[ G. R. No. 40709. August 01, 1934 ] 60 Phil. 255
[ G. R. No. 40709. August 01, 1934 ]
ASTURIAS SUGAR CENTRAL, INC., PLAINTIFF AND APPELLANT, VS. THE PURE CANE MOLASSES CO., INC., DEFENDANT AND APPELLEE. D E C I S I O N
AVANCEÑA, C.J.:
Prior to the month of January, 1931, the plaintiff Asturias Sugar Central, Inc., and the defendant Pure Cane Molasses Co., entered into a contract, Exhibit A, whereby the former bound itself to sell and the latter to buy all the molasses which the said plaintiff would produce at the prices and under the conditions specified therein, one of which was that the defendant deposit the sum of P6,000 in the Bank of the Philippine Islands as security for compliance with the terms of the contract, which the said defendant did. In an action which the plaintiff later brought against the defendant for the amendment of the contract Exhibit A, the latter, in its answer, filed on January 14, 1931, raised the Question relative to its right to cancel the contract upon payment of the sum of P6,000 in accordance with the terms thereof, alleging that it had made a demand on the plaintiff to accept the cancellation and to receive the sum of P6,000, which said plaintiff refused. Consequently, it prayed that the plaintiff be ordered to accept the said sum of P6,000 and that the contract Exhibit A be declared cancelled. The lower court rendered judgment therein holding, among other things, that the terms of the contract Exhibit A did not authorize the defendant to cancel it and, therefore, the cancellation was not in order. On appeal, this court reversed the judgment of the trial court and held that, under the terms of the contract, the defendant had the right to cancel it at any time upon payment of the sum of P6,000, which had been deposited in the Bank of the Philippine Islands for this and other purposes. Upon the filing of a motion for reconsideration the judgment of this court was ratified by resolution of this court of December 31, 1932, which further declared that the contract was deemed cancelled only on November 18, 1932, the date when the defendant deposited the sum of P6,000 with the clerk of the court and when the cancellation was consummated.[1]
After the former case was remanded to the lower court, the plaintiff brought another action against the defendant on February 3, 1933, for the recovery of the sum of P72,569.28. This sum represented the alleged damages suffered by the plaintiff by reason of the refusal of the defendant to purchase the molasses which it had produced from the month of January, 1931, to November 18, 1932. The trial court dismissed the complaint and absolved the defendant therefrom. From this judgment the plaintiff took the appeal now under consideration.
Although the judgment rendered by this court in the former case was not unanimous, it is now res judicata that the defendant had the option to cancel the contract at any time upon payment of the sum of P6,000, in accordance with the terms of the document Exhibit A. However, the judgment of this court in the sense that the contract was deemed cancelled on November 18, 1932, implies that the contract in question was in force prior to that date, Therefore, the whole question raised in this appeal hinges on whether or not the plaintiff has the right to demand from the defendant the payment of the amount claimed by it as damages resulting from the defendant’s refusal to purchase the molasses it had produced from the month of January, 1931, to November, 1932, and which said defendant was bound to purchase under the contract which was in force during that period.
It is an established fact that the defendant demanded the cancellation of the contract and tendered payment of the sum of P6,000 in consideration thereof. The very answer of the defendant, which was filed in the former case on January 14, 1931, is an express demand for cancellation and a formal tender of the sum of P6,000. This demand and tender were all that the defendant needed to make in order that the plaintiff would be obliged to give its consent to the cancellation. It was not necessary for the defendant to deposit the sum of P6,000 with the clerk of the court merely because the plaintiff refused to accept it. The tender made by the defendant in good faith was sufficient. Article 1176 et seq. of the Civil Code requiring the deposit of the thing due with the clerk of the court, are not applicable to this case on the ground that they refer to the payment of a debt. In this case the defendant owed the plaintiff nothing. The said sum of P6,000 was not a debt of the defendant but merely a consideration for the cancellation of the contract previously agreed upon. The payment thereof constituted the obligation to be performed by the defendant, and the cancellation of the contract, the corresponding obligation to be performed by the plaintiff. The defendant was not obliged to pay the sum of P6,000 before the plaintiff cancelled the contract, just as the plaintiff was not obliged to cancel the contract before the defendant paid the sum of P6,000. Both are reciprocal obligations which should have been performed simultaneously. In principle, the defendant’s obligation to pay the sum of P6,000 to the plaintiff for the cancellation of the contract is the same as that of the vendor in a contract of sale with the right of repurchase to refund the purchase price to the purchaser, for the purposes of the resale, in which case this court has held that deposit of the repurchase price is not necessary to compel the purchaser to make the resale, if he refuses to accept it. (Villegas vs. Capistrano, 9 Phil., 416.)
Furthermore, this court is of the opinion that the offer of the defendant to pay to the plaintiff the sum of P6,000 was made in good faith, taking into consideration, particularly, the fact that said sum had been deposited in a bank at the disposal of the plaintiff, for the purpose, among other things, of the cancellation of the contract.
If, according to the judgment of this court in the former case, Exhibit A grants the defendant the option to cancel the contract at any time, upon payment of the sum of P6,000, and if the defendant demanded such cancellation offering to pay said sum in good faith, the plaintiff in refusing to consent to such cancellation, violated the contract. Such being the case, the plaintiff has no cause of action against the defendant because it is based on the alleged obligation of the said defendant to purchase its molasses during the period in which such obligation would not have existed, had not the plaintiff, in violation of the contract, refused the cancellation thereof. In such case, the plaintiff derives its cause of action from its own violation thereof. To recognize the validity of such cause of action would be to sanction and legalize such breach. On the other hand, such breach of contract cannot be the source of rights. Had the contract been cancelled in January, 1931, when the defendant demanded its cancellation, as it had a right to do, there would have been no contract to be complied with by the defendant from that date and the plaintiff’s cause of action could not have been based on the cancelled contract. Plaintiff’s violation of that contract by refusing to cancel the same cannot now be the basis of its cause of action.
Wherefore, the judgment appealed from is hereby affirmed, with costs against the appellant. So ordered.
Street, Hull, Vickers, Butte, and Goddard, JJ., concur.