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>G.R. No. 105387

TodayisSaturday,August20,2016

RepublicofthePhilippines
SUPREMECOURT
Manila
THIRDDIVISION

G.R.No.105387November11,1993
JOHANNESSCHUBACK&SONSPHILIPPINETRADINGCORPORATION,petitioner,
vs.
THEHON.COURTOFAPPEALS,RAMONSANJOSE,JR.,doingbusinessunderthenameandstyle
"PHILIPPINESJINDUSTRIALTRADING,"respondents.
Hernandez,Velicaria,Vibar&Santiagoforpetitioner.
ErnestoM.Tomanengforprivaterespondent.

ROMERO,J.:
Inthispetitionforreviewoncertiorari,petitionerquestionsthereversalbytheCourtofAppeals 1of the trial court's
rulingthatacontractofsalehadbeenperfectedbetweenpetitionerandprivaterespondentoverbusspareparts.

ThefactsasquotedfromthedecisionoftheCourtofAppealsareasfollows:
Sometimein1981,defendant 2establishedcontactwithplaintiff 3throughthePhilippineConsulateGeneral
in Hamburg, West Germany, because he wanted to purchase MAN bus spare parts from Germany. Plaintiff
communicated with its trading partner. Johannes Schuback and Sohne Handelsgesellschaft m.b.n. & Co.
(SchubackHamburg)regardingthesparepartsdefendantwantedtoorder.

On October 16, 1981, defendant submitted to plaintiff a list of the parts (Exhibit B) he wanted to
purchasewithspecificpartnumbersanddescription.PlaintiffreferredthelisttoSchubackHamburgfor
quotations.Uponreceiptofthequotations,plaintiffsenttodefendantaletterdated25November,1981
(Exh.C)enclosingitsofferontheitemslistedbydefendant.
OnDecember4,1981,defendantinformedplaintiffthathepreferredgenuinetoreplacementparts,and
requestedthathebegiven15%onallitems(Exh.D).
On December 17, 1981, plaintiff submitted its formal offer (Exh. E) containing the item number,
quantity,partnumber,description,unitpriceandtotaltodefendant.OnDecember,24,1981,defendant
informed plaintiff of his desire to avail of the prices of the parts at that time and enclosed Purchase
Order No. 0101 dated 14 December 1981 (Exh. F to F4). Said Purchase Order contained the item
number,partnumberanddescription.Defendantpromisedtosubmitthequantityperunithewantedto
orderonDecember28or29(Exh.F).
On December 29, 1981, defendant personally submitted the quantities he wanted to Mr. Dieter
Reichert,GeneralManagerofplaintiff,atthelatter'sresidence(t.s.n.,13December,1984,p.36).The
quantities were written in ink by defendant in the same Purchase Order previously submitted. At the
bottom of said Purchase Order, defendant wrote in ink above his signature: "NOTE: Above P.O. will
includea3%discount.TheabovewillserveasourinitialP.O."(Exhs.GtoG3a).
Plaintiff immediately ordered the items needed by defendant from Schuback Hamburg to enable
defendanttoavailoftheoldprices.SchubackHamburginturnordered(OrderNo.12204)theitems
fromNDK,asupplierofMANsparepartsinWestGermany.OnJanuary4,1982,SchubackHamburg
sentplaintiffaproformainvoice(Exhs.N1toN3)tobeusedbydefendantinapplyingforaletterof

