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Song Fo Co. vs. Philippine Hawaiian Co.

Hawaiian-Philippine Co. (HPC) contracted to deliver 300,000 gallons of molasses to Song Fo & Co. (SFC) and said they could possibly provide an additional 100,000 gallons. HPC delivered 55,006 gallons before SFC alleged breach. SFC sued for damages. The Supreme Court ruled that HPC only agreed to 300,000 gallons and SFC's late payment was not substantial enough to allow HPC to rescind the contract. SFC was entitled to damages of P3,000 for the extra costs of obtaining replacement molasses but not the claimed P14,000 in lost profits, which were not sufficiently proven.

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134 views

Song Fo Co. vs. Philippine Hawaiian Co.

Hawaiian-Philippine Co. (HPC) contracted to deliver 300,000 gallons of molasses to Song Fo & Co. (SFC) and said they could possibly provide an additional 100,000 gallons. HPC delivered 55,006 gallons before SFC alleged breach. SFC sued for damages. The Supreme Court ruled that HPC only agreed to 300,000 gallons and SFC's late payment was not substantial enough to allow HPC to rescind the contract. SFC was entitled to damages of P3,000 for the extra costs of obtaining replacement molasses but not the claimed P14,000 in lost profits, which were not sufficiently proven.

Uploaded by

Joshua Ouano
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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#2 Song Fo vs.

Hawaiian Ph
Facts:

Hawaiian-Philippine Co. (HPC) entered into a contract with Song Fo & Co. (SFC) for
the delivery of 300,000 gallons of molasses to the latter. SFC asked if HPC could
supply an additional 100,000 gallons of molasses, which HPC said that we believe that
this is possible and we will do our best to let you have these extra 100,00 gallons

HPC. was able to deliver 55,006 gallons of molasses before SFC alleged that there was
a breach in contract.

SFC filed a complaint for breach of contract against Hawaiian-Philippine Co. and asked
for P70,369.50. HPC claimed the special defense of delay in the payment from SFC and
that they have the right to rescind the contract.

CF: CFI condemned HPC to pay SFC a total of P35,317.93, with legal interest from the date of
the presentation of the complaint.
Issue:
(1) Did HPC agree to sell 400,000 gallons of molasses or 300,000 gallons of molasses?
(2) Had HPC the right to rescind the contract of sale made with SFC?
(3) On the basis first, of a contract for 300,000 gallons of molasses, and second, of a contract
imprudently breached by HPC, what is the measure of damages?

Held:
(1) Only 300,000 gallons of molasses was agreed to by HPC. as seen in the documents
presented in court. The language used with reference to the additional 100,000 gallons was not
a definite promise.
(2) With reference to the second question, doubt has risen as to when SFC was supposed to
make the payments for the delivery of molasses as shown in the documents presented by the
parties. (unclear date as to when monthly payment starts) *****
However, the SC deduced that SFC was to pay HPC at the end of each month. Under this
hypothesis, SFC should have paid for the molasses received on Jan 5, 1923 not later than Jan
31, 1923. Instead, the payment was not made until February 20, 1923. All the rest of the
molasses payments were either paid ahead or on time.
The terms of payment fixed by the parties are controlling. Theoretically speaking, HPC would
have the right to rescind the contract with SFC because of the breach of contract.
However, the general rule is that rescission will not be permitted for a slight or casual
breach of contract, but only for breaches that are so substantial and fundamental as to
defeat the object of the parties in making the agreement.
There was only a slight breach of contract when the payment was delayed for 20 days
after which HPC accepted the payment of the overdue accounts and continued with the
contract, waiving its right to rescind the contract. The delay in the payment of SFC was not such
a violation for the contract.
(3) With regard to the third question, the first cause of action of SFC is based on the greater
expense to which it was put in being compelled to secure molasses from other sources.
HPC conceded that out of the 300,000 gallons of molasses in the total agreement, only 55,000
gallons were delivered to SFC before the breach. This leaves 245,000 gallons of molasses
undelivered which SFC had to purchase in the open market. SFC procured more molasses at
the expense of an extra One and centavos per gallon, thus, the Supreme Court ruled that
P3,000 should be paid to SFC as damages.
The second cause of action was based on the lost profits on account of the breach of contract.
Supreme Court said that SFC is not entitled to recover anything under the second cause of
action because the testimony of Mr. Song Heng was unable to substantiate by proof nor facts
that there was a unrealized profit of P14,000.
Thus, SFC is entitled to recover damages for the breach of contract on the first cause of action
in the amount of 3,000 and the second cause of action in no amount.

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