Republic of the Philippines SUPREME COURT Manila EN BANC

G.R. No. 97412 July 12, 1994 EASTERN SHIPPING LINES, INC., petitioner, vs. HON. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY, INC., respondents. Alojada & Garcia and Jimenea, Dala & Zaragoza for petitoner. Zapa Law Office for private respondent.

ITUG, J.: The issues, albeit not completely novel, are !a" #hether or not a claim for dama$e sustained on a shipment of $oods can be a solidary, or %oint and several, liability of the common carrier, the arrastre operator and the customs bro&er' !b" #hether the payment of le$al interest on an a#ard for loss or dama$e is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered' and !c" #hether the applicable rate of interest, referred to above, is t#elve percent !()*" or si+ percent !,*". The findin$s of the court a !o, adopted by the Court of Appeals, on the antecedent and undisputed facts that have led to the controversy are hereunder reproduced This is an action a$ainst defendants shippin$ company, arrastre operator and bro&erfor#arder for dama$es sustained by a shipment #hile in defendants. custody, filed by the insurer-subro$ee #ho paid the consi$nee the value of such losses/dama$es. 0n 1ecember 2, (34(, t#o fiber drums of riboflavin #ere shipped from 5o&ohama, 6apan for delivery vessel 788 EA8TERN C0MET7 o#ned by defendant Eastern 8hippin$ 9ines under Bill of 9adin$ No. 5MA-4 !E+h. B". The shipment #as insured under plaintiff.s Marine :nsurance Policy No. 4(/;((<< for P=,,=4),2,,.=4. >pon arrival of the shipment in Manila on 1ecember (), (34(, it #as dischar$ed unto the custody of defendant Metro Port 8ervice, :nc. The latter e+cepted to one drum, said to be in bad order, #hich dama$e #as un&no#n to plaintiff. 0n 6anuary <, (34) defendant Allied Bro&era$e Corporation received the shipment from defendant Metro Port 8ervice, :nc., one drum opened and #ithout seal !per 7Re?uest for Bad 0rder 8urvey.7 E+h. 1".

0n 6anuary 4 and (2, (34), defendant Allied Bro&era$e Corporation made deliveries of the shipment to the consi$nee.s #arehouse. The latter e+cepted to one drum #hich contained spilla$es, #hile the rest of the contents #as adulterated/fa&e !per 7Bad 0rder @aybill7 No. (;,23, E+h. E". Plaintiff contended that due to the losses/dama$e sustained by said drum, the consi$nee suffered losses totalin$ P(3,;=).3A, due to the fault and ne$li$ence of defendants. Claims #ere presented a$ainst defendants #ho failed and refused to pay the same !E+hs. B, :, 6, C, 9". As a conse?uence of the losses sustained, plaintiff #as compelled to pay the consi$nee P(3,;=).3A under the aforestated marine insurance policy, so that it became subro$ated to all the ri$hts of action of said consi$nee a$ainst defendants !per 7Dorm of 8ubro$ation7, 7Release7 and Philban&in$ chec&, E+hs. M, N, and 0". !pp. 4A-4,, "ollo." There #ere, to be sure, other factual issues that confronted both courts. Bere, the appellate court said 1efendants filed their respective ans#ers, traversin$ the material alle$ations of the complaint contendin$ that As for defendant Eastern 8hippin$ it alle$ed that the shipment #as dischar$ed in $ood order from the vessel unto the custody of Metro Port 8ervice so that any dama$e/losses incurred after the shipment #as incurred after the shipment #as turned over to the latter, is no lon$er its liability !p. (<, Record"' Metroport averred that althou$h sub%ect shipment #as dischar$ed unto its custody, portion of the same #as already in bad order !p. ((, Record"' Allied Bro&era$e alle$ed that plaintiff has no cause of action a$ainst it, not havin$ ne$li$ent or at fault for the shipment #as already in dama$e and bad order condition #hen received by it, but nonetheless, it still e+ercised e+tra ordinary care and dili$ence in the handlin$/delivery of the car$o to consi$nee in the same condition shipment #as received by it. Drom the evidence the court found the follo#in$ The issues are (. @hether or not the shipment sustained losses/dama$es' ). @hether or not these losses/dama$es #ere sustained #hile in the custody of defendants !in #hose respective custody, if determinable"' =. @hether or not defendant!s" should be held liable for the losses/dama$es !see plaintiff.s pre-Trial Brief, Records, p. =2' Allied.s pre-Trial Brief, adoptin$ plaintiff.s Records, p. =4". As to the first issue, there can be no doubt that the shipment sustained losses/dama$es. The t#o drums #ere shipped in $ood order and condition, as clearly sho#n by the Bill of 9adin$ and Commercial :nvoice #hich do not indicate any dama$es drum that #as shipped !E+hs. B and C". But #hen on 1ecember (), (34( the

