Song Fo and Co v.

Hawaiian-Phil Co
Facts: Hawaiian-Philippine Co (HPC) entered into a contract with Song Fo and Co (SFC)
where it would deliver molasses to the latter evidenced by a letter containing their
contract. The same states that Mr. Song Fo agreed to the delivery of 300,000 gallons of
molasses and the same requested for an additional 100,000 molasses which the HPC
promised that it will do its best to comply with the additional shipment. However, the
HPC was only able to deliver 55,006 gallons. SFC thereafter filed a complaint with two
causes of action for breach of contract against the HPC and asked for P70,369.50. HPC
answered that there was a delay in the payment from SFC and that HPC has the right to
rescind the contract because of the same· The trial court condemned HPC to pay SFC a
total of P35,317.93, with legal interest.

Issues: Does HPC have a right to rescind the contract?

RULING: No. HPC has no right to rescind the contract. The court provided that the
general rule is that rescission will not be permitted for a slight or casual breach of the
contract, but only for such breaches as are so substantial and fundamental as to defeat
the object of the parties in making the agreement. It should be noted that the time of
payment stipulated for in the contract should be treated as of the essence of the
contract. There was only a slight breach of contract when the payment was delayed for
20 days and does not violate essential condition of the contract which warrants
rescission for non-performance. Furthermore, HPC accepted the payment of the
overdue accounts and continued with the contract, waiving its right to rescind the same.
Petition of partly granted, and the judgment appealed is modified. Plaintiff shall have
and recover from the defendant the sum of P3,000, with legal interest from date of
judgment, no special costs.