G.R. No. 96505 July 1, 1993
Legaspi Oil Co., Inc., petitioner, vs. The Court of Appeals and Bernard Oseraos, respondents.

FACTS

Petitioner Legaspi Oil Co., Inc. entered into a contract of sale with private respondent Bernard Oseraos, through his authorized agent Jose Llover, for 100 tons of copra at P82.00 per 100 kilos, with delivery terms of 20 days effective March 8, 1976. Oseraos delivered only 46,334 kilos, leaving an undelivered balance of 53,666 kilos. Petitioner made repeated demands for compliance, including a final demand letter dated October 6, 1976, warning that failure to deliver would result in cancellation, purchase of the balance at open market, and charging of the price differential to Oseraos. As Oseraos still failed to deliver, petitioner purchased the undelivered balance on October 22, 1976, at the open market price of P168.00 per 100 kilos, resulting in a price differential of P86.00 per 100 kilos or a total of P46,152.76. Petitioner filed a complaint for breach of contract and damages. The trial court ruled in favor of petitioner, but the Court of Appeals reversed and dismissed the complaint.

ISSUE

Whether or not private respondent Bernard Oseraos is liable for damages arising from fraud or bad faith in deliberately breaching the contract of sale.

RULING

Yes. The Supreme Court held that private respondent is guilty of fraud in the performance of his obligation. His deliberate failure to deliver the balance of the copra, especially after the market price had more than doubled, constituted a willful and intentional evasion of his contractual duty. Under Article 1170 of the Civil Code, those guilty of fraud in the performance of their obligation are liable for damages. Consequently, private respondent is liable to pay petitioner the amount of P46,152.76 as actual damages. The decision of the Court of Appeals was annulled and set aside, and the decision of the trial court was reinstated.