Case Digest (G.R. No. L-15645)
Facts:
Paz P. Arrieta and Vitaliado Arrieta v. National Rice and Corn Corporation, G.R. No. L-15645, January 31, 1964, the Supreme Court En Banc, Regala, J., writing for the Court.The plaintiffs-appellees, Paz P. Arrieta and Vitaliado Arrieta, bid for and were awarded a public contract called by the National Rice and Corn Corporation (NARIC) to supply 20,000 metric tons of Burmese rice. On July 1, 1952 the parties executed a Contract of Sale under which Arrieta obligated herself to deliver the rice CIF Manila and NARIC obligated to pay “by means of an irrevocable, confirmed and assignable letter of credit in U.S. currency ... immediately.”
After execution, NARIC delayed in opening the required letter of credit. Its first application to the Philippine National Bank (PNB) was forwarded on July 30, 1952, accompanied by a transmittal letter in which NARIC admitted it did “not have sufficient deposit” to meet the bank’s requirements and requested special consideration. PNB approved the L/C only on condition of a 50% marginal cash deposit and that drafts be paid upon presentment; NARIC was unable to furnish that deposit. The letter of credit was actually opened only on September 8, 1952.
Because of the delay, Arrieta’s supplier in Rangoon cancelled the allocation and forfeited the 5% deposit (amounting to 524,000 kyats, roughly P200,000). Arrieta attempted but failed to reinstate the allocation and offered to substitute Thai rice; NARIC rejected the substitution. Arrieta then demanded compensation (P286,000 in U.S. dollars representing unrealized profit) and, upon refusal, sued.
At NARIC’s instance a counterclaim was filed and Manila Underwriters Insurance Co., Inc. was impleaded as third-party defendant on the performance bond. The trial court (decision dated February 20, 1958) found for the plaintiffs, awarded $286,000 as damages, and dismissed NARIC’s counterclaim and third-party claim. NARIC appealed to the Supreme Court.
The Court considered statutory context: NARIC had been abolished and its functions transferred to the...(Subscriber-Only)
Issues:
- Did NARIC breach the July 1, 1952 contract by failing to open the required letter of credit promptly and is it liable in damages to Arrieta?
- Did Arrieta’s subsequent offer to substitute Thailand rice constitute a waiver of her rights arising from NARIC’s breach?
- Is Manila Underwriters Insurance Co., Inc. liable under the performance bond?
- In what currency and at what exchange rate sh...(Subscriber-Only)
Ruling:
- (Subscriber-Only)
Ratio:
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Doctrine:
- (Subscriber-Only)