(41) Solar Harvest, Inc. v. Davao Corrugated Carton Corp.

, GR 176868, July 26, 2010

[Per J. Nachura, Second Division]
ISSUE: Whether or not Davao Corrugated Carton Corporation (DCCC) is in default.
FACTS: Solar Harvest, Inc. entered into an agreement with Davao Corrugated Carton
Corporation (DCCC) for the purchase of corrugated carton boxes, specifically designed
exporting fresh bananas. The agreement was not reduced into writing. To start the
production, Solar deposited on March 31, 1998 the full payment for the ordered boxes.
Despite such payment, Solar did not receive any boxes from DCCC. On January 3, 2001,
Solar wrote a demand letter for reimbursement of the amount paid. DCCC replied that the
boxes had been completed as early as April 3, 1998 and that Solar failed to pick them up
from their warehouse 30 days from completion, as agreed upon. Solar alleges that the
agreement was for DCCC to deliver within 30 days from payment the said cartons to
Tagum Agricultural Development Corporation (TADECO). DCCC then demanded Solar
to remove the boxes from the factory and to pay the balance for the additional boxes.
HELD: No, DCCC is not in default. It was unthinkable that, over a period of more than two
years, Solar did not even demand for the delivery of the boxes. Even assuming that the
agreement was for DCCC to deliver the boxes, DCCC would not be liable for breach of
contract as Solar had not yet demanded from it the delivery of the boxes. In reciprocal
obligations, the general rule is that the fulfillment of the parties respective obligation
should be simultaneous. The party would incur in delay only from the moment the other
party demands fulfillment of the obligation. Thus, demand upon the obliged is still
necessary before the obligor can be considered in default and before a cause of action
for rescission will accrue. Here, Solar alleges that they made a follow-up upon
respondent, which, however, would not qualify as a demand for the fulfillment obligation.
Solar also testified that they made a follow-up of the boxes, but not a demand. Therefore,
DCCC is not in default and Solar did not establish a cause of action for rescission and
should relieve DCCC from the burden of keeping the boxes.