THE ROYAL SHIRT FACTORY, INC., PLAINTIFF AND APPELLEE, VS. CO BON TIC, DEFENDANT AND APPELLANT.

The present appeal involves an action originally brought in the
Municipal Court of Manila by the plaintiff, the Royal Shirt Factory,
Inc., to recover from defendant Co Bon Tic the sum of P1,422 said to
represent the balance of the purchase price of 350 pairs of
“Balleteenas” shoes at P7 a pair, with interest at 12 per cent per
annum from August 27, 1948, and 25 per cent of said sum as attorney’s
fees, and costs.

The principal issues in the Municipal Court was the nature of the
sale of the 350 pairs of shoes by plaintiff to defendant—whether it was
an outright sale as contended by the plaintiff, or a sale merely on
consignment as claimed by the defendant who wanted to return the shoes
not yet sold by him. There was also involved the question of the amount
already paid by the defendant to the plaintiff. The Municipal Court
held that the contract was of sale on consignment; that of the 350
pairs of shoes consigned, 207 pairs were sold at the rate of TS a pair,
amounting to a total of P1,656; and that defendant had paid the sum of
P1,028 to plaintiff on account of the purchase price of the shoes sold,
excluding the amount of P42, value of Check No. 790264 issued by
defendant as payment but returned to him by the plaintiff and not
replaced with cash. Judgment was rendered sentencing the defendant to
pay plaintiff the sum of P628 with interest thereon at the legal rate
from the date of the filing of the complaint, and to return to
plaintiff the 143 pairs of shoes still unsold, unless he preferred to
retain and pay for them at the rate of P8 a pair within a period of
fifteen days from receipt of a copy of the decision.

The defendant appealed from the judgment to the Court of First
Instance of Manila, and after trial, the appellate court held that the
transaction involved was one of outright sale at P7 per pair of shoes,
sales tax included, the court accepting the version given by the
plaintiff to the effect that on the basis of the order slip (Exhibit
A), the defendant had 9 days from delivery of the shoes to make his
choice of the two alternatives, that is to consider the sale of the 350
pairs of shoes closed at the flat rate of P7 per pair, sales tax
included, or, at the expiration of 9 days to pay for the shoes sold at
P8 per pair, and to return the remaining unsold ones to plaintiff; and
that, inasmuch as defendant, at the expiration of the 9 days
stipulated, failed to return the shoes, and actually began making
partial payments on account of the purchase price agreed upon, the
transaction in the nature of a straight sale, was considered closed.
The court also found as did the Municipal Court that the amount of P420
represented by Check No. 790624 was never replaced or exchanged for
cash by the defendant upon its return to him, and consequently, it may
not be considered as part payment.

Judgment was rendered in favor of the plaintiff and against the
defendant and the latter was ordered to pay to the former the sum of
Pl,422, the unpaid balance of the sales price of 350 pairs of shoes in
question, with interest on the amount due at the rate of 12 per cent
per annum from August 27, 1948 until final payment, plus the amount of
25 per cent of the same sum for attorney’s fees as stipulated, and
costs. After failing to get a reconsideration of the judgment, the
defendant appealed the case to the Court of Appeals which Tribunal
after submission of the briefs for both parties, and acting upon a
motion filed by counsel for the appellant that the case be certified to
the Supreme Court for the reason that the question raised in his first
and second assignment of errors involved the jurisdiction of the trial
court, granted the same and certified the appeal to us for final
determination pursuant to Section 17, par. 2(3) of Republic Act 296.

Under the first and second assignment of errors, the defendant
raises the question of jurisdiction of the Court of First Instance of
Manila in reviewing and passing upon the issues already passed upon and
decided by the Municipal Court but not appealed from by plaintiff. It
is the theory of the appellant that as for instance, when the Municipal
Court found that the transaction between plaintiff and defendant was a
sale on consignment and plaintiff failed to appeal from that decision,
that part of the judgment became final as to him (plaintiff), and
should be regarded as res adjudicata, and that the Court of
First Instance in the exercise of its appellate not original
jurisdiction may not review and pass upon the same question or issue,
and that in so doing it exceeded its appellate jurisdiction. Defendant
further contends and cites authorities in support of his contention
that regardless of the provisions of Rule 40, section 9, of the Rules
of Court whose provisions are to the effect that a perfected appeal
from a decision of the justice of the peace or the municipal court
shall operate to vacate the said judgment and shall stand for trial de
novo upon its merits in accordance with the regular procedure in that
court as though the same had never been tried before and had been
originally commenced there, an appeal brings up for review only that
which was decided against the appellant so that that part of the
judgment favorable to him is not reviewable if the other party does not
appeal; that a party who has not appealed a judgment cannot assail it,
neither can he ask for a judgment more favorable to him than that
rendered in the court below; that the party who has not appealed a
judgment signifies his acceptance of the correctness of the said
judgment, and that in the appeal his position is merely defensive and
he may only refute appellant’s assignment of errors and sustain the
judgment of the trial court.

