232 - Katigbak v. CA

ARTEMIO KATIGBAK, petitioner, vs.
COURT OF APPEALS, DANIEL EVANGELISTA and V. K. LUNDBERG, respondents.

G.R. No. L-16480 January 31, 1962
PAREDES, J. SUPREME COURT EN BANC
NATURE OF THE ACTION: Appeal by Certiorari
FACTS:
There was an agreement of purchase and sale of a Double Drum Carco Tractor Winch between
Katigbak and V.K. Lundberg. The price quoted was P12,000 and Katigbak was referred to
Evangelista (owner) for the reduction of the price. After the meeting, it was agreed that
Katigbak was to purchase the winch for P12,000, payable at P5,000 upon delivery and the
balance of P7,000 within 60 days. The condition was that the winch would be delivered in good
condition. Katigbak was apprised that the winch needed some repairs, which could be done in
the shop of Lundberg. There was a stipulation that the amount necessary for the repairs will be
advanced by Katigbak but deductible rom the initial payment. For some reason, the sale was not
consummated and Katigbak sued Evangelista, Lundberg and the company for the refund of such
amount.
Lundberg alleged non-liability for the amount since the obligation for refund was purely a
personal account between Evangelista and Katigbak. Evangelista claimed that while there was an
agreement between him and Katigbak for the sale of the winch, Katigbak refused to comply with
his contract to purchase the same and because of his refusal, Evangelista was forced to sell it to a
third person for P10,000.
The lower court ordered Evangelista and the company to pay Katigbak. Upon appeal to the CA,
it reversed the lower court and ruled that notwithstanding Katigbak’s breach of contract it is also
undeniable that Evangelista has the right to recover his loss of P2,000. The CA cited the case of
Hanlon v. Hausserman that if the purchaser fails to take delivery and pay the purchase price of
the subject matter of the contract, the vendor, without the need of first rescinding the contract
judicially, is entitled to resell the same, and if he is obliged to sell it for less than the contract
price, the buyer is liable for the difference. This loss, which is the subject matter of Evangelista’s
main counterclaim, should therefore be set off against the sum claimed by appellee.
Katigbak appealed to the SC by certiorari claiming that the CA erroneously applied the doctrine
in the Hanlon case and failed to apply the law relative to rescission of contracts.
ISSUE: Whether or not Evangelista had the right to resell the winch for Katigbak’s failure or
breach of the contract.
RULING: Yes, the case was dismissed and the decision appealed from is affirmed in all respects.
We quote from the Hanlon case:
.... In the present case the contract between Hanlon and the mining company was executory as to
both parties, and the obligation of the company to deliver the shares could not arise until Hanlon
should pay or tender payment of the money. The situation is similar to that which arises every
day in business transactions in which the purchaser of goods upon an executory contract fails to
take delivery and pay the purchase price. The vendor in such case is entitled to resell the goods.
If he is obliged to sell for less than the contract price, he holds the buyer for the difference; if he
sells for as much as or more than the contract price, the breach of contract by the original buyer
is damnum absque injuria. But it has never been held that there is any need of an action of
rescission to authorize the vendor, who is still in possession, to dispose of the property where the
buyer fails to pay the price and take delivery...
The facts of the case under consideration are identical to those of the Hanlon case. The herein
petitioner failed to take delivery of the winch, subject matter of the contract and such failure or
breach was, according to the Court of Appeals, attributable to him, a fact which We are bound to
accept under existing jurisprudence. The right to resell the equipment, therefore, cannot be
disputed. It was also found by the Court of Appeals that in the subsequent sale of the winch to a
third party, the vendor thereof lost P2,000.00, the sale having been only for P10,000.00, instead
of P12,000.00 as agreed upon, said difference to be borne by the supposed vendee who failed to
take delivery and/or to pay the price.
Of course, petitioner tried to draw a distinction between the Hanlon case and his case. The slight
differences in the facts noted by petitioner are not, however, to our mode of thinking, sufficient
to take away the case at bar from the application of the doctrine enunciated in the Hanlon case.

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ARTEMIO KATIGBAK, petitioner, vs.

COURT OF APPEALS, DANIEL EVANGELISTA and V. K. LUNDBERG, respondents.

NATURE OF THE ACTION: Appeal by Certiorari

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