Bunge Corporation vs. Elena Camenforte and Company

A generic obligation is not extinguished by the loss or destruction of a particular thing belonging to the genus; the obligor remains bound to deliver as long as the commodity is available (genus nunquam perit). The obligor's inability to perform, regardless of the cause, does not relieve him from his commitment where the thing promised is generic.

The plaintiffs, Bunge Corporation and Universal Commercial Agencies, are commercial entities engaged in the purchase and sale of copra. The defendants, Elena Camenforte and Company, doing business as Visayan Products Company, are copra merchants. The dispute arises from a contract of sale of 500 long tons of Philippine copra, with the Civil Code of Spain, particularly article 1096, governing the distinction between determinate and generic things, which is central to the resolution of the case.

The plaintiffs, Bunge Corporation and Universal Commercial Agencies, brought an action against the defendants to recover damages for the failure to deliver 500 long tons of Philippine copra. On October 22, 1947, in the City of Cebu, a contract was entered into between the Visayan Products Company and Bunge Corporation (represented by the Universal Commercial Agencies) whereby the former sold to the latter 500 long tons of merchantable Philippine copra in bulk at the price of $188.80, U.S. currency, per ton, less 1 per cent brokerage per short ton of 2,000 pounds, C & F Pacific Coast, U.S.A. Under the terms of the contract, the vendor was to ship the copra during November or December 1947 to San Francisco, California, for delivery to the vendee.

Believing in good faith that the vendor would ship and deliver the copra on time, the vendee sold to El Dorado Oil Works the quantity of copra it had purchased at the same price agreed upon. Because of the vendor's failure to fulfill its contract, the vendee suffered damages in the amount of P180,000.

The defendants answered separately, denying that the Visayan Products Company had ever entered into a contract of sale of copra with the plaintiffs. They averred that Vicente Kho, who signed for and in behalf of the company, never had any authority to act for the company, as the only ones authorized were Elena Camenforte (general manager), Tan Se Chong (manager), and Tiu Kee (assistant manager). Vicente Kho, for his part, admitted the transaction but claimed it was with the Visayan Products Company in Tacloban, Leyte, not the one in Cebu. He also claimed force majeure: he informed the plaintiffs in December 1947 that the copra would be ready for shipment at the port of San Ramon, Samar, but before the arrival of the ship, a strong storm destroyed the bodega where the copra was stored and washed the copra into the sea.

After trial, the lower court rendered judgment ordering defendant Elena Camenforte & Company to pay the plaintiffs P79,744 with legal interest from the filing of the complaint, plus costs. The court ordered that, in case the company be unable to pay due to total or partial insolvency, the co-defendants pay jointly and severally. The defendants appealed.

On appeal, the defendants abandoned their defense that no contract was entered into, admitting that a contract of purchase and sale of copra was in effect entered into under the terms and conditions embodied in the contract quoted in the complaint, and relied solely on the defense of force majeure. The Court examined the contract (Exhibit C) and found that the subject matter was generic copra — 500 long tons of Philippine copra — with no reference to any particular or specific lot, no place where the copra was to be acquired, and no portion earmarked or segregated; the vendor was at liberty to acquire the copra from any part of the Philippines. The Court also noted that the lower court erred in disregarding the El Dorado Oil Works transaction (Exhibit O) due to a one-day date discrepancy, since New York time is several hours behind Cebu time, making the transactions practically executed on the same day; however, this error did not change the result because the plaintiffs did not appeal.

• Force Majeure: Appellants argued that the copra they had gathered and stored for delivery to the appellees in Samar was destroyed by a storm, which under the law has the effect of exempting them from liability for damages.
• Contract Existence (abandoned on appeal): Appellants initially denied that Visayan Products Company entered into the contract, claiming Vicente Kho had no authority to act for the company, but abandoned this defense on appeal, admitting that a contract of purchase and sale of copra was in effect entered into.

• Damages: Appellees claimed that, immediately after concluding their agreement to buy copra from the appellants, they agreed to sell to El Dorado Oil Works the 500 long tons of copra subject matter of the agreement, together with another lot of 500 tons, confident in their belief that the Visayan Products Company would comply with its agreement; because of the appellants' failure to fulfill the agreement, appellees failed to deliver the copra and had to pay damages in the sum of $84,630.86 (or P169,461.72).

• Generic vs. Specific Obligation: Whether the obligation to deliver 500 long tons of Philippine copra was generic or specific.
• Force Majeure: Whether the destruction of the copra stored in San Ramon, Samar, by a storm constitutes force majeure that exempts the appellants from liability for failure to deliver the copra.
• El Dorado Oil Works Transaction: Whether the lower court erred in disregarding the El Dorado Oil Works transaction due to the one-day date discrepancy between the contracts.

• Generic vs. Specific Obligation: Generic. The contract referred to 500 long tons of Philippine copra without specifying a particular lot, place of acquisition, or earmarked portion, making the obligation generic rather than specific.
• Force Majeure: No. A generic obligation is not extinguished by the loss of a particular thing belonging to the genus; genus nunquam perit, and the obligation subsists as long as the commodity is available.
• El Dorado Oil Works Transaction: Yes, the lower court erred in disregarding the transaction, but the error does not change the result because the appellees, who are not appellants, may not assign errors to have the judgment modified or reversed.

• Generic vs. Specific Obligation: The Court examined the contract (Exhibit C) and found that the subject matter was Philippine copra, sold by weight — 500 long tons — with no reference to any particular or specific lot, no mention of the place where the copra was to be acquired, and no portion earmarked or segregated. The vendor was at liberty to acquire the copra from any part of the Philippines. The sale simply referred to 500 long tons of Philippine copra, making the subject matter generic, not specific. The Court cited Manresa's comment on article 1096 of the Civil Code of Spain, which distinguishes a determinate thing as a concrete, particularized object indicated by its own individuality, while a generic thing is one whose determination is confined to its nature, to the genus to which it pertains, such as a horse or a chair.

