LOSSES AND DAMAGES

Eastern Shipping Lines v CA

G.R. No. 97412 July 12, 1994
VITUG, J.:

DOCTRINE:
Art. 1734. Common carriers are responsible for the loss, destruction, or deterioration of
the goods, unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.

FACTS:
Two fiber drums were shipped owned by Eastern Shipping from Japan. The shipment
as insured with a marine policy. Upon arrival in Manila unto the custody of metro Port
Service, which excepted to one drum, said to be in bad order and which damage was
unknown the Mercantile Insurance Company. Allied Brokerage Corporation received the
shipment from Metro, one drum opened and without seal. Allied delivered the shipment
to the consignee’s warehouse. The latter excepted to one drum which contained
spillages while the rest of the contents was adulterated/fake. As consequence of the
loss, the insurance company paid the consignee, so that it became subrogated to all the
rights of action of consignee against the defendants Eastern Shipping, Metro Port and
Allied Brokerage. The insurance company filed before the trial court. The trial court
ruled in favor of plaintiff an ordered defendants to pay the former with present legal
interest of 12% per annum from the date of the filing of the complaint. On appeal by
defendants, the appellate court denied the same and affirmed in toto the decision of the
trial court.

ISSUE:
(1)   Whether the applicable rate of legal interest is 12% or 6%.

(2)   Whether the payment of legal interest on the award for loss or damage is to be
computed from the time the complaint is filed from the date the decision appealed from
is rendered.

RULING:
(1) The Court held that the legal interest is 6% computed from the decision of the court
a quo. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damaes awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No interest shall be adjudged on
unliquidated claims or damages except when or until the demand can be established
with reasonable certainty.

When the judgment of the court awarding a sum of money becomes final and executor,
the rate of legal interest shall be 12% per annum from such finality until satisfaction, this
interim period being deemed to be by then an equivalent to a forbearance of money.

The interest due shall be 12% PA to be computed for default.

(2) From the date the judgment is made. Where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made
judicially 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 of judgment of the
court is made.