3. pilipinas shell vs boardman.docx

8/17/2019 3. pilipinas shell vs boardman.docx

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PILIPINAS SHELL PETROLEUM G.R. No. 159831

CORPORATION,

Petitioner, Present:

Pn!ni"n, J.,

C#ir$n,

% &ers's % Sn(o&)%G'tierre*,

Coron,

Cr+io Mor)es, n(

Gri, JJ

-OHN OR/MAN LT/. O0 Pro$')!te(:

ILOILO, INC.,

Respondent. October 14, 2005

%% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %% %%

/ECISION

PANGANIAN, J.:


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eeply imbedded in our jurisprudence is the doctrine that the factual findings of the Court of

ppeals !C" affirming those of the trial court are, subject to some e#ceptions, binding upon this

Court. Other$ise stated, only %uestions of la$, not of facts, may be raised before this Court in

petitions for re&ie$ under Rule 45 of the Rules of Court. 'onetheless, in the interest ofsubstantial justice, the Court del&ed into both the factual and the legal issues raised in the present

case and found no reason to o&erturn the Cs main (ecision. )urthermore, under the peculiar

factual circumstances of the instant appeal, this Court holds that the period for rec*oning the prescription of the present cause of action began only $hen respondent disco&ered $ith certainty

the short deli&eries made by petitioner.

T#e Cse

+efore us is a etition for Re&ie$[1] under Rule 45 of the Rules

of Court, assailing the ugust 20, 2002 (ecision[2] and ugust 2-,

200 Resolution[3] of the Court of ppeals !C" in C/R C 'o.

4-34. he challenged (ecision disposed as follo$s

(

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WHEREFORE, premises considered, the assailed decision dated August30, 1991 of the RTC, Branch 26, Manila in Ciil Case !o" 13#19 is here$%AFFIRMED &ith the MODIFICATION that the a&ard of e'emplar% damages andattorne%s fees $e $oth reduced to (100,000"00"

The order dated )ecem$er 9, 1991 is li*e&ise AFFIRMED"+#

he assailed Resolution denied reconsideration.

T#e 0ts

etitioner ilipinas 6hell etroleum Corporation !ilipinas 6hell"

is a corporation engaged in the business of refining and processing

petroleum products.[5] he in&oicing of the products $as made by

ilipinas 6hell, but deli&ery $as effected through rabay, 7nc., its sole

distributor at the time material to the present case.[6] )rom 1-55 to

1-35, Respondent 8ohn +ordman 9td. of 7loilo, 7nc. !8ohn +ordman"

purchased bun*er oil in drums from rabay.[7] :hen rabay ceased its

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operations in 1-35, ilipinas 6hell too* o&er and directly mar*eted its

products to 8ohn +ordman.[8]

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On ugust 20, 1-;0, 8ohn +ordman filed against ilipinas 6hell a

ci&il case for specific performance. he former demanded the latters

short deli&eries of fuel oil since 1-55< as $ell as the payment of

e#emplary damages, attorneys fees and costs of suit.[9] 8ohn +ordman

alleged that ilipinas 6hell and rabay had billed it at 210 liters per

drum, $hile other oil companies operating in +acolod had billed their

customers at 200 liters per drum. On 8uly 24, 1-34, $hen representati&es

from 8ohn +ordman and rabay conducted a &olumetric test to

determine the %uantity of fuel oil actually deli&ered, the drum used could

only fill up to 1-0 liters, instead of 210 liters, or a short deli&ery rate of

-.5=.[10] fter this &olumetric test, rabay reduced its billing rate to

200 !instead of 210" liters per drum, e#cept for 4 deli&eries bet$een

ugust 1 and 6eptember -, 1-34, $hen the billing $as at 1-0 liters per

drum.[11]



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On 8anuary 2, 1-35, another &olumetric test allegedly sho$ed

that the drum could contain only 1;3.5 liters.[12] On )ebruary 1, 1-35,

8ohn +ordman re%uested from ilipinas 6hell that 40,000 liters of fuel

oil, representing the latters alleged deficient deli&eries, be credited to the

formers account.[13] he &olume demanded $as adjusted to 3;0,000

liters, upon a reali>ation that the billing rate of 210 liters per drum had

been effecti&e since 1-.

