9/7/2016 G.R.No.

L8346

TodayisWednesday,September07,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L8346March30,1915

GUTIERREZHERMANOS,plaintiffappellant,
vs.
ORIAHERMANOS&CO.,defendantappellant.

RafaeldelaSierraforplaintiff.
ChicoteandMirandafordefendant.

TORRES,J.:

OnAugust12,1909,counselforthemercantilefirmofGutierrezHermanosofthiscityfiledawrittencomplaintin
theCourtofFirstInstanceofManilaagainstthecommercialconcernofOriaHermanos&Co.ofLaoang,Province
of Samar, alleging therein as a cause of action that between plaintiff and defendant there have existed
commercialrelationswhichgaverisetotheopeningofamutualcurrentaccount,at8percentinterest,underthe
name of Oria Hermanos & Co., on the books of the plaintiff Gutierrez Hermanos that, on January 11, 1909,
plaintifftransmittedtodefendantanabstractofthelatter'scurrentaccountonDecember31,1908,whichshowed
abalanceinplaintiff'sfavorofP144,473.78andwhichwasapprovedbydefendant,OriaHermanos&Co.,bya
letter of March 9, 1909, which was copied literally in the complaint that, on May 25, 1909, plaintiff notified
defendantthatthecurrentaccountexistingbetweenthemwouldbeclosedattheendofthirtydayscountingfrom
thatdate,attheexpirationofwhichperioddefendantshouldpayanydebitbalancethatmightbeowingthat,on
June 30 of the same year, Gutierrez Hermanos transmitted to the defendant, Oria Hermanos & Co., the
statementofthelatter'scurrentaccountuptothatdateand,confirmingitspreviouslettertothedefendantofMay
25,1909,calledattentiontothenecessityofpayingthebalance,whichthenamountedtoP147,204.28thatthe
defendantfirm,notwithstandingthesaiddemandsandotherssubsequentlymade,andwithouthavingmadeany
objectionwhatevertothesaidstatementofaccount,refusedtopaytheprincipalandinterestowingonthesaid
account. Plaintiff's counsel therefore prayed that Oria Hermanos and Co. be sentenced to pay the sum of
P147,204.28,besidestheinterestthereonattherateof8percentannumfromJune30,1909,andthecosts.

DefendantfileditsansweronNovember9,1909,settingupfourcrosscomplaintsandsixcounterclaimsagainst
theplaintiff,GutierrezHermanos,andspecificallydeniedsuchoftheallegationsofthecomplaintaswerenotin
agreement with its answer. Plaintiff demurred to certain paragraphs of the answer and as to the others thereof
prayedthecourttoorderdefendanttomakeitsallegationsmorespecific.Thecourtoverruledthisdemurrer,but
grantedthepetitionthatdefendantshouldmakeitsallegationsmorespecificinthesecond,third,andfourthcross
complaintsandfirstcounterclaim.

Incompliancewiththesaidorder,defendant,onMay4,1910,filedamamendedanswerinwhichitspecifically
admitted paragraphs 1 and 2 of the complaint, and as the first cross complaint, alleged that, by reason of
mercantile relations and the opening of a mutual current account from May 1, 1900, the plaintiff had obligated
itselfperiodicallytosendtothedefendantfirmamemorandumorstatementofthecurrentaccount,andfurther
obligated itself, in case the said mercantile relations should be finally terminated, to present a general and
complete account, duly supported by vouchers and other proofs that plaintiff, Gutierrez Hermanos, had
contended itself by sending to Oria Hermanos and Co. some memoranda or abstracts of account, accepted by
defendantassuch"abstractofaccount,"withoutthelatter'shavingwaiveditsrighttodemandthepresentation,
as agreed upon, of the vouchers and other proofs upon the closing of the current account, a stipulation which
GutierrezHermanoshadfailedtocomplywith.Defendantthereforeprayedthattheplaintiff,GutierrezHermanos,
besentencedtorenderandpresentthesaidfinalaccount,dulyaccompaniedbyvouchers,inconformitywiththe
agreementmade.

Inthesecondcrosscomplaintdefendantallegedthat,byvirtueofacommissioncontract,OriaHermanos&Co.
hadfromthe1stofMay,1900,tothe7thofSeptember,1909,forwarded65,119.66piculsofcopra,70,420bales
ofhemp,and5,175.03piculsofloosehemptoGutierrezHermanosforsaleoncommissionthatthelatterfirm
informed the defendant that it, the plaintiff, had sold the said products to third persons for the account of the
http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 1/15
9/7/2016 G.R.No.L8346

defendant, Oria Hermanos & Co. that by reason of said sale or sales Gutierrez Hermanos collected large and
importantsumsforcommissionandbrokerageandhadturnedinforthegoodssoldamountslessthanwhatthey
wereactuallyworthinManilathatdefendant,OriaHermanos&Co.,hadrecentlyreceivedinformationthatthese
lots of hemp and copra were purchased by the firm of Gutierrez Hermanos for itself, notwithstanding that the
latterhadstatedtoitsprincipals,OriaHermanos&Co.,thattheyhadbeensoldtothirdpersonsthatitcollected
byreasonofsuchsale,commissionandbrokerageactswhichredoundtothefraud,injury,andprejudiceofthe
defendant,OriaHermanosandCo.ThereforethelatterprayedthatGutierrezHermanosbesentencedtorender
ageneralandcompleteaccountoftheamountsofhempandcoprareceivedbyitforsaleoncommissionfrom
theyear1900to1909,settingoutthedatesofthereceiptofthesaidmerchandise,datesofthesales,namesof
thepurchasers,pricesstipulated,discountsobtained,andcommissionscollectedbyGutierrezHermanos,etc.

Defendant alleged as the third cross complaint that, by virtue of the said commission contract, Gutierrez
HermanossenttothefirmofOriaHermanos&Co.,atdifferenttimesaccordingtothelatter'srequest,fromMay
1, 1900, up to the date of the closing of the current account, 193,310 sacks of rice alleged to have been
purchased from third persons, wherefore Oria Hermanos & Co. paid a certain stipulated percentage as
commission or brokerage for the sales but that now Oria Hermanos & Co. have received information which it
believes to be true, and so alleges, that the rice so forwarded had not been purchased from third persons, but
belonged to Gutierrez Hermanos who sold it directly to defendant, collecting from the latter excessive prices,
advancepayments,commissionandinterest,alltothefraudandinjuryofthedefendantfirm.OriaHermanos&
Co.,therefore,prayedthatGutierrezHermanosbesentencedtorenderanaccount,dulysupportedbyvouchers,
ofallthelotsofriceforwardedtoOriaHermanos,withastatementofthedatesoftheorders,amounts,datesof
thepurchases,namesofpurchasers,amountschargedtoOriaHermanos&Co.,etc.

Inthefourthcrosscomplaintdefendantrelatedthat,byreasonofthesamecommissioncontractexistingbetween
thetwofirms,GutierrezHermanoshadsenttoOriaHermanos&Co.,fromthe1stofMay,1900,uptotheclosing
ofthecurrentaccount,variousquantitiesofsalt,petroleum,tobacco,groceriesandbeverages,andhadcollected
acommissionforthepurchasethereof,thatafterwardsOriaHermanos&Co.learnedthattheforwardingfirm,the
plaintiff,hadsetlargerpricesonthesaidgoodsthanithadactuallypaidforthemandhadundulychargedsuch
prices,beforeithadpaidthem,tothedefendant'saccount,collectingforitselfcommissionandinterestthereon,
to the fraud and prejudice of the defendant firm. Therefore the latter prayed that Gutierrez Hermanos be
sentencedtorenderacompleteaccount,accompaniedbyvouchers,oftheshipmentsaforementioned.

Inthefirstcounterclaimfiledbythedefendant,OriaHermanos&Co.,petitionwasmadethatGutierrezHermanos
besentencedtopayitthesumofP13,894.60,astheamountofanoverchargeof3percentininterestcollected
from defendant, in a charge of 8 percent interest per annum on a private debt of P47,649 drawing 5 per cent
interestperannum,whichlatteramountJuanT.MolledaowedthefirmofGutierrezHermanosandpaymentfor
whichwasassumedbyOriaHermanos&Co.uponitsorganizationintoamercantilefirminMay,1900.

In the second counterclaim the defendant firm, Oria Hermanos & Co. set forth: That, on April 18, 1900, its
predecessorhadordereditsconsigneeinManila,GutierrezHermanos,toinsureagainstallwarrisksthestocks
ofhempandmerchandisewhichthesaidfirmpossessedinthepuebloofLaoang,forP35,000,andlikewisethose
it had in Catubig, for P32,000 that Gutierrez Hermanos did not comply with the said order, only insuring the
stocksinLaoangforP67,000,leavingthoseofCatubigtotallyunprotectedthatwhen,onMay10,1900,thislatter
pueblowasdestroyedbyfireOriaHermanos&Co.lostallitsstocksthereandcouldnotcollecttheinsuranceof
P32,000onthesaidproperty,which,throughthefault,negligence,andomissionofGutierrezHermanoshadnot
been insured. This amount last mentioned, added to the premiums, expenses, and interest paid by Oria
Hermanos&Co.aggregatesthesumofP63,700,paymentofwhichdefendantdemandedofplaintiff.

Asathirdcounterclaimitisallegedthat,onMay18,1900,thefirmofGutierrezHermanos,complyingwithorders
from Oria Hermanos, & Co., insured against all war risks, in a certain insurance company of London, England,
whoseagentinthePhilippineIslandswasStevenson&Co.,thestockofhempwhichthedefendantcompanyhad
inthepuebloofCatarman,Samar,for3,000poundssterling,andpaidthepremiumsthereonattherateof10per
centperquarterthat,duringthefirstquarterforwhichthepremiumshadbeensopaid,alltheinsuredtobacco
belonging to Oria Hermanos & Co., in Catarman, was stolen by the insurgent forces that then the underwriter
refused to pay the amount of the insurance on the ground that Gutierrez Hermanos had made out the said
insurance defectively wherefore Oria Hermanos & Co. ordered its agent Gutierrez Hermanos to institute
proceedings before the courts of these Islands for the collection of the amount of the said insurance but that
plaintiff instead brought suit for the purpose before the courts of England and by its negligence, indolence, and
carelessnesshad,duringaperiodofeightyears,obligedthedefendantfirmtoincurcostlyexpenditureswhich,
addedtotheamountoftheinsurancepremiumspaid,attorney'sfees,costs,interest,etc.,aggregatedP67,000
thatforthissum,togetherwithlegalintereststhereon,itprayedthatitbereimbursedbyGutierrezHermanos.

