PAZ P. ARRIETA and VITALIADO ARRIETA vs. National Rice and Corn Corp. And Manila Underwriters Insurance Co. ; G.R. No. L-15645; January 31, 1964

TOPIC: ART. 6, waiver of rights.

RATIONALE:

Waivers are not presumed, but must be clearly and convincingly shown either by express stipulation or acts admitting no other reasonable explanation. (Ramirez VS. Court of Appeals)

GIST:

Arrieta won for the bidding of NARIC for supply of 20,000 metric ton of Burmese Rice. However, NARIC was not able to successfully apply for a Commercial Letter Credit to PNB within the deadline on 04 August 1952 since it had no sufficient funds, even after the 15-day grace period.

Since she is also transacting with a supplier in Burma, she came up with a win-win situation and offered NARIC Thailand rice as a substitute but this was rejected. She demanded damages for unrealized profits. NARIC said she waived her right to claim when she made that offer of substitution. The Court ruled waivers are not presumed. Since it was a mere attempt to salvage the transaction, and not even express but merely presumed, it cannot be deemed as a waiver.

FACTS:

1. On 19 May 1952, Paz Arrieta participated in a public bidding by National Rice and Corn Administration (NARIC) calling for the supply of 20,000 metric ton on Burmese rice.

2. Paz Arrieta was awarded and entered into a contract with NARIC on 01 July 1952 to deliver the 20,000MT of Burmese Rice at $ 203.00. 

3. 30 July 1952, NARIC sent its application for Commercial Letter Credit to PNB accompanied by a transmittal letter saying that they have no sufficient deposit for credit and that it be treated as a special case. And that Paz's deadline is 04 August 1952. 

4. 30 July 1952, Paz Arrieta advised NARIC about the extreme necessity of immediate opening of the letter credit since she had made a tender to her supplier in Rangoon, Burma, and that 5% of 20,000 at $ 180.70 will be confiscated if the required letter of credit is not received before 04 August 1952. 

5. NARIC confessed in its letter to Paz Arrieta dated 02 August 1952 that the application for the letter of credit had been filed since 30July1952 but they were not able to meet the required 50% of the value of letter deposit amounting to $ 3,614,000.00. 

6. Consequently, the allocation of Paz's supplier in Rangoon was canceled and 5% deposit or P200,000.00 was forfeited. Although 4 August was the deadline, 20 August 1952 was the effective date of allocation and confiscation of 5%. Still, NARIC was not able to make good of its commitment to open the disputed letter of credit. 

7. Paz tried but failed to restore the Burmese rice allocation. She then tried offered to substitute Thailand Rice to Burmese rice which ought to be beneficial for both parties. 

8. However, on 15 November, this offer was rejected. 

9. Thus, she demanded compensation for the damages amounting to $ 268,000.00 for unrealized profit. This demand was rejected, and thus, instituted in this appeal.

ISSUE:

W / N Paz Arrieta's offer to substitute Thailand rice for the originally contracted Burmese rice amounted to a waiver by appellee of whatever rights she might have derived from the breach of contract.

RULING:

No. It doesn't amount to waiver. Waivers are not presumed, but must be clearly and convincingly shown either by express stipulation or acts admitting no other reasonable explanation. (Ramirez VS. Court of Appeals)

Since it was just Paz Arrieta's attempt to proceed with the transaction with benefits to both parties, it cannot be deemed as a waiver on her part, because she didn't express any waiver. 

Also, it is apparent that the sole and principal reason is NARIC's failure to open a letter of credit within the agreed period. 

Thus, NARIC is found liable for breach of contract with damages in the amount of $286,000.00  to be paid in peso (exchange rate on 01 July 1952.)