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The case was re-raffled anew in another RTC which later reinstated the
injunction. UCPB filed an appeal with the CA. The CA affirmed the RTC.
Selegna Mgmt. acquired a P70 Million loan from UCPB. As security for the
loan, Angeles executed a real estate mortgage of their properties in
In the main, Angeles averred that they have a clear right to injunction based
Muntinlupa, Antipolo, Las Pias, Quezon and some condo units in Makati.
on the fact that UCPB never explained how the loan went up to P132 M; that
increased the loan amount to P103 Million with a 21% interest rate per
and that they gave a P10 M payment which prevented the determination of
UCPB and Angeles agreed in their Credit Agreement that failure to pay any
HELD: No. Angeles is clearly in default per provisions laid down in their
Credit Agreement with UCPB which is the binding law between the parties. In
fact, the parties stipulated in their credit agreements, mortgage contracts and
Eventually, in 1999, Angeles went into default and their loan ballooned to
P132 M. UCPB sent them demand letters. In response, Angeles paid about
P10 M in interest at the same time they asked for a 60 day period to
is not disputed.
was not granted because they failed to show any irreparable damage that
FACTS:
In the first quarter of 1998, petitioner, Solar Harvest, Inc., entered into an
agreement with Davao Corrugated Carton Corporation, for the purchase of
corrugated carton boxes, specifically designed for petitioner's business of
exporting fresh bananas, at US$1.10 each. The agreement was not reduced
into writing. To get the production underway, petitioner deposited, on March
31, 1998, US$40,150.00 in respondent's US Dollar Savings Account with
Westmont Bank, as full payment for the ordered boxes.
obligation.
It is in fact clear from the agreement of the parties that when the payment is
accelerated due to an event of default, the penalty charge shall be based on
the total principal amount outstanding, to be computed from the date of
acceleration until the obligation is paid in full. Their Credit Agreement even
provides for the application of payments. It appears from the agreements that
the amount of total obligation is known or, at the very least, determinable.
Despite full payment, it did not receive any boxes. It made repeated
follow-ups but respondent only showed samples, and promised to
deliver the boxes 30 days from completion, as they had agreed.
Further, in the Real Estate Mortgage agreement between the parties (in the
Event of Default clause), Angeles granted UCPB the right to extrajudicially
foreclose the properties mortgaged which secured the loan/obligation.
cancel the order because it was already too late for them to meet
their commitment to ship the bananas to China.
He also said that the reason why petitioner did not pick up the boxes
was that the ship that was to carry the bananas did not arrive; that
during the last visit of Que, he asked him to withdraw the boxes
immediately because they were occupying a big space in his plant,
but they, instead, told him to sell the cartons as rejects. He was able
to sell 5,000 boxes at P20.00 each for a total of P100,000.00. Que
then told him to apply the said amount to the unpaid balance.
Feb. 1999, Que visited the factory again and supposedly advised
respondent to sell the boxes as rejects to recoup the cost of the
unpaid 14,000 boxes, because petitioner's transaction to ship
bananas to China did not materialize.
(RTC) ruled that respondent did not commit any breach of faith that would
justify rescission of the contract and the consequent reimbursement of the
amount paid by petitioner. The RTC said that respondent was able to produce
the ordered boxes but petitioner failed to obtain possession thereof because
its ship did not arrive. It also dismissed respondents counterclaim for lack of
merit.
CA affirmed the RTC decision. According to the CA, it was unthinkable that,
over a period of more than two years, petitioner did not even demand for the
delivery of the boxes. The CA added that even assuming that the agreement
was for respondent to deliver the boxes, respondent would not be liable for
breach of contract as petitioner had not yet demanded from it the delivery of
the boxes.
ISSUE:
WON there was default on the part of Davao Corrugated Carton to deliver the
boxes and thus make it liable for breach of contract to Solar Harvest
HELD: None, thus, Solar Harvest cannot demand for the refund of its
payment, which in essence is actually a claim for rescission.
Based on Art. 1191, in reciprocal obligations, the right to rescind a contract
arises once the other party defaults in the performance of his obligation. In
determining when default occurs, Art. 1191 should be taken in conjunction
with Art. 1169 which provides as to when delay is incurred.
Even assuming that a demand had been previously made before filing the
present case, petitioner's claim for reimbursement would still fail, as the