RELATED TOPIC: 12% Legal Interest
FACTS: Two fiber drums of riboflavin were shipped from Yokohama, Japan, on a delivery vessel owned by defendant Eastern Shipping Lines, under a Bill of Lading. The shipment was insured under plaintiff’s Marine Insurance Policy for ₱36,382,466.38. Upon arrival of the shipment in Manila, it was discharged into the custody of defendant Metro Port Service, Inc. The latter excepted to one drum, said to be in bad order, which was unknown to plaintiff. Allied Brokerage Corporation (ABC) received the shipment from defendant Metro Port Service, Inc., finding one drum opened and without a seal. When ABC made deliveries of the shipment to the consignee’s warehouse, one drum was found to contain spillages, and the rest of the contents were adulterated. Due to the losses/damage sustained by said drum, plaintiff was compelled to pay the consignee ₱19,032.95 under the marine insurance policy, thus, becoming subrogated to the consignee’s rights against defendants.
ISSUE/S: Whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered; and whether the applicable rate of interest is twelve percent (12%) or six percent (6%).
DECISION: In the absence of stipulation, when the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
When an obligation, does not constitute a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) otherwise, the interest shall begin to run only from the date the judgment of the court is made.
The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.
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