Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-9935 February 1, 1915
YU TEK an CO., plaintiff-appellant,
vs.
!"S#L#O GON$"LES, defendant-appellant.
Beaumont, Tenney and Ferrier for plaintiff.
Buencamino and Lontok for defendant.
TRENT, J.%
The basis of this action is a written contract, Ehibit A, the pertinent para!raphs of
which follow"
#. That Mr. Basilio $on%ale% hereb& ac'nowled!es receipt of the su( of
P),*** Philippine currenc& fro( Messrs. +u Te' and Co., and that in
consideration of said su( be obli!ates hi(self to deliver to the said +u Te'
and Co., ,** piculs of su!ar of the first and second !rade, accordin! to the
result of the polari%ation, within the period of three (onths, be!innin! on the
#st da& of -anuar&, #.#/, and endin! on the )#st da& of March of the sa(e
&ear, #.#/.
/. That the said Mr. Basilio $on%ales obli!ates hi(self to deliver to the said
Messrs. +u Te' and Co., of this cit& the said ,** piculs of su!ar at an& place
within the said (unicipalit& of 0anta Rosa which the said Messrs. +u Te' and
Co., or a representative of the sa(e (a& desi!nate.
). That in case the said Mr. Basilio $on%ales does not deliver to Messrs. +u
Te' and Co. the ,** piculs of su!ar within the period of three (onths, referred
to in the second para!raph of this docu(ent, this contract will be rescinded
and the said Mr. Basilio $on%ales will then be obli!ated to return to Messrs.
+u Te' and Co. the P),*** received and also the su( of P#,/** b& wa& of
inde(nit& for loss and da(a!es.
Plaintiff proved that no su!ar had been delivered to it under this contract nor had it
been able to recover the P),***. Plaintiff pra&ed for 1ud!(ent for the P),*** and, in
addition, for P#,/** under para!raph 2, supra. -ud!(ent was rendered for P),*** onl&,
and fro( this 1ud!(ent both parties appealed.
The points raised b& the defendant will be considered first. 3e alle!es that the court
erred in refusin! to per(it parol evidence showin! that the parties intended that the
su!ar was to be secured fro( the crop which the defendant raised on his plantation,
and that he was unable to fulfill the contract b& reason of the al(ost total failure of his
crop. This case appears to be one to which the rule which ecludes parol evidence to
add to or var& the ter(s of a written contract is decidedl& applicable. There is not the
sli!htest inti(ation in the contract that the su!ar was to be raised b& the defendant.
Parties are presu(ed to have reduced to writin! all the essential conditions of their
contract. 4hile parol evidence is ad(issible in a variet& of wa&s to eplain the (eanin!
of written contracts, it cannot serve the purpose of incorporatin! into the contract
additional conte(poraneous conditions which are not (entioned at all in the writin!,
unless there has been fraud or (ista'e. 5n an earl& case this court declined to allow
parol evidence showin! that a part& to a written contract was to beco(e a partner in a
fir( instead of a creditor of the fir(. 6Pastor vs. $aspar, / Phil. Rep., 7./.8 A!ain, in
Eveland vs. Eastern Minin! Co. 6#2 Phil. Rep., 7*.8 a contract of e(plo&(ent provided
that the plaintiff should receive fro( the defendant a stipulated salar& and epenses.
The defendant sou!ht to interpose as a defense to recover& that the pa&(ent of the
salar& was contin!ent upon the plaintiff9s e(plo&(ent redoundin! to the benefit of the
defendant co(pan&. The contract contained no such condition and the court declined to
receive parol evidence thereof.
5n the case at bar, it is sou!ht to show that the su!ar was to be obtained eclusivel&
fro( the crop raised b& the defendant. There is no clause in the written contract which
even re(otel& su!!ests such a condition. The defendant undertoo' to deliver a
specified :uantit& of su!ar within a specified ti(e. The contract placed no restriction
upon the defendant in the (atter of obtainin! the su!ar. 3e was e:uall& at libert& to
purchase it on the (ar'et or raise it hi(self. 5t (a& be true that defendant owned a
plantation and epected to raise the su!ar hi(self, but he did not li(it his obli!ation to
his own crop of su!ar. ;ur conclusion is that the condition which the defendant see's
to add to the contract b& parol evidence cannot be considered. The ri!hts of the parties
(ust be deter(ined b& the writin! itself.
The second contention of the defendant arises fro( the first. 3e assu(es that the
contract was li(ited to the su!ar he (i!ht raise upon his own plantation< that the
contract represented a perfected sale< and that b& failure of his crop he was relieved
fro( co(pl&in! with his underta'in! b& loss of the thin! due. 6Arts. #27/, #*.,, and
##=/, Civil Code.8 This ar!u(ent is fault& in assu(in! that there was a perfected sale.