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On October 24, 1-33 and 'o&ember -, 1-33, representati&es from

8ohn +ordman, the auditor of the 7loilo City Commission on udit,

pump boat carriers, and truc* dri&ers conducted actual measurements of

fuel loaded on tan*er truc*s as transferred to dented drums at mouth full.

hey found that the drums could contain 1;0 liters only.[14] 7n its

Complaint, 8ohn +ordman prayed for the appointment of commissioners

to ascertain the &olume of short deli&eries.[15]

On October 21, 1-;0, ilipinas 6hell and rabay filed their

ns$er $ith Counterclaim.[16] hey specifically denied that fuel oil

deli&eries had been less than those billed.[17] ?oreo&er, the drums

used in the &olumetric tests $ere allegedly not representati&e of the ones

used in the actual deli&eries.[18]

+y $ay of affirmati&e defense, ilipinas 6hell and rabay

countered that 8ohn +ordman had no cause of action against them.[19]

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7f any e#isted, it had been $ai&ed or e#tinguished< or other$ise barred

by prescription, laches, and estoppel.[20]

(uring the pretrial, the parties agreed to limit the issues to the

follo$ing !1" $hether the action had prescribed, and !2" $hether there

had been short deli&eries in the %uantities of fuel oil.[21] 8ohn

+ordmans ?otion for rial by Commissioner $as granted by the RC,

[22] and the court/appointed commissioner submitted her Report on

pril 20, 1-;;.[23]

On pril , 1-;-, ilipinas 6hell and rabay filed a ?otion for

Resolution of their affirmati&e defense of prescription.[24] +ecause

prescription had not been established $ith certainty, the RC ordered

them on 'o&ember , 1-;-, to present e&idence in support of their

defense.[25]



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On ugust 0, 1--1, the RC issued a (ecision in fa&or of

respondent.[26] ilipinas 6hell and rabay $ere re%uired to deli&er to

8ohn +ordman -1,4;3.2 liters of bun*er fuel oil, to pay actual

damages of 1,000,000< e#emplary damages of 500,000< attorneys fees

of 500,000< and the costs of suit.[27] he basis of the trial courts

decision $as predicated on the follo$ing pronouncement

-ince +respondent had full% paid their contract price at 210 liters per drum, thenthe +petitioner should delier to the +respondent the undeliered olume of fueloil from 19.. to 19/#, &hich is 20 liters per drum and 10 liters per drum from19/# to 19//" (er the inoice receipts su$mitted, the total olume of fuel oil

&hich +petitioner hae failed to delier to +respondent is 916,#/"62 liters" +2

ilipinas 6hell appealed to the C, alleging that 8ohn +ordman

had failed to pro&e the short deli&eries< and that the suit had been barred

by estoppel, laches, and prescription.[29]

R')in! o2 t#e Co'rt o2 A++e)s

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@pholding the trial court, the C o&erruled petitioners objections to the

e&idence of respondent in relation to the testimonies of the latters

$itnesses and the results of the &olumetric tests.[30] he C noted that

deli&eries from 1-55 to 1-33 had been admitted by petitioner< and the

fact of deficiency, established by respondent.[31]

he appellate court also debun*ed petitioners claims of estoppel and

laches. 7t held that the stipulation in the product in&oices stating that

respondent had recei&ed the products in good order $as not controlling.

[32] On the issue of prescription, the C ruled that the action had been

filed $ithin the period re%uired by la$.[33]

Aence, this etition.[34]

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T#e Iss'es

etitioner states the issues in this $ise

"

Respondents allegation that the (etition must $e summaril% dismissed forcontaining a false, defectie and unauthoried erification and certification

against forum shopping is patentl% unmeritorious, as the re4uisites for a aliderification and certification against forum shopping hae $een complied &ith"

"

The )ecisions of the court a quo and of the 5onora$le Court of Appeals &ereclearl% issued &ith grae a$use of discretion, $ased as the% are on an

unmista*a$le misappreciation of facts clearl% appearing in the records of thecase"

A"

The 5onora$le Court of Appeals erred giing full faith andcredence to the testimon% of respondents sole &itness, &ho&as neither an e'pert &itness nor one &ith personal*no&ledge of the material facts"

B"

The 5onora$le Court of Appeals erred in ruling that thetestimon% of respondents sole &itness &as not controertedand that the results of his olumetric tests &ere notdisproed $% petitioner as the records of the court a quo


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indu$ita$l% sho& that petitioner disputed the testimon% ofsaid &itness in eer% material respect"

C"

The court a quo and the 5onora$le Court of Appeals erred&hen it failed to hold that the results of the olumetric testsconducted $% respondents sole &itness are not &orth% of fullfaith and credence, considering that drums su$ected to saidtests in 19/# and 19/. &ere not the same &ith, or other&isesimilar to those used $% petitioner in the delieries made torespondent since 19.."

