G.R. No. L-8439. May 30, 1958
CO CHO CHIT, DOING BUSINESS UNDER THE NAME AND STYLE OF GRACE PARK ENGINEERING, PETITIONER, VS. HANSON, ORTH & STEVENSON, INC., ET AL., RESPONDENTS.
BAUTISTA ANGELO, J.:
modifying that of the court a quo “in the sense that defendant is not bound to
pay the plaintiff the sum of P2.341.69 as expenses incurred by the latter in
connection with the installation of the hemp press in its plant, and that upon
refund of the purchase price of this machine and of the corresponding legal
interest theraon, plaintiff shall allow defendant to get back the hemp preys
bought from him in the same condition as it was when delivered.”
The facts as found by the Court of Appeals are:
“On March 10, 1949, Co Cho Chit entered a contract with Hanson, Orth &
Stevenson, Inc., in virtue of which the latter bought from the former one hemp
press, furnished With marine type reversible clutch; hemp box guide made of
angular steel and beltings to the main drive power engine’ for the sum of
P8,000.00, which the buyer paid the purchaser under the terms and conditions
stipulated in the contract of sale (Exhs. A & 1), one of which was that the
vendor would furnish free of charge the services of a competent mechanic to
supervise the installation of the above hemp press and turn same over to the
purchaser in satisfactory running order, as well as the mechanic to supervise
the installation of the power drive engine to be furnished by the purchaser for
said hemp press. As per letter of Co Cho Chit of March 10, 1949, to Hanson, Orth
& Stevenson, Inc. (Exhs. A-l & 4), the vendor further guaranteed that
the said hemp press would give satisfactory service under reasonable use of the
same for a period of six months, excepting breakage of any part thereof due to
careless handling by buyer’s operators.“In consonance with the contract and letter aforementioned, said hemp press
was shipped to, and installed at, plaintiff’s Fiber Plant in Davao City under
the supervision and direction of the vendor’s mechanics, though in spite of all
efforts and cooperation given by the purchaser, the same has never been up to
the present in a satisfactory running order, nor could it give satisfactory
service, because it could not compress and turn out hemp bales to regulation
size of 12 cubic feet each, or less, in accordance with Section 9, paragraph (d)
of Fiber Inspection Administration Order No. 5, nor has the vendor ever turned
over said hemp press to the buyer as provided in said contract.“By reason of such vendor’s alleged failure to comply with his aforementioned
obligations, the purchaser demanded from him the refund of the sum of P8,000.00
paid as purchase price of the hemp press, and as Co Cho Chit refused to yield to
this demand, Hanson, Orth & Stevenson, Inc., instituted on October 13, 1949,
the corresponding complaint that gave rise to this action in the Court of First
Instance of Manila against Co Cho Chit, praying in the complaint that this
defendant be sentenced to refund said sum of P8,000.00 to the plaintiff and to
further pay the latter the following sums: (1) P2,341.68 spent for freight,
loading and forwarding charges of the hemp press and for materials and labor in
the installation of the same at purchaser’s Fiber Plant in Davao City and for
the transportation, board and lodging of defendant’s mechanic who supervised and
directed the installation of the hemp press as well as the power drive engine
mentioned in said contract; (2) P2,400.00 paid by the purchaser to Arsenio Siy
as rentals for the warehouse located in Davao City for the months of July and
August, 1949, that is, after the period that the vendor had to finish the
installation of the hemp press and the said power engine as per the contract;
and (3) the sum of P100.00 a month as compensation for the safekeeping of the
aforesaid hemp press in purchaser’s Davao Fiber Plant from July 1, 1949, until
the said hemp press be removed therefrom.“The defendant answered the
complaint setting affirmative defenses and denying that the hemp press is not in
a satisfactory-running order; that it does rot give satisfactory service; that
it does not press and turn out hemp bales in government regulation size; and
that it has net been turned over to the plaintiff by the defendant, and prayed
the court to dismiss the complaint, with costs against plaintiff, praying
further for such other remedy as the court may deem just and equitable in the
premises.“As on November 29, 1950, plaintiff Hanson, Orth & Stevenson had sold,
transferred, conveyed and assigned unto Conrad & Co., Inc. its claims and
cause of action in this case, the latter applied for the substitution of the
former in this litigation, which substitution was approved by order of the court
of May 14, 1951. After hearing the court rendered judgment, the dispositive part
of which is as follows:“IN VIEW OF THE FOREGOING, the Court hereby renders judgments in favor of the
plaintiff and against the defendant, declaring the contract rescinded and
ordering the defendant to pay the plaintiff the amounts of P8,000.00 and
P2,341.69, the purchase price and the expense incurred by it for the
unsatisfactory installation, respectively, with interest at the rate of 6% per
annum from the date of the filing of the complaint until fully paid. With cost
against the defendant.”‘
From this decision the defendant appealed to the Court of Appeals which
modified the same as stated above. Petitioner now contends that:
“THE COURT OF APPEALS ERRED ON A QUESTION OF LAW WHEN, IN EFFECT, IT HELD
THAT UNDER THE CONTRACT APPELLANT BOUND HIMSELF ON A WARRANTY THAT THE HEMP
PRESS WOULD RENDER ‘SATISFACTORY’ SERVICE IN THE SENSE THAT ‘THE PRESS COULD BE
USED, AFTER INSTALLATION, IN ACCORDANCE WITH APPELLEE’S BUSINESS OF EXPORTATION
OF HEMP’—“(a) THERE BEING NO EXPRESS WARRANTY IN THAT SENSE,
“(b) THERE BEING NO IMPLIED WARRANTY AS CONTRACT WAS FOR THE SALE AND
DELIVERY OF A SPECIAL HEMP PRESS,“(c) EVIDENCE OF CIRCUMSTANCES TENDING TO VARY TERMS OF A WRITTEN CONTRACT
BEING BARRED BY THE PAROL EVIDENCE RULE FROM CONSIDERATION BY THE COURT,
AND“(d) THERE BEING NO CASE OF WARRANTY AGAINST HIDDEN DEFECTS, THE
DEFECTS COMPLAINED OF BEING NOT HIDDEN DEFECTS AND THE VENDEE NOT HAVING RELIED
UPON THE KNOWLEDGE OR SKILL OF VENDOR.”
