SECOND DIVISION

[G.R. Nos. 21651-25153. December 29, 1924.]

LOTHAR F. ENGEL, ET AL. , plaintiffs-appellees, vs . MARIANO VELASCO

& CO. , defendant-appellant.

Crossfield & O'Brien and Fisher, DeWitt, Perkins & Brady for appellant.
Gibbs & McDonough for appellees.

SYLLABUS

1. CONTRACTS; TELEGRAPHIC MESSAGE AS MEDIUM OF

COMMUNICATION; CONFIRMATORY LETTER. — Under the second paragraph of article
51 of the Code of Commerce, as the same stood prior to its repeal by Act No. 3089,
telegraphic correspondence could not serve as a basis of obligation between
contracting parties who had not admitted this medium in a written contract,
nevertheless, where telegraphic communications are followed by letters expressly
referring to the telegrams and con rming the same, such telegrams become
admissible as part of the correspondence between the parties.
2. ID.; ID.; ID.; RATIFICATION. — There is nothing in the provision cited which
prohibits the parties to a contract from ratifying agreements effected by telegram; and
subsequent rati cation or incorporation if the telegraphic message in a letter of the
same or late date has all the effect of a previous written agreement under said
provision.
3. ID.; DELAY IN SHIPMENT OF GOODS. — Delay on the part of the seller in
dispatching goods is su ciently excused where it appears not only that the delay was
requested by the purchaser but also was further rendered necessary by the inability of
the purchaser to comply with an agreement to supply the credit necessary to transport
the goods.
4. ID.; DEVIATION FROM TERMS OF CONTRACT; ACQUIESCENCE OF
PURCHASER. — The purchaser of merchandise will not be released from his obligation
to accept and pay for the goods by deviations on the part of the seller from the exact
terms of the contract, if the purchaser acquiesces in such deviations after due notice
thereof.
5. ID.; ID.; ID.; CASE AT THE BAR. — various minor deviations from the exact
terms of the defendant's orders are considered by the court and held to be justi ed
under the circumstances involved in the case, and especially by the circumstance that
the plaintiffs acted as agents for the defendant in placing orders and possessed a
certain discretion in the lling of orders which was recognized as necessary by the
defendant.

DECISION

STREET , J : p

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 The three consolidated actions now before us were instituted in the Court of First
Instance Manila by Lothar F. Engel, Carl J. Upmann and Max Kummer, of New York City,
copartners under the rm name of Engel, Upmann & Co., a general partnership engaged
in mercantile business in the City of Manila, for the purpose of recovering various sums
of money, with interest, for the alleged failure of the defendant to accept and pay for
various consignments of merchandise ordered from the plaintiffs by the defendant. the
defendant interposed answers in the three cases denying generally the allegations of
the complaints and setting forth various special defenses, with counterclaims and an
a rmative cross action. Upon hearing the proof the trial judge absolved the plaintiffs
from the defendants counterclaims and cross complaint and gave judgment for the
plaintiffs to recover to the defendant the sum of P152,217.74, with interest at six per
centum, to be calculated upon different portions of the total from speci ed dates.
From this judgment the defendant appealed.
In reality this appeal involves twenty different cause of action, sixteen of which
are set out in the plaintiffs three complaint, and four in the defendant's counterclaims
and cross complaint. These various cause of action are set forth fully in the pleadings,
and an analysis of each is found in the appealed decision. The record is necessarily
voluminous beyond the ordinary, but the labor of handling so great a mass of matter is
in some degree lessened by the circumstance that all of the different causes of action
present features in common.
At the time of the transactions with which we are here concerned the plaintiffs
were export brokers, or jobbers, of textile merchandise in the City of New York, while
the defendant was the owner, as it still is, of a large store in Manila where general
merchandise is sold both at wholesale and retail. In connection with this business the
defendant from time to time has occasion to import textile fabrics on a large scale. In
the beginning of the year 1920 commercial relations were established between the
plaintiffs and the defendant, and in the succeeding three months the defendant, and in
the succeeding three months the defendant sent to the plaintiffs numerous orders for
merchandise. The general course of business between the two parties appears to have
been this: The defendant would rst obtain from the plaintiffs by cable information as
to the prices of the goods desired, and would there upon send a cablegram to the
plaintiffs, instructing them to buy and hold speci ed qualities of goods in the amount
and at the prices stated. Contemporaneously with the sending of the cablegram the
defendant would dispatch by mail more extended instructions, con rming the
cablegram and giving such other advice as was desirable. The cablegram were written
in cipher and were necessarily brief, while the letters of con rmation and vice were
more extended, containing speci cations as to pattern in the case of suitings and the
stampings in the case of fabrics commonly called coco blanco. Upon receipt of the
cabled order, the plaintiffs cabled their acceptance in reply, indicating the approximate
time of delivery or, if the goods could not be obtained, so advised. At or about the same
time the plaintiffs placed an order for the same goods with the manufacturer, subject
to subsequent specifications as to patterns and stampings.
