Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 115129 February 12, 1997 IGNACIO BARZAGA, petitioner, vs. COURT OF APPEALS and ANGELITO ALVIAR, respondents.

BELLOSILLO, J.: The Fates ordained that Christmas 1990 be bleak for Ignacio Barzaga and his family. On the nineteenth of December Ignacio's wife succumbed to a debilitating ailment after prolonged pain and suffering. Forewarned by her attending physicians of her impending death, she expressed her wish to be laid to rest before Christmas day to spare her family from keeping lonely vigil over her remains while the whole of Christendom celebrate the Nativity of their Redeemer. Drained to the bone from the tragedy that befell his family yet preoccupied with overseeing the wake for his departed wife, Ignacio Barzaga set out to arrange for her interment on the twenty-fourth of December in obediencesemper fidelis to her dying wish. But her final entreaty, unfortunately, could not be carried out. Dire events conspired to block his plans that forthwith gave him and his family their gloomiest Christmas ever. This is Barzaga's story. On 21 December 1990, at about three o'clock in the afternoon, he went to the hardware store of respondent Angelito Alviar to inquire about the availability of certain materials to be used in the construction of a niche for his wife. He also asked if the materials could be delivered at once. Marina Boncales, Alviar's storekeeper, replied that she had yet to verify if the store had pending deliveries that afternoon because if there were then all subsequent purchases would have to be delivered the following day. With that reply petitioner left. At seven o'clock the following morning, 22 December, Barzaga returned to Alviar's hardware store to follow up his purchase of construction materials. He told the store employees that the materials he was buying would have to be delivered at the Memorial Cemetery in Dasmarinas, Cavite, by eight o'clock that morning since his hired workers were already at the burial site and time was of the essence. Marina Boncales agreed to deliver the items at the designated time, date and place. With this assurance, Barzaga purchased the materials and paid in full the amount of P2,110.00. Thereafter he joined his workers at the cemetery, which was only a kilometer away, to await the delivery. The construction materials did not arrive at eight o'clock as promised. At nine o'clock, the delivery was still nowhere in sight. Barzaga returned to the hardware store to inquire about the delay. Boncales assured him that although the delivery truck was not yet around it had already left the garage and that as soon as it arrived the materials would be brought over to the cemetery in no time at all. That left petitioner no choice but to rejoin his workers at the memorial park and wait for the materials.

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By ten o'clock, there was still no delivery. This prompted petitioner to return to the store to inquire about the materials. But he received the same answer from respondent's employees who even cajoled him to go back to the burial place as they would just follow with his construction materials. After hours of waiting which seemed interminable to him Barzaga became extremely upset. He decided to dismiss his laborers for the day. He proceeded to the police station, which was just nearby, and lodged a complaint against Alviar. He had his complaint entered in the police blotter. When he returned again to the store he saw the delivery truck already there but the materials he purchased were not yet ready for loading. Distressed that Alviar's employees were not the least concerned, despite his impassioned pleas, Barzaga decided to cancel his transaction with the store and look for construction materials elsewhere. In the afternoon of that day, petitioner was able to buy from another store. But since darkness was already setting in and his workers had left, he made up his mind to start his project the following morning, 23 December. But he knew that the niche would not be finish in time for the scheduled burial the following day. His laborers had to take a break on Christmas Day and they could only resume in the morning of the twenty-sixth. The niche was completed in the afternoon and Barzaga's wife was finally laid to rest. However, it was two-and-a-half (2-1/2) days behind schedule. On 21 January 1991, tormented perhaps by his inability to fulfill his wife's dying wish, Barzaga wrote private respondent Alviar demanding recompense for the damage he suffered. Alviar did not respond. Consequently, petitioner sued him before the Regional Trial Court. 1 Resisting petitioner's claim, private respondent contended that legal delay could not be validly ascribed to him because no specific time of delivery was agreed upon between them. He pointed out that the invoices evidencing the sale did not contain any stipulation as to the exact time of delivery and that assuming that the materials were not delivered within the period desired by petitioner, the delivery truck suffered a flat tire on the way to the store to pick up the materials. Besides, his men were ready to make the delivery by ten-thirty in the morning of 22 December but petitioner refused to accept them. According to Alviar, it was this obstinate refusal of petitioner to accept delivery that caused the delay in the construction of the niche and the consequent failure of the family to inter their loved one on the twenty-fourth of December, and that, if at all, it was petitioner and no other who brought about all his personal woes. Upholding the proposition that respondent incurred in delay in the delivery of the construction materials resulting in undue prejudice to petitioner, the trial court ordered respondent Alviar to pay petitioner (a) P2,110.00 as refund for the purchase price of the materials with interest per annum computed at the legal rate from the date of the filing of the complaint, (b) P5,000.00 as temperate damages, (c) P20,000.00 as moral damages, (d) P5,000.00 as litigation expenses, and (e) P5,000.00 as attorney's fees. On appeal, respondent Court of Appeals reversed the lower court and ruled that there was no contractual commitment as to the exact time of delivery since this was not indicated in the invoice receipts covering the sale. 2 The arrangement to deliver the materials merely implied that delivery should be made within a reasonable time but that the conclusion that since petitioner's workers were already at the graveyard the delivery had to be made at that precise moment, is non-sequitur. The Court of Appeals also held that assuming that there was delay, petitioner still had sufficient time to construct the tomb and hold his wife's burial as she wished. We sustain the trial court. An assiduous scrutiny of the record convinces us that respondent Angelito Alviar was negligent and incurred in delay in the performance of his contractual obligation. This sufficiently entitles petitioner Ignacio Barzaga to be indemnified for the damage he suffered as a consequence of delay or a contractual breach. The law expressly provides that those who in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof, are liable for damages. 3

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Contrary to the appellate court's factual determination, there was a specific time agreed upon for the delivery of the materials to the cemetery. Petitioner went to private respondent's store on 21 December precisely to inquire if the materials he intended to purchase could be delivered immediately. But he was told by the storekeeper that if there were still deliveries to be made that afternoon his order would be delivered the following day. With this in mind Barzaga decided to buy the construction materials the following morning after he was assured of immediate delivery according to his time frame. The argument that the invoices never indicated a specific delivery time must fall in the face of the positive verbal commitment of respondent's storekeeper. Consequently it was no longer necessary to indicate in the invoices the exact time the purchased items were to be brought to the cemetery. In fact, storekeeper Boncales admitted that it was her custom not to indicate the time of delivery whenever she prepared invoices. 4 Private respondent invokes fortuitous event as his handy excuse for that "bit of delay" in the delivery of petitioner's purchases. He maintains that Barzaga should have allowed his delivery men a little more time to bring the construction materials over to the cemetery since a few hours more would not really matter and considering that his truck had a flat tire. Besides, according to him, Barzaga still had sufficient time to build the tomb for his wife. This is a gratuitous assertion that borders on callousness. Private respondent had no right to manipulate petitioner's timetable and substitute it with his own. Petitioner had a deadline to meet. A few hours of delay was no piddling matter to him who in his bereavement had yet to attend to other pressing family concerns. Despite this, respondent's employees still made light of his earnest importunings for an immediate delivery. As petitioner bitterly declared in court " . . . they (respondent's employees) were making a fool out of me." 5 We also find unacceptable respondent's justification that his truck had a flat tire, for this event, if indeed it happened, was forseeable according to the trial court, and as such should have been reasonably guarded against. The nature of private respondent's business requires that he should be ready at all times to meet contingencies of this kind. One piece of testimony by respondent's witness Marina Boncales has caught our attention - that the delivery truck arrived a little late than usual because it came from a delivery of materials in Langcaan, Dasmarinas, Cavite. 6 Significantly, this information was withheld by Boncales from petitioner when the latter was negotiating with her for the purchase of construction materials. Consequently, it is not unreasonable to suppose that had she told petitioner of this fact and that the delivery of the materials would consequently be delayed, petitioner would not have bought the materials from respondent's hardware store but elsewhere which could meet his time requirement. The deliberate suppression of this information by itself manifests a certain degree of bad faith on the part of respondent's storekeeper. The appellate court appears to have belittled petitioner's submission that under the prevailing circumstances time was of the essence in the delivery of the materials to the grave site. However, we find petitioner's assertion to be anchored on solid ground. The niche had to be constructed at the very least on the twenty-second of December considering that it would take about two (2) days to finish the job if the interment was to take place on the twentyfourth of the month. Respondent's delay in the delivery of the construction materials wasted so much time that construction of the tomb could start only on the twenty-third. It could not be ready for the scheduled burial of petitioner's wife. This undoubtedly prolonged the wake, in addition to the fact that work at the cemetery had to be put off on Christmas day. This case is clearly one of non-performance of a reciprocal obligation. In their contract of purchase and sale, petitioner had already complied fully with what was required of him as purchaser, i.e., the payment of the purchase price of P2,110.00. It was incumbent upon respondent to immediately fulfill his obligation to deliver the goods otherwise delay would attach. We therefore sustain the award of moral damages. It cannot be denied that petitioner and his family suffered wounded feelings, mental anguish and serious anxiety while keeping watch on Christmas day over the remains of their loved one who could not be laid to rest on the date she herself had chosen. There is no gainsaying the7