)" The 5onora$le Court of Appeals erred in holding that

petitioners unilateral reduction of $illing rates constitutes animplied admission of the fact of short delieries" Thereduction &as made for no other purpose than as a $usinessaccommodation of a alued client"


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"

The court a quo, as &ell as the 5onora$le Court of Appeals, grael% erred in notruling that respondents claims of alleged short delieries for the period 19.. to19/6 &ere alread% $arred $% prescription"

7"

The 5onora$le Court of Appeals and the court a quo erred in not ruling that

respondents claims are $arred $% estoppel and laches considering thatrespondent failed to assert its claim for a$out t&ent%8fie 2.: %ears"

7"

The 5onora$le Court of Appeals erred in a&arding to respondent compensator%damages, e'emplar% damages, attorne%s fees and cost of suit, &hen petitioner

has not other&ise acted in a &anton, fraudulent, rec*less, oppressie ormaleolent manner"+3.

T#e Co'rts R')in!

7n the main, the etition has no merit, e#cept in regard to the Cs grant

of e#emplary damages.



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0irst Iss'e:

Validity of Verification and Certification

reliminarily, the Court shall tac*le respondents allegation that

petitioners &erification and certification against forum shopping had not

complied $ith, and $ere in fact made in contra&ention of, 6ection 4 of Rule

45 of the Rules of Court.[36] Respondent alleges that Romeo +. arcia,

&ice/president of ilipinas 6hell, had no authority to e#ecute them.[37]

he records, ho$e&er, sho$ that petitioners president conferred

upon its &ice/president the po$er to institute actions. s certified by the

assistant board secretary, the delegation $as authori>ed by petitioners

board of directors.[38] he po$er to institute actions necessarily

included the po$er to e#ecute the &erification and certification against

forum shopping, as re%uired in a petition for re&ie$ before this Court.



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7n any e&ent, the policy of liberal interpretation of procedural rules

compels us to gi&e due course to the etition.[39] here appears to be no

intention to circum&ent the need for proper &erification and certification,

$hich are intended to assure the truthfulness and correctness of the

allegations in the etition and to discourage forum shopping.[40]



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Seon( Iss'e:

Appreciation of Facts

s a general rule, %uestions of fact may not be raised in a petition for re&ie$.[41] he factualfindings of the trial court, especially $hen affirmed by the appellate court, are binding and

conclusi&e on the 6upreme Court.[42] 'e&ertheless, this rule has certain e#ceptions,[43]

$hich petitioner asserts are present in this case.[44] he Court re&ie$ed the e&idence presented and re&isited the applicable pertinent rules. +eing intert$ined, the issues raised by

petitioner relating to the e&idence $ill be discussed together.

Objection to Respondents Witness

etitioner claims that the trial court erred in gi&ing credence to the testimony of respondents

$itness, Bngineer 8ose . ?acarubbo. he testimony had allegedly consisted of his personalopinion. @nder the Rules of B&idence, the opinion of a $itness is not admissible, unless it is

gi&en by an e#pert.[45] ?acarubbo $as allegedly not an e#pert $itness< neither did he ha&e

personal *no$ledge of material facts.[46]

:e clarify. ?acarubbo testified that sometime in ?ay 1-34, respondent had contacted him to

re&ie$ the reception of fuel at its lime plant. Ae disco&ered that rabay had been billingrespondent at 210 liters per drum, $hile other oil companies billed their customers at 200 liters

per drum.[47] On 8uly 24, 1-34, he and 8erome 8uare>, branch manager of ilipinas 6hell,conducted a &olumetric test to determine the amount of fuel that $as actually being deli&ered to

respondent.[48] On 8anuary 25, 1-35, the test $as again conducted in the presence of

?acarubbo, 8uare> and ?anuel Ra&ina !rabays sales super&isor".[49]

)rom the foregoing facts, it is e&ident that ?acarubbo did not testify as an e#pert $itness. he

C correctly noted that he had testified based on his personal *no$ledge and in&ol&ement in

disco&ering the short deli&eries.[50] Ais testimony as an ordinary $itness $as aptly allo$ed by the appellate court under the follo$ing rule on admissibility

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-ec" 36" Testimony generally confined to personal knowledge; hearsayexcluded. A &itness can testif% onl% to those facts &hich he *no&s of hispersonal *no&ledge that is, &hich are deried from his o&n perception, e'cept

as other&ise proided in these rules"+.1

Challenge to Voluetric !ests

etitioner disputes the Cs finding that it had failed to dispro&e the results of the &olumetric

tests conducted by respondent. he former claims that it $as able to contro&ert the latters

e&idence.[52]

(uring the 8uly 24, 1-34 &olumetric test, representati&es of both petitioner and

respondent allegedly agreed to conduct t$o tests using drums independently chosen by each.