Upon receiving the defendant's written order by mail the plaintiffs transmitted
the transmitted the instructions contained therein to the manufacturer for the execution
and at the same time prepared and forwarded to the defendant a formal written sales
note, conforming in the main to the terms speci ed in the previous communications
between the plaintiffs and the defendant. As a result of this procedure the plaintiffs
came directly obligated to the manufacturer who produced the goods, while the
defendant became obligated to the plaintiffs, assuming that all conditions essential to
the creation of liability had been fulfilled.
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 It is said that as many as thirty-seven orders were given by the defendant to the
plaintiffs beginning in the month of January, 1920. A number of these orders were duly
honored by the defendant upon the receipt of the goods and the price paid in due
course. The causes of action stated in the three complaints have their origin in sixteen
or seventeen orders nearly all of which were sent to the plaintiffs between February 5
and April 2, 1920, inclusive. These orders appear to have been promptly placed with the
manufacturers by the plaintiffs, but delay occurred in the matter of shipment; and when
delivery was nally tendered in Manila of the goods covered by the orders included in
actions 19917 and 201637 of the lower court, acceptance was refused. These goods
were there upon sold by the plaintiffs in Manila and claim made upon the defendant for
the difference between the amount realized and the contract price. The goods involved
in the orders covered by case No. 20321 were never shipped from New York to Manila.
and after it was found that said goods would not be here accepted, the plaintiffs
caused the same to be sold in New York City.
The plaintiffs proceed upon the idea of breach of contract on the part of the
defendant in its failure to accept and to pay for the goods covered by the orders above
referred to. On the part of the defense a preliminary question is made with reference to
the admissibility of so much of the correspondence as was conducted by cable, and for
the rest it is claimed that the plaintiffs have not complied with the terms of the various
orders and that the refusal of the defendant to accept and pay for the goods in
question was justified.
To dispose first of the controversy regarding the admissibility of the cablegrams,
reference must be made to paragraph 2 of article 51 of the Code of Commerce, as it
stood prior to the enactment of Act No. 3098 of the Philippine Legislature by which
said paragraph was repealed. The provision referred to is as follows:
"Telegraphic correspondence shall only be the basis of an obligation
between contracting parties who have previously admitted this medium in a
written contract, and provided the telegram ful ll the conventional conditions or
conventional signs which may have been previously xed and agreed to by the
contracting parties."
This provision was in force at the time all of the orders involved in this litigation
were given, and it is therefore insisted that the messages transmitted by cable are
inadmissible against the defendant. In this agreement is in evidence by which the
parties expressly admitted telegraphic correspondence with the plaintiffs had been
supplied by the latter.
We are unable to concede to this provision the effect claimed for it by the
defendant, namely, of eliminating entirely from the case so much of the
correspondence as was conducted by cable. Upon examining the documentary proof, it
will be found that upon sending its orders by cable, the defendant followed with letters
of con rmation by mail, in which the various cables were referred to and in effect
incorporated in the written correspondence. By reason of this circumstance it is proper
to refer to the cablegrams in relation with the letters. There is nothing in the provision
quoted from article 51 which prohibits parties to a contract from ratifying agreements
effected by telegraphic communications; and subsequent rati cation, or incorporation
of the telegraphic communications in written letters of the same or later date, must be
conceded to have all the effect of a previous written agreement under the provision
quoted. Furthermore, it is apparent that even under the statute telegraphic
communication conveying noti cation of acts done could not be ignored, where the
basis of a contract has already been established, and the same must be true of
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 telegraphic directions communicated by one contracting party to another in relation
with the performance of the contract. In this connection we note that the attorneys for
the defendant, while vigorously insisting upon the elimination of the telegraphic
correspondence in general, have not hesitated to rely upon more than one cablegram
passing between the parties.
The failure of the defendant to accept and pay for all the goods ordered and
shipped to Manila was undoubtedly due, as will hereafter more fully appear, to the
inability of the defendant to command the funds necessary to meet the obligation, but
when confronted with the necessity of dishonoring the orders, the responsible o cers
of the defendant put forth various pretexts to justify its position. Several of this
excuses are manifestly of trivial import, but inasmuch as they have been called upon to
do service in the defendant's answer and cross complaint, they will be examined by us
in due time.
