Case Summary (G.R. No. 32958)
Factual Background
Blossom & Company and Manila Gas Corporation entered a contract of sale dated September 10, 1918, modified January 1, 1919, by which the defendant agreed to deliver specified monthly quantities of water gas tar and coal gas tar for a ten-year period beginning January 1, 1919. Blossom alleged that about the last part of July or the first part of August, 1920, Manila Gas ceased deliveries and thereafter refused to make any deliveries under the contract. Blossom claimed damages for the continuous failure to deliver and, in a former action, sought recovery of the damages it purportedly sustained up to the then date.
Prior Litigation and Judgment
In the earlier action filed by Blossom, case No. 25352, Blossom alleged a willful and deliberate breach from July, 1920, and prayed for damages in the sum of P124,848.70 and for specific performance. On November 23, 1923, the Court of First Instance rendered judgment for Blossom in the sum of P26,119.08 as damages for the breach occurring from July, 1920 up to and including September, 1923, with legal interest from November 23, 1923, and costs. That court declined to order the defendant to resume deliveries under the contract but left Blossom its remedy for damages for any subsequent breaches. That judgment was later affirmed by this Court.
Present Action and Relief Sought
In the present action Blossom sought to recover damages it alleged to have sustained after September, 1923, arising from further breaches of the same ten-year contract for the period remaining until January 1, 1929. Blossom alleged that the defendant continued in bad faith to refuse deliveries and that the contract remained in force. The complaint in the present suit thus sought recovery for damages accruing after the period covered by the former judgment.
Procedural Posture and Evidentiary Correspondence
The record showed that the defendant made no deliveries from July, 1920, to April, 1926, and thereafter made nine deliveries between April 7, 1926 and January 5, 1927. Correspondence between the parties in March, April, and January of 1926 and 1927 demonstrated divergent constructions of the contract: Blossom sought to resume minimum monthly deliveries under the old contract and requested adjustments for the unpaid period, while Manila Gas replied that it was prepared to furnish minimum quantities but disputed Blossom’s contractual construction and insisted on its interpretation concerning entitlement to total output. Blossom thereafter served notice of intent to commence action, which it did.
Referee and Lower Court Findings
A referee found that Blossom was entitled to P2,219.60 for overcharges on deliveries of fifty-four tons of coal gas tar and one hundred eighty tons of water gas tar after April, 1926. The lower court adopted the referee’s findings and calculations on that point, observing that the defendant had attempted to discourage purchases by inflating the price of raw materials. The lower court's broader findings addressed the nature of the prior breach and the legal consequences of the earlier litigation.
Issues Presented
The decisive legal issue was whether the prior judgment for damages covering July, 1920 to September, 1923 constituted a bar to Blossom’s present action to recover damages accruing after September, 1923 for breaches of the same contract; that is, whether Blossom could maintain a second suit to recover damages for subsequent or continuing breaches after it had recovered judgment for an earlier period and had pleaded a total repudiation of the contract in the former action.
Parties' Contentions
Blossom contended that the former judgment did not preclude a subsequent action for damages accruing after September, 1923 and that it retained the right to recover continuing damages for the remainder of the ten-year term. Manila Gas asserted that the prior suit, in which Blossom had alleged total refusal and bad faith, resulted in a final adjudication of the contract breach and that Blossom could not split its demand but must recover all damages in one action when the contract had been totally repudiated.
Legal Basis and Reasoning
The Court surveyed authorities establishing the governing rule that where a contract to do several things at several times is entire in nature and is totally breached by an unqualified and positive refusal to perform, the injured party may treat the renunciation as a complete breach and must recover all damages in a single action; a judgment for damages on such a total breach constitutes a bar to subsequent suits on the same contract. The Court cited decisions applying this principle, including Roehm vs. Horst, Pakas vs. Hollingshead, L. Bucki & Son Lumber Co. vs. Atlantic Lumber Co., Watts vs. Weston, and decisions concerning continuous supplies of water such as Abbott vs. 76 Land and Water Co. and Fish vs. Folley, to show the established rule that an indivisible demand arising from a total repudiation of a continuous contract must be presented in one action and that what is not presented is foregone.
The Court emphasized that the former complaint had specifically alleged that the defendant "has refused, and still refuses, to deliver to the plaintiff any coal and water gas tar whatsoever under the said contract" since about July, 1920, and
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Case Syllabus (G.R. No. 32958)
Parties and Procedural Posture
- Blossom & Company, Inc. was the plaintiff and appellant who sought damages for breaches of a ten-year tar supply contract.
- Manila Gas Corporation was the defendant and appellee which was alleged to have repudiated the contract and later delivered limited quantities of tar.
- The plaintiff commenced a prior suit, obtained a judgment for P26,119.08 covering damages from July 1920 through September 1923, and attached that judgment as Exhibit G to the present complaint.
- The plaintiff filed the present action to recover damages alleged to have accrued after September 1923 and during the remainder of the ten-year contract.
- The trial court sustained the plea of res judicata, adopted the referee’s finding on overcharges, and entered judgment against the appellant, which the Supreme Court affirmed.
- Costs were awarded against the appellant, and the opinion recorded concurrence by Johnson, Street, Malcolm, Villamor, Ostrand, Romualdez, and Villa-Real, JJ.
Key Factual Allegations
- The complaint alleged that Manila Gas Corporation willfully and deliberately ceased deliveries about July 1920 and continually refused to deliver any coal or water gas tar thereafter.
- In the prior action (No. 25352) Blossom & Company, Inc. recovered P26,119.08 as damages for breach from July 1920 to September 1923, with legal interest from November 23, 1923.
- The record showed no deliveries by Manila Gas Corporation from July 1920 until April 1926 and nine deliveries from April 7, 1926, to January 5, 1927.
- Correspondence in 1926–1927 revealed dispute over contract construction and a demand by Blossom & Company, Inc. for adjustments and further deliveries, which Manila Gas Corporation denied.
- The referee found an overcharge of P2,219.60 for deliveries after April 1926, and the trial court adopted that finding.
Contract Terms
- The contract originated on September 10, 1918, and was modified effective January 1, 1919, to run for ten years until January 1, 1929.
- The contract provided for specified monthly minimum deliveries of water gas tar and coal gas tar, including twenty tons of water gas tar and six tons of coal gas tar per month after January 1, 1919.
- The contract granted Blossom & Company, Inc. the option to take the total output of water gas tar and fifty percent of the gross output of coal gas tar, and, upon ninety days’ notice, the right to the entire output of coal gas tar except what Manila Gas Corporation required for its own use.
- Prices were to be fixed on the basis of raw material costs as reflected in the parties’ correspondence and the referee’s findings.
Prior Litigation
- The prior complaint alleged that Manila Gas Corporation ceased deliveries in July or August 1920, that the defendant refused to comply thereafter, and that damages had accrued and would continue to accrue through the contract term.
- The prior pleading sought P124,848.70 and specific performance, but the former court rendered judgment awarding P26,119.08 for damages up to and including September 1923 and declined to order resumption of deliveries.
- The pr