[53] Respondent allegedly chose the $orst/dented drum that could fill only up to 1-0 liters.he second drum, $hich $as chosen by petitioner, $as not tested in the presence of ?acarubbo

because of hea&y rain.[54] 7t supposedly filled up to 210 liters, ho$e&er.[55]

he issue, therefore, relates not to the submission of e&idence, but to its $eight and

credibility. :hile petitioner may ha&e submitted e&idence, it failed to dispro&e the shortdeli&eries. he lo$er courts ob&iously ga&e credence to the &olumetric tests $itnessed by both

parties as opposed to those done solely by petitioner.

etitioner also challenges the reliability of the &olumetric tests on the grounds of failure

to simulate the position of the drums during filling[56] and the fact that those tested $ere not

representati&e of the ones used from 1-55 to 1-34.[57] hese contentions fail to o&erturn theshort deli&eries established by respondent.

he e&idence of petitioner challenging the &olumetric tests $as $anting. 7t did not

present any as regards the correct position of the drums during loading. 'otably, its

representati&e had $itnessed the t$o tests sho$ing the short deli&eries.[58] Ae therefore hadthe opportunity to correct the position of the drums, if indeed they had been incorrectly

positioned. )urther, there $as no proof that those used in pre&ious years $ere all good drums

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$ith no defects. 'either $as there e&idence that its deli&eries from 1-55 had been properly

measured.

)rom the foregoing obser&ations, it is apparent that the e&idence presented by both parties preponderates in fa&or of respondent. he Court agrees $ith the follo$ing obser&ations

of the C

+(etitioner posits that its fuel delieries &ere properl%

measured and;or cali$rated" To the mind of this Court, regardless of&hat method or manner the delieries &ere made, &hether pre8pac*ed drums, $% the dip stic* method or through e'8ett%, the factremains that +petitioner failed to oercome the $urden of proingthat indeed the drums used during the delieries contain 210 liters"

The +petitioner, to support its claim, adduced no eidence"Moreoer, it failed to disproe the results of the olumetric tests"+.9

Aa&ing sustained the finding of short deli&eries, the Court finds it no longer necessary to addressthe contention of petitioner that its subse%uent reduction of billings constituted merely a business

accommodation.[60]

T#ir( Iss'e:

"rescription

Action #ased on Contract



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etitioner a&ers that respondents action // a claim for damages as a result of o&er/billing // has

already prescribed. Respondents claim supposedly constitutes a %uasi/delict, $hich prescribes in

four years.[61]



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:e do not agree. 7t is elementary that a %uasi/delict, as a source of an obligation, occurs only

$hen there is no pree#isting contractual relation bet$een the parties.[62] he action ofrespondent for specific performance $as founded on short deli&eries, $hich had arisen from its

Contract of 6ale $ith petitioner, and from $hich resulted the formers obligation in the present

case. ny action to enforce a breach of that Contract prescribes in ten years.[63]

"rescripti$e "eriod Counted fro

the Accrual of the Cause of Action

etitioner a&ers that the action of respondent, e&en if based on a Contract, has ne&ertheless

already prescribed, because more than ten years had lapsed since 1-55 to ugust 20, 1-30 // the

period of short deli&eries that the latter see*s to reco&er .[64] Respondents re%uest for fueladjustments on October 24, 1-34, )ebruary 1, 1-35, pril , 1-35, and 6eptember 22, 1-35,

$ere not formal demands that $ould interrupt the prescripti&e period, says petitioner.

he Court shall first address the contention that formal demands $ere not alleged in theComplaint. his argument $as not raised in the courts a quo< thus, it cannot be brought before

this tribunal.[65] :ell settled is the rule that issues not argued in the lo$er courts cannot be

raised for the first time on appeal.[66] t any rate, it appears from the records that respondentsletters to petitioner dated October 24, 1-34 and )ebruary 1, 1-35 $ere formal and $ritten

e#trajudicial demands that interrupted the prescripti&e period.[67] 'e&ertheless, theinterruption has no bearing on the prescripti&e period, as $ill be sho$n presently.

Cause of Action %efined

ctions based upon a $ritten contract should be brought $ithin ten years from the time the right

of action accrues.[68] his accrual refers to the cause of action, $hich is defined as the act or

the omission by $hich a party &iolates the right of another .[69]

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8urisprudence is replete $ith the elements of a cause of action !1" a right in fa&or of the

plaintiff by $hate&er means and under $hate&er la$ it arises or is created< !2" an obligation on

the part of the named defendant to respect or not to &iolate the right< and !" an act or omissionon the part of the defendant &iolati&e of the right of the plaintiff or constituting a breach of an

obligation to the latter.[70] 7t is only $hen the last element occurs that a cause of action arises.

[71]

pplying the foregoing elements, it can readily be determined that a cause of action in a

contract arises upon its breach or &iolation.[72] herefore, the period of prescriptioncommences, not from the date of the e#ecution of the contract, but from the occurrence of the

breach.

he cause of action resulting from a breach of contract is dependent on the facts of each

particular case. he follo$ing cases in&ol&ing prescription illustrate this statement.

