G.R. No. L-10907; January 29, 1916
ONG JANG CHUAN, plaintiff-appellee, vs. WISE & CO. (LTD.), defendant-appellant.

FACTS:
On July 29, 1914, Wise & Co. entered into a contract with Ong Jang Chuan for the sale of 1,000 sacks of “Mano” brand flour at a specified price, with 500 sacks to be delivered in September and 500 in October 1914. At the time of the contract, Wise & Co. did not have the flour in stock in Manila; it was to be imported from Australia. Subsequently, the government of Australia, due to scarcity of grain caused by World War I, prohibited the exportation of flour. This made it impossible for Wise & Co. to obtain and deliver the flour to Ong Jang Chuan. Ong Jang Chuan filed an action for damages for breach of contract. The Court of First Instance of Manila ruled in favor of Ong Jang Chuan, ordering Wise & Co. to pay damages. Wise & Co. appealed, arguing that the non-compliance was due to a fortuitous event and that the contract was not a perfected sale.

ISSUE:
Was the contract between the parties a perfected sale, such that the defense of a fortuitous event (the Australian export prohibition) would excuse non-performance?

RULING:
No, the contract was not a perfected sale. The Supreme Court affirmed the trial court’s judgment condemning Wise & Co. to pay damages.

The Court held that for a sale to be perfected, the specific object of the sale must be physically segregated and designated from all others of the same class. Citing the precedent in Yu Tek & Co. vs. Gonzales, the Court ruled that there is a perfected sale with regard to the “thing” only when the article has been physically set apart.

In this case, the contract merely described the subject matter as 1,000 sacks of “Mano” brand flour. There was no appropriation or segregation of any specific lot of flour. In fact, Wise & Co. did not have the flour in its possession in Manila at the time of the contract. Since the flour was not specified or set apart, the sale was not perfected. Consequently, the obligations under the contract remained executory, and the defense of a fortuitous event (which typically applies to the loss or destruction of a specific, designated thing after a perfected sale) was not available to excuse Wise & Co.’s breach of its contractual obligation to deliver.