Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. of Iloilo

Summary

A petroleum company was sued by a long-time customer for short deliveries of fuel oil over a 20-year period. The customer discovered through volumetric tests that drums contained significantly less fuel than the 210 liters per drum being billed. The Supreme Court ruled that the action for specific performance was not barred by prescription because the cause of action arose only when the buyer discovered the short deliveries with certainty in 1974, and the case was filed in 1980 within the 10-year prescriptive period for contract actions. The Court affirmed orders for specific performance of delivering the shortage and payment of attorney's fees, but deleted exemplary damages for lack of showing of bad faith. The case establishes important precedent on when prescription begins to run in cases involving hidden defects or shortages that buyers cannot readily detect.