Ayala Life vs.

Ray Burton
Facts:
Ayala Life Assurance, Inc. and Ray Burton Development Corporation entered into a "Contract to Sell"
wherein petitioner agreed to sell to respondent a parcel of land, with an area of 1,691 square meters,
situated at Madrigal Business Park, Ayala Alabang Village, Muntinlupa City. The purchase price of the land
is P55,000.00 per square meter or a total of P93,005,000.00

Respondent notified petitioner in writing that it will no longer continue to pay due to the adverse effects of the
economic crisis to its business. Respondent then asked for the immediate cancellation of the contract and
for a refund of its previous payments.

Petitioner filed a case with the RTC against the respondent to pay the remaining balance. RTC rendered a
decision saying that the respondent acted in bad faith

CA reversed RTCs decision saying failure to pay the price in full is not a breach of contract but merely an
event that prevents petitioner from conveying the title to respondent. What should govern the parties'
relation are the provisions of their contract on the "Event of Default".
(In case of failure of payment not attributable to the petitioner, he has the right to cancel the contract. In case
of cancellation, petitioner shall return to the respondent the amount he received, less penalties, unpaid
charges and dues on the property.)

Issues:
1. W/N respondent's non-payment of the balance of the purchase price gave rise to a cause of action
on the part of petitioner to demand full payment of the purchase price
2. W/N petitioner should refund respondent the amount the latter paid under the contract to sell.

Held:
1. The real nature of a contract may be determined from the express terms of the written agreement and
from the contemporaneous and subsequent acts of the contracting parties. The questioned agreement
clearly indicates that it is a contract to sell, not a contract of sale.

According to Lim v. Court of Appeals, in a contract of sale, the title passes to the buyer upon the delivery of
the thing sold. However, in a contract to sell, the ownership is reserved in the seller and is not to pass until
the full payment of the purchase price is made.

Before the remedy of specific performance may be availed of, there must be a breach of the contract. Under
a contract to sell, the title of the thing to be sold is retained by the seller until the purchaser makes full
payment of the agreed purchase price. Such payment is a positive suspensive condition, the non-fulfillment
of which is not a breach of contract but merely an event that prevents the seller from conveying title to the
purchaser.

Thus, a cause of action for specific performance does not arise.

2. The provision of the contract under "Event of Default" provides that has the right to retain an amount
equivalent to 25% of the total payments. Provisions in the contract with respect to penalties and interest are
not applicable since the petitioner informed the respondent in writing of its intention to cancel the contract.

De Dios vs CA
Facts:
Philippine Veterans Bank (PVB) conveyed a parcel of land under a conditional sale to Averdi Marketing and
Development Corporation. Petitioner Artie Vergel de Dios, as general manager of Averdi, then transferred
his rights to Eduardo Lopingco, herein private respondent. Lopingco filed with the RTC a complaint against
the petitioner and PVB for revocation of the said board resolution and the rescission of his contract with the
petitioner.

Philippine Veterans Bank filed a motion to dismiss the complaint on the grounds of lack of a cause action
and improper party. Lopingco filed an amended complaint and at the same time served a copy thereof on
the petitioner by registered mail.

RTC declared the petitioner in default

Petitioner filed for a motion for a new trial but the RTC denied the motion

Petitioner filed an appeal with the CA and it affirmed RTCs decision

Issues:
W/N the private respondent has no cause of action for rescission and contends that the proper action is for
reformation of the Memorandum of Agreement and the Addendum

Held:
According to the terms and conditions of the Memorandum of Agreement, upon the down payment of the
amount of P700,000.00 to the Philippine Veterans Bank by Lopingco, De Dios, as the first party, hall execute
in favor of Lopingco, as the second party, a deed of assignment over the property subject of the agreement.
However, De dios failed to execute a deed of assignment.

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should
not comply with what is incumbent upon him.

Private respondent could avail himself of the remedy of rescission in pursuant of Article 1191 of the Civil
Code

Angeles vs Calasanz
Facts:
Defendants-appellants Ursula Torres Calasanz and Tomas Calasanz and plaintiffs-appellees Buenaventura
Angeles and Teofila Juani entered into a contract to sell a piece of land located in Cainta, Rizal for the
amount of P3,920.00 plus 7% interest per annum.