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inexpressible pain and sorrow Ignacio Barzaga and his family bore at that moment caused no less by the ineptitude, cavalier behavior and bad faith of respondent and his employees in the performance of an obligation voluntarily entered into. We also affirm the grant of exemplary damages. The lackadaisical and feckless attitude of the employees of respondent over which he exercised supervisory authority indicates gross negligence in the fulfillment of his business obligations. Respondent Alviar and his employees should have exercised fairness and good judgment in dealing with petitioner who was then grieving over the loss of his wife. Instead of commiserating with him, respondent and his employees contributed to petitioner's anguish by causing him to bear the agony resulting from his inability to fulfill his wife's dying wish. We delete however the award of temperate damages. Under Art. 2224 of the Civil Code, temperate damages are more than nominal but less than compensatory, and may be recovered when the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case, be proved with certainty. In this case, the trial court found that plaintiff suffered damages in the form of wages for the hired workers for 22 December 1990 and expenses incurred during the extra two (2) days of the wake. The record however does not show that petitioner presented proof of the actual amount of expenses he incurred which seems to be the reason the trial court awarded to him temperate damages instead. This is an erroneous application of the concept of temperate damages. While petitioner may have indeed suffered pecuniary losses, these by their very nature could be established with certainty by means of payment receipts. As such, the claim falls unequivocally within the realm of actual or compensatory damages. Petitioner's failure to prove actual expenditure consequently conduces to a failure of his claim. For in determining actual damages, the court cannot rely on mere assertions, speculations, conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss. 8 We affirm the award of attorney's fees and litigation expenses. Award of damages, attorney's fees and litigation costs is left to the sound discretion of the court, and if such discretion be well exercised, as in this case, it will not be disturbed on appeal. 9 WHEREFORE, the decision of the Court of Appeals is REVERSED and SET ASIDE except insofar as it GRANTED on a motion for reconsideration the refund by private respondent of the amount of P2,110.00 paid by petitioner for the construction materials. Consequently, except for the award of P5,000.00 as temperate damages which we delete, the decision of the Regional Trial Court granting petitioner (a) P2,110.00 as refund for the value of materials with interest computed at the legal rate per annum from the date of the filing of the case; (b) P20,000.00 as moral damages; (c) P10,000.00 as exemplary damages; (d) P5,000.00 as litigation expenses; and (4) P5,000.00 as attorney's fees, is AFFIRMED. No costs. SO ORDERED. Padilla, Vitug, Kapunan and Hermosisima, Jr., JJ., concur. Footnotes 1 Assigned to RTC-Br. 21, Imus, Cavite, presided over by Judge Roy S. del Rosario, Rollo, p. 68. 2 Decision penned by Justice Manuel C. Herrera, concurred in by Justices Cezar D. Francisco and Buenaventura J. Guerrero, Rollo, p. 38. 3 Art. 1170, Civil Code. 4 TSN, 6 December 1991, pp. 22-23.

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5 TSN, 19 September 1991, p. 47. 6 TSN, 6 December 1991, p. 35. 7 Art. 1169, last par., Civil Code. 8 Dichoso v. Court of Appeals, G.R. No. 55613, 10 December 1990, 192 SCRA 169; People v. Rosario, G.R. No. 108789, 18 July 1995, 246 SCRA 658. 9 Philippine Airlines, Inc. v. Court of Appeals, G.R. Nos. 50504-05, 13 August 1990, 188 SCRA 461. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-58122 December 29, 1989 MOBIL OIL PHILIPPINES, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and FERNANDO A. PEDROSA, respondents. Quiason, De Guzman, Makalintal & Barot for petitioner. Magno & Kare for respondent Pedrosa.

PARAS, J.: Before us is a petition for review which questions the decision 1 of the Court of Appeals affirming in toto the 2 decision of the Court of First Instance of Quezon City in Civil Case No. Q18580, the dispositive part of which reads as follows: WHEREFORE, judgment is hereby rendered sentencing defendant to pay plaintiff the following sums: P 3,470.00 for unearned profits on the subject prepaid order of February 15, 1974;

P 2,360.00 for loss of earnings due to the suspension of gasoline deliveries, occasioned by plaintiffs refusal to pay the price differentials; P 25,000.00 P 50,000.00 P 10,000.00 for exemplary damages for moral damages, and for attorney's fees

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P 90,830.00

TOTAL

Defendant's counterclaim against plaintiff is hereby dismissed for lack of merit. The original case was an action for damages filed by private respondent Fernando A. Pedrosa against petitioner Mobil Oil Philippines alleging that the latter deliberately delayed the delivery of gasoline to him notwithstanding his pre-paid order dated February 14, 1974. The undisputed facts of the case as found by the lower court and affirmed by the appellate court are as follows: Plaintiffs is a dealer of defendant's petroleum products and accessories operating a Mobil gasoline service station under the name of Anne Marie Mobil Service Station located at Aurora Blvd., San Juan, Metro Manila. The contractual relationship between plaintiff and defendant is governed by a Retail Dealer Contract, Exh. A, also Exh. 1. In the later part of 1973, an international oil crisis came about by reason of the concerted action of principal oil producing countries to increase the oil prices. The Philippines was not spared of this economic scourge and to meet the emergency, as the commodity became scarce while the demand therefore remained the same. On February 15, 1974-a Friday while there was still this oil crisis, plaintiff placed with defendant a pre-paid order for 8,000 liters of premium gasoline and 2,000 liters of regular gasoline paying therefore a PBTC Cashier's Check in the amount of P 4,610.00 was received at on the basis of the following computations: 8,000 liters MP at P 0.85............P3,510.00 2,000 liters MR at P 0.53............ 1,060.00 Delivery Freight Cargo.................. 40.00 ---------------------Total................... P 4,610.00 The above computation is contained in a product order form, Exh. 3, which was prepared and filled up by defendant's order clerk when plaintiff placed his order on Feb. 15, 1974, as in fact the handwritings thereon are those of the said order clerk. It is stated in Exh. 6 that the order was taken '2:20'(Exh. 3-A) and 12/15' and the delivery due date is 'Today'. Mr. Alberto Latuno, defendant's accounting analyst assigned on the order and billing section, explains the processing of an order, thusly: The order clerk prepares the product order form (Exh. 6) and it goes to him for checking then to the credit clerk for checking in their ledger; then to the credit man, Mr. F. Marcella, who has all the necessary documents and the authority to cause the approval of the release of the order; then to the volume comptroller; then to the coupon clerk; then it goes back to him for final invoicing. (Tsn., 9- 8-75, pp. 135-144) Mr. Floro Marcella, defendant's credit man, approved this order of February 15, 1974 (TSN., 9-375, p. 89), although he was no longer involved in its subsequent processing in fact, even when there was a price differential which occurred after his approval was made, the said order was not given back to him for reprocessing (Tsn., 9-3-75, p. 66).

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Mr. Alberto Latuno further states that the order, Exh. B, did not come back to him for invoicing that Friday afternoon (February 15, 1974); it was on February 19, 1974 that he received again the order, because the processing thereof by one coupon comptroller was completed only on that day, the reason for the delay being that on February 18 there was a price increase and they had to give priority to the recall of invoices already with their warehouse and dispatcher for repricing. (Tsn., 9-8-75, pp. 144-148). He also stated that since Exh. 8 was covered by the price increase, he altered the computation therein and made the necessary changes; this, he crossed out the old computation and refilled with a new one based on the new increased price, and placed the words 'short P 2,880.00'. (Tsn., 9-8-75, pp. 148-150). Plaintiff was informed of the difference in price, and as the price differential was not paid by plaintiff, he gave Exh. 3 back to the clerk assigned to the order and billing section. (Tsn., 9-8-75, 151). It appears that due to a posting error committed by a defendant's employees in the preparation of plaintiff's monthly statement of account, there remained outstanding against plaintiff an obligation in the sum of P5,653.34, which he paid after the proper verification by his accountant. However, plaintiff refused to pay the price differential of P2,880.00 corresponding to the February 15 order, as reflected in Exhibit 3, but this notwithstanding defendant delivered to plaintiff this February 15 order on March 5, 1974, albeit on the basis of the new increased prices thus reflecting an outstanding obligation of P 2,880.00 against plaintiff. (pp. 51-53, Rollo) Thus it appears from the record that there was an increase in the price of gasoline on February 18, 1974. Plaintiff was charged the cost of the gasoline under the increased rates, or in the total sum of P7,490.00 including delivery and freight charges. It was defendant's contention that since the gasoline was actually delivered on March 5, 1974, the then prevailing increased rates should be made to apply and not the price prevailing on February 14, 1974 the date when the order was made and paid by plaintiff with a cashier's check. To such contention, plaintiff disagreed by arguing that defendant committed a contractual breach and incurred in delay that should make it liable for damages when it did not deliver the gasoline to plaintiff on the agreed due date of delivery appearing on the prepaid order i.e. February 15,1974 and that therefore defendant cannot claim benefits by reason of this breach. Both the trial court and the appellate court found in favor of plaintiff, as mentioned earlier, hence, defendant now comes to Us on a petition by certiorari submitting that the: Respondent Hon. Court of Appeals in its Decision of June 22, 1981 (Annex "A) and its Resolution of September 3,1981 (Annex "G") decided questions of substance contrary to law and evidence as well as the applicable decisions of the Honorable Court, and acted without jurisdiction and/or with grave abuse of discretion when it failed to make the finding that: 1. The retail dealer agreement (Exh- 1) is merely a contract to buy and sell, and is not a perfected contract to sell. 2. Under the retail dealer agreement, the respondent, as buyer, must make an order for the products covered, and the petitioner as seller has to approve the order, before there can be a perfected sale. 3. The product order form (Exh. 3) was merely an offer made by the respondent to purchase the goods listed therein and was not a perfected contract of sale.

