G.R. No. 13203 September 18, 1918 precio de Dollar Gold Nine and 75/100 1-lbs.

"

BEHN, MEYER & CO. (LTD.), plaintiff-
appellant,
vs.
TEODORO R. YANCO, defendant-appellee.
Crossfield & O'Brien for appellant.Charles C.
Cohn for appellee.
MALCOLM, J.:
The first inquiry to be determined is what was
the contract between the parties.
The memorandum agreement executed by the
duly authorized representatives of the parties to
this action reads:
Contract No. 37.
Resorting to the circumstances surrounding the
agreement are we are permitted to do, in
pursuance of this provision, the merchandise
was shipped from New York on the steamship
Chinese Prince. The steamship was detained by
the British authorities at Penang, and part of the
cargo, including seventy-one drums of caustic
soda, was removed. Defendant refused to
accept delivery of the remaining nine drums of
soda on the ground that the goods were in bad
order. Defendant also refused the optional offer
of the plaintiff, of waiting for the remainder of
the shipment until its arrival, or of accepting the
substitution of seventy-one drums of caustic
soda of similar grade from plaintiff's stock. The
plaintiff thereupon sold, for the account of the
defendant, eighty drums of caustic soda from
which there was realized the sum of P6,352.89.
Deducting this sum from the selling price of
P10,063.86, we have the amount claimed as
damages for alleged breach of the contract.

MANILA, 7 de marzo, de 1916.

Confirmanos haber vendido a Bazar Siglo XX, 80
drums Caustic Soda 76 per cent "Carabao"
brand al precio de Dollar Gold Nine and 75/100
per 100-lbs., c.i.f. Manila, pagadero against
delivery of documents. Embarque March, 1916.
Comprador Bazar Siglo XX
de Teodoro R. Yangco
J. Siquia
Law. It is sufficient to note that the specific
merchandise was never tendered. The soda
which the plaintiff offered to defendant was not
of the "Carabao" brand, and the offer of drums
of soda of another kind was not made within the
time that a March shipment, according to
another provision the contract, would normally
have been available.
2. PLACE OF DELIVERY.
Facts. The contract provided for "c.i.f. Manila,
pagadero against delivery of documents."

