Arcman Corp. v. Island Quarry and Aggregates Corp.

THIRD DIVISION

[G.R. No. 235706. July 1, 2020.]

ARCMAN CORPORATION, petitioner, vs.ISLAND QUARRY AND AGGREGATES CORPORATION, respondent.

[G.R. No. 235818. July 1, 2020.]

ISLAND QUARRY AND AGGREGATES CORPORATION, petitioner, vs.ARCMAN CORPORATION, respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court, Third Division, issued a Resolution datedJuly 1, 2020, which reads as follows:

"G.R. Nos. 235706 (Arcman Corporation v. Island Quarry and Aggregates Corporation) and 235818 (Island Quarry and Aggregates Corporation v. Arcman Corporation). — These are separate Petitions for Review on Certiorari1 under Rule 45 of the Rules of Court assailing the Decision 2 dated and the Resolution 3 dated November 17, 2017 of the Court of Appeals (CA) in CA-G.R. CV No. 104284. The CA Decision and Resolution ordered Island Quarry and Aggregates Corporation (IQAC) to pay Arcman Corporation (Arcman) P413,001.70 plus legal interest and P50,000.00 attorney's fees.

IQAC contracted Arcman to perform a specific service — i.e., "the processing of raw materials used for manufacturing cement." 4 On February 6, 2004, IQAC and Arcman entered into a 5-year Contract for Pantay Quarry and Crusher Operation 5 (Pantay Contract). Under the Pantay Contract, Arcman was to quarry aggregates in Antipolo, Rizal and deliver the extracted aggregates to IQAC's Crusher 1 and Crusher 2 in Sitio Tagbak, Barangay San Jose, Antipolo City. Arcman was also tasked to operate the New Line Crusher 2 operation, and extract and haul waste materials from the quarry to the Iglesia Ni Kristo Waste Dump Site (INK Dump Site). 6

On April 3, 2008, Arcman filed a Complaint 7 for Sum of Money with Damages before the Regional Trial Court (RTC) of Quezon City. 8 Arcman alleged that IQAC failed to pay Arcman's fees for its services, as follows:

Delivery of quarry aggregates in November 2007	P107,078.98
Delivery of quarry aggregates in December 2007	305,922.72
Price adjustment for January 2007 delivery	457,611.95
	––––––––––––
Total	P870,613.65 9
	===========

Arcman prayed that IQAC be ordered to pay P870,613.65 with three percent (3%) monthly interest from the date of demand until full payment with P500,000.00 as attorney's fees. 10

In its Answer with Compulsory Claims 11 dated July 14, 2008 (Answer), IQAC averred that Arcman's claims for payment were premature because IQAC exercised its right to withhold payment of all amounts due Arcman. 12 According to IQAC, Arcman failed to comply with its monthly obligation of delivering 36,000 metric tons (MT) 13 of aggregates to the 2 crushers. 14 Instead, Arcman's deliveries were as follows:

Month	Actual Quantity Delivered by Arcman to New Line Crusher 2 (in MT)
June	3,140.23
July	4,587.98
August	4,474.96
September	9,562.13
October	13,937.70
November	18,036.66
December	14,591.56
Total	68,331.22 15

By way of compulsory counterclaim, IQAC accused Arcman of failing to maintain and repair the New Line Crusher 2. 16 IQAC sought to have Arcman pay IQAC P12,860,975.51, broken down as follows:

(1) P2,491,048.00 for crushing and production costs as of June 2007;

(2) P2,347,867.38 for repair/rehabilitation of the New Line Crusher 2;

(3) P7,222,122.63 for spare parts and labor used for repair/rehabilitation of the New Line Crusher 2; and

(4) P799,937.50 for the replacement of the submersible pump owned by IQAC which Arcman supposedly took. 17

IQAC also prayed that Arcman be ordered to pay P1,000,000.00 as attorney's fees and exemplary damages.

Ruling of the Regional Trial Court

In a Decision 18 dated June 30, 2014, the RTC granted Arcman's complaint by ordering IQAC to pay Arcman P870,613.65 with three percent (3%) stipulated monthly interest and attorney's fees of P50,000.00. IQAC was also ordered to reimburse Arcman for the filing fees Arcman paid.

