G.R. No. 108129 September 23, 1999
AEROSPACE CHEMICAL INDUSTRIES, INC., petitioner, vs. COURT OF APPEALS, PHILIPPINE PHOSPHATE FERTILIZER, CORP., respondents.

FACTS

On June 27, 1986, petitioner Aerospace Chemical Industries, Inc. (Aerospace) purchased 500 metric tons of sulfuric acid from private respondent Philippine Phosphate Fertilizer Corporation (Philphos) under a contract specifying terms including price, payment (cash five days prior to shipment), and shipping conditions (laycan: July; load ports: Basay, Negros Oriental and Sangi, Cebu). Petitioner, as buyer, was to provide the vessel. Petitioner paid P553,280.00 on October 3, 1986. Petitioner chartered M/T Sultan Kayumanggi, which, in November and December 1986, loaded only 70.009 MT from Basay and 157.51 MT from Sangi due to the vessel tilting, for a total of 227.51 MT. The vessel later sank with this cargo. Petitioner chartered another vessel, M/T Don Victor, and in letters dated January 26, 1987, March 20, 1987, and May 15, 1987, requested an additional purchase of 227.51 MT to complete a 500 MT shipment from a single safe berth (Sangi, Cebu), offering to pay the prevailing price. In a July 6, 1988 letter, petitioner again requested the additional 227.51 MT. By telephone, petitioner requested to get the additional acid from Isabel, Leyte, but private respondent refused via letter dated July 22, 1988, citing pyrite limitation and delayed imports. Private respondent demanded petitioner retrieve the remaining 30 MT from Basay or pay storage. Petitioner filed a complaint for specific performance and/or damages. The Regional Trial Court ruled in favor of petitioner. The Court of Appeals reversed, dismissed the complaint, and on the counterclaim, ordered petitioner to pay private respondent P324,516.63 for balance of maintenance cost and tank rental charges due to petitioner’s failure to haul the acid on the designated date.

ISSUE

The primary issue is whether petitioner (buyer) or private respondent (seller) was guilty of breach of contract, specifically, whether petitioner was in delay in providing a vessel to lift the sulfuric acid, making it liable for storage and rental damages, or whether private respondent failed to deliver the remaining balance of the acid.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals decision. The Court ruled that petitioner was guilty of delay in the performance of its obligation. The contract required petitioner to provide the vessel and pay five days prior to the shipment date set for July 1986. Petitioner paid only on October 3, 1986, and its chartered vessel failed to fully load the cargo in November and December 1986 due to its own unseaworthiness. Petitioner’s subsequent requests for an additional order of 227.51 MT to complete a 500-ton shipment from one port constituted a proposal for a new contract, which private respondent was not obligated to accept. Private respondent’s refusal to supply the additional acid from Isabel, Leyte was justified and did not constitute a breach of the original contract. Petitioner’s failure to haul the remaining acid (272.49 MT) on time made it liable for the resulting storage and tank rental charges. The Court of Appeals’ computation of damages (P324,516.63) was upheld. The Supreme Court ordered private respondent to return the excess payment of P31,483.37 (the difference between petitioner’s advance payment and the value of acid loaded plus the damages awarded) to petitioner.