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Eastern Shipping Lines v.

CA WON it is proper for the lower court to impose the 6% per annum beyond the
final judgment until it is fully paid. NO, beyond final judgment it is 12%.(par.3)
Crismina Garments, Inc. vs CA • In the case of Eastern Shipping Lines, Inc. v CA, the court gave the following
guidelines for the application of the proper interest rate in the ff. paragraphs:
• Crismina Garments operated as an exporter of girls’ denim pants.
1. inapplicable in this case :When the obligation is breached and it consists in
• They on February –April 1979 contracted with D’Wilmar Enterprises, owned by the payment of money(i.e. loans, forbearance of money) the interest due
should be that which may have been stipulated in writing. The interest due shall
Norma Siapro(respondent) to sew 20,762 pieces of girls’ denim pants worth P76,410.
itself earn legal interest from the time it is judicially demanded.
• D’ wilmar finished the pieces on time and delivered it to the petitioners in good
condition and the latter acknowledged it as such by the dated delivery receipts. 2. applicable in this case: those obligations not constituting a loan or
• Then the petitioner complained that some of the pants were defective, but later said forbearance of money is breached, an interest on the amount of damages may
it was already good. Respondent was asked to come back for her check for P76,410. be imposed at the discretion of the court at the rate of 6% per annum. No
• Later, the petitioner didn’t pay for the delivered pants, prompting D’Wilmar to ask interest can be adjudged on unliquidated terms or until the demand can be
their counsel to write a letter demanding payment within 10 days. Still nothing reasonably established with certainty. Where the demand can be reasonably
happened. established with certainty, the interest shall begin to run from the time
• On Feb 7, 1980, respondent’s counsel received a letter from the petitioner that 6,164 the claim is made judicially or extra-judicially (Art.1169) but when such
of the pants were defective, so the respondents are liable for P49,925.51 to them. certainty can’t be so reasonably established at the time the demand is made,
Jan. 8, 1981, respondents filed a case in the trial court demanding the principal of the interest shall begin to run only from the date of the judgment of the
P76,410 from the petitioners. court.(actual base of the legal interest is actual amount finally adjudged)

• Feb 28, 1981, the court ordered the petitioners to pay the respondents P76,410 and 3. applicable in this case: when the judgment awarding the money
12% interest from the time of filing of this complaint until fully paid. They also becomes final and exeutory, the rate of legal interest whether the case
asked the petitioners to pay the atty’s fess and costs of the suit. falls on par. 1 or 2 above (i.e. forbearance and non-forbearance) the
• An appeal was made by the petitioners, CA affirmed the decision except deleted the legal interest rate is 12% per annum from such finality until its full
payment. This interim period being deemed to be by then an equivalent to a
atty’s fees. They also denied the MFR filed by the petitioners.
forbearance of credit.
• So petitioners petitioned for a certiorari, contending the applicable interest.
• Keng Hua was cited but it says the same thing as par. 3 above. 12% interest per
annum on the monetary award beyond final judgment.
WON it is proper to impose the interest at 12% per annum for an obligation that
The decision of the lower court is modified, the rate of interest shall be 6% per annum
does not involve a loan or forbearance of money in the absence of stipulations of
computed form the filing of the complaint in the trial court until the finality of judgment.
the parties. NO
The, the remaining balance in addition to the unpaid interest after final judgment, shall be
• Because the applicable provision in this case is Art. 2209, “if the obligation consists computed for 12% per annum from the time the judgment became final and executory
in the payment of money and the debtor incurs in delay, the indemnity for damages, until full payment.
there being no stipulation to the contrary, shall be the payment of the interest No judgment as to costs.(not that we care).
agreed upon, and in the absence of stipulation, the legal interest is 6% per
Regional Trial Court of Manila, Br. 21 and Sea-Land Service, Inc., respondents
• Respondents contend that the interest rate should be 12% in accordance with [1998]
Central Bank Circular # 416, because the money sought to be recovered was  Sea-Land Service Inc. (SLSI) is a foreign shipping company licensed to do business
supposedly from a forbearance.1The CBC is inapplicable because the delay resulting in the Phil.
to the interest rate wasn’t from loans; forbearance of money, goods or credits; nor  Jun. 29, 1982: SLSI received sealed container of 76 bales of unsorted waste paper in
judgment involving loans, forbearance of money, goods or credit. The source was its Hong Kong terminal for shipment to Keng Hua Paper Products (Keng Hua for
from a contract for a piece of work. short) in Manila. SLSI issued a bill of lading.
