You are on page 1of 9

Subject : Sulfuric Acid Shipment

Republic of the Philippines


SUPREME COURT Gentlemen:
Manila This is to confirm our agreement to
SECOND DIVISION supply your Sulfuric Acid requirement
under the following terms and
conditions:
G.R. No. 108129 September 23, 1999
A. Commodity : Sulfuric Acid in
AEROSPACE CHEMICAL INDUSTRIES, INC., Bulk
petitioner,
B. Concentration : 98-99%
vs.
H2SO4
COURT OF APPEALS, PHILIPPINE PHOSPHATE
FERTILIZER, CORP., respondents. C. Quantity : 500 MT-100 MT
Ex-Basay
400 MT Ex-Sangi
QUISUMBING, J.:
D. Price : US$ 50.00/MT-FOB
This petition for review assails the Decision 1 dated
Cotcot,
August 19, 1992, of the Court of Appeals, which set
aside the judgment of the Regional Trial Court of Basay, Negros Or.
Pasig, Branch 151. The case stemmed from a US$ 54.00/MT-FOB Sangi, Cebu
complaint filed by the buyer (herein petitioner)
against the seller (private respondent) for alleged E. Payment : Cash in Philippine
breach of contract. Although petitioner prevailed in currencypayable to Philippine
the trial court, the appellate court reversed and Phosphate Fertilizer Corp.
instead found petitioner guilty of delay and (MAKATI) at PCIB selling rate at
therefore liable for damages, as follows: the time of payment at least
five (5) ays prior to shipment
WHEREFORE, the Decision of the date.
court a quo is SET ASIDE and a new
one rendered, dismissing the F. Shipping Conditions
complaint with costs against the 1. Laycan : July
plaintiff (herein petitioner) and, on the
counterclaim, ordering the plaintiff 2. Load port : Cotcot,
Aerospace Chemical Industries, Inc. to Basay, Negros
pay the defendant, Philippine Or. and
Phosphate Fertilizer Corporation the Atlas Pier, Sangi, Cebu
sum of P324,516.63 representing the
xxx xxx xxx
balance of the maintenance cost and
tank rental charges incurred by the 11. Other terms and Conditions: To be
defendant for the failure of the mutually agreed upon.
plaintiff to haul the rest of the rest of
Very truly yours,
the sulfuric acid on the designated
date. Philippine Phosphate Fertilizer Corp.
Costs against plaintiff-appellee. 2 Signed: Herman J. Rustia
As gleaned from the records, the following are the Sr. Manager, Materials & Logistics
antecedents: CONFORME:
On June 27, 1986, petitioner Aerospace Industries, AEROSPACE INDUSTRIES, INC.
Inc. (Aerospace) purchased five hundred (500)
metric tons of sulfuric acid from private respondent Signed: Mr. Melecio Hernandez
Philippine Phosphate Fertilizer Corporation Manager
(Philphos). The contract 3 was in letter-form as
follows: Initially set beginning July 1986, the agreement
provided that the buyer shall pay its purchases in
27 June 1986 equivalent Philippine currency value, five days prior
AEROSPACE INDUSTRIES INC. to the shipment date. Petitioner as buyer committed
to secure the means of transport to pick-up the
203 E. Fernandez St. purchases from private respondent's loadports. Per
San Juan, Metro Manila agreement, one hundred metric tons (100 MT) of
sulfuric acid should be taken from Basay, Negros
Attention: Mr. Melecio Hernandez
Oriental storage tank, while the remaining four
Manager
hundred metric tons (400 MT) should be retrieved the lifting of the total 500 MT be
from Sangi, Cebu. centered/confined to only one safe
berth which is Atlas Pier, Sangi, Cebu.
On August 6, 1986, private respondent sent an 7
advisory letter 4 to petitioner to withdraw the
sulfuric acid purchased at Basay because private March 20, 1987
respondent had been incurring incremental expense This refers to the remaining balance
of two thousand (P2,000.00) pesos for each day of of the above product quantity which
delay in shipment. were not loaded to the authorized
On October 3, 1986, petitioner paid five hundred cargo vessel, M/T Sultan Kayumanggi
fifty-three thousand, two hundred eighty at your load port — Sangi, Toledo
(P553,280.00) pesos for 500 MT of sulfuric acid. City.
