CARMELITA LEAO vs.

COURT OF APPEALS
G.R. No. 129018
NOVEMBER 15, 2001

FACTS:

Hermogenes Fernando, as vendor and Carmelita Leao, as vendee executed a contract to sell involving a piece of land.
In the contract, Leao bound herself to pay Fernando P10,775.00 at the signing of the contract with the balance of P96,975.00 to
be paid within a period of TEN (10) years at a monthly amortization of P1,747.30. The contract also provided for a grace period
of one month within which to make payments, together with the one corresponding to the month of grace. Should the month of
grace expire without the installments for both months having been satisfied, an interest of 18% per annum will be charged on the
unpaid installments.

ISSUE:
Whether petitioner was in delay in the payment of the monthly amortizations.

RULING:

On the issue of whether petitioner Leao was in delay in paying the amortizations, we rule that while the contract
provided that the total purchase price was payable within a ten-year period, the same contract specified that the purchase price
shall be paid in monthly installments for which the corresponding penalty shall be imposed in case of default. Petitioner Leao
cannot ignore the provision on the payment of monthly installments by claiming that the ten-year period within which to pay has
not elapsed.

Article 1169 of the Civil Code provides that in reciprocal obligations, neither party incurs in delay if the other does not
comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties
fulfills his obligation, delay by the other begins. In the case at bar, respondent Fernando performed his part of the obligation by
allowing petitioner Leao to continue in possession and use of the property. Clearly, when petitioner Leao did not pay the
monthly amortizations in accordance with the terms of the contract, she was in delay and liable for damages. However, we agree
with the trial court that the default committed by petitioner Leao in respect of the obligation could be compensated by the
interest and surcharges imposed upon her under the contract in question.

HEIRS OF LUIS BACUS vs. HON. COURT OF APPEALS

G.R. No. 127695
DECEMBER 3, 2001

FACTS:

Luis Bacus leased to private respondent Faustino Duray a parcel of agricultural land. The contract contained an option
to buy clause. Under said option, the lessee had the exclusive and irrevocable right to buy 2,000 square meters of the property
within five years from a year after the effectivity of the contract. Close to the expiration of the contract, Luis Bacus died.
Thereafter, the Duray spouses informed one of the heirs of Luis Bacus, that they were willing and ready to purchase the property
under the option to buy clause. Due to the refusal of petitioners to sell the property, Duray filed a complaint for specific
performance against the heirs of Luis Bacus asking that he be allowed to purchase the lot specifically referred to in the lease
contract with option to buy. On the other hand, petitioners alleged that before Luis Bacus death, private respondents conveyed to
them the formers lack of interest to exercise their option because of insufficiency of funds. They further alleged that private
respondents did not deposit the money as required by the Lupon and instead presented a bank certification which cannot be
deemed legal tender.
ISSUE:
Did private respondents incur in delay when they did not deliver the purchase price or consign it in court on or before
the expiration of the contract?

RULING:

Obligations under an option to buy are reciprocal obligations. The performance of one obligation is conditioned on the
simultaneous fulfillment of the other obligation. In other words, in an option to buy, the payment of the purchase price by the
creditor is contingent upon the execution and delivery of a deed of sale by the debtor. In this case, when private respondents
opted to buy the property, their obligation was to advise petitioners of their decision and their readiness to pay the price. They
were not yet obliged to make actual payment. Only upon petitioners actual execution and delivery of the deed of sale were they
required to pay. Notice of the creditors decision to exercise his option to buy need not be coupled with actual payment of the
price, so long as this is delivered to the owner of the property upon performance of his part of the agreement. Consequently,
since the obligation was not yet due, consignation in court of the purchase price was not yet required.

Private respondents did not incur in delay when they did not yet deliver payment nor make a consignation before the
expiration of the contract. In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to
comply in a proper manner with what is incumbent upon him. Only from the moment one of the parties fulfills his obligation,
does delay by the other begin. In this case, as there was no compliance yet with what was incumbent upon petitioners under the
option to buy, private respondents had not incurred in delay when the cashiers check was issued even after the contract expired.

INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS

G.R. No. 115117
JUNE 8, 2000

FACTS:

Petitioner and private respondent executed an order agreement whereby private respondent bound itself to deliver to
petitioner 3,450 reams of printing papers under specified schedule of delivery. As of July 30, 1979, private respondent had
delivered to petitioner 1,097 reams of printing paper out of the total 3,450 reams stated in the agreement. Petitioner alleged it
wrote private respondent to immediately deliver the balance because further delay would greatly prejudice petitioner. From June
5, 1980 and until July 23, 1981, private respondent delivered again to petitioner various quantities of printing paper amounting to
P766,101.70. However, petitioner encountered difficulties paying private respondent said amount. Accordingly, private
respondent made a formal demand upon petitioner to settle the outstanding account. Private respondent filed a collection suit
against petitioner for the sum of P766,101.70, representing the unpaid purchase price of printing paper bought by petitioner on
credit. In its answer, petitioner denied the material allegations of the complaint. It alleged that private respondent was able to
deliver only 1,097 reams of printing paper which was short of 2,875 reams, in total disregard of their agreement; that private
respondent failed to deliver the balance of the printing paper despite demand therefor, hence, petitioner suffered actual damages
and failed to realize expected profits.

ISSUE:
Whether or not private respondent violated the order agreement.

RULING:

The transaction between the parties is a contract of sale whereby private respondent (seller) obligates itself to deliver
printing paper to petitioner (buyer) which, in turn, binds itself to pay its equivalent (price). Both parties concede that the order
agreement gives rise to a reciprocal obligation such that the obligation of one is dependent upon the obligation of the other.
Reciprocal obligations are to be performed simultaneously, so that the performance of one is conditioned upon the simultaneous
fulfillment of the other. Thus, private respondent undertakes to deliver printing paper of various quantities subject to petitioners
corresponding obligation to pay, on a maximum 90-day credit, for these materials. Clearly, petitioner did not fulfill its side of the
contract as its last payment in August 1981 could cover only materials covered by delivery invoices dated September and October
1980. Thus, private respondent did not violate the order agreement.

LAFORTEZA vs. MACHUCA

G.R. No. 137552
 JUNE 16, 2000

FACTS:

In the exercise of the Special Power of Attorney executed by their co-heirs, by Roberto Z. Laforteza and Gonzalo Z.
Laforteza, Jr. entered into a Memorandum of Agreement (Contract to Sell) with the plaintiff over the subject house and lot for the
sum of P630,000.00. On September 18, 1998, defendant heirs, through their counsel wrote a letter to the plaintiff furnishing the
latter a copy of the reconstituted title to the subject property, advising him that he had thirty (3) days to produce the balance of
P600,000.00 under the Memorandum of Agreement which plaintiff received on the same date. The plaintiff requested a 30-day
extension within which he would pay the balance of the purchase price. This was granted by Roberto Laforteza but not by
Gonzalo Laforteza, the second attorney-in-fact.

On November 15, 1989, plaintiff informed the defendant heirs, through defendant Roberto Z. Laforteza, that he already
has the money. However, the defendants, refused to accept the told him that the subject property was no longer for sale.
Thereafter, plaintiff reiterated his request to tender payment of the balance but the defendants insisted on the rescission of the
Memorandum of Agreement. Thereafter, plaintiff filed the instant action for specific performance.

ISSUE:
Whether or not defendants may rescind the contract of sale entered with Machuca.

RULING:

Admittedly, the failure of the respondent to pay the balance of the purchase price was a breach of the contract and was a
ground for rescission thereof. The extension of thirty (30) days allegedly granted to the respondent by Roberto Z. Laforteza was
correctly found by the Court of Appeals to be ineffective inasmuch as the signature of Gonzalo Z. Laforteza did not appear
thereon as required by the Special Powers of Attorney. However, the evidence reveals that after the expiration of the six-month
period provided for in the contract, the petitioners were not ready to comply with what was incumbent upon them, i.e. the
delivery of the reconstituted title of the house and lot. It was only on September 18, 1989 or nearly eight months after the
execution of the Memorandum of Agreement when the petitioners informed the respondent that they already had a copy of the
reconstituted title and demanded the payment of the balance of the purchase price. The respondent could not therefore be
considered in delay for in reciprocal obligations, neither party incurs in delay if the other party does not comply or is not ready to
comply in a proper manner with what was incumbent upon him.

Even assuming for the sake of argument that the petitioners were ready to comply with their obligation, we find that
rescission of the contract will still not prosper. Delay in payment was only thirty days which was caused by the respondents
justified but mistaken belief that an extension to pay was granted to him. We agree with the Court of Appeals that the delay of
one month in payment was a mere casual breach that would not entitle the respondents to rescind the contract. Rescission of a
contract will not be permitted for a slight or casual breach, but only such substantial and fundamental breach as would defeat the
very object of the parties in making the agreement.

