Song Fo v. Hawaiian Phil

SONG Fo & COMPANY vs HAWAIIAN
PHILIPPINE Co.
GR # 47 Phil 821
Petitioner/Plaintiff: SONG Fo & COMPANY,
Defendant/Appellant: HAWAIIAN PHILIPPINE Co.
Date September 16, 1925

SPECIAL NOTE

This is the previous digest made by Belle, I only added
some notes, so just check that out.

DOCTRINE 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.

(SHORT VERSION)

Parties agreed to deliver 300,000 gallons of molasses
and added 100,000 if means be possible. Defendant
rescinded the contract on the ground that the plaintiff
defaulted the payment.

FACTS

A written contract between Song Fo & Co. and
Hawaiian-Philippine Co. was made. They have agreed to
deliver 300,000 gallons of molasses. Mr. Song Heng, the
representative of Song Fo & Co., demanded that an
additional 100,000 gallons be delivered. It was written as
follows: Mr. Song Fo also asked if we could supply
him with another 100,000 gallons of molasses, and we
stated we believe that this is possible and will do our
best to let you have these extra 100,000 gallons The
payment for these molasses shall be done at the end of
each month.

Plaintiff presented a complaint with two causes of action
for breach of contract against the defendant, in which
judgment was asked for P70,369.50. Defendant set up
the special defense that the plaintiff delayed the payment
for the molasses, compelling the former to cancel and
rescind the contract.

ISSUES/HELD

(1) Did defendant agree to sell to the plaintiff 400,000
gallons of molasses or 300,000 gallons of molasses?
300,000

(2) Had the Hawaiian-Philippine Co. the right to rescind
the contract of sale made with Song Fo & Co.? No.

(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 for damages? See Ratio.

RATIO

(1) The contract has clearly shown the agreed 300,000
gallons of molasses to be delivered. It was the additional
100,000 gallons that Mr. Song Ho requested that this
issue has arisen. Although the defendant mentioned that
providing such an amount was possible, it only
constituted a definite promise and not an obligation.

(2) Plaintiff was to pay defendant at the end of each
month. The records show, however, that for the delivery
made in December 1922, the payment was not made
until February 20, 1923. The Supreme Court stated a
delay in payment for a small quantity of molasses for
some twenty days is not such a violation of an essential
condition of the contract as warrants rescission for non-
performance.

(3) The first cause of action of the plaintiff 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 P3000 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. The Supreme
Court, however, did not affirm any recovery as regards
this cause. It reasoned out that it has found the decision
of the trial court unsustainable; the testimony of Mr.
Song Heng will follow the same line of thought. In
addition, his testimony was thought to be insufficient
proof of allegations of the complaint and will lead only
to a mere conclusion and not a proven fact. The Supreme
Court said that it did not have the means of knowing the
alleged lost profits of P14000.

We rule that the plaintiff is entitled to recover damages
from the defendant for breach of contract on the first
cause of action in the amount of P3000 and on the
second cause of action in no amount.

DECISION

Agreeable to the foregoing, the judgment appealed from
shall be modified and the plaintiff shall have and recover
from the defendant the sum of P3000, with legal interest
from October 2, 1923, until payment. Without special
finding as to costs in either instance, it is so order.

NOTE

Take note that the reason why there is no breach in the
part of Song-Fo while there is in the part of Hawaiian-
Phil is that the court did not recognize the non-payment
of Song-Fo to Hawaiian-Phil as a breach but still
Hawaiian-Phil, upon non-payment of Song-Fo, moved to
cancel and rescind the said contract. Thus in the eyes and
reasoning of the court, it was the Hawaiian-Phil which
first violated the contract.

Also, the reason why the court did not recognize that the
non-payment of Song-Fo as a breach is for the fact that
after month of non-payment, Song-Fo suddenly resumed
to pay their monthly obligations to Hawaiian-Phil and
that the latter accepted it. The court reasoned that a delay
in payment for a small quantity of molasses for some
twenty days is not such a violation if an essential
condition of the contract as warrants rescission for non-
performance.

L
3
and O

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