Nabus v. Court of Appeals[73] dealt $ith an action to rescind a Contract of 6ale. hecause of action arose at the time $hen the last installment $as not paid. 6ince the case $as filed

ten years after that date, the action $as deemed to ha&e prescribed.[74]

7n Elido v. Court of Appeals,[75] the o&erdraft greement stipulated that theobligation $as payable on demand. hus, the breach started only $hen that judicial demand $as

made. his rule $as applied recently to China Banking Corporation v. Court of Appeals,[76] $hich held that the prescripti&e period commenced on the date of the demand, not on the

maturity of the certificate of indebtedness. 7n that case, the certificate had stipulated that payment

should be made upon presentation.

Banco Filipino Savings & ortgage Bank v. Court of Appeals[77] in&ol&ed aContract of 9oan $ith real estate mortgages, $hereby the creditor could unilaterally increase the

interest rate. :hen the debtor failed to pay the loan, the creditor foreclosed on the mortgage. heCourt ruled that the cause of action for the annulment of the foreclosure sale should be counted

from the date the debtor discovered the increased interest rate.[78]

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7n Cole v. !regorio,[79] the agreement to buy and sell $as conditioned upon theconduct of a preliminary sur&ey of the land to &erify $hether it contained the area stated in the

a# (eclaration. +oth the agreement and the sur&ey $ere made in 1-. he Court ruled that theright of action for specific performance arose only in 1-, $hen the plaintiff disco&ered the

completion of the sur&ey.[80]

Serrano v. Court of Appeals[81]dealt $ith money claims arising from a Contract ofBmployment, $hich $ould prescribe in three years from the time the cause of action accrued.

[82] he Court noted that the cause of action had arisen $hen the employer made a definitedenial of the employees claim. 7t $as deemed that the issues had not yet been joined prior to the

definite denial of the claim, because the employee could ha&e still been reinstated.[83]

Naga "elephone Co. v. Court of Appeals[84] in&ol&ed the reformation of a Contract.mong others, the grounds for the action filed by the plaintiff included allegations that the

contract $as too one/sided in fa&or of the defendant, and that certain e&ents had made the

arrangement ine%uitable.[85] he Court ruled that the cause of action for a reformation $ould

arise only $hen the contract appeared disad&antageous.[86]

Cause of Action in

the "resent Case

he Court of ppeals noted that, in the case before us, respondent had been negotiating

$ith petitioner since 1-34. ccordingly, the C ruled that the cause of action had arisen only in

1-3-, after a manifestation of petitioners denial of the claims.[87]

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he nature of the product in the present factual milieu is a major factor in determining

$hen the cause of action has accrued. he deli&ery of fuel oil re%uires the buyers dependence upon

the seller for the correctness of the &olume. :hen fuel is deli&ered in drums, a buyer readilyassumes that the agreed &olume can be, and actuall# is, contained in those drums.

+uyer dependence is common in many ordinary sale transactions, as $hen gasoline is

loaded in the gas tan*s of motor &ehicles, and $hen be&erage is purchased in bottles and ice

cream in bul* containers. 7n these cases, the buyers rely, to a considerable degree, on the sellersrepresentation that the agreed &olumes are being deli&ered. hey are no longer e#pected to ma*e

a meticulous measurement of each and e&ery deli&ery.

o the mind of this Court, the cause of action in the present case arose on 8uly 24, 1-34,$hen respondent discovered the short deli&eries $ith certainty. rior to the disco&ery, the latter

had no indication that it $as not getting $hat it $as paying for. here $as yet no issue to spea*

of< thus, it could not ha&e brought an action against petitioner. 7t $as only after the disco&ery ofthe short deli&eries that respondent got into a position to bring an action for specific

performance. B&idently then, that action $as brought $ithin the prescripti&e period $hen it $as

filed on ugust 20, 1-;0.

0o'rt# Iss'e:

&stoppel

etitioner alleges, in addition to prescription, that respondent is estopped from claiming short

deli&eries.[88] 7t is argued that, since the initial deli&eries had been made $ay bac* in 1-55,the latter belatedly asserted its right only in 1-;0, or after t$enty/fi&e years. ?oreo&er,

respondent should allegedly be bound by the Certification in the deli&ery Receipts and 7n&oicesthat state as follo$s

R



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&stoppel by 'aches

Bstoppel by laches is the failure or neglect for an unreasonable

length of time to do that $hich, by the e#ercise of due diligence, could

or should ha&e been done earlier.[90] Other$ise stated, negligence or

omission to assert a right $ithin a reasonable time $arrants a

presumption that the party has abandoned or declined the right.[91]

his principle is based on grounds of public policy, $hich discourages

stale claims for the peace of society.[92]

Respondent cannot be held guilty of delay in asserting its right during the time it did not

yet *no$ of the short deli&eries. he facts in the present case sho$ that after the disco&ery of the

short deli&eries, it immediately sought to reco&er the undeli&ered fuel from petitioner.[93] 9aches refers, inter alia, to the length of time in asserting a claim. he Court, therefore, agrees

$ith the lo$er courts that respondents claim $as not lost by laches.

