Maglasang v. Northwestern University In compliance with the CHED’s requirement before a school could offer maritime transportation programs, on June 10, 2004, Northwestern University (Northwestern), respondent, engaged the services of GL enterprises, petitioner, to install a new Integrated Bridge System or IBS. The parties executed two contracts. Two months after the execution of the contracts, GL Enterprises started delivering materials. However, when they were installing the components, Northwestern halted the operations. GL enterprises requested for an explanation. Northwestern explained that the stoppage was because the materials and equipment were substandard. It explained that the components (1) were old; (2) did not have manual and warranty certificates; (3) contained indications of being reconditioned machines; (4) did not meet with CHED and IMO standards. GL enterprises file a complaint for breach of contract. The RTC rendered a decision that both parties are at fault. However, the CA, found that GL enterprises was the only at fault, for delivering defective equipment that materially and substantially breached the contracts. Applying Article 1191 of the Civil Code, the CA declared the rescission of the contracts. Issue: Whether the CA gravely erred in (1) finding substantial breach on the part of GL enterprises. Held: The Supreme Court said that, the CA correctly applied Article 1191, which provides thus: The power to rescind obligations is implied in reciprocal ones, in case of the obligors should not comply with what is incumbent upon him. The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the rescission becomes impossible. The court shall decree the rescission, unless there be just cause authorizing the fixing of a period. The Supreme Court said that the two contracts require substantial breach. Then, it went also to cite the definition, in the case of Cannu v. Galang, that substantial breach are fundamental breaches that defeat the object of the parties entering into an agreement, since the law is not concerned with trifles. In the case at hand, it was incumbent upon GL enterprises to supply components that would create an IBS that would effectively facilitate the learning of the students. However, it miserably failed it meetings its responsibility. It supplied substandard equipment when it delivered components (1) were old; (2) did not have manual and warranty certificates; (3) contained indications of being reconditioned machines; (4) did not meet with CHED and IMO standards. Also, GL enterprises did not also refute that it delivered defective equipment. Evidently, the materials were not likely to pass the CHED and IMO standards.
The Supreme affirmed in toto the decision of the Court of Appeals.