The principal defense, and the one which requires most attentive consideration,
is that which has relation to the belated dates of shipment of the goods from New York
City, in the case of these goods which were actually dispatched, and the failure of the
plaintiffs to dispatch in the stipulated time such of the goods as never left New York. In
this connection we note that the dates for delivery, or shipment, speci ed in the
different sales notes relating to the goods which were in fact sent to Manila, run
through the months of May, June, July, August, September and December, while the
actual dates of departure of said goods from New York City were in September,
October and December, 1920, and there was one shipment which, for reasons to be
explained, occurred as late as May, 1921.
Upon giving its orders the defendant in each case speci ed the time when
delivery was desired, adding in nearly every instance, the words "sooner, if possible". In
conformity with the suggestion contained in these words the plaintiffs, in specifying the
time do delivery and their sales notes, nearly always added the same word, "sooner if
possible." It resulted that the plaintiffs were at liberty to ship all of the ordered goods at
an earlier date than that speci ed, if practicable; and except for the circumstances
presently to be mentioned, they were obligated to make deliveries at least as soon as
the dates specified for delivery or shipment of each order.
Upon the delays that actually occurred in shipment, as above indicated, the
defense claims that delivery was not made within the time speci ed in the contract and
that as a consequence the defendant should be absolved from all liability. The answer
to this question requires an exposition of events that occurred between the time when
the goods were shipped, and of the manner in which the relations of the parties to this
contract were affected by said occurrences as revealed in their correspondences by
cable and by letters.
It will remembered that the early months of the year 1920 constituted a period of
unparalleled activity in industrial and mercantile circles. The prices of textile fabrics, in
common with other commodities, had reached very high levels in said period. and it
seemed to many merchants that the extraordinarily prosperous conditions through
which the world of industry was then passing would continue for a considerable time.
Now, all of the defendant's orders with which we are here concerned were given while
prices were rising and before the peak was reached in May, 1920. The defendant
company appears to have had a large business, and in connection with its own
requirements as a dealer in merchandise, both at wholesale and retail, it had adopted a
practice of giving orders in its own name for the shipment of goods to other
merchants, its customer in the Philippine Islands, who did not have a high mercantile
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 rating and who could not command the credit facilities necessary to enable them to
import goods upon their own account. the o cers in charge of the defendant company
appear at about the same time to have conceived the ambition of gaining complete
control of the textile market in the Philippine Islands, and this circumstance possibly
accounts in part for the large orders which were transmitted by the defendant to the
plaintiffs.
A touch of reaction was felt by the trade in Manila in the month of May, owing to
the fact that the banks about that time were becoming somewhat wary, and credit
facilities were not so easily commanded by importers as before. The situations in this
respect became more delicate as weeks passed, and the textile market soon began to
decline. In September and October the real crash came, enormous declines in values
being registered in all lines. The last three orders here in litigation were given by the
defendant in the rst half of the month of May, 1920, and in the two months that
followed the o cers of the defendant company apparently began to feel that they had
overdone the matter of giving orders. Thus, on July 7, 1921, the defendant cabled the
plaintiffs to delay as much as possible the shipments of its orders of coco blanco
(Amsinck red), and in a letter of the same date, explanatory of this cablegram, the
defendant said: "During the last two months business is absolutely dead in textiles as
well as in other lines and we don't think there will be a change for the better in the next
few months. There is no ready money available here and the banks refuse to open
credit, claiming that they have no gold on hand." And in a postscript to the same letter
the defendant added: "P.S. — in view of the bad situation of the market we beg you to
retard the shipment of coco blanco and coco encarnado as much as possible."
It will be noted that part of the goods mentioned in these communications were
goods that had been ordered by the defendant for direct shipment upon the
defendant's account to Chua Soco, one of the large customers of the defendant in
Manila. Others of the goods referred to were goods that were intended for the
defendant 's own store. In a latter cablegram, of July 19, the defendant, referring
speci cally to the Chua Soco orders, directed that shipment should not be made earlier
than September; and in a letter explanatory of this cablegram, the defendant said:
"Referring to our cablegram regarding Chua Soco please note, that present
hauling (sic?) conditions are in such a state, that it is impossible for us or any one
else to open up a credit in gold anywhere.
"This has nothing to do at all with the standing of a commercial house, but
the banks here claim, that they have no gold at present and a change of the
present situation cannot be expected before a month from now.
"In view of the present situation, Mr. Chua Soco begs that the shipment of
his orders covered by the two credits in question be postponed until September,
which month means the end of the rainy season here and in October, November,
when these goods would arrive, business is picking up as usual at that time of the
year."