The above contention of appellant might possibly hold with regards
to appeals from judgments of Courts of First Instance to the Court of
Appeals or to the Supreme Court in that one cannot seek further remedy
or relief in the appeal not taken by him than that granted him by the
trial court, unless of course, the appellate court motu proprio
takes cognizance of palpable errors committed by the trial court and
proceeds to correct the same even if the correction favors the appellee
(Section 5, Rule 53, Rules of Court). However, we have a special legal
provision governing an appeal from justice of the peace or municipal
courts to Courts of First Instance, the very Rule 40, section 9, of the
Rules of Court cited by defendant-appellant. Such appeal serves to
vacate the judgment appealed from and the action will stand for trial
de novo upon its merits as though the same had never been tried before
and had been originally commenced in the Court of First Instance. The
Court of First Instance will try the case without regard to the proof
presented in the Justice of the Peace or Municipal Court or the
conclusions arrived by said court. The Court of First Instance will not
affirm, reverse, or modify the rulings or the judgment appealed from
for the simple reason that there is no ruling or judgment to affirm,
reverse or modify because all the proceedings had in the justice of the
peace or municipal court, including the judgment, do not in
contemplation of law exist, having been vacated; and the only instance
when said judgment appealed from is revived is when the appeal is
withdrawn or dismissed (Crisostomo vs. Director of Prisons. 41 Phil.,
868; Colegio do San Jose vs. Sison, 56 Phil., 344, 351; Lizo vs.
Carandang, 2 Off. Gaz., 302, March 1943; Co Tiamco vs. Diaz, ^[*]
42 Off. Gaz., 1169, 1231; Lichauco vs. Guash, 42 Off. Gaz., 1863, 1865;
Rule 40, Sec. 9, Rules of Court). From all this it is evident that the
contention of the appellant is untenable; and that any and all issues
involved in a case originating in an inferior court, whether or not
passed upon by said court and whether or not appealed upon by any or
both parties, are, thrown open and may be passed upon by the Court of
First Instance when the case is appealed to it. Consequently, the Court
of First Instance of Manila had jurisdiction and authority to rule on
the issue as to the nature of the transaction between plaintiff and
defendant as to the sale of the shoes. Now, was it an absolute sale or
a sale on consignment?

Exhibit A of the plaintiff which was accepted, admitted and
considered by the Court of First Instance of Manila is an order slip
which lists down and classifies the 350 shoes in question according to
color, and contains the following condition of the sale in the
handwriting of Mr. Chebat, the agent of the plaintiff who sold the
shoes to the defendant—

CONDICION (Terms)

“Al cabo de 9 dias, pagar todo a razon de P7 al par, o pagar lo vendido a P8 el par”.

Explaining said condition, Mr. Chebat testifying, said that it meant
that the defendant could either consider the sale as one on
consignment, sell as many shoes as he could at any price, pay for them
at P8 a pair and at the end of nine days return the shoes unsold to the
plaintiff, or, consider the sale of the 350 shoes as absolute at P7 a
pair; and that since the defendant did not return any of the shoes at
the expiration of 9 days he must be held to have chosen the second
alternative, namely, that he bought the whole stock of shoes at P7 a
pair. It will be noted, however, that Exhibit “A” was never accepted,
much less signed by the defendant or his sales manager Mr. Bernardo
Geronimo, and therefore, cannot bind the defendant and so is but a self-serving evidence which should not have been admitted and considered
by the trial court.

Disregarding Exhibit “A”, the nature of the transaction must be
judged by other evidence, including the conduct of the parties at the
time of making the contract and subsequent thereto (Art. 1282 of the
old Civil Code and Art. 1371 of the new Civil Code). Exhibit “B” of the
plaintiff is an invoice of the same 350 pairs of shoes whose price
including sales tax is listed as P2,450. It was evidently not only
accepted by the defendant but on it he noted down in his own
handwriting the different partial payments of P500, P528 and lastly of
the controversial P420 by check. It will also be noticed that the
defendant in making said notations of payment considered the full
purchase price of the 350 pairs of shoes at P7.00 or P2,450, and it was
against said total that he had been making the payments, putting down
the balance after each payment. For instance, after paying P500 on
account, he put PI,950 as balance, and after paying another P528, he
put down as balance Pl,422. In other words, he obviously accepted the
straight sale to him on credit of the whole 350 pairs of shoes for
P2,450 and made partial payments on account thereof. In making said
partial payments, he made no mention whatsoever of the number of shoes
sold by him and the number of shoes remaining unsold, which he should
have done had the sale been on the consignment basis. On the other
hand, he merely mentioned the balance of the purchase price after
deducting the several partial payments made by him. Furthermore, if the
sale had been on consignment, a stipulation as to the period of time
for the return of the unsold shoes should have been made; but evidently
that had not been done and defendant kept the shoes unsold more or less
indefinitely, but giving the same excuse that he could not return them
to the plaintiff because he did not know where to return them. The
plaintiff Royal Shirt Factory, Inc., is quite well-known. It has a
store at the Escolta and according to the invoice (Exhibit B), it is an
importer, wholesaler and manufacturer, and it could not have been hard,
much less impossible for the defendant to return the shoes unsold by
him had the transaction really been a sale on consignment. So, on this
issue of the nature of the transaction between the parties, we agree
with the trial court that it was a straight sale at the rate of P7 per
pair of shoes.

As regards Check No. 790264″ of the China Banking Corporation,
Exhibit F, in the amount of P420 with which defendant attempted to make
another partial payment as appears in Exhibit ‘B’, both parties agree
that since the check was postdated, it was returned by the plaintiff to
the defendant who however claims that he replaced it with cash. This
was stoutly denied by plaintiff. After a careful review of the
evidence, we agree with the trial court that the preponderance thereof
is to the effect that the amount of said check of P420 was never
replaced by the defendant. It is also interesting to note that the
Municipal Court of Manila where this issue was first considered, came
to the same conclusion that the defendant never replaced the amount of
this check in cash.

The decision appealed from sentences the defendant to pay to the
plaintiff Pl,422 with interest at 12 per cent per annum from August 27,
1948, plus 25 per cent of the same sum for attorney’s fees, besides
costs. This rate of interest and the 25 per cent for attorney’s fees
appears in Exhibit “B” in printed form as terms or conditions. In
Exhibit “A”, the order slip, the conditions of sale also printed
provide for 20 per cent only as attorney’s fees and no rate of interest
in case of litigation. Had the defendant signed Exhibit “A”, which he
did not, he would have been bound by it and would be liable to 20 per
cent of any amount due from him, but because of the absence of
stipulation as to the rate of interest he would be paying only the
legal rate of 6 per cent per annum. There is no explanation of this
difference in conditions of sale about rate of interest and attorney’s
fees found in the order slip (Exhibit “A”) and the invoice (Exhibit
“B”) both of the plaintiff. Anyway, neither did the defendant sign
Exhibit “B”. If we hold defendant bound by Exhibit “B” at all, it is
because of his tacit acceptance of the total value of 350 pairs of
shoes and by his notation against it of his partial payments. We do not
think it fair for him to be bound also by the printed terms of the
conditions of sale. Moreover, we find under said printed form the
clause in pencil: “as agreed with Mr. Chebat.” We may even say that
said clause in hand- writing may be considered as having overruled what
was printed as to the rate of interest and the attorney’s fees. We
therefore hold that the defendant should only pay 6 per cent interest
on the amount due him from the date of the filing of the complaint,
with costs, and nothing for attorney’s fees. It is also interesting to
note that this was the same ruling of the Municipal Court on this point.

With the above modification, the decision appealed from is hereby affirmed, with costs.

Paras, C J., Pablo, Bengzon, Reyes, Jugo, Bautista Angelo, Labrador, and Concepcion, JJ., concur.

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^[*] 75 Phil., 672.