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Philippine Supreme Court Jurisprudence > Year 1956 > November 1956 Decisions > [G.R. No. L-8717. November
20, 1956.] GENERAL FOODS CORPORATION, Plaintiff-Appellant, vs. NATIONAL COCONUT CORPORATION,
Defendant-Appellee.:

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EN BANC
ChanRobles On-Line Bar Review [G.R. No. L-8717. November 20, 1956.]
GENERAL FOODS CORPORATION, Plain&-Appellant, vs. NATIONAL COCONUT CORPORATION,
Defendant-Appellee.

D E C I S I O N
REYES, J. B. L., J.:
Appellant General Foods Corpora.on is a foreign corpora.on organized under the laws of the
State of Delaware, U. S. A., and licensed to do business in the Philippines; while Appellee chan roblesvirtualawlibrary

Na.onal Coconut Corpora.on (otherwise called NACOCO), was, on the date of the transac.on
in ques.on, a corpora.on created by Commonwealth Act No. 518, but later abolished and place
in liquida.on by Execu.ve Order No. 3727 dated November 24, 1950.
On September 23, 1947, Appellee sold to Appellant 1,500 (later reduced to 1,000) long tons of
copra, at $164 (later reduced to $163) per ton of 2,000 pounds, under the following terms and
condi.ons: chanroblesvirtuallawlibrary

CONTRACT NO. RH-3551

DebtKollect Company, Inc.
FRANKLIN BAKER DIVISION OF GENERAL FOODS CORPORATION
15th & Bloomeld Streets
Hoboken, New Jersey
WE CONFIRM HAVING PURCHASED FOR YOU TODAY from Messrs. Na.onal Coconut
Corpora.on, Manila, Philippine Islands, through Mercan.le, Inc., Manila, P. I.
COMMODITY: COPRA Fair Merchantable Quality, Basis chanroblesvirtuallawlibrary

6% F. F. A.
QUALITY: As per rule 100 of Na.onal Ins.tute of
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Oilseeds Products.
QUANTITY: Fikeen Hundred (1500) tons of 2,240 pounds each. Seller has the op.on of
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delivering 5 per cent more or less of the contracted quan.ty, such surplus or deciency to be
selled as follows: On the basis of the delivered weight up to 3 per cent at the contract chanroblesvirtuallawlibrary

price and any excess or deciency beyond this 3 per cent at the market price of the day of
arrival at port of discharge, this market price to be xed by the Execu.ve Commilee of the
ChanRobles Intellectual Property Na.onal Ins.tute of Oilseeds Products. Each shipment to be treated as a separate contract.
Division PACKING: In bulk. SHIPMENT: November, 1947, earlier if possible, from Philippine Islands.
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PRICE: One hundred and sixty-four dollars ($164) per ton of 2,000 pounds, CIF New York.
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PAYMENT: Buyers to open immediately by cable in favor of Sellers Irrevocable Leler of

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November-1956 Jurisprudence
[G.R. No. L-9123. November 7, 1956.] THE PEOPLE
OF THE PHILIPPINES, Plaintiff-Appellee, vs. CORNELIO
MELGAR, Defendant-Appellant.
[G.R. No. L-9023. November 13, 1956.] BISLIG BAY
LUMBER COMPANY. INC., Plaintiff-Appellee, vs. THE
PROVINCIAL GOVERNMENT OF SURIGAO, Defendant-
Appellant.
[G.R. Nos. L-9238-39. November 13, 1956.] THE
PEOPLE OF THE PHILIPPINES, Plaintiff-Appellant, vs.
VICTORIO JABAJAB, accused-Appellee.
[G.R. No. L-10128. November 13, 1956.] MAMERTO C.
CORRE, Plaintiff-Appellant, vs. GUADALUPE TAN
CORRE, Defendant-Appellee.
[G.R. No. L-9523. November 15, 1956.] GALICANO E.
YAP, Plaintiff-Appellant, vs. FRANCISCO BOLTRON, ET
AL., Defendants-Appellees.
[G.R. No. L-9202. November 19, 1956.] THE
COLLECTOR OF INTERNAL REVENUE, Petitioner, vs.