Vendores Law. Determination of the place of delivery

BEHN, MEYER & CO. (Ltd.)
O. LOMBECK.
This contract of sale can be analyzed into three
component parts.
1. SUBJECT MATTER AND CONSIDERATION.
Facts. The contract provided for "80 drums
Caustic Soda 76 per cent "Carabao" brand al
always resolves itself into a question of act. If
the contract be silent as to the person or mode
by which the goods are to be sent, delivery by
the vendor to a common carrier, in the usual
and ordinary course of business, transfers the
property to the vendee. A specification in a
contact relative to the payment of freight can be
taken to indicate the intention of the parties in
regard to the place of delivery. If the buyer is to
pay the freight, it is reasonable to suppose that
he does so because the goods become his at the
point of shipment. On the other hand, if the
seller is to pay the freight, the inference is
equally so strong that the duty of the seller is to
have the goods transported to their ultimate
destination and that title to property does not
pass until the goods have reached their
destination. (See Williston on Sales, PP. 406-
408.)
The letters "c.i.f." found in British contracts
stand for cost, insurance, and freight. They
signify that the price fixed covers not only the
cost of the goods, but the expense of freight
and insurance to be paid by the seller. (Ireland
vs. Livingston, L. R., 5 H. L., 395.) Our instant
contract, in addition to the letters "c.i.f.," has
the word following, "Manila." Under such a
contract, an Australian case is authority for the
proposition that no inference is permissible that
a seller was bound to deliver at the point of
destination. (Bowden vs. Little, 4 Comm.
[Australia], 1364.)
In mercantile contracts of American origin the
letters "F.O.B." standing for the words "Free on
Board," are frequently used. The meaning is
that the seller shall bear all expenses until the
goods are delivered where they are to be
"F.O.B." According as to whether the goods are
to be delivered "F.O.B." at the point of shipment
or at the point of destination determines the
time when property passes.
Both the terms "c.i.f." and "F.O.B." merely make
rules of presumption which yield to proof of
contrary intention. As Benjamin, in his work on
Sales, well says: "The question, at last, is one of
intent, to be ascertained by a consideration of
all the circumstances." For instance, in a case of
Philippine origin, appealed to the United States
Supreme Court, it was held that the sale was
complete on shipment, though the contract was
for goods, "F.O.B. Manila," the place of
destination the other terms of the contract
showing the intention to transfer the property.
(United States vs. R. P. Andrews & Co. [1907],
207 U.S., 229.)
With all due deference to the decision of the
High Court of Australia, we believe that the
word Manila in conjunction with the letters
"c.i.f." must mean that the contract price,
covering costs, insurance, and freight, signifies
that delivery was to made at Manila. If the
plaintiff company has seriously thought that the
place of delivery was New York and Not Manila,
it would not have gone to the trouble of making
fruitless attempts to substitute goods for the
merchandise named in the contract, but would
have permitted the entire loss of the shipment
to fall upon the defendant. Under plaintiffs
hypothesis, the defendant would have been the
absolute owner of the specific soda confiscated
at Penang and would have been indebted for
the contract price of the same.
This view is corroborated by the facts. The
goods were not shipped nor consigned from
New York to plaintiff. The bill of lading was for
goods received from Neuss Hesslein & Co. the
documents evidencing said shipment and
symbolizing the property were sent by Neuss
Hesslein & Co. to the Bank of the Philippine
Islands with a draft upon Behn, Meyer & Co.
and with instructions to deliver the same, and
thus transfer the property to Behn, Meyer & Co.
when and if Behn, Meyer & Co. should pay the
draft.
The place of delivery was Manila and plaintiff
has not legally excused default in delivery of the
specified merchandise at that place.
3. TIME OF DELIVERY.
Facts. The contract provided for: "Embarque:
March 1916," the merchandise was in fact
shipped from New York on the Steamship
Chinese Prince on April 12, 1916.
Law. The previous discussion makes a
resolution of this point unprofitable, although
the decision of the United States Supreme Court
in Norrington vs. Wright (([1885], 115 U.S.,
188) can be read with profit. Appellant's second
and third assignments of error could, if
necessary, be admitted, and still could not
recover.
THE CONTRACT.
To answer the inquiry with which we begun this
decision, the contract between the parties was
for 80 drums of caustic soda, 76 per cent
"Carabao" brand, at the price of $9.75 per one
hundred pounds, cost, insurance, and freight
included, to be shipped during March, 1916, to
be delivered to Manila and paid for on delivery [G.R. No. L-8717. November 20, 1956.]
of the documents.
GENERAL FOODS CORPORATION, Plaintiff-
PERFORMANCE. Appellant, vs. NATIONAL COCONUT
CORPORATION, Defendant-Appellee.
In resume, we find that the plaintiff has not
proved the performance on its part of the
conditions precedent in the contract. The
warranty the material promise of the seller DECISION
to the buyer has not been complied with. The
buyer may therefore rescind the contract of sale
REYES, J. B. L., J.:
because of a breach in substantial particulars
going to the essence of the contract. As
contemplated by article 1451 of the Civil Code, Appellant General Foods Corporation is a foreign
the vendee can demand fulfillment of the corporation organized under the laws of the
contract, and this being shown to be impossible, State of Delaware, U. S. A., and licensed to do
is relieved of his obligation. There thus being business in the Philippines; chan
sufficient ground for rescission, the defendant is roblesvirtualawlibrarywhile Appellee National
not liable. Coconut Corporation (otherwise called
NACOCO), was, on the date of the transaction in
question, a corporation created by
The judgment of the trial court ordering that the
Commonwealth Act No. 518, but later abolished
plaintiff take nothing by its action, without
and place in liquidation by Executive Order No.
special finding as to costs, is affirmed, with the
3727 dated November 24, 1950.
costs of this instance. Against the appellant. So
ordered.
On September 23, 1947, Appellee sold to
Appellant 1,500 (later reduced to 1,000) long
Arellano, C.J., Torres, Johnson, Street and
tons of copra, at $164 (later reduced to $163)
Avancea, JJ., concur.
per ton of 2,000 pounds, under the following
terms and conditions:chanroblesvirtuallawlibrary