At an early stage of the correspondence between the plaintiffs and the defendant
the latter had agreed to supply through banking agencies in New York con rmed letters
of credit to cover the price of such goods as the defendant should order to be sent
upon its account directly to defendant's customers, like Chua Soco, in Manila. As for the
goods which were to be shipped directly to the defendant, no express undertaking to
supply con rmed letters of credit appears to have been made, but the rst letter
written by the defendant to the plaintiffs (Exhibit A) contained the following paragraph
concerning the discounting of the drafts to be drawn on the defendant for the goods to
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 be ordered by it:
"Should there be any difficulty in discounting your drafts on us then please
cable and we shall arranged this matter by wire."
This communication is important; for as will be seen, the solution of the cases
before us depends mainly upon the failure of the defendant to supply the draft
discounting facilities promised in this paragraph. Certainly, it was not contemplated
that the plaintiffs should handle the vast amount of merchandise involved in these
transactions on its own unassisted credit; and the credit of the defendant was so highly
esteemed in banking circles that no trouble was expected in the matter of the
necessary banking arrangements. An indication of the plaintiffs' position was conveyed
in its letter of April 16 to the defendant, as follows:
"Whereas we had the good fortune of being able to make a favorable
arrangement with our own bank for a fairly large drafts credit when our business
was in its infancy, it was our plan to make use of this credit partially for your
business but nd this impossible for our business in Central and South America
which has grown very large of late.
"It is with regret therefore that we have to ask you to take the necessary
steps to open credits in our favor against orders in excess of $40,000 to $50,000,
which we believe will be easy at your end."
In May, 1920, the plaintiffs ascertained from the bank which had been handling
the defendant's paper in New York City that it would not discount drafts thereafter
drawn by the plaintiffs upon the defendant for amounts in excess of $50,000, in the
absence of con rmed letters of credit from Manila. The plaintiffs thereupon cabled this
information to the defendant and asked it to make necessary arrangements. On June
18 the plaintiffs advised that the same bank (American Foreign Banking Corporation)
would take no further drafts without security and asked the defendant if it had opened
credit. To this the defendant replied that it had sent forward credit for P50,000 through
the Philippine National Bank.
On September 14, 1920, the defendant cabled the plaintiffs as follows:
"Quite impossible at present obtained credit. Can you ship draw at sixty
days sight payable in exchange for documents?"
On the same date the defendant wrote the plaintiffs a letter in which it said:
"We beg to confirm our telegrams of even date translation of which find
attached.
"We have tried our best to obtain credits from the banks but without
success so far and we don't know when condition will change. Unless a firm does
also export business it is impossible to get credits in gold.
"We hope, that you will be able to ship our orders as we are sure that within
three to five months from now there will be a shortage of goods in this market."
In reply to the cablegram of September 20, the plaintiffs, in September 25, cabled
the defendant as follows:
"Not able to make arrangements draft credit. Please arrange by wire a
credit for us as soon as possible $100,000. Goods now ready for shipment
$50,000."
On September 29, 1920, in reply to plaintiffs' cablegram of September 25, the
defendant cabled as follows:
"Upon no consideration whatever bank give credit for the present on
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 account of imports. No one knows how long it will take conditions to alter. Will
telegraph immediately there is any change."
On October 6, plaintiffs in reply to defendant's above quoted cable of September
29 cabled:
"Cannot hold goods long time. We cannot discount drafts. We must pay
prompt. Do the best possible. Please arrange by wire a credit for us."
On October 27, plaintiffs further wired defendant as follows:
"We are informed credit can be arranged apply to China Banking
Corporation. Are much in need of $75,000."
On October 30, defendant in reply to the foregoing cable, wrote a letter in which,
among other things, it said:
"We beg to acknowledge receipt of your cablegram as per translation
enclosed. As already mentioned in our former letters, it is impossible to get a
credit, also not from the Chinese Banking Corporation. We have tried every thing
possible to get credit, but it is an impossibility for us as well as for our
competitors. The market is at standstill and no business transactions are made at
all."
Meanwhile the goods to supply the defendant's orders were coming in upon the
plaintiffs from the factories, and it was necessary for the plaintiffs to meet its
obligations. Confronted with the breakdown of the defendant's credit, the plaintiffs had
no other recourse than to act upon defendant's cable of September 14 and ship the
goods out with drafts at sixty days on the defendant. In making these shipments the
plaintiffs were not able to discount the drafts in full, but were able to obtain advances
for a certain percentage. Necessarily, when the drafts were dishonored, the plaintiffs
were compelled to take them up and refund the amount advanced upon them. All of the
goods involved in case 19917 and 20637 of the lower court appear to have been
dispatched in this manner upon dates and in amounts as follows:
"Goods to the value of $20, 510.02, loaded Sept. 25, 1920; $17,740.74 on
Bolton Castle, which sailed Oct. 14; and $2,769.28 on S.S. Telemachus, which
sailed Sept. 25.
"Goods to the value of $29,632.82, loaded in early part of November on
S.S. Satsuma, which sailed Dec. 4.