• Furthermore the case of Eastern Shipping Lines defined “forbearance” in the  Jul. 9, 1982: shipment discharged at Manila International Container Port. Notices of
CBC/Usury Lawn as “contractual obligation of lender or creditor to refrain during a arrival were sent to Keng Hua but they failed to retrieve the shipment from the
given period of time, from requiring the borrower or debtor to repay a loan or debt container during the free time or grace period w/c lasted until Jul. 29, 1982. It
from due or payable”. Clearly not what is in the case. remained there until Nov. 22, 1983 when shipment was unloaded f container. A total
of 481 days.
WON it is proper for the lower court to impose the interest rates from the filing
of the complaint. YES, (but this is not an issue in this case!!!!)(par.2)
 SLSI sent letters to Keng Hua demanding payment for demurrage2 charges for the
481-day period amounting to P67,340.00. However, oblig remained unpaid w/c
prompted SLSI to institute civil action for collection & damages.
 Keng Hua’s defense:
The usury law has prescribed the rate of interest for the loan or forbearance of any
money, good or credits and the rate allowed in judgments, in the absence of express 2
contract as to such rate of interest, shall be 12% per annum. Demurrage – allowance/compensation for the delay/detention of a vessel. It’s a particular sum deemed fair by the
parties as compensation for delays. It’s the true measure of damages in all cases of mere detention, for that allowance
has reference to the ship’s expenses, wear & tear, and common employment. (Justice Story, The Apollon)
1. it only purchased 50 tons of waste paper from Hong Kong shipper, Ho Kee cargo remained unclaimed, the higher the demurrage. CA affirmed P67,340.00
Waste Paper as proven in a letter of credit issued by Equitable Banking Corp. finding of RTC and such is binding on the SC.
and the remaining balance was only 10 tons whereas the shipment SLSI was 3. WON the bill of lading is separate from the other letter of credit
asking Keng Hua to accept was 20 metric tons or twice that of the shipment it arrangements. – YES
was expecting.  3 distinct & independent contracts in a letter of credit w/c must be kept perpetually
2. Accepting the shipment would violate Central Bank rules & regulations & custom separated from each other:
& tariff laws. a. contract of sale bet. Buyer & seller
3. SLSI has no cause of action since it was not Keng Hua that hired SLSI. Cause of b. contract of buyer w/issuing bank
action should be against Ho Kee w/c contracted SLSI’s services. c. letter of credit proper wherein bank promises to pay seller pursuant to terms &
4. They informed SLSI about the wrong shipment thru a letter dated Jan. 24, conditions stated
1983.  Additional contract of carriage may be needed when buyer & seller are in different
 RTC: Keng Hua liable for demurrage, atty.’s fees & expenses of litigation. Appealed to countries such as in this case. This contract of carriage must be treated
CA. independently of the other contracts as well. Any discrepancy on the amount of
 CA: denied appeal & affirmed RTC decision. goods described in the contract of sale & letter of credit will not affect the validity &
Issues & Ratio: enforceability of the contract of carriage as embodied in the bill of lading. Meaning,
1. WON Keng Hua accepted the bill of lading sent by SLSI. – YES even if the contract of sale & letter of credit stipulated 10 metric tons of waste paper,
 A bill of lading has 2 functions: the contract of carriage stipulating 20 metric tons of such will still be valid &
a. It’s a receipt for the goods shipped. enforceable by virtue of the independence of these contracts.
b. A contract by w/c the shipper (Ho Kee), carrier (SLSI) & consignee (Keng Hua)  Thus, Keng Hua can’t negate its oblig to SLSI arising from the contract of carriage.
undertake specific responsibilities & assume stipulated oblig. Besides, SLSI had no knowledge of the contents of the container since it was the
 Delivery & acceptance of a bill of lading, w/ full knowledge of its contents, gives rise shipper who was responsible for loading the container. Keng Hua’s remedy in case of
to the presumption that the same was a perfected & binding contract. overshipment lies against the shipper (Ho Kee), not against SLSI.