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4. The offer (product order form, Exhibit 3) became a perfected contract of sale only upon delivery of the products ordered. 5. The proper price that should be paid by respondent is that prevailing at the time of actual delivery. 6. Petitioner was not guilty of delay in delivering gasoline. 7. Granting for the sake of argument, that there was delay on the part of petitioner, the same was not deliberate. 8. Petitioner did not suspend gasoline deliveries from February 18 to February 23,1974. 9. Respondent did not suffer damages, actual or otherwise. (pp. 172-173, Rollo) Simply stated, petitioner contends that it did not commit a breach of contract since there was no perfected contract of sale with the private respondent and therefore petitioner cannot be made liable for any damage due to delay or breach of contract. Petitioner contends that Exh. "A" or Exh. "1" the Retail Trade Agreement is merely a contract to buy and sell. We cannot sustain petitioner's contentions. The pertinent provision of the Retail Trade Agreement or Exh. "A" or Exh. "1", which is Par. 2 reads as follows: 2 PRICES, TERMS, DELIVERIES SELLER agrees to sell and BUYER agrees to purchase at SELLER's current wholesale/dealer's prices and/or current dealer's discounts prevailing on date and at point of delivery and in such quantities as the BUYER may from time to time require and the SELLER may approve at SELLER'S option. All prices are payable in cash at the time the order is placed, except to the extent credit is extended.... (pp. 53-54, Rollo) Thus, it can be gathered clearly from the above quoted portion of the dealership agreement that "the price prevailing on date and at point of delivery should determine how respondent dealer should pay defendant (petitioner) on the order of February 15, 1974. A scrutiny of the prepaid product order form dated February 15, 1974 shows that the delivery date was stated as "Today" or February 15, 1974 and also the word "rush". Since the said prepaid order was prepared on the same date by petitioner's Order Clerk and after being thus approved by petitioner's credit man, private respondent paid for the price therein indicated by tendering a Prudential Bank Cashier's Check #19972. Because of this, petitioner Mobil became duty bound to deliver the gasoline to private respondent on February 15, 1974 and the price paid for by private respondent was that price then prevailing which was the amount indicated in private respondent's cashier's check given to petitioner. By actually delivering the gasoline on March 6, 1974, petitioner committed a contractual breach and incurred in delay that should make it liable for damages. In invoking that no contract of sale was existing, petitioner referred to the RTA dealership as merely a contract to buy and sell. Private respondent agreed that the RTA dealership agreement is not a contract of sale but in the same vein argued that it is a mere trade agreement or contract governing the relationship between Mobil and respondent Pedrosa regarding the operation of a gasoline station and the marketing of Mobil petroleum products and prescribing in general terms, among other things, how the ensuing subsidiary contract orders for Mobil products were to be placed and delivered under said dealerhip agreement. And one such contract order is that product order form (Exh. "3") which listed down the gasoline ordered by respondent Pedrosa and its corresponding price which was approved by Mobil and paid for by respondent Pedrosa with his Cashier's check as

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already mentioned earlier. Said prepaid order form was a perfected contract of sale the moment it was approved and accepted by Mobil through its proper representative on the same day and paid for by respondent Pedrosa likewise on the same day as evidenced by Mobil's Cash Receipt No. C-078355. On the part of Pedrosa it can even be said that the contract was consummated as far as he was concerned since he executed his part of the contract by his prepayment of the order. The other assigned errors of petitioner question the finding of facts of the Court of Appeals affirming those of the trial court quoted as follows: The second issue to be resolved is whether or not the delay in the delivery was intentional. The Court finds and so holds that defendant deliberately delayed the delivery of the gasoline in question to a date subsequent to February 15,1974, in the erroneous belief that thereby it could impose upon the defendant the increased new price that took effect on February 18, 1974, considering the following facts and circumstances to wit: 1. The delay in the delivery of the gasoline according to defendant's witness Mr. Alberto Latuno was due to the fact that the processing of the subject order by the coupon comptroller was completed only on February 19,1974 because on February 18, there was a price increase and they had to give priority to the recall of invoices already with their warehouse and dispatcher for re-pricing. (Tsn., 9-875, pp. 144-176). Thus, another Mobil dealer, plaintiff's witness Joaquin Coronel, suffered the same fate, although his prepaid order was made earlier on February 14,1974, a Thursday. 2. Defendant alleges that for "plaintiff's refusal to pay the price differential", aside from the fact that he had an outstanding account with defendant Mobil did not deliver the order of February 15, 1974 until March 5 of the same year, plaintiff having paid the day previously his indebtedness to Mobil in the sum of P5,653.34 (on p. 4 of Memorandum of the Defendant). As heretofore discussed plaintiffs refusal to pay the price differential was justified, and therefore cannot be considered as a valid reason for the delay. The alleged outstanding account of plaintiff in favor of defendant is admittedly due to a posting error committed by defendant's employees, which upon proper verification by plaintiff's accountant was fully paid. During the month of January 1974, this outstanding account already surfaced which the said posting error was discovered, but it did not affect the gasoline deliveries for the same month of January and early part of February 1974. However, when defendant anticipated the February 18 increase in oil prices, it conveniently invoked this outstanding account to delay the plaintiff's pre-paid order of February 15. There is evident bad faith in aforegoing actuations of defendant. 3. Defendant argues that plaintiffs pre-paid order of February 15, a Friday, could not be delivered until after February 18 because it was placed at 2:20 p.m. and defendant makes no delivery on Saturdays and Sundays. The argument pales vis a vis the fact, as shown by the very evidence of defendants; vis the due date of delivery is February 15,1974, a Friday. Besides, it has been proved that defendant has made gasoline deliveries on Saturday, within the months of January and February 1974, to wit: January 5,1974 (Exhs. J & K; Tsn. 4-22-76, pp. 20 & 27). And February 28,1974 (Exh. L & M Tsn., 4-11-76, pp. 26-27, 32-33). In view of the above findings a) that defendant committed a contractual breach and incurred in delay with respect to plaintiff's pre-paid order of February 15, 1974, by delivering the subject gasoline beyond the agreed due date of delivery; and

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b) that the delay in the delivery was intentional on the part of the defendant, in anticipation of the increase of oil prices on February 18, 1974, for the obvious purpose of profiting thereby; the court holds liable to plaintiff for damages, as follows: 1. Plaintiff is entitled to the profits that would have accrued in his favor if the gasoline covered by the subject pre-paid order of February 15, 1974 was timely delivered to him. As reflected in Exh. I, such profits amount to P3,470.00. 2. Due to the suspension in gasoline deliveries between the period from February 18 to 28, 1974, plaintiff suffered loss of earnings amounting to P2,380.00 per computation in Exh. I. 3. Defendant took unfair advantage of the anticipated oil increase on February 18, 1974, motivated by a desire to rake for itself substantial profits that legitimately belonged to its Mobil dealers, similarly situated as plaintiff. It threatened plaintiff and made good its threat to suspend gasoline deliveries, if plaintiff should not accede to its undue demand for the payment of the price differential. These actuations of defendant are indeed oppressive and malevolent that should make it liable for exemplary damages, which this court assesses in the amount of P 25,000.00 4. On his moral damages claim, plaintiff testified as follows: ATTY. FERRER Q. Now, aside from this actual damages or compensatory damages that you were testifying to a while ago, can you tell us in what way this particular incident you had with the Company regarding the withholding of the February 15 order and so on, affect you personally and your clientele? A In the first place, you will recall that this time there was a very harsh demand for gasoline and there were about at least two hundred were or three hundred cars lined up waiting for their chance to get their twenty (20) liters fuel for the day and since we have been operating since 1966 we have developed a clientele which relied on us for their fuel supplies, because of the fact that we were unable, by virtue of this failure to deliver by Mobil Oil, to provide our clientele and the public in general with this allocation of ours, my oil customers were highly disgusted with us. And in fact some customers complained to the Metrocom that we are not giving gasoline as required by the President no less. Q Were you visited by the Metrocom or any other Government Agency regarding your failure to sell gasoline to the public during this period? A Yes, sir. Q What happened? A There was a Metrocom, I believe it was a Lieutenant, who demanded to know why we are not giving gasoline to the public and we could only explain we had no gasoline in the first place. They did not believe us, so we showed them the contents of the tank which was empty. In the second place, a team from the Price Control Council accompanied by a Metrocom Sergeant, visited us to demand from us why we were not supplying our customers. They insinuated that we were hoarding gasoline and in fact the empty oil cans in the gasoline station were brought out and