"Goods to the value of $15,539.04, loaded end of November or early part of
December on S.S. Duquesne, which sailed on Dec. 9.
"Goods to the value of $12,352.68, loaded on S.S. Haleric, which sailed on
May 8, 1921."
On November 6 the plaintiffs informed the defendant by cable of the rst
shipment above noted, against sixty-day sight drafts. In reply to this advice the
defendant, on November 9, cabled the plaintiffs as follows:
"Cease all shipments. We cannot meet drafts, due to money scarcity."
On the following day the defendant wrote to the plaintiffs to the following effect:
"We beg to confirm our cablegram of even date translation of which please
find enchosed. Business at present is at a stand still and there is no hope, as far
as we can see, that business will get better within the first two months.
"At present we are not selling one-twentieth part of that what we sell in
regular times and as business has been like this for the last three months you will
be able to figure out what this means for us.
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 "There is absolutely no money obtained her in the Philippines; also the
banks have no money and will not give credit or extend drafts.
"We are very sorry indeed, as this is the first time that we ever had to stop
our orders; but if our orders are coming forward, we shall not be able to take up
the drafts for the want of money or credit. Of course everybody else is in the same
fix."
Upon receipt of defendant's cable of November 9 plaintiffs answered:
"We expect payment of all drafts. $30,000 is all on board steamer. We shall
draw on you at sixty days sight. We cannot hold goods longer. We have much
need of money because pending orders must be paid by us."
In reply to the foregoing cable of the plaintiffs, defendant again cabled as
follows:
"It is now impossible pay drafts. Quite a panic in the market. Bank cancel
loan, refuse credit."
In a letter of December 13 the plaintiffs, in explanation of the course pursued by
them, made this statement:
"In view of your cable of September 14, in which you authorized is to draw
sixty days sight drafts, we made our arrangements accordingly. In order to meet
your wishes we delayed our shipments as long as we were able to; however, we
could not hold them back for any further length of time and were compelled to get
the goods under way."
The shipment aboard the Duquesne, of December 9, appears to have been made,
notwithstanding the defendant's cablegram of November 9, because the plaintiffs had
already been compelled to take delivery and pay for the goods thus shipped and
because the only reason given in the cable of November 9, because the plaintiffs that
Mr. Kummer, who was then on his way to Manila, would be able by extensions of time to
arrange for payment by defendant.
The last shipment in the Haleric, made on May 8, 1921, was of coco encarnado
under order No. 707. The material included in this order was specially stamped under
instructions from defendant for the Manila trade with Tagalog stamping and could not
be advantageously disposed of in any other market. Said goods had been retained in
New York pending efforts of Mr. Kummer to arrange matters with defendant, and upon
his ascertaining that he could not do so, were shipped to Manila for sale here.
The goods which are the subject of action in case No. 20321 of the lower court
are said to have been held in New York in account of the plaintiffs' inability to get further
advances from the banks, the factories meanwhile having the plaintiffs' negotiations
with the defendant in Manila had proved fruitless, it was decided that these goods
could be disposed of more advantageously in the New York market, and they were
accordingly sold there for the account of the defendant.
From the correspondence exhibited above it is plain that the defendant is not in a
position successfully to invoke delay in the making of shipments as ground for its
release from the obligation to pay for the merchandise. When the defendant found itself
caught with these large orders in a paralyzed market, the only hope that presented itself
to the defendant's o cers was that the shipments might be delayed for a few months
until business should improve, as was expected would be the case in the autumn. The
requests for delay contained in the cables and letters if July 7 and September 14 were
accordingly dispatched, and the plaintiffs were kept well informed as to the situation in
which the defendant was placed. The requests for delay, as well as the proven inability
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 of the defendant to comply with its promise to supply the credit necessary to move the
goods, considered as a ground for the dissolution of the defendant's obligations. It
should be noted that the cable and the letter of September 14 were dispatched at a
date subsequent to the times originally stipulated for shipments of most of the goods,
indicating that the defendant waived the delay in delivery. Upon referring to the
plaintiffs' acceptances it will be noted that one small shipment of moderate amount
was to be shipped in December, while only three others were scheduled for date as late
as September. All the other shipments had been intended for dates then already past,
namely, in May, June, July and August.
The attorneys for the defendant submit the surmise that the plaintiffs were really
not in a position to have shipped the goods anyway, owing to the previous urgent
demand in all markets for textile goods, — a demand which abated only when the
reaction came in the autumn. How much truth there may be in this suggestion it is
unnecessary to inquire. the defendant could have tested the matter by standing strictly
on its contract, without further compromising itself by requests for delayed shipments.