The RTC found Arcman's demand for payment on its November and December 2007 deliveries proper. Arcman was not found in default because IQAC failed to send a demand letter asking Arcman to comply with its obligation under the Pantay Contract. 19 As for IQAC's liability over the unbilled price adjustment, IQAC was liable due to its admission over the adjusted amount. 20

The RTC dismissed IQAC's compulsory counterclaims. 21 IQAC's evidence (i.e., summary of Arcman's daily delivery reports) was not considered for not being authenticated. The RTC did not find Arcman liable because the Pantay Contract's daily tonnage delivery was not mandatory. 22 This was bolstered, by the testimony of IQAC's witness, who stated that Solid Cement (IQAC's parent company and Arcman's client in another quarrying contract) 23 was not strict with its suppliers and contractors in meeting quotas. 24

The RTC found IQAC's documentary evidence insufficient to prove its claim for reimbursement on the repairs of the New Line Crusher 2. Citing Manaban v. Court of Appeals, 25 the trial court claimed that "a mere list of expenses, without any official receipts or any other evidence obtainable, does not prove actual expenses incurred." 26 The RTC observed that IQAC also failed to present the inspector, planner, and executioner/installer, who were assigned to repair the New Line Crusher 2 equipment. 27

The RTC denied IQAC's prayer for reimbursement of its submersible pump. The testimony of a certain Larry Baysa (Baysa), Solid Cement's security guard, showed that Baysa had no personal knowledge of who took the submersible pump. 28

Aggrieved, IQAC elevated the matter to the CA via a Petition for Certiorari under Rule 65 of the Rules of Court.

Ruling of the Court of Appeals

In its Decision 29 dated June 5, 2017, the appellate court affirmed with modification the Decision of the RTC on IQAC's liability. The CA directed IQAC to pay Arcman P413,001.70 30 with 12% compounded annual interest from January 17, 2008 31 to June 30, 2013 and six percent (6%) compounded annual interest from July 1, 2013 to June 4, 2017. A six percent simple annual interest is imposed from June 5, 2017 until full payment. The RTC's award of P50,000.00 attorney's fees and payment of filing fees were maintained.

The CA agreed with the RTC's conclusion on the absence of a monthly quota by applying Article IV (h) of the Pantay Contract. Article IV (h) allowed Arcman to "adjust the quality and quantity of aggregates and wastes delivered in accordance with the instructions provided by IQAC's authorized representative." 32 Thus, IQAC was the party responsible for dictating the quality and quantities of aggregates Arcman was to deliver.

The CA reiterated the RTC's findings that Arcman was not in default because IQAC failed to comply with the requirement of sending a written notice prior to suspending payment. 33 IQAC's failure to give a 7-day prior written notice to Arcman (notifying the latter of any breach in the contract) proves that the parties mutually agreed to terminate the contract in December 2007. 34 With the Pantay Contract terminated, Arcman's removal of its submersible pump was justified. 35

On the repair of the New Line Crusher 2 equipment, the CA echoed the RTC's verdict. The CA disregarded IQAC's summaries of expenses and work orders for insufficiently proving actual costs incurred in the equipment's repair/rehabilitation. The testimony of IQAC's witness also admitted that "the document containing the total cost of materials and labor to restore the New Line Crusher 2 is merely an estimate and has not yet been incurred." 36

However, the CA exonerated IQAC from paying the P457,611.95 price adjustment for the January 2007 delivery in the absence of any written confirmation by IQAC. 37

The appellate court struck down the imposition of a three percent (3%) monthly interest for being excessive, iniquitous, unconscionable and exorbitant. 38 The CA also modified the imposition of legal interest on IQAC's P413,001.70 obligation following this Court's ruling in Nacar v. Gallery Frames. 39

Both IQAC's and Arcman's Motions for Partial Reconsideration 40 were denied by the CA in its November 17, 2017 Resolution. 41 This prompted both parties to file their respective petitions for review on certiorari under Rule 45 of the Rules of Court.