On November 19, 1986, petitioner chartered M/T Please be advised that we will be
Sultan Kayumanggi, owned by Ace Bulk Head getting the above product quantity
Services. The vessel was assigned to carry the within the month of April 1987 and we
agreed volumes of freight from designated loading are arranging for a 500 MT Sulfuric
areas. M/T Kayumanggi withdrew only 70.009 MT of Acid inclusive of which the remaining
sulfuric acid from Basay because said vessel heavily balance: 272.49 MT an additional
tilted on its port side. Consequently, the master of product quantity thereof of 227.51
the ship stopped further loading. Thereafter, the MT. 8
vessel underwent repairs. Petitioner's letter 9 dated May 15, 1987, reiterated
5
In a demand letter dated December 12, 1986, the same request to private respondent.
private respondent asked petitioner to retrieve the On January 25, 1988, petitioner's counsel, Atty.
remaining sulfuric acid in Basay tanks so that said Pedro T. Santos, Jr., sent a demand letter 10 to
tanks could be emptied on or before December 15, private respondent for the delivery of the 272.49 MT
1986. Private respondent said that it would charge of sulfuric acid paid by his client, or the return of the
petitioner the storage and consequential costs for purchase price of three hundred seven thousand
the Basay tanks, including all other incremental five hundred thirty (P307,530.00) pesos. Private
expenses due to loading delay, if petitioner failed to
respondent in reply, 11 on March 8, 1988, instructed
comply. petitioner to lift the remaining 30 MT of sulfuric acid
On December 18, 1986, M/T Sultan Kayumanggi from Basay, or pay maintenance and storage
docked at Sangi, Cebu, but withdrew only 157.51 MT expenses commencing August 1, 1986.
of sulfuric acid. Again, the vessel tilted. Further On July 6, 1988, petitioner wrote another letter,
loading was aborted. Two survey reports conducted insisting on picking up its purchases consisting of
by the Societe Generale de Surveillance (SGS) Far 272.49 MT and an additional of 227.51 MT of sulfuric
East Limited, dated December 17, 1986 and January acid. According to petitioner it had paid the
2, 1987, attested to these occurrences. chartered vessel for the full capacity of 500 MT,
Later, on a date not specified in the record, M/T stating that:
Sultan Kayumanggi sank with a total of 227.51 MT With regard to our balance of sulfuric
of sulfuric acid on board.1âwphi1.nêt acid — product at your shore
Petitioner chartered another vessel, M/T Don Victor, tank/plant for 272.49 metric ton that
with a capacity of approximately 500 MT. 6 On was left by M/T Sultana Kayumanggi
January 26 and March 20, 1987, Melecio Hernandez, due to her sinking, we request for an
acting for the petitioner, addressed letters to private additional quantity of 227.51 metric
respondent, concerning additional orders of sulfuric ton of sulfuric acid, 98%
acid to replace its sunken purchases, which letters concentration.
are hereunder excerpted: The additional quantity is requested
January 26, 1987 in order to complete the shipment, as
the chartered vessel schedule to lift
xxx xxx xxx
the high grade sulfuric acid product is
We recently charter another vessel contracted for her full capacity/load
M/T DON VICTOR who will be which is 500 metric tons more or less.
authorized by us to lift the balance
We are willing to pay the additional
approximately 272.49 MT.