Withrespecttothefourthcounterclaim,thedefendantfirmsetforththat,underthecommissioncontractandthe
current account contract existing between both companies, Gutierrez Hermanos bound itself to acquire for and
forward to Oria Hermanos & Co. such rice and other effects, including cash, as defendant might order from
plaintiff but that, since the beginning of 1904, the firm of Gutierrez Hermanos maliciously failed to make the

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 2/15
9/7/2016 G.R.No.L8346

consignments of rice and other effects, under the false pretext that there were no such articles in the market,
thereby preventing the said firm of Oria Hermanos & Co. from obtaining a profit of not less than P25,000 and,
besides,injuringitsfame,credit,andmercantilereputationintheIslandofSamartotheextentofapproximately
P50,000.ThereforedefendantprayedthatGutierrezHermanosbesentencedtopayitthesumofP75,000asthe
amountofsuchlossesanddamagesoccasionedit.

Asthefifthcounterclaimdefendantallegedthat,foraperiodoftwentytwomonths,fromthemonthofMay,1900,
itcharteredseveralofitsboatstotheAmericanmilitarygovernmentthatthecharterpartiesaggregatedavalue
of P400,000 that these contracts were executed and the amounts thereof collected by Messrs. Oria & Fuster,
membersofthedefendantcompany,whoturnedthesaidamountsintothecurrentaccounttheyhadwiththefirm
ofGutierrezHermanosbuttheplaintiffchargedinthecurrentaccount,appropriatedtoitself,andcollectedfrom
thefundsofOriaHermanos&Co.whichithadinitspossession,21/2percentoftheamountcollectedbyreason
of the said charter parties for commission and brokerage, there being no stipulation whatever relative to the
collectionofthiscommissionthatGutierrezHermanos,moreover,chargedagainstthesaidamountcollectedbyit
8 per cent compound interest and that the sum in such wise improperly charged and appropriated amounted,
together with the accumulated interest, to P15,000, which defendant prayed be returned to it by Gutierrez
Hermanos.

The object of the sixth counterclaim is the recovery of P31,000, in which amount defendant, Oria Hermanos &
Co., alleged it was injured by Gutierrez Hermanos having arbitrarily charged in the current account compound
interestattherateof8percentpersemesterfromtheyear1900uptothetimeoftheclosingofthesaidcurrent
account,whiletheagreementmadebetweenbothfirmsuponopeningthesaidaccountwasthatthelattershould
bearamutualinterestof8percentperannumonly.

OnMay14,1910,counselforGutierrezHermanosfiledawrittenanswertotheforegoingcountercomplaintsand
counterclaims,andprayedthatplaintiffbeabsolvedtherefrom.

On August 1, 1910, this case came up for hearing and was continued on the following days until on April 24,
1912,theHonorableS.delRosario,judge,renderingjudgmenttherein,thedispositivepartofwhichisasfollows:
"Messrs. Oria Hermanos & Co. are sentenced to pay to Messrs. Gutierrez Hermanos the sum of P147,204.28,
withinterestthereonattherateof8percentperannumfromthe30thofJune,1909,afterdeductionofallthe
sums that result as balances, in favor of the former, from the accounts that shall be rendered by the latter, in
conformitywiththecrosscomplaintsandcounterclaimsthathavebeenadmitted.

Messrs.GutierrezHermanosaresentenced:

(a)Withrespecttothefirstcrosscomplaint,torendertoMessrs.OriaHermanos&co.accounts,supported
byvouchers,onlyofthosearticlesintheacquisitionofwhichfraud,deceit,orerrorhasbeenprovenandto
whichthefollowingpronouncementsrefer.

(b)Asregardsthesecondcrosscomplaint,toreturntoMessrs.OriaHermanos&Co.,afterduesettlement
oftheaccounts,allthesumscollectedasinternalrevenuetaxandreferredtointheinvoicesofrice,salt,
petroleum, lime, rattan, flour, aniseed spirit, cigarettes, and other articles mentioned in their respective
placesintherecord,unlessplaintiffshowsinasatisfactorymannerthatitdidactuallypaytotheBureauof
InternalRevenue,thecontentsofExhibit178notwithstanding,thesumswhich,forthereasonaforestated,
weredebitedtodefendant,inwhichcasethelattermaybringanactionagainstthesaidBureauofInternal
Revenue.

(c) With respect to the third cross complaint, plaintiff must render to defendant an account, supported by
vouchers, of the shipments of rice concerned in the invoices examined in which fraud or error was
discovered,andsaidaccountshallembracethe153invoicesreferredtobythelitigantsinthissuit(page
324ofthetranscriptofthestenographicnotes,sessionofNovember29,1910).

(d)Withregardtothefourthcrosscomplaint,plaintiffshallrenderanaccount,supportedbyvouchers,ofall
thepurchasesitmadeofpetroleumforMessrs.OriaHermanos&Co.,andinconnectionwiththeinvoices
heldinthelatter'spossessionandreferredtoonpage391ofthetranscriptofthestenographicnotesofthe
sessionofNovember29,1910.

(e)Inthematterofthesecondcounterclaim,plaintiffshallreturntoMessrs.OriaHermanos&Co.thesum
ofP1,812withinterestthereonattherateof8percentperannumfromthe5thofMay,1910,tothedateof
payment. The interest due shall be compounded after each semester, reckoning from June 1, 1900, and
boththeprincipalandtheinterestsocompoundedshallbearthesameinterestof8percentperannum.

Messrs.GutierrezHermanosareabsolved,inthefirstplace,fromthesecondcrosscomplaintinsofaras
concernsthedemandthereinmadeforarenditionofaccountsinconnectionwiththehempandcopraand
inthesecondplace,fromthefirst,third,fourth,fifth,andsixthcounterclaims.

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 3/15
9/7/2016 G.R.No.L8346

Withoutspecialfindingastocosts.

The parties, upon their notification of this judgment, duly excepted thereto and by written motion prayed for a
reopeningofthecaseandanewtrial.Thesemotionswereoverruled,withexceptionbytheappellants,andthe
properbillsofexceptionshavingbeenfiled,thesamewereapprovedandforwardedtotheclerkofthiscourt.

ThisactionwasbroughttorecoverthesumofP147,204.28,thebalanceofacurrentaccountopenedonMay1,
1900, between Gutierrez Hermanos and the commercial firm of Oria Hermanos & Co., at the rate 8 per cent
mutual interest up to June 30, 1909, which sum was found to be owing by Oria Hermanos & Co. to the
commercialfirmofGutierrezHermanos.

Other subject matters of the present suit are the rendition of accounts by Gutierrez Hermanos, as commission
agent, to Oria Hermanos & Co., as principal, and the collection of various sums demanded by the latter in the
cross complaints and counterclaims filed, during the trial, by its counsel against the claim made by Gutierrez
Hermanosforthepaymentoftheamountspecifiedintheprecedingparagraph.

Toprovetheproprietyandjusticeofitscomplaint,GutierrezHermanos,plaintiff,alleged:That,inaccordancewith
the agreement made, it sent semiannually a general account that comprised a statement of the business
transacted during the preceding six months, to Oria Hermanos & Co. who, after examining the account with its
specification and vouchers, sometimes approved the same without comment of any kind, and at others, after
some objections, but that, in the latter cases, upon explanations being subsequently given by Gutierrez
Hermanos,thedefendantfirmusedatlasttoaccepttheaccountrenderedthatsuchwastheprocedurefollowed
duringthenineyearsapproximatelythatbothfirmsmaintainedcommercialrelations,andthattherecordshowed
thatduringthesaidnineyearsOriaHermanos&Co.hadgiveninfavorofGutierrezHermanos17agreementsor
approvalsofaccount,thelastofwhich,transcribedinthecomplaint,isofthefollowingtenor:

LAOAG,March9,1909.

Messrs.GUTIERREZHERMANOS,Manila.

DEARSIRS:Inourpossession,yourveryesteemedletterdatedDecember31last,fromwhich
we have withdrawn the extract of our current account with your firm, closed the same day,
showingabalanceinyourfavorofP144,473.78,whichextractmeetswithourapproval.

Weremain,Yours,veryrespectfully,ORIAHERMANOS&Co.

That,onMay25,1909,theplaintifffirmnotifiedthedefendantfirmthatitcouldnotcontinuetodobusinesswith
the latter and therefore the current account stipulated between both parties would be closed within a period of
thirtydaysplaintiffthereforetransmittedtodefendantageneraldetailedaccountthatcomprisedtheperiodfrom
January,1909,toJune30ofthesameyear,withthewarningthatafterthatdate(May25,1909)defendantwould
havetopaythedebitbalance,inasmuchas,althoughthesaidlastaccounthadnotbeenapproved,noobjection
whatever had been made thereto by Oria Hermanos & Co. Therefore in the said letter of May 25, plaintiff
demandedofdefendantthepaymentofthesummentionedofP147,204.28whichthelatterhadnotpaidinspite
of plaintiff's demands and notwithstanding the fact that defendant had made no objection whatever to the last
accountrendered.

Counsel for defendant, Oria Hermanos & Co., after a denial of the facts that had not been admitted prayed in
special defense and in four cross complaints that the plaintiff, Gutierrez Hermanos, be compelled to present a
general account, duly verified and supported by vouchers, of all the shipments of hemp, copra, rice and other
effectsspecificallymentioned,andtorenderafinalaccountinconformitywiththeagreementmadebetweenboth
partiesandconvertingthedetailsmentionedinthesaidcrosscomplaints.

Notwithstandingtheproofshownintherecordofthecertaintyandrealityofthedebtasabalanceresultingfrom
thecurrentaccountkeptbetweentheparties,itisofcourseimpossibletodeterminethenetamount,theobjectof
theclaimpresentedbyplaintiff,untilthereshallhavefirstbeendecidedwhetherthereshouldornotberendered
ageneralaccount,accompaniedbyvouchers,comprehensiveofthebusinesstransactedinconnectionwiththe
different commercial articles dealt in, and of the mercantile relations between both firms from May 1, 1900, to
June 30, 1909, and also whether Gutierrez Hermanos is indebted to Oria Hermanos & Co. and what is the
amountofthedebt.

