GR L 21511; (June, 1967) (Digest)
G.R. No. L-21511 June 29, 1967
GERTRUDES CARLOS, plaintiff-appellant, vs. OVERSEAS FACTORS, INC. and BRIGIDO P. VALENCIA, defendants-appellees.
FACTS
Defendant Overseas Factors, Inc. (Overseas), through its President Brigido P. Valencia, entered into two contracts with the National Rice and Corn Corporation (NARIC) to supply rice from Pakistan. Overseas appointed NARIC as its agent to sell the rice. Lacking sufficient funds, Overseas entered into a contract with plaintiff Gertrudes Carlos whereby she undertook to make the required marginal cash deposit and defray related expenses, including bond premiums. In consideration, it was agreed that all proceeds from the sale of the rice would be equally divided between Carlos and Overseas after deducting and reimbursing each party’s expenses, with liquidation to occur only after the rice was fully paid for by NARIC. Valencia executed a supplemental personal guarantee to Carlos. Plaintiff filed an action to recover various sums, including her alleged balance of deposit, expenses, share in profits, and damages. The lower court dismissed the complaint for lack of cause of action, finding that no liquidation had taken place because Overseas had not received any proceeds from NARIC from the rice sales; the transactions resulted in a loss, and NARIC had not paid Overseas. Plaintiff appealed.
ISSUE
Whether or not the plaintiff has a cause of action against the defendants for the recovery of her expenses and a share in the profits from the rice transactions.
RULING
No. The Supreme Court affirmed the dismissal of the complaint. The contract between Carlos and Overseas specifically provided that her expenses would be deducted from the proceeds of the sale of the rice and that liquidation would not occur until the rice was fully paid for by NARIC. The evidence showed that Overseas had not received any payment from NARIC as proceeds from the sale; the transactions resulted in a liability of Overseas to NARIC. Plaintiff’s right to recover was dependent upon the liquidation of proceeds, and since no proceeds were received by Overseas from NARIC, she had no cause of action. The Court rejected plaintiff’s argument that payment by NARIC via letters of credit to the Pakistani vendor constituted payment to Overseas, as the contract contemplated payment by NARIC to Overseas for the rice. The counterclaims of the defendants were also properly dismissed.