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credit. Said invoice required that the letter of credit be opened in favor of Schuback Hamburg.
Defendantacknowledgedreceiptoftheinvoice(t.s.n.,19December1984,p.40).
An order confirmation (Exhs. I, I1) was later sent by Schuback Hamburg to plaintiff which was
forwardedtoandreceivedbydefendantonFebruary3,1981(t.s.n.,13Dec.1984,p.42).
On February 16, 1982, plaintiff reminded defendant to open the letter of credit to avoid delay in
shipmentandpaymentofinterest(Exh.J).Defendantreplied,mentioning,amongothers,thedifficulty
he was encountering in securing: the required dollar allocations and applying for the letter of credit,
procuring a loan and looking for a partnerfinancier, and of finding ways 'to proceed with our orders"
(Exh.K).
In the meantime, Schuback Hamburg received invoices from, NDK for partial deliveries on Order
No.12204 (Direct Interrogatories., 07 Oct, 1985, p. 3). Schuback Hamburg paid NDK. The latter
confirmedreceiptofpaymentsmadeonFebruary16,1984(Exh.CDeposition).
OnOctober18,1982,Plaintiffagainremindeddefendantofhisorderandadvisedthatthecasemaybe
endorsedtoitslawyers(Exh.L).DefendantrepliedthathedidnotmakeanyvalidPurchaseOrderand
that there was no definite contract between him and plaintiff (Exh. M). Plaintiff sent a rejoinder
explainingthatthereisavalidPurchaseOrderandsuggestingthatdefendanteitherproceedwiththe
order and open a letter of credit or cancel the order and pay the cancellation fee of 30% of F.O.B.
value,orplaintiffwillendorsethecasetoitslawyers(Exh.N).
SchubackHamburgissuedaStatementofAccount(Exh.P)toplaintiffenclosingtherewithDebitNote
(Exh.O)chargingplaintiff30%cancellationfee,storageandinterestchargesinthetotalamountofDM
51,917.81. Said amount was deducted from plaintiff's account with Schuback Hamburg (Direct
Interrogatories,07October,1985).
Demandletterssenttodefendantbyplaintiff'scounseldatedMarch22,1983andJune9,1983wereto
noavail(ExhsRandS).
Consequently, petitioner filed a complaint for recovery of actual or compensatory damages, unearned profits,
interest,attorney'sfeesandcostsagainstprivaterespondent.
In its decision dated June 13, 1988, the trial court4 ruled in favor of petitioner by ordering private respondent to pay
petitioner,amongothers,actualcompensatorydamagesintheamountofDM51,917.81,unearnedprofitsintheamountof
DM14,061.07,ortheirpesoequivalent.

Thereafter,privaterespondentelevatedhiscasebeforetheCourtofAppeals.OnFebruary18,1992,theappellate
court reversed the decision of the trial court and dismissed the complaint of petitioner. It ruled that there was no
perfectionofcontractsincetherewasnomeetingofthemindsastothepricebetweenthelastweekofDecember
1981andthefirstweekofJanuary1982.
Theissueposedforresolutioniswhetherornotacontractofsalehasbeenperfectedbetweentheparties.
WereversethedecisionoftheCourtofAppealsandreinstatethedecisionofthetrialcourt.Itbearsemphasizing
thata"contractofsaleisperfectedatthemomentthereisameetingofmindsuponthethingwhichistheobjectof
thecontractandupontheprice...."5
Article1319oftheCivilCodestates:"Consentismanifestedbythemeetingoftheofferandacceptanceuponthe
thingandthecausewhicharetoconstitutethecontract.Theoffermustbecertainandtheacceptanceabsolute.A
qualifiedacceptanceconstitutesacounteroffer."Thefactspresentedtousindicatethatconsentonbothsideshas
beenmanifested.
TheofferbypetitionerwasmanifestedonDecember17,1981whenpetitionersubmitteditsproposalcontainingthe
item number, quantity, part number, description, the unit price and total to private respondent. On December 24,
1981, private respondent informed petitioner of his desire to avail of the prices of the parts at that time and
simultaneously enclosed its Purchase Order No. 0l01 dated December 14, 1981. At this stage, a meeting of the
minds between vendor and vendee has occurred, the object of the contract: being the spare parts and the
consideration, the price stated in petitioner's offer dated December 17, 1981 and accepted by the respondent on
December24,1981.
Althoughsaidpurchaseorderdidnotcontainthequantityhewantedtoorder,privaterespondentmadegood,his
promise to communicate the same on December 29, 1981. At this juncture, it should be pointed out that private
respondentwasalreadyintheprocessofexecutingtheagreementpreviouslyreachedbetweentheparties.