REGALA v. CARIN
G.R. No. 188715
April 6, 2011

FACTS:

Petitioner and respondent are adjacent neighbors at Spirig Street, BF Resort Village, Las Pias City. When petitioner
decided to renovate his one storey residence by constructing a second floor, he under the guise of merely building an extension to
his residence, approached respondent sometime in May 1998 for permission to bore a hole through a perimeter wall shared by
both their respective properties, to which respondent verbally consented on condition that petitioner would clean the area affected
by the work.

As earlier indicated, petitioners real intention was to build a second floor, in fact with a terrace atop the dividing wall.
In the course of the construction of the second floor, respondent and his wife Marietta suffered from the dust and dirt which fell
on their property. As petitioner failed to address the problem to respondents satisfaction, respondent filed a letter-complaint[3]
with the Office of the City Engineer and Building Official of Las Pias City on June 9, 1998.

ISSUE:

Whether or not the injuries sustained by respondent was done maliciously.

RULING:

Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral
obliquity; it is different from the negative idea of negligence in that malice or bad faith contemplates a state of mind affirmatively
operating with furtive design or ill will. While the Court harbors no doubt that the incidents which gave rise to this dispute have
brought anxiety and anguish to respondent, it is unconvinced that the damage inflicted upon respondents property was malicious
or willful, an element crucial to merit an award of moral damages under Article 2220 of the Civil Code.

Necessarily, the Court is not inclined to award exemplary damages.Petitioner, however, cannot steer clear from any liability
whatsoever. Respondent and his familys rights to the peaceful enjoyment of their property have, at the very least, been
inconvenienced from the incident borne of petitioners construction work. Any pecuniary loss or damage suffered by respondent
cannot be established as the records are bereft of any factual evidence to establish the same. Nominal damages may thus be
adjudicated in order that a right of the plaintiff, respondent herein, which has been violated or invaded by the defendant,
petitioner herein, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by
him.

THE INTERNATIONAL CORPORATE vs. SPS. GUECO

G.R. No. 141968
FEBRUARY 12, 2001

FACTS:

The Gueco Spouses obtained a loan from petitioner International Corporate Bank (now Union Bank of the Philippines)
to purchase a car. In consideration thereof, the Spouses executed promissory notes which were payable in monthly installments
and chattel mortgage over the car to serve as security for the notes. The Spouses defaulted in payment of installments. After some
negotiations and computation, the amount of car loan was lowered. Finally, Dr. Gueco delivered a managers check in the
amount of reduced car loan but the car was not released because of his refusal to sign the Joint Motion to Dismiss. Petitioner,
however, insisted that the joint motion to dismiss is standard operating procedure in their bank to effect a compromise and to
preclude future filing of claims, counterclaims or suits for damages.

ISSUE:

Whether or not there was fraud in the part of herein petitioner.

RULING:

Fraud has been defined as the deliberate intention to cause damage or prejudice. It is the voluntary execution of a
wrongful act, or a willful omission, knowing and intending the effects which naturally and necessarily arise from such act or
omission. We fail to see how the act of the petitioner bank in requiring the respondent to sign the joint motion to dismiss could
constitute as fraud. True, petitioner may have been remiss in informing Dr. Gueco that the signing of a joint motion to dismiss is
a standard operating procedure of petitioner bank. However, this can not in anyway have prejudiced Dr. Gueco. The motion to
dismiss was in fact also for the benefit of Dr. Gueco, as the case filed by petitioner against it before the lower court would be
dismissed with prejudice. The whole point of the parties entering into the compromise agreement was in order that Dr. Gueco
would pay his outstanding account and in return petitioner would return the car and drop the case for money and replevin before
the Metropolitan Trial Court. Petitioner's act of requiring Dr. Gueco to sign the joint motion to dismiss can not be said to be a
deliberate attempt on the part of petitioner to renege on the compromise agreement of the parties. It should, likewise, be noted
that in cases of breach of contract, moral damages may only be awarded when the breach was attended by fraud or bad faith. The
law presumes good faith. Dr. Gueco failed to present an iota of evidence to overcome this presumption. Necessarily, the claim
for exemplary damages must fail. In no way, may the conduct of petitioner be characterized as wanton, fraudulent, reckless,
oppressive or malevolent.

