51. CHRYSLER PHILIPPINES CORPORATION vs.

THE HONORABLE COURT OF

Facts:
On October 2, 1970, Sambok, Bacolod ordered from Chrysler Philippines Corporation
various automotive products worth P30,909.61, payable in 45 days. On November 25,
1970, Chrysler Philippines Corporation delivered said products to its forwarding agent,
Allied Brokerage Corporation for shipment. Allied Brokerage loaded the goods on board
the M/S Doña Florentina, a vessel owned and operated by Negros Navigation
Company, for delivery to Sambok, Bacolod. Upon collection, Sambok, Bacolod refused
to pay claiming that it had not received the merchandise. Chrysler Philippines
Corporation demanded the return of the merchandise or their value from Allied
Brokerage and Negros Navigation, but both denied any liability. A complaint for
damages was filed against Allied Brokerage Corporation, Negros Navigation Company
and Sambok, Bacolod.
The Court of First Instance of Rizal dismissed the complaint against Allied Brokerage
and Negros Navigation for lack of cause of action but finding Sambok, Bacolod liable for
refusing to take delivery of the shipment for no justifiable reason from Negros
Navigation despite having received the Bill of Lading constituted wrongful neglect or
refusal to accept and pay for the subject shipment. On appeal, the Appellate Court set
aside the appealed judgment and dismissed the complaint finding that there was
misdelivery as the goods should have been delivered to Sambok, Iloilo.

Issue:
1. Whether or not Sambok, Bacolod should be liable for refusing to accept and pay for
the subject shipment.
2. Whether or not Sambok, Bacolod should be liable for the loss of the cargo.

Held:
1. No. The evidence is clear that Negros Navigation could not produce the
merchandise nor ascertain its whereabouts at the time Sambok, Bacolod, was ready to
take delivery. Where the seller delivers to the buyer a quantity of goods less than he
contracted to sell, the buyer may reject them.

2. No. From the evidentiary record, Negros Navigation was the party negligent in failing
to deliver the complete shipment either to Sambok, Bacolod, or to Sambok, Iloilo, but as
the Trial Court found, Chrysler Philippines Corporation failed to comply with the
conditions precedent to the filing of a judicial action. Thus, in the last analysis, it is
Chrysler Philippines Corporation that must shoulder the resulting loss. The general rule
that before, delivery, the risk of loss is home by the seller who is still the owner, under
the principle of "res petit domino", is applicable on the case at bar.
In sum, the judgment of respondent Appellate Court, will have to be sustained not on
the basis of misdelivery but on non-delivery since the merchandise was never placed in
the control and possession of Sambok, Bacolod, the vendee.
The Supreme Court affirmed the decision of the Court of Appeals.
52. ARTEMIO KATIGBAK vs. COURT OF APPEALS, DANIEL EVANGELISTA and V. K.
LUNDBERG
G.R. No. L-16480 January 31, 1962

Facts:
Artemio Katigbak upon reading an advertisement for the sale of a Double Drum Cargo
Tractor Winch by V.K. Lundberg, owner and operator of the International Tractor and
Equipment Co, Ltd., went to see Lundberg and inspected the equipment. The price quoted
was P12,000.00. Desiring a reduction of the price, Katigbak was referred to Daniel
Evangelista, the owner. After the meeting, it was agreed that Katigbak was to purchase the
winch for P12,000.00, payable at P5,000.00 upon delivery and the balance of P7,000.00
within 60 days. The condition of the sale was that the winch would be delivered in good
condition. Katigbak was apprised that the winch needed some repairs, which could be done
in the shop of Lundberg. It was then stipulated that the amount necessary for the repairs will
be advanced by Katigbak but deductible from the initial payment of P5,000.00. The repairs
were undertaken and the total of P2,029.85 for spare parts was advanced by Katigbak for
the purpose. For one reason or another, the sale was not consummated and Katigbak sued
Evangelista, Lundberg and the latter's company, for the refund of such amount.
The lower court ruled in favor of Katigbak ordering Evangelista and Lundberg to refund
P2,029.85 for the repair costs advanced by Katigbak. This decision was reversed by the
Court of Appeals as Katigbak committed a breach of contract and should be held liable.
Katigbak brought the matter to this Court on appeal by certiorari.

Issue:
Whether or not action of rescission is needed in an executory contract to authorize the
seller to resell the goods when the buyer fails to pay the price and take delivery.