The contract that was concluded between the parties relative to the sale of
the hemp press in question is embodied in the letter of March 10, 1949 sent by
petitioner to respondent which, for purposes of reference, we quote
hereunder:
March 10, 1949
Messrs. Hanson, Orth & Stevenson, Inc.
Trade &
Commerce Building
Juan Luna Street, ManilaCONTRACT
Dear Sirs:
Confirming previous correspondence, we submit for your
consideration the following offer:
One (1) Hemp Press furnished with marine
type reversible clutch; hemp box guide made of angular steel and beltings to the
main drive power engine—Price, including tax; crating; forwarding and loading aboard the ship at
Manila harbor—P8,000.00.TERMS OF PAYMENT:
P8,000.00 cash upon presentation of shipping documents and invoices.
We shall furnish, free of charge, the services of a competent mechanic to
supervise the installation of the above hemp press and turn same over to you in
satisfactory running order. Our mechanic will also supervise the installation of
the power drive engine to be furnished by you for the above hemp press.Ocean freight, unloading and forwarding charges at ship destination to site
of installation will be for your account.Erection materials, such, as cement, sand, gravel, from lumber for cement
foundations and hemp box, and all other equipment not specifically included in
the above offer will be for your account.Please signify your acceptance to the above by signing the original of this
contract and returning same to this office.
Yours very truly, GRACE PARK ENGINEERING /s/ Co Cho Chit /t/ Co Cho Chit Proprietor We hereby accept the offer herein made, subject to all terms and conditions
therein, specified.
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HANSON, ORTH & STEVENSON, INC.
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/s/ J. DEANE CONRAD
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In connection with the aforequoted contract, the Court of Appeals also
considered as important the statement made in ‘another letter which says: “In
connection with the said hemp press, we guaranty same to give
satisfactory-service under reasonable use of same for a period of six months,
excepting breakage of any part thereof due to careless handling by your
operators” (Exhibit A-l). And considering the terms of the two letters in
relation to the rest of the evidence, the Court of Appeals made the following
findings:
“It is to be also noted in this connection that J. Deane Conrad who carried
oat the transaction with Co Cho Chit, is not a mechanic, while the vendor is the
head, if not the owner, of Grace Park Engineering; that Hanson, Orth &
Stevenson. Inc., for which the hemp press was bought, needed this machine in the
operation of its business of exporting hemp from the country; that with the
exception of a very small percentage, almost all of the hemp produced in the
Philippines is for exportation; that since its installation the hemp press in
question has not been able to bale hemp of regulation size for exportation; and
that because of this failure or defect plaintiff has never accepted said hemp
press. Such being the case, and even if the terms of the contract do not
specifically or expressly bind defendant to make the installation of the hemp
press but only to furnish the service of competent mechanics to supervise the
installation thereof, yet this hemp press had to be installed under the
supervision of the personnel of the defendant and had ‘to give (after
installation) satisfactory service under reasonable use of same for a period of
six months, excepting breakage of any part thereof due to careless handling by
plaintiff’s operators; and such service could not be ‘satisfactory if the hemp
press could not be used, after its installation, in accordance with appellee’s
business of exportation of hemp. In the case at bar, the failure in carrying”
out the installation in question may not be a basis for rescission of the
contract Exhibit A, but even so, there still would be ground for the resolution
thereof if one of the parties thereto fails to fulfill his part of the
contract.”
From the above findings, the following appears clear; that
respondent, for which the hemp press was bought, needed this machine in the
operation of its business of exporting hemp from the country; that with the
exception of a very small percentage, almost all the hemp produced in the
Philippines is for exportation; that since its installation, the hemp press in
question has not been able to bale hemp of regulation size for exportation; and
that because of this failure or defect, respondent has never accepted said hemp
press. For this reason, the court concluded that petitioner breached his
contract and so respondent is entitled to its rescission.
The letter-contract Exhibit A shows clearly that petitioner obligated himself
to perform only two obligations, to wit: first, to sell and deliver to
respondent the described hemp press, and, second, to furnish free of charge the
services of a competent mechanic to supervise the installation of the hemp press
and turn the same over to respondent in satisfactory running condition. In
addition, it may be said, considering the clarifying letter Exhibit A-l, that
petitioner guaranteed that the hemp press would “give satisfactory service under
reasonable use of same for a period of six months.” It would appear that these
commitments of petitioner were complied with, since the hemp press as described
was delivered, the same was installed to respondent’s satisfaction, and it is
giving satisfactory service under reasonable use for the purpose for which it
was made. There is nothing in the record to show that the hemp press delivered
is not in accordance with the specification contained in the contract, nor is
there any point raised that it is not functioning for the purpose for which it
was made. Such being the case, it would seem that petitioner has done his part
in the contract and therefore there Is no reason why it should be rescinded to
his prejudice. Of course, in the clarifying contract Exhibit A-1, petitioner
guaranteed that the hemp press would give satisfactory service under reasonable
use for a period of six months, but this guaranty cannot be interpreted to mean
that the hemp press would press hemp in bales of any specified size or according
to the regulation size needed for exportation. Said guaranty only means that the
hemp press would give satisfactory service if reasonably used for the purpose it
was made, and this purpose is the one described in the contract.
It is true that the hemp press is not able to bale hemp of regulation size
for exportation which is the purpose respondent want to be, but why is it that
such brand of press was not specified in the contract? Why is it that it was not
clearly expressed therein that the hemp press needed by respondent was intended
to bale hemp in connection with its business of exportation? The record shows
that J. Deane Conrad, who carried out the transaction with petitioner, is a
responsible official who has-had enough experience in the business of hemp and
as such he should have known what was best for his firm in connection with the
purchase, and when he failed to make his intention clear and definite, he alone
should be blamed for the consequences. The vendor cannot be expected to presume
the particular commodity a customer desires to buy when he goes to his store and
make his own choice and pays for it. After the vendor has done his part of
delivering the merchandise the purchaser has chosen, it would be unfair to
rescind the contract if it turns out not suitable to the purpose the latter has
intended. This is the situation herein obtained.
Moreover, the hemp press installed was strictly in accordance with the
description in the contract. There is no claim to the contrary. Such being the
case, the fact that respondent could not use it to suit its own private and
specific purpose cannot render the contract rescindable. The vendor has done his
part and it is but fair that the vendee should do his. The contract in such a
case is valid and binding and not rescindable.
“After a careful examination of the record, we have not the. least doubt that
the plaintiff delivered the machine as described in the sales contract, and the
fact that the defendant could not use it satisfactorily in the three cold stores
divisions cannot be attributed to plaintiff’s fault; as far as we can see, the
machine was strictly in accordance with the written contract between the parties,
and the defendant can hardly honestly say that there was any deception by the
plaintiff. (See article 327, Code of Commerce; Palanca vs. Fred Wilson &
Co., 37 Phil., 506).” (Pacific Commercial Company vs. Ermita Market & Cold
Stores, Inc., 56 Phil., 617, 620-621; Italics supplied)
Wherefore, the decision appealed from is reversed. The complaint is
dismissed, with costs against respondent.
Paras, C.J., Bengzon, Montemayor, Reyes, A., Concepcion, Reyes, J.B.L. and Endencia, JJ., concur.
DISSENTING
LABRADOR, J.,
The facts found by the Court of Appeals, which cannot be modified by Us, are
as follows:
“It is to be also noted in this connection that J. Deane Conrad who carried
out the transaction with Co Cho Chit, is not a mechanic while the vendor is the
head, if not the owner, of Grace Park Engineering; that Hanson, Orth &
Stevenson, Inc., for which the hemp press was bought, needed this machine in the
operation of its business of exporting hemp from the country; that with the
exception of a very small percentage, almost all of the hemp produced in the
Philippines is for exportation; that since its installation the hemp press in
question has not been able to bale hemp of regulation size for exportation; and
that because of this failure or defect plaintiff has never accepted said hemp
press. Such being the case, and even if the terms of the contract do not
specifically or expressly bind defendant to make the installation of the hemp
press but only to furnish the service of competent mechanics to supervise the
installation thereof, yet this hemp press had to be installed under the
supervision of the personnel of the defendant and had ‘to give (after
installation) satisfactory service under reasonable use of same, for a period of
six months, excepting breakage of any part thereof due to careless handling by
plaintiff’s operators’; and such service could not be ‘satisfactory’ if the hemp
press could not be used, after its installation, in accordance with appellee’s
business of exportation of hemp. In the case at bar, the failure in carrying out
the installation in question may not be a basis for rescission of the contract
Exhibit A, but even so, there still would be ground for the resolution thereof
if one of the parties thereto fails to fulfill his part of the
contract.”
The above facts fully justify the conclusion and
judgment rendered by the Court of Appeals. I, therefore, believe that said
judgment should be affirmed.