Issues

In G.R. No. 235706, Arcman claims IQAC should be made to pay the P457,611.95 January 2007 price adjustment because of IQAC's admission over such liability. Arcman also argues that the three percent monthly interest was proper as: (1) this was stipulated in the Pantay Contract; and (2) it was never an issue during trial.

In G.R. No. 235818, IQAC claims that the CA erred in: (1) exonerating Arcman from any liability; (2) ruling that IQAC failed to send Arcman any notice of default; (3) concluding that IQAC's pieces of evidence did not establish the cost of repairs/rehabilitation of the New Line Crusher 2; (4) finding Arcman to be the owner of the submersible pump; and (5) awarding Arcman attorney's fees. The IQAC also assailed the CA's decision in computing legal interest from the time of Arcman's demand on January 17, 2008.

The main issue is IQAC's liability over the aggregates delivered by Arcman on November and December 2007 and its liability over the price adjustment of Arcman's delivery on January 2007. Such would require this Court to interpret the Pantay Contract — the law between the parties.

Ruling of the Court

Arcman must be paid for its

Citing Article IV (g) of the Pantay Contract, IQAC insists that Arcman failed to comply with its daily delivery quota of 1,200MT of aggregates. Because of Arcman's alleged underdelivery, IQAC invoked its right to suspend payment under Article VIII of the Pantay Contract.

Article IV (g) of the Pantay Contract states:

g. The estimated tonnage of aggregate materials is about One Thousand Two Hundred (1,200) metric tons per day to the two (2) crushers. The aggregates requirements of IQAC may be increased or decreased by IQAC in accordance with the operation and output of the Antipolo plant. If production and aggregates requirement, as well as the waste material extracted, are below the estimated volume, IQAC is not obliged to pay for any unused or un-ordered shortfall volume. 42

The Pantay Contract is clear. The 1,200MT of aggregates per day is only an estimate. The same provision shows that Arcman's output will vary depending on the output/operation of IQAC's Antipolo plant. Under the last sentence, any "underdelivery" is allowed and even anticipated by the parties since IQAC would not be obliged to pay for any shortfall volume — or the difference between the estimated 1,200MT and actual delivery made.

Since the Pantay Contract does not expressly mandate a daily quota of 1,200MT aggregates, IQAC's claim that Arcman failed to meet the production target is unsubstantiated. Under Article VIII of the Pantay Contract, IQAC must give Arcman at least 15 days written notice to inform Arcman of the latter's breach/es in the Pantay Contract before IQAC can: (1) terminate the contract; and (2) exercise its right to withhold payment. 43 While IQAC alleged that it took over Arcman's service obligations since August 2007, IQAC sent a Letter 44 informing Arcman of its alleged violations under the Pantay Contract only on February 20, 2008 — six (6) months after the supposed violations. 45 The said letter was issued only when Arcman sent a demand letter 46 dated January 17, 2008 asking for the release of Arcman's Surety Bond. 47

IQAC's February 20, 2008 Letter, Answer, and Pre-trial Brief 48 failed to allege (much more prove) the amount of damages it incurred as a result of Arcman's supposed November and December 2007 underdeliveries. Coupled with IQAC's unqualified acceptance of Arcman's earlier "underdeliveries" 49 (from June to October 2007) IQAC failed to prove that the 1,200MT daily estimate under the Pantay Contract was a quota that Arcman must always comply with.

IQAC's denial of its liability for

Arcman sought to have IQAC pay P457,611.95 representing the price adjustment for Arcman's January 2007 delivery. In its Answer, IQAC denied Arcman's claim "for being false" 50 and alleged that "the truth being that stated in the Affirmative Allegations and Defenses [in the Answer]." 51 However, IQAC's Affirmative Allegations and Defenses was silent on its liability for the January 2007 price adjustment.