quantity — 227.51 metric tons high
We request your goodselves to grant grade sulfuric acid in the prevailing
us for another Purchase Order with price of the said product. 12
quantity of 227.51 MT and we are
xxx xxx xxx
willing to pay the additional order at
the prevailing market price, provided
By telephone, petitioner requested private —————— ——————
respondent's Shipping Manager, Gil Belen, to get its Receivable/Counterclaim
additional order of 227.51 MT of sulfuric acid at (P324,516.63)
Isabel, Leyte. 13 Belen relayed the information to his
associate, Herman Rustia, the Senior Manager for ===========
Imports and International Sales of private Trial ensued and after due proceedings, judgment
respondent. In a letter dated July 22, 1988, Rustia was rendered by the trial court in petitioner's favor,
replied: disposing as follows:
Subject: Sulfuric Acid Ex-Isabel WHEREFORE, judgment is hereby
Gentlemen: rendered in favor of plaintiff and
against defendant, directing the latter
Confirming earlier telcon with our Mr. to pay the former the following sums:
G.B. Belen, we regret to inform you
that we cannot accommodate your 1. P306,060.77 —
request to lift Sulfuric Acid ex-Isabel representing the value
due to Pyrite limitation and delayed of the undelivered
arrival of imported Sulfuric Acid from 272.49 metric tons of
Japan. 14 sulfuric acid plaintiff
paid to defendant;
On July 25, 1988, petitioner's counsel wrote to
private respondent another demand letter for the 2. P91,818.23 —
delivery of the purchases remaining, or suffer representing unrealized
tedious legal action his client would commence. profits, both items with
12% interest per
On May 4, 1989, petitioner filed a complaint for annum from May 4,
specific performance and/or damages before the 1989, when the
Regional Trial Court of Pasig, Branch 151. Private complaint was filed
respondent filed its answer with counterclaim, until fully paid;
stating that it was the petitioner who was remiss in
the performance of its obligation in arranging the 3. P30,000.00 — as
shipping requirements of its purchases and, as a exemplary damages;
consequence, should pay damages as computed and
below: 4. P30,000.00 — as
Advanced Payment by Aerospace attorney's fees and
(Oct. 3, 1986) P553,280.00 litigation expenses,
both last items also
Less Shipments with 12% interest per
70.009 MT sulfuric acid annum from date
P72,830.36 hereof until fully paid.
151.51 MT sulfuric acid Defendant's counterclaims are hereby
176,966.27 dismissed for lack of merit.
(249,796.63) Costs against defendant. 15

—————— —————— In finding for the petitioner, the trial court held that
Balance P303,483.37 the petitioner was absolved in its obligation to pick-
up the remaining sulfuric acid because its failure
Less Charges
was due to force majeure. According to the trial
Basay Maintenance court, it was private respondent who committed a
Expense breach of contract when it failed to accommodate
from Aug. 15 to Dec. the additional order of the petitioner, to replace
15, 1986 those that sank in the sea, thus:

(P2,000.00/day x 122 To begin with, even if we assume that


days) P244,000.00 it is incumbent upon the plaintiff to
"lift" the sulfuric acid it ordered from
Sangi — Tank Rental defendant, the fact that force
from Aug. 15, 1986 to majeure intervened when the vessel
Aug. 15, 1987 which was previouly (sic) listing, but
which the parties, including a
(P32,000.00/mo. x 12 representative of the defendant, did
mos.) 384,000.00 not mind, sunk, has the effect of
(628,000.00) absolving plaintiff from "lifting" the
sulfuric acid at the designated load We find no basis for the decision of
port. But even assuming the plaintiff the trial court to make the defendant
cannot be held entirely blameless, the liable to the plaintiff not only for the
allegation that plaintiff agreed to a cost of the sulfuric acid, which the
payment of a 2,000-peso incremental plaintiff itself failed to haul, but also
expenses per day to defendant for for unrealized profits as well as
delayed "lifting has not been proven." exemplary damages and attorney's
... fees. 17
Also, if it were true that plaintiff is Respondent Court of Appeals found the petitioner
indebted to defendant, why did guilty of delay and negligence in the performance of
defendant accept a second additional its obligation. It dismissed the complaint of
order after the transaction in petitioner and ordered it to pay damages
litigation? Why also, did defendant representing the counterclaim of private
not send plaintiff statements of respondent.
account until after 3 years? The motion for reconsideration filed by petitioner
All these convince the Court that was denied by respondent court in its Resolution
indeed, defendant must return what dated December 21, 1992, for lack of merit.
plaintiff has paid it for the goods Petitioner now comes before us, assigning the
which the latter did not actually following errors:
receive. 16
I.