REPUBLIC OF THE PHILIPPINES vs. THE COURT OF TAX APPEALS

G.R. No. 139050
OCTOBER 2, 2001

FACTS:

On 12 December 1992, a shipment of bales of textile gray cloth arrived at the Manila International Container Port
(MICP). There has been a mistake in the name of the consignee provided in the shipment's Inward Foreign Manifest. Forthwith,
the shipping agent, FIL-JAPAN, requested for an amendment of the Inward Foreign Manifest so as to correct the name of the
consignee from that of GQ GARMENTS, Inc., to that of AGFHA, Inc. Subsequently, FIL-JAPAN forwarded to AGFHA, Inc., the
amended Inward Foreign Manifest which the latter, in turn, submitted to the MICP Law Division. The MICP indorsed the
document to the Customs Intelligence Investigation Services (CIIS). The CIIS placed the subject shipment under Hold Order on
the ground that GQ GARMENTS, Inc., could not be located in its given address and was thus suspected to be a fictitious firm.
Forfeiture proceedings under Section 2530(f) and (l) (3-5) of the Tariff and Customs Code were initiated.

ISSUE:
Whether or not the private respondent is guilty of fraud in relation to the shipment subject of the case at bench.

RULING:

Petitioner asserts that all of the requisites for forfeiture proceedings under the Tariff and Customs Code are present in
this case. Private respondent AGFHA, Inc., on the other hand, maintains that there has only been an inadvertent error and not an
intentional wrongful declaration by the shipper to evade payment of any tax due.
Fraud must be proved to justify forfeiture. It must be actual, amounting to intentional wrong-doing with the clear purpose of
avoiding the tax. Forfeiture is not favored in law nor in equity. Mere negligence is not equivalent to the fraud contemplated by
law. What is here involved is an honest mistake, not even directly attributable to private respondent, which will not deprive the
government of its right to collect the proper tax. The conclusion of the appellate court, being consistent with the evidence on
record and not contrary to law and jurisprudence, hardly can be overturned by this Court.

DIAZ VS. DAVAO LIGHT

GR No. 160959 April 2, 2007

FACTS:

Plaintiff asks for damages for defendants alleged malicious prosecution of a criminal case of theft of electricity against
him, for plaintiffs filing of a charge of violation of P.D. 401 as amended after dismissal of the theft case, the filing of a damage
suit against him before the RTC of Cebu City which was dismissed and the filing of another damage suit before the same Cebu
RTC which is still pending. Damages are also being sought for defendants removal of Electric Meter, but this is a subject matter
of a case pending before Branch 13 of this Court and therefore said court retains jurisdiction over the said cause of action.
The RTC held that while the City Prosecutor, and later the Secretary of Justice, concluded that there was no probable
cause for the crime of theft, this did not change the fact that plaintiff made an illegal connection for electricity. A persons right to
litigate should not be penalized by holding him liable for damages.
On October 1, 2003, the CA affirmed the decision of the RTC. It concluded that the evidence on hand showed good
faith on the part of DLPC in filing the subject complaints. It pointed out that Diaz had been using the electrical services of DLPC
without its consent. As to the effect of the compromise agreement, the CA ruled that it did not bar the filing of the criminal action.
Thus, under the principle of damnum absque injuria, the legitimate exercise of a persons right, even if it causes loss to another,
does not automatically result in an actionable injury.
Diaz, now petitioner, comes before this Court in this petition for review on certiorari

ISSUES:

1. Whether or not the compromise agreement entered into between DLPC and Diaz barred the former from instituting
further actions; and
 2. Whether or not DLPC acted in bad faith in instituting the criminal cases against Diaz

RULING:
Article 2028 of the Civil Code defines a compromise as a contract whereby the parties, by making reciprocal
concessions, avoid litigation or put an end to one already commenced. The purpose of compromise is to settle the claims of the
parties and bar all future disputes and controversies. However, criminal liability is not affected by compromise for it is a public
offense which must be prosecuted and punished by the Government on its own motion, though complete reparation should have
been made of the damages suffered by the offended party. A criminal case is committed against the People, and the offended
party may not waive or extinguish the criminal liability that the law imposes for the commission of the offense. Moreover, a
compromise is not one of the grounds prescribed by the Revised Penal Code for the extinction of criminal liability. On the other
hand, malicious prosecution has been defined as an action for damages brought by or against whom a criminal prosecution, civil
suit or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such
prosecution, suit, or other proceeding in favor of the defendant therein. It is an established rule that in order for malicious
prosecution to prosper, the following requisites must be proven by petitioner: (1) the fact of prosecution and the further fact that
the defendant (respondent) was himself the prosecutor, and that the action finally terminated with an acquittal; (2) that in bringing
the action, the prosecutor acted without probable cause; and (3) that the prosecutor was actuated or impelled by legal malice, that
is, by improper or sinister motive. The foregoing are necessary to preserve a persons right to litigate which may be emasculated
by the undue filing of malicious prosecution cases.
From the foregoing requirements, it can be inferred that malice and want of probable cause must both be clearly
established to justify an award of damages based on malicious prosecution. DLPC was not motivated by malicious intent or by a
sinister design to unduly harass petitioner, but only by a well-founded anxiety to protect its rights. Respondent DLPC cannot
therefore be faulted in availing of the remedies provided for by law.