Under Rule 8, Section 10 of the Rules of Court, there are three (3) modes of making a specific denial, to wit:

(1) by specifying each material allegation of the fact in the complaint, the truth of which the defendant does not admit, and whenever practicable, setting forth the substance of the matters which he will rely upon to support his denial; (2) by specifying so much of an averment in the complaint as is true and material and denying only the remainder; (3) by stating that the defendant is without knowledge or information sufficient to form a belief as to the truth of a material averment in the complaint, which has the effect of a denial. 52

In the case of PBCOM v. Spouses Go, 53 this Court explained that "[t]he purpose of requiring a defendant to make a specific denial is to make him disclose the matters alleged in the complaint which he succinctly intends to disprove at the trial, together with the matter which he relied upon to support the denial." 54

IQAC's Answer never explained why it did not owe Arcman P457,611.95. Neither did IQAC deny knowing about Arcman's claim. As this Court held in the case of Camitan v. Court of Appeals, 55 failure of a party to make a specific denial over the opposing party's allegations is tantamount to an admission pursuant to Section 11, 56 Rule 8 of the Rules of Court. 57 For failure to properly make a specific denial of Arcman's claim for P457,611.95, IQAC is deemed to have admitted Arcman's allegation. Thus, the CA erred in exonerating IQAC from such liability.

IQAC failed to prove that the

IQAC alleged that it took over Arcman's obligation under the Pantay Contract from August 2007. 58 Upon take-over, IQAC asserted that the New Line Crusher 2 suffered substantial damage to the point that it could no longer produce commercial-grade aggregates. To prove its claim, IQAC presented pictures taken on May 26, 2007 and September 24, 2007. 59 However, its summary of expenses and the work orders issued for the repair of the New Line Crusher 2 were for the years 2008 and 2009 only. 60 There was no documentary proof that there were repairs made in 2007. Worse, the report on the inspections conducted on May 26, 2007 and September 24, 2007 was made only in 2009.

IQAC claimed that it spent on the repair of the New Line Crusher 2 — with the total cost reaching P5,510,214.16. 61 Since the New Line Crusher 2 was allegedly rendered inoperable by Arcman, then IQAC would have had the same repaired when it took over the operations in August 2007 in order to use the equipment. However, its documentary evidence shows that the P5,510,214.16 was incurred only from January 2008 until December 2009. Therefore, IQAC failed to definitively prove that the P5,510,214.16 was a direct result of Arcman's exclusive use of the New Line Crusher 2.

The Pantay Contract states that the New Line Crusher 2 was turned over to Arcman in good working condition. When Solid Cement's Mechanical Maintenance Leader testified, he stated that the New Line Crusher 2 was still operational upon inspection and that it still produced plant-grade aggregates. IQAC's insistence that the New Line Crusher 2 must produce commercial-grade aggregates has no leg to stand on. The Pantay Contract never required Arcman to produce commercial-grade aggregates. Under Article IV (g), Arcman "will adjust the quality and quantity of aggregates and wastes delivered in accordance with the instructions provided by IQAC's authorized representative." IQAC never proved that it required Arcman to produce commercial-grade aggregates using the New Line Crusher 2. 62 Neither was there any notice was sent to Arcman informing it of any damage to the New Line Crusher 2. 63

IQAC never alleged nor admitted

The CA erroneously held that IQAC admitted Arcman's ownership of the submersible pump in IQAC's pre-trial brief. The pre-trial brief stated that Arcman "removed its 40-horsepower submersible pump." 64 While the pronoun "its" may refer to Arcman, the same may also refer to IQAC as the clause prior to such phrase referred to IQAC and its lack of consent in having the submersible pump removed from the premises.

Arcman never claimed ownership over the submersible pump. All Arcman alleged was IQAC's failure to prove that Arcman took IQAC's submersible pump. 65

While this Court finds IQAC to be the owner of the submersible pump, We join the trial court in ruling that IQAC failed to prove that Arcman took the same. Baysa's testimony was correctly disregarded for being hearsay. In his testimony, Baysa stated that "the guard on duty on the shift prior to his told him that some of the personnel of Arcman took the submersible pump x x x without permission and that the said incident was recorded in the logbook of Solid Cement." 66 IQAC failed to present the guard who actually witnessed the taking of the submersible pump. Neither was the said logbook presented in evidence.

Attorney's fees was properly

We find the award of P50,000.00 as attorney's fees reasonable. Aside from Article 2208 (2) 67 of the Civil Code cited by the CA, paragraph 11 68 of the same provision allows the court to exercise its discretion in granting attorney's fees so long as it is just and equitable. In all cases under Article 2208, attorney's fees must be reasonable.

