Vitamins vs. Woodcraft Works, Ltd.

No. L-18916. November 28, 1969.

JOSE ABESAMIS, plaintiff-appellee, vs. WOODCRAFT WORKS, LTD., defendant-appellant.

Civil Law; Contracts; Interpretation of contracts; Contemporaneons and subsequent acts of the parties as

aids in interpretalion; Case at bar.—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 conclusion that the obligation to furnish a vessel devolved upon appellant. 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.
Same; Obligations; Reciprocal obligation with a period; Obligation of parties before expiration of period.
—Where the obligation is reciprocal and with a period, neither party could demand performance nor incur
delay before the expiration of the period.
Same; Same; Same; Same; Where party benefited by period waives it.—Where the party benefited by the
period waives it by assuring the other party that he would perform his part of the obligation and fails to do
so, without any satisfactory explanation for such failure, said party incurs delay and should bear the
corresponding loss or damages suffered by the other party.
Same; Damages; Actual or compensatory damages must be proved.—Actual or compensatory damages
must be established by clear evidence.

373

VOL. 30, NOVEMBER 28, 1969 373

Abesamis vs. Woodcraft Works, Ltd.

Same; Same; Same; Proof of loss of credit by letters of demand not sufficient.—A few letters of demand
for payment of money accounts received from creditors and presented as exhibits and the mere fact that
such demands were made does not necessarily prove loss of credit.

APPEAL from a judgment of the Court of First Instance of Leyte. Garlitos, J.

The facts are stated in the opinion of the Court.

     Ramon O. de Veyra for plaintiff-appellee.
     Zosimo Rivas for defendant-appellant.

MAKALINTAL, J.:

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 board 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."
374

374 SUPREME COURT REPORTS ANNOTATED

Abesamis vs. Woodcraft Works, Ltd.

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 P 145,623.03, plus the amount of P50,000.00
representing: the plaintiffs 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 decidinf that
(appellee) had sufficient stock of logs to cover the contract on July 31, 1951; (8) in stating that
appellant f 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 f avor 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.
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Abesamis vs. Woodcraft Works, Ltd.

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 bd. ft. 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 bd. ft. 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 f
orth 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 f urnish 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.
376

376 SUPREME COURT REPORTS ANNOTATED

Abesamis vs. Woodcraft Works, Ltd.

Finally it was appellant, through its witness rza 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. C it 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.
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Abesamis vs. Woodcraft Works, Ltd.

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 the 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 am 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. BE 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
378
378 SUPREME COURT REPORTS ANNOTATED
Abesamis vs. Woodcraft Works, Ltd.

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 f eet, 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 f or
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
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Abesamis vs. Woodcraft Works, Ltd.

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
satisf actory explanation f or such failure. Therefore, appellant should bear the corresponding
loss.
Third and f inally, 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 f eet 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.

Judgment affirmed with modification.