 Both RTC & CA ruled that the bill of lading was a valid & perfected contract among 4. WON interest ran only from the time Keng Hua received the complaint by
the 3 parties. Sec. 17 of the bill of lading provided that the shipper & consignee were summons. – YES.
liable for the payment of demurrage charges for failure to discharge the shipment  This was the first time Keng Hua learned of the demurrage claim of P67,340.00 thus
beyond the grace period, thus making Keng Hua liable. interest can’t run from date of extrajudicial demands since during those times, no
 Keng Hua’s defense: demand for interest was made.
a. There was only “physical acceptance” but in reality, it did not really accept the  Oblig not constituting loan/forbearance of money is breached, interest on amt of
terms & conditions printed in the bill of lading. It invokes the Notice of Refused damages may be imposed at court’s discretion at rate of 6% per annum. Where
or On Hand Freight it received from SLSI w/c they claim acknowledges their demand is established w/reasonable certainty, the interest shall begin to run from
refusal to accept the shipment. the time the claim is made judicially or extrajudicially (CC Art. 1169). But when
b. It sent a letter to SLSI stressing that acceptance of the bill of lading would be certainty can’t be established at the time the demand is made, interest shall begin to
tantamount to smuggling since it only imported 10k kg and not 20,313 kg. This run only from the date the judgment of the court is made. Actual base for
can make them susceptible to legal sanctions for violation of Central Bank laws. computation of leg interest shall be on the amount finally adjudged.
c. The demurrage was a consequence of Ho Kee’s mistake.  Since bill of lading didn’t specify amt of demurrage, total amount demanded can’t be
 Keng Hua admits that it received the bill of lading. It had the chance to examine the deemed to have been established w/reasonable certainty until trial court rendered its
document but it did not object or dissent from any term or stipulation. Its letter to judgment.
SLSI saying that it can’t accept the shipment was only sent 6 mos after it received Holding: CA affirmed w/modification.
the bill of lading. One can infer that it has accepted the terms & conditions of the bill 1. Legal interest of 6% per annum shall be computed from Sept. 28, 1990 until its full
of lading due to its inaction for a long time. payment before finality of judgment.
 Notice of Refused or On Hand Freight does not prove anything but Keng Hua’s 2. Interest rate adjusted to 12% per annum from finality of judgment until full
prolonged failure to object to the bill of lading. It actually supports the finding that satisfaction.
the bill of lading was impliedly accepted by petitioner. 3. Attorney’s fees deleted since no reason was stated for awarding such. Its basis being
 Petitioner can’t likewise invoke its fear of violating the law. Mere apprehension of improperly left to speculation & conjecture makes it tantamount to a conclusion w/o
violating said laws w/o clear demonstration that taking delivery of shipment has premise
become legally impossible can’t defeat its contractual oblig & liability under the bill of
lading.  Private respondent Magtanggol Eusebio executed 3 promissory notes in favor of
 Petitioner actually raised this issue for the first time before the SC. Such can’t be petitioner Security Bank and Trust Co. (SBTC) of the amounts P100K, P100K and
entertained since an issue raised for the first time on appeal & not raised timely in P65K with a stipulated interest of 23% per annum. On all promissory notes, private
the lower court proceedings is barred by estoppel. respondent Leila Ventura had signed as co-maker.