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they said there were prima facie evidence of hoarding. In fact I have to remind them that if I am hoarding I would have gasoline, not to mention of course near fistheads (sic) during the day caused near fistfights with my boss in the station. On the personal side I felt that as I explained to Mr. Oliveros, I felt that it was a matter of principle that I would have to stand for what I believe on, any due right to be delivered what I have paid for and that considering that our relationship with Mobil Oil had been such a long standing one, they should have considered that this price increase should have been handled with more objectivity. Q How about you personally, how did this incident affect you? ATTY. VENERACION: A That is what he has been answering, Your Honor. ATTY. FERRER: Q Personally and emotionally? A As Mr. Oliveros and Mr. Estagle know I was very very upset over this matter. In fact, I was practically shouting over the telephone over this matter and I was deeply upset over this matter, Your Honor. (Tsn., 1-8-75, pp. 70-76). Considering the foregoing, the Court holds defendant liable to plaintiff for moral damages which is assessed at P50,000.00. Q Plaintifff has been compelled to litigate in this instance, and justifiably so, for which reason this Court holds defendant liable to plaintiff for attorney's fees, which is fixed at P10,000.00. (Amended Record on Appeal, pp. 66-80) One of the reasons why Mobil Oil Philippines, Inc. did not deliver immediately the pre-paid order of February 15, 1974 involved in this case is because appellee Fernando A. Pedrosa had an unpaid balance of P5,653.34 on his account as of December 31, 1973 and it was company policy to require all dealers to liquidate all their outstanding balances at the end of 1973 before further delivery of oil products would be made to them (T.S.N., January 8, 1975, p. 30; April 2,1975, pp. 25-27, p.8) and that the price differential of P 2,880.00 had not yet been paid. However, the exact state of appellee's account balance with Mobil was really immaterial for the purpose of filling appellee's February 15th order was because as judicially represented by appellant in their answer, appellee's order of February 15, 1974 involved in this case was duly approved by Mobil's credit man as follows: On February 15, 1974, plaintiff, thru his representative, placed a product order at 2:20 P.M. and to accommodate plaintiff, the said order was approved by the credit man before closing of the Mobil Terminal at 4:00 P.M. with a final warning that no further delivery would be acted upon unless the outstanding balance of P5,653.34 is fully paid. (Paragraph 5, Affirmative and Special Defenses, Amended Answer, p. 28, Record on Appeal) Mobil's credit man, Floro Marcella testified that he did approve the order of February 15, 1974 (T.S.N., September 3, 1975 p. 63). This clearly means that Mobil would deliver the order of February 15th although there was still an unpaid balance of P5,653.34 because what would really be affected by the unpaid balance of P 5,653.34 are the orders subsequent to the order of

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February 15, 1974. And that order of February 15 was delivered on March 5 even though appellee had not (and still up to the present has not) yet paid the price differential of P 2,880.00 that appellant was demanding. This goes to show, that contrary to appellants contention, they do deliver orders even if the customer has unpaid balance on account. Another reason or excuse advanced by the appellant why the delivery of the pre-paid order of February 15, 1974 was suspended was because Mobil does not make any delivery on Saturdays and Sundays effective September 8, 1973 (Exhibit 2). Dioscoro Franco, another Mobil dealer and witness for appellee, testified that he placed orders on Fridays which were delivered the following day, Saturday, as evidenced by the following exhibits: 1. Exhibits J and K-Sales Invoices Nos. 35416 and 35417 for 6,000 and 12,000 liters of gasoline, respectively, both dated January 4, 1974 (a Friday) and both shipped or delivered on January 5, 1974 (a Saturday). Mr. Franco testified that he actually requested that those particular orders be delivered that same day, Friday, but Mobil delivered them the following day instead, a Saturday (t.s.n., April 22,1976, pp. 17-21). 2. Exhibits L and M-Sales Invoices Nos. 04295 and 04296 for 12,000 and 14,000 liters of gasoline, respectively, both dated February 22, 1974, (a Friday) and both shipped or delivered on February 23, 1974 (a Saturday). Mr. Franco testified that he requested that those particular orders be delivered the following day, a Saturday, and Mobil complied (surprisingly in the face of its "supposed no Saturday delivery" rule). (T.s.n., April 22, 1976, pp. 25-26) Mobil's witness, Mario Oliveros, tried self-exonerating to justify and qualify these Saturday deliveries to Mr. Franco as being exceptions but he could not say who in Mobil decides on the exceptions (T.s.n., April 23,1975, pp. 61-63). Still, another excuse given by Mobil was that the coupon system was a cause of the delay in the delivery of the fuel. Appellant's witness Mario Oliveros stated that the coupon system of rationing gasoline among the consumers was another cause for the delay in delivery of plaintiff-appellee's pre-paid order of February 15, 1974. The supposed laborious work involved in a dealer submitting these coupons to the oil company when placing an order unduly burdened the system of placement and processing of orders (T.s.n., April 23,1975, p. 62). The evidence clearly shows that the coupon system could not be a reason for the delay in appellant's deliveries of appellee's pre-paid order. (Exhibits J, K, L, and M show that the orders of Mr. Dioscoro Franco were served on the day following the date of the invoice and the day of service was even a Saturday.) Also, there are the rebuttal exhibits regarding Mr. Dioscoro Franco's orders Exhibits Q, Q-1 to Q24 covering the period from January 14, to February 28,1974 which are described as follows: Exhibit Mobil Sales Invoice Date of Invoice Date Shipped or

No.

12

No. Q 36083C Jan. 14, 1974 Jan. 14, 1974 Jan. 14, 1974 Jan. 15, 1974 Jan. 15, 1974 Jan. 17, 1974 Jan. 17, 1974 Jan. 21, 1974 Jan. 21, 1974 Jan. 23, 1974 Jan. 28, 1974 Jan. 28, 1974 Feb. 5, 1974 Feb. 5,

Delivered Jan.14,1974

Q-1

36084C

Jan. 14, 1974

Q-2

36093

Jan. 14, 1974

Q-3

36271C

Jan. 15, 1974

Q-4

36272C

Jan. 15, 1974

Q-5

36353C

Jan. 17, 1974

Q-6

36354C

Jan. 17, 1974

Q-7

36585C

Jan. 21, 1974

Q-8

36586C

Jan. 21, 1974

Q-9

41453C

Jan. 23, 1974

Q-10

41743C

Jan. 28, 1974

Q-11

41744C

Jan. 28, 1974

Q-12

42347C

Feb. 5, 1974 Feb. 5,

Q-13

42348C

13

1974 Q-14 73691 Feb. 8, 1974 Feb. 13, 1974 Feb. 20, 1974 Feb. 20, 1974 Feb. 21, 1974 Feb. 21, 1974 Feb. 25, 1974 Feb. 27, 1974 Feb. 27, 1974 Feb. 28, 1974 Feb. 28, 1974

1974 Feb. 8, 1974 Feb. 13, 1974

Q-15

00783D

Q-16

01564D

Feb. 20, 1974

Q-17

01565D

Feb. 20, 1974

Q-18

86852B

Feb. 21, 1974

Q-19

86853B

Feb. 21, 1974

Q-20

04434D

Feb. 25, 1974

Q-21

04691D

Feb. 27, 1974

Q-22

04692D

Feb. 27, 1974

Q-23

06850D

Feb. 28, 1974

Q-24

06851D

Feb. 28,1974

The above rebuttal evidence clearly, indisputably and conclusively shows that Mobil Oil Philippines, Inc. made deliveries to Mr. Dioscoro Franco's gasoline station on the same days as the date of the invoices in accordance with the request that the delivery be made "today". These invoices disprove the excuses of Mobil that it had a back-log of gasoline orders and that the coupon system of distribution then in force accounted for alleged delay in delivery of plaintiff's order.