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BelowExh.G3,markedasExhibitG3A,thereappearsthisstatementmadebyprivaterespondent:"Note.above
P.O.willincludea3%discount.TheabovewillserveasourinitialP.O."Thisnotationonthepurchaseorderwas
anotherindicationofacceptanceonthepartofthevendee,forbyrequestinga3%discount,heimplicitlyaccepted
thepriceasfirstofferedbythevendor.Theimmediateacceptancebythevendeeoftheofferwasimpelledbythe
factthatonJanuary1,1982,priceswouldgoup,asinfact,thepetitionerinformedhimthattherewouldbea7%
increase,effectiveJanuary1982.Ontheotherhand,concurrencebythevendorwiththesaiddiscountrequestedby
the vendee was manifested when petitioner immediately ordered the items needed by private respondent from
SchubackHamburgwhichinturnorderedfromNDK,asupplierofMANsparepartsinWestGermany.
When petitioner forwarded its purchase order to NDK, the price was still pegged at the old one. Thus, the
pronouncementoftheCourtAppealsthatthereasnoconfirmedpriceonoraboutthelastweekofDecember1981
and/orthefirstweekofJanuary1982waserroneous.
While we agree with the trial court's conclusion that indeed a perfection of contract was reached between the
parties, we differ as to the exact date when it occurred, for perfection took place, not on December 29, 1981.
AlthoughthequantitytobeorderedwasmadedeterminateonlyonDecember29,1981,quantityisimmaterialinthe
perfectionofasalescontract.Whatisofimportanceisthemeetingofthemindsastotheobjectandcause,which
fromthefactsdisclosed,showthatasofDecember24,1981,theseessentialelementshadalreadyoccurred.
Onthepartofthebuyer,thesituationrevealsthatprivaterespondentfailedtoopenanirrevocableletterofcredit
withoutrecourseinfavorofJohannesSchubackofHamburg,Germany.Thisomission,however.doesnotprevent
the perfection of the contract between the parties, for the opening of the letter of credit is not to be deemed a
suspensive condition. The facts herein do not show that petitioner reserved title to the goods until private
respondent had opened a letter of credit. Petitioner, in the course of its dealings with private respondent, did not
incorporateanyprovisiondeclaringtheircontractofsalewithouteffectuntilafterthefulfillmentoftheactofopening
aletterofcredit.
The opening of a etter of credit in favor of a vendor is only a mode of payment. It is not among the essential
requirements of a contract of sale enumerated in Article 1305 and 1474 of the Civil Code, the absence of any of
whichwillpreventtheperfectionofthecontractfromtakingplace.
To adopt the Court of Appeals' ruling that the contract of sale was dependent on the opening of a letter of credit
wouldbeuntenablefromapragmaticpointofviewbecauseprivaterespondentwouldnotbeabletoavailoftheold
priceswhichwereopentohimonlyforalimitedperiodoftime.Thisexplainswhyprivaterespondentimmediately
placedtheorderwithpetitionerwhich,inturnpromptlycontacteditstradingpartnerinGermany.Assuccinctlystated
bypetitioner,"itwouldhavebeenimpossibleforrespondenttoavailofthesaidoldpricessincetheperfectionofthe
contractwouldarisemuchlater,oraftertheendoftheyear1981,orwhenhefinallyopenstheletterofcredit."6
WHEREFORE, the petition is GRANTED and the decision of the trial court dated June 13, 1988 is REINSTATED
withmodification.
SOORDERED.
Feliciano,Bidin,MeloandVitug,JJ.,concur.

#Footnotes
1PennedbyJusticeArtemonD.LunaandconcurredinbyJusticesSerafinE.CamilonandCelsoL.
Magsino.
2Hereinprivaterespondent.
3Hereinpetitioner.
4RegionalTrialCourtofMakati,MetroManila,Branch146.(PennedbyJusticeJoseL.Coscolluela,
Jr.)
5CivilCode,Article1475,C&CCommercialCorp.v.PNB,G.R.No.92499,July5,1989,175SCRA
NGAv.IntermediateAppellateCourt,G.R.No.79970,March8,1989,171SCRA131.
6Rollo,p.46.
TheLawphilProjectArellanoLawFoundation

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