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[G.R. No. 8346. March 30, 1915. ]

GUTIERREZ HERMANOS, Plaintiff-Appellant, v. ORIA HERMANOS & CO., Defendant-Appellant.

Rafael de la Sierra for plaintiff.

Chicote & Miranda for defendant.


1. ACCOUNTS; SET-OFF AND COUNTERCLAIM. — If a creditor is under obligation to render an account of the result of certain commercial operations carried on between him and his debtor, even though the latter may unquestionably appear to owe him a certain sum, it is impossible to determine whether said plaintiff creditor is or is not entitled to collect the whole amount claimed in the complaint until it is demonstrated by the account rendered at the request of said debtor whether or not his creditor owes him anything which, although it may not entirely offset the sum claimed by the creditor, may at least reduce his indebtedness by that amount.

2. ID.; RECONSIDERATION OF APPROVAL. — After an account has been submitted by the party obligated to render it and it has been approved by the one whom it affects, it cannot be again revised at the latter’s request, unless it be demonstrated that in the approval thereof intervened deceit, fraud, or error gravely prejudicial to the party who gave said approval. (Civil Code, arts. 1265, 1266; Pastor v. Nicasio, 6 Phil. Rep., 152.)

3. PRINCIPAL AND AGENT; RESPONSIBILITY OF AGENT FOR ACTS OF PRINCIPAL. — When an agent in executing the orders and commissions of his principal carries out the instructions he has received from his principal, and does not appear to have exceeded his authority or to have acted with negligence, deceit, or fraud, he cannot be held responsible for the failure of his principal to accomplish the object of the agency.

4. CONTRACTS; EFFECT OF FAILURE OF PERFORMANCE. — When one party to a mutual obligation fails duly to carry out his agreement, he thereby releases the other, who does not thus become delinguent. Delinquency commences when one of the contracting parties fulfills his obligation and becomes invested with power to terminate the contract because of failure on the other’s part to carry out the agreement.

5. INTEREST; STIPULATION AS TO TIME OF PAYMENT. — In the absence of a written contract regarding the date when mutual interest verbally stipulated at the rate of 8 per cent a year, should be paid, the approval given by one of the interested parties to seventeen accounts submitted semiannually by the other for a period of more than nine years, during which the interest was paid semiannually, gives rise to the presumption that the interested parties had verbally contracted to that effect, especially when this verbal contract is sustained and continually corroborated without protest or objection on the part of the one who now claims that such payment ought to be made annually instead of semiannually; and the assent and acquiescence given seventeen times cannot later be changed in order to set aside said semi-annual payments, repeatedly made in accord with the other party, once the accumulation of interest on the principal has been authorized by article 317 of the Code of Commerce.



On August 12, 1909, counsel for the mercantile firm of Gutierrez Hermanos of this city filed a written complaint in the Court of First Instance of Manila against the commercial concern of Oria Hermanos & Co. of Laoang, Province of Samar, alleging therein as a cause of action that between plaintiff and defendant there have existed commercial relations which gave rise to the opening of a mutual current account, at 8 per cent interest, under the name of Oria Hermanos & Co., on the books of the plaintiff Gutierrez Hermanos; that, on January 11, 1909, plaintiff transmitted to defendant an abstract of the latter’s current account on December 31, 1908, which showed a balance in plaintiff’s favor of P144,473.78 and which was approved by defendant, Oria Hermanos & Co., by a letter of March 9, 1909, which was copied literally in the complaint; that, on May 25, 1909, plaintiff notified defendant that the current account existing between them would be closed at the end of thirty days counting from that date, at the expiration of which period defendant should pay any debit balance that might be owing; that, on June 30 of the same year, Gutierrez Hermanos transmitted to the defendant, Oria Hermanos & Co., the statement of the latter’s current account up to that date and, confirming its previous letter to the defendant of May 25, 1909, called attention to the necessity of paying the balance, which then amounted to P147,204.28; that the defendant firm, notwithstanding the said demands and others subsequently made, and without having made any objection whatever to the said statement of account, refused to pay the principal and interest owing on the said account. Plaintiff’s counsel therefore prayed that Oria Hermanos & Co. be sentenced to pay the sum of P147,204.28, besides the interest thereon at the rate of 8 per cent per annum from June 30, 1909, and the costs.

Defendant filed its answer on November 9, 1909, setting up four cross complaints and six counterclaims against the plaintiff, Gutierrez Hermanos, and specifically denied such of the allegations of the complaint as were not in agreement with its answer. Plaintiff demurred to certain paragraphs of the answer and as to the others thereof prayed the court to order defendant to make its allegations more specific. The court overruled this demurrer, but granted the petition that defendant should make its allegations more specific in the second, third, and fourth cross complaints and first counterclaim

In compliance with the said order, defendant, on May 4 1910, filed an amended answer in which it specifically 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 itself periodically to send to the defendant firm a memorandum or statement of the current account, and further 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 contented itself by sending to Oria Hermanos & Co. some memoranda or abstracts of account, accepted by defendant as such "abstracts of account," without the latter’s having waived its right to demand the presentation, as agreed upon, of the vouchers and other proofs upon the closing of the current account, a stipulation which Gutierrez Hermanos had failed to comply with. Defendant therefore prayed that the plaintiff, Gutierrez Hermanos, be sentenced to render and present the said final account, duly accompanied by vouchers, in conformity with the agreement made.