Even upon the supposition that the plaintiff, Gutierrez Hermanos, is obliged to make a general rendition of
accountscomprehensiveofthebusinesstransactedbetweenbothfirmswithinthedatesmentioned,itisevident
that,untilitbeknownwhetherplaintiffisorisnotindebtedtoOriaHermanos&Co.andwhatistheamountowing
as disclosed by the account rendered, it cannot be decided whether plaintiff is or is not entitled to collect the
whole amount claimed in the complaint, for only in view of the result of the rendition of accounts requested by
plaintiffcanitbelawfullyestablishedwhetherGutierrezHermanosisacreditorofOriaHermanos&Co.andwhat
amountisowingtoitbythelatter.Allthisisreferredtointhefirsterrorallegedbydefendant.

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 4/15
9/7/2016 G.R.No.L8346

Incaseitshouldbeheldthatthelawdoesnotallowtherenditionofaccountsrequestedbythedefendant,Oria
Hermanos&Co.,andthatthislatterisnotacreditorofGutierrezHermanos,itisevidentofcoursethatplaintiff
would be unquestionably entitled to collect the amount specified in the complaint, or some other amount duly
provedattrialtobeowingitbydefendant.Itisthereforeincumbentuponustoelucidatehereinafterthepropriety
orimproprietyofthecontentionsmadebydefendantinitsfourcrosscomplaints.

Defendant'scounselinhisfirstcrosscomplaintandspecialdefenseprayedthattheplaintiff,GutierrezHermanos,
becompelledtorenderandpresentageneral,final,completeandverifiedaccount,pursuanttotheagreement
made between both parties, inasmuch as plaintiff bound itself to send periodically to defendant a note or
numericalextractofthecurrentaccount,andincasethemercantilerelationsbetweenbothfirmsshouldcometo
an end or be finally closed, Gutierrez Hermanos bound itself to present a general and complete account, duly
supportedbyvouchers,anddefendant,inacceptingandapprovingthesemiannualaccountsrenderedbyplaintiff,
did not waive its right to demand the general account agreed upon, at the time of the final closing of the said
currentaccount,theobligationtofurnishwhichwasnotcompliedwithbytheplaintiff,GutierrezHermanos.

ThelatterdeniedinitsanswertheallegationsmadebyOriaHermanos&Co.initscrosscomplaint,andsetforth
that, in consequence of the mutual current account opened between the parties from the year 1900, plaintiff
transmittedweeklyorfortnightly,accordingtocircumstances,aspecificstatementofthetransactionseffected,as
well as, semiannually, a general account of the business done during the six months last elapsed, and that
defendant, after an examination of such semiannual account together with its details and vouchers, and after
someobjectionstheretohadbeenexplained,wasaccustomedtoprovethesame.Thiswastheprodurecarried
onformorethannineyearsduringwhichOriaHermanos&Co.fromtimetotimeapprovedeachoneofthe17
account that were presented to it, and upon Gutierrez Hermanos closing the current account from January to
June,1909,italsopresentedtodefendantageneraldetailedaccount,which,nothwithstandingthatnoobjection
whateverwasmadetoit,wasnotapproved.Thereforethecomplaintwasfiledthatinitiatedthislitigation.

Had the agreement between the parties been recorded with all its conditions in some instrument, it would have
appeared whether Gutierrez Hermanos actually bound itself to present to Oria Hermanos and Co., besides the
semiannual accounts rendered, a general account comprising all the business undertaken between 1900 and
June,1909,onwhichlatterdateitwasconsideredbyGutierrezHermanosasterminated.Theallegationmadeby
defendantrelativetothispointhadnotbeensubstantiatedbyanyevidencewhatever,andthereforethereisno
reason nor legal ground whereby plaintiff could be compelled to present that general account requested in the
firstcrosscomplaint.

It is, in our opinion, appropriate it insert hereinafter what the trial court, in the judgment rendered, says with
respecttothismatter:"Ifcommissionagentsbeobligedtorendertotheirprincipalsitemizedaccounts,supported
byvouchers,ofthesumstheycollectascommissionandofthetransactionseffectedbytheminrelationwiththeir
principals,asoftenasthelattermaydesire,incaseswheretherearisessometrouble,somedifferenceofopinion
oraconflictofinterests,orwherethecommissionagentsclosetheaccount,asoccursinthecaseatbarbecause
the principals did not pay what they were owing or because, instead of the debt being diminished, it was
increased,thecommissioncontractwouldbecomeaninexhaustibleandneverendingsourceoflitigationandof
claimswithoutnumber,aformidablearmforspitefulprincipalsagainstwhichitwouldbeinsufficienttoopposean
arsenalofvoucherssuchasmightbetreasuredbythemostprescientcommissionagent,becausetherecouldbe
avoidedneitherthebrotherresultingfromtheirnecessaryexamination,northeheavyexpensesandlossoftime
thataretheinevitableaccompanimentofthisclassofwork."

When an account has been presented or rendered and has been approved by the party whom it concerns or
interests, it is not proper to revise it, unless it should be proved that in its approval there was deceit, fraud, or
errorseriouslyprejudicialtothepartywhogavesuchapproval.Arts.1265and1266,CivilCode.)

In the decision rendered in the case of Pastor vs. Nicasio, (6 Phil. Rep., 152), the following doctrine was laid
down

Whenaccountsoftheagenttotheprincipalareonceapprovedbytheprincipal,thelatterhasnorightto
askafterwardsforarevisionofthesameorforadetailedaccountofthebusiness,unlesshecanshowthat
therewasfraud,deceit,errorormistakeintheapprovaloftheaccountsfactsnotproveninthiscase.

TherecorddoesnotshowittohavebeendulyproventhatuponOriaHermanos&Co.givingitsapprovaltothe
17 accounts presented by Gutierrez Hermanos there was deceit, fraud, or mistake prejudicial to the former's
interests.ForthesolereasonthatGutierrezHermanos,uponclosingthecurrentaccountwithOriaHermanos&
Co. was obliged, certainly an unwarranted obligation, to render a general account comprehensive of all the
businesstransactedbetweenbothpartiesduringmorethannineyears,andtherebeingnoproofofthealleged
agreementbetweenthem,itwouldbeimpropertoholdthattheplaintiffisobligedtorenderandpresentageneral
accountinthesenserequestedbyOriaHermanos&Co.initsfirstcrosscomplaint.

With respect to the second crosscomplaint, relative to the sale on commission of lots of hemp and copra by
defendantstoplaintiffduringtheperiodfrommay,1900,untilthecloseofthemercantilerelationsbetweenboth
http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 5/15
9/7/2016 G.R.No.L8346

firms,itwasallegedthatforsuchsaleorsaleoncommissionGutierrezHermanoscollectedalargeandimportant
commission of many thousands of pesos and credited defendant in the current account with lesser prices than
those obtained and that defendant received information that these lots of hemp and copra which were said to
have sold to third persons were afterwards found to have been purchased by the firm of Gutierrez Hermanos
itself,tothefraud,injury,andprejudiceofthedefendant,OriaHermanosandCo.whereforethelatterprayedthat
plaintiffshouldpresentageneralandcompleteaccount,dulyverifiedbyvouchersandwiththedetailsspecifiedof
eachandalloftheshipmentsofhempandcopraforwardedtoplaintifffromMay,1900,to1909.Thesefactswere
deniedbyplaintiff,andthecourt,inviewoftheevidenceadducedbybothparties,heldthattherecordshowed
absolutelynoproofthatplaintiff,GutierrezHermanos,hadcommittedanyfraudorerrorprejudicialtodefendant.

InfactitwasnotprovedthatGutierrezHermanoscreditedinthecurrentaccountalesserpricethanthatobtained
from the sale on commission of the lots of hemp and copra sent to it by Oria Hermanos and Co., for from the
documentaryevidenceconsistingofaccounttransmittedbyplaintifftothecommercialfirmsofStevensonandCo.
andWarner,BarnesandCo.(Limited),incollectionofthepriceofhempandcopraacquiredbythesehouses,it
appearsthatthepricesfixedatsaletothelatterarethesameandagreewiththosespecifiedinthestatements
transmitted by plaintiff to defendant, Oria Hermanos and Co., and that the hemp and copra shipped by the
defendantweresoldoncommissiontothirdpersonsthatis,totheaforesaidcommercialfirms.

Thechargelaidagainstplaintiff,thatitdidnotdisclosethenameofthecommercialfirmorconcernfromwhom
thehempthatitsoldhadcome,doesnot,althoughitmayhaveconcealedthisfact,constituteafraudulentact,
nor one originating civil liability, inasmuch as plaintiff realized on the lots of hemp under the marks of Oria
Hermanos & Co. which they bore from their point of origin and by which they were known both in Manila and
abroad(ExhibitDD)andnotonlyintheinvoices,butalsointheaccountspresentedbyGutierrezHermanosupon
itscollectingthepriceofsuchhempsoldoncommission,thereappearedthemarksstampedbyOriaHermanos&
Co. on their lots of hemp, and therefore it cannot be affirmed that Gutierrez Hermanos superseded Oria
Hermanos&Co.astheownerofthehempthatplaintiffsoldoncommissionandthatcamefromdefendantduring
themorethannineyearsinwhichtheformerwasacommissionagentofthelatter.

WithrespecttothefactofGutierrezHermanosnothavingdisclosedthenameoftheconcerntowhichthehemp
belonged,inthecaseswhereplaintiffsolditinitsownname,plaintiff'sprocedurecannotbequalifiedasdeceitful
orfraudulent,inasmuchasarticle245oftheCodeofCommerceauthorizedittoactasitdid,tocontractonits
ownaccountwithoutneedofdisclosingthenameofitsprincipal,inwhichcaseGutierrezHermanoswasliableto
thepersonorconcernwithwhomitcontracted,asifthebusinesswereitsown.So,then,thepurchaserhasno
right of action against the principal, nor the latter against the former, without prejudice to the actions which lie
respectivelyinbehalfoftheprincipalandthecommissionagent,pursuanttotheprovisionsofarticle246ofthe
CivilCode.

Withregardtothelotsofcopra,notwithstandingtheallegationsmadeinthiscrosscomplaint,defendanthasnot
produced any proof whatever of the facts charged, in face of plaintiff's denial in its answer. Therefore, in
considerationofthereasonssetforthwithrespecttothelotsofhemp,thejudgmentofthelowercourtdisallowing
defendant's petition that plaintiff render accounts relative to the sales of hemp and copra is held to be in
accordancewithlaw.

