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    Basilan Lumber Co

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    Camille Britanico
    This case involves a breach of contract by Cagayan Timber Expert Co. to supply logs to Basilan Lumber Co. Basilan had a contract to supply logs to a Japanese buyer. Due to Cagayan's breach, the Japanese buyer incurred demurrage and dead freight costs of $9,814.59. Basilan sued Cagayan to recover these costs. The Supreme Court ruled that Basilan could not recover the costs because it had not actually paid them itself yet or been required to pay by the Japanese buyer. The damages were still prospective, as Basilan had not suffered actual harm under the Civil Code. Basilan thus could not demand payment from Cagayan for damages it had not itself suffered.

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    Basilan Lumber Co

    Uploaded by

    Camille Britanico
    74 views1 page
    This case involves a breach of contract by Cagayan Timber Expert Co. to supply logs to Basilan Lumber Co. Basilan had a contract to supply logs to a Japanese buyer. Due to Cagayan's breach, the Japanese buyer incurred demurrage and dead freight costs of $9,814.59. Basilan sued Cagayan to recover these costs. The Supreme Court ruled that Basilan could not recover the costs because it had not actually paid them itself yet or been required to pay by the Japanese buyer. The damages were still prospective, as Basilan had not suffered actual harm under the Civil Code. Basilan thus could not demand payment from Cagayan for damages it had not itself suffered.

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    This case involves a breach of contract by Cagayan Timber Expert Co. to supply logs to Basilan Lumber Co. Basilan had a contract to supply logs to a Japanese buyer. Due to Cagayan's breach, the Japanese buyer incurred demurrage and dead freight costs of $9,814.59. Basilan sued Cagayan to recover these costs. The Supreme Court ruled that Basilan could not recover the costs because it had not actually paid them itself yet or been required to pay by the Japanese buyer. The damages were still prospective, as Basilan had not suffered actual harm under the Civil Code. Basilan thus could not demand payment from Cagayan for damages it had not itself suffered.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    74 views1 page

    Basilan Lumber Co

    Uploaded by

    Camille Britanico
    This case involves a breach of contract by Cagayan Timber Expert Co. to supply logs to Basilan Lumber Co. Basilan had a contract to supply logs to a Japanese buyer. Due to Cagayan's breach, the Japanese buyer incurred demurrage and dead freight costs of $9,814.59. Basilan sued Cagayan to recover these costs. The Supreme Court ruled that Basilan could not recover the costs because it had not actually paid them itself yet or been required to pay by the Japanese buyer. The damages were still prospective, as Basilan had not suffered actual harm under the Civil Code. Basilan thus could not demand payment from Cagayan for damages it had not itself suffered.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Basilan Lumber Co. v. Cagayan Timber Expert Co.

    , 2 SCRA 766 (1961)


    In an action for damages resulting from a breach of contract to supply, may the exporter recover from a supplier the amount of
    damages for which it would be held liable under its contract with a Japanese buyer even if such damages have not yet been
    demanded from and paid by it, and before said exporter actually paid the same?

    FACTS:
    1.

    2.

    3.

    4.

    The plaintiff Basilan Lumber Company entered into a contract with the defendant Cagayan Timber Export
    Company, whereby the latter agreed to deliver to the former 1,200,000 board feet of exportable logs not
    later than May 31, 1951. This contract is dated April 25, 1951. Subsequently, in an agreement dated July 3,
    1951, the logs to be delivered were reduced to 500,000 board feet and the delivery thereof was to be made
    not later than July 15, 1951. But in another agreement of August 22, 1951, the contract was again amended,
    increasing the amount to be delivered to 740,000 board feet of logs to be delivered on or about September
    1,1951. In this contract, it was further agreed that a minimum of 50,000 board feet per gang per hatch per
    weather working day would be loaded.
    The plaintiff sold the logs to a Japanese buyer, who had entered into a contract with the plaintiff through the
    East Asiatic Company, which acted as intermediary. The logs were to be loaded on the "Kanatsu Maru"
    which was chartered by the Japanese buyer and which arrived in the Philippines on September 9, 1951, at
    the place agreed upon for loading. It stayed in port for a total of 8 days, but was able to load only 483,672
    board feet supplied by defendant.
    There were four hatches in the vessel, hence the loading was to have lasted two and a half days, more or
    less. However, it actually took 7 days to load because no sufficient logs were available at the place where
    the loading was to take place and because of the poor stevedoring service. Hence the demurrage amounted,
    as per decision of the Court of First Instance, to $4,141.16. As to dead freight, which corresponds to the
    freight of the logs which were not delivered shipside, the same amounted to $5,673.43. So, the total amount
    of demurrage and dead freight is $9,814.59, or P19,629.18. This is the amount awarded in the Court of First
    Instance. Legal interest on the said amount and attorney's fees amounting to P2,000 were also granted.
    CA: reversed CFI decision. Because the damages in question are yet to be suffered and are not actual, they
    may fall under the general category of prospective damages.

    PETITIONERS CONTENTIONS: the demurrage and dead freight due the buyer in Japan had already been paid by the

    East Asiatic Company, Ltd., through which the Basilan Lumber Company sold the logs. The receipts evidencing
    such payment had been submitted as Exhibits "I-1", "J" and "K", in accordance with debit notes (Exhs. "G" and "H"
    Deposition); in accordance with the decisions of United States courts, it is enough that there is proof or reasonable
    certainty that substantial future damages will result in order that a recovery for damages can be had; that the
    majority of the provisions of the Uniform Sales Law had been adopted in the Civil Code, so that the decisions of
    American courts in the matter of damages should be applied; also invoked provisions in their contract In case of
    non-compliance by the SELLER with the amended contract conditions, the SELLER hereby agrees to indemnify the
    BUYER for whatever damages the BUYER would be held liable to their buyers in Japan as a Consequence thereof
    SUPREME COURT:
    1. NCC 2199 denies the grant of speculative damages, damages not actually proved to have existed and to have
    been caused to the party claiming the same
    2. In the case at bar the evidence shows that actual damage was caused to the agent through which petitioner
    sold the logs to a Japanese buyer, as said agent had already paid the same to the latter. However, there is no
    proof that respondent had already paid the agent said damages, or that it had already been required to pay
    the same, and while these have not happened the damage to the petitioner may not, under the above-cited
    article of the Civil Code, be deemed to have actually been caused to him.
    3. As regards the express terms of the agreement holding the seller liable for the damages it may cause the
    buyer, the same are merely declaratory of the obligation assumed, not an obligation which the obligee may
    demand in compliance with upon breach of the terms of the contract and even before actual payment of
    damages by the one who breached the agreement, because the obligee has not yet actually suffered the
    damage or paid the same to the person to whom damage was caused. It is only when the obligee actually
    suffers the damage, that compliance, with the obligation may be demanded.

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