PAMINTUAN v.

CA

G.R. No. L-26339, December 14, 1979.

94 Phil. 556

AQUINO, J.

FACTS:

Mariano Pamintuan was in an agreement with Yu Ping Kun Co., Inc. to sell plastic sheetings imported
by the former from Japan through a barter license he had for the export of white flint corn to Toyo Menka
Kaisha, Ltd. While the plastic sheetings were arriving in Manila, Pamintuan informed the President of Yu Ping
Kun that he was in dire need of cash and requested that he be paid immediately for the plastic sheetings.
Consequently, the two parties fixed a price to the plastic sheetings regardless of the kind, quality or actual
invoice value thereof and based it on dividing the total price of the shipment with its aggregate quantity. After
the shipments arrived in Manila (4 shipments in total), Pamintuan only delivered a portion or 224, 150 yards of
the expected 339, 440 yards of plastic sheetings he received to Yu Ping Kun's warehouse. Furthermore, he
delivered plastic sheetings of inferior quality that were valued at a lesser price than what Yu Ping Kun had paid.
Subsequently, Yu Ping Kun filed an action to enforce a provision in their contract of sale which states that any
violation of the stipulations of that contract would entitle the aggrieved party to liquidated damages in the
amount of 10, 000 Php from the offending party.

ISSUE:

Whether or not compensatory damages may be awarded for breach of a contract of sale in addition to
liquidated damages/stipulated penalty in the said contract.

HELD:

Yes, compensatory damages may be awarded for breach of a contract of sale in addition to liquidated
damages/stipulated penalty in the said contract. Paragraph 1 of Article 1226 of the New Civil Code states that:

“In obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of
interests in case of noncompliance, if there is no stipulation to the contrary. Nevertheless, damages shall be
paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.”

Thus, as a general rule, the penalty takes the place of the indemnity for damages and the payment of
interest. However there are exceptions to this rule under the Civil Code, and one of them is; when the obligor is
guilty of fraud in the fulfillment of the obligation, indemnity for damages may be awarded in addition to and
apart from the penalty stipulated.

The factual findings of the lower courts that Pamintuan was guilty of fraud because he did not make a
complete delivery of the plastic sheetings and he overpriced the same is conclusive upon the Supreme Court.
Hence, based on this fact, Pamintuan should pay damages. However, in case of fraud the creditor (in this case
Yu Ping Kun), in addition to and apart from the stipulated penalty, may only recover the actual proven damages
and the stipulated penalty.
Pamintuan v. CA (G. R. No. L-26339),

December 14, 1979

FACTS:

This is about the recovery compensatory, damages of breach of a contract of sale in addition to the liquidated
damages.

Pamintuan and Yu Ping Kun were business partners. Pamintuan was a license barter who export corn flakes to
Japan in exchange of plastic sheetings. Yu Ping Kun complains in violation of their contract because although
plastic sheetings were delivered on the proper time and place. The quality of materials and overpricing the
same violates their agreement.

ISSUE:

Whether or not Pamintuan is guilty of fraud?

HELD:

Yes. Pamintuan is guilty of fraud because he change the manner of paying that resulted to overpricing, he
controlled disposal of goods in the warehouse and manipulated receipts. There is no justification for the Civil
Code to make an apparent distinction between penalty and liquidated damages because the settled rule is that
there is no difference between penalty and liquidated damages insofar as legal results are concerned and that
either maybe recovered without the necessary of proving actual damages and both maybe reduced when
proper. The CA ordered him to deliver to Yu Ping Kun plastic sheetings if he could not do so, to pay P100 559.28
as damages with 6% interest. With the modification of the judgment the CA is affirmed with all respects. No
cost in this instance.