Song fo vs Hawaiian philippines,47 phil 821

FACTS: Hawaiian Philippine Co. agreed to deliver a certain amount of molasses to Song Fo.
Song Fo claimed in trial court that Hawaiian Phil. Co. breached the contract and claimed
damages for greater expense, and lost profits incurred by the breach. Hawaiian Philippine Co.
contended that Song Fo defaulted in payment. Therefore, it was forced to rescind the contract.

The Court of First Instance ruled in favor of Song Fo, awarding 35,000 pesos in damages.
Hawaiian Philippine Co. appealed, arguing that the agreed amount was only 300,000 gallons and
not 400,000 gallons, and that it had a right to rescind the contract because Song Fo had paid later
than agreed upon.

ISSUES:

1. Did the Hawaiian Philippine Co have a right to rescind the contract because of Song Fo’s
late payment? – NO.
2. Is the amount of damages awarded to Song Fo correct? – NO.

RATIO:Hawaiian Philippine Co. only had no right to rescind since the breach is not
substantial.

From the evidence presented, it is clear that Song Fo & Company was to pay the Hawaiian-
Philippine Co. upon presentation of accounts at the end of each month. Song Fo should have paid
on January 1922 based on the timetable, but instead did so only in February. However, this is
merely a casual breach, not a substantial one. “Rescission will not be permitted for a slight or
casual breach of the contract, but only for such breaches as are so substantial and fundamental as
to defeat the object of the parties in making the agreement.” Not only this, but the Hawaiian-
Philippine Co. waived this condition by accepting payment of the overdue accounts and
continuing with the contract. Thereafter, Song Fo & Company was not in default in payment so
that the Hawaiian-Philippine co. had in reality no excuse for writing its letter of April 2, 1923,
cancelling the contract. Hawaiian Philippine Co. had no legal right to rescind the contract.

Song Fo can only recover the difference in what it paid to other suppliers and what is agreed
upon in the contract.

Essentially, Song Fo was forced to buy from two other companies, aside from Hawaiian
Philippine Co., because of the latter’s breach of contract. Song Fo bought molasses from Central
North Negros Sugar Co. at the same rate as the respondent, so there are no damages incurred in
this purchase. However, Song Fo bought from Central Victorias Milling at 1.5 cents more than
Hawaiian Philippine’s rate. Hence, Song Fo can claim 3,000 pesos in damages.

As to lost profits, there is no conclusive evidence as to this claim. The only evidence presented is
based on out-of-court testimony by the manager of Song Fo (Mr. Song Heng) that the breach had
resulted in loss of 14,000 pesos in profit. Hence, it could not form as the basis for the award of
lost profits.
Filoil Refinery Corp., Petrophil Corp. and Filoil Marketing Corp. vs. Hon. Mendoza and Hon. Zosa, in
their capacity as Judge of Branch V of CFI of Cebu, Jesus P. Garcia and Severina B. Garcia
G.R. No. L-55526, June 15, 1987
Facts:
The private respondents, Jesus P. Garcia and Severina B. Garcia, entered into a lease contract with Filoil
Refinery Corporation to lease a lot in Cebu City. Filoil Refinery Corp. violated the terms and conditions of
the lease agreement when it subleased it to Filoil Marketing Corp. and subsequently the latter subleased
it to Petrophil Corp. The petitioner also delayed several monthly rental payments. This caused the
private respondents to file a case to rescind the contract of lease. The lower court ruled in favour of the
private respondents finding that the petitioner illegally subleased the lot. On appeal, the Court of
Appeals affirmed the lower court’s ruling where their motion for reconsideration was denied due to
their failure to amend or to complete their record on appeal. Hence, the petitioner filed the petition
before the Supreme Court.
Issues:
Whether or not the petitioners timely perfected their appeal?
Held: Yes.
Ratio:
 It is a fact that petitioners filed their record on appeal well within the reglementary period and that
the lower court never issued an order declaring the Record on Appeal incomplete or defective nor
an order ordering petitioners to complete or correct the same. The lower court did not act on the
record on appeal filed by petitioners despite the opposition of the private respondents to the
approval of the same.
Whether or not there was a violation of the terms of the lease contract?
Held: No.
Ratio:
 An examination of the lease contract reveals that there is no express prohibition against the
assignment of the leasehold right. Under the law, when there is no express prohibition, the lessee
may sublet the thing leased and all rights acquired by virtue of an obligation are transmissible, if
there has been no stipulation to the contrary.
Whether or not there was delay in payment?
Held: Yes.
Petitioners admit that on a few occasions, they were late in paying the rentals which were due within
the first 15 days of each month but their delay was only for a few days. The delayed rentals for the
months of May, July, August and September, 1974 were remitted to private respondents on May 21,
July 19, August 19 and September 16, 1974, respectively. Such breaches were not so substantial and
fundamental as to defeat the object of the parties in making the agreement because the law is not
concerned with such trifles.
Whether or not the case has become moot and academic?
Held: Yes.
All these arguments however have become moot and academic considering that the contract of lease
sought to be rescinded expired or terminated last September 16, 1982 or almost 5 years ago by its own
terms as provided for in the Lease Contract. Petitioners have won the case without the necessity of an
order by this Court to reverse the judgment of the respondent court and/or to grant the petition as
prayed for.