Legaspi Oil Co. v. The Court of Appeals

Summary

Legaspi Oil Co., Inc. sued Bernard Oseraos for breach of a copra sales contract where Oseraos failed to deliver 53,666 kilos out of the contracted 100 tons. The trial court awarded damages, but the Court of Appeals reversed. The Supreme Court reinstated the trial court decision, finding Oseraos guilty of fraud in deliberately breaching his contractual obligation. The Court noted that Oseraos' conduct showed deliberate fraudulent intent to evade his obligation as copra prices had more than doubled during the delivery period. Under Article 1170 of the Civil Code, those guilty of fraud in performance of obligations are liable for damages. The Court awarded P46,152.76 in damages representing the price differential petitioner paid when forced to purchase the undelivered balance at the higher open market price. This case establishes that deliberate breach of contract constitutes fraud when done with intent to evade obligations due to favorable market changes.