Inthispartofthejudgmentofthetrialcourtconsiderationwasalsogiventothefactofplaintiff'shavingdebited
againstdefendantintheaccountrendereditthepaymentoftheinternalrevenuetaxofonethirdof1percent.

With respect to the tax paid on the price of the hemp and copra sold by the plaintiff in the name and for the
account of the defendant, the procedure of the plaintiff is perfectly legal, in accordance with the provisions of
section139oftheInternalRevenueLaw,inlayinguponOriaHermanos&Co.theobligationtopaythesaidtaxas
theownerofthehempandcoprasold,and,therefore,theclaimmadebydefendantagainsttheaccountdrawn
upbyGutierrezHermanosisunreasonableandunfounded.

Asregardsthetaxofonethirdof1percentwhich,accordingtoaccountspresentedbyGutierrezHermanosto
Oria Hermanos & Co., plaintiff had paid on the price of the rice, salt, kerosene, lime, mats, rattan, flour, anise
seedspirits,andcigarettes,inasmuchasthesaidsectionoftheabovecitedActobligesthevendorsandnotthe
purchasers of these articles to pay the said tax, it is undeniable that the firm of Gutierrez Hermanos that had
acquired the said articles which were forwarded to Oria Hermanos & Co. should neither have paid the tax in
question, nor should have charged it for payment against defendant, since it had already been paid to the
Governmentbytheownersofthearticlessoldtoplaintiff.

In view of the provisions of law contained in the aforesaid section 139, it is not understood how Gutierrez
Hermanos could have been compelled to pay the said tax on the rice, salt, petroleum, lime, mats, rattan, flour,
aniseseed spirit, and cigarettes, nor on the price of the beer, on the supposition that plaintiff acquired these
articlesfromthirdpersonsinthiscity.Inthecaseofthericeimportedfromabroad,thepaymentofthetaxthereon
pertainstotheimporterwhosellsittothirdpersons.

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 6/15
9/7/2016 G.R.No.L8346

If Gutierrez Hermanos made a mistake, notwithstanding the clear phraseology of the said section, said mistake
shouldnotprejudicedefendantwho,inJuly,1905,hadalreadystatedthatitdidnotagreewithplaintiff'sactionin
thematterfor,intheletterExhibitFF,defendantdemandedthatplaintiffinvestigatethecaseinordertoavoida
doublepaymentofthetax.

Fortheforegoingreasonstheplaintiffs,GutierrezHermanos,afterliquidationofthesumspaidasataxofone
thirdof1percentonthepriceofthericeacquiredinthiscityandofthesalt,kerosene,lime,mats,flour,anise
seedspirit,cigarettes,andbeer,referredtointhesecondcountercomplaint,mustpaytoOriaHermanos&Co.
theamountshownbysaidliquidationtobeowing.

Asregardsthethirdcrosscomplaint,whereinitisallegedthatfraud,deceit,orerrorwascommittedorincurredby
GutierrezHermanosinconnectionwiththeaccountsforthericeforwardedtoOriaHermanos&Co.,afactdenied
byplaintiff,thetrialjudge,inviewoftheevidenceintroducedatthehearingofthecase,establishedthefollowing
conclusion:

Justice, therefore, demands that Messers. Gutierrez Hermanos render a new account of the lots of rice
which they shipped to Messrs. Oria Hermanos & Co., inasmuch as they, as proved in the verification of
someofthelots,committedthefraudofhavingcollectedacommissionof2percentforthepurchaseof
the rice, as commission agents, in addition to a profit in reference to the said lots, in their capacity of
merchants,onthepriceofthericeimportedbythemfromSaigon.

Iftheyactedascommittedagents,theycouldhavecontentedthemselveswiththe2percentcommission
andshouldnothavechargedanyextraprice.If,ascommissionagents,itwasmoreadvantageousforthem
toreaptheprofitsfromthericeimportedfromSaigon,theyshouldneitherhavechargednorcollectedthe2
per cent commission. The commission agent is obliged to acquire the articles or effects for which he has
received an order from his principal in the most advantageous and less onerous conditions for the latter.
Suchanobligation,prescribedbyarticle258oftheCodeofCommerce,wasnotfulfilledbytheprocedure
observed by plaintiff in the matter of the verified invoices of rice, in some of which, as has been proved,
thereappearstohavebeenchargedalargeramountthanthecostprice.

Thiscourtreservesitsopinion,unitatsuchpropertimeitshallhaveseentoresult,shownbythenewaccountsto
bepresentedbyplaintiff,astowhether,inthericeaccountsrenderedbyittodefendant,therewasfraudoronly
errorsusceptibleofcorrection,forplaintiffallegesinturn,asshownintheletterExhibit,thatOriaHermanos&
Co.requiredplaintifftoincreasethepriceintheinvoicesofrice,aniseseedspirit,petroleum,etc.,by25percent
ofthecostofthesearticles.Thereforeplaintiffshallrenderanaccount,verifiedbyvouchers,toOriaHermanosof
all the shipments of rice concerned, not only in the invoices examined, but also ion those that have not been
examined,uptoNo.153,whichinvoicesarethosementionedonpage324ofthetranscriptofthestenographic
notesofthesessionofNovember29,1910.

The approval and agreement given by defendant to the 17 semiannual accounts presented by plaintiff is no
impediment to a revision of the same, once it shall have been shown that there was fraud, error, or serious in
correctionprejudicialtothepartywhoacceptedthesaidaccounts.Thelawwhichprotectshimwhoactsingood
faithcannotpermitanyconsiderableprejudicetobecausedtotherightsandinterestsofathirdpartywhohad
neithertheoccasionnortheopportunitytoacquainthimselfwiththetruthofthefactswhichhehadadmittedas
trueinsuchmannerastheywerepresentedtohim.

Oria Hermanos & Co., upon its accepting and approving the accounts which were presented to it by Gutierrez
Hermanos, as transcripts or copies from the latter's books, did not have an opportunity to make the required
verificationoftheentriesofricecontainedinthesaidaccountsoroftheinvoicesofthisarticleinalltheirdetails,
and whenever it has discovered that Gutierrez Hermanos, as commission agent, has made overcharged or
placed extra prices in addition to the 2 per cent commission, it has a right to demand reimbursement of the
excess in price which it had erroneously paid as principal. The judgment of the lower court must, therefore, be
affirmed with respect to the entries of rice made in the 170 invoices referred to in the accounts presented by
plaintiff, by means of a revision of the accounts presented in connection with the said article of the Code of
Commerce.

With respect to the fourth crosscomplaint relative to Gutierrez Hermanos having entered in the invoices
transmitted to Oria Hermanos & Co. higher prices than those paid for the salt, beverages, tobacco, wine, beer,
and groceries, in spite of the allegations made by plaintiff the record of the proceedings shows no proof of the
truthoftheactchargedtoplaintiff.Thefactofnothavingrecordedintheinvoicesofthesaideffectsshippedto
defendantthenamesofthepersonswhohadacquiredthemdoesnotconstituteproofnorevenapresumptionof
illegalprocedureonthepartofGutierrezHermanos.Neitherisplaintiffobligedbyanylawtostatethenamesof
theownersofsucharticles,nordoestheomissionthereofshowbadfaithonthepartofthecommissionagents.

As regards the petroleum, it is undeniable that in the invoices to which the fourth crosscomplaint refers higher
pricesweregiventhanthoseitactuallycost.Moreover,OriaHermanos&Co.isentitledtothediscountobtained
bythecommissionhousefromthecommercialfirmwhichsoldthepetroleum.
http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 7/15
9/7/2016 G.R.No.L8346

Thetrialjudge,asgroundsforhisfinding,saysthefollowing:"Itisthereforeevidentthat,accordingtotheproofs
submitted, Messrs. Gutierrez Hermanos committed fraud in the purchase and shipments of the said article, not
onlybecausetheykeptthediscountallowedbythesellingfirmbywhichtheirprincipals,forwhomtheypurchased
thepetroleumshouldhaveprofited,andnotthecommissionagentswhoactedforthemsimplyinthecapacityof
agents but also because in one of the invoices they charged, besides, a greater price than they paid to the
vendors, and then collected a commission of 2 per cent on all the invoices. It is the obligation of commission
agentstomakethepurchasesfortheirprincipalsonthemostadvantageousterms.Forthistheyarepaidtherate
of commission stipulated. They have no right to keep the discount allowed by the vendors on the price of the
articlestheypurchasefortheirprincipals,evenlesstoincrease,totheirbenefit,thepricechargedthem."

In consideration, then, of evidence introduced relative to the purchase of the petroleum shipped to defendant,
referredtointhefourthcrosscomplaint,plaintiffmustrenderanaccount,verifiedbyvouchers,ofthepriceofall
thepetroleumthatitacquiredforOriaHermanos&Co.andwhichiscoveredbytheinvoicesmentionedonpage
391ofthetranscriptofthestenographicnotestakenofthesessionofDecember28,1910.

ThejudgmentofthelowercourttreatsofthefactthatGutierrezHermanoschargedinterestonthevalueofthe
articles which it had purchased for Oria Hermanos & Co., before even having paid the vendors the price of the
articlesacquired.Defendanthascomplaintagainstthisprocedureonthepartofplaintiffandqualifiesasimproper
andillegalthecollectionofthe8percentinterestonthepriceoftheeffectsforwardedtoOriaHermanos&Co.
fromthedateoftheirshipment,whenactualpaymentofsuchpurchaseswasmademanydaysafterwards.

TheaccountspresentedbyGutierrezHermanos,whereinnotewasmadeofthecollectionofinterestattherateof
8percentonthepriceoftheeffectsacquiredbyplaintiffforOriaHermanos&Co.andshippedtodefendantfor
itsdisposal,notwithstandingthattheywerenotpaidforunitmanydaysafterwards,wereapprovedandaccepted
byplaintiffwithoutanyobjectiontheretowhateverandwithnoprotestagainstthenotationoftheinterestonthe
priceofthearticlespurchased.Therefore,asidefromthereasonsgivenbythelowercourtinhisjudgmentand
relativetothispoint,itcannotbeheldthattherewaseitherfraudorerrorintheprocedureobservedbyGutierrez
Hermanosincharginginitsaccountthestipulatedinterestfromthedatewhenitacquiredtheeffects,afterwards
shipped to the defendant, Oria Hermanos & Co., because Gutierrez Hermanos could have paid cash for the
articlespurchased.EventhoughpaymentmighthavebeendelayedforafewdaysmoreitiscertainthatGutierrez
Hermanos as commission agent was obliged to pay the price of the articles acquired and, consequently, said
pricebegantodrawinterestchargeabletotheconsigneewho,asownerofsucharticles,coulddisposeofthem
freely.Forthesereasonsdefendant'sclaimcannotbesustained.