Alleged Certification (ot a #ar

7t is not disputed that the alleged Certification stating that respondent recei&ed the fuel oil

in good condition is in the nature of a contract of adhesion.[94] he statement $as in fine print

at the lo$er right of petitioners in&oices.[95] 7t $as made in the form and language prepared by petitioner. he latters customers, including respondent, $ere re%uired to sign the statement



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upon e&ery deli&ery. he primary purpose of an in&oice, ho$e&er, is merely to e&idence deli&ery

and receipt of the goods stated in it.

:hile the Court has sustained the &alidity of similar stipulations in other contracts, it hasalso recogni>ed that reliance on them cannot be fa&ored $hen the facts and circumstances

$arrant the contrary.[96] 'oting the nature of the product in the present factual milieu, asdiscussed earlier in the claim of prescription, the dependence of the buyer upon the seller ma*es

the stipulation inapplicable.

7ndeed, it $ould be too cumbersome and impractical for respondent to measure the fuel

oil in each and e&ery drum deli&ered. 'onetheless, upon deli&ery by petitioner, the former $as

obliged to sign the Certification in the in&oice. 7n signing it, respondent could not ha&e $ai&ed

the right to a legitimate claim for hidden defects. hus, it is not estopped from reco&ering shortdeli&eries.

(oubts in the interpretation of stipulations in contracts of adhesion should be resol&ed

against the party that prepared them. his principle especially holds true $ith regard to $ai&ers,

$hich are not presumed, but $hich must be clearly and con&incingly sho$n.[97]

0o'rt# Iss'e:

&)eplary %aages and Attorneys Fees

7n the last error assigned, petitioner challenges the Order for specific performance and the

a$ards of e#emplary damages and attorneys fees in fa&or of respondent.[98] he directi&e for

the deli&ery of -1,4;3.2 liters of bun*er oil $ill no longer be ta*en up because, as discussedearlier, this fact is borne out by the e&idence.

he C sustained the a$ard of e#emplary damages because of petitioners $anton refusal to

deli&er the shortages of fuel oil after the demand $as made.[99] 6imilarly, attorneys fees $ere

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imposed, because respondent had been compelled to litigate to protect its interests.[100] +oth

a$ards, ho$e&er, $ere each reduced from 500,000 to 100,000.[101]

&)eplary %aages (ot "roper

B#emplary damages are imposed as a correcti&e measure[102] $hen the guilty party has

acted in a $anton, fraudulent, rec*less, oppressi&e, or male&olent manner.[103] hese

damages are a$arded in accordance $ith the sound discretion of the court.[104]

etitioner argues that its refusal to deli&er the shortages of fuel $as premised on good faith.

[105] 7ndeed, records re&eal that it had re&ie$ed respondents re%uests for the deli&ery of

shortages before declining them.[106] 7t li*e$ise readily granted respondents re%uests toconduct &olumetric tests. 7t simply had the mista*en belief that it $as not liable for any

shortages. @nfortunately, the e&idence sho$ed the contrary.

bsent any sho$ing of bad faith on the part of petitioner, e#emplary damages cannot be imposedupon it.

Attorneys Fees Allo*ed

etitioner claims that the a$ard of attorneys fees $as tied up $ith the a$ard for e#emplary

damages.[107] 6ince those damages $ere not reco&erable, then the attorneys fees allegedlyhad no legal basis.

:hile attorneys fees are reco&erable $hen e#emplary damages are a$arded, the former

may also be granted $hen the court deems it just and e%uitable.[108] he grant of attorneysfees depends on the circumstances of each case and lies $ithin the discretion of the court. hey

may be a$arded $hen a party is compelled to litigate or to incur e#penses to protect its interest

by reason of an unjustified act by the other .[109]

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he Court agrees that the a$ard of 100,000 as attorneys fees is &ery reasonable<

[110] in fact, it is almost symbolic, as it $ill not totally recompense respondent for the actualfees spent to prosecute its cause. he case has dragged on unnecessarily despite petitionersfailure to present counter&ailing e&idence during the trial. ?oreo&er, respondent $as compelled

to litigate, not$ithstanding its attempt at an amicable settlement from the time it disco&ered the

shortages in 1-34 until the actual filing of the case in 1-;0.[111]

:ABRB)ORB, the etition is hereby %&(+&%. he assailed

(ecision and Resolution are AFF+R&% $ith the slight

O%+F+CA!+O( that the a$ard of e#emplary damages is deleted.

