4) G.R. No.

L-58122 December 29, 1989

MOBIL OIL PHILIPPINES, INC., petitioner, vs. CA and FERNANDO A. PEDROSA, respondents.

Doctrine: Article 1250

Facts:
 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.
 Pedrosa, the plaintiff/respondent is a dealer of defendant's/petitioner’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.
 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, with delivery date on same date.
The order was received by the defendant’s clerk and approved for release by its credit man on
same date.
 Order was held until February 19, 1974, 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 re-pricing. The order was increased by P2,880.
 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.
 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.
 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. Ordering the defendant to
pay the following:
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 — for exemplary damages
P 50,000.00 — for moral damages, and
P 10,000.00 — for attorney's fees
 Hence, this appeal.
 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.
 Pending final judgement respondent filed the following motion:
a) to require petitioner to file a supersedes bond or deposit with this Court the amount awarded
to private respondent by the lower court; and

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 b) the judgment award should be adjusted upward by at least 150% in keeping with the inflation
that has supervened.

Issue: Whether or not judgment award should be adjusted upward by at least 150% in keeping with the
inflation that has supervened?

Held: No. Inflation adjustment may not be invoked nor applied without a proper declaration of
extraordinary inflation or deflation of currency by the competent authorities.
As held in Commissioner of Public Highways vs. Burgos (96 SCRA 831): 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.
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.

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