Smith Bell v. Gimenez
REITERATIONFacts
The Antecedents: Petitioner Smith, Bell & Co. (Phils.), Inc. sold one Underwood Typewriter to the Municipality of Paniqui, Tarlac, for P820.00, on terms F.O.B. Manila. The typewriter was shipped via Phil-American Freight Forwarding Services, Inc. and was received on August 30, 1958. On September 9, 1958, the municipal building, including the newly purchased typewriter, was destroyed by fire. Procedural History: Petitioner submitted a bill for the typewriter's cost. The Municipal Council of Paniqui passed a resolution requesting condonation of the payment due to the fire, which petitioner declined. The Municipal Treasurer submitted a voucher for payment, which was investigated. An administrative deputy found the municipality liable. The Provincial Auditor forwarded the matter to the Auditor General. The Petition: The Auditor General disapproved the claim, holding the municipality not liable because he found no actual delivery and that ownership had not passed to the consignee, thus the risk of loss remained with the seller. Petitioner appealed this decision to the Supreme Court, arguing that delivery was made, the municipality accepted the typewriter, and subsequent administrative circulars rendered a contractual stipulation regarding inspection obsolete.
Issue(s)
Whether the Municipality of Paniqui is liable for the cost of the typewriter despite its destruction by fire. Whether actual delivery of the typewriter to the municipality was sufficiently established. Whether the acceptance of the typewriter by the municipality, evidenced by its use for ten days, made it liable for the purchase price. Whether a stipulation requiring inspection by the General Auditing Office was still binding in light of subsequent administrative circulars.
Ruling
The Supreme Court reversed the decision of the Auditor General. It held that the Municipality of Paniqui is legally bound to pay for the typewriter. The Court found that delivery was sufficiently proven and that the municipality's use of the typewriter constituted acceptance, making it liable for the purchase price. The stipulation regarding inspection was deemed obsolete due to subsequent administrative circulars.
Ratio Decidendi
On Issue 1: The Supreme Court found the Municipality of Paniqui liable for the cost of the typewriter. The Court reasoned that the risk of loss passes to the buyer upon delivery and acceptance. Since the typewriter was delivered and used by the municipality for ten days before the fire, the risk of loss had already transferred to the municipality. Therefore, the municipality was obligated to pay the purchase price. On Issue 2: The Court held that actual delivery of the typewriter to the municipality was unequivocally established. Evidence included the carrier's records, the testimony of the policeman who received the typewriter, the municipal mayor who witnessed the delivery, and the municipal council's resolution acknowledging the purchase. The fact that delivery was made to a policeman instead of the named consignee was explained by the circumstances of delivery on a Saturday afternoon when the office was closed, and this deviation was attributable to the carrier, not the petitioner. On Issue 3: The Court ruled that the municipality's acceptance of the typewriter was evident. The fact that municipal officials took delivery of the typewriter and made use of it for a period of ten days before the fire constituted acceptance under Article 1585 of the Civil Code. This act of using the goods is inconsistent with the seller's ownership and signifies the buyer's acceptance, thereby making the municipality liable for payment. On Issue 4: The Supreme Court determined that the stipulation requiring inspection by the General Auditing Office (GAO) was no longer binding. The Court noted that this condition was part of old contract forms used before 1957. However, GAO Circular No. 45 (1957) and Provincial Auditor's Circular No. 35 (1957) provided that deliveries of supplies, materials, and equipment costing P2,000.00 or less did not require GAO inspection. Since the typewriter cost P820.00, the stipulation had become obsolete and could not be invoked to invalidate the claim.
Main Doctrine
The Supreme Court held that the Municipality of Paniqui was liable for the payment of the lost typewriter. The Court found that actual delivery of the typewriter to the municipality had been established through various pieces of evidence, including the carrier's records, testimony of witnesses, and the municipal council's resolution. Furthermore, the municipality's use of the typewriter for ten days before the fire constituted acceptance, thereby transferring the risk of loss to the buyer. The Auditor General's disallowance of the claim was reversed.