ACTUAL DAMAGES
G.R. No. 170633
October 17, 2007
Petitioner: MCC INDUSTRIAL SALES CORPORATION
Respondents: SSANGYONG CORPORATION
Facts:
Petitioner filed a petition for review on certiorari of the decision and resolution of the Court
of Appeals. Petitioner is engaged in the business of importing and wholesaling stainless steel
products situated in Binondo, Manila. On the other hand, respondent Ssangyong Corporation
is an international trading company with head office in Seoul, South Korea and regional
headquarters in Makati City, Philippines. The latter is one of the suppliers of the former. The
two corporations conducted a business through telephone calls and facsimile or telecopy
transmissions. Respondent would send the pro forma invoices containing the details of the
steel product order to the petitioner; if the latter conforms thereto, its representative affixes his
signature on the faxed copy and sends it back to Ssangyong by fax. Every letter is addressed
to Gregory Chan, MCC Manager [also the President of Sanyo Seiki Stainless Steel
Corporation. Under its contract, the terms and condition stipulated that payment for the
ordered steel products would be made through an irrevocable letter of credit (L/C) at sight in
favor of Ssangyong, and such delivery of the goods was to be made after the L/C had been
opened. Upon the respondent’s delivery, petitioner failed to open its second L/C upon the
agreed time, thus result to a breach of contract. Respondent filed a civil action for damages.
The RTC ruled that when plaintiff agreed to sell and defendants agreed to buy, the contract
was perfected. Therefore the decision is in favor of the respondent. Petitioner appealed,
however, CA affirm the decision of the lower court. Hence, the petition.
Issue:
Whether there was a perfected contract of sale between MCC and Ssangyong, and, if in the
affirmative, whether MCC breached the said contract.
Ruling:
Yes.
In an action for damages due to a breach of a contract, it is essential that the claimant proves
(1) the existence of a perfected contract, (2) the breach thereof by the other contracting party
and (3) the damages which he/she sustained due to such breach. Actori incumbit onus
probandi. The burden of proof rests on the party who advances a proposition affirmatively. In
other words, a plaintiff in a civil action must establish his case by a preponderance of
evidence, that is, evidence that has greater weight, or is more convincing than that which is
offered in opposition to it.
In general, contracts are perfected by mere consent, which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the contract. The
offer must be certain and the acceptance absolute. They are, moreover, obligatory in whatever
form they may have been entered into, provided all the essential requisites for their validity
are present. Sale, being a consensual contract, follows the general rule that it is perfected at
the moment there is a meeting of the minds upon the thing which is the object of the contract
and upon the price. From that moment, the parties may reciprocally demand performance,
subject to the provisions of the law governing the form of contracts.
The Court held that there is a valid contract, it is crystal-clear that when petitioner did not
open the L/C for the first half of the transaction (100MT), despite numerous demands from
respondent Ssangyong, petitioner breached its contractual obligation. It is a well-entrenched
rule that the failure of a buyer to furnish an agreed letter of credit is a breach of the contract
between buyer and seller. Indeed, where the buyer fails to open a letter of credit as stipulated,
the seller or exporter is entitled to claim damages for such breach. Damages for failure to
open a commercial credit may, in appropriate cases, include the loss of profit which the seller
would reasonably have made had the transaction been carried out.