The plaintiffs-appellees made a downpayment of P392.00 upon the execution of the contract. They
promised to pay the balance in monthly installments of P41.20 until fully paid. On numerous occasions, the
defendants-appellants accepted and received delayed installment payments from the plaintiffs-appellees.

Aggregate amount of payment amounted to P4,533.38. Defendants-appellants wrote the plaintiffs-appellees

a letter requesting the remittance of past due accounts.

Defendants-appellants cancelled the said contract because the plaintiffs-appellees failed to meet
subsequent payments.

Plaintiffs-appellees filed a civil case with the CFI of Rizal to compel the defendants-appellants to execute in
their favor the final deed of sale alleging that after computing all subsequent payments for the land in
question, they found out that they have already paid the total amount of P4,533.38 including interests, realty
taxes and incidental expenses for the registration and transfer of the land.

Defendants-appellants alleged in their answer that failed and refused to pay and/or offer to pay the monthly
installments corresponding to the month of August 1966 for more than five (5) months

The lower court rendered judgment in favor of the plaintiffs-appellees. MR was denied

Issue:
W/N the contract to sell has been automatically and validly cancelled by the defendants-appellants

Held:
According to Lopez v. Commissioner of Customs, a judicial action for the rescission of a contract is not
necessary where the contract provides that it may be revoked and cancelled for violation of any of its terms
and conditions.

According to paragraph 6 of their contract, should a period of 90 days elapse, to begin from the expiration
of the month of grace herein mentioned, and the party of SECOND PART has not paid all the amounts he
should have paid with the corresponding interest up to that date, the party of the FIRST PART has the right
to declare this contract cancelled and of no effect, and as consequence thereof, the party of the FIRST
PART may dispose of the parcel of land covered by this contract in favor of other persons, as if this contract
had never been entered into. (in short a provision in the contract provides a provision for cancellation in
case of a breach of contract)

However, the party who deems the contract violated many consider it resolved or rescinded, and act
accordingly, without previous court action, but it proceeds at its own risk. For it is only the final judgment of
the corresponding court that will conclusively and finally settle whether the action taken was or was not
correct in law.

Article 1234: If the obligation has been substantially performed in good faith, the obligor may recover as
though there had been a strict and complete fulfillment, less damages suffered by the obligee.
The general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only for
such substantial and fundamental breach as would defeat the very object of the parties in making the
agreement

The breach of contract alleged by the defendants-appellants is so slight and casual when we consider that
apart from the initial downpayment of P392.00 the plaintiffs-appellees had already paid the monthly
installments for a period of almost nine (9) years.

Also, by accepting and receiving delayed payments instead of exercising their alleged right to rescind the
contract defendants-appellants have waived their alleged right of rescission and is estopped from exercising
it.

De La Cruz vs. Northern Theatrical Enterprises Inc.

Facts:
Domingo De la Cruz is a special guard at a movie house in Laoag, Ilocos Norte. He has the obligation to to
guard the main entrance of the cine, to maintain peace and order and to report the commission of disorders
within the premises. As such guard he carried a revolver.

Benjamin Martin wanted to crash the gate or entrance of the movie house. Infuriated by the refusal of
plaintiff De la Cruz to let him in without first providing himself with a ticket, Martin attacked him with a bolo.
De la Cruz defended himself as best he could until he was cornered, at which moment to save himself he
shot the gate crasher, resulting in the latter's death

He was charged with two criminal cases of homicide which was dismissed with the help of his attorney
whom he employed.

De la Cruz demanded reimbursement from his former employer but it refused. De la Cruz filed a complaint
with the CFI of Ilocos norte asking for reimbursement for the amounts he had paid his lawyers and moral
damages. CFI dismissed the complaint saying that the plaintiff had no cause of action .

Issues:
W/N De La Cruz is entitled to reimbursement and damages?

Held:
The court held that the employer has no legal obligation to give legal assistance to employees there being
no law to compel the employer to do so.