On appeal by private respondent, the Court of
Appeals reversed the decision of the trial court, as RESPONDENT COURT OF APPEALS
follows: ERRED IN NOT HOLDING PRIVATE
RESPONDENT TO HAVE COMMITTED A
Based on the facts of this case as BREACH OF CONTRACT WHEN IT IS
hereinabove set forth, it is clear that NOT DISPUTED THAT PETITIONER
the plaintiff had the obligation to PAID IN FULL THE VALUE OF 500 MT
withdraw the full amount of 500 MT of OF SULFURIC ACID TO PRIVATE
sulfuric acid from the defendant's RESPONDENT BUT THE LATTER WAS
loadport at Basay and Sangi on or ABLE TO DELIVER TO PETITIONER
before August 15, 1986. As early as ONLY 227.51 M.T.
August 6, 1986 it had been
accordingly warned by the defendant II.
that any delay in the hauling of the RESPONDENT COURT OF APPEALS
commodity would mean expenses on GRAVELY ERRED IN HOLDING
the part of the defendant amounting PETITIONER LIABLE FOR DAMAGES TO
to P2,000.00 a day. The plaintiff sent PRIVATE RESPONDENT ON THE BASIS
its vessel, the "M/T Sultan OF A XEROX COPY OF AN ALLEGED
Kayumanggi", only on November 19, AGREEMENT TO HOLD PETITIONER
1987. The vessel, however; was not LIABLE FOR DAMAGES FOR THE
capable of loading the entire 500 MT DELAY WHEN PRIVATE RESPONDENT
and in fact, with its load of only FAILED TO PRODUCE THE ORIGINAL IN
227.519 MT, it sank. CONTRAVENTION OF THE RULES ON
Contrary to the position of the trial EVIDENCE.
court, the sinking of the "M/T Sultan III.
Kayumanggi" did not absolve the
plaintiff from its obligation to lift the RESPONDENT COURT OF APPEALS
rest of the 272.481 MT of sulfuric acid ERRED IN FAILING TO CONSIDER THE
at the agreed time. It was the UNDISPUTED FACTS THAT
plaintiff's duty to charter another PETITIONER'S PAYMENT FOR THE
vessel for the purpose. It did contract GOODS WAS RECEIVED BY PRIVATE
for the services of a new vessel, the RESPONDENT WITHOUT ANY
"M/T Don Victor", but did not want to QUALIFICATION AND THAT PRIVATE
lift the balance of 272.481 MT only RESPONDENT ENTERED INTO
but insisted that its additional order of ANOTHER CONTRACT TO SUPPLY
227.51 MT be also given by the PETITIONER 227.519 MT OF SULFURIC
defendant to complete 500 MT. ACID IN ADDITION TO THE
apparently so that the vessel may be UNDELIVERED BALANCE AS PROOF
availed of in its full capacity. THAT ANY DELAY OF PETITIONER WAS
xxx xxx xxx
DEEMED WAIVED BY SAID ACTS OF hence
RESPONDENT. prior
delay, if
IV.
any, had
RESPONDENT COURT OF APPEALS been
ERRED IN NOT CONSIDERING THE waived?
LAW THAT WHEN THE SALE INVOLVES
2. Did the respondent
FUNGIBLE GOODS AS IN THIS CASE
court err in awarding
THE EXPENSES FOR STORAGE AND
damages to private
MAINTENANCE ARE FOR THE
respondent?
ACCOUNT OF THE SELLER (ARTICLE
1504 CIVIL CODE). 3. Should expenses for
the storage and
V.
preservation of the
RESPONDENT COURT OF APPEALS purchased fungible
ERRED IN FAILING TO RENDER goods, namely sulfuric
JUDGMENT FOR PETITIONER acid, be on seller's
AFFIRMING THE DECISION OF THE account pursuant to
TRIAL COURT. Article 1504 of the Civil
From the assigned errors, we synthesize the Code?
pertinent issues raised by the petitioner as follows: To resolve these issues, petitioner urges us to
1. Did the respondent review factual findings of respondent court and its
court err in holding that conclusion that the petitioner was guilty of delay in
the petitioner the performance of its obligation. According to
committed breach of petitioner, that conclusion is contrary to the factual
contract, considering evidence. It adds that respondent court disregarded
that: the rule that findings of the trial court are given
weight, with the highest degree of respect. Claiming
a) the that respondent court's findings conflict with those
petitioner of the trial court, petitioner prays that the trial
allegedly court's findings be upheld over those of the
paid the appellate court.
