Solar Harvest, Inc. vs. Davao Corrugated Carton Corporation GR No. 176858 ul!

"6, "#1# $%C&S:An unwritten agreement was entered into in the 1stQuarter of 1998 by Solar Harvest and Davao Corrugated. Solar Harvest ordered bo es from Davao Corrugatedto be used for its business of e !orting bananas at "SD 1.1# ea$h. %ull !ayment of "SD &#'1(#.## was given by !etitioner. Come )anuary *' +##1'!etitioner has yet to re$eive any of the ordered bo es. ,n %eb. 19' +##1 Davao Corrugated re!lied that as early as A!ril *' 1998' order for bo es were $om!letedand that it was Solar Harvest who failed to retrieve same from their warehouse within *# days from $om!letion as agreed u!on. -es!ondent mentioned that !etitioner even !la$ed additional order of +&'###.## bo es' out of whi$h' 1&'### had already been manufa$tured without any advan$e !ayment from Solar Harvest. Davao Corrugated then demanded that Solar Harvest remove bo es from their warehouse' !ay balan$e of "SD 1('&##.## for the additional bo es and .1*+'### as storage fee. ,n August 1/' +##1 Solar harvest filed $om!laint against Davao Corrugated for sum of money and damages $laiming that the agreement was for the delivery of the bo es' whi$h Davao Corrugated failed to do. 0hey further alleged that whenever follow1u!s were made' they would only see sam!le bo es and get !romise of delivery. Due to Davao Corrugated2s failure to deliver' Solar Harvest had to $an$el the order and demanded !ayment and3or refund whi$h Davao Corrugated refused to !ay. Davao Corrugated $ounter$laimed that they had already $om!leted !rodu$tion of the *4'(## bo es !lus an additional 1&'### bo es 5whi$h was !art of the additional +&'### order that is un!aid6. 0he agreement was for Solar Harvest to !i$7 u! the bo es' whi$h they did not do. 0hey even averred that on ,$t. 8' 1998' Solar Harvest2s re!resentative 8obby Que even went to the warehouse to ins!e$t and saw that indeed bo es were ready for !i$7 u!. 0hat on %eb. +#' 1999' Que visited the fa$tory again and said that they ought to sell the bo es to re$ou! some of the $osts of the1&'### additional orders be$ause their transa$tion to shi! the bananas did not materiali9e. Solar Harvest denies that they made the additional order. ,n :ar$h +#' +##& the -0C ruled in favor of Davao Corrugated. ISS'();hether or not Davao Corrugated was res!onsible for brea$h of $ontra$t as Solar Harvest had not yet demanded from it the delivery of the bo es< H(*D) =,. >t was held that it was unthin7able that for around two 5+6 years !etitioner merely followed u! and did not demand the delivery of the bo es. ?ven assuming that the agreement is for delivery by Davao Corrugated' res!ondent would not be liable for brea$h of $ontra$t as !etitioner had not yet demanded from it the delivery of the bo es. ?rror was not found in the de$ision of the -0C. %urthermore' the $laim for reimbursement is a$tually one for res$ission or resolution of $ontra$t under Arti$le 1191 of the Civil Code. 0he right to res$ind $ontra$ts arises

on$e the !arty defaults in the !erforman$e of his obligation. Arti$le 1191 should be ta7en in $on@un$tion with Arti$le 1149: Those obliged to deliver or to do something in delay from the time the obligee judicially or extra judicially demands form them the fulfilment of their obligation. However the demand from creditor shall not be necessary in order that delay may exist: 1.When the obligation or the law expressly so declares or !.When from the nature and the circumstance of the obligation it appears that the designation of the timewhen the thing is to be delivered or the service is to be rendered was a controlling motive for theestablishment of the contract" or #.When the demand would be useless as when the obligor has rendered it beyond his power to perform. $.xxx 0he general rule in re$i!ro$al obligation is that the fulfilment of the !arties2 res!e$tive obligations should be simultaneous. Demand is not ne$essary be$ause on$e a !arty fulfils his obligation and the other !arty fails to do his' the latter automati$ally in$urs delay. ;hen dates are set' the default for ea$h obligation is determined by the rules given in the 1 st!aragra!h of the arti$le. 0hus even in re$i!ro$al obligations' if the !eriod for the fulfilment of the obligation is fi ed' demand from the obligee is still ne$essary before the obligor $an be $onsidered in default and before a $ause of a$tion for res$ission will a$$rue. >n the $ase of Solar Harvest' merely following u! the order was not the same as demanding for the bo es. 0he Su!reme Courtdenied Solar Harvest2s !etition. >t ruled that Davao Corrugated did not $ommit brea$h of $ontra$t. .etitioner was ordered to remove the bo es from res!ondent2s warehouse within thirty days.