• Force Majeure: Because the obligation was to deliver copra in a generic sense, the obligation could not be deemed extinguished by the destruction or disappearance of the copra stored in San Ramon, Samar. The obligation subsists as long as that commodity is available. A generic obligation is not extinguished by the loss of a thing belonging to a particular genus — genus nunquam perit. The Court cited De Leon vs. Soriano, where the obligation to deliver palay of a stipulated quality, regardless of origin, was not excused by alleged failure of crops through fortuitous cause, and Reyes vs. Caltex, where the obligation to deliver centrifugal sugar, a generic thing, was not relieved by the defendant's inability to produce sugar, irrespective of the cause, since war, like floods and other catastrophes, was a contingency that could have been provided for by proper stipulation.

• El Dorado Oil Works Transaction: The lower court erred in disregarding the transaction with El Dorado Oil Works simply because of an apparent discrepancy in the dates appearing in the contracts. Exhibit C appears dated October 22, 1947, and was executed in Cebu, Philippines, whereas Exhibit O appears dated October 21, 1947, and was executed in New York City. The difference of one day is merely nominal because New York time is several hours behind Cebu time; both transactions were practically executed on the same day. Even supposing the contract with El Dorado Oil Works called for future deliveries, there is nothing improbable for the appellees to sell copra which they expect to acquire in the future for purposes of speculation. However, this error cannot materially change the result because the plaintiffs-appellees did not appeal. The Court cited Saenz vs. Mitchell for the rule that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but may not do so if his purpose is to have the judgment modified or reversed, for in such case he must appeal.

• Genus nunquam perit — A generic obligation is not extinguished by the loss or destruction of a particular thing belonging to the genus. The obligor remains bound to deliver as long as the commodity is available. The Court applied this doctrine to hold that the destruction of the copra stored in San Ramon, Samar, by a storm did not extinguish the appellants' obligation to deliver 500 long tons of Philippine copra, since the contract referred to generic copra and the vendor was at liberty to acquire it from any part of the Philippines.

• Determinate vs. Generic Things — A determinate thing is a concrete, particularized object indicated by its own individuality, while a generic thing is one whose determination is confined to its nature, to the genus to which it pertains, such as a horse or a chair. The Court applied this distinction, as explained by Manresa on article 1096 of the Civil Code of Spain, to determine that the copra in question was generic because the contract did not specify a particular lot, place of acquisition, or earmarked portion.

• "It appearing that the obligation of appellant is to deliver copra in a generic sense, the obligation cannot be deemed extinguised by the destruction or disappearance of the copra stored in San Ramon, Samar. Their obligation subsists as long as that commodity is available. A generic obligation is not extinguished by the loss of a thing belonging to a particular genus. Genus nunquan perit." — This is the ratio decidendi, stating the core rule that generic obligations are not extinguished by the loss of a particular thing, and it is the canonical formulation of the genus nunquam perit principle in this case.

• "Manresa explains the distinction between determinate and generic thing in his comment on article 1096 of the Civil Code of Spain, saying that the first is a concrete, particularized object, indicated by its own individuality, while a generic thing is one whose determination is confined to that of its nature, to the genus (genero) to which it pertains, such as a horse, a chair." — This defines the controlling doctrine on the distinction between determinate and generic things, which is essential to the Court's analysis of whether the obligation was extinguished.

• "the difference of one day in the execution of these documents is merely nominal because New York time is several hours behind Cebu time. In fact both transactions have been practically executed on the same day." — This addresses the date discrepancy issue, explaining why the lower court erred in disregarding the El Dorado Oil Works transaction, though the error did not change the result because the appellees did not appeal.

• De Leon vs. Soriano, 87 Phil., 193 — Cited as controlling precedent for the proposition that a generic obligation (palay of a stipulated quality, regardless of origin) is not excused by alleged failure of crops through fortuitous cause; the obligee is bound to receive any palay of the quality stipulated, and the obligor's obligation is discharged only by actual delivery.

• Reyes vs. Caltex, 84 Phil., 654 — Cited as controlling precedent for the proposition that a generic obligation (centrifugal sugar) is not relieved by the obligor's inability to produce, irrespective of the cause; war, like floods and other catastrophes, is a contingency that could have been provided for by proper stipulation.

• Vda.-Lacson vs. Diaz, 87 Phil., 150 — Cited alongside Reyes vs. Caltex for the same proposition that generic obligations are not extinguished by fortuitous events.

• Saenz vs. Mitchell, 60 Phil., 69 — Cited for the procedural rule that an appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment on other grounds, but may not do so if his purpose is to have the judgment modified or reversed, for in such case he must appeal.

• Article 1096, Civil Code of Spain — Cited via Manresa's commentary for the distinction between determinate and generic things. The Court applied this provision to determine that the copra in question was generic because the contract did not specify a particular lot, place of acquisition, or earmarked portion, and therefore the obligation was not extinguished by the destruction of the copra stored in San Ramon, Samar.

Paras, C.J., Padilla, Tuason, Montemayor, and Labrador, JJ., concurred. Bengzon, J., concurred with additional remarks: the copra was to be delivered at the Pacific Coast of the U.S. during November/December 1947, the sellers' duty to deliver matured at the end of December 1947, and in the absence of special circumstances, failure to comply gave the buyer the right to damages based upon the price of Philippine copra at the end of December 1947 in the U.S. Pacific Coast, which price, according to the decision and not challenged by appellants, was $260 per short ton; on that basis, the judgment for damages in the amount of P79,744 may be affirmed.