shipment #as delivered to defendant Metro Port 8ervice, :nc., it e+cepted to one drum in bad order. Correspondin$ly, as to t#e second iss!e, it follo#s that the losses/dama$es #ere sustained #hile in the respective and/or successive custody and possession of defendants carrier !Eastern", arrastre operator !Metro Port" and bro&er !Allied Bro&era$e". This becomes evident #hen the Marine Car$o 8urvey Report !E+h. E", #ith its 7Additional 8urvey Notes7, are considered. :n the latter notes, it is stated that #hen the shipment #as 7landed on vessel7 to doc& of Pier F (A, 8outh Barbor, Manila on 1ecember (), (34(, it #as observed that 7one $%& fiber dr!m $was& in damaged condition, covered b' t#e vessel(s Agent(s )ad Order *all' +#eet ,o. -./01.7 The report further states that #hen defendant Allied Bro&era$e #ithdre# the shipment from defendant arrastre operator.s custody on 6anuary <, (34), one drum #as found opened #ithout seal, cello ba$ partly torn but contents intact. Net unrecovered spilla$es #as (A &$s. The report #ent on to state that #hen the drums reached the consi$nee, one drum #as found #ith adulterated/fa&ed contents. :t is obvious, therefore, that these losses/dama$es occurred before the shipment reached the consi$nee #hile under the successive custodies of defendants. >nder Art. (<=< of the Ne# Civil Code, the common carrier.s duty to observe e+traordinary dili$ence in the vi$ilance of $oods remains in full force and effect even if the $oods are temporarily unloaded and stored in transit in the #arehouse of the carrier at the place of destination, until the consi$nee has been advised and has had reasonable opportunity to remove or dispose of the $oods !Art. (<=4, NCC". 1efendant Eastern 8hippin$.s o#n e+hibit, the 7Turn-0ver 8urvey of Bad 0rder Car$oes7 !E+hs. =Eastern" states that on 1ecember (), (34( one drum #as found 7open7. and thus held @BERED0RE, PREM:8E8 C0N8:1ERE1, %ud$ment is hereby rendered A. 0rderin$ defendants to pay plaintiff, %ointly and severally (. The amount of P(3,;=).3A, #ith the present le$al interest of ()* per ann!m from 0ctober (, (34), the date of filin$ of this complaints, until fully paid !the liability of defendant Eastern 8hippin$, :nc. shall not e+ceed >8GA;; per case or the C:D value of the loss, #hichever is lesser, #hile the liability of defendant Metro Port 8ervice, :nc. shall be to the e+tent of the actual invoice value of each pac&a$e, crate bo+ or container in no case to e+ceed PA,;;;.;; each, pursuant to 8ection ,.;( of the Mana$ement Contract"' ). P=,;;;.;; as attorney.s fees, and =. Costs.

B. 1ismissin$ the counterclaims and crossclaim of defendant/cross-claimant Allied Bro&era$e Corporation. 80 0R1ERE1. !p. );<, Record". 1issatisfied, defendant.s recourse to >8. The appeal is devoid of merit. After a careful scrutiny of the evidence on record. @e find that the conclusion dra#n therefrom is correct. As there is sufficient evidence that the shipment sustained dama$e #hile in the successive possession of appellants, and therefore they are liable to the appellee, as subro$ee for the amount it paid to the consi$nee. !pp. 4<43, "ollo." The Court of Appeals thus affirmed in toto the %ud$ment of the court a !o. :n this petition, Eastern 8hippin$ 9ines, :nc., the common carrier, attributes error and $rave abuse of discretion on the part of the appellate court #hen H :. :T BE91 PET:T:0NER CARR:ER 60:NT95 AN1 8EIERA995 9:AB9E @:TB TBE ARRA8TRE 0PERAT0R AN1 C>8T0M8 BR0CER D0R TBE C9A:M 0D PR:IATE RE8P0N1ENT A8 ERANTE1 :N TBE J>E8T:0NE1 1EC:8:0N' ::. :T BE91 TBAT TBE ERANT 0D :NTERE8T 0N TBE C9A:M 0D PR:IATE RE8P0N1ENT 8B0>91 C0MMENCE DR0M TBE 1ATE 0D TBE D:9:NE 0D TBE C0MP9A:NT AT TBE RATE 0D T@E9IE PERCENT 23" A,,45 :N8TEA1 0D DR0M TBE 1ATE 0D TBE 1EC:8:0N 0D TBE TR:A9 C0>RT AN1 0N95 AT TBE RATE 0D 8:K PERCENT 23" A,,45, PR:IATE RE8P0N1ENT.8 C9A:M BE:NE :N1:8P>TAB95 >N9:J>:1ATE1. The petition is, in part, $ranted. :n this decision, #e have be$un by sayin$ that the ?uestions raised by petitioner carrier are not all that novel. :ndeed, #e do have a fairly $ood number of previous decisions this Court can merely tac& to. The common carrier.s duty to observe the re?uisite dili$ence in the shipment of $oods lasts from the time the articles are surrendered to or unconditionally placed in the possession of, and received by, the carrier for transportation until delivered to, or until the lapse of a reasonable time for their acceptance by, the person entitled to receive them !Arts. (<=,-(<=4, Civil Code' EanLon vs. Court of Appeals, (,( 8CRA ,2,' Cui Bai vs. 1ollar 8teamship 9ines, A) Phil. 4,=". @hen the $oods shipped either are lost or arrive in dama$ed condition, a presumption arises a$ainst the carrier of its failure to observe that dili$ence, and there need not be an e+press findin$ of ne$li$ence to hold it liable !Art. (<=A, Civil Code' Philippine National Rail#ays vs. Court of Appeals, (=3 8CRA 4<' Metro Port 8ervice vs. Court of Appeals, (=( 8CRA =,A". There are, of course, e+ceptional cases #hen such presumption of fault is not observed but these cases, enumerated in Article (<=2 1 of the Civil Code, are e+clusive, not one of #hich can be applied to this case.