Damage suffered by the plaintiff by reason of the expenses incurred by him in remunerating his lawyer, is
not caused by his act of shooting to death the gate crasher but rather by the filing of the charge of homicide
which made it necessary for him to defend himself with the aid of counsel. Had no criminal charge been filed
against him, there would have been no expenses incurred or damage suffered

Pelayo vs. Lauron

Facts:
Arturo Pelayo, a physician-residing in Cebu, filed a complaint against Marcelo Lauron and Juana Abella.

He was requested by them to render medical assistance to their daughter-in-law who was about to give birth
to a child., It was found necessary, on account of the difficult birth, to remove the fetus by means of forceps
which operation was performed by the plaintiff, who also had to remove the after birth, in which service he
was occupied until the following morning, and that afterwards, on the same day, he visited the patient
several times; that the just and equitable value of the services rendered by him was P500, which the
defendants refuse to pay without alleging any good reason.

Issue:
W/N the parents-in-law of the patient is obliged to pay her medical expenses?

Held:
No. Obligations arising from law are not presumed. Those expressly determined in the code or in special
laws, etc., are the only demandable ones.

According to the Family Code, The rendering of medical assistance in case of illness is comprised among
the mutual obligations to which spouses are bound by way of mutual support.

The plaintiff, who believes that he is entitled to recover his fees, must direct his action against the husband
who is under obligation to furnish medical assistance to his lawful wife in such an emergency.

FGU Insurance Corporation vs. GP Sarmiento Trucking Corporation

Facts:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of
Condura S.D. white refrigerators aboard one of its Isuzu truck, from the plant site of Concepcion Industries,
Inc. to the Central Luzon Appliances in Dagupan City. During the trip, it collided with an unidentified truck,
causing it to fall into a deep canal, resulting in damage to the cargoes.

FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value
of the covered cargoes. FGU seek reimbursement from GPS but it didnt respond to it.

FGU filed a complaint with the RTC Makati against GPS and its truck driver. GPS filed an answer saying
that they are not engaged in business as a common carrier.

RTC Makati dismissed the complaint due to FGUs failure to present evidence that GPS is a common carrier
or the truck driver is negligent, GPS cannot be made liable for the damages of the subject cargoes.

FGU appealed to the CA and it ruled in favor of the GPS

Issue:
W/N GPS and its truck driver is liable for damages to the cargoes?

Held:
GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc., rendering or offering its
services to no other individual or entity, cannot be considered a common carrier.

However, GPS acknowledging that there have a contract of carriage with FGU, failure deliver the goods in
its custody to the place of destination - gives rise to a presumption of lack of care and corresponding liability
on the part of GPS.

The mere proof of the existence of the contract and the failure of its compliance justify a corresponding right
of relief

Respondent driver, on the other hand, without concrete proof of his negligence or fault, may not himself be
ordered to pay petitioner. The driver, not being a party to the contract of carriage between petitioner's
principal and defendant, may not be held liable under the agreement.

Cathay Pacific vs Vasquez

Facts:
Respondents-spouses Dr. Daniel Earnshaw Vazquez and Maria Luisa Madrigal Vazquez are frequent flyers
of Cathay and are Gold Card members of its Marco Polo Club. The members enjoy several privileges, such
as priority for upgrading of booking without any extra charge whenever an opportunity arises.

Vazquezes, together with their maid and two friends Pacita Cruz and Josefina Vergel de Dios, went to
Hongkong for pleasure and business

For their return flight, they were given Business Class boarding passes for the Vasquezes and their two
friends and a Economy class boarding pass for the maid.

Upon entering, ground attendant Ms. Chiu informed the Vazquezes that they were upgraded to First Class
due to their Marco Polo Club membership. Vazquezes rejected because it would be rude to their guests. Ms.
Chiu informed them that the Business Class is fully booked and if they dont accept the upgrade they will not
be allowed to take the flight. As a result, Vazquezes accepted the upgrade.

Upon their return the Vazquezes wrote a letter to the Cathays Country manager demanding them to pay
P1M pesos for humiliation and embarassment caused by their employees an an apology to Miss Chui.
Cathay promised to investigate and to get back to them in a weeks time.

After the lapse of Cathays self-imposed deadline, the Vazquezes filed an action for damages 250 000 as
temperate damages, 500 000 as moral damages and 250 000 for attorneys fees with the RTC Makati.

