REFRACTORIES CORPORATION OF THE PHILIPPINES, PETITIONER, VS. THE INTERMEDIATE APPELLATE COURT AND FIRESTONE CERAMIC, INC., RESPONDENTS.

In 1980, petitioner
Refractories Corporation of the Philippines
(Refractories, for short) imported from Japan
around 250 metric tons of magnesite “ube” green and magnesia clinker.  When the shipment arrived, they were discovered to be water-damaged
and unfit for consumption hence they were stored in the warehouse of petitioner
at Iligan City.  As a consequence, petitioner declared the
whole cargo a total loss and filed a claim with its insurer, Filriters Guaranty
Assurance Corporation (hereinafter referred to as Filriters).

Subsequently, with the knowledge and consent of petitioner, Filriters placed said shipment on bid for salvage disposal
and, in the public auction held by virtue thereof, one Alejandrino
Sangalang, acting for and in behalf of private
respondent Firestone Ceramic, Inc. (Firestone, for brevity), submitted a sealed
bid in the amount of P115,182.00, at the rate of
P450.00 per metric ton.  The goods were
thereafter awarded to private respondent, as the highest bidder, for the
aforesaid amount of the bid.

After full payment of the price of the goods, private respondent
attempted to withdraw the goods from the warehouse of petitioner but the latter
refused to release the same on the ground that it had not received its
insurance claim payment and the question of whether or not the goods were
exempt from customs duties and taxes had yet to be resolved.

Petitioner later withdrew its objection after entering into an
agreement on February 19, 1981
with herein private respondent, said Alejandrino Sangalang and Filriters, providing
inter alia
that;

“1. 
RCP hereby withdraws its objection/opposition to the award of the
bidding to Sangalang and/or FCI and allows them or
their agents to remove the salvaged cargo consisting of 255.96 metric tons of magnesite ‘ube green’ and magnesia
clinker from the premises of RCP at Iligan City;

“2. 
The removal of said cargo shall be supervised by Average
Adjusters, Inc. and shall be done within 15 days from the time the surveyors
confirm their availability and the costs and expenses to be incurred therefore
(sic) shall be for the sole account of Sangalang
and/or FCI.  Said removal shall be done
within the regular bonded warehouse working hours;

“3.  Sangalang and/or FCI shall undertake to pay, if
required, any liability for customs duties, compensating tax and/or any other
import taxes, duties, and/or obligations of whatever nature that may be levied in connection with said award and
shall hold RCP and Filriters free and harmless from
any and all such claims relating to the award in favor of Sangalang
and/or FCI;

“4.  Filriters, Sangalang
and/or FCI waives and abandons any and all claims for damages, liabilities,
causes of action or otherwise against RCP arising out of or in connection with
the opposition to the award of the bid then interposed by RCP;

“5. 
In the event that the salvaged cargo at the premises of RCP to be
removed by Sangalang and/or FCI is less than the bidded
quantity, due to shortage or non-existence thereof, Filriters
shall correspondingly reimburse Sangalang and/or FCI for the deficiency at P450 per metric
ton.  Likewise, the claim of RCP against Filriters shall be correspondingly reduced at such
computation as stated in the Subrogation Receipt.

“6.  Filriters shall pay the insurance proceeds
to RCP in the amount of P737,682.03 under the terms and conditions set forth in
the Subrogation Receipt which the latter would sign.  It is understood that this Agreement does not
supersede, alter, amend or modify any of the provisions of the Subrogation
Receipt.”^[1]

Accordingly, private respondent paid the customs duties and taxes
on the goods on May 5, 1981
amounting to P14,865.00.  In spite of
this, petitioner again refused to release the goods when respondent tried to
take them the next day, May 6, 1981.  This time, petitioner demanded payment of
storage fees in the sum of P3,455.44 per month, claiming that there was delay on the part
of private respondent in withdrawing the goods which supposedly forced
petitioner to store the goods in Iligan
City.  Private respondent refused to pay “on
the ground that the demand was unlawful and unjustified since the conditions of
the agreement have been complied with”^[2]
and insisted on the delivery of the goods.