The ?uestion of char$in$ both the carrier and the arrastre operator #ith the obli$ation of properly deliverin$ the $oods to the consi$nee has, too, been passed upon by the Court. :n 6ireman(s 6!nd 7ns!rance vs. 5etro 2ort +ervices !(4) 8CRA 2AA", #e have e+plained, in holdin$ the carrier and the arrastre operator liable in solid!m,thus The le$al relationship bet#een the consi$nee and the arrastre operator is a&in to that of a depositor and #arehouseman !9ua Cian v. Manila Railroad Co., (3 8CRA A M(3,<N. The relationship bet#een the consi$nee and the common carrier is similar to that of the consi$nee and the arrastre operator !Northern Motors, :nc. v. Prince 9ine, et al., (;< Phil. )A= M(3,;N". 8ince it is the duty of the ARRA8TRE to ta&e $ood care of the $oods that are in its custody and to deliver them in $ood condition to the consi$nee, such responsibility also devolves upon the CARR:ER. Both the ARRA8TRE and the CARR:ER are therefore char$ed #ith the obli$ation to deliver the $oods in $ood condition to the consi$nee. @e do not, of course, imply by the above pronouncement that the arrastre operator and the customs bro&er are themselves al#ays and necessarily liable solidarily #ith the carrier, or vice8versa, nor that attendant facts in a $iven case may not vary the rule. The instant petition has been brou$ht solely by Eastern 8hippin$ 9ines, #hich, bein$ the carrier and not havin$ been able to rebut the presumption of fault, is, in any event, to be held liable in this particular case. A factual findin$ of both the court a !o and the appellate court, #e ta&e note, is that 7there is sufficient evidence that the shipment sustained dama$e #hile in the successive possession of appellants7 !the herein petitioner amon$ them". Accordin$ly, the liability imposed on Eastern 8hippin$ 9ines, :nc., the sole petitioner in this case, is inevitable re$ardless of #hether there are others solidarily liable #ith it. :t is over the issue of le$al interest ad%ud$ed by the appellate court that deserves more than %ust a passin$ remar&. 9et us first see a chronolo$ical recitation of the ma%or rulin$s of this Court The early case of 5ala'an 7ns!rance 9o., 7nc., vs. 5anila 2ort +ervice, 2 decided ! on (A May (3,3, involved a suit for recover' of mone' arising o!t of s#ort deliveries and pilferage of goods. :n this case, appellee Malayan :nsurance !the plaintiff in the lo#er court" averred in its complaint that the total amount of its claim for the value of the undelivered $oods amounted to P=,32<.);. This demand, ho#ever, #as neither established in its totality nor definitely ascertained. :n the stipulation of facts later entered into by the parties, in lieu of proof, the amount of P(,22<.A( #as a$reed upon. The trial court rendered %ud$ment orderin$ the appellants !defendants" Manila Port 8ervice and Manila Railroad Company to pay appellee Malayan :nsurance the sum of P(,22<.A( #ith legal interest t#ereon from t#e date t#e complaint was filed on 0- December %:.0 !ntil f!ll pa'ment t#ereof. The appellants then assailed, inter alia, the a#ard of le$al interest. :n sustainin$ the appellants, this Court ruled :nterest upon an obli$ation #hich calls for the payment of money, absent a stipulation, is the le$al rate. 8uch interest normally is allo#able from the date of demand, %udicial or e+tra%udicial. The trial court opted for %udicial demand as the startin$ point.
But then upon the provisions of Article ))(= of the Civil Code, interest 7cannot be recovered upon unli?uidated claims or dama$es, e+cept #hen the demand can be established #ith reasonable certainty.7 And as #as held by this Court in "ivera vs. 2erez, 4 9-,334, Debruary )3, (3A,, if t#e s!it were for damages, 7!nli !idated and not ;nown !ntil definitel' ascertained, assessed and determined b' t#e co!rts after proof