RTC rendered a decision ordering Cathay to pay damages to the Vazquezes

On appeal by Cathay, CA reduced the amount of damages to be paid by Cathay but nonetheless affirmed
the decision of the RTC.

By upgrading the Vazquezes to First Class, Cathay novated the contract of carriage without the former's
consent. There was a breach of contract not because Cathay overbooked the Business Class Section of
Flight CX-905 but because the latter pushed through with the upgrading despite the objections of the
Vazquezes

Issues:
1. W/N Cathay breached its contract of carriage with the Vazquezes
2. W/N upgrading was tainted with bad faith
3. W/N Vazquezes are entitled to damages

Held:
1. The contract between the parties was for Cathay to transport the Vazquezes to Manila on a Business
Class accommodation in Flight CX-905. After checking-in their luggage at the Kai Tak Airport in Hong Kong,
the Vazquezes were given boarding cards indicating their seat assignments in the Business Class Section.
However, during the boarding time, when the Vazquezes presented their boarding passes, they were
informed that they had a seat change from Business Class to First Class due to their Marco Polo Club
Membership.

However, just like every other privelege, their priority to be upgraded can be waived. They clearly waived
their priority or preference when they asked that other passengers be given the upgrade. It should not have
been imposed on them over their vehement objection. By insisting on the upgrade, Cathay breached its
contract of carriage with the Vazquezes.

2. Bad faith is a breach of a known duty through some motive or interest or ill will that partakes of the nature
of fraud. The Vazquezes were not induced to agree to the upgrading through insidious words or deceitful
machination or through willful concealment of material facts. Overbooking of the Business Class does not
constitute bad faith.

3. Moral damages predicated upon a breach of contract of carriage may only be recoverable in instances
where the carrier is guilty of fraud or bad faith or where the mishap resulted in the death of a passenger.
Since the breach of contract is not done with bad faith, moral damage cannot be awarded

To award exemplary damages, act of the offender must be accompanied by bad faith or done in wanton,
fraudulent or malevolent manner. Since none of the requisites were present, exemplary damages cannot be
awarded.

Considering that the breach was intended to give more benefit and advantage to the Vazquezes by
upgrading their Business Class accommodation to First Class because of their valued status as Marco Polo
members,award for nominal damages is reduced to P5,000

De La Rosa vs BPI
Facts:
A complaint was filed on the ground that the defendant bank started a contest of designs and plans for the
construction of a building, announcing that the prizes would be awarded not later than on November 30,
1921; that the plaintiff took part in said contest, having performed work and incurred expenses for that
purpose; that said bank refrained from naming judges and awarding the prizes in accordance with the
conditions stipulated.

After trial, the court rendered judgment ordering the defendant bank to pay the plaintiff an indemnity of
P4,000 and the costs.

Both parties appealed

Issue:
W/N the defendant bank was in default in not awarding the prizes on the said date?

Held:
The defendant bank cannot be held to have been in default through the mere lapse of time. For this judicial
or extrajudicial demand was necessary for the performance of the obligation, and it was not alleged here,
nor does it appear that before bringing this action the plaintiff had ever demanded it from the defendant bank
in any manner whatsoever

The plaintiff's allegation that the defendant bank abstained from continuing the contest was not proven. On
the contrary, it was proved, and so stated in the decision appealed from, that during the trial of this case in
the Court of First Instance the designs were on the way to New York where they were sent to a technical
committee

Lorenzo Shipping Corp. vs BJ Marthel International Inc.

Facts:
From 1987 up to the institution of the case, BJ Marthel International Inc. (BMII) supplied Lorenzo Shipping
Corporation (LSC) with spare parts for its marine engines. Sometime in 1989, LSC asked BMII for a
quotation of various machine parts.

Instead of paying the 25% down payment for the first cylinder liner which is stated in the purchase order of
LSC, petitioner issued in favor of respondent ten post dated check to be drawn against the former's account
with Allied Banking Corporation. The checks were supposed to represent the full payment of the
aforementioned cylinder liner.

1st post dated check was dishonored and other 9 post dated checks were returned. LSC claimed that it
replaced the rejected check with a good one.

All items except the two cylinders liners were fully paid by LSC. BMII demanded payment from LSC but it
only offered to pay P150 000 because the cylinders were delivered late.

