Solar Harvest, Inc. v. Davao Corrugated Carton Corp.

GR No. 176868, 26 July 2010.

FACTS:
In the first quarter of 1998, petitioner, Solar Harvest, Inc., entered into an agreement with
respondent, Davao Corrugated Carton Corporation, for the purchase of corrugated
carton boxes, specifically designed for petitioners business of exporting fresh bananas.
The agreement was not reduced into writing. To get the production underway, petitioner
deposited, on March 31, 1998, US$40,150.00 in respondents US Dollar Savings Account
with Westmont Bank, as full payment for the ordered boxes.
Despite such payment, petitioner did not receive any boxes from respondent. On
January 3, 2001, petitioner wrote a demand letter for reimbursement of the amount paid.
On February 19, 2001, respondent replied that the boxes had been completed as early
as April 3, 1998 and that petitioner failed to pick them up from the formers warehouse
30 days from completion, as agreed upon. Respondent mentioned that petitioner even
placed an additional order of 24,000 boxes, out of which, 14,000 had been manufactured
without any advanced payment from petitioner. Respondent then demanded petitioner to
remove the boxes from the factory and to pay the balance of US$15,400.00 for the
additional boxes and P132,000.00 as storage fee.
On August 17, 2001, petitioner filed a Complaint for sum of money and damages against
respondent. The Complaint averred that the parties agreed that the boxes will be
delivered within 30 days from payment but respondent failed to manufacture and deliver
the boxes within such time.
In its Answer with Counterclaim, respondent insisted that, as early as April 3, 1998, it
had already completed production of the 36,500 boxes, contrary to petitioners
allegation. According to respondent, petitioner, in fact, made an additional order of
24,000 boxes, out of which, 14,000 had been completed without waiting for petitioners
payment. Respondent stated that petitioner was to pick up the boxes at the factory as
agreed upon, but petitioner failed to do so. Respondent averred that, on October 8,
1998, petitioners representative, Bobby Que (Que), went to the factory and saw that the
boxes were ready for pick up. On February 20, 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 petitioners transaction to ship bananas to China did not
materialize. Respondent claimed that the boxes were occupying warehouse space and
that petitioner should be made to pay storage fee at P60.00 per square meter for every
month from April 1998. As counterclaim, respondent prayed that judgment be rendered
ordering petitioner to pay $15,400.00, plus interest, moral and exemplary damages,
attorneys fees, and costs of the suit.
In its March 2, 2004 Decision, the Regional Trial Court (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.
On September 21, 2006, the CA denied the appeal for lack of merit. The appellate court
held that petitioner failed to discharge its burden of proving what it claimed to be the

parties agreement with respect to the delivery of the boxes. 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:
Whether or not petitioner may claim reimbursement under Article 1191 of the Civil
Code?
HELD:
NO
RATIO:
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 of the same law.
In reciprocal obligations, as in a contract of sale, the general rule is that the fulfillment of
the parties respective obligations should be simultaneous. Hence, no demand is
generally necessary because, once a party fulfills his obligation and the other party does
not fulfill his, the latter automatically incurs in delay. But when different dates for
performance of the obligations are fixed, the default for each obligation must be
determined by the rules given in the first paragraph of the present article, that is, the
other party would incur in delay only from the moment the other party demands
fulfillment of the formers obligation. Thus, even in reciprocal obligations, if the period for
the fulfillment of the obligation is fixed, demand upon the obligee is still necessary before
the obligor can be considered in default and before a cause of action for rescission will
accrue.
Evident from the records and even from the allegations in the complaint was the lack of
demand by petitioner upon respondent to fulfill its obligation to manufacture and deliver
the boxes. The Complaint only alleged that petitioner made a follow-up upon
respondent, which, however, would not qualify as a demand for the fulfillment of the
obligation. Petitioners witness also testified that they made a follow-up of the boxes, but
not a demand. Note is taken of the fact that, with respect to their claim for
reimbursement, the Complaint alleged and the witness testified that a demand letter was
sent to respondent. Without a previous demand for the fulfillment of the obligation,
petitioner would not have a cause of action for rescission against respondent as the
latter would not yet be considered in breach of its contractual obligation.

Spouses Lam v. Kodak Philippines, Ltd.

GR No. 167615, 11 January 2016

FACTS:
ISSUE:
HELD:
RATIO:

The Wellex Group, Inc. v. U-Land Airlines Co., Ltd.