In the second cross complaint defendant alleged that, by virtue of a commission contract, Oria Hermanos & Co. had from the 1st of May, 1900, to the 7th of September, 1909, forwarded 65,119.66 piculs of copra, 70,420 bales of hemp, and 5,176.03 piculs of loose hemp to Gutierrez Hermanos for sale on commission; that the latter firm informed the defendant that it, the plaintiff, had sold the said products to third persons for the account of the defendant, Oria Hermanos & Co.; that by reason of said sale or sales Gutierrez Hermanos collected large and important sums for commission and brokerage and had turned in for the goods sold amounts less than what they were actually worth in Manila; that defendant, Oria Hermanos & Co., had recently received information that these lots of hemp and copra were purchased by the firm of Gutierrez Hermanos for itself, notwithstanding that the latter had stated to its principals, Oria Hermanos & Co., that they had been sold to third persons; that it collected by reason of such sale, commission and brokerage; acts which redound to the fraud, injury, and prejudice of the defendant, Oria Hermanos & Co. Therefore the latter prayed that Gutierrez Hermanos be sentenced to render a general and complete account of the amounts of hemp and copra received by it for sale on commission from the year 1900 to 1909, setting out the dates of the receipt of the said merchandise, dates of the sales, names of the purchasers, prices stipulated, discounts obtained, and commissions collected by Gutierrez Hermanos, etc.

Defendant alleged as the third cross complaint that, by virtue of the said commission contract, Gutierrez Hermanos sent to the firm of Oria Hermanos & Co., at different times according to the latter’s request, from May 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, advance payments, commission and interest, all to the fraud and injury of the defendant firm. Oria Hermanos & Co., therefore, prayed that Gutierrez Hermanos be sentenced to render an account, duly supported by vouchers, of all the lots of rice forwarded to Oria Hermanos, with a statement of the dates of the orders, amounts, dates of the purchases, names of purchasers, amounts charged to Oria Hermanos & Co., etc.

In the fourth cross complaint defendant related that, by reason of the same commission contract existing between the two firms, Gutierrez Hermanos had sent to Oria Hermanos & Co., from the 1st of May, 1900, up to the closing of the current account, various quantities of salt, petroleum, tobacco groceries and beverages, and had collected a commission for the purchase thereof, that afterwards Oria Hermanos & Co. learned that the forwarding firm, the plaintiff, had set larger prices on the said goods than it had actually paid for them and had unduly charged such prices, before it had paid them, to the defendant’s account, collecting for itself commission and interest thereon, to the fraud and prejudice of the defendant firm. Therefore the latter prayed that Gutierrez Hermanos be sentenced to render a complete account, accompanied by vouchers, of the shipments aforementioned.

In the first counterclaim filed by the defendant, Oria Hermanos & Co., petition was made that Gutierrez Hermanos be sentenced to pay it the sum of P13,894.60, as the amount of an overcharge of 3 per cent in interest collected from defendant, in a charge of 8 per cent interest per annum on a private debt of P47,649 drawing 5 per cent interest per annum, which latter amount Juan T. Molleda owed the firm of Gutierrez Hermanos and payment for which was assumed by Oria Hermanos & Co. upon its organization into a mercantile firm in May, 1900.

In the second counterclaim the defendant firm, Oria Hermanos & Co. set forth: That, on April 18, 1900, its predecessor had ordered its consignee in Manila, Gutierrez Hermanos, to insure against all war risks the stocks of hemp and merchandise which the said firm possessed in the pueblo of Laoang, for P35,000, and likewise those it had in Catubig, for P32,000; that Gutierrez Hermanos did not comply with the said order, only insuring the stocks in Laoang for P67,000, leaving those of Catubig totally unprotected; that when, on May 10, 1900, this latter pueblo was destroyed by fire Oria Hermanos & Co. lost all its stocks there and could not collect the insurance of P32,000 on the said property, which, through the fault, negligence, and omission of Gutierrez Hermanos had not been insured. This amount last mentioned, added to the premiums, expenses, and interest paid by Oria Hermanos & Co. aggregates the sum of P63,700, payment of which defendant demanded of plaintiff.

As a third counterclaim it is alleged that, on May 18, 1900, the firm of Gutierrez Hermanos, complying with orders from Oria Hermanos, & Co., insured against all war risks, in a certain insurance company of London, England, whose agent in the Philippine Islands was Stevenson & Co., the stock of hemp which the defendant company had in the pueblo of Catarman, Samar, for 3,000 pounds sterling, and paid the premiums thereon at the rate of 10 per cent per quarter; that, during the first quarter for which the premiums had been so paid, all the insured tobacco 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 carelessness had, during a period of eight years, obliged the defendant firm to incur costly expenditures which, added to the amount of the insurance premiums paid, attorney’s fees, costs, interest, etc., aggregated P67,000; that for this sum, together with legal interests thereon, it prayed that it be reimbursed by Gutierrez Hermanos.

With respect to the fourth counterclaim, the defendant firm set forth that, under the commission contract and the 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 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, injuring its fame, credit, and mercantile reputation in the Island of Samar to the extent of approximately P50,000. Therefore defendant prayed that Gutierrez Hermanos be sentenced to pay;t the sum of P75,000 as the amount of such losses and damages occasioned it.

As the fifth counterclaim defendant alleged that, for a period of twenty-two months, from the month of May, 1900, it chartered several of its boats to the American military government; that the charter parties aggregated a value of P400,000; that these contracts were executed and the amounts thereof collected by Messrs. Oria & Fuster, members of the defendant company, who turned the said amounts into the current account they had with the firm of Gutierrez Hermanos; but that plaintiff charged in the current account, appropriated to itself, and collected from the funds of Oria Hermanos & Co. which it had in its possession, 2
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