BMII filed an action for sum of money and damages before the RTC Makati. It alleged that despite its
repeated demands, LSC refused to settle its obligation.

Respondent filed an amended complaint with respect to issuance by petitioner of the postdated checks and
the amounts of damages claimed.

RTC denied the complaint and ordered BMII to pay LSCs attorneys fees

MR was denied for lack of merit

BMII appealed to the CA and the CA reversed RTCs decision. It held that respondent could not have
incurred delay in the delivery of cylinder liners as no demand, judicial or extrajudicial, was made by
respondent upon petitioner.

MR was denied

Issue:
W/N BMII incurred delay considering time is of the essence

Held:
In determining whether time is of the essence in a contract, the ultimate criterion is the actual or apparent
intention of the parties and before time may be so regarded by a court, there must be a sufficient
manifestation, either in the contract itself or the surrounding circumstances of that intention.

Time was not of the essence. The delivery of the cylinder liners on 20 April 1990 was made within a
reasonable period of time considering that respondent had to place the order for the cylinder liners with its
principal in Japan and that the latter was, at that time, beset by heavy volume of work. There having been no
failure on the part of the respondent to perform its obligation, the power to rescind the contract is unavailing
to the petitioner.
Article 1191: The power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him.
People vs Velasco
Facts:
Office of the City Prosecutor of Makati City filed in the RTC two informations charging Inovero, Ma. Harleta
Velasco y Briones, Marissa Diala and Berna Paulino with illegal recruitment and 11 informations charging
the same accused with estafa. Only Inovero was arrested and prosecuted, the other accused having
remained at large.

1 criminal case for illegal recruitment and 5 criminal cases for estafa pursued. Others are dismissed.
Prosecution presented five witnesses for illegal recruitment. RTC acquitted Inovero for five counts of estafa
but convicted her of estafa.

Inovero appealed before the CA

Issue:
W/N Inovero is civilly liable for commiting the crime of illegal recruitment?

Held:
Every criminally liable person is civilly liable. Civil liability includes restitution, reparation of the damage
caused,and indemnification for consequential damages.

The nature of the obligation of the co-conspirators in the commission of the crime requires solidarity,
and each debtor may be compelled to pay the entire obligation. As a co-conspirator, then, Inoveros civil
liability was similar to that of a joint tortfeasor under the rules of the civil law. They are liable as
principals.

Inoveros liability towards the victims of their illegal recruitment was solidary,regardless of
whether she actually received the amount spaid or not, and notwithstanding that her
co-accused,having escaped arrest until now, have remained untried.
Spouses Guanio vs Makati Shangri-la Hotel and Resort
Facts:
spouses Luigi M. Guanio and Anna Hernandez-Guanio had their reception at Shangri-la Hotel Makati.
-Catering Director Bea Marquez and Sales Manager Tessa Alvarez,did not show up
their guests complained of the delay in the service of the dinner
-certain items listed in the published menu were unavailable;
-the hotels waiters were rude and unapologetic when confronted about the delay;
-despite Alvarezs promise that there would be no charge for the extension of the reception beyond 12:00
midnight, they were billed and paid P8,000 per hour for the three-hour extension of the event up to 4:00 A.M.
the next day.
-They brought wine and liquor in accordance with their open bar arrangement, but these were not served to
the guests who were forced to pay for their drinks.

They filed a complaint for breach of contract and damages before the RTC Makati.

RTC rendered a decision ordering Shangri-la Hotel Makati to pay damages

CA reversed RTCs decision holding that the proximate cause of petitioners injury was an unexpected
increase in their guests. MR was denied.

Issue:
W/N there is a breach of contract

Held:
According to a provision in the Banquet and Meeting Services Contract between the parties,In case the
actual number of attendees exceed the minimum guaranteed number by ten percent (10%), the HOTEL
shall not in any way be held liable for any damage or inconvenience which may be caused thereby.

Breach of contract is defined as the failure without legal reason to comply with the terms of a contract. As far
as Shangri-la Hotel Makati is concerned, any damage or inconvenience caused by them is not a breach of
contract because the attendees of the reception exceeded the minimum number by 10% and they failed to
inform the hotel within 48 hours within the scheduled date and time as provided in a provision in the
Banquet and Meeting Services Contract between the parties.

