Eastern Shipping Lines vs.

CA (GR 97412, 12 July 1994) En Banc, Vitug (J): 13 concur, 1 took no part Facts: On 4 December 1981, 2 fiber drums of riboflavin were shipped from Yokohama, Japan for deliveryves sel SS Eastern Com et own ed by Eastern Shipping Lines under Bill of Lading YM A-8. Th e shipment was insured under Mercantile Insurance Companys Marine Insurance Policy 81/01177 for P36,382,466.38.Upon arrival of the shipment in Manila on 12 December 1981, it was discharged unto the custody of MetroPort Services, Inc. The latter excepted to one drum, said to be in bad order, which damage was unknown toMercantile Insurance. On 7 January 1982, Allied Brokerage Corporation received the shipment from MetroP o r t S e r v i c e , o n e d r u m o p e n e d a n d w i t h o u t s e a l . O n J a n u a r y 8 a n d 1 4 , 1 9 8 2 , A l l i e d B r o k e r a g e m a d e deliveries of the shipment to the consignees warehouse. The latter excepted to one drum which containedspillages, whi le the rest of the contents was adulterated/ fake. Due t o the loss es/damage sustained b y sai ddrum, the consignee suffered loss es totaling P19,032.95, due to the fault and negligence of the shippingcompany, arrastre operator and broker-forwarder. Claims were presented against them who failed and refusedto pay the same. As a consequence of the losses sustained, Mercantile Insurance was compelled to pay theconsignee P19,032.95 under the aforestated marine insurance policy, so that it became subrogated to all therights of action of said consignee against the shipping company, etc.After trial, the trial court rendered judgment (1) ordering the shipping company, the arrastre operator and thebroker-forwarder to pay Mercantile Insurance, in solidum, the amount of P19,032.95 with the present legalinterest of 12% per annum from October 1, 1982, the date of filing of this complaints, until fully paid (theliability of defendant Eastern Shipping, Inc. shall not exceed US$500 per case or the CIF value of the loss,whichever is lesser, while the liability of defendant Metro Port Service, Inc. shall be to the extent of the actualinvoice va lue of ea ch package, crate box or container in no case to exc eed P5,000.00 each, pursuant toSection 6.01 of the Management Contract); P3,000.00 as attorneys fees, and costs; and dismissing thecounterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation.Dissatisfied, Eastern Shipping Lines appealed to the Court of Appeals. The Court of Appeal affirmed in totothe judgment of the court a quo.T h e S u p r e m e C o u r t p a r t l y g r a n t e d t h e p e t i t i o n . T h e C o u r t a f f i r m e d t h e a p p e a l e d d e c i s i o n w i t h t h e modification that the legal interest to be paid is 6% on the amount due computed from the decision, dated 3February 1988, of the court a quo. A 12% interest, in lieu of 6%, shall b e impos ed on such amount upon finality of this decision until the payment thereof. 1.Duration of common carriers duty to observe requisite diligence The common carriers duty to observe the requisite diligence in the shipment of goods lasts from thetime the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrierfor transportation until delivered to, or until the lapse of a reasonable time for their acceptance, by the personentitled to receive them (Arts. 1736-1738, Civil Code; Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Baivs. Dollar Steamship Lines, 52 Phil. 863). 2.Presumption of carriers negligence in case of loss, damage of goods; N o n e o f t h e e x c l u s i v e exceptions can be applied

Haystacks (Berne Guerrero)

When the goods shipped either are lost or arrive in

damaged condition, a presumption arises againstthe carrier of its failure to observe that diligence, and there need

not be an express finding of negligence tohold it liable (Art. 1735, Civil Code; Philippine National Railways vs.

Court of Appeals, 139 SCRA 87; MetroPort Service vs. Court of Appeals, 131 SCRA 365). There are, of course,

exceptional cases when suchpresumption of fault is not observed but these cases, enumerated in Article 1734 1 of

the Civil Code, areexclusive, not one of which can be applied to the case at bar.
3.The rationale why the carrier and arrastre

operator are made liable in solidum

In Firemans Fund Insurance vs. Metro Port Services (182 SCRA 455), the Court has

explained inholding the carrier and the arrastre operator liable in solidum, in the manner that The legal relationshipbetwe

en the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v.Manila

Railroad Co., 19 SCRA 5 [1967]. The relationship between the consignee and the common carrier issimilar to that of the consignee

and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil.253 [1960]). Since it is the duty of the

Arrastre to take good care of the goods that are in its custody and todeliver them in good condition to the consignee, such

responsibility also devolves upon the Carrier. Both theArrastre and the Carrier are therefore charged with the obligation to

deliver the goods in goods condition tothe consignee. The pronouncement, however, does not imply that the arrastre

operator and the customsbroker are themselves always and necessarily liable solidarily with the carrier, or vice-versa, nor

thatattendant facts in a given case may not vary the rule.

4.First group of cases on variances on the Courts ruling on legal interest

In the cases of the cases of Reformina v. Tomol (1985), Philippine Rabbit Bus Lines v. Cruz (1986),Florendo v. Ruiz (1989)

and National Power Corporation v. angas (1992), the basic issue focus on theapplication of either the 6% (under the Civil

Code) or 12% (under the Central Bank Circular) interest perannum. It is easily discernible in these cases that there has been a

consistent holding that the Central BankCircular imposing the 12% interest per annum applies only to loans or

forbearance 16 of money, goods orcredits, as well as to judgments involving such loan or forbearance of money, goods or

credits, and that the6% interest under the Civil Code governs when the transaction involves the payment of

indemnities in theconcept of damage arising from the breach of a delay in the performance of obligations in general.

Observe,too, that in these cases, a common time frame in the computation of the 6% interest per annum has beenapplied, i.e.,

from the time the complaint is filed until the adjudged amount is fully paid.
5.Second group of cases on variances on the

Courts ruling on legal interest

The cases of Malayan Insurance Company v. Manila Port Service (1969),

Nakpil and Sons v. Court ofAppeals (1988), and American Express International v. Intermediate

Appellate Court (1988), did not alter thepronounced rule on the application of the 6% or 12% interest per

annum, depending on whether or not theamount involved is a loan or forbearance, on the one hand, or one of

indemnity for damage, on the other hand.Unlike, however, the first group which remained consistent in

holding that the running of the legal interestshould be from the time of the filing of the complaint until fully paid, the

second group varied on thecommenceme nt of the running of the legal interest. Malayan held that the amount awarded

should bear legalinterest from the date of the decision of the court a quo, explaining that if the suit were for

damages,unliqui dated and not known until definitely ascertained, assessed and determined by the courts after

proof,then, interest should be from the date of the decision. American Express International v. IAC, introduced

adifferent time frame for reckoning the 6% interest by ordering it to be computed from the finality of (the)decision

until paid. The Nakpil and Sons case ruled that 12% interest per annum should be imposed from thefinality of the decision until the

judgment amount is paid. The factual circumstances may have called fordifferent applications, guided by the rule

that the courts are vested with discretion, depending on the equitiesof each case, on the award of interest.

6.Rules in the determination of legal interests