$5ontilla c.9orporacion de 2.2. Ag!stinos, 0< 2#il. //1= Lic#a!co v. G!zman, >- 2#il. >?0&,7 t#en, interest 7s#o!ld be from t#e date of t#e decision.7 !Emphasis supplied"

The case of "eformina vs. *omol, " rendered on (( 0ctober (34A, #as for 7"ecover' of Damages for 7nj!r' to 2erson and Loss of 2ropert' .7 After trial, the lo#er court decreed @BERED0RE, %ud$ment is hereby rendered in favor of the plaintiffs and third party defendants and a$ainst the defendants and third party plaintiffs as follo#s 0rderin$ defendants and third party plaintiffs 8hell and Michael, :ncorporated to pay %ointly and severally the follo#in$ persons +++ +++ +++ !$" Plaintiffs Pacita D. Reformina and Drancisco Reformina the sum of P(=(,;42.;; #hich is the value of the boat D B Pacita ::: to$ether #ith its accessories, fishin$ $ear and e?uipment minus P4;,;;;.;; #hich is the value of the insurance recovered and the amount of P(;,;;;.;; a month as the estimated monthly loss suffered by them as a result of the fire of May ,, (3,3 up to the time they are actually paid or already t#e total s!m of 2>1?,???.?? as of J!ne /, %:10 wit# legal interest from t#e filing of t#e complaint !ntil paid and to pay attorney.s fees of PA,;;;.;; #ith costs a$ainst defendants and third party plaintiffs. !Emphasis supplied." 0n appeal to the Court of Appeals, the latter modified the amount of dama$es a#arded but sustained the trial court in ad%ud$in$ legal interest from t#e filing of t#e complaint !ntil f!ll' paid. @hen the appellate court.s decision became final, the case #as remanded to the lo#er court for e+ecution, and this #as #hen the trial court issued its assailed resolution #hich applied the ,* interest per ann!m prescribed in Article ));3 of the Civil Code. :n their petition for revie# on certiorari, the petitioners contended that Central Ban& Circular No. 2(,, providin$ thus H By virtue of the authority $ranted to it under 8ection ( of Act ),AA, as amended, Monetary Board in its Resolution No. (,)) dated 6uly )3, (3<2, has prescribed that the rate of interest for the loan, or forbearance of any money, $oods, or credits and the rate allo#ed in %ud$ments, in the absence of e+press contract as to such rate of interest, shall be t#elve !()*" percent per ann!m. This Circular shall ta&e effect immediately. !Emphasis found in the te+t" H should have, instead, been applied. This Court # ruled The %ud$ments spo&en of and referred to are %ud$ments in liti$ations involvin$ loans or forbearance of any money, $oods or credits. Any other &ind of monetary %ud$ment #hich has nothin$ to do #ith, nor involvin$ loans or forbearance of any money, $oods or credits does not fall #ithin the covera$e of the said la# for it is not #ithin the ambit of the authority $ranted to the Central Ban&. +++ +++ +++ Comin$ to the case at bar, the decision herein sou$ht to be e+ecuted is one rendered in an Action for 1ama$es for in%ury to persons and loss of property and