full value
of its Petitioner argues that it paid the purchase price of
purchase sulfuric acid, five (5) days prior to the withdrawal
s, yet thereof, or on October 3, 1986, hence, it had
received complied with the primary condition set in the sales
only a contract. Petitioner claims its failure to pick-up the
portion of remaining purchases on time was due to a storm, a
said force majeure, which sank the vessel. It thus claims
purchase exemption from liability to pay damages. Petitioner
s? also contends that it was actually the private
respondent's shipping officer, who advised
b) petitioner to buy the additional 227.51 MT of sulfuric
petitioner acid, so as to fully utilize the capacity of the vessel
and it chartered. Petitioner insists that when its ship was
private ready to pick-up the remaining balance of 272.49
responde MT of sulfuric acid, private respondent could not
nt comply with the contract commitment due to "pyrite
allegedly limitation."
had also
agreed While we agree with petitioner that when the
for the findings of the Court of Appeals are contrary to
purchase those of the trial court, this Court may review
18

and those findings, we find the appellate court's


supply of conclusion that petitioner violated the subject
an contract amply supported by preponderant
additiona evidence. Petitioner's claim was predicated merely
l 227.519 on the allegations of its employee, Melecio
MT of Hernandez, that the storm or force majeure caused
sulfuric the petitioner's delay and failure to lift the cargo of
acid, sulfuric acid at the designated loadports. In
contrast, the appellate court discounted Hernandez' These two vital pieces of information were totally
assertions. For on record, the storm was not the ignored by trial court. The appellate court correctly
proximate cause of petitioner's failure to transport took these into account, significantly. As to the
its purchases on time. The survey report submitted weather condition in Basay, the appellate court
by a third party surveyor, SGS Far East Limited, accepted surveyor Rabe's testimony, thus:
revealed that the vessel, which was unstable, was Q. Now, Mr. Witness,
incapable of carrying the full load of sulfuric acid. what was the weather
Note that there was a premature termination of condition then at
loading in Basay, Negros Oriental. The vessel had to Basay, Negros Oriental
undergo several repairs before continuing its during the loading
voyage to pick-up the balance of cargo at Sangi, operation of sulfuric
Cebu. Despite repairs, the vessel still failed to carry acid on board the
the whole lot of 500 MT of sulfuric acid due to ship Sultana Kayumanggi?
defects like listing to one side. Its unfortunate
sinking was not due to force majeure. It sunk A. Fair, sir. 21

because it was, based on SGS survey report, Since the third party surveyor was neither
unstable and unseaworthy. petitioner's nor private respondent's employee, his
Witness surveyor Eugenio Rabe's incident report, professional report should carry more weight than
dated December 13, 1986 in Basay, Negros Oriental, that of Melecio Hernandez, an employee of
elucidated this point: petitioner. Petitioner, as the buyer, was obligated
under the contract to undertake the shipping
Loading was started at 1500hrs. requirements of the cargo from the private
November 19. At 1600Hrs. November respondent's loadports to the petitioner's
20, loading operation was temporarily designated warehouse. It was petitioner which
stopped by the vessel's master due to chartered M/T Sultan Kayumanggi. The vessel was
ships stability was heavily tilted to petitioner's agent. When it failed to comply with the
port side, ship's had tried to transfer necessary loading conditions of sulfuric acid, it was
the loaded acid to stbdside but failed incumbent upon petitioner to immediately replace
to do so, due to their auxiliary pump M/T Sultan Kayumanggi with another seaworthy
on board does not work out for acid. vessel. However, despite repeated demands,
xxx xxx xxx petitioner did not comply seasonably.
Note. Attending surveyor arrived BMC Additionally, petitioner claims that private
Basay on November 22, due to respondent's employee, Gil Belen, had
delayed advice of said vessel recommended to petitioner to fully utilize the
Declared quantity loaded onboard vessel, hence petitioner's request for additional
based on data's provided by order to complete the vessel's 500 MT capacity. This
PHILPHOS representative. claim has no probative pertinence nor solid basis. A
party who asserts that a contract of sale has been
On November 26, two representative
changed or modified has the burden of proving the
of shipping company arrived Basay to
change or modification by clear and convincing
assist the situation, at 1300Hrs
evidence. 22 Repeated requests and additional
repairing and/or welding of tank
orders were contained in petitioner's letters to
number 5 started at 1000Hrs
private respondent. In contrast, Belen's alleged
November 27, repairing and/or
action was only verbal; it was not substantiated at
welding was suspended due to the
all during the trial. Note that, using the vessel to full
explosion of tank no. 5. Explosion
capacity could redound to petitioner's advantage,
ripped about two feet of the double
not the other party's. If additional orders were at the
bottom tank.