GR No. 167519, 14 January 2015
FACTS:
ISSUE:
HELD:
RATIO:

Casumpang v. Cortejo
GR No. 171127, 11 March 2015
FACTS:
ISSUE:
HELD:
RATIO:

De Carmen v. Spouses Sabordo

GR No. 181723, 11 August 2014

FACTS:
Sometime in 1961, the spouses Suico, along with several business partners, entered
into a business venture by establishing a rice and corn mill at Mandaue City, Cebu. As
part of their capital, they obtained a loan from the Development Bank of the Philippines
(DBP), and to secure the said loan, four parcels of land owned by the Suico spouses,
denominated as Lots 506, 512, 513 and 514, and another lot owned by their business
partner, Juliana Del Rosario, were mortgaged.
Subsequently, the Suico spouses and their business partners failed to pay their loan
obligations forcing DBP to foreclose the mortgage. After the Suico spouses and their
partners failed to redeem the foreclosed properties, DBP consolidated its ownership over
the same. Nonetheless, DBP later allowed the Suico spouses and Flores spouses, as
substitutes for Juliana Del Rosario, to repurchase the subject lots by way of a conditional
sale for the sum of P240,571.00. The Suico and Flores spouses were able to pay the
down payment and the first monthly amortization, but no monthly installments were
made thereafter. Threatened with the cancellation of the conditional sale, the Suico and
Flores spouses sold their rights over the said properties to herein respondents Restituto
and Mima Sabordo, subject to the condition that the latter shall pay the balance of the
sale price. On September 3, 1974, respondents and the Suico and Flores spouses
executed a supplemental agreement whereby they affirmed that what was actually sold
to respondents were Lots 512 and 513, while Lots 506 and 514 were given to them as
usufructuaries. DBP approved the sale of rights of the Suico and Flores spouses in favor
of herein respondents. Subsequently, respondents were able to repurchase the
foreclosed properties of the Suico and Flores spouses.
On September 13, 1976, respondent Restituto Sabordo (Restituto) filed with the then
Court of First Instance an original action for declaratory relief with damages and prayer
for a writ of preliminary injunction raising the issue of whether or not the Suico spouses
have the right to recover from respondents Lots 506 and 514.
In its Decision dated December 17, 1986, the Regional Trial Court (RTC) of San Carlos
City, Negros Occidental, ruled in favor of the Suico spouses directing that the latter have
until August 31, 1987 within which to redeem or buy back from respondents Lots 506
and 514.
In a Resolution dated February 13, 1991, the CA granted the Suico spouses an
additional period of 90 days from notice within which to exercise their option to purchase
or redeem the disputed lots. Later, they discovered that respondents mortgaged Lots
506 and 514 with Republic Planters Bank (RPB) as security for a loan, which,
subsequently, became delinquent.
Thereafter, claiming that they are ready with the payment of P127,500.00, but alleging
that they cannot determine as to whom such payment shall be made, petitioner and her
coheirs filed a Complaint with the RTC of San Carlos City, Negros Occidental seeking to
compel herein respondents and RPB to interplead and litigate between themselves their
respective interests on the above mentioned sum of money. The Complaint also prayed
that respondents be directed to substitute Lots 506 and 514 with other real estate
properties as collateral for their outstanding obligation with RPB and that the latter be
ordered to accept the substitute collateral and release the mortgage on Lots 506 and

514. Upon filing of their complaint, the heirs of Toribio deposited the amount of
P127,500.00 with the RTC of San Carlos City, Branch 59.
On December 5, 2001, the RTC rendered judgment, dismissing the Complaint of
petitioner and her co-heirs for lack of merit. Respondents Counterclaim was likewise
dismissed.
Petitioner and her coheirs filed an appeal with the CA contending that the judicial deposit
or consignation of the amount of P127,500.00 was valid and binding and produced the
effect of payment of the purchase price of the subject lots. In its assailed Decision, the
CA denied the above appeal for lack of merit and affirmed the disputed RTC Decision.
ISSUE:
Whether or not there was a valid consignation.
HELD:
NO
RATIO:
In the cases of Del Rosario v. Sandico, 85 Phil. 170 (1949) and Salvante v. Cruz, 88 Phil.
236 (1951), likewise cited as authority by petitioner, this Court held that, for a
consignation or deposit with the court of an amount due on a judgment to be considered
as payment, there must be prior tender to the judgment creditor who refuses to accept it.
The same principle was reiterated in the later case of Pabugais v. Sahijwani, 423 SCRA
596 (2004). As stated above, tender of payment involves a positive and unconditional act
by the obligor of offering legal tender currency as payment to the obligee for the
formers obligation and demanding that the latter accept the same. In the instant case,
the Court finds no cogent reason to depart from the findings of the CA and the RTC that
petitioner and her coheirs failed to make a prior valid tender of payment to respondents.
Furthermore, the fact that the subject lots are in danger of being foreclosed does not
excuse petitioner and her coheirs from tendering payment to respondents, as directed by
the court.