Article #27* defines a perfected sale as follows"
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The sale shall be perfected between vendor and vendee and shall be bindin!
on both of the(, if the& have a!reed upon the thin! which is the ob1ect of the
contract and upon the price, even when neither has been delivered.
Article #27/ reads" >The in1ur& to or the profit of the thin! sold shall, after the contract
has been perfected, be !overned b& the provisions of articles #*., and ##=/.>
This court has consistentl& held that there is a perfected sale with re!ard to the >thin!>
whenever the article of sale has been ph&sicall& se!re!ated fro( all other articles
Thus, a particular tobacco factor& with its contents was held sold under a contract
which did not provide for either deliver& of the price or of the thin! until a future ti(e.
McCullou!h vs. Aenlle and Co. 6) Phil. Rep., /.78. ?uite si(ilar was the recent case of
Barretto vs. Santa Marina 6/, Phil. Rep., /**8 where specified shares of stoc' in a
tobacco factor& were held sold b& a contract which deferred deliver& of both the price
and the stoc' until the latter had been appraised b& an inventor& of the entire assets of
the co(pan&. 5n Borromeo vs. Franco 67 Phil. Rep., 2.8 a sale of a specific house was
held perfected between the vendor and vendee, althou!h the deliver& of the price was
withheld until the necessar& docu(ents of ownership were prepared b& the vendee. 5n
Tan Leonco vs. Go Inui 6= Phil. Rep., 7)#8 the plaintiff had delivered a :uantit& of
he(p into the warehouse of the defendant. The defendant drew a bill of echan!e in
the su( of P=**, representin! the price which had been a!reed upon for the he(p
thus delivered. Prior to the presentation of the bill for pa&(ent, the he(p was
destro&ed. 4hereupon, the defendant suspended pa&(ent of the bill. 5t was held that
the he(p havin! been alread& delivered, the title had passed and the loss was the
vendee9s. 5t is our purpose to distin!uish the case at bar fro( all these cases.
5n the case at bar the underta'in! of the defendant was to sell to the plaintiff ,** piculs
of su!ar of the first and second classes. 4as this an a!ree(ent upon the >thin!> which
was the ob1ect of the contract within the (eanin! of article #27*, supra@ 0u!ar is one
of the staple co((odities of this countr&. Aor the purpose of sale its bul' is wei!hed,
the custo(ar& unit of wei!ht bein! deno(inated a >picul.> There was no deliver& under
the contract. Now, if called upon to desi!nate the article sold, it is clear that the
defendant could onl& sa& that it was >su!ar.> 3e could onl& use this !eneric na(e for
the thin! sold. There was no >appropriation> of an& particular lot of su!ar. Neither part&
could point to an& specific :uantit& of su!ar and sa&" >This is the article which was the
sub1ect of our contract.> 3ow different is this fro( the contracts discussed in the cases
referred to aboveB 5n the McCullou!h case, for instance, the tobacco factor& which the
parties dealt with was specificall& pointed out and distin!uished fro( all other tobacco
factories. 0o, in the Barretto case, the particular shares of stoc' which the parties
desired to transfer were capable of desi!nation. 5n the Tan Ceonco case, where a
:uantit& of he(p was the sub1ect of the contract, it was shown that that :uantit& had
been deposited in a specific warehouse, and thus set apart and distin!uished fro( all
other he(p.