Held:
No. We quote from the Hanlon case:
.... In the present case the contract between Hanlon and the mining company was
executory as to both parties, and the obligation of the company to deliver the shares could
not arise until Hanlon should pay or tender payment of the money. The situation is similar to
that which arises every day in business transactions in which the purchaser of goods upon
an executory contract fails to take delivery and pay the purchase price. The vendor in such
case is entitled to resell the goods. If he is obliged to sell for less than the contract price, he
holds the buyer for the difference; if he sells for as much as or more than the contract price,
the breach of contract by the original buyer is damnum absque injuria. But it has never been
held that there is any need of an action of rescission to authorize the vendor, who is still in
possession, to dispose of the property where the buyer fails to pay the price and take
delivery... (40 Phil. 815).
The facts of the case under consideration are identical to those of the Hanlon case. The
herein petitioner failed to take delivery of the winch, subject matter of the contract and such
failure or breach was, according to the Court of Appeals, attributable to him, a fact which
We are bound to accept under existing jurisprudence. The right to resell the equipment,
therefore, cannot be disputed. It was also found by the Court of Appeals that in the
subsequent sale of the winch to a third party, the vendor thereof lost P2,000.00, the sale
having been only for P10,000.00, instead of P12,000.00 as agreed upon, said difference to
be borne by the supposed vendee who failed to take delivery and/or to pay the price.
53. JULIAN BORROMEO vs. JOSE FRANCO Y FRANCO ET AL. 
G.R. No. 1698. September 26, 1905

Facts:
The Francos agreed to sell to Borromeo y Galan their property in Cebu and such
agreement was executed in a contract. In addition, Borromeo was given six months
from the date of the execution of their contract to arrange and complete the documents
relating to the said property.
Borromeo filed a complaint in the Court of First Instance compelling the Francos to sell
to him the property in question under the terms of the contract. He had already taken
steps to complete the documents and papers relating to the property but he was unable
to complete it. The Francos asked that the complaint be dismissed for Borromeo had
failed to comply with the condition of completing the documents and papers related to
the property.

Issue:
Whether or not Borromeo can demand fulfilment from the Francos.

Held:
Yes. The contract in question is a bilateral one containing mutual obligations and the
fulfillment of which may be demanded. The failure of Borromeo to complete the
documents and papers related to the property is not an essential part of the contract
and cannot be an obstacle for the fulfilment thereof.
The obligation which the purchaser, Borromeo, imposed upon himself, to perfect the
papers to the property within a period of six months, is not correlative with the obligation
to sell the property. These obligations do not arise from the same cause. They create no
reciprocal rights between the contracting parties, so that a failure to comply with the
stipulation contained in clause (c) on the part of the plaintiff purchaser within the period
of six months provided for in the said contract, as he the plaintiff, himself admits, does
not give the defendants the right to cancel the obligation which they imposed upon
themselves to sell the two houses in question in accordance with the provisions of
article 1124 of the Civil Code, since no real juridical bilaterality or reciprocity existed
between the two obligations, because the obligation to perfect the title papers to the
houses in question is not correlative with the obligation to fulfill the promise to sell such
property. One obligation is entirely independent of the other. The latter obligation is not
subordinate to nor does it depend upon the fulfillment of the obligation to perfect the title
deeds to the property. 

Article 1451 of the Civil Code provides as follows:

"Whenever the promise to purchase and sell can not be fulfilled, the provisions relating
to obligations and contracts of this book shall be observed by the vendor and by the
vendee, as the case may be.”
54. TAN LEONCO vs. GO INQUI
G.R. No. L-3383. September 13, 1907

Facts:
In 1897, Tan Leonco went to China and prior to his departure turned over to Tan
Tonguan the management of the plantations of abaca (hemp). Tonguan worked the
abaca and obtained 800 pesos worth of fiber, which he delivered and stored, by
direction of Go Inqui, in a warehouse owned by the latter in Buhang and in exchange a
draft or check was executed in payment for the abaca. The draft was later handed to
Leonco upon his return from China. However, Leonco was not able to collect the
amount stated in the draft as Inqui suspended the payment of the said draft. After
deposit of the hemp and before the same was removed from the warehouse by Inqui,
the warehouse and its contents were destroyed by the insurrectos.
Inqui alleged that he never received the hemp and therefore there was no consideration
for the bill of exchange. Leonco, on the other hand, claims that when the hemp was
deposited in the warehouse it became the property of Inqui and that the latter
recognized this fact when he stated in the bill of exchange that it was given for “value
received”.

Issue:
Whether or not Go Inqui and its company, J.C., bear the loss of the hemp.

Held:
Yes. It is not disputed that the warehouse in which the hemp was deposited was the
warehouse of the defendant. The hemp became the property of the defendant upon the
delivery thereof in the warehouse of the defendant (arts. 1462 and 1463, Civil Code),
and was property of the defendant at the time of its destruction by the insurrectos.
There had been a complete delivery of the said abaca to the defendant, and the loss
occurring thereafter,. without any fault of the plaintiff, was loss of the defendant. That
the delivery of the hemp as above stated was duly made to the defendant and
constituted a valuable consideration for the said bill of exchange or check. 
55. THE ASIATIC PETROLEUM COMPANY (LTD.) vs.THE INSULAR COLLECTOR
OF INTERNAL REVENUE
G.R. No. L-12687            August 27, 1918

Facts:
The Insular Collector of Internal Revenue, under threat of penalty, compelled the Asiatic
Petroleum Company to pay the internal revenue tax provided for under section 17
(paragraph 72a) of Act No. 2432 upon all such oils which the latter had on hand on the
first day of January, 1915, whether or not the same had been sold theretofore or not.
The tax was paid under protest.
The Asiatic Petroleum Company contends that the tax collected was illegal, for the
reason that the law had expressly relieved him from the necessity of paying the same
on all such oils which he had "disposed of to consumers or persons other than
manufacturers or wholesale dealers, prior to January 1, 1915"; that inasmuch as he had
made a valid and legal sale of such oils before January 1, 1915 even though the same
had not been actually delivered they had been "disposed of" and he was therefore
relieved from the necessity of paying the tax imposed by said Act. No contention is
made that the oils "disposed of" had been disposed of to "manufacturers or wholesale
dealers."