We may observe in passing that it is not necessary to hold that the original contracts
were abrogated and a new agreement substituted by mutual agreement of the parties
as a consequence of the communications above mentioned; and all discussion of the
question whether the minds of the parties ever met in a complete new agreement, with
the condition that the plaintiffs should ship against sixty-day sight drafts, is
super uous. It is enough to say that delay in the shipment of the goods was favorable
to the defendant and was in effect requested by it.
Other contentions advanced for the defendant as justi cation of the
nonacceptance of the goods are based upon minor deviations in the consignments
from the literal terms of the defendant's orders. In this connection we note: (1) That the
length of some of the pieces of merchandise shipped by the plaintiffs were not exactly
fty yards as speci ed in the written order by deviated there from in some instances to
the extent of several of several yards; (2) that some of the orders of the defendant were
delivered in single shipments whereas partial shipments had been speci ed in the
orders. and vice versa; (3) that the plaintiffs had shipped some of the goods in question
after they had received the cablegram of November 9 instructing them to cease
shipments; (4) and, nally, that the date of contemplated delivery speci ed in the sales
notes did not conform in all respects to the exact terms of the written orders.
As to the deviation in the lengths of pieces, it appears that manufactures of
fabrics of the kind here in question do not put up the goods in pieces of exactly fty
yards length, the practice being to make the pieces of about the speci ed lengths. In
conformity with this usage, the private code of the plaintiffs, which was being used by
the defendant, was so constructed that the code words referring to particular qualities
of goods indicated pieces of length of about fty yards; and the defendant's
cablegrams therefore called for pieces of this length. In preparing the written orders,
however, corresponding to some of these cablegrams, the individual in charge of
defendant's correspondence department by mistake indicated lengths of fty without
quali cation, instead of about fty yards, in some of these orders. The plaintiffs sales
notes corresponded with the cabled order, with the result that some deviation from the
stated length was discovered in these lots, the pieces being longer than had been
called for. As the goods were to be paid for by the yard, the resulting price was
somewhat greater than it otherwise would have been.
With reference to the irregular deliveries, namely, delivery by partial shipments
where delivery of the whole was called for, or of the whole where partial shipments
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 were called for, we note that in one or more instances the defendant's written orders
speci ed the manner of delivery, and that these instructions were not in all case
observed by the plaintiffs. The explanation given of this is that in view of the delays that
had occurred the plaintiffs considered that the advice to ship part of an order on one
boat and part on the following boat had lapsed. Furthermore, in view of the confessed
inability of the defendant to nance the shipments, the plaintiffs say that they shipped
as much as they could on their own credit but were not able to ship all; and; therefore, in
the exercise of a fair discretion, and with a view to relieving the defendant as much as
possible they thought best to distribute their shipments over several classes of goods
rather than to ship one or more larger orders entire.
In regard to the plaintiffs' shipment of goods after the receipt of the cablegram
of November 9 from the defendant instructing the plaintiffs to cease shipment, the
plaintiffs suggest that said cablegram was not interpreted as a at repudiation of the
contract but was taken rather as a temporary cry of distress, owing to the inability of
the defendant to meet its nancial arrangements; and it was believed that the plaintiffs'
representative, Mr. Kummer, could adjust the matter by making arrangement for long
extensions in Manila. Some of the goods were therefore forwarded that might have
been stopped; but others had already been embarked and the shipment could not be
recalled though the sailing of the vessel occurred after the cablegram was received.
None of the contentions above referred to, nor others of less moment,
constitutes in our opinion any su cient ground of absolving the defendant from
liability. None of these contentions came to light in the defendant's correspondence;
and even while negotiations were being conducted in the early months of 1921
between Kummer, the plaintiffs' representative, and the defendant, no word of
complaint from the defendant was heard upon any of these points. Even the question
about the undue delay in the shipment of the goods was never raise by the defendant
until the drafts covering the goods shipped in the autumn began to arrive in Manila and
were presented by the bank to the defendant. Then nding itself without funds and
unable to confront the situation, the defendant put forth the claim that the shipment of
the goods had been out of time. That this was a mere pretext, and felt to be such,
appears clearly from the testimony of the individual who had charge of the
correspondence in the defendant's import department. We may add that when Mr.
Kummer was engaged in negotiations with the defendant in Manila, its manager made
no complaint or recrimination against the plaintiffs on any score, except as to the
quality of the goods covered by one order; and its refusal to accept the goods was
placed exclusively on the ground of money scarcity and the drop in prices. when
Kummer, by way of compromise, offered to extend the drafts from six to nine months
the defendant's manager refused, with the observation that if the matter were left to the
course of law, the litigation could be protracted probably for three years, thereby
assuring the defendant cheap money — or words to that effect.
