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SONG FO & CO. V HAWAIIAN- PHILIPPINE CO. MALCOLM; September 16, 1925
FACTS Plaintiff presented a complaint with two causes of action for breach of contract against the defendant in which judgment was asked for P70,369.50, with legal interest and cost. In an amended answer and cross-complaint, the defendant set up the special defense that since the plaintiff had defaulted in the payment for molasses delivered to it by the defendant under the contract between the parties, the latter was compelled to cancel and rescind the contract. The case was submitted for decision on a stipulation of facts and exhibits. The judgment of the trial court condemned the defendant to pay to the plaintiff a total of P35,317.93 with legal interest from the date of the presentation of the complaint, and with costs. HELD - The written contract between the parties provided for the delivery by the Hawaiian-Philippine Co. to Song Fo & Co. of 300,000 gallons of molasses. The language used in another exhibit with reference to the additional 100,000 gallons was not a definite promise. Still less did it constitute an obligation. - The terms of contract fixed by the parties are controlling. The time of payment stipulated for in the contract should be treated as of the essence of the contract. Hawaiian-Philippine Co. had no legal right to rescind the contract of sale because of the failure of Song Fo & Co. to pay for the molasses within the time agreed upon by the parties. The general rule is that the rescission will not be permitted for a slight or casual breach of the contract, but only for such breaches are as so substantial and fundamental as to defeat the object of the parties in making the agreement. A delay in payment for a small quantity of molasses for some 20 days is not such a violation of an essential condition of the contracts as warrants rescission for nonperformance. - The measure of damages for breach of contract in this case is as follows: Song Fo & Co. is allowed P3,000 on account of the greater expense to which it was put in being compelled to secure molasses in the open market. It is allowed nothing for lost profits on account of the breach of the contract, because of failure of proof.
the breach committed by petitioners was a nonperformance of a reciprocal obligation, not a violation of the terms and conditions of the mortgage contract. Thus, the automatic rescission and forfeiture of payment clauses do not apply. Civil Code provisions shall govern. - Since breach herein is under A1191, mutual restitution is required to bring back the parties their original situation prior to the inception of the contract. - Rescission creates an obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. To rescind is to declare a contract void at its inception and to put an end to it as though it never was. 3. SC did not find it necessary to discuss third issue but said that the three conditions were not part of the original contract, and that petitioners had no right
DE GUIA V MANILA ELECTRIC, RAILROAD & LIGHT CO STREET; January 28, 1920
FACTS -The plaintiff is a physician residing in Caloocan City. -Sept 4, 1915, at about 8pm, the defendant boarded a car at the end of the line with the intention of coming to Caloocan. -At about 30 meters from the starting point the car entered a switch, the plaintiff remaining on the back platform holding the handle of the right-hand door. Upon coming out of the switch, the small wheels of the rear truck left the track ran for a short distance and hit a concrete post. -the post was shattered: at the time the car struck against the concrete post, the plaintiff was allegedly standing on the rear platform, grasping the handle of the right-hand door. The shock of the impact threw him forward, and the left part of his chest struck against the door causing him to fall. In the falling, the plaintiff alleged that his head struck one of the seats and he became unconscious. -the plaintiff was taken to his home which was a short distance away from the site of the incident. A physician of the defendant company visited the plaintiff and noted that the plaintiff was walking about and apparently suffering somewhat from bruises on his chest. The plaintiff said nothing about his head being injured and refused to go to a hospital. -The plaintiff consulted other physicians about his condition, and all these physicians testified for the plaintiff in the trial court. -the plaintiff was awarded with P6,100, with interest and costs, as damages incurred by him in consequence of physical injuries sustained. The plaintiff and the defendant company appealed. ISSUES 1. WON the defendant has disproved the existence of negligence 2. What is the nature of the relation between the parties? 3. WON the defendant is liable for the damages 4. If liable for damages, WON the defendant could avail of the last paragraph of Art 1903 on culpa aquiliana (Art 2180) 5. What is the extent of the defendants liability? 5.1 Did the trial judge err in the awarding of the damages for loss of professional earnings (P900)? 5.2 Did the trial judge err in the awarding of the damages for inability to accept a position as a district health officer? 5.3 Did the trial judge err in not awarding damages for the plaintiffs supposed incapacitation for future professional practice (P30,000)? 5.4 Is the plaintiff reasonable in demanding P10,000 for the cost of medical treatment and other expenses incident to his cure? 6. WON the trial judge erred in treating written statements of the physicians who testified as primary evidence? HELD
c.
manner. d.