Arcman is entitled to payment for the deliveries it made in November and December 2007. The RTC, CA, and this Court unanimously ruled that Arcman was not in default. IQAC failed to comply with its obligation to notify Arcman of any breach in the Pantay Contract before IQAC exercised its right to withhold payments due to Arcman. Coupled with the fact that this collection case for P870,613.65 has been in litigation since 2008, a P50,000.00 award for attorney's fees (approximately six percent (6%) of the judgment award), with costs for litigation expenses (i.e., reimbursement for filing fees) are reasonable.

Compounded interest cannot be

While the CA correctly struck down the three percent 3% stipulated monthly interest for being unconscionable, 69 there is a need to modify the CA's imposition of compounded interest. Courts are not empowered to impose compounded interest in monetary awards. Compounded interest is authorized only when the parties agreed to such, following Article 1959 70 of the Civil Code. Although Article 2212 of the Civil Code provides that "[i]nterest due shall earn legal interest from the time it is judicially demanded," this does not mean that interest legal interest shall be compounded annually. It only means that whatever interest a party may be entitled to under a contract shall earn simple legal interest from the time it is judicially demanded. Since there is no stipulation as to interest in this case, a six percent annual interest shall be imposed from January 17, 2008 (i.e., the date when Arcman sent IQAC a demand letter for the payment of P870,613.65). The annual rate of six percent is in compliance with Section 1 71 of Presidential Decree No. 116. 72 Thereafter, legal interest at six percent (6%) shall be imposed on the interest due from the time of finality of this judgment until full payment. These interest rates are in accordance this Court's ruling in Nacar v. Gallery Frames. 73

WHEREFORE, Island Quarry and Aggregates Corporation's petition in G.R. No. 235818 is DENIED and Arcman Corporation's petition in G.R. No. 235706 is PARTLY GRANTED. The Decision dated June 5, 2017 and the Resolution dated November 17, 2017 of the Court of Appeals in CA-G.R. CV No. 104284 is AFFIRMED with MODIFICATION. Island Quarry and Aggregates Corporation is ordered to pay Arcman Corporation P870,613.65 in total obligations plus interest computed as follows:

1. Interest of six percent (6%) per annum from January 17, 2008 until fully paid; and

2. Legal interest of six percent (6%) from finality of this Resolution until full payment.

The award of P50,000.00 as attorney's fees is MAINTAINED.

SO ORDERED."

Very truly yours,

(SGD.) MISAEL DOMINGO C. BATTUNG IIIDivision Clerk of Court

Footnotes

1.Rollo (G.R. No. 235706), pp. 8-25 and rollo (G.R. No. 235818), pp. 9-46.

2. Penned by Associate Justice Ramon M. Bato, Jr., with Associate Justices Manuel M. Barrios and Renato C. Francisco, concurring; rollo (G.R. No. 235706), pp. 30-44.

3.Id. at 45-46.

4.Rollo (G.R. No. 235818), p. 9.

5.Rollo (G.R. No. 235706), pp. 52-71.

6.Id. at 43.

7.Id. at 47-51.

8. Raffled to the Regional Trial Court of Quezon City, Branch 92. Docketed as Civil Case No. 08-62280.

9.Rollo (G.R. No. 235706), pp. 48-49.

10.Id. at 49.

11.Id. at 87-98.

12.Id. at 88-89.

13. Computed at 1,200MT of aggregates per day x 30 days.

14.Rollo (G.R. No. 203706), p. 91.

15.Id. at 91-92.

16.Id. at 92, 95.

17.Id. at 92-93. This is aside from the P1,000,000.00 sought by IQAC as attorney's fees and exemplary damages.

18.Id. at 196-217. Penned by Presiding Judge Eleuterio Larisma Bathan.

19.Id. at 202.

20.Id. at 215.

21.Id. at 217.

22.Id. at 210.

23.Id. at 201. See also rollo (G.R. No. 235818), p. 13.

24.Rollo (G.R. No. 235706), pp. 210-211.

25. 527 Phil. 84 (2006).

26.Id. at 107.

27.Rollo (G.R. No. 235706), p. 213.

28.Id. at 216.

29.Supra note 2.

