Eastern Shipping Lines, Inc. vs. Court of Appeals

A common carrier is presumed to be at fault when goods in its custody are lost or damaged, and this liability may be solidary with that of the arrastre operator and customs broker who successively handle the goods. With respect to monetary awards, the legal interest rate is 6% per annum for indemnities arising from breach of obligations not constituting a loan or forbearance of money, computed from the date of the court's judgment quantifying the damages; after the judgment becomes final and executory, the rate increases to 12% per annum until full payment.

On December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan, aboard the "SS EASTERN COMET," owned by petitioner Eastern Shipping Lines, Inc. The shipment was insured by private respondent Mercantile Insurance Company, Inc. Upon arrival in Manila on December 12, 1981, the shipment was discharged to the custody of the arrastre operator, Metro Port Service, Inc., which noted one drum in bad order. The customs broker, Allied Brokerage Corporation, later received the shipment with one drum opened and without seal. Upon delivery to the consignee, one drum was found to contain adulterated/fake contents. The insurer paid the consignee P19,032.95 for the loss and, as subrogee, filed a complaint for damages against the carrier, arrastre operator, and broker.

• Nature of the Action: This was a civil action for damages filed by the insurer-subrogee (Mercantile Insurance) against the common carrier (Eastern Shipping Lines), arrastre operator (Metro Port Service), and customs broker (Allied Brokerage) to recover the value of a damaged shipment.
• Shipment and Insurance: Two drums of riboflavin were shipped from Japan to Manila aboard petitioner's vessel. The shipment was covered by a marine insurance policy issued by private respondent.
• Arrival and Noted Damage: Upon arrival in Manila and discharge to the arrastre operator, one drum was noted to be in "bad order" per the vessel agent's tally sheet.
• Subsequent Handling and Delivery: The customs broker received the shipment from the arrastre with one drum opened and without seal. Upon delivery to the consignee's warehouse, one drum contained adulterated/fake contents, resulting in a loss valued at P19,032.95.
• Claims and Subrogation: Claims presented to the defendants were refused. The insurer paid the consignee's loss and was subrogated to its rights.
• Lower Courts' Findings: Both the RTC and CA found sufficient evidence that the damage was sustained while the shipment was in the successive possession of the defendants. The carrier failed to rebut the presumption of fault under Articles 1735 and 1737 of the Civil Code.

• Against Solidary Liability: Petitioner argued that it should not be held jointly and severally liable with the arrastre operator and customs broker, as its liability should be limited to the period of carriage and not extend to the handling by other parties after discharge from the vessel.
• On Legal Interest Rate: Petitioner contended that the 12% interest rate under Central Bank Circular No. 416 was inapplicable because the claim was for unliquidated damages, not a loan or forbearance of money. It argued the applicable rate should be 6% per annum under Article 2209 of the Civil Code.
• On Interest Commencement: Petitioner maintained that interest on an unliquidated claim should run from the date of the court's decision quantifying the damages, not from the date of the filing of the complaint.

• Presumption of Fault: Respondent countered that the common carrier is presumed to be at fault when goods are lost or damaged, and petitioner failed to overcome this presumption.
• Solidary Liability: Respondent argued that the carrier and arrastre operator are both charged with the obligation to deliver goods in good condition to the consignee, justifying their solidary liability.
• Appropriateness of 12% Interest: Respondent maintained that the 12% legal interest awarded by the lower courts was proper and in accordance with prevailing jurisprudence at the time.

• Solidary Liability: Whether the common carrier, arrastre operator, and customs broker are solidarily liable for the damage sustained by the shipment.
• Applicable Interest Rate: Whether the legal interest rate on the monetary award should be 12% per annum (under CB Circular No. 416) or 6% per annum (under the Civil Code).
• Commencement of Interest: Whether the legal interest should be computed from the filing of the complaint or from the date of the trial court's decision.