instance of private respondent, the same must be
November 27 up to date no progress properly proved together with its relevance to the
of said vessel. 19 question of delay. Settled is the principle in law that
While at Sangi, Cebu, the vessel's condition (listing) proof of verbal agreements offered to vary the
did not improve as the survey report therein noted: terms of written agreements is inadmissible, under
the parol evidence rule. 23 Belen's purported
Declared quantity loaded on board recommendation could not be taken at face value
was based on shore tank withdrawal and, obviously, cannot excuse petitioner's default.
due to ship's incomplete tank
calibration table. Barge displacement Respondent court found petitioner's default
cannot be applied due to ship was unjustified, and on this conclusion we agree:
listing to Stboard side which has been It is not true that the defendant was
loaded with rocks to control her not in a position to deliver the
stability. 20 272.481 MT which was the balance of
the original 500 MT purchased by the In order that the debtor may be in default, it is
plaintiff. The whole lot of 500 MT was necessary that the following requisites be present:
ready for lifting as early as August 15, (1) that the obligation be demandable and already
1986. What the defendant could not liquidated; (2) that the debtor delays performance;
sell to the plaintiff was the additional and (3) that the creditor requires the performance
227.51 MT which said plaintiff was judicially or extrajudicially. 27
ordering, for the reason that the In the present case, private respondent required
defendant was short of the supply petitioner to ship out or lift the sulfuric acid as
needed. The defendant, however, had agreed, otherwise petitioner would be charged for
no obligation to agree to this the consequential damages owing to any delay. As
additional order and may not be stated in private respondent's letter to petitioner,
faulted for its inability to meet the dated December 12, 1986:
said additional requirements of the
plaintiff. And the defendant's Subject: M/T "KAYUMANGGI"
incapacity to agree to the delivery of Gentlemen:
another 227.51 MT is not a legal
justification for the plaintiffs refusal to This is to reiterate our telephone
lift the remaining 272.481. advice and our letter HJR-8612-031
dated 2 December 1986 regarding
It is clear from the plaintiff's letters to your sulfuric acid vessel, M/T
the defendant that it wanted to send "KAYUMANGGI".
the "M/T Don Victor" only if the
defendant would confirm that it was As we have, in various instances,
ready to deliver 500 MT. Because the advised you, our Basay wharf will
defendant could not sell another have to be vacated 15th December
227.51 MT to the plaintiff, the latter 1986 as we are expecting the arrival
did not send a new vessel to pick up of our chartered vessel purportedly to
the balance of the 500 MT originally haul our equipments and all other
contracted for by the parties. This, remaining assets in Basay. This
inspite the representations made by includes our sulfuric acid tanks. We
the defendant for the hauling thereof regret, therefore, that if these tanks
as scheduled and its reminders that are not emptied on or before the 15th
any expenses for the delay would be of December, we either have to
for the account of the plaintiff. 24 charge you for the tanks waiting time
at Basay and its consequential costs
We are therefore constrained to declare that the (i.e. chartering of another vessel for
respondent court did not err when it absolved its second pick-up at Basay, handling,
private respondent from any breach of contract. etc.) as well as all other incremental
Our next inquiry is whether damages have been costs on account of the protracted
properly awarded against petitioner for its loading delay. 28 (Emphasis supplied)
unjustified delay in the performance of its obligation Indeed the above demand, which was unheeded,
under the contract. Where there has been breach of justifies the finding of delay. But when did such
contract by the buyer, the seller has a right of action delay begin? The above letter constitutes private
for damages. Following this rule, a cause of action of respondent's extrajudicial demand for the petitioner
the seller for damages may arise where the buyer to fulfill its obligation, and its dateline is significant.