JOSE AVELINO and COURT OF TAX APPEALS,
Respondents.
[G.R. No. L-8717. November 20, 1956.] GENERAL
FOODS CORPORATION, Plaintiff-Appellant, vs.
NATIONAL COCONUT CORPORATION, Defendant-
Appellee.
[G.R. No. L-8774. November 26, 1956.] In the matter
of the testate estate of the deceased JUANA JUAN VDA.
DE MOLO. EMILIANA MOLO-PECKSON and PILAR
PEREZ-NABLE, Petitioners-Appellees, vs. ENRIQUE
TANCHUCO, FAUSTINO GOMEZ, ET AL., Oppositors-
Appellants.
[G.R. No. L-9098. November 26, 1956.] A.
MAGSAYSAY, INC., Plaintiff-Appellee, vs. CEBU
PORTLAND CEMENT CO., Defendant-Appellant.
[G.R. No. L-9551. November 26, 1956.] THE PEOPLE
OF THE PHILIPPINES, Plaintiff-Appellant, vs.
ALEJANDRO PAET Y VELASCO, Defendant-Appellee.
[G.R. No. L-9627. November 26, 1956.] MARGARITA
ABARCA VASQUEZ, assisted by her husband, GUIDO N.
VASQUEZ, Plaintiffs-Appellees, vs. ISIDORA LANDRITO
MESAGAL, assisted by her husband, VENTURA
MESAGAL, Defendants-Appellants.
[G.R. No. L-7644. November 27, 1956.] HENRY
Credit through the Philippine Na.onal Bank for 95 per cent of invoice value based on
shipping weight in exchange for the following documents: chanroblesvirtuallawlibrary
1. Provisional Invoice.
2. Full set of nego.able ocean bills of lading, freight charges fully prepaid and showing the
material on board.
3. Weight Cer.cate conrming quan.ty shown on invoice and bill of lading.
4. Consular invoice or cer.cate of origin in duplicate.
5. Loading survey report and weight cer.cate of Superintendence Corpora.on.
6. Consular form No. 197 (Pure Food & Drug Cer.cate).
Balance due to be paid promptly upon ascertainment and based upon oulurn weights and
quality at port of discharge.
WEIGHTS: Net landed weights. chanroblesvirtuallawlibrary
SAMPLING: As per Rule 101 of Na.onal Ins.tute of Oilseeds Products. chanroblesvirtuallawlibrary
INSURANCE: Buyer to provide valid insurance for Marine and War risks for 110 per cent of
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CIF contract value. Seller to allow buyer from the CIF price an amount equivalent to the
current rate of insurance prevailing on the date of shipment, in lieu of sellers covering usual
marine insurance themselves.
CLAUSE PARAMOUNT: This contract is subject to published rules of the Na.onal Ins.tute of chanroblesvirtuallawlibrary
Oilseeds Products adopted and now in force, which are hereby made a part hereof. Any
dispute arising under this contract shall be selled by a Board of Arbitrators selected by the
Chairman of the Foreign Commerce Associa.on of the San Francisco Chamber of Commerce
and to be judged according to the rules of the Na.onal Ins.tute of Oilseeds Products and
the ndings of said Board will be nal and binding upon all the signatories hereto, providing
such rules are not in conict with exis.ng Government regula.ons.
The above shipment to be made under Franklin Bakers license No. 26429. This contract covers
the sale made by the Nacoco thru the Mercan.le, Inc. dated September 9, 1947 in the
Philippines. (Exhibit A).
From November 14 to December 3, 1947, Appellee shipped 1054.6278 short tons of copra to
Appellant on board the S. S. Mindoro. The weighing of the cargo was done by the Luzon
Brokerage Co., in its capacity as agent of the General Superintendence Co., Ltd., of Geneva,
Switzerland, by taking the individual weight of each bag of copra and summing up the total
gross weight of the shipment, then weighing a certain number of empty bags to determine the
average tare of the empty bags, which was subtracted from the gross weight of the shipment to
determine the net weight of the cargo. On the strength of the net weigh thus found, Appellee
prepared and remiled to Appellant the corresponding bills of lading and other documents, and
withdrew from the lalers leler of credit 95 per cent of the invoice value of the shipment, or a
total of $136,686.95.