We now take up the fifth special defense, or the first counterclaim presented by defendant against plaintiff,
wherein it is prayed that the latter be sentenced to pay to the former the sum of P13,894.60, together with the
legal interest thereon, which sum is the difference between the 5 per cent which was all Oria Hermanos & Co.
should have the sum of P47,649, the debt contracted by Juan T. Molleda in favor of Gutierrez Hermanos and
transferredtoOriaHermanosandCo.whoassumeditspaymentinsteadofMolleda.

The reasons, set forth in the judgment appealed from and based on documentary evidence, are so clear and
conclusive that they could not be rejected by defendant, nor invalidated at trial by other evidence in rebuttal.
Consequently,weareconstrainedtoadmitthemasdecisiveofthepointincontroversyandasdulyshowingthat
theintereststipulatedontheamountwhichwastransferredtoOriaHermanosandCo.is8percentandnot5per
centasdefendantclaims.ThereforethesumofP13,894.60claimedcannotberecovered,anditisheldthatthe
findingmadebythetrialjudgeinrespecttothefirstcounterclaimfiledbydefendantisinaccordwiththelawand
the evidence. This finding is based on the following grounds: "If the firm of Molleda and Oria as well as that of
OriaHermanos&Co.,ofwhichlatterMr.TomasOriaismanager,bothconsentedtoMessrs.GutierrezHermanos
charginginalltheextractsofcurrentaccountsenttothemaninterestof8percentonthesumofP47,64956
andiftheywillinglyandconstantlyacquiescedinthepaymentofaparticularrateofinterestinsteadofthatof5
percent,duringnineyearswithoutraisinganyobjectionwhatever,theyarenotentitledtoobtainedrestitutionfor
thedifferencepaidof3percent,norhavetheyanyrighttoconsiderasunlawfullycollectedthe8percentinterest
onthesumabovementioned.Therecordshowsnoproofoftheexistenceofanyoftheviceswhich,accordingto
law,mightinvalidatetheconsentgivenbydefendanttothecollectionfromitoftheinterestof8percent,which
mustbethatstipulated,norwassuchaviceallegedbyOriaHermanos&Co."Moreover,againstthisfindingin
plaintiff'sfavornoerrorwhateverhasbeenallegedbydefendant.

Inthesecondcounterclaim,thesixthspecialdefense,defendantpraysthatGutierrezHermanosbesentencedto
the payment of P63,700, with legal interest thereon from the date of the presentation of this counterclaim, and
allegedthatthefirmofGutierrezHermanos,disregardingtheinstructionsofMolledaandOria,thepredecessor
ofOriaHermanosandCo.,merelyinsuredthestocksofhempandmerchandisewhichthelatterhadinLaoang,
for an imaginary value of P67,000, leaving totally unprotected the stocks of hemp and merchandise in Catubig,
valuedatP32,000thatsuchfailuretocomplywithsaidinstructioncausedOriaHermanosandCo.,byreasonof
thefirethatoccurredinCatubig,tolosethesumofP63,700,includingthepremiums.expenses,andinterestpaid,
andthatdefendant,immediatelyupondiscoveryofthelossbyplaintiff'sfaultandnegligence,filedclaimtherefor
andprotestedagainstthesame.

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 8/15
9/7/2016 G.R.No.L8346

In answer Gutierrez Hermanos alleged that in the letter from Oria Hermanos and Co., of the date of April 28,
1900,thelatterstatedthatitrecommendedtoplaintiffthequestionoftheinsuranceofthewarehousesinLaoang
and of the houses in Catubig, advised that if the stocks of hemp and merchandise therein were insured, as
defendant believed they were, plaintiff should endeavor to increase the insurance thereon and that in another
letter of the same date Don Tomas Oria, after relating the fact that the insurgents had attacked the pueblo of
Catubigandkilledthetroopstheregarrisoned,statedthatheearnestlyrecommendedtoGutierrezthematterof
theinsuranceinorderthatitmightbemadeassoonaspossibleinthemannerexplainedintheofficialletterof
thesamedate.

Gutierrez Hermanos, supposing that Catubig might already have been burned and destroyed as a result of the
occurrencesrelatedbyOriainhisletter,judgingbythenewspublishedinthenewspapersofthiscityonMay2,
1900,deemedthatitwouldbeauselessexpensetoincreasetheinsuranceofthemerchandiseheldinstockin
the said pueblo under ordinary fire insurance which was that taken out by the firm of Molleda and Oria, for the
reasonthattheinsurancecompanieswouldrefusetopaytheamountoftheinsuranceincasethedamagewas
caused by war, invasion, riot, military force, etc. As Gutierrez Hermanos then had no means whereby it might
communicateswithMolledaandOriatorequestspecificinstructionsfromthislatterfirminregardtotheinsurance
ordered,whichordinaryandnotwarinsurance,ithadtoconsultDonCasimiroOria,apartnerofOriaHermanos
and Co., and this gentleman, with a full knowledge of the state of affairs in Catubig, advised that no further
attemptbemadetoincreasetheordinaryfireinsuranceonthegoodsinCatubig,becauseitwouldbeauseless
expense and because there were wellfounded reasons for supposing that at that date the pueblo had already
been completely destroyed, together with the buildings and stocks of merchandise which it was proposed to
insure. But after taking into account the importance of the buildings and the large stocks of goods stored in
Laoang, which pueblo, according to a letter from Oria to Gutierrez Hermanos, was also in danger of being
attacked by the insurgents, plaintiff proceeded to insure them against war risks for three months for P7,000
sterling,atransactionwhichwascommunicatedbyplaintifftoMolledaandOriabyaletterofMay5,1900,and
which this latter firm acknowledged without making any objection whatever to the war insurance placed that,
sincethe2dofJuneofthesameyear,neitherwasanyclaimorprotestmadebythefirmofOriaHermanos,but,
onthecontrary,OriaHermanosandCo.appliedtotheGovernmentoftheUnitedStatesclaiminganindemnityof
P90,000 Philippine currency for the burning of the buildings and goods in the pueblo of Catubig a claim still
pendingdecisionbytheGovernment.

ThejudgeoftheCourtofFirstInstance,decidingthequestionraisedinthiscounterclaim,setforthamongothers
thefollowingconsiderations:"IfMessrs.GutierrezHermanoshadtakenstepstoinsurethestocksofmerchandise
in Catubig and had declared to any officer of the insuring company the truth about the terrible slaughter which
hadjusttakenplace,itwouldhavebeenimpossibletoobtainawarinsuranceonthesaidmerchandiseandif,
insteadofdeclaringthetruth,plaintiffhadomittedit,theinsuranceifobtainedcouldnothavebeencollected.The
insurancecompanywouldhavelearnedofthecircumstanceswhichhadnotbeenstatedandhadbeenomittedin
theapplicationandwouldhaverefusedtopaytheinsurance,asitdidinthecaseoftheCatarmaninsurance,as
willbeseenfurtheron.AndifplaintiffhadappliedtotheEnglishcourts,asitdidinthecasereferredto,theresult
wouldhavebeenthesame."

Even though Gutierrez Hermanos had increased by value of the insurance on the hemp and merchandise in
Catubig through means of ordinary fire insurance, pursuant to the instructions given by Molleda and Oria, the
predecessors of Oria Hermanos & Co. and whose rights this latter firm represents, the same result would have
followed, inasmuch as in this class of insurance the insuring company does not assume risks for fires and
damages caused by war, riot, and military force and as in the official letter aforementioned plaintiff was not
authorizedtoincreasetheinsurancethroughmeansofawarinsurancepolicy,itisunquestionablethatplaintiff,in
notincreasingtheordinaryinsurance,proceededinaprudentandreasonablemannerandforthebenefitofthe
defendantbysavingthelatterfromuselesslypayinganimportantpremiumforaninsurancewhichitafterwards
couldnothavecollected,Furthermore,thenewswasalreadydisseminatedinManilathatthepuebloofCatubig
had been completely burned to the ground. Not only, therefore, would it have been impossible to obtain the
increase of an ordinary insurance, but even a war insurance, though offering to pay a large and excessive
premium.

In the letter of the date of May 34, 1900, Exhibit 5, page 190 of the file of the record, Gutierrez Hermanos
informed Oria Hermanos and Co. that the insurance firm refused to pay the amount of the insurance on the
merchandiseinCatubig,forthereasonthatthecasesoffirecausedthroughmilitaryforce,etc.,wereexcluded
fromthepolicy.SothateventhoughGutierrezHermanoshad,incompliancewithordersfromOriaHermanos&
Co.,increasedtheamountoftheinsuranceonthestockofmerchandisestoredinCatubig,OriaHermanos&Co.
wouldnothavebeenbenefitedthereby,becausetheinsurancecompanywouldhaverefusedtopaytheincrease,
just as it did not pay the amount of the original insurance for the reason aforementioned. Furthermore, as we
havealreadystated,theordertoincreasetheinsuranceonlyreferstoordinaryinsuranceagainstfire,andnotto
extraordinaryinsuranceagainstwarrisks.

WithrespecttothewarinsuranceplacedonthestocksofgoodsinLaoang,thetrialcourtcouldnotinaccordance
withlawholdplaintifftobeliableforthepaymentofthesumOriaHermanosandCo.didnotprotestnorobjectin

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 9/15
9/7/2016 G.R.No.L8346

anywiseagainsttheplacingofthesaidwarinsuranceonthemerchandiseinLaoang, and also because in the

second counterclaim no petition or demand whatever was made in connection with this transaction. For these
reasonstherefore,GutierrezHermanosmustbeabsolvedofthesecondcounterclaim.

We now come to the third counterclaim, the seventh special defense presented by defendant, wherein petition
was made that the firm of Gutierrez Hermanos be compelled to pay to Oria Hermanos the sum of P67,000,
besides the legal interest thereon since the filing of this claim, which sum was the amount of the insurance,
premiums paid, fees, costs, interest, and charges for telegrams, etc., alleged to have been expended and lost
throughtheinattention,negligence,improvidence,andcarelessnessoftheplaintiff,GutierrezHermanos,without
defendant'sbeingabletocollecttheamountoftheinsuranceonthestockofhempinCatarman,Samar.