14

Another Mobil dealer and witness for appellee, Joaquin Coronel, testified in this case in connection with a pre-paid order he placed with the company on February 14, 1974, a Thursday, which was never delivered because the price increase took effect on February 18,1974 and Mobil wanted him to pay the price differential. Mr. Coronel refused to pay the piece increase differential and filed an administrative case against Mobil with the Oil Industry Commission (OIC), OIC Case No. 193 entitled "In the Matter of the Refusal to Deliver Pre-paid Oil Products, Joaquin P. Coroner, Petitioner, versus Mobil Oil Philippines, Inc., Respondent. In its decision, the Oil Industry Commission, while finding itself without the jurisdiction or power to grant the relief Mr. Coronel prayed for, nonetheless found respondent Mobil definitely guilty of the charge imputed to it by complainant Coronel. Hence, on pages 4 and 5 of the decision, the Oil Industry Commission said: On this, it is our considered view that the enticement of additional profit should not be allowed to prevail over the social and economic responsibility that the oil companies assumed the very moment they set out to manufacture and sell petroleum products in this country. When the incident subject matter of this case occurred, the whole country including the Metropolitan Manila Area, was in the grip of an acute fuel shortage. This was precisely the reason why the government, through all the agencies concerned, was pushing through a campaign intended to make available to the consuming public as much product as possible by going against hoarders and black-marketers and conducting inventories of all kinds of petroleum products in refineries, depots, and gasoline stations. Any act of withholding any quantity of petroleum product from the market then undermined to the same extent the efforts of the government to insure a continuous flow of supply. ... This Commission, however, could see no reason (and no reason really was put forward by respondent) for withholding the delivery, except that respondent had anticipated the grant of the increase in prices, and motivated by a desire to realize more profit, held on to its product instead of causing its immediate delivery to the petitioner. The adverse effect on the jeepney drivers and operators and the commuting public of such ill-advised decision of respondent can only be imagined. But certainly 6,000 liters of diesel oil could have caused many jeepneys to ply their respective routes and carry passengers to their places of work and thereby afforded many segments of the community some form of benefit or another. (Exhibit N, pp. 4 and 5) Therefore, in the dispositive portion of the decision, the Oil Industry Commission declared: ... declares respondent's act of unreasonably delaying delivery of petroleum products ordered and paid for in advance by petitoner to be violative of the directives and regulations on the matter, and hereby sternly warns said respondent that any other similar act that it may commit in the future with respect to herein petitioner or to any of its other dealers shall be dealt with more severely. (Exh. N, p.7) We will now determine whether the award by the court a quo of P 25,000.00 for exemplary and P 50,000.00 for moral damages is reasonable or not. Alberto Latuno, witness for defendant-appellant on direct examination testified as follows: Q. What about the 18th, why was it not proceeded on the 18th?

15

A. Because on the 18th, sir, we had this price increase and we had to give priority to the invoices already with our warehouse and dispatcher which were recalled for re- pricing. Q. They were recalled, Mr. Latuno, for re-pricing because of the price increase? A. Yes, sir. COURT: Mr. Latuno, in order for your company to increase the price in accordance with the price increase which took effect in February 19? A. Yes, Your Honor. COURT: Proceed. ATTY. VENERACION: And this invoice was already in the warehouse. A. And bulk dispatcher, sir. Q. So that was given priority? A. Yes, sir. (T.S.N., September 3, 1975, pp. 145-147) Mr. Mario Oliveros, witness for defendant-appellant, also testified that they had to recall and reprocess all orders previously invoiced because of the pace increase which took effect on February 18, 1974 (T.s.n., April 2,1975, p. 14). The above clearly indicates that defendant-appellant gave priority to the recall and reprocess of all invoices already with their warehouse and dispatcher for re-pacing because of the price increase which took effect on February 18, 1 974. This means that all invoices covering orders already paid for as early as February 14 and 15,1974 were recalled and revised to reflect the price increase and said orders were not delivered unless the dealers pay the corresponding price differential. Defendant-appellant cancelled the orders of dealers like Dioscoro Franco and Joaquin P. Coroner who refused to pay the price differential and their payments were just treated as payments on their respective accounts (T.s.n., April 22,1976, pp. 61-63) Therefore, defendant-appellant's act of unreasonably delaying delivery of petroleum products ordered and paid for in advance by its dealers is not only violative of the directives and regulations of the Oil Industry Commission, but also allowed appellant to amass unreasonably huge profits which if it had exercised fairness, honesty, good faith, and ordinary diligence in its business dealings, said profits should have gone to its dealers to whom it legitimately belonged. Such awards are necessary retribution for the oppressive, malevolent, unfair and high-handed actuations of the defendant- appellant. (Rollo, pp. 55-57).

16

We find the above factual findings as a fair, reasonable and just conclusion well grounded on the documentary and testimonial evidence presented in court which were not convincingly disputed by petitioner Mobil Oil Philippines. As We found nothing capricious, whimsical, speculative or arbitrary in the conclusions arrived at, the same cannot be disturbed on appeal. Finally, We will consider private respondent's motion addressed to Us pending final judgment of this case a) to require petitioner to file a supersedeas bond or deposit with this Court the amount awarded to private respondent by the lower court; and b) the judgment award should be adjusted upward by at least 150% in keeping with the inflation that has supervened. Petitioner in their "Rejoinder and Opposition" assured this Court that "it has more than adequate assets or financial resources to pay any judgment that may be rendered against it, in fact, it emphasized that "it has already taken sufficient steps for the protection of the interest of its creditors and has even appointed trustees, for the purpose of receiving all claims against the petitioner for settlement. Aside from this, the issue has already become moot and academic at this stage. On the second issue for adjustment claims, private respondent has no basis in contract or in law. Parenthetically, the principle We laid down in the case of Commissioner of Public Highways vs. Burgos(96 SCRA 831) can be applied here, to wit: ... an agreement is needed for the effects of an extraordinary inflation to be taken into account to alter the value of the currency at the time of the establishment of the obligation which, as a rule, is always the determinative element, to be varied by agreement that would find reason only in the supervention of extraordinary inflation or deflation. (pp. 837-838 Emphasis supplied). Moreover, in his concurring opinion in the same case, Justice Claudio Teehankee stated: I concur in the result with the observation that the statements in the main opinion re: the applicability or non-applicability of Article 1250 of the Civil Code should be taken as obiter dicta, since said article may not be invoked nor applied without a proper declaration of extraordinary inflation or deflation of currency by the competent authorities. (p. 840, Italics ours) In the case at bar, the obligation of the petitioner, if any, is based on law since the same calls for the application of the Civil Code provisions on damages. Moreover, there has been no official pronouncement or declaration of the existence of extraordinary inflation or deflation. WHEREFORE, premises considered, finding lack of merit in the petition, the same is hereby DISMISSED and the appealed judgment of the appellate court is hereby AFFIRMED. SO ORDERED. Melencio-Herrera (Chairperson), Sarmiento and Regalado, JJ., concur. Padilla, J.,took no part.

Footnotes

17

1 Penned by Justice Jose A.R. Melo, concurred in by Justices Mama D. Busran and Guillermo P. Villasor. 2 Penned by Judge Ulpiano Sarmiento. Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-21749 September 29, 1967

REPUBLIC OF THE PHILIPPINES, plaintiff-appellee, vs. LUZON STEVEDORING CORPORATION, defendant-appellant. Office of the Solicitor General for plaintiff-appellee. H. San Luis and L.V. Simbulan for defendant-appellant.

REYES, J.B.L., J.: The present case comes by direct appeal from a decision of the Court of First Instance of Manila (Case No. 44572) adjudging the defendant-appellant, Luzon Stevedoring Corporation, liable in damages to the plaintiffappellee Republic of the Philippines. In the early afternoon of August 17, 1960, barge L-1892, owned by the Luzon Stevedoring Corporation was being towed down the Pasig river by tugboats "Bangus" and "Barbero"1 also belonging to the same corporation, when the barge rammed against one of the wooden piles of the Nagtahan bailey bridge, smashing the posts and causing the bridge to list. The river, at the time, was swollen and the current swift, on account of the heavy downpour of Manila and the surrounding provinces on August 15 and 16, 1960. Sued by the Republic of the Philippines for actual and consequential damage caused by its employees, amounting to P200,000 (Civil Case No. 44562, CFI of Manila), defendant Luzon Stevedoring Corporation disclaimed liability therefor, on the grounds that it had exercised due diligence in the selection and supervision of its employees; that the damages to the bridge were caused by force majeure; that plaintiff has no capacity to sue; and that the Nagtahan bailey bridge is an obstruction to navigation. After due trial, the court rendered judgment on June 11, 1963, holding the defendant liable for the damage caused by its employees and ordering it to pay to plaintiff the actual cost of the repair of the Nagtahan bailey bridge which amounted to P192,561.72, with legal interest thereon from the date of the filing of the complaint. Defendant appealed directly to this Court assigning the following errors allegedly committed by the court a quo, to wit:

18

I The lower court erred in not holding that the herein defendant-appellant had exercised the diligence required of it in the selection and supervision of its personnel to prevent damage or injury to others.1awphl.nt II The lower court erred in not holding that the ramming of the Nagtahan bailey bridge by barge L-1892 was caused by force majeure. III The lower court erred in not holding that the Nagtahan bailey bridge is an obstruction, if not a menace, to navigation in the Pasig river. IV The lower court erred in not blaming the damage sustained by the Nagtahan bailey bridge to the improper placement of the dolphins. V The lower court erred in granting plaintiff's motion to adduce further evidence in chief after it has rested its case. VI The lower court erred in finding the plaintiff entitled to the amount of P192,561.72 for damages which is clearly exorbitant and without any factual basis. However, it must be recalled that the established rule in this jurisdiction is that when a party appeals directly to the Supreme Court, and submits his case there for decision, he is deemed to have waived the right to dispute any finding of fact made by the trial Court. The only questions that may be raised are those of law (Savellano vs. Diaz, L-17441, July 31, 1963; Aballe vs. Santiago, L-16307, April 30, 1963; G.S.I.S. vs. Cloribel, L-22236, June 22, 1965). A converso, a party who resorts to the Court of Appeals, and submits his case for decision there, is barred from contending later that his claim was beyond the jurisdiction of the aforesaid Court. The reason is that a contrary rule would encourage the undesirable practice of appellants' submitting their cases for decision to either court in expectation of favorable judgment, but with intent of attacking its jurisdiction should the decision be unfavorable (Tyson Tan, et al. vs. Filipinas Compaia de Seguros) et al., L-10096, Res. on Motion to Reconsider, March 23, 1966). Consequently, we are limited in this appeal to the issues of law raised in the appellant's brief. Taking the aforesaid rules into account, it can be seen that the only reviewable issues in this appeal are reduced to two: 1) Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan bridge was in law caused by fortuitous event or force majeure, and 2) Whether or not it was error for the Court to have permitted the plaintiff-appellee to introduce additional evidence of damages after said party had rested its case. As to the first question, considering that the Nagtahan bridge was an immovable and stationary object and uncontrovertedly provided with adequate openings for the passage of water craft, including barges like of appellant's, it is undeniable that the unusual event that the barge, exclusively controlled by appellant, rammed the bridge supports raises a presumption of negligence on the part of appellant or its employees manning the barge or the tugs that towed it. For in the ordinary course of events, such a thing does not happen if proper care is used. In Anglo American Jurisprudence, the inference arises by what is known as the "res ipsa loquitur" rule (Scott vs. London Docks Co., 2 H & C 596; San Juan Light & Transit Co. vs. Requena, 224 U.S. 89, 56 L. Ed., 680; Whitwell vs. Wolf, 127 Minn. 529, 149 N.W. 299; Bryne vs. Great Atlantic & Pacific Tea Co., 269 Mass. 130; 168 N.E. 540; Gribsby vs. Smith, 146 S.W. 2d 719). The appellant strongly stresses the precautions taken by it on the day in question: that it assigned two of its most powerful tugboats to tow down river its barge L-1892; that it assigned to the task the more competent and

19

experienced among its patrons, had the towlines, engines and equipment double-checked and inspected; that it instructed its patrons to take extra precautions; and concludes that it had done all it was called to do, and that the accident, therefore, should be held due to force majeure or fortuitous event. These very precautions, however, completely destroy the appellant's defense. For caso fortuito or force majeure (which in law are identical in so far as they exempt an obligor from liability)2 by definition, are extraordinary events not foreseeable or avoidable, "events that could not be foreseen, or which, though foreseen, were inevitable" (Art. 1174, Civ. Code of the Philippines). It is, therefore, not enough that the event should not have been foreseen or anticipated, as is commonly believed, but it must be one impossible to foresee or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee the same: "un hecho no constituye caso fortuito por la sola circunstancia de que su existencia haga mas dificil o mas onerosa la accion diligente del presento ofensor" (Peirano Facio, Responsibilidad Extra-contractual, p. 465; Mazeaud Trait de la Responsibilite Civil, Vol. 2, sec. 1569). The very measures adopted by appellant prove that the possibility of danger was not only foreseeable, but actually foreseen, and was not caso fortuito. Otherwise stated, the appellant, Luzon Stevedoring Corporation, knowing and appreciating the perils posed by the swollen stream and its swift current, voluntarily entered into a situation involving obvious danger; it therefore assured the risk, and can not shed responsibility merely because the precautions it adopted turned out to be insufficient. Hence, the lower Court committed no error in holding it negligent in not suspending operations and in holding it liable for the damages caused. It avails the appellant naught to argue that the dolphins, like the bridge, were improperly located. Even if true, these circumstances would merely emphasize the need of even higher degree of care on appellant's part in the situation involved in the present case. The appellant, whose barges and tugs travel up and down the river everyday, could not safely ignore the danger posed by these allegedly improper constructions that had been erected, and in place, for years. On the second point: appellant charges the lower court with having abused its discretion in the admission of plaintiff's additional evidence after the latter had rested its case. There is an insinuation that the delay was deliberate to enable the manipulation of evidence to prejudice defendant-appellant. We find no merit in the contention. Whether or not further evidence will be allowed after a party offering the evidence has rested his case, lies within the sound discretion of the trial Judge, and this discretion will not be reviewed except in clear case of abuse.3 In the present case, no abuse of that discretion is shown. What was allowed to be introduced, after plaintiff had rested its evidence in chief, were vouchers and papers to support an item of P1,558.00 allegedly spent for the reinforcement of the panel of the bailey bridge, and which item already appeared in Exhibit GG. Appellant, in fact, has no reason to charge the trial court of being unfair, because it was also able to secure, upon written motion, a similar order dated November 24, 1962, allowing reception of additional evidence for the said defendant4 appellant. WHEREFORE, finding no error in the decision of the lower Court appealed from, the same is hereby affirmed. Costs against the defendant-appellant. Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Bengzon, J.P. J., on leave, took no part. Footnotes

20

1

The lead-tugboat "Bangus" was pulling the barge, while the tugboat "Barbero" was holding or restraining it at the back.2

Lasam vs. Smith, 45 Phil. 661. Lopez vs. Liboro, 81 Phil. 429. p. 89, Record on Appeal. Republic of the Philippines SUPREME COURT Manila EN BANC

3

4

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.

VITUG, J.: The issues, albeit not completely novel, are: (a) whether or not a claim for damage sustained on a shipment of goods can be a solidary, or joint and several, liability of the common carrier, the arrastre operator and the customs broker; (b) 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 (c) whether the applicable rate of interest, referred to above, is twelve percent (12%) or six percent (6%). The findings of the court a quo, 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 against defendants shipping company, arrastre operator and broker-forwarder for damages sustained by a shipment while in defendants' custody, filed by the insurer-subrogee who paid the consignee the value of such losses/damages. On December 4, 1981, two fiber drums of riboflavin were shipped from Yokohama, Japan for delivery vessel "SS EASTERN COMET" owned by defendant Eastern Shipping Lines under Bill of Lading No. YMA-8 (Exh. B). The shipment was insured under plaintiff's Marine Insurance Policy No. 81/01177 for P36,382,466.38.

21

Upon arrival of the shipment in Manila on December 12, 1981, it was discharged unto the custody of defendant Metro Port Service, Inc. The latter excepted to one drum, said to be in bad order, which damage was unknown to plaintiff. On January 7, 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service, Inc., one drum opened and without seal (per "Request for Bad Order Survey." Exh. D). On January 8 and 14, 1982, defendant Allied Brokerage Corporation made deliveries of the shipment to the consignee's warehouse. The latter excepted to one drum which contained spillages, while the rest of the contents was adulterated/fake (per "Bad Order Waybill" No. 10649, Exh. E). Plaintiff contended that due to the losses/damage sustained by said drum, the consignee suffered losses totaling P19,032.95, due to the fault and negligence of defendants. Claims were presented against defendants who failed and refused to pay the same (Exhs. H, I, J, K, L). As a consequence of the losses sustained, plaintiff was compelled to pay the consignee P19,032.95 under the aforestated marine insurance policy, so that it became subrogated to all the rights of action of said consignee against defendants (per "Form of Subrogation", "Release" and Philbanking check, Exhs. M, N, and O). (pp. 85-86, Rollo.) There were, to be sure, other factual issues that confronted both courts. Here, the appellate court said: Defendants filed their respective answers, traversing the material allegations of the complaint contending that: As for defendant Eastern Shipping it alleged that the shipment was discharged in good order from the vessel unto the custody of Metro Port Service so that any damage/losses incurred after the shipment was incurred after the shipment was turned over to the latter, is no longer its liability (p. 17, Record); Metroport averred that although subject shipment was discharged unto its custody, portion of the same was already in bad order (p. 11, Record); Allied Brokerage alleged that plaintiff has no cause of action against it, not having negligent or at fault for the shipment was already in damage and bad order condition when received by it, but nonetheless, it still exercised extra ordinary care and diligence in the handling/delivery of the cargo to consignee in the same condition shipment was received by it. From the evidence the court found the following: The issues are: 1. Whether or not the shipment sustained losses/damages; 2. Whether or not these losses/damages were sustained while in the custody of defendants (in whose respective custody, if determinable); 3. Whether or not defendant(s) should be held liable for the losses/damages (see plaintiff's pre-Trial Brief, Records, p. 34; Allied's pre-Trial Brief, adopting plaintiff's Records, p. 38). As to the first issue, there can be no doubt that the shipment sustained losses/damages. The two drums were shipped in good order and condition, as clearly shown by the Bill of Lading and Commercial Invoice which do not