Said controversy resulted in the filing by private respondent of
a complaint for specific performance and damages against Filriters
Guaranty Assurance Corporation and petitioner Refractories
Corporation of the Philippines^[3]
on May 29, 1981, praying that judgment be rendered ordering defendants therein
to release to plaintiff 70.715 metric tons of the aforesaid magnesite
and 185.245 metric tons of magnesia clinker and to pay actual and compensatory damages in the amount of
P234,000.00, moral and exemplary damages in an amount to be determined by the
trial court, attorney’s fees in the sum of P50,000.00, and costs of suit.^[4]

During the pendency of said case in the
court a quo, private respondent was able to obtain delivery of
159.28 metric tons of the cargo upon a deposit of P44,920.98
representing the storage fees for the period from March 8, 1981 to April
8, 1982.  Around 96 metric
tons were left in the warehouse of petitioner.^[5]

On January 24, 1983,
the trial court rendered judgment finding that it was petitioner which
prevented the immediate removal of the cargo and if there was any delay on the
part of private respondent, the same was caused by the imposition of custom
duties and taxes.  According to the
court, the parties to the agreement of February
19, 1981 “were aware of the possible delay in the removal of
the cargo in view of the probability of the demand for the payment of customs
duties and taxes on the shipment.”^[6]
The dispositive portion contains the following
directives, viz:

“1) Ordering defendants to allow plaintiff to take delivery of 96
metric tons of water-damaged magnesite ube green and magnesia clinker and in default thereof, to
pay to plaintiff jointly and severally the sum of P276,672.00
which is equivalent to the insurance payment on the shipment plus the legal
interest thereon at 18 per cent per annum
from May 6, 1981 until the same is fully paid;

“2) Sentencing defendants jointly and severally to pay to plaintiff
the sum of P234,000.00 as and for actual and
compensatory damages, and the further sum of P50,000.00 as and for attorney’s
fees and expenses of litigation;

“3) Sentencing defendant Filriters
Guaranty Assurance Corporation (to) pay to defendant Refractories
Corporation of the Philippines
the sum of P73,768.20 representing the unpaid balance
of the insurance proceeds of the water-damaged cargo;

“4) On its cross-claim, defendant FGAC is entitled to the
reimbursement by defendant RCP of whatever amount the former pays to plaintiff
by reason of this judgment;

“5) The Clerk of Court is hereby ordered to release to plaintiff by
way of refund the amount of P44,920.98 heretofore
deposited by the latter;

“6) The counterclaims of both defendants against plaintiff are
hereby dismissed.

“With
costs against defendants.”^[7]

On appeal to the then Intermediate Appellate Court,^[8]
said decision of the trial court was affirmed with a modification regarding the
interest which was reduced to twelve percent (12%) per annum.^[9]

Refractories and Filriters
separately appealed to this Court by petitions for review on certiorari.  Acting on Filriter’s
petition, docketed as G.R. No. 70945, we resolved on July 8, 1985 to deny the same for lack of merit.^[10]
A motion for reconsideration thereof was subsequently denied on September 18, 1985 and judgment
became final and executory on October 10, 1985.

Likewise, the present petition of Refractories
was denied in our resolution of October
23, 1985 for lack of merit.^[11]
Petitioner’s motion for reconsideration of said resolution, on which the
parties were allowed to submit their respective memoranda, is now before us for
resolution.

