SALES BATCH 3 CASE DIGESTS 2JD-B

CASE 1: GALICINAO
BEHN, MEYER & CO. vs YANCO
G.R. No. 13203
FACTS:
A sale of 80 drums of caustic soda,provided for "c.i.f.
Manila, pagadero against delivery of documents, was
agreed between Behn, Meyer & Co. (seller) and Teodoro
Yanco (buyer). The merchandise was shipped from New
York to Manila. However, the ship carrying the cargo was
detained by the British Authorities at Penang and 71 of
the 80 drums were removed. DefendantYangco refused
to accept the 9 remaining on the ground that the goods
were in bad order. He also refused the Behn, Meyer &
Co.soffer of waiting for the remainder of the shipment
until its arrival or to have the products substituted with
other merchandise, which however were different from
what was ordered. Yanco filed a suit against BEHN,
MEYER & CO.
ISSUE: Whether BEHN, MEYER & CO. should bear the
burden of the loss of the merchandise.
HELD:
Yes. Rule as to delivery of goods by a vendor via a
common carrier (If contract is silent delivery of
seller to common carrier transfer ownership to
buyer)
Determination of the place of delivery 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.

Payment of freight by the buyer = acquires

ownership at the point of shipment
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.
Payment of freight by the seller = title of
property does not pass until the goods have
reached their destination
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.
c.i.f. means Cost, Insurance and Freight = CFI is
paid by the seller
The letters "c.i.f." found in British contracts stand
forcost, 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.
F.O.B. stands for Free on Board = seller bear all
expenses until goods are delivered
In this case, in addition to the letters "c.i.f.," has the
word following, "Manila." 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."

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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.
However, both the terms "c.i.f." and "F.O.B." merely
make rules of presumption which yield to proof of
contrary intention.
Delivery was to be made at Manila
Hence, 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 be made at Manila. If petitioner
Behn Meyer 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.
Behn Meyer failed to prove that it performed its
part in the contract
In this case, the place of delivery was Manila and
plaintiff (Behn Meyer) has not legally excused default in
delivery of the specified merchandise at that place. In
resume, we find that the plaintiff has not proved the
performance on its part of the conditions precedent in
the contract.
For breach of warranty, the buyer (Yanco) may
demand rescission of the contract of sale
The warranty the material promise of the seller to
the buyer has not been complied with. The buyer may
therefore rescind the contract of sale because of a
breach in substantial particulars going to the essence of
the contract. As contemplated by article 1451 of the
Civil Code, the vendee can demand fulfillment of the

contract, and this being shown to be impossible, is

relieved of his obligation. There thus being sufficient
ground for rescission, the defendant is not liable.
CASE 2: TITO

CASE 3: PAVICO
THE AMERICAN FOREIGN BANKING CORPORATION
vs.
J. R. HERRIDGE
G.R. No. L-21005,December 20, 1924
FACTS:
Petitioner is the claimant bank of the 560 bales of
tobacco.
Defendants are creditors of the insolvent estate of
Umberto
Facts: Umberto de Poli, a licensed public warehouseman
in the City of Manila, issued warehouse receipt No. A-48,
commonly known as a "quedan," for 560 bales of
tobacco, which tobacco was particularly described
therein as "Cagayan tabacco en rama" with specified
marks thereon. Said U. de Poli certified over his
signature on the face of said quedan as follows: I certify
that I am the sole owner of the merchandise herein
described." (Exhibit A of American Foreign Banking
Corporation.) This quedan was endorsed in bank by

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U. de Poli, who delivered it to the American Foreign
Banking Corporation as security upon his overdraft, then
amounting to about P40,000.
The claimant bank, by its motion of April 23, 1921,
asked that the assignee be ordered to deliver to said
bank the 560 bales of leaf tobacco called for in said
quedan upon surrender of the original of the warehouse
receipt.
In answer to said motion the assignee denied that the
560 bales of Cagayan tobacco listed in said Exhibit A
are now in his possession as assignee of said
insolvent estate, and denied that said Exhibit A
constitutes a negotiable warehouse receipt under
the law, for the reason that it does not comply with the
provisions of sections 2, 4 or 5 of the Warehouse Receipt
Act.
Defendants amended answer alleges that said Exhibit A
was not delivered by the insolvent, U. de Poli, to the
claimant for the purpose of transferring the
ownership of the property described therein to it,
but only as collateral security for a preexisting
indebtedness by way of overdraft.
The evidence shows that there were only 530 bales of
this tobacco. The quedan (Exhibit A) calls for "Cagayan
tobacco," but it was stipulated in this case that the 530
bales of tobacco claimed by the American Foreign
Banking Corporation are Isabela tobacco. Mr. De Poli
explained this discrepancy in discrepancy in description
by saying that he "had the description of grade only and
made the quedan without giving importance if it was
Cagayan or Isabela tobacco; that he asked only for
grade, and did not ask whether it was Cagayan or
Isabela tobacco, because he had to deliver the security
no matter whether it was Isabela or Cagayan tobacco.