refuses to remove the goods, such that buyer has to Given its date, however, we cannot sustain the
remove them. 25 Article 1170 of the Civil Code finding of the respondent court that petitioner's
provides: delay started on August 6, 1986. The Court of
Those who in the performance of their Appeals had relied on private respondent's earlier
obligations are guilty of fraud, letter to petitioner of that date for computing the
negligence, or delay and those who in commencement of delay. But as averred by
any manner contravene the tenor petitioner, said letter of August 6th is not a
thereof, are liable for damages. categorical demand. What it showed was a mere
statement of fact, that "[F]for your information any
Delay begins from the time the obligee judicially or delay in Sulfuric Acid withdrawal shall cost us
extrajudicially demands from the obligor the incremental expenses of P2,000.00 per day."
performance of the obligation. 26 Art. 1169 states: Noteworthy, private respondent accepted the full
Art. 1169. Those obliged to deliver or payment by petitioner for purchases on October 3,
to do something incur in delay from 1986, without qualification, long after the August
the time the obligee judicially or 6th letter. In contrast to the August 6th letter, that
extrajudicially demands from them of December 12th was a categorical demand.
the fulfillment of their obligation.
Records reveal that a tanker ship had to pick-up the buyer or seller the goods are at
sulfuric acid in Basay, then proceed to get the the risk of the party at fault.
remaining stocks in Sangi, Cebu. A period of three (emphasis supplied)
days appears to us reasonable for a vessel to travel On this score, we quote with approval the findings of
between Basay and Sangi. Logically, the the appellate court, thus:
computation of damages arising from the shipping
delay would then have to be from December 15, . . . The defendant [herein private
1986, given said reasonable period after the respondent] was not remiss in
December 12th letter. More important, private reminding the plaintiff that it would
respondent was forced to vacate Basay wharf only have to bear the said expenses for
on December 15th. Its Basay expenses incurred failure to lift the commodity for an
before December 15, 1986, were necessary and unreasonable length of time.
regular business expenses for which the petitioner But even assuming that the plaintiff
should not be obliged to pay. did not consent to be so bound, the
Note that private respondent extended its lease provisions of Civil Code come in to
agreement for Sangi, Cebu storage tank until August make it liable for the damages sought
31, 1987, solely for petitioner's sulfuric acid. It by the defendant.
stands to reason that petitioner should reimburse Art. 1170 of the Civil Code provides:
private respondent's rental expenses of P32,000
monthly, commencing December 15, 1986, up to Those who in the
August 31, 1987, the period of the extended lease. performance of their
Note further that there is nothing on record refuting obligations are guilty of
the amount of expenses abovecited. Private fraud, negligence, or
respondent presented in court two supporting delay and those who in
documents: first, the lease agreement pertaining to any manner contravene
the equipment, and second a letter dated June 15, the tenor thereof, are
1987, sent by Atlas Fertilizer Corporation to private liable for damages.
respondent representing the rental charges Certainly, the plaintiff [herein
incurred. Private respondent is entitled to recover petitioner] was guilty of negligence
the payment for these charges. It should be and delay in the performance of its
reimbursed the amount of two hundred seventy two obligation to lift the sulfuric acid on
thousand August 15, 1986 and had contravened
(P272,000.00) 29 pesos, corresponding to the total the tenor of its letter-contract with the
amount of rentals from December 15, 1986 to defendant. 30
August 31, 1987 of the Sangi, Cebu storage tank.
As pointed out earlier, petitioner is guilty of delay,
Finally, we note also that petitioner tries to exempt after private respondent made the necessary
itself from paying rental expenses and other extrajudicial demand by requiring petitioner to lift
damages by arguing that expenses for the the cargo at its designated loadports. When
preservation of fungible goods must be assumed by petitioner failed to comply with its obligations under
the seller. Rental expenses of storing sulfuric acid the contract it became liable for its shortcomings.
should be at private respondent's account until Petitioner is indubitably liable for proven damages.
ownership is transferred, according to petitioner.