There is another feature of the case which is pertinent to all of the contentions
now advanced by the defendant as a justi cation of its denial liability. It will be
remembered that the plaintiffs were brokers, and the proof shows that the defendant
considered them in the light of agents. The cabled orders themselves show that the
defendant treated the plaintiffs as agents for making these purchases. "Buy and hold"
was the formula uniformly used in these instructions. The defendant's o cers were
well aware that under the conditions then existing, buyers could not be dictators and
that the merchant who undertook to stand on precise details on every point would
probably not get any goods. The contract relation between plaintiffs and defendant
was technically that of seller and buyer, but in considering the acts of the parties in the
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 course of performance and the interpretation to be placed on the contracts, it is not
improper to bear in mind that the plaintiffs were acting as agents of the defendant in
the placing of orders. In this capacity the plaintiffs undoubtedly possessed a certain
discretion, which was recognized as necessary by the defendant acquiesced in such
deviations on the part of the plaintiffs from written orders as have been made the
subject of criticism.
A situation requiring a few words of comment is revealed in the contention
contained in the third cause of action in case No. 20637 of the lower court, which
relates to an alleged excessive shipment of Turkish red. In this connection it appears
that in February, 1920, the defendant had dispatched a letter to the plaintiffs,
requesting prices and samples for twenty- ve inches wide and twenty-four yards per
pieces. In response to this the plaintiffs, quoted on two thousand pieces. Later the
defendant cabled an order, followed by a letter, directing the shipment of one thousand
pieces. Upon this order the plaintiffs purchase and held for the defendant enough of the
un nished material to make one thousand pieces of fty yards each, explaining in their
letter of May 14 that all prints are usually sold in pieces of fifty yards lengths.
It appears that the plaintiffs intended to inclose the sales note relating to this
transaction in this letter, but apparently the sales note was not inclosed, as the same
document, produced in evidence by the defendant, bears date of May 25, having
probably been forwarded by later mail. In the natural course of events the letter of the
plaintiffs of May 14, 1920, explaining what had been done, must have reached the
defendant at least by the rst days of July; and it was on July 7, 1920, that the
defendant cabled to the plaintiffs to delay as much as possible the shipment of coco
blanco and Turkish red. Instructions to the same effect were contained in a letter of the
same date con rming said cablegram. Neither in this letter nor in any subsequent
communication did the defendant make any complaint as to the excessive quantity of
the Turkish red which had been bought for it by the plaintiffs. On the contrary, as we
have already seen, in its letter of September 14 the defendant expressed the earnest
hope that the plaintiffs would be able to ship the orders ("our orders") upon drafts at
sixty-day sight. Upon the facts stated the trial judge held that the defendant was
estopped from rejecting the surplus or any part of the order. His conclusion on this
point appears to us to be correct. If not satis ed with what had been done by the
plaintiffs, it was the duty of the defendant to have indicated its dissent, and under the
circumstances it is estopped from now making a question as to excess in the
shipment.
What has been thus far said is su cient, we believe, to dispose of the main
contentions advanced in justi cation of the defendant's refusal to accept the goods;
and other less important contentions advanced in its behalf must necessarily be
determined upon similar considerations. Moreover, the same consideration that are
fatal to the defense in the controversies presented in the plaintiffs' three original
complaints are also decisive against the contentions advanced by the defendant in its
counterclaims and cross complaint, with a single exception now to be discussed.
The goods involved in the controversy now to be considered were intended for
Chua Soco and were paid for upon arrival in Manila from a letter of credit that had been
supplied by the defendant. As there was no default in the matter of payment for these
goods, they are not involved in any of the plaintiffs' actions. The controversy was
therefore presented by the defendant itself in its independent cross complaint ( rst of
action).
It appears that the nishers of textile goods are accustomed to use a certain
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 unbleached cloth, or grey sheeting, as a basis for two different nished goods, namely,
the cambrid nish and the madapolan nish. the only difference between the two is that
the cambric nish is smooth while the madapolan nish is somewhat coarse and stiff.
The cost of the different nishes appears from the testimony of Mr. Kummer to be the
same. The defendant's order called for quality No. 5119, which indicates a cambric
nish. This order was not accompanied by stamping instructions, this matter being left
to future direction. Upon receiving the order for quality No. 5119, the plaintiffs bought
grey sheetings in su cient quality to supply the order, supposing that the goods were
to be given a cambric nish. Later, the stamping instructions were received,
accompanied by a model of the label to be placed on goods. This label bore the words
"Extra Madapolan."
Upon receiving this model, seeing that the brand indicated madapolan nish, the
plaintiffs naturally concluded that the defendant intended a modi cation of its order
upon this point. This conclusion was the more reasonable as the distinction between
cambric nish and madapolan nish is well known to the trade, and it would be a
misrepresentation for any seller of textile goods to put upon the market cambric goods
under the madapolan brand. The plaintiffs accordingly gave the goods the madapolan
finish and stamped it with a label conforming to the model supplied by the defendant.