30. Computed as the sum of the November and December 2007 deliveries (i.e., P107,078.98 + P305,922.72).

31. The date when Arcman set IQAC a demand letter. See rollo, (G.R. No. 235706), p. 34.

32.Rollo (G.R. No. 235706), pp. 38, 60.

33. Under Article VIII (a) of the Pantay Contract. See id. at 39.

34.Rollo (G.R. No. 235706), pp. 40, 67.

35.Id. at 38-40.

36.Id. at 41.

37.Id.

38.Id. at 42, citing De La Paz v. L&J Development Co., 742 Phil. 420 (2014).

39. 716 Phil. 267 (2013).

40.Rollo (G.R. No. 235706), pp. 294-328, 308-328.

41.Supra note 3.

42.Rollo (G.R. No. 235706), p. 60.

43.Id. at 65. See Article VIII (b) and (c) of the Pantay Contract.

44.Id. at 99-102.

45.Id. at 93.

46.Id. at 85.

47. See id. at 99.

48.Id. at 110-120.

Per IQAC's Petition for Review on Certiorari (rollo [G.R. No. 235818], p. 19) and IQAC's (supra note 11, Arcman made the following deliveries:

 

Months in 2007	Target (per month)	Arcman's Actual Delivery
June	36,000MT	3,140.23MT
July	36,000MT	4,587.98MT
August	36,000MT	4,474.96MT
September	36,000MT	8,763.90MT (in petition for review)
October	36,000MT	2,833.51MT (in petition for review)

 

49. Note from the Publisher: Copied verbatim from the official document. Missing Footnote Text.

50.Id. at 88.

51.Id.

52.PBCom v. Spouses Go, 658 Phil. 43, 57 (2011), citing Spouses Gaza v. Lim, 443 Phil. 337, 345 (2003).

53. 658 Phil. 43 (2011).

54.Id. at 58. Underscoring supplied.

55. 540 Phil. 377 (2006).

56. Section 11. Allegations not specifically denied deemed admitted. — Material averment in the complaint, other than those as to the amount of unliquidated damages, shall be deemed admitted when not specifically denied. Allegations of usury in a complaint to recover usurious interest are deemed admitted if not denied under oath.

57.Id. at 386.

58.Seerollo (G.R. No. 235706), p. 92.

59.Seeid. at 135-136.

60.Seeid. at 136-139.

61.Rollo (G.R. No. 235818), p. 16.

62.Seeid. at 212.

63.Id. at 41 and 212.

64.Rollo (G.R. No. 235818), p. 112.

65.Id. at 168.

66.Rollo (G.R. No. 235706), p. 216.

67. Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

xxx xxx xxx

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest.

xxx xxx xxx

68. (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.

69. In De La Paz v. L&J Development Co., Inc., 742 Phil. 420 (2014), We held:

Time and again, it has been ruled in a plethora of cases that stipulated interest rates of 3% per month and higher, are excessive, iniquitous, unconscionable and exorbitant. Such stipulations are void for being contrary to morals, if not against the law. (Id. at 431, citing Macalinao v. Bank of the Philippine Islands, 616 Phil. 60 (2009).

70. Art. 1959. Without prejudice to the provisions of Article 2212, interest due and unpaid shall not earn interest. However, the contracting parties may by stipulation capitalize the interest due and unpaid, which as added principal, shall earn new interest. (n)

71. Sec. 1. The rate of interest for the loan or forbearance of any money, goods, or credits and the rate allowed in judgments, int eh absence of express contract as to such rate of interest, shall be six per centum per annum or such a rate as may be prescribed by the Monetary Board of the Central Bank of the Philippines for that purpose in accordance with the authority hereby granted.

72. An Act Further Amending Certain Sections of Act Number Two Thousand Six Hundred Fifty-Five, as Amended, Otherwise Knowns as "The Usury Law."

73. 716 Phil. 267 (2013). The guidelines in Nacar state:

To recapitulate and for future guidance, the guidelines laid down in the case of Eastern Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:

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. The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages.

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 money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

And, in addition to the above, judgments that have become final and executory prior to July 1, 2013, shall not be disturbed and shall continue to be implemented applying the rate of interest fixed therein.