Maglasang v.

Northwestern University
In compliance with the CHEDs 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.