Rustan Pulp and Paper Mills v. IAC

G. R. No. 70789, 19 October 1992

FACTS:

Petitioner Rustan established a pulp and paper mill in Baloi, Lano del Norte. Respondent Lluch, who is a holder of a forest products license, transmitted a letter to petitioner Rustan for the supply of raw materials by the former to the latter. In their contract it stated that the supply is not exclusive, Rustan shall have the option to buy supplies from other and that buyer shall have the right to stop delivery of the materials by the seller if the supply will be efficient, however the seller is given sufficient notice.

During the test run of the pulp mill, the machinery line thereat had major defects while deliveries of the raw materials piled up, which prompted the Japanese supplier of the machinery to recommend the stoppage of the deliveries. The suppliers were informed to stop deliveries and the letter of similar advice sent by petitioners to private respondents.

Lluch sought to clarify the tenor of the notice as to whether stoppage of delivery or termination of the contract of sale was intended, but Rustan Pulp failed to reply. This alleged ambiguity notwithstanding, Lluch and the other suppliers resumed deliveries after a series of talks between Lluch and Romeo Vergara, the manager of Rustan Pulp.

Later, Lluch filed a complaint for breach of contract. The case was dismissed, but at the same time, the court enjoined Rustan Pulp to honor the contract. On appeal, the court ruled that Rustan Pulp’s suspension of deliveries was not in the lawful exercise of its rights under the contract of sale.

ISSUE:

Is the suspension of deliveries by Rustan (D) a proper exercise of its rights under the contract of sale?

RULING:

No. There is cogent basis for private respondent’s apprehension on the illusory resumption of deliveries inasmuch as the prerogative suggests a condition solely dependent upon the will of petitioners. Petitioners can stop delivery of pulp wood from private respondents if the supply at the plant is sufficient as ascertained by petitioners, subject to re-delivery when the need arises as determined likewise by petitioners.

Article 1182 of the civil code states that: When the fulfillment of the condition depends upon the sole will of the debtor, the conditional obligation shall be void. If it depends upon chance or upon will of a third person, the obligation shall take effect in conformity with the provisions of this Code.

A purely potestative imposition of this character must be obliterated from the face of the contract without affecting the rest of the stipulations considering that the condition relates to the fulfillment of an already existing obligation and not to its inception.

 * Case digest by Aileen B. Buenafe, LLB-1, Andres Bonifacio Law School, SY 2017-2018

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