He is liable for the cost of executing the obligation in the proper He is also liable for the missing parts.
e.
But the moral damages and attorneys fees should not be awarded because they were not alleged in the complaint.
RUSTAN PULP AND PAPER MILLS V IAC MELO; October 19, 1992
FACTS - Rustan established a pulp and paper mill in Lanao del Norte in 1966. - Lluch, a holder of a forest products license, wrote to Rustan and offered to supply raw materials. In response, petitioner Rustan proposed, among other things, in a letter That the contract to supply is not exclusive because Rustan shall have the option to buy from other suppliers who are qualified and holder of appropriate government authority or license to sell and dispose pulp wood." - On April 1968, they executed a contract of sale whereby Lluch agreed to sell, and Rustan Pulp and Paper Mill, Inc. to pay the price of P30.00 per cubic meter of pulp wood raw materials to be delivered at the buyer's plant. - In the bilateral undertaking, they stipulated the following: "That BUYER shall have the option to buy from other SELLERS that BUYER shall not buy from any other seller whose pulp woods being sold shall have been established to have emanated from the SELLER'S lumber and/or firewood concession. . . .And that SELLER has the priority to supply the pulp wood materials requirement of the BUYER; (Par 7) That the BUYER shall have the right to stop delivery of the said raw materials by the seller covered by this contract when supply of the same shall become sufficient until such time when need for said raw materials shall have become necessary provided, however, that the SELLER is given sufficient notice." - During the test run of the pulp mill, the machinery line had major defects while deliveries of the raw materials piled up, which prompted the Japanese supplier of the machinery to recommend the stoppage of the deliveries. - The suppliers were informed to stop deliveries and Rustan sent a letter (dated Sept 1968) to Lluch informing him that the supply of raw materials to us has become sufficient and we will not be needing further delivery from you. As per the terms of our contract, please stop delivery 30 days from today. It was signed by Dr. Romeo Vergara, the resident manager. - Lluch sought to clarify whether stoppage of delivery or termination of the contract of sale was intended, but the query was not answered by petitioners. This alleged ambiguity notwithstanding, Lluch and the other suppliers resumed deliveries after the series of talks between Vergara and Lluch.
HELD 1. Boysaw violated the contract when he fought with Avila. Civil Code provides, the power to rescind obligations is implied, in reciprocal ones, (as in this case) in case one of the obligors shld not comply w/ what is incumbent upon him. Another violation was made in the transfers of managerial rights. These were in fact novations which, to be valid, must be consented to by Interphil. When a contract is unlawfully novated, the aggrieved creditor may not deal with the substitute. 2. The appellees could have opted to rescind or refuse to recognize the new manager, but all they wanted was to postpone the fight owing to an injury Elorde sustained. The desire to postpone the fight is lawful and reasonable. The GAB did not act arbitrarily in acceding to the request to reset the date of the fight and Yulo himself agreed to abide by the GAB ruling. The appellees offered to move the fight w/in the 30 day period for postponement but this was refused by the appellants, notwithstanding the fact that by virtue of the
ISSUES 1. WON the contract entered into by the parties may be validly rescinded under Article 1191 of the New Civil Code 2. WON the parties had novated their original contract as to the time and manner of payment HELD 1. NO. - Article 1191 of the New Civil Code refers to rescission applicable to reciprocal obligations. Rescission of reciprocal obligations under Article 1191 of the New Civil Code should be distinguished from rescission of contracts under Article 1383. - While Article 1191 uses the term rescission, the original term which was used in the old Civil Code, from which the article was based, was resolution. Resolution is a principal action which is based on breach of a party, while rescission under Article 1383 is a subsidiary action limited to cases of rescission for lesion under Article 1381 of the New Civil Code, which expressly enumerates the rescissible contracts. - The contract entered into by the parties in the case at bar does not fall under any of those mentioned by Article 1381. Consequently, Article 1383 is inapplicable. - The "Agreement of Purchase and Sale" shows that it is in the nature of a contract to sell, as distinguished from a contract of sale. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while in a contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full payment of the purchase price. In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring an obligatory force. - Respondents in the case at bar bound themselves to deliver a deed of absolute sale and clean title covering the two parcels of land upon full payment by the buyer of the purchase price of P2,000,000.00. This promise to sell was subject to the fulfillment of the suspensive condition of full payment of the purchase price by the petitioner. Petitioner, however, failed to complete payment of the purchase price. The non-fulfillment of the condition of full payment rendered the contract to sell ineffective and without force and effect. It must be stressed that the breach contemplated in Article 1191 of the New Civil Code is the obligor's failure to comply with an obligation. Failure to pay, in this instance, is not even a breach but merely an event which prevents the vendor's obligation to convey title from acquiring binding force. Hence, the agreement of the parties may be set aside, but not because of a breach on the part of petitioner for failure to complete payment of the purchase price. Rather, his failure to do so brought about a situation which
On October 31, 1951, Jesus Anduiza and Quintana Cano executed a promissory note binding themselves to jointly and severally pay the Agricultural and Industrial Bank P13800, with an interest rate of 6%. Payments are to be paid in 10 years in annual installments. Anduiza and Cano failed to pay the yearly amortizations that fall due on October 1942 and 1943. When Estelito Madrid, who temporarily lived in Anduizas house during the Japanese occupation, learned this, he offered to pay for Anduizas indebtedness. He paid P10000 on Oct 23, 1944. Alleging that Anduiza failed to pay, the Agricultural and Industrial Bank (now RFC) refused to cancel his mortgage. Madrid then instituted an action with the CFI to declare that Anduizas indebtedness of P16,425.17 has been paid, to release the properties mortgaged to RFC, and condemning Anduiza to pay him P16, 425.17. RFC replied that the loan was not due and demandable in Oct 1944. They also claim that they only held Madrids payment as deposit pending proof of approval by Anduiza and that if Anduiza refused to approve, the deposit will be annulled. Anduiza claims that the payment made by Madrid was without his knowledge or consent and that RFC did not accept such payment. The trial court rendered in favor of RFC, but the CA reversed.
ISSUE WON Madrids payment should be accepted HELD YES. - Art 1158 of the Spanish CC states that payment can be made by any person, whether approved by the debtor or not. One who makes the payment may recover from the debtor, unless it was made against his express will. In the latter case, he can recover only in so far as the payment was beneficial to him. - Madrid then is entitled to pay the obligation irrespective of Anduizas will or the bank.
The payments were not made against the objection of either Anduiza or Madrid. Although Anduiza later on questioned such payments, he impliedly acquiesced therin, for he joined Madrid in his appeal from the decision of the CFI. - Similarly, the receipts issued by the bank acknowledging said payments without qualification belie its alleged objection thereto. The bank as a creditor had no other right than to exact payment. - Two consequences flow from the foregoing: o Good or bad faith is immaterial to the issue.
REPARATIONS COMMISSION V UNIVERSAL DEEP- SEA FISHING CORPORATION CONCEPCION; June 27, 1978
FACTS - Universal was awarded 6 trawl boats by the Reparations Commission as end-user of reparation goods. These were delivered 2 at a time. - The first 2 boats were delivered Nov 20, 1958 and the Contract of Conditional Purchase and Sale of Reparations Goods executed Feb 12, 1960 provided among others, that "the first installment representing 10% of the amount shall be paid within 24 months from the date of complete delivery thereof, the balance shall be paid in the manner herein stated as shown in the Schedule of Payments". To guarantee the compliance with the obligations under said contract, a performance bond in the amount of P53,643.00, with UNIVERSAL as principal and the Manila
Where there is no imputation of payment made by either the debtor or creditor, the debt which is the most onerous to the debtor shall be deemed to have been satisfied
ART. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rules shall be observed: (1)When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other's undertaking; (2)When only one of the contracting parties is at fault, he cannot recover, what he has given by reason of the contract, or ask for fulfillment of what has been promised him. The other, who is not at fault, may demand the return of what he has given without any obligation to comply with his promise.
ART. 1409. The conjugal partnership shall also be chargeable with anything which may have been given or promised by the husband alone to the children born of the marriage in order to obtain employment for them or give then, a profession or by both spouses by common consent, should they not have stipulated that such expenditures should be borne in whole or in part by the separate property of one of them.". ART. 1415. The husband may dispose of the property of the conjugal partnership for the purposes mentioned in Article 1409. ART. 1413. In addition to his powers as manager the husband may for a valuable consideration alienate and encumber the property of the conjugal partnership without the consent of the wife.