Issue:
Whether or not a dealer is required to pay the internal revenue tax, provided for under
section 17, (paragraph 72a) of Act No. 2342, upon mineral oils, but not delivered, prior
to the first day of January, 1915.

Held:
No. Merchandise may be "disposed of" even though the price has not been paid nor the
same delivered. A sale may be perfected between vendor and vendee and may be
binding on both of them, if they have agreed upon the thing, the object of the contract
and the price, even though the price had not been paid nor the merchandise delivered.
(Art. 1450, Civil Code.)
The Legislature, by Act No. 2445, fully recognized that the phrase "disposed of" meant
nothing more or less than a contract whereby the vendor was bound to furnish an
article, because in said Act (No. 2445) it provided that "whenever any person has prior
to the enactment of this law (2432) entered into a contract whereby he has bound
himself to furnish to another an article subject to the tax or increased rate of tax . . .," the
purchaser, and not the vendor, was subject to pay such tax in the absence of
stipulations to the contrary.
56. AUYONG HIAN (HONG WHUA HANG) vs. COURT OF TAX APPEALS, COLLECTOR OF
CUSTOMS, COMMISSIONER OF CUSTOMS, CONSOLIDATED TOBACCO INDUSTRIES OF
THE PHILIPPINES, INC. (CTIP) & LUZON STEVEDORING CORPORATION
G.R. No. L-28782 November 27, 1981

Facts:
600 hogsheads of Virginia type tobacco were stored at Customs Bonded Warehouse No. 81,
operated by Consolidated Terminals, Inc. Seizure proceedings was instituted against the
tobacco as an illegal importation pursuant to Republic Acts No. 698 and 1194. The goods were
declared forfeited to the government and its sale was ordered for public auction which the CTIP
took advantage of. The Collector, through the Chairman of the Special Bidding Committee
approved the final sale subject to the condition that the balance of the purchase price in the
amount of P500,000.00 should be paid within five (5) days from receipt thereof and that the said
tobacco will be released in favor of CTIP upon the posting of a surety bond in the amount of
P1,000,000.00 to guarantee CTIP's undertaking to export locally grown tobacco. Additional to
the foregoing, it is likewise incontrovertible that notwithstanding compliance by movant with all
the requirements, movant was unable to secure delivery of the tobacco purchased by it in view
of the pendency of several court proceedings filed by Auyong Hian wherein such delivery was
judicially enjoined. When the last of those injunctions was lifted and before another one could be
obtained by Auyong HIan, movant demanded delivery of the tobacco but the Consolidated
Terminals, Inc. (or Luzon Stevedoring Co., Inc.) in whose warehouses the tobacco was stored
refused to release the same without its being paid the storage fees due as of then.
Apprehensive that a new injunction might be secured by Auyong Hian which would further delay
its getting delivery of the tobacco, and because the Bureau of Customs could not immediately
make the corresponding payment, movant paid the Consolidated Terminals, Inc. the storage
fees demanded in the amount of P823,768.20, under an express understanding, according to
movant, with the Bureau of Customs, thru then Collector of Customs, Pedro Pacis, that the
same would be refunded to it.

Issue:
Whether or not movant is entitled to refund to movant on advance payment made for the
storage charges.

Held:
Yes. Until after goods sold by the Bureau of Customs in an auction sale shag have been
delivered either actually or constructively to the winning bidder, ownership thereof remains with
that office. Such is the unequivocal provision of Article 1477 of the Civil Code which says, "The
ownership of the thing sold shall be transferred to the vendee upon the actual or constructive
delivery thereof. " Accordingly, it is but logical and proper that, unless otherwise expressly
stipulated, all expenses incurred for the preservation and keeping or storage of the goods sold
should be home by the Bureau until their actual or constructive delivery to the buyer. Relatedly,
Condition No. 8 of the Notice of Sale provides that "Storage fees shall be imposed on article
awarded but not claimed within ten (10) days from the date of approval of the sale." To Our
mind, this provision, indicates that responsibility for storage fees would pass to the buyer only
upon the occurrence of the contingency so stated and not earlier. Movant did claim the tobacco
it had purchased within the ten-day period stipulated the Bureau of Customs was the one not
ready to comply.
But as between these parties, there can be no doubt that responsibility for any expenses or
damages arising during the pendency of the injunction should be the liability of the owner of the
goods who is under obligation to warrant its title and right to sell and deliver the same to the
buyer free from any adverse claim.