G.R. No. L-58122. December 29, 1989.
MOBIL OIL PHILIPPINES, INC., petitioner, vs. THE HONORABLE COURT OF APPEALS and FERNANDO A. PEDROSA, respondents.

FACTS

Private respondent Fernando A. Pedrosa, a Mobil dealer, pre-paid an order for gasoline on February 15, 1974, with the product order form indicating the delivery due date as “Today.” The order was approved by Mobil’s credit man. However, Mobil did not deliver the gasoline on that date. A price increase for gasoline was implemented on February 18, 1974. Consequently, when Mobil finally delivered the order on March 5, 1974, it demanded that Pedrosa pay a price differential based on the new, higher rates. Pedrosa refused to pay the differential, arguing that Mobil was in breach for failing to deliver on the agreed date.
Pedrosa filed an action for damages against Mobil. He contended that Mobil’s failure to deliver on February 15 constituted contractual breach and delay, and that Mobil could not benefit from this breach by charging the increased price. Mobil defended its action by asserting that since the physical delivery occurred on March 5, the prevailing increased rates at the time of delivery should apply, not the prices effective when the order was placed and paid.

ISSUE

Whether Mobil Oil Philippines, Inc. is liable for damages for its failure to deliver the pre-paid gasoline order on the contractually stipulated date.

RULING

Yes, Mobil is liable. The Supreme Court affirmed the decisions of the lower courts, holding Mobil liable for damages arising from its breach of contract. The legal logic is anchored on the principles of contractual obligations and mora solvendi (delay in performance). A perfected contract of sale was established when Pedrosa’s pre-paid order was accepted and approved by Mobil’s credit man on February 15, 1974. The notation “Today” on the order form constituted the agreed delivery date. Mobil’s failure to deliver on that stipulated date constituted delay in the performance of its obligation.
This delay was not justified. The Court found that the internal processing delays within Mobil’s organization, including the reprioritization of work due to the price increase, were within its control and did not excuse its failure to comply with the agreed delivery schedule. Since Mobil was guilty of breach and delay, it cannot invoke the subsequent price increase to its advantage. To allow it to charge the new price would permit it to profit from its own contractual default. The award of actual damages for lost profits was therefore proper. The awards for moral and exemplary damages were also sustained, as Mobil’s act of withholding delivery to coerce payment of the differential was found to be in bad faith. The Court denied Pedrosa’s separate motion to adjust the monetary award for inflation, noting the absence of an official declaration of extraordinary inflation required for the application of Article 1250 of the Civil Code.