Food Terminal, Inc. v. Court of Appeals
REITERATIONFacts
The Antecedents: Petitioner Food Terminal, Inc. (FTI), a government-owned corporation, entered into a storage contract with private respondent Tao Development, Inc. for the safekeeping of 22,716 bags of yellow granex onions and 2,853 bags of red creole onions, intended for export. In May 1984, an ammonia leak occurred within FTI's facilities, rendering the onions unfit for export and causing damage to the private respondent's goods. Procedural History: Private respondent filed a complaint for damages against FTI, seeking compensation for the value of the goods, unrealized profits, exemplary damages, and attorney's fees. The lower court found FTI negligent and awarded substantial damages, including actual damages, lost profits, and attorney's fees, with a 12% interest rate. Upon appeal, the Court of Appeals affirmed the lower court's decision with modifications to the actual damages awarded, but maintained the 12% interest rate. The Petition: Petitioner FTI filed a petition for review on certiorari, challenging both the factual finding of negligence and the imposition of the 12% interest rate. The petition argued that the damage was due to the poor quality of the onions and the respondent's delay in disposal, not FTI's negligence. FTI also contended that the CA erred in affirming the 12% interest rate on the monetary judgment. The Supreme Court noted that factual findings are generally not disturbed on appeal but agreed that the CA erred in applying the 12% interest rate to the initial award, modifying the interest rate to 6% from the date of the breach until finality of judgment, and 12% thereafter.
Issue(s)
Whether the Court of Appeals erred in finding petitioner negligent. Whether the Court of Appeals erred in affirming the rate of interest imposed by the lower court.
Ruling
The petition is partly granted. The decision of the Court of Appeals is affirmed with modification regarding the interest rate. Petitioner Food Terminal, Inc. is ordered to pay private respondent Tao Development, Inc. P2,400,168.00 as actual damages, P1,534,005.00 as unearned profits, and P100,000.00 as attorney's fees. These amounts shall earn interest at the rate of SIX PERCENT (6%) per annum from May 15, 1984, until the judgment becomes final. From the date of finality of the judgment until the obligation is totally paid, a TWELVE PERCENT (12%) interest shall be imposed.
Ratio Decidendi
On the issue of negligence: The Court held that the factual findings of the trial court and the Court of Appeals are entitled to great weight and respect and will not be disturbed on appeal, save in exceptional circumstances. The Court found that the evidence on record sufficiently supported the finding of negligence on the part of petitioner FTI, which led to the damage of private respondent's goods. Petitioner's contention that the damage was due to the poor quality of the onions or the delay in their disposal was not substantiated and was contrary to the concurrent findings of the lower courts. Therefore, on this ground, the petitioner's contention must fail. On the issue of the interest rate: The Court found the petitioner's contention regarding the interest rate to be well-taken. It clarified that Central Bank Circular No. 416, which prescribes a 12% per annum interest rate, applies to loans or forbearance of money, goods, or credits, or to judgments involving such. The monetary judgment in favor of the private respondent did not involve a loan or forbearance of money, goods, or credit. Therefore, the proper imposable rate of interest in accordance with Article 2209 of the Civil Code should be 6% per annum. However, the Court, citing Eastern Shipping Lines, Inc. vs. CA, held that the interim period from the finality of the judgment until payment is deemed a forbearance of credit, thus warranting a 12% interest rate during that period.
Main Doctrine
The rate of legal interest on monetary judgments not involving loans or forbearance of money is 6% per annum, but it becomes 12% per annum from the finality of the judgment until full satisfaction.