FACTS:

On September 17, 1906, CASTLE BROTHERS, WOLFE AND SONS (plaintiffs-appellees) and GUTIERREZ HERMANOS (defendants-appellants) entered into a verbal contract for the sale of 500 bales of hemp at P24 per picul. The dispute arose over the agreed-upon quality of the hemp.

Plaintiffs, through their representative Mr. Knight, claimed that they bought “good current Manila” hemp, and that while specific marks were mentioned, Knight explicitly stated he would not accept them unless they met the “good current Manila” quality. This testimony was corroborated by Mr. Higginbotham, Knight’s assistant, who was present during the conversation and later wrote a letter indicating his understanding that the contract was for “Manila good current” hemp, stating that the inspected bales were not a “fair tender against ‘Manila good current’.” Further corroboration came from telegrams with Portland Cordage Company, where plaintiffs offered “good current Manila” hemp after allegedly confirming with defendants that they could supply it.

Defendants, through their representative Don Leopoldo Criado, denied that “good current” was ever mentioned. He asserted that he sold 500 bales out of 554 bales bearing four specific “letter marks,” and admitted that hemp indicated by these marks was not equal to “good current.” He also denied prior conversations with Knight regarding the Portland telegrams or being shown the acceptance telegram.

It was established that hemp is generally sold in Manila either by “marks” (indicating ownership/district/quality) or by “grades” (e.g., “extra superior,” “good current”). Buyers always have the right to inspect the hemp.

Upon delivery, plaintiffs accepted and paid for 210 bales but refused 299 bales, contending they were not “good current Manila” quality. They demanded defendants furnish 299 bales of the correct quality, and upon defendants’ refusal, plaintiffs purchased the substitute hemp in the market at P28.50 per picul, incurring a loss of P4.50 per picul, totaling P2,691.

The lower court found in favor of the plaintiffs.

ISSUE:

Whether the verbal contract of sale between the parties was for 500 bales of “good current Manila” hemp or for 500 bales of hemp of the quality indicated by specific letter marks.

RULING:

The Supreme Court, in its decision on April 1, 1908, affirmed the judgment of the court below, finding that the evidence sustained the plaintiffs’ contention. The Court held that the verbal contract was for the sale of 500 bales of “good current Manila” hemp.

Consequently, since the defendants failed to deliver the agreed-upon quality for 299 bales and refused to substitute them, the plaintiffs were justified in purchasing the equivalent quantity of “good current Manila” hemp in the market. The defendants were thus liable for the increased cost incurred by the plaintiffs due to their breach of contract.

The judgment in favor of CASTLE BROTHERS, WOLFE AND SONS for P2,691, with costs against GUTIERREZ HERMANOS, was affirmed.