Republic v. Litton & Co. et al (Nov. 28, 1953) Paras, C.J. Seller: Litton & Co.

et al(Partnership), managing partner George Litton, to supply (2 contracts) padlocks, and various office supply to Buyer: Republic for the April 23,1946 elections. Facts: 2 causes of action because there are two contracts subject of this case. 1. Two contracts contained Important conditions re: delivery in par2: The stipulated delivery period shall not be exceeded. However should there be delay in delivery, Purchasing Agent may grant a reasonable time for extension. Deliveries made within the extended period, shall not be subjected to any of the following penalties. 2. The two contracts also contained in par.4: In case of Contractors (Litton) failure to deliver, will authorize Purchasing Agent (Republic), in his discretion, to impose: a. Penalty, deduct from each day of delay in delivery, a liquidated damage 1/10 of 1% per day of total value of contract OR b. To make open market purchases, and charge the contractor the excess in price. c. Either case, Republic reserves the right to rescind the contract. 3. Re: Contract 1-Padlocks. a. Entered into on Dec. 22,1945. b. To supply and deliver on or before March 1,1945 c. 96,000 padlocks at P1.87 each. d. As guarantee, co-defendant, Central Surety Co. executed a surety bond P35,904. e. Litton failed to deliver on said date. It however delivered on April8 34,200 padlocks. These were fully paid. f. Republic was compelled to make open market purchases, incurring loss of P176,243.13 4. Re: Contract 2- (Office Supplies) a. Entered into Dec. 26,1945 b. To deliver on or before March 1, 1945 c. Indelible pencils, lead pencils, bottle of inks, pen points, chalks, clips, etc. = P25,979.55 d. As guarantee, co-defendant, Central Surety Co. executed a surety bond P4,700 e. Litton also failed to deliver. After elections they however delivered 2K boxes of clips costing P180. f. Republic was compelled to make open market purchases, incurring loss of P20,164.17 5. Republic is now claiming a total of P259,366.41 as losses from open market purchases. 6. Littons DEFENSE: a. The contracts did not express the true contract. The real agreement was that Litton would deliver provided the Rep. should obtain shipping priority and the necessary export license from the US. Rep failed to secure them. b. Hence delay of delivery was due to Rep. fault and to circumstances beyond Littons control. c. Open market purchases were made at exorbitant prices.

d. Counterclaim: Litton delivered after elections, an additional 9K padlocks. Republic has refused to pay these despite demands. 7. RTC: Granted claims of government BUT also granted the counterclaim of Litton allowing a deduction of 25K. Litton was still the one with the sole obligation to obtain the necessary export license and shipping space. Acts done by the republic to ease the shipping of good were merely in the nature of a friendly assistance. Issue: w/n Litton unconditionally bound himself to deliver the supplies. Decision: YES. Litton undertook to deliver NOT LATER than March 1, 1946. This was UNCONDITIONAL. Hence delay due to the non acquisition of the licenses was not due to Republics acts, and CAN be subject to penalties in par.4 1. It was expressly stated that the supplies were for election purposes, and the bidder was therefore required to state the shortest time of delivery. It would be preposterous to suppose that delivery after the elections would ever be contemplated or accepted. 2. Litton in his letter to the purchasing agent said that, it is understood that your Office (Republic) will give us a letter certifying that the padlocks are urgently needed..so that the export license can be secured without delay The foregoing shows that Litton merely expected Rep. to give a certification. 3. The execution of the sureties negate the contention that the delivery was subject to any contingency. 4. Moreover, Litton also sent another letter, foreseeing his inability to deliver on time, asked for an extension. 5. True the Govt exerted efforts, and that the licenses were issued in the name of the Rep., but these do not prove that it was Rep.s obligation to secure the same. They were merely done in furtherance of the letter asking for certification. 6. RE: Delay in delivery. a. The vessels carrying the supplies arrived in Manila on or before April 1,1946 b. At the time Rep purchased supplies in the open market, the vessels carrying the shipment of supplies were already inside the breakwater waiting for unloading. c. However due to lack of berthing space, their cargo was unloaded and delivered only after the elections. d. On purely equitable reasons the SC reduced the damages awarded by 90K, the difference between the stated contract price and open market price for the padlocks delivered after the elections. 7. At any rate Litton failed to protect itself or minimize damages by buying in the open market himself at lower prices than that acquired by the government (allegedly at black market prices). WHEREFORE MODIFIED. Reduce damages by 90K. -Czarina Dee