InaletterofMay10,1900,addressedbyOriaHermanos&Co.toGutierrezHermanos,theformercommissioned
the latter to try to insure against war risks some 1,400 piculs of hemp that Oria Hermanos and Co. had in the
puebloofCatarmanwhichhadbeenevacuatedbytheAmericantroopsandinanotherletterofthesamedate
Tomas Oria said to Gutierrez Hermanos that Catarman had been evacuated by the troops three days after the
departureofthesteamerSantanderwhichwasunabletoloadabout3,000piculsofhempthathisfirmhadthere,
and,asheknewthatthesaidpueblohadnotbeenburned,hewishedtohaveinsurancetakenoutonthevalueof
about 1,400 piculs of hemp stored in the Delgado warehouse. Gutierrez Hermanos had Stevenson and Co., of
Manila, cable to the latter's head office in London for the desired insurance, and as soon as it was obtained
Gutierrez Hermanos wrote to Oria Hermanos & Co. informing defendant that plaintiff had insured against war
risks1,400piculsofhempdepositedintheDelgadowarehouseinCatarman,forthreemonthsfromthe18thof
May,1900.

A few days subsequent to the placing of this insurance, Oria Hermanos & Co. ordered Gutierrez Hermanos to
collecttheamountoftheinsurance,forthereasonthatallthestockofhempinCatarmanhadbeenstolenbythe
insurgents.Therepresentativeoftheunderwriterrefused,however,topaytheamountoftheinsurancebecause
OriaHermanosandCo.hadconcealedcertainfactswhich,hadtheybeenknowntotheunderwriter,wouldhave
deterredthecompanyfromissuingapolicyforthehemp,andallthestepstakenforthepurposeofobtainingthe
collectionofthe3,000sterlingforwhichthehemphadbeeninsured,resultedinfailure.

Therefore,onpetitionofthefirmofOriaHermanos&Co.throughthefirmofStevensonandCo.,suitwasduly
broughtbeforetheEnglishcourtsinLondon.TheprosecutionofthissuitwascommendedtoEnglishattorneysto
whomOriaHermanos&Co.furnished,throughGutierrezHermanos,allthedocumentsanddataconducivetoa
successful issue. Notwithstanding, the claim of Oria Hermanos & Co. was rejected by the London courts. No
liabilityattachedtoGutierrezHermanosforthefailureofthesuitinLondon.

ThefirmofGutierrezHermanosmerelycompliedwiththeordersofOriaHermanos&Co.toinsurethestockof
hempinCataraman,withaninsurancecompanyestablishedinLondon,throughStevensonandCo.ofManila,in
viewofthefactthattherewasnoinsurancecompanyinthiscitywhichwouldissuepoliciesagainstwarrisks.For
thispurpose,byaletterofOctober17,1905,ExhibitF2OriaHermanos&Co.transmittedtoGutierrezHermanos
thepowerofattorneyandtheletterforMessrs.Horsley,KibbleandCo.forthepurposeofthelatter'snegotiating
withtheunderwritersforsomehonorablesettlementofthematter,duringthetimerequiredforthereceiptofall
thedocumentsthathadbeenrequested.InanotherletterofJanuary25,1906,OriaHermanos&Co.statedto
StevensonandCo.thatittookpleasureinreplyingtothelatter'sfavorofthe19thinstant,addressedtoMr.Oria
that Delgado's letter to Oria of the date of October 19, 1901, was forwarded in the original to London, through
Messrs. Gutierrez Hermanos, to Stevenson and Co., on July 16, 1904 that defendant inclosed a copy of
Delgado'sdeclarationbeforethemunicipaljudgeofCatarman,transmittedtoStevensonandCo.onNovember
21,1903andthatthetwoletterstoGutierrezHermanos,ofMay28,1903,andOctober2,1901,aswellasthe
memorandumofthevaluesofthegoods,hadbeentransmittedtoGutierrezHermanoswithatelegraphicorderto
saidfirmtodeliverthemtoStevensonandCo.Iftheamountoftheinsurancecouldnotafterwardsbecollected,it
wasnotthroughfaultofGutierrezHermanos,whoactedinthematterinaccordancewithinstructionsfromOria
HermanosandCo.

So that firm of Gutierrez Hermanos was a mere conductor through which the stock of hemp in Catarman was
insuredbyafirminLondonthroughmediationofMessrs.StevensonandCo.,forthefirmofOriaHermanosand
Co.hadtograntapowerofattorneyonbehalfofthesaidMessrs.Horsley,KibbleandCo.inorderthatthelatter
mightrepresenttheformerbeforethecourtsinEngland.IfafterwardstherepresentativesofOriaHermanosand
Co.didnotobtainafavorabledecisioninthosecourts,thelossofthesuitcannotbeascribedtoeitherthefaultor
the negligence of Gutierrez Hermanos, inasmuch as this plaintiff merely complied with the orders of the
defendant, Oria Hermanos and Co., to bring suit in the English courts, not against Stevenson and Co. of these
Islands,butagainsttheinsurancecompanyofLondon.

ThefirmofGutierrezHermanos,inexecutingordersandchargesofOriaHermanosandCo.,became,byvirtue
ofanimpliedagency,anagentofthelatterand,inthefulfillmentoftheordersoftheprincipal,adjusteditsaction
to the instructions of Oria Hermanos & Co. The record does not show that in so doing it proceeded with
negligenceorwithdeceit.Thereforethereisnoreasonnorlegalgroundwherebyplaintiffshouldbecompelledto

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 10/15
9/7/2016 G.R.No.L8346

paythesumdemandedinthethirdcounterclaimforthecausesthereinstated.(Arts.1710,1719and1726ofthe
CivilCode.)ConsequentlyGutierrezHermanosshouldbeabsolvedfromthethirdcounterclaimfiledbydefendant.

In the fourth counterclaim, the eighth special defense, defendant, Oria Hermanos & Co., prays that plaintiff,
GutierrezHermanos,besentencedtopayP75,000forlossesanddamages,withinterest,inasmuchasbyreason
ofacontractexecutedbetweenbothparties,plaintiffbounditselftoacquireforandtransmittodefendantriceand
otherarticles,includingcoin,whichOriaHermanos&Co.mightrequestatLaoang,Samar,andsoplaintiffdidbut
since 1904, the fifth year of their mercantile relations, plaintiff failed repeatedly to comply with its obligation to
sendthericeandotherarticlerequestedbydefendant,totallysometimesandatothertimespartiallylimitingthe
shipment of the effects ordered and excusing itself from remitting money on the pretext that it could not obtain
insurancefortheshipmentofcashthatdefendantafterwardsdiscoveredthattherewereinthiscitylargestocks
ofriceandothereffectswhichplaintiff[defendant]hadrequested,andcouldsurelyhavebeensoldinLaoangand
thepueblosofthecoastofSamar,asOriaHermanos&Co.wastheonlyimportingfirminthatislandandhad
defendant received from plaintiff the rice and the other effects the former had requested to be shipped to it,
defendantwouldhaveobtainedaprofitofnotlessthanP25,000whereuponitcouldhaveboughtlargequantities
ofhempwhichwouldhavebroughtitgreatprofit.Defendantfurtherallegedthatsuchfailureonthepartofplaintiff
tocomplywiththeagreementmadecausedinjurytothereputationandmercantilecreditofOriaHermanosand
Co., in Samar, and losses and damages of the value of about P50,000, the total of the losses and damages
sufferedonbothaccountsamountingtoasumofnotlessthanP75,000andthatthemotiveofsuchprocedure
onthepartofGutierrezHermanoswastoinjureanddestroydefendant'screditinLaoangandontheentirecoast
ofSamar,becauseplaintiffplannedtoestablishthereabusinessofitsownlikethatofOriaHermanosandCo.

Plaintiff,GutierrezHermanos,specificallydeniedthefactsallegedbydefendantinitscounterclaimandsetforth
that the evidence introduced relative to such facts showed that since 1904 plaintiff had been reducing the
shipmentsofrice,wine,andothereffectstosuchextentthatin1906and1907casesoccurredwheretheorder
shipped was reduced to onethird, and in 1908 also where the steamer Serantes was sent without any cargo
whatever,forthereasonthatthedebitbalanceindefendant'scurrentaccountamounted,in1905,toP321,000
andbecauseOriaHermanosandCo.didnotsendaquantityofhempandcoprasufficientinvaluetocoverthe
value of the remittance of money and of the shipments of the effects requested that defendant, instead of
sendinghemptoplaintiffforthegradualpaymentofitsdebt,sentittoCebuthatthereforeOriaHermanos&Co.
hadnowellfoundedgroundswhereupontoclaimindemnityforlossesanddamages,especiallysince,according
tothestipulationsoftheagreementandasshownbytheevidence,thepartofthecreditutilizedbydefendantwas
tobecoveredandpaidforwiththepriceofthehemp,copraandothereffectswhichOriaHermanos&Co.should
havetosendtoGutierrezHermanosandthat,ifthedebtorbalanceofthecurrentaccountcontinuedtoincrease
insteadofdecreasing,itmustbeconcludedthattheprocedureofGutierrezHermanosinreducingtheamountof
the shipments of the orders was due to the conduct of Oria Hermanos & Co. who did not endeavor by the
shipmentofcopra,hemp,andothereffectsgraduallytopayevenapartofthecreditopened,notwithstandingthat
therightsandobligationsestablishedinthecontractshouldhavebeenmutual.

Ifdefendant,withoutconcerningitselfwithdiminishingitsdebtorbalance,didnomorethanordergoodsforsale
andremitdraftstothepaidbyGutierrezHermanos,notsendinginexchangetoplaintiffhemp,copra,andother
effects,plaintiff,GutierrezHermanos,inrefusingdiscretionallytofurnishcertaineffectstodefendantandtopay
draftsdrawnbythelatter,didnotviolatetheobligationsitassumedinthecontract.

ThefactthatthedebtorbalanceacceptedbyOriaHermanosandCo.onMarch9,1909,ExhibitA,wasraisedto
P144,473.78, is the best proof of the good conduct observed by plaintiff during the nine years of mercantile
relations between both parties, and is at the same time the most graphical demonstration that defendant's
contentionmadeinitsfourthcounterclaimisnotbasedonanyjustorlegalgrounds.