CONTRACT NO. RH-3551

FRANKLIN BAKER DIVISION OF GENERAL

FOODS CORPORATION

15th & Bloomfield Streets

Hoboken, New Jersey

WE CONFIRM HAVING PURCHASED FOR YOU

TODAY from Messrs. National Coconut
Corporation, Manila, Philippine Islands, through
Mercantile, Inc., Manila, P. I.

COMMODITY:chanroblesvirtuallawlibrary COPRA
Fair Merchantable Quality, Basis

6% F. F. A.

QUALITY:chanroblesvirtuallawlibrary As per rule

100 of National Institute of
Oilseeds Products.
QUANTITY:chanroblesvirtuallawlibrary Fifteen
Hundred (1500) tons of 2,240 pounds each.
Seller has the option of delivering 5 per cent
more or less of the contracted quantity, such
surplus or deficiency to be settled as
follows:chanroblesvirtuallawlibrary On the basis
of the delivered weight up to 3 per cent at the
contract price and any excess or deficiency
beyond this 3 per cent at the market price of
the day of arrival at port of discharge, this
market price to be fixed by the Executive
Committee of the National Institute of Oilseeds
Products. Each shipment to be treated as a
separate contract.
PACKING:chanroblesvirtuallawlibrary In bulk.
SHIPMENT:chanroblesvirtuallawlibrary
November, 1947, earlier if possible, from
Philippine Islands.
PRICE:chanroblesvirtuallawlibrary One hundred
and sixty-four dollars ($164) per ton of 2,000
pounds, CIF New York.
PAYMENT:chanroblesvirtuallawlibrary Buyers to
open immediately by cable in favor of Sellers
Irrevocable Letter of Credit through the
Philippine National 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 negotiable ocean bills of lading,
freight charges fully prepaid and showing the
material on board.
3. Weight Certificate confirming quantity shown
on invoice and bill of lading.
4. Consular invoice or certificate of origin in
duplicate.
5. Loading survey report and weight certificate
of Superintendence Corporation.
6. Consular form No. 197 (Pure Food & Drug
Certificate).
Balance due to be paid promptly upon
ascertainment and based upon outturn weights
and quality at port of discharge.
WEIGHTS:chanroblesvirtuallawlibrary Net
landed weights.
SAMPLING:chanroblesvirtuallawlibrary As per
Rule 101 of National Institute of Oilseeds
Products.
INSURANCE:chanroblesvirtuallawlibrary Buyer
to provide valid insurance for Marine and War
risks for 110 per cent of 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:chanroblesvirtuallawlibrary This
contract is subject to published rules of the
National Institute of Oilseeds Products adopted
and now in force, which are hereby made a
part hereof. Any dispute arising under this
contract shall be settled by a Board of
Arbitrators selected by the Chairman of the
Foreign Commerce Association of the San
Francisco Chamber of Commerce and to be
judged according to the rules of the National
Institute of Oilseeds Products and the findings
of said Board will be final and binding upon
all the signatories hereto, providing such
rules are not in conflict with existing
Government regulations.
The above shipment to be made under Franklin
Bakers license No. 26429. This contract covers
the sale made by the Nacoco thru the
Mercantile, 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 remitted to
Appellant the corresponding bills of lading and
other documents, and withdrew from the latters
letter 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. Deducting 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. Sometime after the
receipt of Appellants demand, the Appellee,
through its officers-in-charge Jose Nieva, Sr.,
acknowledged in a letter liability for the
deficiency in the outturn 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
liquidation. Appellant submitted its claim to the
Board of Liquidators, which refused to pay the
same; chan roblesvirtualawlibrarywherefore, it
filed the present action in the Court of First
Instance of Manila to recover 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 attorneys fees and costs. The Court a quo
found for the Defendant and dismissed the
complaint; chan roblesvirtualawlibraryhence, this
appeal by Plaintiff.
Plaintiff-Appellants theory is that although the
sale between the parties 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 destination, and that therefore, the risk of the
shipment was upon the seller. Defendant-
Appellee, on the other hand, insists that the
contract in question 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
latter having paid its price, the sale was
consummated.
There is no question 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 roblesvirtualawlibrary46 Am.
Jur. 313; chan roblesvirtualawlibraryII Williston
on Sales, 103 107). There is equally no
question that the parties may, by express
stipulation or impliedly (by making the buyers
obligation depend on arrival and inspection of
the goods), modify a CIF contract and throw the
risk upon the seller until arrival in the port of
destination (77 CJS 983- 984; chan
roblesvirtualawlibraryWilliston, supra, 116; chan
roblesvirtualawlibraryalso Willits vs. Abekobei,
189 NYS 525; chan
roblesvirtualawlibraryNational Wholesale Grocery
Co. vs. Mann. 146 NE 791, Klipstein vs. Dilsizian,
273 F 473).
In the transaction now in question, 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 letter 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
was to be ascertained on the basis of outturn
weights and quality of the cargo at the port of
discharge, indicate an intention 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 destination. That is
furthermore shown by the provision that the
seller could deliver 5 per cent more or less than
the contracted quantity, such surplus or
deficiency 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
parties 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; chan
roblesvirtualawlibrarybut it was also agreed that
the seller had the right, upon presentation 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
construction 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 finally determined until
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
partially 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 construction 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 after 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 outturn
weight of the cargo, upon arrival in New York,
was 898.692 short tons. Although the evidence
shows that the estimated weight of the
shipment when it left 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
stipulated 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 letter of credit.
Appellee contends that as it was only the
balance due to be paid that was to be
ascertained and based upon outturn 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 latters letter of credit.
The argument is untenable. The provision
regarding the ascertainment of the balance due
based upon outturn weight and quality of the
shipment at the port of discharge, should not be
construed separately from the stipulation that
the net landed weight was to control. The
manifest intention of the parties was for the
total price to be finally ascertained only upon
determining the net weight and quality of the
goods upon arrival in New York, most likely
because the cargo in question, being copra, by
nature dries up and diminishes in weight during
the voyage; chan roblesvirtualawlibrarythat no
bulk weigher was available in Manila 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; chan
roblesvirtualawlibraryand that the buyer in New
York had no agent in Manila to represent it and
protect its interest during the weighing of the
cargo. The intention of the parties to be bound
by the outturn or net landed weight in New York
is clearly shown in the letter of Appellees then
officer-in-charge Jose Nieva, Sr., acknowledging
liability for the deficiency in the outturn weight
of the copra (Exhibit B). Although this letter
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 corporation, it is nevertheless
competent evidence of the intention of the
parties, particularly the NACOCO, to be bound
by the net landed weight or outturn 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 RUDOLF LIETZ, INC., G.R. No. 122463
$24,154.59 to the United States, such excise tax
is no longer imposed in view of the trade Petitioner,
(Laurel-Langley) agreement, so that it need not
be taken into account.
Present:

Wherefore, the judgment appealed from is

reversed and the Appellee National Coconut
Corporation is ordered to pay the Appellant
General Foods Corporation the equivalent in - versus- PUNO, J.,
Philippine currency of the amount of
$24,154.59, with legal interest from the time of Chairman, AUSTRIA-MARTINEZ,
the filing of the complaint. No pronouncement
as to costs. SO ORDERED. CALLEJO, SR.,

THE COURT OF APPEALS, TINGA, and

AGAPITO BURIOL, TIZIANA CHICO-NAZARIO,

JJ.

TURATELLO & PAOLA SANI,

Respondents. Promulgated:

December 19, 2005

x
-----------------------------------------------------------
---------x

DECISION

Tinga, J.:

This is a petition for review on certiorari under

Rule 45 of the Revised Rules of Court, praying
for the annulment of the Decision[1] dated April
17, 1995 and the Resolution[2] dated October 25,
1995 of the Court of Appeals in CA-G.R. CV No.
38854. The Court of Appeals affirmed the
Decision[3] in Civil Case No. 2164 of the Regional
Trial Court (RTC), Branch 48, of Palawan and
Puerto Princesa City with the modification that
herein respondents Tiziana Turatello and Paola
Sani are entitled to damages, attorneys fees,
and litigation expenses.
The dispositive portion of the RTC
Decision reads:
WHEREFORE, in
view of the foregoing and
as prayed for by the
defendants, the instant
complaint is hereby
DISMISSED. Defendants
counterclaim is likewise
DISMISSED. Plaintiff,
however, is ordered to pay
defendant Turatello and
Sanis counsel the sum of
P3,010.38 from August 9,
1990 until fully paid
representing the expenses
incurred by said counsel
when the trial was
cancelled due to the non-
appearance of plaintiffs
witnesses. With costs
against the plaintiff.
SO ORDERED.[4]
As culled from the records, the following
antecedents appear:
Respondent Agapito Buriol previously owned a
parcel of unregistered land situated at Capsalay
Island, Port Barton, San Vicente, Palawan. On
August 15, 1986, respondent Buriol entered into
a lease agreement with Flavia Turatello and
respondents Turatello and Sani, all Italian
citizens, involving one (1) hectare of respondent
Buriols property. The lease agreement was for a
period of 25 years, renewable for another 25
years. The lessees took possession of the land
after paying respondent Buriol a down payment
of P10,000.00.[5] The lease agreement, however,
was reduced into writing only in January 1987.
On November 17, 1986, respondent Buriol sold
to petitioner Rudolf Lietz, Inc. the same parcel
of land for the amount of P30,000.00. The Deed
of Absolute Sale embodying the agreement
described the land as follows:
A parcel of land, consisting of FIVE
(5) hectares, more or less,
a portion of that parcel of
land declared in the name
of Agapito Buriol, under
Tax Declaration No. 0021,
revised in the year 1985,
together with all
improvements thereon,
situated at the Island of
Capsalay, Barangay Port
Barton, municipality of San
Vicente, province of
Palawan which segregated
from the whole parcel
described in said tax
declaration, has the
following superficial
boundaries: NORTH, Sec.
01-017; and remaining
property of the vendor;
EAST, by Seashore;
SOUTH, 01-020; and
WEST, by 01-018 (now
Elizabeth Lietz).[6]
 from is hereby AFFIRMED,
with the following
modification:

Petitioner later discovered that respondent

Buriol owned only four (4) hectares, and with
one more hectare covered by lease, only three
(3) hectares were actually delivered to
petitioner. Thus, petitioner instituted on April 3,
1989 a complaint for Annulment of Lease with
Recovery of Possession with Injunction and
Damages against respondents and Flavia
Turatello before the RTC. The complaint alleged Plaintiff-
that with evident bad faith and malice, appellant Rudolf Lietz, Inc.
respondent Buriol sold to petitioner five (5) is hereby (1) ordered to
hectares of land when respondent Buriol knew pay defendants-appellants
for a fact that he owned only four (4) hectares Turatello and Sani, the
and managed to lease one more hectare to sum of P100,000.00 as
Flavia Turatello and respondents Tiziana moral damages; (2)
Turatello and Paola Sani. The complaint sought P100,000.00 as exemplary
the issuance of a restraining order and a writ of damages; (3) P135,728.73
preliminary injunction to prevent Flavia Turatello as attorneys fees; and (4)
and respondents Turatello and Sani from P10,000.00 as litigation
introducing improvements on the property, the expenses.
annulment of the lease agreement between
respondents, and the restoration of the amount
paid by petitioner in excess of the value of the
property sold to him. Except for Flavia Turatello,
respondents filed separate answers raising
similar defenses of lack of cause of action and
lack of jurisdiction over the action for recovery
of possession. Respondents Turatello and Sani
also prayed for the award of damages and
SO ORDERED.[8]
attorneys fees.[7]

After trial on the merits, the trial court rendered

judgment on May 27, 1992, dismissing both
petitioners complaint and respondents Petitioner brought to this Court the instant
counterclaim for damages. Petitioner and petition after the denial of its motion for
respondents Turatello and Sani separately reconsideration of the Court of Appeal Decision.
appealed the RTC Decision to the Court of The instant petition imputes the following errors
Appeals, which affirmed the dismissal of to the Court of Appeals.
petitioners complaint and awarded respondents
Turatello and Sani damages and attorneys fees.
The dispositive portion of the Court of Appeals
Decision reads:
I. IN DEFENDING
AGAPITO
BURIOLS GOOD
FAITH AND IN
WHEREFORE, the decision appealed STATING THAT
 ASSUMING IV. IN GRANTING
THAT HE RESPONDENTS
(BURIOL) WAS TIZIANA
IN BAD FAITH TURATELLO
PETITIONER AND PAOLA
WAS SOLELY SANI
RESPONSIBLE EXHORBITANT
FOR ITS [sic] AMOUNTS
INEXCUSABLE AS DAMAGES
CREDULOUSNE WHICH ARE
SS. EVEN BEREFT
OF
EVIDENTIARY
BASIS.[9]

II. IN ASSERTING THAT

ARTICLES 1542
AND 1539 OF
THE NEW CIVIL Essentially, only two main issues
CODE ARE, confront this Court, namely: (i) whether or not
RESPECTIVELY, petitioner is entitled to the delivery of the entire
APPLICABLE five hectares or its equivalent, and (ii) whether
AND or not damages may be awarded to either party.
INAPPLICABLE
IN THE CASE Petitioner contends that it is entitled to the
AT BAR. corresponding reduction of the purchase price
because the agreement was for the sale of five
(5) hectares although respondent Buriol owned
only four (4) hectares. As in its appeal to the
Court of Appeals, petitioner anchors its
argument on the second paragraph of Article
1539 of the Civil Code, which provides:

III. IN NOT GRANTING

PETITIONERS
CLAIM FOR
ACTUAL AND Art. 1539. The
EXEMPLARY obligation to deliver the
DAMAGES. thing sold includes that of
placing in the control of
the vendee all that is
mentioned in the contract,
in conformity with the
following rules:

If the sale of
real estate should be made
with a statement of its
area, at the rate of a
certain price for a unit of
measure or number, the
vendor shall be obliged to
deliver to the vendee, if
the latter should demand
it, all that may have been
stated in the contract; but,
should this be not
possible, the vendee may
choose between a
proportional reduction of
the price and the
rescission of the contract,
provided that, in the latter
case, the lack in the area
be not less than one-tenth
of that stated.
....
The Court of Appeals Decision,
however, declared as inapplicable
abovequoted provision and instead ruled that
petitioner is no longer entitled to a reduction in
price based on the provisions of Article 1542 of
the Civil Code, which read:
Art. 1542. In
the sale of real estate,
made for a lump sum and
not at the rate of a certain
sum for a unit of measure
or number, there shall be
no increase or decrease of
the price, although there
be a greater or lesser area
or number than that stated
in the contract.
The same rule
shall be applied when two
or more immovables are
sold for a single price; but
if, besides mentioning the
boundaries, which is
indispensable in every
conveyance of real estate,
its area or number should
be designated in the
contract, the vendor shall
be bound to deliver all that
is included within said
boundaries, even when it
exceeds the area or
number specified in the
contract; and, should he
not be able to do so, he
shall suffer a reduction in
the price, in proportion to
what is lacking in the area
or number, unless the
contract is rescinded
because the vendee does
not accede to the failure to
deliver what has been
the stipulated.