22

indicate any damages drum that was shipped (Exhs. B and C). But when on December 12, 1981 the shipment was delivered to defendant Metro Port Service, Inc., it excepted to one drum in bad order. Correspondingly, as to the second issue, it follows that the losses/damages were sustained while in the respective and/or successive custody and possession of defendants carrier (Eastern), arrastre operator (Metro Port) and broker (Allied Brokerage). This becomes evident when the Marine Cargo Survey Report (Exh. G), with its "Additional Survey Notes", are considered. In the latter notes, it is stated that when the shipment was "landed on vessel" to dock of Pier # 15, South Harbor, Manila on December 12, 1981, it was observed that "one (1) fiber drum (was) in damaged condition, covered by the vessel's Agent's Bad Order Tally Sheet No. 86427." The report further states that when defendant Allied Brokerage withdrew the shipment from defendant arrastre operator's custody on January 7, 1982, one drum was found opened without seal, cello bag partly torn but contents intact. Net unrecovered spillages was 15 kgs. The report went on to state that when the drums reached the consignee, one drum was found with adulterated/faked contents. It is obvious, therefore, that these losses/damages occurred before the shipment reached the consignee while under the successive custodies of defendants. Under Art. 1737 of the New Civil Code, the common carrier's duty to observe extraordinary diligence in the vigilance of goods remains in full force and effect even if the goods are temporarily unloaded and stored in transit in the warehouse of the carrier at the place of destination, until the consignee has been advised and has had reasonable opportunity to remove or dispose of the goods (Art. 1738, NCC). Defendant Eastern Shipping's own exhibit, the "TurnOver Survey of Bad Order Cargoes" (Exhs. 3-Eastern) states that on December 12, 1981 one drum was found "open". and thus held: WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered: A. Ordering defendants to pay plaintiff, jointly and severally: 1. The amount of P19,032.95, with the present legal interest of 12% per annum from October 1, 1982, the date of filing of this complaints, until fully paid (the liability of defendant Eastern Shipping, Inc. shall not exceed US$500 per case or the CIF value of the loss, whichever is lesser, while the liability of defendant Metro Port Service, Inc. shall be to the extent of the actual invoice value of each package, crate box or container in no case to exceed P5,000.00 each, pursuant to Section 6.01 of the Management Contract); 2. P3,000.00 as attorney's fees, and 3. Costs. B. Dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation. SO ORDERED. (p. 207, Record).

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Dissatisfied, defendant's recourse to US. The appeal is devoid of merit. After a careful scrutiny of the evidence on record. We find that the conclusion drawn therefrom is correct. As there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants, and therefore they are liable to the appellee, as subrogee for the amount it paid to the consignee. (pp. 87-89, Rollo.) The Court of Appeals thus affirmed in toto the judgment of the court a quo. In this petition, Eastern Shipping Lines, Inc., the common carrier, attributes error and grave abuse of discretion on the part of the appellate court when I. IT HELD PETITIONER CARRIER JOINTLY AND SEVERALLY LIABLE WITH THE ARRASTRE OPERATOR AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE RESPONDENT AS GRANTED IN THE QUESTIONED DECISION; II. IT HELD THAT THE GRANT OF INTEREST ON THE CLAIM OF PRIVATE RESPONDENT SHOULD COMMENCE FROM THE DATE OF THE FILING OF THE COMPLAINT AT THE RATE OF TWELVE PERCENT PER ANNUM INSTEAD OF FROM THE DATE OF THE DECISION OF THE TRIAL COURT AND ONLY AT THE RATE OF SIX PERCENT PER ANNUM, PRIVATE RESPONDENT'S CLAIM BEING INDISPUTABLY UNLIQUIDATED. The petition is, in part, granted. In this decision, we have begun by saying that the questions raised by petitioner carrier are not all that novel. Indeed, we do have a fairly good number of previous decisions this Court can merely tack to. 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 (Arts. 1736-1738, Civil Code; Ganzon vs. Court of Appeals, 161 SCRA 646; Kui Bai vs. Dollar Steamship Lines, 52 Phil. 863). 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 (Art. 1735, Civil Code; Philippine National Railways vs. Court of Appeals, 139 SCRA 87; Metro Port Service vs. Court of Appeals, 131 SCRA 365). There are, of course, exceptional cases when 1 such presumption of fault is not observed but these cases, enumerated in Article 1734 of the Civil Code, are exclusive, not one of which can be applied to this case. The question of charging both the carrier and the arrastre operator with the obligation of properly delivering the goods to the consignee has, too, been passed upon by the Court. In Fireman's Fund Insurance vs. Metro Port Services (182 SCRA 455), we have explained, in holding the carrier and the arrastre operator liable in solidum,thus: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v. Manila Railroad Co., 19 SCRA 5 [1967]. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors, Inc. v. Prince Line, et al., 107 Phil. 253 [1960]). Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the consignee, such responsibility also devolves upon the

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CARRIER. Both the ARRASTRE and the CARRIER are therefore charged with the obligation to deliver the goods in good condition to the consignee. We do not, of course, imply by the above pronouncement that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier, or vice-versa, nor that attendant facts in a given case may not vary the rule. The instant petition has been brought solely by Eastern Shipping Lines, which, being the carrier and not having been able to rebut the presumption of fault, is, in any event, to be held liable in this particular case. A factual finding of both the court a quo and the appellate court, we take note, is that "there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants" (the herein petitioner among them). Accordingly, the liability imposed on Eastern Shipping Lines, Inc., the sole petitioner in this case, is inevitable regardless of whether there are others solidarily liable with it. It is over the issue of legal interest adjudged by the appellate court that deserves more than just a passing remark. Let us first see a chronological recitation of the major rulings of this Court: The early case of Malayan Insurance Co., Inc., vs. Manila Port 2 3 Service, decided on 15 May 1969, involved a suit for recovery of money arising out of short deliveries and pilferage of goods. In this case, appellee Malayan Insurance (the plaintiff in the lower court) averred in its complaint that the total amount of its claim for the value of the undelivered goods amounted to P3,947.20. This demand, however, was neither established in its totality nor definitely ascertained. In the stipulation of facts later entered into by the parties, in lieu of proof, the amount of P1,447.51 was agreed upon. The trial court rendered judgment ordering the appellants (defendants) Manila Port Service and Manila Railroad Company to pay appellee Malayan Insurance the sum of P1,447.51 with legal interest thereon from the date the complaint was filed on 28 December 1962 until full payment thereof. The appellants then assailed, inter alia, the award of legal interest. In sustaining the appellants, this Court ruled: Interest upon an obligation which calls for the payment of money, absent a stipulation, is the legal rate. Such interest normally is allowable from the date of demand, judicial or extrajudicial. The trial court opted for judicial demand as the starting point. But then upon the provisions of Article 2213 of the Civil Code, interest "cannot be recovered upon unliquidated claims or damages, except when the demand can be established with 4 reasonable certainty." And as was held by this Court in Rivera vs. Perez, L-6998, February 29, 1956, if the suit were for damages, "unliquidated and not known until definitely ascertained, assessed and determined by the courts after proof (Montilla c.Corporacion de P.P. Agustinos, 25 Phil. 447; Lichauco v. Guzman, 38 Phil. 302)," then, interest "should be from the date of the decision." (Emphasis supplied) The case of Reformina vs. Tomol, 5 rendered on 11 October 1985, was for "Recovery of Damages for Injury to Person and Loss of Property." After trial, the lower court decreed: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and third party defendants and against the defendants and third party plaintiffs as follows: Ordering defendants and third party plaintiffs Shell and Michael, Incorporated to pay jointly and severally the following persons: xxx xxx xxx

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(g) Plaintiffs Pacita F. Reformina and Francisco Reformina the sum of P131,084.00 which is the value of the boat F B Pacita III together with its accessories, fishing gear and equipment minus P80,000.00 which is the value of the insurance recovered and the amount of P10,000.00 a month as the estimated monthly loss suffered by them as a result of the fire of May 6, 1969 up to the time they are actually paid or already the total sum of P370,000.00 as of June 4, 1972 with legal interest from the filing of the complaint until paid and to pay attorney's fees of P5,000.00 with costs against defendants and third party plaintiffs. (Emphasis supplied.) On appeal to the Court of Appeals, the latter modified the amount of damages awarded but sustained the trial court in adjudging legal interest from the filing of the complaint until fully paid. When the appellate court's decision became final, the case was remanded to the lower court for execution, and this was when the trial court issued its assailed resolution which applied the 6% interest per annum prescribed in Article 2209 of the Civil Code. In their petition for review on certiorari, the petitioners contended that Central Bank Circular No. 416, providing thus By virtue of the authority granted to it under Section 1 of Act 2655, as amended, Monetary Board in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for the loan, or forbearance of any money, goods, or credits and the rate allowed in judgments, in the absence of express contract as to such rate of interest, shall be twelve (12%) percent per annum. This Circular shall take effect immediately. (Emphasis found in the text) should have, instead, been applied. This Court 6 ruled: The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money, goods or credits. Any other kind of monetary judgment which has nothing to do with, nor involving loans or forbearance of any money, goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. xxx xxx xxx Coming to the case at bar, the decision herein sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan, much less forbearances of any money, goods or credits. As correctly argued by the private respondents, the law applicable to the said case is Article 2209 of the New Civil Code which reads

Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of interest agreed upon, and in the absence of stipulation, the legal interest which is six percent per annum. The above rule was reiterated in Philippine Rabbit Bus Lines, Inc., v. Cruz, 7 promulgated on 28 July 1986. The case was for damages occasioned by an injury to person and loss of property. The trial court awarded private respondent Pedro Manabat actual and compensatory damages in the amount of P72,500.00 with legal interest thereon from the filing of the complaint until fully paid. Relying on the Reformina v. Tomol case, this 8 Court modified the interest award from 12% to 6% interest per annum but sustained the time computation thereof, i.e., from the filing of the complaint until fully paid.

