G.R. No. 31125, January 21, 1930
TIBURCIO LUTERO, plaintiff-appellant, vs. SIULIONG and CO., defendant-appellant.

FACTS

Plaintiff Tiburcio Lutero and defendant Siuliong & Co. entered into two contracts (Exhibits A and C) in 1919. Under Exhibit A (June 30, 1919), Lutero agreed to sell 500 piculs of sugar from his 19191920 crop at fixed prices (P12 for No. 1, etc.), with Siuliong advancing P3,000. Under Exhibit C (August 21, 1919), Lutero agreed to sell 800 piculs at higher fixed prices (P14 for No. 1, etc.), with an advance of P5,600. Both contracts stipulated that if Lutero failed to deliver the sugar, he would pay the undelivered portion based on the current market price at the time of delivery. Lutero delivered only 1,000.44 piculs total, which Siuliong accepted and sold. Lutero sued, arguing the contracts were loans payable in sugar and usurious due to the low fixed prices compared to the high market price (P30 per picul) at delivery time. He sought the difference. Siuliong counterclaimed for damages due to undelivered sugar, interest, and attorney’s fees. The trial court absolved both parties. Both appealed.

ISSUE

1. Whether the contracts (Exhibits A and C) are contracts of sale or loans payable in sugar.
2. If they are contracts of sale, whether they are usurious or illegal due to the disparity between the fixed price and the market price at delivery.
3. Whether Siuliong’s delay in suing for default constituted laches or waiver of rights.
4. Whether Siuliong is entitled to damages, interest, and attorney’s fees under the contracts.

RULING

1. The contracts are contracts of sale, not loans. The Supreme Court held that Exhibits A and C are contracts of sale of sugar to be delivered in the future (future delivery sales), not loans payable in sugar. The advances were part of the purchase price, not a loan. The obligation to pay the balance upon delivery and the stipulation for payment of the market price for undelivered sugar confirm this nature.
2. The contracts are not usurious or illegal. The Court ruled that a sale of goods for future delivery at a fixed price is valid, even if the price is much lower than the market price at the time of delivery. The disparity does not constitute usury, as usury applies only to loans or forbearance of money. The contracts were lawful business transactions.
3. Siuliong’s delay did not constitute laches or waiver. The Court found that Siuliong’s failure to sue immediately upon Lutero’s default did not deprive it of its right to claim damages. The action based on a written contract prescribes in ten years (under the Code of Civil Procedure), and only six years had elapsed. Silence did not amount to renunciation of rights.
4. Siuliong is entitled to damages but not interest or attorney’s fees. The Court awarded Siuliong damages for Lutero’s breach, calculated as the difference between the contract price and the market price (P12 per picul for Exhibit A and P14 per picul for Exhibit C) at the time delivery was due. However, considering the circumstances, the Court deemed it equitable not to award interest on the advances or attorney’s fees.

DISPOSITIVE:
The judgment of the trial court was reversed. Lutero was absolved from the complaint, but on Siuliong’s counterclaim, Lutero was ordered to pay:
– Under Exhibit A: P2,661.83 with legal interest from the filing of the counterclaim.
– Under Exhibit C: P6,463.22 with legal interest from the filing of the counterclaim.
Costs against Lutero.

SEPARATE OPINIONS:
– Justice Street (concurring and dissenting): Concurred with absolving Lutero’s complaint but dissented on awarding Siuliong’s counterclaim, arguing Siuliong’s appeal brief did not comply with procedural rules. Chief Justice Avanceña concurred.
– Justice Villamor: Dissented, believing the contract was usurious and judgment should favor Lutero.