Upon arrival in New York, the net cargo was reweighed by Appellant and was found to weigh
only 898.792 short tons. Deduc.ng from the value of the shortage the sum of $8,092.02
received by Appellant from the insurer for 58.25 long tons lost or destroyed even before the
copra was loaded on board the vessel, Appellant demanded from Appellee the refund of the
amount of $24,154.59. Some.me aker the receipt of Appellants demand, the Appellee,
through its ocers-in-charge Jose Nieva, Sr., acknowledged in a leler liability for the deciency
in the oulurn weights of the copra and promised payment thereof as soon as funds were
available (Exhibit B). Then Appellee was, as already stated, abolished and went into
liquida.on. Appellant submiled its claim to the Board of Liquidators, which refused to pay the
same; wherefore, it led the present ac.on in the Court of First Instance of Manila to recover
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from Defendant-Appellee the amount of $24,154.49 and the 17 per cent exchange tax thereon
which, under the provisions of Republic Act 529, had to be paid in order to remit said amount
to the United States, plus alorneys fees and costs. The Court a quo found for the Defendant
and dismissed the complaint; hence, this appeal by Plain-. chan roblesvirtualawlibrary
Plain--Appellants theory is that although the sale between the par.es quoted a CIF New York
price, the agreement contemplated the payment of the price according to the weight and
quality of the cargo upon arrival in New York, the port of des.na.on, and that therefore, the
risk of the shipment was upon the seller. Defendant-Appellee, on the other hand, insists that
the contract in ques.on was an ordinary C. I. F. agreement wherein delivery to the carrier is
delivery to the buyer, and that the shipment having been delivered to the buyer and the laler
having paid its price, the sale was consummated.
There is no ques.on that under an ordinary C.I.F. agreement, delivery to the buyer is complete
upon delivery of the goods to the carrier and tender of the shipping and other documents
required by the contract and the insurance policy taken in the buyers behalf (77 C.J. S. 983; chan
46 Am. Jur. 313; II Williston on Sales, 103 107). There is equally no ques.on that the
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par.es may, by express s.pula.on or impliedly (by making the buyers obliga.on depend on
arrival and inspec.on of the goods), modify a CIF contract and throw the risk upon the seller
un.l arrival in the port of des.na.on (77 CJS 983- 984; Williston, supra, 116; also Willits vs.
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Abekobei, 189 NYS 525; Na.onal Wholesale Grocery Co. vs. Mann. 146 NE 791, Klipstein vs. chan roblesvirtualawlibrary
Dilsizian, 273 F 473).
In the transac.on now in ques.on, despite the quoted price of CIF New York, and the right of
the seller to withdraw 95 per cent of the invoice price from the buyers leler of credit upon
tender of the shipping and other documents required by the contract, the express agreement
that the Net Landed Weights were to govern, and the provision that the balance of the price
LITAM, ETC., ET AL., Plaintiffs-Appellants, vs.
REMEDIOS R. ESPIRITU, as guardian of the
incompetent MARCOSA RIVERA, and ARMINIO RIVERA,
Defendants-Appellees. [G.R. No. L-7645. November 27,
1956] IN THE MATTER OF THE INTESTATE OF THE
DECEASED RAFAEL LITAM. GREGORIO DY TAM,
Petitioner-Appellant, vs. REMEDIOS R. ESPIRITU, in her
capacity as judicial guardian of the incompetent
MARCOSA RIVERA, counter-Petitioner, ARMINIO
RIVERA, administrator-Appellee.
[G.R. No. L-9709. November 27, 1956.] CONCEPCION
R. LIM DE PLANAS and ILUMINADO PLANAS, Plaintiffs-
Appellants, vs. RICARDO L. CASTELLO, Defendant-
Appellee.
[G.R. No. L-10060. November 27, 1956.] MARIA S.
PASCUAL, Plaintiff-Appellee, vs. JOSE LACSAMANA,
Defendant-Appellant.
[G.R. No. L-7617. November 28, 1956.] THE PEOPLE
OF THE PHILIPPINES, Plaintiff-Appellee, vs. PELAGIO
G. YANGA, Defendant-Appellant.
[G.R. No. L-8437. November 28, 1956.] ESTATE OF K.