YASOA VS. DE RAMOS

GR No. 156339 October 6, 2004

FACTS:

Aurea Yasoa and her son, Saturnino, went to the house of Jovencio de Ramos to ask for financial assistance in paying
their loans to Philippine National Bank (PNB), otherwise their residential house and lot would be foreclosed. Inasmuch as Aurea
was his aunt, Jovencio acceded to the request. They agreed that, upon payment by Jovencio of the loan to PNB, half of Yasoas
subject property would be sold to him. Jovencio paid Aureas bank loan. As agreed upon, Aurea executed a deed of absolute sale
in favor of Jovencio over half of the lot consisting of 123 square meters. Thereafter, the lot was surveyed and separate titles were
issued by the Register of Deeds of Sta. Cruz, Laguna in the names of Aurea and Jovencio
Twenty-two years later, in August 1993, Aurea filed an estafa complaint against brothers Jovencio and Rodencio de
Ramos on the ground that she was deceived by them when she asked for their assistance in 1971 concerning her mortgaged
property. In her complaint, Aurea alleged that Rodencio asked her to sign a blank paper on the pretext that it would be used in the
redemption of the mortgaged property
On February 21, 1994, Assistant Provincial Prosecutor Rodrigo B. Zayenis dismissed the criminal complaint for estafa
for lack of evidence. On account of this dismissal, Jovencio and Rodencio filed a complaint for damages on the ground of
malicious prosecution. They alleged that the filing of the estafa complaint against them was done with malice and it caused
irreparable injury to their reputation, as Aurea knew full well that she had already sold half of the property to Jovencio.

ISSUE:

Whether or not the filing of the criminal complaint for estafa by petitioners against respondents constituted malicious
prosecution?

RULING:

To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to
vex or humiliate a person, and that it was initiated deliberately by the defendant knowing that his charges were false and
groundless. Concededly, the mere act of submitting a case to the authorities for prosecution does not make one liable for
malicious prosecution.
In this case, the records show that the sale of the property was evidenced by a deed of sale duly notarized and registered
with the local Register of Deeds. After the execution of the deed of sale, the property was surveyed and divided into two portions.
Separate titles were then issued in the names of Yasoa and Jovencio. Since 1973, Jovencio had been paying the realty taxes of
the portion registered in his name. In 1974, Aurea even requested Jovencio to use his portion as bond for the temporary release of
her son who was charged with malicious mischief. Also, when Aurea borrowed money from the Rural Bank of Lumban in 1973
and the PNB in 1979, only her portion was mortgaged.
All these pieces of evidence indicate that Aurea had long acknowledged Jovencios ownership of half of the property.
Furthermore, it was only in 1993 when petitioners decided to file the estafa complaint against respondents. If petitioners had
honestly believed that they still owned the entire property, it would not have taken them 22 years to question Jovencios
ownership of half of the property.
Malicious prosecution, both in criminal and civil cases, requires the elements of (1) malice and (2) absence of probable cause.
These two elements are present in the present controversy. The complaint for estafa was dismissed outright as the prosecutor did
not find any probable cause against respondents. A suit for malicious prosecution will prosper where legal prosecution is carried
out without probable cause.