Costs against petitioner.

6O OR(BRB(.

ARTEMIO . PANGANIAN

ssociate 8ustice

Chairman, hird (i&ision

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4 E C O N C U R :

ANGELINA SAN/OAL%GUTIERRE RENATO C. CORONA

ssociate 8ustice ssociate 8ustice

CONCHITA CARPIO MORALES CANCIO C. GARCIA

ssociate 8ustice ssociate 8ustice

ATTESTATION


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7 attest that the conclusions in the abo&e (ecision had been reached in consultation before thecase $as assigned to the $riter of the opinion of the Courts (i&ision.

ARTEMIO . PANGANIAN

ssociate 8ustice

Chairman, hird (i&ision

CERTI0ICATION

ursuant to 6ection 1, rticle 777 of the Constitution, and the (i&ision

Chairmans ttestation, it is hereby certified that the conclusions in the

abo&e (ecision had been reached in consultation before the case $as

assigned to the $riter of the opinion of the Courts (i&ision.

HILARIO G. /AI/E, -R.


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Chief 8ustice

[1] Rollo, pp. ;/122.

[2] 7d., pp. 10/14-. enth (i&ision. enned by 8ustice Remedios . 6ala>ar/)ernando, $ith theconcurrence of 8ustices Romeo 8. Callejo 6r. !(i&ision chair and no$ a member of this Court"and (anilo +. ine !member".

[3] 7d., p. 151.

[4] C (ecision, p. 1-< rollo, p. 14;.

[5] etitioners ?emorandum, p. 3< rollo, p. 501.

[6] RC (ecision dated ugust 0, 1--1, p. 5< C rollo, p. ;.

[7] 7bid< etitioners ?emorandum, p. 3< rollo, p. 501.

[8] 7bid.< etitioners B#hibit 4 !records, p. 113-".

[9] Complaint, p. 3< records, p. -.

[10] 7d., pp. 2/ 4/5.

[11] 7d., pp. 5.

[12] 7bid.

[13] 7d., pp. 4 .

[14] 7d., pp. ;.

[15] 7d., pp. 3 -.

[16] ssailed (ecision, p. ;< rollo, p. 13.

[17] ns$er $ith Counterclaim, p. 4< records, p. 1.

[18] 7bid.

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[19] 7d., pp. 10/11 1-/20.

[20] 7d., pp. 11/12 20/21.

[21] RC Order dated ugust 5, 1-;2< records, p. 32.

[22] here $ere three commissioners ?r. ictoriano . ?acarubo !representing 8ohn+ordman", tty. 9uis . era Cru> 8r. !representing ilipinas 6hell and rabay", and Rebecca R.

?ariano !as appointed by the trial court".

[23] Report by Commissioner Rebecca R. ?ariano< records, pp. 2;/2;4.

[24] ssailed (ecision, p. ;< rollo, p. 13.

[25] RC Order dated 'o&ember , 1-;-, pp. 2/< records, pp. 104/1044.

[26] RC (ecision< C rollo, pp. ;2/-1.

[27] 7d., pp. -/10< C rollo, pp. -0/-1.

[28] RC (ecision, pp. ;/-< C rollo, pp. ;-/-0.

[29] ppellants +rief, pp. -/10< C rollo, pp. 5/54.

[30] ssailed (ecision, pp. 12/1< rollo, pp. 140/141.

[31] 7bid.

[32] 7d., pp. 14 142.

[33] 7d., pp. 13 145.

[34] he case $as deemed submitted for decision on 'o&ember 1;, 2004, upon this Courtsreceipt of petitioners ?emorandum, signed by ttys. na eresa rnaldo/Oracion and Ria

Cora>on . ole>. Respondents ?emorandum, signed by tty. ?iguel ntonio A. al&e>, $as

recei&ed by this Court on 'o&ember , 2004.

[35] etitioners ?emorandum, pp. 12/1< rollo, pp. 50/503. Original in uppercase.

[36] he rule re%uires a certification against forum shopping and &erification that theallegations in the etition are true and correct based on personal *no$ledge and authentic

records.

[37] Respondents ?emorandum, pp. 1/2< rollo, pp. 425/42.

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[38] Certification of Bfren 9. 9egaspi< rollo, p. 123.

[39] of Rule 1 of the Rules of Court.

[40] 6ee BA Savings Bank v. Sia, 6CR 4;4, 8uly 23, 2000.

[41] 1 of Rule 45 of the Rules of Court.