H. HEMADY, deceased, vs. LUZON SURETY CO., INC.,
claimant-Appellant.
[G.R. No. L-8940. November 28, 1956.] CAPITAL
INSURANCE & SURETY COMPANY, INC., Plaintiff-
Appellee, vs. JOE EBERLY, Defendant-Appellant.
[G.R. No. L-8961. November 28, 1956.] ALTO SURETY
& INSURANCE CO., INC., Plaintiff-Appellant, vs.
ALEJANDRO ANDAN, UY SIOK KIAO, TAN LEE and
QUIEN TONG, Defendants-Appellees.
[G.R. Nos. L-9391-9392. November 28, 1956.] RIO Y
COMPAIA (Succesor of Rio y Olabarrieta), Plaintiff-
Appellant, vs. VICENTE SANDOVAL, MARIA R. DE
SANDOVAL, and RAFAEL R. SANDOVAL, Defendants-
Appellees.
[G.R. No. L-9476. November 28, 1956.] G.
ASSANMAL, Petitioner, vs. UNIVERSAL TRADING CO.,
INC., Respondent.
[G.R. No. L-6584. November 29, 1956.] THE PEOPLE
OF THE PHILIPPINES, Plaintiff-Appellee, vs. GUIALIL
KAMAD alias MORO JOSE, Defendant-Appellant.
[G.R. No. L-6897. November 29, 1956.] In the Matter
of the Claim for Attorneys Fees. CLARO M. RECTO,
claimant-Appellee, vs. ESPERANZA P. DE HARDEN and
FRED M. HARDEN, Defendants-Appellants.
[G.R. No. L-8502. November 29, 1956.] LEONORA T.
ROXAS, Petitioner-Appellant, vs. ISAAC SAYOC, as
Collector of Customs of Manila, Respondent.
[G.R. No. L-8508. November 29, 1956.] MARIA B.
CASTRO, Plaintiff-Appellee, vs. SATURNINO DAVID, in
his capacity as Collector of Internal Revenue,
Defendant-Appellee. E. AWAD AND CO., INC.,
Intervenor-Appellant.
[G.R. No. L-9147. November 29, 1956.] RAFAELA
CAMPO, ERNESTO GILUANO, REMEDIOS GILUANO,
ROSALINA GILUANO, and FELIX GILUANO, Plaintiffs-
Appellees, vs. JUAN CAMAROTE and GREGORIO
GEMILGA, Defendants. JUAN CAMAROTE, Appellant.
[G.R. No. L-9352. November 29, 1956.] Intestate
Estate of the late JOVITO CO, FLORA ROBERSON CO,
Administratrix, Petitioner-Appellee, vs. COLLECTOR OF
INTERNAL REVENUE, Defendant-Appellant.
[G.R. No. L-9657. November 29, 1956.] LEOPOLDO T.
BACANI and MATEO A. MATOTO, Plaintiffs-Appellees,
vs. NATIONAL COCONUT CORPORATION, ET AL.,
Defendants, NATIONAL COCONUT CORPORATION and
BOARD OF LIQUIDATORS, Defendants-Appellants.
[G.R. No. L-9941. November 29, 1956.] PEDRO Z.
CLARAVALL, Petitioner-Appellant, vs. FRANCISCO
PARAAN, ET AL., Respondents-Appellees.
was to be ascertained on the basis of oulurn weights and quality of the cargo at the port of
discharge, indicate an inten.on that the precise amount to be paid by the buyer depended
upon the ascertainment of the exact net weight of the cargo at the port of des.na.on. That is
furthermore shown by the provision that the seller could deliver 5 per cent more or less than
the contracted quan.ty, such surplus or deciency to be paid on the basis of the delivered
weight.