As for petitioners claim that respondent departed from its verbal agreement with petitioners, the same fails,
given that the written contract which the parties entered into the day before the event, being the law between
them.

under considerations of equity, the Court deems it just to award the amount of P50,000.00 by way of
nominal damages to petitioners, for the discomfiture(feeling of unease) that they were subjected to during
the event.
R.S. Thomas Inc. vs. Rizal Cement Company Inc.
Facts:
R.S. Thomas Inc. (RSTI) and Rizal Cement Company Inc. (RCCI) entered into a Contract for the supply of
labor, materials, and technical supervision of the following job-orders:

1. Wiring and installation of primary and secondary lines system.

2. Supply and installation of primary protection and disconnecting switch.
3. Rewinding and conversion of one (1) unit 3125 KVA, 34.5 KV/2.4 KV, 3 Transformer to 4000 KVA, 34.5
KV/480V, 3 Delta Primary, Wye with neutral secondary

RCCI agreed to pay the total sum of P 2,944,000.00 in consideration of the performance of the job orders.
RSTI undertook to complete the projects within one hundred twenty (120) days from the effectivity of the
contract. It was agreed upon that petitioner would be liable to respondent for liquidated damages in the
amount of P29,440.00 per day of delay in the completion of the projects which shall be limited to 10% of the
project cost.To secure the performance of the obligation, RSTI obtained from Times Surety & Insurance Co.
Inc. (Times Insurance) a performance bond in an amount equivalent to fifty percent (50%) of the contract

RSTI requested an extension of 75 days 2 times via letter to RCCI due to unavailability of some materials
needed to finish the job orders. RCCI informed RSTI that it was already in default for failure to finish the job
orders within 120 days. They also informed RSTI that they will terminate the contract and demanded a
refund for the amount already paid. They also sent a demand letter to Times Insurance with respect to the
performance bond it issued.

RCCI entered into two contracts with Geostar Philippines, Inc. (Geostar) for the completion of the projects
commenced but not completed by petitioner for a total consideration of P3,435,000.00

RSTI reiterated its desire to complete the 1st two job orders and to exclude 3rd one but it was denied by
RCCI saying that the amicable settlement is impossible.

RCCI filed a complaint for sum of money against RSTI and Times Insurance for the payment of
downpayments and advancements. 10% of the project cost agreed upon in case of delay and damages.

RTC dismissed the complaint and held that the failure of RSTI to complete the projects was not solely due to
its fault but more on RCCIs misrepresentation and bad faith. The court awarded damages in favor of RSTI.

CA reversed RTCs decision and held that the petitioner failed to prove that respondent made fraudulent
misrepresentation to induce the former to enter into the contract. CA ordered RSTI to pay the excess
payment made by RCCI, liquidated damages, reimbursement of payment to Geostar and the 10% of the
project cost agreed upon in case of delay and damages.

Petitioner appealed before the SC via petition on review for certiorari

Issue:
W/N there was a breach of contract

Held:
RSTI and RCCI entered into a contract for the supply of labor, materials, and technical supervision primarily
for the rewinding and conversion of one (1) unit of transformer and related works aimed at providing the
power needs of RCCI. As agreed upon by the parties, the projects were to be completed within 120 days
from the effectivity of the contract. Admittedly, however, RSTI failed, not only to perform its part of the
contract on time but, in fact, to complete the projects.

Petitioner justified its inability to complete the projects within the stipulated period on the alleged
unavailability of the materials to be used to perform the projects as stated in the job orders. Nowhere in
letters sent to RCCI did RSTI claim that it could not finish the projects, particularly the conversion of the
transformer unit because the defects were worse than the representation of respondent.

It can be inferred from the foregoing facts that there was not only a delay but a failure to complete the
projects as stated in the contract; that petitioner could not complete the projects because it did not have the
materials needed; and that it is in need of financial assistance.
San Fernando Regala Trading vs. Cargill Philippines Inc.
Facts:
Cargill filed a complaint for sum of money and damages against San Fernando before the RTC Makati.