ISSUE: Whether or not the discrepancy in the

description avoids the negotiability of the warehouse
receipt.
HELD:
No, he discrepancy did not avoid the qudans as
negotiable instruments.
The court is of the opinion that the intention of the
parties to the transaction must prevail against such a
technical objection as to the sufficiency of the
description of the tobacco. It might be different if there
had been Cagayan tobacco in the warehouse at the
time of the issuance of the quedan, Exhibit A, or if there
were any doubt whatever as to the identity of the
tobacco intended to be covered by the quedan. The
assignee stands in the shoes of the insolvent, and while
it is his duty to protect the general creditors, he is not in
the position of a judgment creditor with an unsatisfied
execution.
In view of the foregoing considerations, the court is of
the opinion that the quedan, Exhibit A, is a negotiable
warehouse receipt which was duly issued and delivered
by the debtor U. de Poli to the American Foreign
Banking Corporation, and that it divested U. de Poli of
his title to said tobacco and transferred the position and
the title thereof to the American Foreign Banking
Corporation.
CASE 4: RIEGO
SIY CONG BIENG & CO. VS. HONGKONG &
SHANGHAI BANK
56 Phil. 598, No. 34655 March 5, 1932

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FACTS: Plaintiff sold certain quantity of hemp to one by
the name of Otto Ranft by quedans and sent the
quedans, together with the covering invoice, to Ranft,
without having been paid for, but plaintiff's
understanding was that the payment would be made
against the quedans. Ranft on the same day turned over
the quedans to the defendant bank to secure payment
of his preexisting debts. Ranft died on the evening of
the day the quedans were delivered to the bank.
Plaintiff brought this action to recover the quedans or
their values.
ISSUE: Whether or not the plaintiff has the right to
recover the quedans or their values.
HELD:
No, the plaintiff has the right to recover the quedans or
their values. Taking into consideration that the quedans
were negotiable in form and duly endorsed in blank by
the plaintiff and by Otto Ranft, it follows that on delivery
of the quedans to the bank, they were no longer the
property of the indorser unless he liquidated his debts
with the bank. Since plaintiff had voluntarily clothed the
person who negotiated the quedans with all the
attributes of ownership and upon which the bank relied,
it is estopped to deny that the bank had a valid title to
the quedans.
Supreme Court sentiments We regret that the plaintiff
in this case has suffered the loss of the quedans, but as
far as we can see, there is now no remedy available to
the plaintiff. The bank is not responsible for the loss; the
negotiable quedans were duly negotiated to the bank
and as far as the record shows, there has been no fraud
on the part of the defendant.
CASE 4: PAVICO

SIY CONG BIENG & CO. VS. HONGKONG &

SHANGHAI BANK
56 Phil. 598, No. 34655 March 5, 1932
NATURE: Recovery of sum of money.
FACTS:
Otto Ranft called at the office of the herein plaintiff to
purchase hemp (abaca), and he was offered the bales of
hemp as described in the quedans ( negotiable
warehouse receipt). The parties agreed to the price of
P31,645 and on the same date the quedans, together
with the covering invoice, were sent to Ranft by the
plaintiff, without having been paid for the hemp.
In the evening of the day upon which the quedans in
question were delivered to the herein defendant, Ranft
died, and when the plaintiff found that such was the
case, it immediately demanded the return of the
quedans, or the payment of the value, but was told that
the quedans had been sent to the herein defendant as
soon as they were received by Ranft.
Demand had been made by the plaintiff on the
defendant bank for the return of the quedans, or their
value, which demand was refused by the bank on the
ground that it was a holder of the quedans in due
course. Thereupon the plaintiff filed its first complaint
against the defendant.
The RTC ruled in favor of the plaintiff principally on the
ground that in the opinion of the court the defendant
bank "could not have acted in good faith for the reason
that according to the statements of its own witness,
Thiele, the quedans were delivered to the bank in order
to secure the debts of Ranft for the payment of their
value and from which it might be deduced that the said
bank knew that the value of the said quedans was not
as yet paid when the same were endorsed to it.

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ISSUE: Whether or not plaintiff may recover the value
of the hemps against defendant.
HELD:
IT MAY ALSO BE READ AS: Whether or Not the
quedans were properly negotiated despite the absence
of payment in the contract of sale between plaintiff and
Otto
Ruling: No, plaintiff may not recover the negotiable
quedans evidencing the hemps.
Under Negotiable Instruments Law
SEC. 47. When negotiation not impaired by fraud,
mistake, or duress. The validity of the negotiation of
a receipt is not impaired by the fact that such
negotiation was a breach of duty on the part of the
person making the negotiation, or by the fact that the
owner of the receipt was induced by fraud, mistake, or
duress to intrust the possession or custody of the
receipt was negotiated, or a person to whom the receipt
was subsequent negotiated, paid value therefor, without
notice of the breach of duty, or fraud, mistake, or
duress.
SEC. 38. Negotiation of negotiable receipts by
indorsement. A negotiable receipt may be negotiated
by the indorsement of the person to whose order the
goods are, by the terms of the receipt, deliverable. Such
indorsement may be in blank, to bearer or to a specified
person. . . . Subsequent negotiation may be made in like
manner.
SEC. 40. Who may negotiate a receipt. A negotiable
receipt may be negotiated:
(a) By the owner thereof, or
(b) By any person to whom the possession or custody of
the receipt has been entrusted by the owner, if, by the

terms of the receipt, the warehouseman undertakes to

deliver the goods to the order of the person to whom
the possession or custody of the receipt has been
entrusted, or if at the time of such entrusting the
receipt is in such form that it may be negotiated by
delivery.
It is apparent in the case that there was delivery on the
part of Plaintiff despite the lack of payment such
delivery puts the quedans in custody or possession of
Otto.
Although the principle of equitable estoppels, that
where one of two innocent persons must suffer a
loss he who by his conduct made the loss possible
must bear it, is applicable. However, Otto the
responsible individual is already dead.
We regret that the plaintiff in this case has suffered the
loss of the quedans, but as far as we can see, there is
now no remedy available to the plaintiff. The bank is not
responsible for the loss; the negotiable quedans were
duly negotiated to the bank and as far as the record
shows, there has been no fraud on the part of the
defendant.
The appealed judgment is reversed and the appellant is
absolved from the plaintiff's complaint

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