VARADERO vs.

INSULAR LUMBER

Facts: INSULAR LUMBER had a lighter called” Tatlo” which was to be repaired by EL VARADERO de
Manila. 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 any other company. When repairs were completed and
EL VARADERO gave INSULAR the bill, the latte refused to pay because it was of the opinion that the price
was grossly exorbitant. INSULAR offered a compromise, but they disagreed.

Hence, they went to court. In the CFI, they entered a compromise again. Ultimately, they never settled
on an agreed figure. Dissatisfied, EL VARADERO appealed to SC.

ISSUE: Whether the compromise must be excluded in arriving at a correct figure of liability?

RULING: Judgment is modified, and in lieu of the judgment rendered in the lower court, another shall
issue in favor of EL VARADERO and against INSULAR LUMBER 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. So ordered.