does not involve any loan, much less forbearances of any money, $oods or credits. As correctly ar$ued by the private respondents, the la# applicable to the said case is Article ));3 of the Ne# Civil Code #hich reads H Art. ));3. H :f the obli$ation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for dama$es, there bein$ no stipulation to the contrary, shall be the payment of interest a$reed upon, and in the absence of stipulation, the le$al interest #hich is si+ percent per ann!m. The above rule #as reiterated in 2#ilippine "abbit )!s Lines, 7nc., v. 9r!z, 7 promul$ated on )4 6uly (34,. The case #as for dama$es occasioned by an in%ury to person and loss of property. The trial court a#arded private respondent Pedro Manabat actual and compensatory dama$es in the amount of P<),A;;.;; #ith legal interest t#ereon from t#e filing of t#e complaint !ntil f!ll' paid . Relyin$ on the "eformina v. *omol case, this Court $modified t#e interest award from %0@ to .@ interest per ann!m b!t s!stained t#e time comp!tation t#ereof, i.e., from t#e filing of t#e complaint !ntil f!ll' paid. :n ,a;pil and +ons vs. 9o!rt of Appeals, 9 the trial court, in an action for the recovery of dama$es arisin$ from the collapse of a buildin$, ordered, inter alia, the 7defendant >nited Construction Co., :nc. !one of the petitioners" . . . to pay the plaintiff, . . . , the sum of P343,==A.,4 #ith interest at t#e legal rate from ,ovember 0:, %:.-, t#e date of t#e filing of t#e complaint !ntil f!ll pa'ment . . . .7 8ave from the modification of the amount $ranted by the lo#er court, the Court of Appeals sustained the trial court.s decision. @hen ta&en to this Court for revie#, the case, on ;= 0ctober (34,, #as decided, thus @BERED0RE, the decision appealed from is hereby M01:D:E1 and considerin$ the special and environmental circumstances of this case, #e deem it reasonable to render a decision imposin$, as @e do hereby impose, upon the defendant and the third-party defendants !#ith the e+ception of Roman 0Laeta" a solidary !Art. (<)=, Civil Code, +!pra. p. (;" indemnity in favor of the Philippine Bar Association of D:IE M:99:0N !PA,;;;,;;;.;;" Pesos to cover all dama$es !#ith the e+ception to attorney.s fees" occasioned by the loss of the buildin$ !includin$ interest char$es and lost rentals" and an additional 0NE B>N1RE1 TB0>8AN1 !P(;;,;;;.;;" Pesos as and for attorney.s fees, the total sum bein$ payable upon the finality of this decision. 4pon fail!re to pa' on s!c# finalit', twelve $%0@& per cent interest per ann!m s#all be imposed !pon aforementioned amo!nts from finalit' !ntil paid . 8olidary costs a$ainst the defendant and third-party defendants !E+cept Roman 0Laeta". !Emphasis supplied" A motion for reconsideration #as filed by >nited Construction, contendin$ that 7the interest of t#elve !()*" per cent per ann!m imposed on the total amount of the monetary a#ard #as in contravention of la#.7 The Court 1% ruled out the applicability of the Reformina and Philippine Rabbit Bus 9ines cases and, in its resolution of (A April (344, it e+plained There should be no dispute that the imposition of ()* interest pursuant to Central Ban& Circular No. 2(, . . . is applicable only in the follo#in$ !(" loans' !)" forbearance of any money, $oods or credit' and !=" rate allo#ed in %ud$ments !%ud$ments spo&en of refer to %ud$ments involvin$ loans or forbearance of any money, $oods or credits. !Philippine Rabbit Bus 9ines :nc. v. CruL, (2= 8CRA (,;-(,( M(34,N' Reformina v. Tomol, 6r., (=3 8CRA ),;

M(34AN". 7t is tr!e t#at in t#e instant case, t#ere is neit#er a loan or a forbearance, b!t t#en no interest is act!all' imposed provided t#e s!ms referred to in t#e j!dgment are paid !pon t#e finalit' of t#e j!dgment . 7t is dela' in t#e pa'ment of s!c# final j!dgment, t#at will ca!se t#e imposition of t#e interest . :t #ill be noted that in the cases already adverted to, the rate of interest is imposed on the total sum, from the filin$ of the complaint until paid' in other #ords, as part of t#e j!dgment for damages. Clearly, they are not applicable to the instant case. !Emphasis supplied." The subse?uent case of American 3Apress 7nternational, 7nc., vs. 7ntermediate Appellate 9o!rt 11 #as a petition for revie# on certiorari from the decision, dated )< Debruary (34A, of the then :ntermediate Appellate Court reducin$ the amount of moral and e+emplary dama$es a#arded by the trial court, to P)2;,;;;.;; and P(;;,;;;.;;, respectively, and its resolution, dated )3 April (34A, restorin$ the amount of dama$es a#arded by the trial court, i.e., P),;;;,;;;.;; as moral dama$es and P2;;,;;;.;; as e+emplary dama$es #ith interest t#ereon at %0@ per ann!m from notice of j!dgment, plus costs of suit. :n a decision of ;3 November (344, this Court, #hile reco$niLin$ the ri$ht of the private respondent to recover dama$es, held the a#ard, ho#ever, for moral dama$es by the trial court, later sustained by the :AC, to be inconceivably lar$e. The Court 12 thus set aside the decision of the appellate court and rendered a ne# one, 7orderin$ the petitioner to pay private respondent the sum of 0ne Bundred Thousand !P(;;,;;;.;;" Pesos as moral dama$es, #ith siA $.@& percent interest t#ereon comp!ted from t#e finalit' of t#is decision !ntil paid . !Emphasis supplied" Reformina came into fore a$ain in the )( Debruary (343 case of 6lorendo v. "!iz 1! #hich arose from a breach of employment contract. Dor havin$ been ille$ally dismissed, the petitioner #as a#arded by the trial court moral and e+emplary dama$es #ithout, ho#ever, providin$ any le$al interest thereon. @hen the decision #as appealed to the Court of Appeals, the latter held @BERED0RE, e+cept as modified hereinabove the decision of the CD: of Ne$ros 0riental dated 0ctober =(, (3<) is affirmed in all respects, #ith the modification that defendants-appellants, e+cept defendant-appellant Merton Munn, are ordered to pay, %ointly and severally, the amounts stated in the dispositive portion of the decision, includin$ the sum of P(,2;;.;; in concept of compensatory dama$es, #ith interest at t#e legal rate from t#e date of t#e filing of t#e complaint !ntil f!ll' paid !Emphasis supplied." The petition for revie# to this Court #as denied. The records #ere thereupon transmitted to the trial court, and an entry of %ud$ment #as made. The #rit of e+ecution issued by the trial court directed that only compensatory dama$es should earn interest at ,* per ann!m from the date of the filin$ of the complaint. Ascribin$ $rave abuse of discretion on the part of the trial %ud$e, a petition for certiorari assailed the said order. This Court said . . . , it is to be noted that the Court of Appeals ordered the payment of interest 7at the le$al rate7 from t#e time of t#e filing of t#e complaint. . . 8aid circular MCentral Ban& Circular No. 2(,N does not apply to actions based on a breach of employment contract li&e the case at bar. !Emphasis supplied" The Court reiterated that the ,* interest per ann!m on the dama$es should be computed from the time the complaint #as filed until the amount is fully paid.