• Solidary Liability: The carrier's liability was affirmed. A common carrier's duty of extraordinary diligence lasts until delivery to the consignee. The presumption of fault under Article 1735 of the Civil Code was not rebutted. While the Court noted that the arrastre operator and broker may also be liable, the carrier's liability in this case was inevitable. The legal relationship between consignee and arrastre, and between consignee and carrier, supports holding both responsible for delivery in good condition.
• Applicable Interest Rate: The petition was partly granted on this issue. The 12% interest rate under CB Circular No. 416 applies only to loans or forbearance of money, goods, or credits. Since the obligation herein arose from a breach of contract (carriage of goods) and is an indemnity for damages, the applicable rate is 6% per annum under Article 2209 of the Civil Code.
• Commencement of Interest: The legal interest of 6% shall be computed from the date of the trial court's decision (03 February 1988), which reasonably ascertained the amount of damages. From the finality of the Supreme Court decision until its satisfaction, the interest rate shall be 12% per annum, this interim period being deemed equivalent to a forbearance of credit.

• Presumption of Fault Against Common Carriers — Under Articles 1735 and 1737 of the Civil Code, a common carrier is presumed to have been at fault if goods in its custody are lost, destroyed, or deteriorated. This presumption arises unless the carrier proves the loss was due to the exclusive causes listed in Article 1734 (e.g., flood, storm, act of the shipper). The duty of extraordinary diligence lasts from receipt of the goods until their delivery to the consignee.
• Solidary Liability of Carrier and Arrastre Operator — The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman, while the relationship between the consignee and the common carrier is similar. Both are charged with the obligation to deliver goods in good condition to the consignee, which can give rise to solidary liability.
• Two-Tiered Framework for Legal Interest — The Court established a definitive rule for interest awards:
  1. For obligations consisting of a loan or forbearance of money, the stipulated rate applies; in its absence, the rate is 12% per annum from judicial or extrajudicial demand.
  2. For obligations not constituting a loan or forbearance (e.g., damages for breach), the rate is 6% per annum. Interest on unliquidated claims runs from the date of the court's judgment quantifying the damages.
  3. Upon finality of a judgment awarding a sum of money, the interest rate becomes 12% per annum until satisfaction, treating the interim period as a forbearance of credit.

• "The common carrier's duty to observe the requisite diligence in the shipment of goods 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."
• "When the goods shipped either are lost or arrive in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable."
• "The Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance of money, goods or credits, as well as to judgments involving such loan or forbearance of money, goods or credits, and that the 6% interest under the Civil Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general."
• "When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest... 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."

• Fireman's Fund Insurance vs. Metro Port Services, 182 SCRA 455 — Cited as controlling precedent for holding the carrier and arrastre operator liable in solidum because both are charged with the obligation to deliver goods in good condition to the consignee.
• Reformina vs. Tomol, 139 SCRA 260 — Applied and distinguished. This case, involving damages for injury to person and loss of property, held that the 12% interest under CB Circular No. 416 applies only to loans or forbearance, and that the 6% rate under Article 2209 of the Civil Code governs other monetary judgments.
• Malayan Insurance Co., Inc. vs. Manila Port Service, 28 SCRA 65 — Cited for the rule that interest on unliquidated damages should be computed from the date of the court's decision, not from the filing of the complaint.
• Nakpil and Sons vs. Court of Appeals, 160 SCRA 334 — Distinguished. In that case, the Court imposed 12% interest from the finality of the decision, explaining it was due to delay in payment of a final judgment, not as part of the original damage award.

• Articles 1734, 1735, 1736, 1737, Civil Code — Define the liability of common carriers for loss or damage to goods, the presumption of fault, and the duration of the carrier's duty of extraordinary diligence.
• Article 2209, Civil Code — Provides that in the absence of stipulation, the legal interest for delay in the payment of a sum of money is 6% per annum. Applied as the governing rate for indemnities not arising from loans.
• Article 2213, Civil Code — States that interest cannot be recovered upon unliquidated claims except when the demand can be established with reasonable certainty. Relied upon to justify computing interest from the date of judgment when damages are unliquidated.
• Central Bank Circular No. 416 — Prescribes a 12% per annum interest rate for loans or forbearance of money, goods, or credits. The Court limited its application strictly to such transactions.

Chief Justice Andres R. Narvasa, Justices Teodoro R. Padilla, Abdulwahid A. Bidin, Florenz P. Regalado, Rodolfo A. Nocon, and all other members of the En Banc concurred. Justice Carolina C. Griño-Aquino took no part.

N/A — No dissenting opinions are recorded in the provided text.