However, the general rule that before delivery, the Considering, however, that petitioner made an
advance payment for the unlifted sulfuric acid in the
risk of loss is borne by the seller who is still the
owner, is not applicable in this case because amount of three hundred three thousand, four
hundred eighty three pesos and thirty seven
petitioner had incurred delay in the performance of
its obligation. Article 1504 of the Civil Code clearly centavos (P303,483.37), it is proper to set-off this
amount against the rental expenses initially paid by
states:
private respondent. It is worth noting that the
Unless otherwise agreed, the goods adjustment and allowance of private respondent's
remain at the seller's risk until the counterclaim or set-off in the present action, rather
ownership therein is transferred to than by another independent action, is encouraged
the buyer, but when the ownership by the law. Such practice serves to avoid circuitry of
therein is transferred to the buyer the action, multiplicity of suits, inconvenience, expense,
goods are at the buyer's risk whether and unwarranted consumption of the court's time. 31
actual delivery has been made or not, The trend of judicial decisions is toward a liberal
except that: extension of the right to avail of counterclaims or
xxx xxx xxx set-offs. 32 The rules on counterclaims are designed
to achieve the disposition of a whole controversy
(2) Where actual delivery has been involving the conflicting claims of interested parties
delayed through the fault of either at one time and in one action, provided all parties
can be brought before the court and the matter 19 Records, p. 21.
decided without prejudicing the right of any party. 33 20 Id. at 23.
Set-off in this case is proper and reasonable. It
involves deducting P272,000.00 (rentals) from 21 TSN, December 20, 1989, p. 6.
P303,483.37 (advance payment), which will leave 22 77 Corpus Juris Secundum, Sales, Section
the amount of P31,483.37 refundable to petitioner. 86, Evidence, p. 773.
WHEREFORE, the petition is hereby DENIED. The 23 Gerales vs. Court of Appeals, 218 SCRA
assailed decision of the Court of Appeals in CA G.R. 638, 648-649 (1993); citing Continental
CV No. 33802 is AFFIRMED, with MODIFICATION that Airlines Inc. vs. Santiago. 172 SCRA 490
the amount of damages awarded in favor of private (1989).
respondent is REDUCED to Two hundred seventy
two thousand pesos (P272,000.00). It is also 24 Rollo, p. 42.
ORDERED that said amount of damages be OFFSET 25 78 Corpus Juris Secundum, Sales, Action
against petitioner's advance payment of Three for Damages, Section 462, Right of Action, p.
hundred three thousand four hundred eighty three 112.
pesos and thirty-seven centavos (P303,483.37)
representing the price of the 272.481 MT of sulfuric 26 SSS vs. Moonwalk Development and
Housing Corporation, 221 SCRA 119, 127
acid not lifted. Lastly, it is ORDERED that the excess
amount of thirty one thousand, four hundred eighty (1993).
three pesos and thirty seven centavos (P31,483.37) 27 Id. at 128.
be RETURNED soonest by private respondent to
28 Records, p. 137.
herein petitioner.1âwphi1.nêt
29 P32,000 x 8.5 months.
Costs against the petitioner.
30 Rollo, pp. 43-44.
SO ORDERED.
31 Development Bank of the Philippines vs.
Bellosillo, Mendoza and Buena, JJ., concur.
Court of Appeals, 249 SCRA 331, 341 (1995).
Footnotes 32 Id., citing 20 Am. Jur. 2d, Counterclaim,
1 Rollo, pp. 36-45, Penned by Justice 237-238.
Associate Justice Salome A. Montoya, 33 Id., citing Kuenzel vs. Universal
concurred in by Justices Jose C. Campos and
Carloading and Distributing Co., Inc. (1939)
Serafin V.C. Guingona, of the Special Fifth 29 F. Supp. 407.
Division of the Court of Appeals.
2 Rollo p. 44.
3 Records, pp. 5-6.
4 Id. at 136.
5 Id. at 137.
6 TSN, September 1, 1989, pp. 28-29.
7 Records, pp. 47-48. Emphasis ours.
8 Id. at 49.
9 Id. at 50.
10 Id. at 41.
11 Id. at 138.
12 Id. at 40.
13 Id. at 65, Affidavit of Gil B. Belen.
14 Id. at 46.
15 Rollo, p. 51.
16 Id. at 52-53.
17 Id. at 41-42.
18 Mijares vs. CA, 271 SCRA 558, 566 (1997),
citing Cuizon vs. Court of Appeals, 260 SCRA
645, (1996); Floro vs. Llenado, 244 SCRA 713
(1995).

You might also like