WHEREFORE, the petition is hereby GIVEN DUE COURSE and is GRANTED. The legal interest rate to be paid by petitioner EASCO to the private respondent is 6% per annum on the amount due corresponding to the period from June 26, 1981 to August 24, 1993; and 12% per annum beginning August 25, 1993 until the money judgment shall have been fully paid. No pronouncement as to costs.

SO ORDERED.

WHEREFORE, judgment is rendered in favor of plaintiff [private respondent Vicente Tan] and ordering defendant [petitioner EASCO]

1. To pay plaintiff the sum of Two Hundred Fifty Thousand (P250,000.00) Pesos representing the fire insurance claim of plaintiff plus legal rate of interest from June 26, 1981 until fully paid;

2. To pay plaintiff the sum of Twenty Thousand (P20,000.00) Pesos as attorney’s fees;

3. To pay plaintiff all expenses incurred when he went to Manila with his lawyer regarding his insurance claim;

4. To pay plaintiff Twenty Thousand Pesos (P20,000.00) Pesos as moral damages and Twenty Thousand (P20,000.00) Pesos as exemplary damages.

SO ORDERED.

WHEREFORE, premises considered, this Court hereby resolve[s] that:

1. The legal rate of interest imposable on the principal sum of P250,000.00 should be twelve (12%) per annum from June 26, 1981 to September 30, 1994, which is the cut-off date agreed upon by the parties;

2. That the manager’s check issued by the defendant in the amount of P448,750.00 in favor of the plaintiff is considered as partial satisfaction of the writ of execution; and

3. Defendant to pay immediately to plaintiff the unpaid balance of interest of the principal amount of P250,000.00 equivalent to 6% per annum from June 26, 1981 to September 30, 1994.

I. The Appellate Court glaringly committed an error of law in its assailed decision when it wrongfully applied the aforecited paragraph 3 of the suggested rules of thumb for future guidance [as formulated in Eastern Shipping Lines, Inc. v. Court of Appeals, 234 SCRA 78 (1994)] and unlawfully ignored or disregarded the agreed cut-off date for the payment of the legal rate of interest on the amount due, contrary to the manifestations/admissions of the parties as well as the stand of the respondent Judge in resolving the issue of applicable legal rate of interest thereon.

II. The application of the abovequoted paragraph 3 of the suggested rules of thumb in the computation of the applicable legal rate of interest embodied in the dispositive part of the assailed decision is tantamount to a "modification of a judgment that is at its execution stage." It is also an "addition" amounting to a material alteration of the same judgment which had been satisfied only at 6% percent interest per annum from June 26, 1981 up to September 30, 1994 (the agreed cut-off date). Hence, it cannot be allowed and is null and void.

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: Jurisä

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 12% 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 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit.

Unquestionably, this case falls under the rule stated in paragraph 3. The question is whether this rule can be applied to this case. Petitioner contends that paragraph 3 cannot be applied to this case considering that the decision of July 30, 1993 of the Court of Appeals, affirming the decision of the trial court, became final and executory on August 25, 1993, whereas the decision in Eastern Shipping Lines, Inc. was rendered only on July 22, 1994. Petitioner argues that the rules stated in that case were in fact made for "future guidance" of courts and, thus, to apply paragraph 3 to the case at bar is to sanction the modification of a judgment which is already final and executory.