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Unformatted text preview: business, financial losses,
rumormongering and oppressive action. Later, IVO filed a supplemental counterclaim alleging that it
was unable to operate its business normally because of the arrest of most of its physical assets;
that its suppliers were driven away; and that its major creditors have inundated it with claims for
immediate payment of its debts, and China Banking Corporation had foreclosed its chattel and real
estate mortgages. During the trial, the lower court found that in 1985, prior to the date of the contracts sued upon, the
parties had entered into and consummated a number of contracts for the sale of crude coconut oil. In those
transactions, Safic placed several orders and IVO faithfully filled up those orders by shipping out the required
crude coconut oil to Safic, totaling 3,500 metric tons. Anent the 1986 contracts being sued upon, the trial
court refused to declare the same as gambling transactions, as defined in Article 2018 of the Civil Code,
although they involved some degree of speculation. After all, the court noted, every business enterprise
carries with it a certain measure of speculation or risk. However, the contracts performed in 1985, on one
hand, and the 1986 contracts subject of this case, on the other hand, differed in that under the 1985
contracts, deliveries were to be made within two months. This, as alleged by Safic, was the time needed for
milling and building up oil inventory. Meanwhile, the 1986 contracts stipulated that the coconut oil were to be
delivered within period ranging from eight months to eleven to twelve months after the placing of orders. The
coconuts that were supposed to be milled were in all likelihood not yet growing when Dominador 56 Monteverde sold the crude coconut oil. As such, the 1986 contracts constituted trading in futures or
in mere expectations.
The lower court further held that the subject contracts were ultra vires and were entered into by
Dominador Monteverde without authority from the Board of Directo...
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This document was uploaded on 03/11/2014.
- Fall '14