Article 1539 governs a sale of
immovable by the unit, that is, at a stated rate
per unit area. In a unit price contract, the
statement of area of immovable is not
conclusive and the price may be reduced or
increased depending on the area actually
delivered. If the vendor delivers less than the
area agreed upon, the vendee may oblige the
vendor to deliver all that may be stated in the
contract or demand for the proportionate
reduction of the purchase price if delivery is not
possible. If the vendor delivers more than the
area stated in the contract, the vendee has the
option to accept only the amount agreed upon
or to accept the whole area, provided he pays
for the additional area at the contract rate.[10]
In some instances, a sale of an
immovable may be made for a lump sum and
not at a rate per unit. The parties agree on a
stated purchase price for an immovable the area
of which may be declared based on an estimate
or where both the area and boundaries are
stated.
In the case where the area of the
immovable is stated in the contract based on an
estimate, the actual area delivered may not
measure up exactly with the area stated in the
contract. According to Article 1542[11] of the Civil
Code, in the sale of real estate, made for a lump
sum and not at the rate of a certain sum for a
unit of measure or number, there shall be no
increase or decrease of the price although there
be a greater or lesser area or number than that
stated in the contract. However, the discrepancy
must not be substantial. A vendee of land, when
sold in gross or with the description more or less
with reference to its area, does not thereby ipso
facto take all risk of quantity in the land. The
use of more or less or similar words in
designating quantity covers only a reasonable
excess or deficiency.[12]
Where both the area and the
boundaries of the immovable are declared, the
area covered within the boundaries of the
immovable prevails over the stated area. In
cases of conflict between areas and boundaries,
it is the latter which should prevail. What really
defines a piece of ground is not the area,
calculated with more or less certainty,
mentioned in its description, but the boundaries
therein laid down, as enclosing the land and
indicating its limits. In a contract of sale of land
in a mass, it is well established that the specific
boundaries stated in the contract must control
over any statement with respect to the area
contained within its boundaries. It is not of vital
consequence that a deed or contract of sale of
land should disclose the area with mathematical
accuracy. It is sufficient if its extent is
objectively indicated with sufficient precision to
enable one to identify it. An error as to the
superficial area is immaterial. [13] Thus, the
obligation of the vendor is to deliver everything
within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the
determinate object.[14]
As correctly noted by the trial court
and the Court of Appeals, the sale between
petitioner and respondent Buriol involving the
latters property is one made for a lump sum.
The Deed of Absolute Sale shows that the
parties agreed on the purchase price on a
predetermined area of five hectares within the
specified boundaries and not based on a
particular rate per area. In accordance with
Article 1542, there shall be no reduction in the
purchase price even if the area delivered to
petitioner is less than that stated in the contract.
In the instant case, the area within the
boundaries as stated in the contract shall control
over the area agreed upon in the contract.
The Court rejects petitioners
contention that the propertys boundaries as
stated in the Deed of Absolute Sale are
superficial and unintelligible and, therefore,
cannot prevail over the area stated in the
contract. First, as pointed out by the Court of
Appeals, at an ocular inspection prior to the
perfection of the contract of sale, respondent
Buriol pointed to petitioner the boundaries of
the property. Hence, petitioner gained a fair
estimate of the area of the property sold to him.
Second, petitioner cannot now assail the
contents of the Deed of Absolute Sale,
particularly the description of the boundaries of
the property, because petitioners subscription to
the Deed of Absolute Sale indicates his assent to
the correct description of the boundaries of the
property.
the public good, in addition to the moral,
temperate, liquidated or compensatory
damages.[16] With the deletion of the award for
moral damages, there is no basis for the award
of exemplary damages.
WHEREFORE, the instant petition for
review on certiorari is GRANTED in PART. The
Court of Appeals Decision in CA-G.R. CV No.
38854 is AFFIRMED with the MODIFICATION
that the award of moral and exemplary damages
is DELETED.

Petitioner also asserts that SO ORDERED.

respondent Buriol is guilty of misleading
petitioner into believing that the latter was
buying five hectares when he knew prior to the
sale that he owned only four hectares. The
review of the circumstances of the alleged
misrepresentation is factual and, therefore,
beyond the province of the Court. Besides, this
issue had already been raised before and passed
upon by the trial court and the Court of Appeals.
The factual finding of the courts below that no
sufficient evidence supports petitioners
allegation of misrepresentation is binding on the
Court.

