Tuesday, March 20, 2012

Song Fo and Co., vs. Hawaiian-Philippine Co. [47 SCRA 821 G.R. No. 23769. September 16, 1925]

Facts: Hawaiian-Philippine Co. got into a contract with Song Fo & Co. where it would deliver molasses to the latter. 

Hawaiian-Philippine Co. was able to deliver 55,006 gallons of molasses before the breach of contract. 

SFC filed a complaint for breach of contract against Hawaiian-Philippine Co. and asked P70,369.50. Hawaiian-Philippine Co. answered that there was a delay in the payment from Song Fo & Co. and that Hawaiian-Philippine Co. has the right to rescind the contract due to that and claims it as a special defense. 

The judgment of the trial court condemned Hawaiian-Philippine Co. to pay Song Fo & Co. a total of P35,317.93, with legal interest from the date of the presentation of the complaint, and with costs. 

Issue: 
(1) Did Hawaiian-Philippine Co. agree to sell 400,000 gallons of molasses or 300,000 gallons of molasses? 

(2) Had Hawaiian-Philippine Co. the right to rescind the contract of sale made with Song Fo & Co.? 

(3) On the basis first, of a contract for 300,000 gallons of molasses, and second, of a contract imprudently breached by Hawaiian-Philippine Co., what is the measure of damages? 

Held:

(1) Only 300,000 gallons of molasses was agreed to by Hawaiian-Philippine Co. as seen in the documents presented in court. The language used with reference to the additional 100,000 gallons was not a definite promise. 

(2) With reference to the second question, doubt has risen as to when Song Fo & Co. was supposed to make the payments for the delivery of molasses as shown in the documents presented by the parties. 

The Supreme Court said that Hawaiian-Philippine Co. does not have the right to rescind the contract. It should be noted that the time of payment stipulated for in the contract should be treated as of the presence of the contract. There was only a slight breach of contract when the payment was delayed for 20 days after which Hawaiian-Philippine Co. accepted the payment of the overdue accounts and continued with the contract, waiving its right to rescind the contract. The delay in the payment of Song Fo & Co. was not such a violation for the contract. 

(3) With regard to the third question, the first cause of action of Song Fo & Co. is based on the greater expense to which it was put in being compelled to secure molasses from other sources to which Supreme Court ruled that P3,000 should be paid by Hawaiian-Philippine Co. with legal interest from October 2, 1923 until payment. 

The second cause of action was based on the lost profits on account of the breach of contract. Supreme Court said that Song Fo & Co. is not entitled to recover anything under the second cause of action because the testimony of Mr. Song Heng will follow the same line of thought as that of the trial court which in unsustainable and there was no means for the court to find out what items make up the P14,000 of alleged lost profits. 


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