Juite recently, the Court had another occasion to rule on the matter. ,ational 2ower 9orporation vs. Angas, 14decided on ;4 May (33), involved the e+propriation of certain parcels of land. After conductin$ a hearin$ on the complaints for eminent domain, the trial court ordered the petitioner to pay the private respondents certain sums of money as %ust compensation for their lands so e+propriated 7wit# legal interest t#ereon . . . !ntil f!ll' paid.7 A$ain, in applyin$ the ,* le$al interest per ann!m under the Civil Code, the Court 1" declared . . . , !T"he transaction involved is clearly not a loan or forbearance of money, $oods or credits but e+propriation of certain parcels of land for a public purpose, the payment of #hich is #ithout stipulation re$ardin$ interest, and the interest ad%ud$ed by the trial court is in the nature of indemnity for dama$es. The le$al interest re?uired to be paid on the amount of %ust compensation for the properties e+propriated is manifestly in the form of indemnity for dama$es for the delay in the payment thereof. Therefore, since the &ind of interest involved in the %oint %ud$ment of the lo#er court sou$ht to be enforced in this case is interest by #ay of dama$es, and not by #ay of earnin$s from loans, etc. Art. ));3 of the Civil Code shall apply. Concededly, there have been seemin$ variances in the above holdin$s. The cases can perhaps be classified into t#o $roups accordin$ to the similarity of the issues involved and the correspondin$ rulin$s rendered by the court. The 7first $roup7 #ould consist of the cases of "eformina v. *omol !(34A", 2#ilippine "abbit )!s Lines v. 9r!z!(34,", 6lorendo v. "!iz !(343" and ,ational 2ower 9orporation v. Angas !(33)". :n the 7second $roup7 #ould be 5ala'an 7ns!rance 9ompan' v.5anila 2ort +ervice !(3,3", ,a;pil and +ons v. 9o!rt of Appeals !(344", and American 3Apress 7nternational v.7ntermediate Appellate 9o!rt !(344". :n the 7first $roup7, the basic issue focuses on the application of either the ,* !under the Civil Code" or ()* !under the Central Ban& Circular" interest per ann!m. :t is easily discernible in these cases that there has been a consistent holdin$ that the Central Ban& Circular imposin$ the ()* interest per ann!m applies only to loans or forbearance 1# of money, $oods or credits, as #ell as to %ud$ments involvin$ such loan or forbearance of money, $oods or credits, and that the ,* interest under the Civil Code $overns #hen the transaction involves the payment of indemnities in the concept of dama$e arisin$ from the breach or a delay in the performance of obli$ations in $eneral. 0bserve, too, that in these cases, a common time frame in the computation of the ,* interest per ann!m has been applied, i.e., from the time the complaint is filed until the ad%ud$ed amount is fully paid. The 7second $roup7, did not alter the pronounced rule on the application of the ,* or ()* interest per ann!m, 17dependin$ on #hether or not the amount involved is a loan or forbearance, on the one hand, or one of indemnity for dama$e, on the other hand. >nli&e, ho#ever, the 7first $roup7 #hich remained consistent in holdin$ that the runnin$ of the le$al interest should be from the time of the filin$ of the complaint until fully paid, the 7second $roup7 varied on the commencement of the runnin$ of the le$al interest. Malayan held that the amount a#arded should bear legal interest from t#e date of t#e decision of t#e co!rt a !o,e+plainin$ that 7if the suit #ere for dama$es, .unli?uidated and not &no#n until definitely ascertained, assessed and determined by the courts after proof,. then, interest .should be from the date of the decision..7 American 3Apress 7nternational v. 7A9, introduced a different time frame for rec&onin$ the ,* interest by orderin$ it to be 7comp!ted from t#e finalit' of $t#e& decision !ntil paid.7 The Na&pil and 8ons case ruled that ()* interest per ann!m should be imposed from the finality of the decision until the %ud$ment amount is paid.

The ostensible discord is not difficult to e+plain. The factual circumstances may have called for different applications, $uided by the rule that the courts are vested #ith discretion, dependin$ on the e?uities of each case, on the a#ard of interest. Nonetheless, it may not be un#ise, by #ay of clarification and reconciliation, to su$$est the follo#in$ rules of thumb for future $uidance. :. @hen an obli$ation, re$ardless of its source, i.e., la#, contracts, ?uasi-contracts, delicts or ?uasidelicts 1$ is breached, the contravenor can be held liable for dama$es. 19 The provisions under Title KI::: on 71ama$es7 of the Civil Code $overn in determinin$ the measure of recoverable dama$es. 2% ::. @ith re$ard particularly to an a#ard of interest in the concept of actual and compensatory dama$es, the rate of interest, as #ell as the accrual thereof, is imposed, as follo#s (. @hen the obli$ation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that #hich may have been stipulated in #ritin$. 21 Durthermore, the interest due shall itself earn le$al interest from the time it is %udicially demanded. 22 :n the absence of stipulation, the rate of interest shall be ()* per ann!m to be computed from default, i.e., from %udicial or e+tra%udicial demand under and sub%ect to the provisions of Article ((,3 2! of the Civil Code. ). @hen an obli$ation, not constitutin$ a loan or forbearance of money, is breached, an interest on the amount of dama$es a#arded may be imposed at the discretion of t#e co!rt 24 at the rate of ,* per ann!m. 2" No interest, ho#ever, shall be ad%ud$ed on unli?uidated claims or dama$es e+cept #hen or until the demand can be established #ith reasonable certainty. 2# Accordin$ly, #here the demand is established #ith reasonable certainty, the interest shall be$in to run from the time the claim is made %udicially or e+tra%udicially !Art. ((,3, Civil Code" but #hen such certainty cannot be so reasonably established at the time the demand is made, the interest shall be$in to run only from the date the %ud$ment of the court is made !at #hich time the ?uantification of dama$es may be deemed to have been reasonably ascertained". The actual base for the computation of le$al interest shall, in any case, be on the amount finally ad%ud$ed. =. @hen the %ud$ment of the court a#ardin$ a sum of money becomes final and e+ecutory, the rate of le$al interest, #hether the case falls under para$raph ( or para$raph ), above, shall be ()* per ann!m from such finality until its satisfaction, this interim period bein$ deemed to be by then an e?uivalent to a forbearance of credit. @BERED0RE, the petition is partly ERANTE1. The appealed decision is ADD:RME1 #ith the M01:D:CAT:0N that the le$al interest to be paid is 8:K PERCENT !,*" on the amount due computed from the decision, dated ;= Debruary (344, of the court a !o. A T@E9IE PERCENT !()*" interest, in lieu of 8:K PERCENT !,*", shall be imposed on such amount upon finality of this decision until the payment thereof. 80 0R1ERE1. ,arvasa, 9.J., 9r!z, 6eliciano, 2adilla, )idin, "egalado, Davide, Jr., "omero, )ellosillo, 5elo, B!iason, 2!no and Cap!nan, JJ., conc!r. 5endoza, J., too; no part.

&Foo'(o')*

( Art. (<=2. Common carriers are responsible for the loss, destruction, or deterioration of the $oods, unless the same is due to any of the follo#in$ causes only !(" Dlood, storm, earth?ua&e, li$htnin$, or other natural disaster or calamity' !)" Act of the public enemy in #ar, #hether international or civil' !=" Act or omission of the shipper or o#ner of the $oods' !2" The character of the $oods or defects in the pac&in$ or in the containers' !A" 0rder or act of competent public authority. ) )4 8CRA ,A. = Penned by 6ustice Conrado 8ancheL, concurred in by 6ustices 6ose B.9. Reyes, Arsenio 1iLon, Juerube Ma&alintal, Cali+to Oaldivar, Enri?ue Dernando, Drancisco Capistrano, Claudio Teehan&ee and Antonio Barredo, Chief 6ustice Roberto Concepcion and 6ustice Dred RuiL Castro #ere on official leave. 2 The correct caption of the case is 7Claro Rivera vs. Amadeo Matute, 9-,334, )3 Debruary (3A,,7 34 Phil. A(,. A (=3 8CRA ),;, ),A. , Penned by 6ustice 8erafin Cuevas, concurred in by 6ustices Bermo$enes Concepcion, 6r., Iicente Abad 8antos, Ameurfina Melencio-Berrera, Ienicio Escolin, 9orenLo Relova, Bu$o EutierreL, 6r., Buenaventura de la Duente, Nestor Alampay and 9ino Pata%o. 6ustice Ramon A?uino concurred in the result. 6ustice Efren Plana filed a concurrin$ and dissentin$ opinion, concurred in by 6ustice Claudio Teehan&ee #hile Chief 6ustice Deli+ Ma&asiar concurred #ith the separate opinion of 6ustice Plana. < (2= 8CRA (A4. 4 Penned by then 6ustice, no# Chief 6ustice, Andres Narvasa, concurred in by 6ustices Pedro 5ap, Ameurfina Melencio-Berrera, :sa$ani A. CruL and Ed$ardo Paras. 3 (,; 8CRA ==2. (; Penned by 6ustice Ed$ardo Paras, #ith the concurrence of 6ustices Marcelo Dernan, Teodoro Padilla, Abdul#ahid Bidin, and :rene Cortes. 6ustice Bu$o EutierreL, 6r., too& no part because he #as the ponente in the Court of Appeals. (( (,< 8CRA );3.