[42] Sps. $agandaon v. Court of Appeals, 52 hil. -2;, ?ay 21, 1--;< %u Bun !uan v. ng,41- hil. ;45, October 1;, 2001< Cuenco v. Cuenco vda. de anguerra, 440 6CR 252, October

1, 2004.

[43] C'( v. E)broider# and !ar)ents 'ndustries *+hil., 'nc., 4 hil. 541, 54, ?arch 22,1---


34/37

[54] etitioners ?emorandum, p. 24< rollo, p. 51;.

[55] 7d., p. 25< rollo, p. 51-.

[56] etitioner claims that a drum $ill contain more fuel oil $hen loaded in an inclined position

than $hen it is filled up in an upright position, because of less ullage or allo$ance for gase#pansion. !etitioners ?emorandum, p. 2< rollo, p. 520"

[57] etitioners ?emorandum, p. 2-< rollo, p. 52.

[58] 6' dated ?ay 2-, 1--0, pp. 13 20.

[59] ssailed (ecision, p. 1< rollo, p. 141.

[60] he C found that the accuracy of the &olumetric tests had been bolstered by 6hells&oluntary reduction of its billing rate. !ssailed (ecision, p. 11< rollo, p. 140".

etitioner &oluntarily reduced its billing rate effecti&e 8uly 24, 1-34, the date on $hich the first

&olumetric test $as conducted. !ns$er, p. 2< records, p. 11< 6' dated ?ay 2-, 1--0, p. 1-.

[61] etitioners ?emorandum, p. 4< rollo, p. 52; !citing rt. 114 of the Ci&il Code".

[62] rt. 212 of the Ci&il Code.

[63] rt. 1144 of the Ci&il Code.

[64] etitioners ?emorandum. pp. 4/5< rollo, pp. 52;/52-.

[65] See etitioners ppellant +rief, pp. 0/2< C rollo, pp. 34/3.

[66] Elido v. Court of Appeals, 21 6CR 3, 4, (ecember 1, 1--2


35/37

Court of Appeals, 1- 6CR 32, 343, )ebruary 3, 1--1< Cole v. !regorio, 202 hil. 22, 2,

6eptember 21, 1-;2.

[71] 7bid.

[72] 7bid.

[73] 1- 6CR 32, )ebruary 3, 1--1.

[74] 7d., p. 343.

[75] 21 6CR 3, 44, (ecember 1, 1--2.

[76] 6upra.

[77] ;; hil. 23, ?ay 0, 2000.

[78] 7d., p. 40.

[79] 6upra.

[80] 7d., p. 2;.

[81] 415 hil. 443, ugust 15, 2001.

[82] rt. 2-1 of the 9abor Code.

[83] 6upra, p. 45;.

[84] 20 6CR 51, )ebruary 24, 1--4.

[85] 7d., p. 55.

[86] 7d., p. -.

[87] ssailed (ecision, p. 13< rollo, p. 145.

[88] etitioners ?emorandum, p. 3< rollo, p. 51.

[89] 7bid.

[90] Alfredo v. Borras, 404 6CR 145, 13, 8une 13, 200


36/37

[91] 7bid.

[92] Feli0ardo v. Fernande0 , supra, Catholic Bishop of Balanga v. Court of Appeals, 2 hil.20, 21-, 'o&ember 14, 1--.

[93] B#hibits C and (< records, pp. 13/1;.

[94] contract of adhesion is one $herein a party prepares the stipulations in the contract,$hile the other party merely affi#es the latters signature to it. !!ulf (esorts v. +hil. Charter

'nsurance Corp., R 'o. 1513, ?ay 1, 2005"

[95] Respondents B#hibits O, O/1 to O/1, , /1 to /105, D, D/1 to D/143, R, R/1 to R/15,6, and 6/1 to 6/;< records, pp. 5/-31.

[96] Cebu Ship#ard & Engineering 2orks v. 2illia) $ines, hil. 4-, 453, ?ay 5, 1---<Seet $ines, 'nc. v. "eves, ; 6CR 1, -, ?ay 1-, 1-3;. 6ee also +hilippine National Bank

v. Court of Appeals, 1- 6CR 5, 545, pril 0, 1--1.

[97] 6ee (a)ire0 v. Court of Appeals, -; hil. 225, 22;, 8anuary 25, 1-5


37/37

[108] rt. 220; of the Ci&il Code.

[109] Chave0 v. Court of Appeals, 45 6CR ;4, ;54, ?arch 1;, 2005< "ugade v. Court of Appeals, 403 6CR 4-3, 515, 8uly 1, 200.

[110] rt. 220; of the Ci&il Code.

[111] etitioners B#hibits C, (, B, ?, and '< records, pp. 13, 1;, 23, and 4;/52.
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