Preliminarily, we dispose of and reject private respondent’s
contention that the petition for review in this case was filed out of
time.  Respondent Firestone’s theory that
the motion for reconsideration
of the decision of respondent court filed therein by Refractories
“merely suspended the running of the 15-day period to appeal”^[12]
is without legal basis.  Section 1, Rule
45 of the Rules of Court provides that “(a) party may appeal by certiorari,
from a judgment of the Court of Appeals, by filing with the Supreme Court a
petition for certiorari, within fifteen (15) days from notice of
judgment or of the denial of his motion for reconsideration filed in due
time.” In other words, in the event a motion for reconsideration is filed
and denied, the period of fifteen days begins to run again from notice of
denial.^[13]
The records show that herein petitioner received on May 16, 1985 a copy of the resolution dated May 9, 1985 of respondent court
denying its motion for reconsideration of the decision in AC­-G.R. CV No.
00493.  Upon motion filed on May 22, 1985, it was granted in our
resolution of June 3, 1985
an extension of 30 days within which to file a petition for review on certiorari
counted from the expiration of the reglementary
period, which petition it seasonably filed on June 18, 1985.

We are also convinced that said motion for reconsideration was
not pro forma since it specifically and adequately pointed out
and discussed the findings and conclusions in the judgment of respondent court which it claimed, correctly as hereinafter shown, were not
supported by the evidence or were contrary to law.^[14]

On the merits of the case, we agree with the findings of the
courts below that respondent’s action for specific performance was
justified.  Petitioner’s demand for
payment of storage fees was not one of respondent’s obligations under the
agreement, hereinbefore quoted, hence there was no need to pay the same before
the goods in question could be released.

However, with respect to the awards for damages and attorney’s
fees, the judgment of the trial court, as affirmed by respondent court, require
modification.  Article 2219 of the Civil
Code is explicit as to the requirements for entitlement to actual or compensatory
damages, that is, that “(e)xcept
as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly
proved.” Indeed, before the award of actual or compensatory damages can be
made, adequate proof of the pecuniary loss suffered is indispensable.  These factual and legal bases must be clearly
established and reliance on mere speculation, conjecture or guesswork on the
part of the trial court will demand the reversal of the award.  The same is true if the proof is flimsy and
unsubstantiated.^[15]

The foregoing considerations appear to have been lost upon the
trial court when it awarded two components of actual and compensatory damages,
one for P234,000.00 and another in the sum of P276,672.00 in case of failure to
deliver the remaining 96 tons of said water-damaged magnesite
and magnesia clinker.  With respect to
the first, the absence of actual proof thereon to justify the same is evident
from the records and transcripts of the
proceedings in the case.  Other
than the recitation of the reliefs prayed for in the
complaint, no evidence with respect to said damages was ever pleaded or adduced
in court.  This may also be gleaned from
private respondent’s own submission.^[16]
Respondent Firestone erroneously relied on the transcript of the notes wherein
petitioner allegedly “readily admitted that the reliefs
prayed for were those outlined in the complaint,”^[17]
obviously under the mistaken belief that the bare statement of reliefs prayed for, and no more, is proof in itself of the
supposed injury resulting from the wrong allegedly committed against it.

Likewise, the award of P276,672.00 which
the petitioner was ordered to pay is not sustained by the evidence.  Such amount was claimed to be equivalent to
the insurance payment, but no reason has been advanced, nor is any apparent, as
to why the measure of the amount to be paid by petitioner in case of
non-delivery of the aforesaid balance of the shipment should be the insurance
amount due from Filriters.  The agreement of February 19, 1981 is clear that the amount to be
paid to private respondent in case of shortage or deficiency in delivery is
P450.00 per metric ton.  This amount is
in fact the same monetary basis
of the bid of Firestone which it actually paid for the salvaged cargo.  Thus, if ever there should be any pecuniary loss because of the non-delivery of the goods, it should not be based on
the insurance coverage or proceeds which would be due only to the petitioner
because of the declaration of
total loss of the cargo since this represents the indemnity for the amount
spent in importing the goods and
is the value thereof at the time of the loss. 
Whatever additional damages may be suffered by private respondent
because of non-delivery or incomplete delivery shall be covered by the legal
interest on the principal amount
due, that is, six percent (6%) per annum from default.^[18]