() Rendered per c!riam #ith the concurrence of then Chief 6ustice Marcelo Dernan, 6ustices Andres Narvasa, :sa$ani A. CruL, Emilio Eancayco, Teodoro Padilla, Abdul#ahid Bidin, Abraham 8armiento, :rene Cortes, Carolina EriPo-A?uino, 9eo Medialdea and DlorenL Re$alado. 6ustices Ameurfina Melencio-Berrera and Bu$o EutierreL, 6r., too& no part because they did not participate in the deliberations. 6ustices Ed$ardo Paras and Dlorentino Deliciano also too& no part. (= (<; 8CRA 2,(. (2 );4 8CRA A2). (A Penned by 6ustice Ed$ardo Paras #ith the concurrence of 6ustices Ameurfina Melencio-Berrera, Teodoro Padilla, DlorenL Re$alado and Rodolfo Nocon. (, Blac&.s 9a# 1ictionary !(33; ed., ,22" citin$ the case of Bafer v. 8paeth, )) @ash. )d =<4, (A, P.)d 2;4, 2(( defines the #ord forbearance, #ithin the conte+t of usury la#, as a contractual obli$ation of lender or creditor to refrain, durin$ $iven period of time, from re?uirin$ borro#er or debtor to repay loan or debt then due and payable. (< :n the case of Malayan :nsurance, the application of the ,* and ()* interest per ann!m has no bearin$ considerin$ that this case #as decided upon before the issuance of Circular No. 2(, by the Central Ban&. (4 Art. ((A<. 0bli$ations arise from. !(" 9a#' !)" Contracts' !=" Juasi-contracts' !2" Acts or omissions punished by la#' and !A" Jausi-delicts.7 (3 Art. ((<;. Those #ho in the performance of their obli$ations are $uilty of fraud, ne$li$ence, or delay, and those #ho in any manner contravene the tenor thereof, are liable for dama$es. ); Art. )(3A. The provisions of this Title !on 1ama$es" shall be respectively applicable to all obli$ations mentioned in article ((A<. )( Art. (3A,. No interest shall be due unless it has been e+pressly stipulated in #ritin$. )) Art. ))(). :nterest due shall earn le$al interest from the time it is %udicially demanded, althou$h the obli$ation may be silent upon this point.

)= Art. ((,3. Those obli$ed to deliver or to do somethin$ incur in delay from the time the obli$ee %udicially or e+tra%udicially demands from them the fulfillment of their obli$ation. 7Bo#ever, the demand by the creditor shall not be necessary in order that delay may e+ist !(" @hen the obli$ation or the la# e+pressly so declare' or !)" @hen from the nature and the circumstances of the obli$ation it appears that the desi$nation of the time #hen the thin$ is to be delivered or the service is to be rendered #as a controllin$ motive for the establishment of the contract' or !=" @hen demand #ould be useless, as #hen the obli$or has rendered it beyond his po#er to perform. 7:n reciprocal obli$ations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner #ith #hat is incumbent upon him. Drom the moment one of the parties fulfills his obli$ation, delay by the other be$ins.7 )2 Art. ))(;. :nterest may, in the discretion of the court, be allo#ed upon dama$es a#arded for breach of contract. Art. ))((. :n crimes and ?uasi-delicts, interest as a part of the dama$es may, in a proper case, be ad%udicated in the discretion of the court. )A Art. ));3. :f the obli$ation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for dama$es, there bein$ no stipulation to the contrary, shall be the payment of the interest a$reed upon, and in the absence of stipulation, the le$al interest, #hich is si+ per cent per ann!m. ), Art. ))(=. :nterest cannot be recovered upon unli?uidated claims or dama$es, e+cept #hen the demand can be established #ith reasonable certainty.