof.

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