A nu(ber of cases have been decided in the 0tate of Couisiana, where the civil law
prevails, which confir( our position. Perhaps the latest is 4itt 0hoe Co. vs. 0ee!ars
and Co. 6#// Ca., #27< 2D 0ou., 2228. 5n this case a contract was entered into b& a
travelin! sales(an for a :uantit& of shoes, the sales havin! been (ade b& sa(ple. The
court said of this contract"
But it is wholl& i((aterial, for the purpose of the (ain :uestion, whether
Mitchell was authori%ed to (a'e a definite contract of sale or not, since the
onl& contract that he was in a position to (a'e was an a!ree(ent to sell or an
eecutor& contract of sale. 3e sa&s that plaintiff sends out )D7 sa(ples of
shoes, and as he was offerin! to sell b& sa(ple shoes, part of which had not
been (anufactured and the rest of which were incorporated in plaintiff9s stoc'
in C&nchbur!, Ea., it was i(possible that he and 0ee!ars and Co. should at
that ti(e have a!reed upon the specific ob1ects, the title to which was to pass,
and hence there could have been no sale. 3e and 0ee!ars and Co. (i!ht
have a!reed, and did 6in effect 8 a!ree, that the identification of the ob1ects
and their appropriation to the contract necessar& to (a'e a sale should
thereafter be (ade b& the plaintiff, actin! for itself and for 0ee!ars and Co.,
and the le!end printed in red in' on plaintiff9s billheads 6>;ur responsibilit&
ceases when we ta'e transportation Co9s. receipt F5n !ood order9> indicates
plaintiff9s idea of the (o(ent at which such identification and appropriation
would beco(e effective. The :uestion presented was carefull& considered in
the case of 0tate vs. 0hields, et al. 6##* Ca., 72D, )2 0ou., ,D)8 6in which it
was absolutel& necessar& that it should be decided8, and it was there held that
in receivin! an order for a :uantit& of !oods, of a 'ind and at a price a!reed
on, to be supplied fro( a !eneral stoc', warehoused at another place, the
a!ent receivin! the order (erel& enters into an eecutor& contract for the sale
of the !oods, which does not divest or transfer the title of an& deter(inate
ob1ect, and which beco(es effective for that purpose onl& when specific !oods
are thereafter appropriated to the contract< and, in the absence of a (ore
specific a!ree(ent on the sub1ect, that such appropriated ta'es place onl&
when the !oods as ordered are delivered to the public carriers at the place
fro( which the& are to be shipped, consi!ned to the person b& who( the
order is !iven, at which ti(e and place, therefore, the sale is perfected and the
title passes.
This case and 0tate vs. 0hields, referred to in the above :uotation are a(pl& illustrative
of the position ta'en b& the Couisiana court on the :uestion before us. But we cannot
refrain fro( referrin! to the case of Carue and Prevost vs. Ru!el&, Blair and Co. 6#* Ca.
Ann., /2/8 which is su((ari%ed b& the court itself in the 0hields case as follows"
. . . 5t appears that the defendants had (ade a contract for the sale, b& wei!ht,
of a lot of cotton, had received G),*** on account of the price, and had !iven
an order for its deliver&, which had been presented to the purchaser, and
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reco!ni%ed b& the press in which the cotton was stored, but that the cotton
had been destro&ed b& fire before it was wei!hed. 5t was held that it was still at
the ris' of the seller, and that the bu&er was entitled to recover the G),*** paid
on account of the price.
4e conclude that the contract in the case at bar was (erel& an eecutor& a!ree(ent< a
pro(ise of sale and not a sale. At there was no perfected sale, it is clear that articles
#27/, #*.,, and ##=/ are not applicable. The defendant havin! defaulted in his
en!a!e(ent, the plaintiff is entitled to recover the P),*** which it advanced to the
defendant, and this portion of the 1ud!(ent appealed fro( (ust therefore be affir(ed.
The plaintiff has appealed fro( the 1ud!(ent of the trial court on the !round that it is
entitled to recover the additional su( of P#,/** under para!raph 2 of the contract. The
court below held that this para!raph was si(pl& a li(itation upon the a(ount of
da(a!es which could be recovered and not li:uidated da(a!es as conte(plated b&
the law. >5t also appears,> said the lower court, >that in an& event the defendant was
prevented fro( fulfillin! the contract b& the deliver& of the su!ar b& condition over
which he had no control, but these conditions were not sufficient to absolve hi( fro(
the obli!ation of returnin! the (one& which he received.>
The above :uoted portion of the trial court9s opinion appears to be based upon the
proposition that the su!ar which was to be delivered b& the defendant was that which
he epected to obtain fro( his own hacienda and, as the dr& weather destro&ed his
!rowin! cane, he could not co(pl& with his part of the contract. As we have indicated,
this view is erroneous, as, under the contract, the defendant was not li(ited to his
!rowth crop in order to (a'e the deliver&. 3e a!reed to deliver the su!ar and nothin! is
said in the contract about where he was to !et it.
4e thin' is a clear case of li:uidated da(a!es. The contract plainl& states that if the
defendant fails to deliver the ,** piculs of su!ar within the ti(e a!reed on, the contract
will be rescinded and he will be obli!ed to return the P),*** and pa& the su( of P#,/**
b& wa& of inde(nit& for loss and da(a!es. There cannot be the sli!htest doubt about
the (eanin! of this lan!ua!e or the intention of the parties. There is no roo( for either
interpretation or construction. Hnder the provisions of article #/77 of the Civil Code
contractin! parties are free to eecute the contracts that the& (a& consider suitable,
provided the& are not in contravention of law, (orals, or public order. 5n our opinion
there is nothin! in the contract under consideration which is opposed to an& of these
principles.
Aor the fore!oin! reasons the 1ud!(ent appealed fro( is (odified b& allowin! the
recover& of P#,/** under para!raph 2 of the contract. As thus (odified, the 1ud!(ent
appealed fro( is affir(ed, without costs in this instance.
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