Article 1100, last paragraph of subarticle 2, of the Civil Code prescribes: "In mutual obligations none of the
personsboundshallincurdefaultiftheotherdoesnotfulfillordoesnotsubmittoproperlyfulfillwhatisincumbent
uponhim.Fromthetimeoneofthepersonsobligatedfulfillshisobligationthedefaultbeginsfortheotherparty."
Article1124ofthesameCodeprovidesasfollows:"Therighttorescindtheobligationsisconsideredasimpliedin
mutualones,incaseoneoftheobligatedpersonsdoesnotcomplywithwhatisincumbentuponhim.

The person prejudiced may chose between exacting the fulfillment of the obligation or its rescission, with
indemnityfordamagesandpaymentofinterestineithercase.Hemayalsodemandtherescission,even
after having requested its fulfillment, should the latter appear impossible." Under these grounds we hold
thattheabsolutoryfindingcontainedinthejudgmentappealedfromisinaccordancewiththelawandthe
evidence.

In the fifth counterclaim, the ninth special defense, defendant, Oria Hermanos and CO., prayed that Gutierrez
HermanosbesentencedtopaythesumofP15,000,togetherwiththelegalinterestthereon,inasmuchasplaintiff,
Gutierrez Hermanos, charged in the current account, collected and appropriated to itself the funds which Oria
Hermanos & Co. had in plaintiff's possession and assessed against the same compound interest at 8 per cent
and2percentonthenetamountofthecollectionmadeascharterageforthesteamersSerantesandLaoang,
thelaunchesComillasandGolondrina,andthecutterRemedios,ascommissionforsaidcharterage,whenallthe
http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 11/15
9/7/2016 G.R.No.L8346

stepsforthecollectionofthesameweretakenpersonallybyMessrs.Oriaandfurther,defendant'spartnersand
therewasnocontractswhateverbetweenthepartieswherebyGutierrezHermanosmightcollect,enterintothe
currentaccountandappropriatetoitselfthesaidamountascommissionthroughthecollectionoftheaforesaid
charterage.

Plaintiff's counsel merely denied the facts alleged, which certainly were not proved at the trial. It was, on the
contrary, fully proven that Don Tomas Oria and the managers of Oria Hermanos & Co. knew, by reason of the
accountsGutierrezHermanoshadbeensendingthem,thattheplaintifffirmchargedthe2percentcommission
ontheamountofthecharterages,foritissorecordedintheletterfromOriaaddressedtoGutierrezHermanos
underdateofJune12,1901,inwhichP690appearsannotatedastheamountofplaintiff's2percentcommission
forthecharterageoftheLaoangandtheSerantes,andinotherletterfromOriaHermanosandCo.ofOctober
18,1900,(ExhibitA2,page476oftherecord)whereindemandwasmadeforvouchersandamemorandumof
the collections effected for the charterage of these steamers, the Laoang, and the Serates. Furthermore, it
appearsinthissameletterforitissteadthatcredithasbeengiveninGutierrezHermanos'accountforP272.50,
asbeingtheamountthisfirmwasentitledtoreceiveas2percentcommissionontheP15,625collectedbyitfrom
thequartermasterforthecharterageoftheSeratesandforthetransportationofeightpassengersonthesteamer
LaoanganditisalsothereinstatedthatGutierrezHermanos'accounthasbeencreditedwiththesumofP24,as
the amount of 2 per cent commission on P1,200 collected for four days' charterage of the Laoang. These
documentsshowthatGutierrezHermanoshastakenpartinthecollectionofthesaidcharteragesand,therefore,
wasentitledtoreceivetheamountagreeduponascommissionforsuchcollection.Oria'sassertionthatGutierrez
Hermanos did nothing for the collection of the P400,000, the amount of the charterage for the boats of Oria
Hermanos and Co., Gutierrez Hermanos relative to the collection of the charterages due for the launches
GolondrinaandAdela,andforthispurposehesentthepropervouchersforsuchcollection.Consequentlythereis
neitherreasonnorlegalgroundtopreventourholdingasproperthefindingestablishedbythetrialcourtthatOria
Hermanos & Co. did, with due knowledge of the matter, approve the amount of the commissions collected by
GutierrezHermanosonthesumsithadcollectedascharterageforthedefendant'sboats,inaccordancewiththe
agreementmadebetweentheparties,whichdefendantcannotrepudiate,norcanitsregretforthepartittook
thereinavailitforthereimbursementsoughtinitsfifthcounterclaim.Thefindingofthetrialjudgeinregardtothe
latteris,therefore,inconformitywiththelaw.

TheobjectofthesixthcounterclaimistoobtainreimbursementofthesumofP31,000,theamountoftheinterest
chargedandcompoundedsemiannually,insteadofannually,attherateof8percentnetinterest.OriaHermanos
&Co.demandsthissumfromGutierrezHermanos,allegingthattherewasanagreementbetweenthepartiesto
theeffectthatasettlementoftheinterestshouldbemadeattheendofeachyear,andalsothattheinterestdue
andunpaidshouldbecapitalizedannually.

ThefirmofOriaHermanos&Co.,TomasOria,oneofthepartnersofthesame,andthedefendant'sbookkeeper,
arelativeofthesaidOriaandalsoapartnerofthefirm,hadbeenreceivingextractsorcopiesofthesemiannual
accountsrenderedbyGutierrezHermanos,and,afteracarefulexaminationofthesame,afterofferingobjections
thereto which sometimes delayed Oria Hermanos and Co.'s approval thereof for more than six months, after
receiving the explanations requested and vouchers demanded of plaintiff, they concluded by admitting and
agreeingtotheaccountsrenderedandtheamountsinvolved,andmadeneitherobjectionnorprotestwhatever
against the system or method employed by Gutierrez Hermanos in capitalizing at the end of each year the
interest of the semiannual accounts rendered, nor against the interest charged on the capitalized interest, not
only in defendant's debit, but also by reciprocation in the credit given it in the account of the receipts obtained
frompriceofthehemp,copraandotherproductsshippedtoGutierrezHermanos.Alltheforegoingfactsappear
onpage18ofthetranscriptofthestenographicnotestakenofthehearingonJuly14,1914.

ThetransactioneffectedbyGutierrezHermanosintheaccountsitpresentedtodefendant,OriaHermanos&Co.,
isconfirmedbysometwentyletterssigned,someofthem,byPriaHermanosandCo.,others,thegreaterpartof
them, by Tomas Oria, and still others by Mr. Fuster, a partner of the latter firm. Therefore the semiannual
capitalization made by plaintiff, Gutierrez Hermanos, was sanctioned and approved by defendant on the
seventeenoccasionsthatitapprovedtheaccountspresentedbyplaintiff,expressiveofsuchcapitalizationofthe
reciprocalintereststipulatedbetweenthecontractingparties.

Article 1109 of the Civil Code prescribes as follows: "Interest due shall earn legal interest from the time it is
judiciallydemanded,eveniftheobligationshouldhavebeensilentonthispoint.

IncommercialtransactionstheprovisionsoftheCodeofCommerceshallbeobserved.

Article 317 of the Code of Commerce provides: "Interest which has fallen due and has not been paid shall not
earninterest.Thecontractingpartiesmay,however,capitalizedthenetinterestwhichhasnotbeenpaid,which,
asnewprincipal,shallearninterest."

UpontheexecutionofthecontractwhichwastheoriginofthemercantilerelationsbetweenGutierrezHermanos
andOriaHermanos&Co.,thestipulationmadebetweenbothpartieswerenotsentforthinanydocument,they
beingcontentwithaverbalagreementinwhichitwasstipulatedthattherateofinterestofthereciprocalcurrent
http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 12/15
9/7/2016 G.R.No.L8346

accounttobekeptbetweenthemshouldbe8percent,withoutdeterminingwhethersuchinterestwastofalldue
annually, as affirmed by Tomas Oria, the manager of Oria Hermanos & Co., or semiannually, as contended by
GutierrezHermanos.However,itiscertainthatintheseventeenaccountspresentedbyplaintifftodefendant,at
theendofeachperiodofsixmonthsfrom1900toDecember31,1908,embracingnearlynineyears,theinterest
duewasliquidatedeverysixmonthsinthereciprocalcurrentaccountbetweenbothfirms,withoutoppositionor
protest on the part of Oria Hermanos and Co. In the absence of a written agreement defendant's procedure
raises the presumption that such were the stipulations verbally made between made between the interested
parties,andtheverbalagreementwasconstantlymaintainedandconfirmedwithoutprotestorobjectionwhatever
onthepartofthemanagersofOriaHermanos&Co.IfTomasOria,changinghisopinion,afterthefirmofwhich
heisprincipalmemberhadapprovedthesaidseventeenaccounts,believedthathewasauthorizedtocontradict
his own acts and to allege another manner of computing and liquidating the 8 per cent interests stipulated by
stating that it should have been collected annually, and not semiannually as was done and approved in the
seventeen accounts rendered during a period of more than nine years, the rectification afterwards made of an
assentandagreementrepentancewhathehimselfdidinagreementwithdefendant,sincetheywereauthorized
to take such action by article 317 of the Code of Commerce. Therefore the ruling of the trial judge absolving
plaintiff of the sixth counterclaim filed by defendant is in accordance with the law and with the evidence as
disclosedbytherecord.

Forallthereasonshereinabovesetforthasgroundsforthefindingsrenderedinrespecttothecomplaintandto
eachoneofthecrosscomplaintsandcounterclaimspresentedbydefendant,theerrorsassignedtothejudgment
appealedfromandnotadmittedinthisdecisionhavebeendulyrefused.

Therefore,forthereasonsassignedinthisdecision,wesentencethecommercialfirmofOriaHermanos&Co.to
thepaymentofthesumofP147,204.28andofthestipulatedinterestattherateof8percentperannumfrom
June 30, 1909, after deduction of all the sums which as balances in favor of defendant may result from the
accountstoberenderedbyGutierrezHermanos,inconformitywiththefindingmade,especiallyinreferenceto
thesecond,third,andfourthcrosscomplaints.

Gutierrez Hermanos is absolved from the first crosscomplaint, and also from the second, in which latter
defendantprayedforanaccountingofthehempandcoprabusiness.Plaintiffislikewiseabsolvedfromthefourth
crosscomplaint,exceptingthepartthereofrelativetothepetroleum,andalsofromthefirst,second,third,fourth,
fifth,andsixthcounterclaimsfiledbydefendant.