WOODHOUSE VS HALILI
G.R. No. L-4811 July 31, 1953

FACTS: On November 29, 1947, the Woodhouse entered in a written agreement with\, the most important that they shall
organize a partnership for the bottling and distribution of Mision soft drinks and that Woodhouse was to secure the Mission Soft
Drinks franchise for and in behalf of the proposed partnership and receive 30 per cent of the net profits of the business.
On that day Woodhouse and Halili went to the United States, a franchise agreement was entered into the Mission Dry
Corporation and granted Halili the exclusive right, license, and authority to produce, bottle, distribute, and sell Mision beverages
in the Philippines.
When the bottling plant was already on operation, Woodhouse demanded of Halili that the partnership papers be executed. In his
complaint Woodhouse asks for the execution of the contract of partnership, an accounting of the profits, and a share thereof of 30
per cent, as well as damages.
Halili's contends that his consent to the agreement was secured by the representation of Woodhouse that he was about to become
owner of an exclusive bottling franchise, which representation was false.
The Court of First Instance rendered judgment ordering Halili to render an accounting of the profits of the bottling and
distribution business, subject of the action, and to pay Woodhouse 15 percent thereof.
ISSUE: Whether or not Woodhouse had falsely represented that he had an exclusive franchise to bottle Mission beverages, and
whether this false representation or fraud, if it existed, annuls the agreement to form the partnership?
HELD: The first draft that Woodhouses lawyer, prepared expressly states that Woodhouse had the exclusive franchise.
Woodhouse did actually represent to Halili that he was the holder of the exclusive franchise and Halili was made to believe, and
he actually believed, that Woodhouse had the exclusive franchise. The main cause that induced Halili to enter into the partnership
agreement with Woodhouse, was the ability of Woodhouse to get the exclusive franchise to bottle and distribute for the Halili or
for the partnership.

While the representation that Woodhouse had the exclusive franchise did not vitiate Halili's consent to the contract, it was used by
Woodhouse to get from Halili a share of 30 per cent of the net profits. In other words, by pretending that he had the exclusive
franchise and promising to transfer it to Halili, he obtained the consent of the latter to give him a big slice in the net profits. But
when Woodhouse learned about such, he reduced Halilis share to 15 per cent.
As to the agreement being executed, Halili may not be compelled against his will to carry out the agreement nor execute the
partnership papers. The law recognizes the individual's freedom or liberty to do an act he has promised to do, or not to do it, as he
pleases.
The Supreme Court ruled that Woodhouse's share of 15 per cent of the net profits shall continue to be paid while Halili uses the
franchise from the Mission Dry Corporation.

LEGASPI OIL CO., INC. vs. THE COURT OF APPEALS

G.R. No. 96505
JULY 1, 1993

FACTS:

Bernard Oseraos had several transactions with Legaspi Oil Co. for the sale of copra to the latter. The price at which
appellant sells the copra varies from time to time, depending on the prevailing market price when the contract is entered into. On
February 16, 1976, appellant's agent Jose Llover signed contract No. 3804 for the sale of 100 tons of copra at P82.00 per 100
kilos with delivery terms of 20 days effective March 8, 1976. After the period to deliver had lapsed, appellant sold only 46,334
kilos of copra thus leaving a balance of 53,666 kilos. Accordingly, demands were made upon appellant to deliver the balance with
a final warning that failure to deliver will mean cancellation of the contract, the balance to be purchased at open market and the
price differential to be charged against appellant. On October 22, 1976, since there was still no compliance, appellee exercised its
option under the contract and purchased the undelivered balance from the open market at the prevailing price of P168.00 per 100
kilos, or a price differential of P86.00 per 100 kilos, a net loss of P46,152.76 chargeable against appellant.
ISSUE:
Whether or not private respondent is guilty of breach of contact.

RULING:

Private respondent is guilty of fraud in the performance of his obligation under the sales contract whereunder he bound
himself to deliver to petitioner 100 metric tons of copra. However within the delivery period, Oseraos delivered only 46,334
kilograms of copra to petitioner. Petitioner made repeated demands upon private respondent to deliver the balance of 53,666
kilograms but private respondent ignored the same. Petitioner made a final demand with a warning that, should private
respondent fail to complete delivery of the balance of 53,666 kilograms of copra, petitioner would purchase the balance at the
open market and charge the price differential to private respondent. Still private respondent failed to fulfill his contractual
obligation to deliver the remaining 53,666 kilograms of copra and since there was still no compliance by private respondent,
petitioner exercised its right under the contract and purchased 53,666 kilograms of copra, the undelivered balance, at the open
market at the then prevailing price of P168.00 per 100 kilograms, a price differential of P46,152.76.

The conduct of private respondent clearly manifests his deliberate fraudulent intent to evade his contractual obligation
for the price of copra had in the meantime more than doubled from P82.00 to P168 per 100 kilograms. Under Article 1170 of the
Civil Code of the Philippines, those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those
who in any manner contravene the tenor thereof, are liable for damages. Pursuant to said article, private respondent is liable for
damages.