Cargill Philippines, Inc. (Cargill) alleged that on July 15, 1996 it entered into a contract covering its sale to
San Fernando Regala Trading, Inc. of 4,000 metric tons (mt) of molasses at the price of P3,950.00 per mt.
Cargill agreed to deliver the molasses within the months of April to May 1997 at the wharf of Union
Ajinomoto, Inc. (Ajinomoto) along the Pasig River, Metro Manila.

Cargill also entered into a contract covering another sale to San Fernando of 5,000 mt of molasses at
P2,750.00 per mt. The delivery period under this contract was within October-November- December 1996.

Cargill alleged that it offered to deliver the molasses but San Fernando only accepted 951 mt and rejected
1174 mt of molasses with respect to the first contract and refused to accept the delivery with respect the
second contract causing damages by means of unrealized profits and demmurage.

San Fernando alleged that aside from the 951 mt, Cargill made no more deliveries. San Fernandos
President, Kehyeng insisted that San Fernando had always received Cargills deliveries even on occasions
when the prices fluctuated resulting in losses to his company. Due to Cargills failure to deliver, San
Fernando incurred damages by means of unrealized profits with respect to two contracts it entered into with
Union Ajinomoto, Inc.

RTC dismissed Cargills complaint awarding San Fernando of its claims for unrealized profits for both
contracts, moral damages, exemplary damages, attorneys fees and cost of litigation

CA ruled that Cargill was not entirely in breach of contract with respect to the 1st contract but it committed
breach of contract with respect to the second contract. CA awarded Cargill reimbursement for demmurage
and San Fernando only its unrealized profit with respect to the second contract.

Issues:
1. Whether or not the CA erred in ruling that Cargill was not guilty of breach of obligation to deliver the 4,000
mt of molasses covered by Contract 5026 during the period April and May 1997

2. Whether or not the CA erred in ruling that Cargill was guilty of breach of obligation to deliver the 5,000 mt
of molasses covered by Contract 5047 during the period October, November, and December 1996

3. Whether or not the CA erred in deleting the award of moral and exemplary damages, attorneys fees, and
cost of suit in favor of San Fernando.

Held:
1.Cargill only delivered a total of 2,125 mt of molasses during the agreed period, Cargill should be regarded
as having violated Contract 5026 with respect to the undelivered balance of 1,875 mt of molasses.

It is not enough for a seller to show that he is capable of delivering the goods on the date he agreed to make
the delivery. He has to bring his goods and deliver them at the place their agreement called for, i.e., at the
Ajinomoto Pasig River wharf

Cargill presented no evidence that it attempted to make other deliveries to complete the balance of Contract
5026.

2. when Cargill wrote San Fernando on May 14, 1997 proposing to move the delivery dates of this contract
to May, June, and July, 1997, it was already in default. San Fernandos refusal to signify its conformity at the
proper space on Cargills letter-proposal regarding Contract 5047 signifies that it was not amenable to the
change.

San Fernando had good reason for this: it had already agreed to supply Ajinomoto the molasses covered by
Contract 5047 at the rate of P4,950.00 per mt. Consequently, Cargills failure to deliver the 5,000 mt of
molasses on October-November-December 1996 makes it liable to San Fernando for P11,000,000.00 in
unrealized profits. Cargill should pay San Fernando the profit that it lost because of such breach.

Cargill of course points out that San Fernando never wrote a demand letter respecting its failure to make
any delivery under that contract. But demand was not necessary since Cargills obligation under the contract
specified the date and place of delivery, i.e., October-November-December 1996, at the Ajinomoto wharf in
Pasig

3. Moral damages are, as a rule, also not recoverable in culpa contractual except when bad faith had been
proved.14 San Fernando failed to show that Cargill was motivated by bad faith or ill will when it failed to
deliver the molasses as agreed

The court may only award exemplary damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner. The evidence has not sufficiently established that Cargills failure to
deliver the molasses on time was attended by such wickedness

The Court has ruled that San Fernando is not entitled to an award of exemplary damages. Both parties
actually committed shortcomings in complying with their contractual obligations. San Fernando failed in
Contract 5026 to accept Cargills delivery of 1,174 mt of molasses; Cargill only complied partially with its
undertakings under Contract 5026 and altogether breached its obligations under Contract 5047. For these,
they must bear their own expenses of litigation