EL VARADERO DE MANILA v. INSULAR LUMBER CO.

G.R. No. 21911 / SEP 15, 1924 / MALCOLM, J. / EVID Compromises / MEEMARCILLA

NATURE
PETITIONERS
RESPONDENTS

Appeal
El Varadero de Manila
Insular Lumber Company

SUMMARY. Varadero made repairs on Insulars Tatlo. Insular sued

Varadero, claiming the bill was grossly exorbitant. CFI awarded
P5,310.70 to Varadero but Varadero wanted to increase it to P12,412.62.
SC held that the reasonable value of the repairs was P7,700.
DOCTRINE. The general rule is that an offer of compromise is
inadmissible. Where, however, the amount named in the offer to accept
a certain sum in settlement appears to have been arrived at as a fair
estimate of value, it is relevant.
The rule of exclusion of compromise negotiations does not apply where
there is no denial expressed or implied of liability, and the only
questions discussed relate to the amount to be paid.
FACTS.
El Varadero de Manila completed repairs on the lighter Tatlo, the
property of the Insular Lumber Company. The work was performed
pursuant to no express agreement, but with the implicit understanding
that the price would be as low as, or lower than, could be secured from
any other company.
Insular Lumber Company alleged that the bill as presented by El
Varadero de Manila was grossly exorbitant so they sued Varadero.
CFI: El Varadero de Manila secured judgment against the Insular Lumber
Company in the amount of P5,310.70, with legal interest from the
presentation of the complaint, and costs.
Still dissatisfied, Varadero has appealed to this court and asked to
increase the amount of the judgment to P12,412.62.
ISSUES & RATIO.
1. WON the rule of exclusion of compromise negotiations applies.
NO
The itemized bill presented by Varadero totals P12,412.62. At one
time during the course of the negotiations, Varadero was willing to
accept P10,241.37. (Exhibit I.) The trial judge held that it was excessive.

Insular Lumber Company claims that a reasonable figure for the work
would be P5,310.70. Witnesses were offered to substantiate this
contention. The trial judge adopted their statements as his own. During
the course of the abortive negotiations, however, Insular
expressed a willingness to pay P8,070.12.
First point of interest: The general rule is that an offer of compromise is
inadmissible. Where, however, the amount named in the offer to accept a
certain sum in settlement appears to have been arrived at as a fair
estimate of value, it is relevant.
The rule of exclusion of compromise negotiations does not apply
where there is no denial expressed or implied of liability, and the
only questions discussed relate to the amount to be paid. Here, there was
no denial of liability and the only question discussed was the amount to be
paid.
Second point of interest: Mariano Yengko, inspector of vessels, a
disinterested witness, testified that the fair value of the repairs was
P5,134.20, but on cross-examination, he raised it to between 7 and 8,000
pesos.
Third point: The tacit understanding between the parties was that the cost
of the repairs should be approximately the same as what other
companies would charge. Insular admits that El Varadero de Navotas
would have done the work for about P8,000.
Therefoe, the reasonable value of the repairs performed by El Varadero de
Manila on the Tatlo owned by the Insular Lumber Company, was something
less than P8,000. We fix the sum definitely at P7,700.
DECISION.
Judgment is modified, and in lieu of the judgment rendered in the lower
court, another shall issue in favor of the plaintiff and against the defendant
for the recovery of P7,700, with legal interest to begin to run from the date
when this judgment shall become final and to continue until payment,
without express finding as to costs in either instance.
NOTES.