A paper mill accepted an offer from a supplier to provide raw materials with a contract containing a condition that allowed the mill to stop deliveries when supply was sufficient at its sole discretion. When defects were found in new machinery, the mill stopped deliveries from the supplier but continued accepting from others. The supplier sought clarification but received no response. Deliveries resumed after talks. The supplier later filed a breach of contract case which was dismissed but the mill was enjoined to honor the contract. On appeal, the court ruled the mill's suspension of deliveries was not a lawful exercise of its rights under the contract as the condition depended solely on the mill's will.
A paper mill accepted an offer from a supplier to provide raw materials with a contract containing a condition that allowed the mill to stop deliveries when supply was sufficient at its sole discretion. When defects were found in new machinery, the mill stopped deliveries from the supplier but continued accepting from others. The supplier sought clarification but received no response. Deliveries resumed after talks. The supplier later filed a breach of contract case which was dismissed but the mill was enjoined to honor the contract. On appeal, the court ruled the mill's suspension of deliveries was not a lawful exercise of its rights under the contract as the condition depended solely on the mill's will.
A paper mill accepted an offer from a supplier to provide raw materials with a contract containing a condition that allowed the mill to stop deliveries when supply was sufficient at its sole discretion. When defects were found in new machinery, the mill stopped deliveries from the supplier but continued accepting from others. The supplier sought clarification but received no response. Deliveries resumed after talks. The supplier later filed a breach of contract case which was dismissed but the mill was enjoined to honor the contract. On appeal, the court ruled the mill's suspension of deliveries was not a lawful exercise of its rights under the contract as the condition depended solely on the mill's will.
IAC machinery were discovered prompting the Japanese supplier
of the machinery to recommend the stoppage of the deliveries. Summary: A paper mill started operations and accepted offers The suppliers were informed to stop deliveries, but were not to supply raw materials from several suppliers. One supplier informed as to the reasons for the stoppage. executed a contract with the paper mill with a condition that the paper mill has the right to stop accepting deliveries whenever Lluch (P) sought to clarify the tenor of the notice as to whether the supply was sufficient. The paper mill exercised that right, stoppage of delivery or termination of the contract of sale was but continued accepting periodic deliveries from other intended, but Rustan Pulp (D) failed to reply. This alleged suppliers. ambiguity notwithstanding, Lluch (P) and the other suppliers resumed deliveries after a series of talks between Lluch (P) Rule of Law: When the fulfillment of the condition depends on and Romeo Vergara, the manager of Rustan Pulp (D). the sole will of the debtor, the conditional obligation shall be void. Later, Lluch (P) filed a complaint for breach of contract. The —Article 1182, Civil Code. case was dismissed, but at the same time, the court enjoined Rustan Pulp (D) to honor the contract. On appeal, the court Facts: When Rustan Pulp & Paper Mills (D) started operations ruled that Rustan Pulp's (D) suspension of deliveries was not Romeo Lluch (P) offered to supply raw materials. Rustan Pulp in the lawful exercise of its rights under the contract of sale. (D) proposed a non-exclusive contract to buy wood pulp from Lluch (P). However, a condition in the contract gave Rustan Issues: Is the suspension of deliveries by Rustan (D) a proper Pulp (D) the right to stop accepting deliveries when the supply exercise of its rights under the contract of sale? became sufficient until such time the raw materials are needed. Ruling: No. There is basis for the apprehension on the illusory resumption of deliveries at Rustan Pulp (D) because the During the test run of the pulp mill, major defects on the prerogative suggests a condition solely dependent upon its exclusive will. The literal import of contested condition is that Rustan Pulp (D) can stop delivery of pulp wood from Lluch (P) if the supply at the plant is sufficient as ascertained by Rustan Pulp (D), subject to re-delivery when the need arises as determined likewise by Rustan Pulp (D).
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 (Civil Code Annotated, by Padilla, 1987 Edition, Volume 4, Page 160).
A condition which is both potestative (or facultative) and
resolutory may be valid, even though the saving clause is left to the will of the obligor as this Court ruled in Taylor vs. Uy Tieng Piao (43 Phil. 873). But the Taylor case, which allowed a condition for unilateral cancellation dependent on the arrival of factory machinery, cannot be applied because the facts relate to the birth of the undertaking and not to the fulfillment of an existing obligation. __________ * Keywords: potestative condition
Case Digest: Pasig Printing Corporation V. Rockland Construction Company, Inc. FACTS: MPLDC Leased Payanig Property or Home Depot Property To ECRM Enterprises (ECRM)