In our opinion, the governing rule may be found in the decision of the Supreme Court of New
York in the case of Warner, Barnes & Co. vs. Warner Sugar R. Co., 192 NYS 151, cited in
Appellees brief (pp. 16-19.) In said case, the par.es had expressly agreed that the payment of
the price was to be according to landed weights, and that delivery of the goods shipped from
the Philippine Islands to New York was to be in New York ex vessel at wharf; but it was also chan roblesvirtualawlibrary
agreed that the seller had the right, upon presenta.on of full shipping documents, including full
insurance, to draw upon the Defendants for 90 per cent of the invoice price, evidencing an
intent to give the buyers dominion over the goods and to place the risk of loss upon them. The
reasonable construc.on given by the Court to this contract was that: chanroblesvirtuallawlibrary
though the seller was required to deliver the goods at a customary wharf in New York, and the
price could not be nally determined un.l the goods were landed, yet the property in the
goods and the risk of loss was intended to pass when the full shipping documents were
presented, including an insurance policy. If the goods were totally lost, then by the express
terms of the contract the buyers were to pay the full amount of invoice and if the goods were
par.ally lost, then it is fairly inferable that, while payment was to be made according to landed
weights, the seller should not be deprived of the right to show that these landed weights were
diminished by loss or damage due to the risk of the voyage. Any other construc.on of the
contract would require the seller to provide insurance for the buyer for a loss which falls not on
the buyer, but on the seller. (Emphasis supplied.)
The same could be said in the instant case. While the risk of loss was apparently placed on the
Appellant aker delivery of the cargo to the carrier, it was nevertheless agreed that the payment
of the price was to be according to the net landed weight. The net landed or oulurn weight
of the cargo, upon arrival in New York, was 898.692 short tons. Although the evidence shows
that the es.mated weight of the shipment when it lek Manila was 1,054.6278 tons, the
Appellee had the burden of proof to show that the shortage in weight upon arrival in New York
was due to risks of the voyage and not the natural drying up of the copra while in transit, or to
reasonable allowances for errors in the weighing of the gross cargo and the empty bags in
Manila. In the absence of such proof on the part of the shipper-Appellee, we are constrained to
hold that the net landed weight of the shipment in New York should control, as s.pulated in the
agreement, and that therefore, the Appellee should be held liable for the amount of $24,154.59
which it had overdrawn from Appellants leler of credit.
Appellee contends that as it was only the balance due to be paid that was to be ascertained
and based upon oulurn weights and quality at port of discharge, as provided in the contract,
there was no more balance due to be ascertained at the port of discharge because it had
already received full payment of the copra it sent to the Appellant when it withdrew
$136,686.95 from the lalers leler of credit. The argument is untenable. The provision
regarding the ascertainment of the balance due based upon oulurn weight and quality of the
shipment at the port of discharge, should not be construed separately from the s.pula.on that
the net landed weight was to control. The manifest inten.on of the par.es was for the total
price to be nally ascertained only upon determining the net weight and quality of the goods
upon arrival in New York, most likely because the cargo in ques.on, being copra, by nature dries
up and diminishes in weight during the voyage; that no bulk weigher was available in Manila
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so that the best that could be done was to get the gross weight of the shipment and deduct the
average tare of the empty bags; and that the buyer in New York had no agent in Manila to
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represent it and protect its interest during the weighing of the cargo. The inten.on of the
par.es to be bound by the oulurn or net landed weight in New York is clearly shown in the
leler of Appellees then ocer-in-charge Jose Nieva, Sr., acknowledging liability for the
deciency in the oulurn weight of the copra (Exhibit B). Although this leler may not be
considered an admission of liability on the part of Appellee in the absence of a showing that
Nieva was authorized to admit liability for the corpora.on, it is nevertheless competent
evidence of the inten.on of the par.es, par.cularly the NACOCO, to be bound by the net
landed weight or oulurn weight of the copra at the port of discharge.
With respect to Appellants claim for damages equivalent to the 17 per cent excise tax which it
has to pay in order to remit the sum of $24,154.59 to the United States, such excise tax is no
longer imposed in view of the trade (Laurel-Langley) agreement, so that it need not be taken
into account.
Wherefore, the judgment appealed from is reversed and the Appellee Na.onal Coconut
Corpora.on is ordered to pay the Appellant General Foods Corpora.on the equivalent in
Philippine currency of the amount of $24,154.59, with legal interest from the .me of the ling
of the complaint. No pronouncement as to costs. SO ORDERED.
Pars, C.J., Bengzon, Padilla, Montemayor, BauTsta Angelo, Labrador, Concepcion, Endencia
and Felix, JJ., concur.
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