GR 120097; (September, 1996) (Digest)
G.R. No. 120097 September 23, 1996
Food Terminal, Inc. vs. Court of Appeals and TAO Development, Inc.
FACTS
Petitioner Food Terminal, Inc. (FTI), a government-owned corporation, entered into a contract of storage with private respondent TAO Development, Inc. in 1984. TAO deposited bags of onions intended for export to Japan in FTI’s cold storage facility. An ammonia leak from FTI’s storage facilities subsequently damaged the onions, rendering them unfit for export. TAO filed a complaint for damages.
The trial court ruled in favor of TAO, awarding actual damages, damages for interest paid on a cash advance, unearned profits, and attorney’s fees, all with 12% annual interest from May 15, 1984. The Court of Appeals affirmed the decision with modifications, removing the award for interest on the cash advance but maintaining the 12% interest rate on the monetary awards. FTI filed the present petition, challenging the findings of negligence and the imposed interest rate.
ISSUE
The primary issues were: (1) whether the factual findings of the lower courts on FTI’s negligence were binding; and (2) whether the Court of Appeals correctly applied a 12% per annum interest rate on the awarded damages.
RULING
The Supreme Court affirmed the CA decision with a modification on the interest rate. On the first issue, the Court held that the factual findings of the trial court and the CA, which found FTI negligent based on the evidence, are generally conclusive and binding. In a petition for review, the Court does not re-evaluate factual questions absent exceptional circumstances, which were not present. Thus, FTI’s negligence stood.
On the second issue, the Court held that the CA erred in imposing a 12% interest rate pursuant to Central Bank Circular No. 416. The Court clarified that the 12% rate applies only to loans or forbearance of money, goods, or credits. The obligation in this case arose from a breach of a contract of deposit (storage), not a loan or forbearance. Therefore, pursuant to Article 2209 of the Civil Code, the proper rate from the time of judicial demand (May 15, 1984) until the judgment’s finality is 6% per annum.
However, citing Eastern Shipping Lines, Inc. vs. CA, the Court ruled that the period from the finality of judgment until its full satisfaction is deemed a forbearance of credit. Thus, a 12% interest rate shall apply from the date of the judgment’s finality until full payment. The award of actual damages, unearned profits, and attorney’s fees was sustained.