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Republic of the Phils v. Litton & Co. et al (1953) Paras, C.J. Seller failed to deliver the ordered padlocks and office supplies in time for the elections, for which the ordered goods were to be used. It was stated in the contract that the seller was to deliver such before a certain date. Because of the delay, the buyer was forced to buy in the open market. Issue: Is the seller liable? SC says yes. In the bidding circular made by the buyer (the government of the Phils), the bidders were notified that the goods were to be used for election purposes. It is then preposter ous that any delivery after this event would have been contemplated by the buyer. In this case, there were 2 causes of action. In the first cause of action what happened was: o (Dec 22, 1945) Litton & Co (seller) agreed to supply and deliver to the plaintiff (buyer) on or before Mar 1, 1946 some padlocks. o On or about April 8, 1946, seller delivered padlocks which is much less than the quantity agreed upon. The seller then failed to deliver the remaining number of padlocks which were to be used during the elections of April 23, 1946. o The buyer alleges that because of such failure, he was compelled to make open market purchases of padlocks, thereby causing him losses and damages of some amount (which is the difference between the price actually paid for said open market purchases and the price which the government would have paid to the seller) In the second cause of action, what happened was the same, only it was for a delivery of pencils, inks, pens, chalk, chips, etc. Now, the buyer wants payment from the seller the damages and losses. The seller answers the complaint: o That the contracts mentioned are not the real contracts and do not express the real agreement o That it was agreed that the seller would deliver the goods PROVIDED, the buyer should obtain shipping priority and the export license to bring the good from the US to the Phils o That the purchases made in the open market were made at exorbitant prices o That the seller is not liable for the alleged losses and damages resulting from those purchases, as the delay or was due to buyers fault. There was also a surety company that issued bonds, in favour of the buyer, to cover and secure the faithful performance by the seller. o But this surety company refused to pay even after demands by the buyer. By counterclaim, the seller alleges that after the elections, it delivered padlocks and office supplies and that the buyer, notwithstanding repeated demands by the seller, the buyer refused to pay. The sellers want the complaint to be dismissed and payment of some damages The TC allowed the buyers claim as to both causes of action, but granted the sellers counterclaims for the unpaid price of padlocks and office supplies. o TC held that although the conditions specified were considered by the buyer, it was still the buyers sole obligation to obtain the necessary papers

Issue: Is the seller liable? Held: Yes Ratio:

In the Circular Proposal No. 13 issued on Nov 27, 1945, to local dealers, calling for bids, it was expressly stated that the goods were for election purposes, and the bidder was required to state the shortest time of delivery, which should not be later than March 1, 1946. It is then preposterous to suppose that delivery after the elections would ever be contemplated. Also, the seller wrote a note to the buyer saying: o It is understood that your Office will give us a letter certifying that the padlocks are urgently needed by the o Philippine Government so that the export license can be secured without delay The letter shows that the seller merely expected the buyer to give a certification that the padlocks were urgently needed Also, the bonds prepared by the surety company made express guaranteed the fulfillment of the contract and under the bonds, it was stated that delivery was to be made on or before March 1, 1946. o This negatives the contention that the delivery was subject to any contingency, much less to the buyers ability to secure some papers.

Re: Sellers argument of buyers responsibility of securing the documents Although the Philippine Government did exert some efforts to the granting by the US of the necessary papers, this does not mean that it was buyers obligation to do so or that the sellers duty to deliver the was conditional. The effort by the Phil Govt was only in furtherance of the sellers letter-request. Re: Sellers argument that there was mutual mistake by both parties because both did not foresee the impossibility of compliance for causes beyond their control The SC does not sustain this argument because the seller, an experienced businessman and aware of the difficulties in bringing US goods to the Phils, chose to bind himself to deliver the goods In conclusion: The contract was unconditional.

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Although in par 2 of the "important conditions" appearing at the back of the purchase orders, the ffg provision is made: o The stipulated delivery period shall not be exceeded BUT, should there be delay, due to an act of the Government to force majeure, or to a condition clearly beyond control, the Purchasing Agent may grant a reasonable time for extension The contention that the "conditions" contained at the back is contrary to law and public morals, because it makes the seller liable for any delay even to an act of the Government, is of no moment, since it is not pretended in this case that the sellers default was caused by such an act.

Judgment affirmed. Sellers liability reduced.