The Court of Appeals reversed the

trial courts dismissal of respondents Turatello
and Sanis counterclaim for moral and exemplary
damages, attorneys fees and litigation expenses.
In awarding moral damages in the amount of
P100,000 in favor of Turatello and Sani, the
Court of Appeals justified the award to alleviate
the suffering caused by petitioners unfounded
civil action. The filing alone of a civil action
should not be a ground for an award of moral
damages in the same way that a clearly
unfounded civil action is not among the grounds
for moral damages.[15]

Exemplary or corrective damages are

imposed, by way of example or correction for
Pacific Vegetable Oil Corporation v. Angel
Singzon
GR. No. L-7917 (Unreported Case)
Facts:
This is an action instituted by the plaintiff, a
foreign corporation, against the defendant to
recover the sum of P157,760 as damages
suffered by plaintiff as a consequence of the
failure of the defendant to deliver 300 tons of
copra which he sold and bound himself to
deliver to the plaintiff.
Singzon in August 1947, acting through a broker
in San Francisco, sold to Pacific 500 tons of
copra for shipment in September and October
1947. The agreed price to be covered by an
irrevocable letter of credit for the contract price.
Thus, pursuant to this, the Bank of California, on
behalf of Pacific, opened an irrevocable letter of
credit with China Bank in the Philippines.
Singzon failed to ship the 500 tons of copra, but
upon negotiation through the broker, a
conditional amicable settlement was arrived at
under which Singzon promised to ship on
February 1948, the amount of 300 tons of copra
with the understanding that if he effectually ship
said 300 tons of copra not later than February,
the original contract would be considered
cancelled. But that should he fail to ship said
300 tons, Singzon shall pay Pacific $10,000 as
damages and shall furthermore be obliged to
fulfill all his obligations under original contract.
Singzon failed to ship and deliver the 300 tons
of copra to Pacific according to their agreement.
Thereafter, Pacific demanded from Singzon the
payment of $10,000 but he failed and refused to
ship the 500 tons of copra. As a result of the
default, Pacific was forced to purchase copra
from the world marker and thus incurred
additional expenses.
Hence, this action is filed by Pacific. Singzon, in
defense, filed a motion to dismiss on the ground
that Pacific Vegetable Oil Corp. (Pacific) failed to
obtain license to transact business in the
Philippines and consequently, it had no
personality to file the action. RTC denied the
motion. It also denied MR. However, the Court
of Appeals reversed and dismissed the case
holding that Pacific had no personality to
institute the present case even if it afterwards
obtained a license to transact business upon the
theory that this belated act did not have the
effect of curing the defect.
Issue: W/N appellant transacted business in the
Philippines in contemplation of law?
Decision: No, it was transacted in the US.
It appears from the facts that the copra in
question was actually sold by the defendant to
the plaintiff in the US. It also appears that the
contract was entered into in the US by
appellees broker and appellants
representatives. It further appears that the
payment of the price was to be made at San
Francisco, California, through a letter of credit to
be opened at the Bank of California. And with
respect to the delivery of copra, it likewise
appears that the price agreed upon was $142
per 2,000 lbs., c.i.f. Pacific Coast. This means
that the vendor was to pay not only the cost of
the goods, but also the freight and insurance
expenses, and, it was judicially interpreted, this
is taken to indicate that the delivery is to be
made at the port of destination. It is therefore
cleat that the contract covering the copra has
not only entered into in the US but it was
agreed to be consummated there. It follows that
Pacific has not transacted business in the
Philippines in contemplation of Sections 68 and
69 of the Corporation Law which require any
foreign corporation to obtain a license before it
could transact business, or before it could have
personality to file suit in the Philippines.
It appearing that Pacific has not transacted
business in the Philippines and as such it is not
required to obtain a license before acquiring
personality to bring court action, it may be
stated that the appellant, even if a foreign
corporation, can maintain the present action
because, as aptly said by this Court, it was
never the purpose of the Legislature to exclude
a foreign corporation which happens to obtain
an isolated order for business in the Philippines,
from securing redress in the Philippine courts,
and thus, in effect, to permit persons to avoid
their contracts made with such foreign
corporation. Wherefore, the decision appealed
from is reversed. Pacific is entitled to prosecute
its claim in the Philippine courts against Singzon.