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In Nakpil and Sons vs. Court of Appeals, the trial court, in an action for the recovery of damages arising from the collapse of a building, ordered, inter alia, the "defendant United Construction Co., Inc. (one of the petitioners) . . . to pay the plaintiff, . . . , the sum of P989,335.68 with interest at the legal rate from November 29, 1968, the date of the filing of the complaint until full payment . . . ." Save from the modification of the amount granted by the lower court, the Court of Appeals sustained the trial court's decision. When taken to this Court for review, the case, on 03 October 1986, was decided, thus: WHEREFORE, the decision appealed from is hereby MODIFIED and considering the special and environmental circumstances of this case, we deem it reasonable to render a decision imposing, as We do hereby impose, upon the defendant and the third-party defendants (with the exception of Roman Ozaeta) a solidary (Art. 1723, Civil Code, Supra. p. 10) indemnity in favor of the Philippine Bar Association of FIVE MILLION (P5,000,000.00) Pesos to cover all damages (with the exception to attorney's fees) occasioned by the loss of the building (including interest charges and lost rentals) and an additional ONE HUNDRED THOUSAND (P100,000.00) Pesos as and for attorney's fees, the total sum being payable upon the finality of this decision. Upon failure to pay on such finality, twelve (12%) per cent interest per annum shall be imposed upon aforementioned amounts from finality until paid. Solidary costs against the defendant and third-party defendants (Except Roman Ozaeta). (Emphasis supplied) A motion for reconsideration was filed by United Construction, contending that "the interest of twelve (12%) per cent per annum imposed on the total amount of the monetary award was in contravention of law." The Court 10 ruled out the applicability of the Reformina and Philippine Rabbit Bus Lines cases and, in its resolution of 15 April 1988, it explained: There should be no dispute that the imposition of 12% interest pursuant to Central Bank Circular No. 416 . . . is applicable only in the following: (1) loans; (2) forbearance of any money, goods or credit; and (3) rate allowed in judgments (judgments spoken of refer to judgments involving loans or forbearance of any money, goods or credits. (Philippine Rabbit Bus Lines Inc. v. Cruz, 143 SCRA 160-161 [1986]; Reformina v. Tomol, Jr., 139 SCRA 260 [1985]). It is true that in the instant case, there is neither a loan or a forbearance, but then no interest is actually imposed provided the sums referred to in the judgment are paid upon the finality of the judgment. It is delay in the payment of such final judgment, that will cause the imposition of the interest. It will be noted that in the cases already adverted to, the rate of interest is imposed on the total sum, from the filing of the complaint until paid; in other words, as part of the judgment for damages. Clearly, they are not applicable to the instant case. (Emphasis supplied.) The subsequent case of American Express International, Inc., vs. Intermediate Appellate Court 11 was a petition for review on certiorari from the decision, dated 27 February 1985, of the then Intermediate Appellate Court reducing the amount of moral and exemplary damages awarded by the trial court, to P240,000.00 and P100,000.00, respectively, and its resolution, dated 29 April 1985, restoring the amount of damages awarded by the trial court, i.e., P2,000,000.00 as moral damages and P400,000.00 as exemplary damages with interest thereon at 12% per annum from notice of judgment, plus costs of suit. In a decision of 09 November 1988, this Court, while recognizing the right of the private respondent to recover damages, held the award, however, for moral damages by the trial court, later sustained by the IAC, to be inconceivably large. The Court 12 thus set aside the decision of the appellate court and rendered a new one, "ordering the petitioner to pay private respondent the sum of One Hundred Thousand (P100,000.00) Pesos as moral damages, with six (6%) percent interest thereon computed from the finality of this decision until paid. (Emphasis supplied)

9

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Reformina came into fore again in the 21 February 1989 case of Florendo v. Ruiz which arose from a breach of employment contract. For having been illegally dismissed, the petitioner was awarded by the trial court moral and exemplary damages without, however, providing any legal interest thereon. When the decision was appealed to the Court of Appeals, the latter held: WHEREFORE, except as modified hereinabove the decision of the CFI of Negros Oriental dated October 31, 1972 is affirmed in all respects, with the modification that defendants-appellants, except defendant-appellant Merton Munn, are ordered to pay, jointly and severally, the amounts stated in the dispositive portion of the decision, including the sum of P1,400.00 in concept of compensatory damages, with interest at the legal rate from the date of the filing of the complaint until fully paid(Emphasis supplied.) The petition for review to this Court was denied. The records were thereupon transmitted to the trial court, and an entry of judgment was made. The writ of execution issued by the trial court directed that only compensatory damages should earn interest at 6% per annum from the date of the filing of the complaint. Ascribing grave abuse of discretion on the part of the trial judge, 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 "at the legal rate" from the time of the filing of the complaint. . . Said circular [Central Bank Circular No. 416] does not apply to actions based on a breach of employment contract like the case at bar. (Emphasis supplied) The Court reiterated that the 6% interest per annum on the damages should be computed from the time the complaint was filed until the amount is fully paid. Quite recently, the Court had another occasion to rule on the matter. National Power Corporation vs. Angas, 14decided on 08 May 1992, involved the expropriation of certain parcels of land. After conducting a hearing on the complaints for eminent domain, the trial court ordered the petitioner to pay the private respondents certain sums of money as just compensation for their lands so expropriated "with legal interest thereon . . . until fully paid." Again, in applying the 6% legal interest per annum under the Civil Code, the 15 Court declared: . . . , (T)he transaction involved is clearly not a loan or forbearance of money, goods or credits but expropriation of certain parcels of land for a public purpose, the payment of which is without stipulation regarding interest, and the interest adjudged by the trial court is in the nature of indemnity for damages. The legal interest required to be paid on the amount of just compensation for the properties expropriated is manifestly in the form of indemnity for damages for the delay in the payment thereof. Therefore, since the kind of interest involved in the joint judgment of the lower court sought to be enforced in this case is interest by way of damages, and not by way of earnings from loans, etc. Art. 2209 of the Civil Code shall apply. Concededly, there have been seeming variances in the above holdings. The cases can perhaps be classified into two groups according to the similarity of the issues involved and the corresponding rulings rendered by the court. The "first group" would consist of the cases of Reformina v. Tomol (1985), Philippine Rabbit Bus Lines v. Cruz(1986), Florendo v. Ruiz (1989) and National Power Corporation v. Angas (1992). In the "second group" would be Malayan Insurance Company v.Manila Port Service (1969), Nakpil and Sons v. Court of Appeals (1988), and American Express International v.Intermediate Appellate Court (1988).

13

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In the "first group", the basic issue focuses on the application of either the 6% (under the Civil Code) or 12% (under the Central Bank Circular) interest per annum. It is easily discernible in these cases that there has been a consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance 16 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. Observe, too, that in these cases, a common time frame in the computation of the 6% interest per annum has been applied, i.e., from the time the complaint is filed until the adjudged amount is fully paid. The "second group", did not alter the pronounced rule on the application of the 6% or 12% interest per annum, 17depending on whether or not the amount involved is a loan or forbearance, on the one hand, or one of indemnity for damage, on the other hand. Unlike, however, the "first group" which remained consistent in holding that the running of the legal interest should be from the time of the filing of the complaint until fully paid, the "second group" varied on the commencement of the running of the legal interest. Malayan held that the amount awarded should bear legal interest from the date of the decision of the court a quo,explaining that "if the suit were for damages, 'unliquidated and not known until definitely ascertained, assessed and determined by the courts after proof,' then, interest 'should be from the date of the decision.'" American Express International v. IAC, introduced a different time frame for reckoning the 6% interest by ordering it to be "computed from the finality of (the) decision until paid." The Nakpil and Sons case ruled that 12% interest per annum should be imposed from the finality of the decision until the judgment amount is paid. The ostensible discord is not difficult to explain. The factual circumstances may have called for different applications, guided by the rule that the courts are vested with discretion, depending on the equities of each case, on the award of interest. Nonetheless, it may not be unwise, by way of clarification and reconciliation, to suggest the following rules of thumb for future guidance. I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. 19 The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. 20 II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of 21 money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due 22 shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, 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 23 of the Civil Code