Further, for lack
of factual basis and legal justification, the award of attorney’s fees should
be eliminated.  No evidence was adduced
to support such claim for attorney’s fees as damages nor did the lower courts
state the reason therefor, all in violation of the
proscription against the imposition of a penalty on the right to litigate. 
The award of attorney’s fees is the exception rather than the general rule and counsel’s fees is not to be awarded every time a party wins a suit.^[19]
The discretion of the court to award attorney’s fees under Article 2208 of the
Civil Code “demands factual, legal and equitable justification, without
which the award is a conclusion without a premise, its basis being improperly
left to speculation and conjecture.”^[20]
In all events, the court must state the reason for the award of attorney’s
fees.^[21]

FOR ALL THE FOREGOING CONSIDERATIONS, the Court resolves
to RECONSIDER its resolution dismissing the petition at bar and to MODIFY the
appealed decision by deleting the award of actual and compensatory damages in
the amount of P234,000.00 and attorney’s fees in the amount of P50,000.00.  The amount to be paid in case petitioner
fails to deliver the 96 metric tons of the water-damaged cargo or a part
thereof is hereby ordered to be P450.00 per metric ton, with interest thereon
at the legal rate of six percent (6%) per annum from May 6, 1981 until fully paid.  In all other respects, the decision of the
trial court, as adopted by respondent court, is hereby AFFIRMED.

SO ORDERED.

Melencio-Herrera, (Chairman), Paras, Padilla, and Sarmiento, JJ., concur.

^[1]
Original Record, 64-65.

^[2]
Rollo, 38.

^[3]
Civil Case No. 9146-P, Court of First Instance of Rizal,
Branch CX, Pasay City; Original Record, 1-4.

^[4]
Id.; id., 4.

^[5]
Rollo, 174.

^[6]
Ibid., id.

^[7]
Ibid., 174-175.

^[8]
AC-G.R. CV No. 00493, Second Civil Cases Division.

^[9]
Penned by Justice Crisolito Pascual, with the concurrence of Justices Serafin E. Camilon and Desiderio P. Jurado.

^[10]
G.R. No. 70945.  Rollo, 44.

^[11]
Rollo, 107.

^[12]
Ibid., 178.

^[13]
Codilla vs. Estenzo,
97 SCRA 351 (1980); Lacsamana, et al. vs. The
Hon. Second Special Cases Division of the Intermediate Appellate Court, et al.,
143 SCRA 643 (1986).

^[14]
Maturan vs.
Araula, et al.,
111 SCRA 615 (1982); Vina vs. Court of
Appeals, et al., 126 SCRA 371 (1983).

^[15]
Rubio vs. Court of Appeals, et al., 141 SCRA 488 (1986); Dee Hua Liong Electrical Equipment
Corporation vs. Romeo Reyes, et al., 145 SCRA 713 (1986); De la Paz,
Jr., et al. vs. Intermediate Appellate Court, et al., 154 SCRA 65
(1987); Danao, et al. vs. Court of Appeals, et
al., 154 SCRA 446 (1987); Medelo vs. Gorospe, et al., 159 SCRA 248 (1988); Civil Aeronautics
Administration vs. Court of Appeals, et al., G.R. No. 51806, November 8,
1988.

^[16]
Rollo, 183-184.

^[17]
Ibid., 184.

^[18]
Reformina, et al. vs. Tomol, Jr., et al., 139 SCRA 260 (1985); Philippine Rabbit
Bus Lines, Inc. vs. Cruz, et al., 143 SCRA 158 (1986).

^[19]
Phoenix Publishing House, Inc. vs. Ramos, et al., 159 SCRA 383 (1988);
Philippine National Bank vs. Court of Appeals, et al., 159 SCRA 433
(1988); Arenas vs. Court of Appeals, et al., G.R. No. 56524, January 27,
1989.

^[20]
Medco Industrial Corporation, et al. vs. Court
of Appeals, et al., G.R. No. 84610, Nov.
24, 1988.

^[21]
Buan, et al. vs. Camaganacan,
16 SCRA 321 (1966), and cases therein cited.