TOPIC: UNDER CAUSE OF ACTION (PAGE 4), IN CONTRAST WITH THE BLOSSOM CASE, THIS IS A CASE WHERE THE

PRINCIPLE OF ANTICIPATORY BREACH CANNOT BE APPLIED DANFOSS, INC. V. CONTINENTAL CEMENT CORP., G.R. NO. 1437 , !"!"#$

NATURE OF THE CASE: The CA affirmed the decision of the RTC that the CCCs (herein respondent) complaint for damages against Danfoss. So, the case was elevated to the Supreme Court on appeal of the said ruling of the CA and the CAs denial for Danfoss motion for reconsideration. FACTS: echatronics !nstruments and Controls, !nc. ( !"C!) is an agent of Danfoss, !nc.s products here in the #hilippines. $n Septem%er &''(, CCC ordered two unit &)* +, Danfoss -rand .re/uenc0 Converter1!nverter from !"C! to %e used in the .inish ill of its Cement #lant in -ulacan. !n the terms of conditions of the original purchase order, the two unit .re/uenc0 Converter shall %e delivered %0 Danfoss within 2 to &3 wee4s from the opening of the letter of credit. The letter of credit opened %0 CCC in favour of Danfoss on Septem%er ', &''(. $n Septem%er &(, &''(, !"C! informed CCC that its order are alread0 read0 for shipment and !"C! re/uested to amend the letter of credit changing the port of origin1loading from Singapore to Denmar4 (Singapore is the Asian Regional $ffice of Danfoss, the 5ead $ffice of the compan0 is Denmar4). CCC complied and the port of origin in the letter of credit was changed. $n "ovem%er 6, &''(, !"C! rela0ed to CCC that Danfoss !nc. was still chec4ing the status of their order. CCC replied that ever0 dela0 in the deliver0 of the order will cause loss to their compan0, so CCC re/uested for earl0 wor4 out and immediate shipment to avoid further loss. -ut, on "ovem%er ', &''(, Danfoss !nc. informed !"C! through fa7, that the reason for the deliver0 pro%lems was that some of the supplied components for the new 89T :333 series (this ma0 %e a part of the converter which is the su%;ect thing in this case or a machine to create the converter) did not meet the agreed /ualit0 standard. So, Danfoss was canvassing for another supplier for the said 89T :333 series. !n the fa7, there was no clear message as to when normal production will resume. <pon receiving the rela0ed information, CCC surmised that Danfoss would not %e a%le to deliver their order. There was also no definite commitment of the deliver0 from Danfoss and !"C!, so CCC informed !"C! that the0 intend to cancel its order. The order was cancelled on "ovem%er &), &''(. 5ence the complaint for damages filed %0 CCC with the RTC of =ue>on Cit0 against Danfoss and !"C! on "ovem%er :, &''2. !n repl0, Danfoss filed a motion to dismiss the complaint. CCC? Due to the @impendingA dela0 in the deliver0 of its order, it suffered more than #2 million and was compelled to loo4 for another supplier. Danfoss? The case should %e dismissed on the ground that it did not state a cause of action.

&) The letter of credit was opened on Septem%er ', &''(, so, since the agreed deliver0 period is 2 to &3 wee4s from the opening of the letter of credit, the due date is until "ovem%er &', &''(. *) Although Danfoss was having a pro%lem with its supplier prior to CCCs cancellation of its order, CCC onl0 surmised that Danfoss could not deliver within the due date agreed upon. )) "either Danfoss nor CCC agreed to change the date of deliver0. $nl0 the port of origin was changed in the letter of credit. Danfoss has until "ovem%er &', &''( to deliver the order, CCC cancelled the order on "ovem%er &), &''(. B) CCC never made an e7tra;udicial demand for the deliver0 of its order on its due date as it cancelled the order %efore the due date. :) Damages sought for %0 CCC could not have accrued 0et since the order was cancelled %efore the deliver0 was actuall0 dela0ed. RTC? Cudgment in favor of CCC. According to the RTC? @...the issue of whether or not the defendants incur dela0 in the deliver0 of the e/uipment in /uestion within the period stipulated is a de%ata%le /uestion which necessitates actual trial on the merits where the parties have to adduce evidence in support of their respective stance. ,hile the defendants contend that the stipulated period of deliver0 had not lapsed 0et when the plaintiff cancelled its order of the two e/uipments in /uestion as the cancellation too4 place seven (() da0s %efore the e7pir0 date of the defendants o%ligation to deliver, the plaintiffs position is that the acts of the defendants had made compliance with their o%ligation to deliver within the period stipulated, impossi%le, hence, there was no need for a demand as the law provides that @when demand would %e useless, as when the o%ligor has rendered it %e0ond his power to perform.A The plaintiffs contention if properl0 and strongl0 supported %0 evidence during the hearing of the merits of the case ma0 well negates (sic) the defendants contrar0 stand.A CA? Affirmed the decision of the RTC and denied the Danfoss. otion for Reconsideration of

ISSUE: ,$" there was a cause of action in the complaint filed %0 CCC against Danfoss and ,$" the principle of anticipator0 %reach can %e applied in the case. HELD: "o, there was no cause of action in the complaint for damages filed %0 CCC. @!n order to sustain a dismissal on the ground of lac4 of cause of action, the insufficienc0 must appear on the face of the complaint. And the test of the sufficienc0 of the facts alleged in the complaint to constitute a cause of action is whether or not, admitting the facts alleged, the court can render a valid ;udgment thereon in accordance with the pra0er of the complaint. .or this purpose, the motion to dismiss must h0potheticall0 admit the truth of the facts alleged in the complaint.A

The RTC erred in ruling that @the issue of whether or not the defendants incurred dela0 in the deliver0 of the e/uipment within the period stipulated was a de%ata%le /uestion.A 5ow could Danfoss %e lia%le for damages when Danfoss had not 0et %reached his o%ligation to deliver the order of CCC, aside from the fact that the o%ligation was alread0 negated when CCC cancelled the order %efore the prestation %ecame due and demanda%leD Thus, there was no %reach and there was no damage caused %0 Danfoss. The principle of anticipator0 %reach cannot %e applied here %ecause the o%ligation was single and indivisi%le E to deliver two units of fre/uenc0 converter %0 "ovem%er &', &''(. There was no showing that Danfoss refused to deliver, and on the contrar0, Danfoss made an effort to ma4e good in its o%ligation %0 loo4ing for other suppliers who could provide the parts needed to ma4e the timel0 deliver0 of the order. Thus, the case was prematurel0 filed. CCCs fear that Danfoss might not %e a%le to deliver its order on time was not the cause of action referred to %0 the Rules and ;urisprudence. #FT!T!$" GRA"TFD. T5F CAS DFC!S!$"S ARF RF8FRSFD A"D SFT AS!DF.