 Thus, petitioner’s prolonged failure to receive & discharge cargo from SLSI’s vessel  Upon failure and refusal of respondent Eusebio to pay the aforestated balance
constitutes a violation of the terms of the bill of lading. payable, a collection case was filed by petitioner SBTC. RTC rendered judgment in
2. WON there is a conflict WRT the amount of demurrage charges demanded favor of petitioner ordering respondent to pay the sum equivalent to 20% of the
by SLSI. – NO total amount due and payable to plaintiff as and by way of attorney’s fees, pay the
The discrepancy between the amount demanded by SLSI’s loss & prevention costs of the suit and pay the unpaid principal balances from the promissory notes
manager (P50,260.00) and its counsel (P37,800.00) can be explained by the fact (P16,665; P83,333; P65K) but attaching only 12% interest per annum for each
that these 2 demands were made at different times. Necessarily, the longer the balance.
 Petitioner filed for a motion for partial reconsideration contending that interest must
be at 23% in accordance to the stipulations of the note and that Leila Ventura
should be held liable jointly and severally with Eusebio as co-maker.
 RTC issued an order denying motion to grant rates of interest beyond 12% and
holding Ventura jointly and solidarily liable with Eusebio

Issue: WON 23% rate of interest agreed upon by petitioner bank and respondents is
allowable and not against the Usury Law.
 YES. CB Circular No. 905, Sec. 1&2 provides:
“Sec. 1. The rate of interest, including commission, premiums, fees and other
charges, on a loan or forbearance of any money, good or credits, regardless pf
maturity and whether secured or unsecured, that may be charged or collected by
any person, whether natural or judicial, shall not be subject to any ceiling
prescribed under or pursuant to the Usury Law, as amended.”
“Sec. 2. The rate of interest for the loan or forbearance of any money, goods or
credits and the rate allowed in judgments, in the absence of express contract as
to such rate of interest, shall continue to be twelve per cent (12%) per annum.”
 This circular was issued by the Central Bank’s Monetory Board pursuant to PD 1684,
empowering them to prescribe the maximum rates of interest for loans and certain
forbearances, to wit:
“Sec. 1. Section 1-a of Act No. 2655, as amended, is hereby amended to read
as follows:
“Sec. 1-a. The Monetary Board is hereby authorized to prescribe the maximum
rate of interest for the loan or renewal thereof or the forbearance of any money,
goods or credits, and to change such rate or rates whenever warranted by
prevailing economic and social conditions: Provided, That changes in such rate or
rates may be effected gradually on scheduled dates announced in advance.
“In the exercise of the authority herein granted, the Monetary Board may
prescribe higher maximum rates for loans of low priority, such as consumer loans
or renewals thereof as well as such loans made by pawnshops, finance companies
and other similar credit institutions although the rates prescribed for these
institutions need not necessarily be uniform. The Monetary Board is also
authorized to prescribed different maximum rate or rates for different types of
borrowings, including deposits and deposit substitutes, or loans of financial
 Philippine National Bank v. Court of Appeals that: P.D. No. 1684 and C.B. Circular
No. 905 no more than allow contracting parties to stipulate freely regarding any
subsequent adjustment in the interest rate that shall accrue on a loan or
forbearance of money, goods or credits. In fine, they can agree to adjust, upward or
downward, the interest previously stipulated.
 All the promissory notes were signed in 1983 and, thus covered by CB Circular No.
905. This circular did not repeal nor in anyway amend the Usury Law but simply
suspended the latter's effectivity.
 Rate of interest was agreed upon by the parties freely. It is not for respondent court
a quo to change the stipulations in the contract where it is not illegal. Furthermore,
Art. 1306 CC provides that contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem convenient, provided they are not
contrary to law, morals, good customs, public order, or public policy.
 In a loan or forbearance of money, the interest due should be that stipulated in
writing, and in the absence thereof, the rate shall be 12% per annum. Hence, only
in the absence of a stipulation can the court impose the 12% rate of interest.
 Promissory notes were signed by both parties voluntarily, thus, stipulations therein
are binding between them.

Almeda v. CA