Held: (1) That Gutierrez Hermanos, after Liquidation of the sums paid as a onethird per cent tax on the
price of the rice acquired in this city, of that of the salt, kerosene, lime, mats, rattan, flour, anisette,
cigarettes, beer, and other articles, for which plaintiff paid said sums and charged them to defendant's
account,mustpaytoOriaHermanos&Co.thesumdisclosedbythesaidliquidation,inconformitywiththe
secondcrosscomplaint.

(2) That Gutierrez Hermanos shall render to defendant an account, supported by vouchers, of the price,
expenses,andallamountspaidfortheshipmentsofricecoveredbytheinvoicesexaminedduringthetrial
ofthiscase,aswellasthe153invoicesmentionedbythepartiesinthehearingofNovember29,1910.

(3) That plaintiff shall render an account, supported by vouchers, of all the petroleum it acquired for Oria
Hermanos&Co.,theinvoicesofwhicharementionedinthetranscriptofthestenographicnotestakenat
thehearingofDecember28,1910.

Thejudgmentappealedfromisaffirmedinsofarasitisinaccordwiththisdecisionandisreversedinsofarasit
isnot,withoutspecialfindingastocosts.

Arellano,C.J.andJohnson,J.,concur.
CarsonandTrent,JJ.,concurintheresult.

SeparateOpinions

MORELAND,J.,dissenting:

I do not agree to the return of this case to the court below for the purpose of having the plaintiff "render
accounts."

Inthefirstplace,thereisnoaccounttorender,andthefindingofthetrialcourtandthiscourttothecontraryis
clearlyerroneous.

Inthesecondplace,thepartiesoffered,orhadeveryopportunitytooffer,alloftheirevidencerelativetothesale
anddeliveryofthemerchandisedescribedinthecomplaintandthepaymentofthepurchaseprice.Itisaplain

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 13/15
9/7/2016 G.R.No.L8346

caseofasaleofgoodsbyplaintifftodefendant.Ifthereisevidencesupportingtheallegationsofthecomplaint,
plaintiff is entitled to a judgment. If not, the defendant wins. There is no reason for a return of the cause. The
partieshavealreadyhadeveryopportunitywarrantedbylaw.(Hicksvs.ManilaHotelCo.,28Phil.Rep.,325Gov.
ofPhil.,Islandsvs.PhilippineSugarEstatesDevelopmentCo.,Ltd.ante,p.27.)

Inthethirdplace,ifthiscourtiscorrectinitsruling,thejudgmentappealedfromisnotfinalandwecandonothing
butdismisstheappeal.

Thejudgmentofthelowercourtisinpartasfollows:

Judgmentis,therefore,renderedagainstOriaHermanosyCompaiaandinfavorofGutierrezHermanos
for the sum of one hundred and fortyseven thousand two hundred and four pesos and twentyeight
centavos(P147,204.28),withinterestateightpercentannumfromthe30thofJune,1909,buttheremust
bedeductedtherefromthesumswhicharefoundinfavorofthesaidOriaHermanosyCompaiafromthe
rendition of accounts by said Gutierrez Hermanos in accordance with the counterclaims and cross
complaintwhichhaveheretoforebeenallowed.

The judgment further says: "(a) With reference to the first counterclaim, to render accounts duly vouchered to
Oria Hermanos y Compaia with reference to those articles as to which fraud or error has been proved and to
whichthesubsequentpronouncementshereinmaderefer.

(b)Withreferencetothesecondcounterclaim,torestoretoOriaHermanosyCompaiaafter the proper

renderingifaccountswithreferencethereto,allofthesums,etc.

xxxxxxxxx

(d) With reference to the fourth counterclaim, to render vouchered accounts of all the purchases of
petroleumwhichOriaHermanosyCompaiahavemadefromtheplaintiffs,etc.

Ifwetakethisjudgmentatitsface,thenitisclearthatisitnotfinal,thatsomethingisnecessaryyettobedone
beforethesumduefromdefendanttoplaintiff,ifanything,canbedetermined.Whereasjudgmentisnotfinal,we
havenoauthoritytotakejurisdictionforthepurposeofdeterminingthemeritsandthedeterminationofthiscourt
intheprevailingopinionofmanyofthequestionswhichwouldhavebeenpresentedifthejudgmentwasfinalis
withoutauthority.Thispropositionhasbeensofrequentlyheldbythiscourtthatthecontrarydoctrinelaiddownby
this case will come as a shock to both the bench and bar (Code of Civil Procedure, sections 123 and 143
InternationalBankvs.Martinez,220U.S.,214).

In the case of Montemayor vs. Cunanan (14 Phil. rep., 454), it appeared that "M commenced an action in the
CourtofFirstInstanceagainstCfordivorceandalsoforadivisionofthemaritalproperty.Thecourt,afterhearing
theevidence,enteredadecreegrantingtoMherdivorceandappointedacommissiontomakeaninventoryof
themaritalpropertyandreporttothecourtforadivisionofthesame.Cdulyexceptedtotheorderdecreeingthe
divorce and without waiting for a division of the marital property presented a bill of exceptions, which was duly
allowed. After the bill of exceptions was received in the Supreme Court M presented a motion asking that the
appealofCbenotalloweduponthegroundthatthejudgmentofthelowercourtwasnotfinal."Inthatcasethe
courtheld"thatsaidmotionshouldbegrantedforthereasonthatthelowercourthadonlyresolvedapartofthe
questionpresentedtoitandthatthedecreeofthelowercourtdidnotfinallydeterminetheactionorproceedingin
saidcausethatbillsofexceptionsshouldonlybealloweduponfinaljudgmentswhichfinallydeterminetheaction
orproceedinginthelowercourt."Intheopinionthecourtsaid:"Weareoftheopinionandsoholdthatitwasthe
purpose of the legislature in enacting the provisions of sections 123 and 143 of the Code of Procedure in Civil
Actions to prohibit appeals except from decisions of the lower court which finally determine the action or
proceeding."TheopinioncitesmanycasesfromSupremeCourtoftheUnitedStatesandotherAmericancourts
andalsoseveraldecisionsofthiscourt.Itisentirelyinpointwiththecaseatbarandshouldbefollowed.Noone
hasofferedanyexplanationwhyitisnotfollowedandIknowofnone.

In the case of Toribio vs. Toribio (7 Phil. Rep., 526), the judgment provided that "therefore, the court, after
consideringthefactsprovedandthelawapplicablethereto,ordersthatthedefendantswithinsixtydayssubmit
fortheconsiderationofthecourtaninventoryofallofthegoodsandpropertyofthemdeceasedNarcisoNatalio
Lopez,andthattheyrenderaccountsofadministrationofthesameinorderthatthecourtmaymaketheproper
orderfortheprotectionoftherespectiverightsofallthepartiesinterested,reservingfinaldecisionofthecause
untilthepropertime."

Theopinion,aftercitingsections123and143oftheCodeofCivilProcedureanddecisionsoftheSupremeCourt
of the United States, held that the judgment was not final inasmuch as the court required the rendering of an
accountbythedefendants.Manyofthecasescitedassertthepropositionthat,underlawssuchasarefoundin
sections 123 and 143 of the Code of Civil Procedure, an appellate court has no jurisdiction in an appeal taken
fromajudgmentwhichisnotfinal.(GuaranteeCompanyvs.Mechanics'SavingsBanketc.,173U.S.,582.)

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 14/15
9/7/2016 G.R.No.L8346

InthecaseofRonvs.Mojica(8Phil.Rep.,328),itwasheldthat"inasuitforthepartitionofproperty,broughtin
accordancewiththeprovisionsoftheCodeofCivilProcedure,thejudicialorderorresolutionbyvirtueofwhich
the judge declares who are the parties who have a right to certain property belonging to several owners is not
final,nordoesitdefinitelyclosethecase,andissubjecttoexception."(Araullovs.Araullo,3Phil.Rep.,567.)

I am of the opinion that the cases cited fully dispose of the right of the parties to appeal in this case, as the
judgmentisnotfinalbyvirtueofitsverytermsandtheamountthereofcannotpossiblybeknown,ifweacceptthe
decisionofthecourtbelowandofthiscourt,untiltheaccountingsrequiredhavebeendulymadeandtheamount
fixedwhichonepartyowestotheother.

This court, in dealing with the merits of this cause, has definitely settled the liability of the defendant for many
thousandsorpesos.Willthejudgmentofthiscourtastothissumbecomefinalattheendofthetimeprescribed
by law? If so, what will the situation be if, on the rendering of the accounts ordered by this decision, it shall be
determinedthattheplaintiffowestothedefendantasumsufficienttooffsettheamountalreadyfoundtobedue
from the defendant to the plaintiff by the judgment of this court? Will the defendant be able to reduce the final
judgmentinfavoroftheplaintiff,renderedbythiscourt,bytheamountwhichisfounddueontheaccounting?Or
will it be obliged to offset the judgment of this court in favor of the plaintiff by the sums found due it on the
accountinginaseparateproceedingforthatpurpose?Ifthereisajudgmentinfavoroftheplaintiffandagainst
thedefendantforP100,000,howcanthedefendantgetthebenefitofsubsequentaccountingsforP100,000inits
favor? This is not like an action of divorce or partition which can be divided into two parts, each separate and
distinctfromtheother,andthejudgmentastoonepartbe,inaway,independentoftheother.Thisisanaction
for a sum of money and the several amounts claimed by the plaintiff and defendant, respectively, must be
aggregatedandabalancestruckbeforeitcanbedeterminedhowmuchoneowestheother.Theactioncannot
bedividedintoparts.itisonesingleactionitcannotbedeterminedthattheplaintiffisentitledtoP100,000onone
cause of action, and that determination affirmed by this court, and then the cause be sent back for the
determination of how much the plaintiff owes defendant on counterclaims. The determination necessary to be
madeinanactionforasumofmoneyistheamountduefromdefendanttoplaintiff.Intheverynatureofthings,
nofinaljudgmentcanberendereduntiltheamountdueisactuallydeterminedandfixed.Nosuchdetermination
hasbeenmadeinthiscase.

ForthesereasonsIdissent.Thetreatmentofthiscasebythecourtiswithoutprecedent.

TheLawphilProjectArellanoLawFoundation

http://www.lawphil.net/judjuris/juri1915/mar1915/gr_l8346_1915.html 15/15