BPI v. Domingo

GR No. 169407, 25 March 2015

FACTS:
ISSUE:
HELD:
RATIO:

Spouses Mamaril v. The Boy Scout of the Philippines

GR No. 179382, 14 January 2013

FACTS:
Spouses Mamaril arejeepneyoperatorssince1971.Theywould

parktheirsix(6)passengerjeepneyseverynightattheBoy
ScoutofthePhilippines(BSP)compoundlocatedat181
ConcepcionStreet,Malate,Manilaforafee.OnMay26,1995
at8intheevening,allthesevehicleswereparkedinsidethe
BSPcompound.Thefollowingmorning,however,oneofhe
vehicleswithPlateNo.DCG392wasmissingandwasnever
recovered.AccordingtothesecurityguardsCesarioPea
(Pea)andVicenteGaddi(Gaddi)ofAIBSecurityAgency,
Inc.(AIB)withwhomBSPhadcontractedforitssecurityand
protection,amalepersonwholookedfamiliartothemtookthe
subjectvehicleoutofthecompound.
Sps.Mamarilfiledacomplaintfordamagesbeforethe
RegionalTrialCourt(RTC)ofManila,Branch39,against
BSP,AIB,PeaandGaddi.Insupportthereof,Sps.Mamaril
averredthatthelossofthesubjectvehiclewasduetothegross
negligenceoftheabovenamedsecurityguardsondutywho
allowedthesubjectvehicletobedrivenoutbyastranger
despitetheiragreementthatonlyauthorizeddriversduly
endorsedbytheownerscoulddoso.PeaandGaddieven
admittedtheirnegligenceduringtheensuinginvestigation.
Notwithstanding,BSPandAIBdidnotheedSps.Mamarils
demandsforaconferencetosettlethematter.Theytherefore
prayedthatPeaandGaddi,togetherwithAIBandBSP,be
heldliable.
InitsAnswer,BSPdeniedanyliabilitycontendingthatnot
onlydidSps.MamarildirectlydealwithAIBwithrespectto
themannerbywhichtheparkedvehicleswouldbehandled,

buttheparkingticketitselfexpresslystatedthatthe
Managementshallnotberesponsibleforlossofvehicleor
anyofitsaccessoriesorarticlelefttherein.Italsoclaimed
thatSps.MamarilerroneouslyreliedontheGuardService
Contract.Apartfromnotbeingpartiesthereto,itsprovisions
coveronlytheprotectionofBSPsproperties,itsofficers,and
employees.
TheRTCfoundthattheactofPeaandGaddiinallowingthe
entryofanunidentifiedpersonandlettinghimdriveoutthe
subjectvehicleinviolationoftheirinternalagreementwith
Sps.Mamarilconstitutedgrossnegligence,renderingAIBand
itssecurityguardsliablefortheformersloss.BSPwasalso
adjudgedliablebecausetheGuardServiceContractitentered
intowithAIBofferedprotectiontoallpropertiesinsidethe
BSPpremises,whichnecessarilyincludedSps.Mamarils
vehicles.Moreover,thesaidcontractstipulatedAIBs
obligationtoindemnifyBSPforalllossesordamagesthatmay
becausedbyanyactornegligenceofitssecurityguards.
Accordingly,theBSP,AIB,andsecurityguardsPeaand
Gaddiwereheldjointlyandseverallyliablefortheloss
sufferedbySps.Mamaril.
InitsassailedDecision,theCAaffirmedthefindingof
negligenceonthepartofsecurityguardsPeaandGaddi.
However,itabsolvedBSPfromanyliability,holdingthatthe
GuardServiceContractispurelybetweenBSPandAIBand
thattherewasnothingthereinthatwouldindicateany
obligationand/orliabilityonthepartofBSPinfavorofthird
persons,suchasSps.Mamaril.Norwasthereevidence
sufficienttoestablishthatBSPwasnegligent.

ISSUE:
HELD:
RATIO:

Lorenzo Shipping v. BJ Marthel Intenational, Inc.

GR No. 145483, 19 November 2004
FACTS:
ISSUE:
HELD:
RATIO:
Land Bank of the Philippines v. Ong
GR No. 190755, 19 November 2004
FACTS:
ISSUE:
HELD:
RATIO:

New World Developers and Management Inc. v. AMA Computer Center, Inc.
GR No. 187930, 23 February 2015
FACTS:
ISSUE:
HELD:
RATIO: