JOSE ABESAMIS, PLAINTIFF-APPELLEE, VS. WOODCRAFT WORKS, LTD., DEFENDANT-APPELLANT.

The plaintiff, doing business
under the name “East Samar Lumber
Mills,” was the owner of a timber concession and sawmill located at
Dolores, Samar.  On November
8, 1950 the
defendant Woodcraft Works, Ltd., entered into an agree­ment with the plaintiff
to purchase from the latter 300,000 board feet of Philippine round logs at
P60.00 per thousand board feet.  Due to
bad weather conditions and the failure of the defendant to send the necessary
vessels to Dolores, Samar,
only 13,068 hoard feet of logs were delivered.

On January 22, 1951
the parties entered into a new contract. 
The previous one was cancelled, with the plain­tiff waiving all his
claims thereunder. 
Certain advances which had been given by the defendant to the plaintiff,
in the aggregate amount of P9,000.00, were transferred
to and considered as advances on the new contract.  It was stipulated that the defendant would
purchase from the plaintiff 1,700,000 board feet of logs of the specifica­tions
stated in the contract – 1,300,000 board feet at P78.00 per thousand and the
rest at P70.00.  It was also agreed that
the shipment was to be “before the end of July, but will not commence
earlier than April with the option to make partial shipment depending on the
availabi­lity of logs and vessels.”

Of the quantity of logs agreed upon, only two shipments were
made, one in March and the other in April, 1951, amounting to 333,832 board
feet and 128,825 board feet, respectively, or a total of 462,657 board
feet.  On September 13, 1951 the plaintiff filed in the Court of
First Instance of Leyte an action for rescission of
the contract of January 22, 1951
and for recovery of damages in the sum of P155,000.00
by reason of the defendant’s failure to com­ply with its obligations.  The defendant filed an answer and later an
amended answer, denying the material allega­tions of the complaint, with
special defenses and counter­claims.

After due trial the lower court rendered judgment as follows:

“WHEREFORE and on the strength of all the foregoing, the Court
renders judgment:  declaring the
aforementioned contract of January 22, 1951, rescinded; ordering the defendant
to pay to the plaintiff for actual damages suffered by the latter in the amount
of P145,623.03, plus the amount of P50,000.00
represent­ing the plaintiff’s actual loss of credit in the operation of his
business, and, another sum of P5,000.00 as attorney’s fees.  The defendant is likewise ordered to pay the
costs.”

The defendant appealed to this Court and now avers that the lower
court erred:  “(1) in stating that
Woodcraft Works, ltd. was obligated to send the boat to receive the shipment of
logs of the East Samar Lumber Mills at Dolores, Samar, before the end of July 1951; (2) in deciding that (appellee) had sufficient stock of logs to cover the con­tract
on July 31, 1951; (3) in stating that appellant failed to comply with the terms
and conditions of the contract; (4) in granting
damages to appellee; and (5) in not granting damages
and recovery of money in favor of herein
appellant.”

The main issue before us is
whether or not appellant Woodcraft Works, Ltd. failed to comply with its
obligations under the contract,
or more specifically, whether or not it was obligated to furnish the vessel to receive the shipment of logs from appellee.  Appellant
contends that it was not.

The contract (Exh.
A) does not expressly provide as to which of the
parties should furnish the vessel.  But it does contain provisions which
show clearly, albeit only by implication, that the obligation to do so devolved
upon appellant, thus:

Fees
& Charges:   Bureau of Forestry inspection charges
and Philippine Govern­ment wharfage fees are for ac­count
of Woodcraft Works, Ltd.

Dispatch of Ship:    Immediately upon arrival of the vessel at
Dolores, Samar, you will
commence loading at the rate of 200,000 bdft. per working day per four hatches.

Should the weather be unfavorable, be sure to have a
certificate signed by the captain
confirming time idle due to this fact. 
Furthermore, in the event
the ship’s gears are not
functioning well, kindly do likewise
and get a statement from the captain.

Demurrage:            Failure to load 200,000 bdft. per working day,
you agree to pay us the
sum of P800.00 per day pro-rata.

The contract was in the form of a letter addressed by appellant
to appellee, and the terms set forth in the
portions aforequoted, particularly with
respect to wharfage dues, demurrage and condition of
the weather and of the ship’s machinery, would have been of little concern to
appellant and would not have been imposed by it if appellee
were the one to furnish the vessel. 
Besides, the contemporaneous and subsequent acts of the parties, which
under the law may be taken into consideration to determine their inten­tion
(Art. 1371, Civil Code), point unequivocally to the same conclusion.  In the two shipments of logs in March and
April of 1961 the vessels “SS AEULUS” and “SS DON JOSE”
were furnished by appellant.  In several
telegraphic com­munications exchanged between the parties it was invariably appellee who requested information as to the arrival of the
vessels and appellant who gave the information accordingly.

Finally it was appellant, through its witness Irza
Toeg, who had to explain at length during the trial
its failure to furnish the necessary vessels, as follows:

“A.  Well, when the shipping firms in Manila
learned about the failures of the vessels which we sent to Dolores, Samar to load, and news travels fast from one
shipping company to the other, the other shipping companies were very hesitant
when we asked for a vessel to call at the port
of Dolores, Samar. 
They asked us whether any vessel has already gone there to load and what
is the loading rate for that particular vessel. 
So the facts of loading rates that the East Samar
Lumber Mills was able to effect on the Bunyo Maru had a very bad effect in obtaining additional
vessels.  Other shipping companies
instructed their vessels not to go to Dolores, Samar
because shipping com­panies as a rule
do not want to gamble and sent vessels to a loading port when they know of the
place and they know that the people operating there would not be able to handle
the loading of the vessels judging from their past performances.

x x x You will recall that the first vessel that loaded in this
contract was a foreign vessel which was the Bunyo Maru.  Out of the
expected quantity of 400,000 bd. ft. of logs only 13,000 approximately was
loaded.  Therefore, that had a very bad
effect on the other foreign vessels.  The
second and third vessels however were of Philippine Registry, and it was only
thru our good connection with the ship­ping company that they even permitted
their vessels to call at Dolores, Samar.  So, after the three sad experiences, each one
with considerable delay in the loading time with incomplete quantities that
should have been loaded, it was difficult for us to obtain vessels to call at
that port.” (T.S.N. pp. 28-30, Deposition)

In the light of all these circumstances, appellant’s claim that
it was not obligated to furnish the vessel can­not prevail.

It is next contended that appellee was
not in a position to comply with his own obligation to
ship the quantities of logs called for under the contract.  This was sought to be proven by means of a
certificate issued by the Bureau of Forestry (Exhs.
11 & 11-A), which is the off­icial record of timber cut under appellee’s permit, showing that appellee’s
production from January to July, 1951, amount­ed only to 1,926.64 cubic meters or 816,795 board feet of logs, which
was short by 833,205 board feet of the quantity called for in the contract.

There is indeed a discrepancy between the certificate of production
issued by the Bureau of Forestry and the testimony of Francisco Abesamis regarding the quantity of timber cut under appellee’s
permit, but this was satisfac­torily explained by him at the trial in this
wise:

“A.   Because
my export grade logs is a big quantity, and if we
immediately report those export grade logs to the Bureau of Forestry before
shipment is made, we will be paying forest charges for the logs for which we
have not received pay­ment yet.  So we
make it a practice to re­port
only the logs that are actually shipped. 
The forest charges amount to so much money that we could hardly afford
to pay this in advance.  This was more or
less a convenience given to us by the lumber grader.  And besides that, we prepare a big quantity
of logs but the lumber grader usually is instructed by the buyer to grade only
a certain portion of it because of the limitation of cargo space in buyer’s
vessel.  For example, we have there
prepared 1,000,000 board feet but Mr. Selga is
instructed to inspect only 400,000 board feet which is the capacity of incoming
vessel.  So the balance of 600, 000 board
feet could not be graded as this quantity could not be loaded.”

Abesamis categorically stated on the
witness stand that by the end of July
1951 he had 1,300,000 board feet of logs available – 800,000 at hand and
ready for loading and the rest deposited
at various stations; and that he advised appellant of that fact in a
telegram dated July 31, 1951
(Exh. S), at the
same time requesting that a grader and a vessel be dispatched to Dolores
immediately as the logs were in danger of deteriorating.

Nicanor Selga,
lumber inspector of the Bureau of Forestry, reported to appellant that as of
July 3, 1951 he had graded appellee’s logs amounting to 488,015 board feet (Exh. aa).  Of this quantity appellant,
in its reply tele­gram of July 13, 1951 (Exh. BB) said that it could accept 239,547 board
feet, made up of logs at least 13 feet in length and 20 inches in diameter. 
However, Selga likewise testified that appellee had other logs – some 600,000 board feet in all –
in the two barrios of Aroganga and Genolaso.  After July
3, 1951, which was the last day Selga made his
inspection, there is evidence that
appellee continued its logging operations, such that there was enough to cover the quantity
called for in the contract by due date, that is, on July 31, 1951.

Appellee divides his claim for damages into three categories, each based
on a separate breach of contract by appellant.

First, appellee maintains that due to
the failure of appellant to send a vessel to
Dolores, Samar, the
storm on May 5, 1951 swept
away almost all the logs then awaiting shipment, amounting to 410,000 board
feet, valued at P73, 537.77.  On this
point it should be noted that under the contract shipment was to be made before the end of July 1951, but not to commence earlier
than April of the same year.  The
obligation between the parties was a reciprocal one, appellant to furnish the
vessel and appellee to furnish the logs.  It was also an obligation with a term, which
obviously was intended for the benefit of both parties, the period having been
agreed upon in order to avoid the stormy weather in Dolores, Samar, during the months of January to March.
The obligation being re­ciprocal and with a period, neither party could demand
performance nor incur in delay before the expiration of the period.  Consequently, when the typhoon struck on May 5, 1951 there was yet no delay on
the part of appel­lant, and the corresponding loss must be shouldered by appellee.

As regards the
second breach it has been established that
after the storm of May 5, 1951
appellee continued its logging
operations.  Appellant was advised of the
quantity of logs ready for shipment and was urged to send a vessel to take
delivery.  It thereupon gave assurance
that a vessel, the “SS ALBAY”, with a capacity of 450,000 board feet,
was coming to Dolores, Samar,
to load on June 25, 1951.  Appel­lee readied
the necessary quantity of logs but the vessel did not arrive.  As a result, 60,000 board feet of logs which
had been rafted broke loose and were lost. 
Appellee’s loss on this account amounted to a
total of P7,685.26, representing the value of the logs
lost, the cost of rafting and other incidental expenses.  It may be observed in this respect that
although the obligation would not become due until July 31, 1951 appellant waived the benefit of the
period by assuring appellee that it would take
delivery of the logs on June 25, 1951.  On that date appellee
was ready to comply, but appellant failed on his commitment, without any
satisfactory explanation for such failure. 
Therefore, appellant should bear the corresponding loss.

Third and finally, as heretofore pointed out, by the end of July
1951 appellee had sufficient logs ready for shipment
in accordance with the contract.  But
appellant, in spite of the representations made by the former, failed to send a
vessel on the aforesaid date.  There is
no evi­dence that such failure was due to circumstances beyond appellant’s
control.  As a result logs totalling 800,000 board feet were destroyed by marine
borers, causing a loss of P62,000.00, for which
appellant should be held liable.

The trial court sentenced appellant to pay P50,000.00
representing appellee’s loss of credit in the
operation of his business.  The decision
does not say upon what evidence the award is based.  Nor is there any attempt in appellee’s brief to justify the amount awarded.  Actual or compensatory damages must be
established by clear evi­dence.  In this
case, other than a few letters of demand for payment of money accounts received
by appellee from its creditors and presented as exhibits, there is
nothing to go upon, and the mere fact
that such demands were made does not necessarily prove loss of
credit.  This item must therefore be eliminated.

In view of the foregoing the judgment appealed from is affirmed,
with the modification that
appellant Woodcraft Works Ltd. is sentenced to pay appellee
the aggregate sum of P69,685.26 by way of damages, plus P5,000 as
attorney’s fees, without costs in this instance.

Concepcion, C.J., Reyes, J.B.L., Dizon, Zaldivar, Sanchez, Castro,
Teehankee, and
Barredo, JJ., concur.