When thirteen cases of these goods reached Manila they were rejected by Chua
Soco, for whom they had been ordered, and were thrown back on the defendant's hands
and sold by it at a loss. There can be no question that Chua Soco had a right to reject
the goods because he had ordered cambric nish from the defendant, and the goods
were different from what he had ordered. But it is quite evident that the defendant has
no cause of complaint against the plaintiffs, upon either legal or moral grounds. When
the defendants manager sent the stamping instructions, he was perhaps inadvertent to
the distinction between cambric nish and madapolan nish; but the error was his, and
the loss resulting from the failure of Chua Soco to accept the goods cannot be shifted
upon the plaintiffs, who appear to have acted in good faith. We need only add that the
claim put forth by the defendant to the effect that, apart from the nish, the goods
comprised in this consignment were materially inferior in quality to the kind contracted
for is not established by a preponderance of the evidence. We note that there were
really twenty cases of goods involve in the order which is now under discussion, and
only thirteen case were actually shipped to Manila. The other seven were never shipped,
and no damages were claimed by the plaintiffs with respect to these. This
circumstance materially reduces the excess contained in the plaintiffs' acceptance over
the amount which the defendant had actually ordered, though not otherwise affecting
the legal aspects of the case. In view of the course that events took, the failure of the
plaintiffs to ship the seven cases was bene cial to the defendant and cannot now be
made the subject of complaint.

The foregoing discussion su ces to dispose of the grounds upon which the
appellant seeks to justify its refusal to accept the goods, though we are aware that a
number of points have been vigorously pressed in the voluminous briefs of the
appellant which have not been touched upon in this opinion. the general discussion,
however, indicates what the solution of those matters would necessarily be if analyzed
in accordance with the ideas her accepted. For the rest we are content to refer to the
lengthier exposition contained in the opinion of the trial court with which, barring one or
two points, we fully agree. We accordingly proceed to consider these features of the
case that are connected with the consequences of the defendant's breach of contract.
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 When the plaintiffs' efforts to induce the defendant to accept and pay for the
goods nally proved fruitless, they elected to treat the contract as broken and to sue
for damages, and at the same time, in order to limit the loss, they proceeded to sell the
goods in Manila and New York for the best prices obtainable, after noti cation of the
defendant.
The right of the seller to treat the contract as abrogated in case of
nonacceptance by the buyer and to sue for damages for the breach, without the
formality of judicial rescission, is not called in this case by the attorneys for the
defendant; and the matter needs no comment her further than to say that this practice
has of late years been sanctioned by this court in more than one case involving the
breach of a mercantile contract.
While the defendant has not called in question the diligence of the plaintiffs with
respect to obtaining the best prices procurable for the goods at the time sold, criticism
is made with respect to the time at which the sales took place; and it is insisted that the
sales were made so long after defendant's default that the prices received afford no
just basis for estimating the market prices of the goods at the time of default. It is true
that considerable time elapsed between default and the dates of the sales; but it does
not appear that it would have been practicable to have made the sales sooner, and the
proofs shows that the market price of textiles at the time the sales were effected were
at least equal to the market price at the date of defendant's default, while the two lots
which were sold latest sold for a higher price. the defendant was therefore not
prejudiced by this delay.
With respect to the goods which were actually dispatched to Manila the trial
court allowed interest at the rate of six per centum per annum upon the total amount
due, estimated from the respective dates when the goods were embarked from New
York City. In the case of the goods which were retained in New York City interest at the
legal rate was allowed from the time when the manufacturers delivered the goods to
the plaintiffs. This was the time when the plaintiffs had to pay for the goods, and the
time when they were prepared to ship, as they would have been sooner , but for the
course pursued by the defendant. We see no error in the action of the court upon this
point. By the terms of the contract the price was to be due when the goods were placed
on board the vessels for shipment; and except for default of the defendant in failing to
make and timely arrangement for payment, all of the goods which were dispatched
would have been at its disposal from the date of embarkation. By article 341 of the
Code of Commerce delay in the payment of the price of merchandise obligate the
purchaser to pay the legal rate of interest on the amount due to the seller.
The last point necessary to be discussed in this opinion has relation to a
question which is treated in the briefs under the topic "Exchange," but which is really
rather a problem in the conversion of the plaintiffs' claim for damages, as estimated in
American currency, into Philippine currency. This matter is not discussed in the
appealed decision, as no question was raised in the lower court as to the propriety of
the method of computation used by the plaintiffs in their complaint and the
accompanying bill of particulars.
The facts necessary to make this question intelligible are as follows: The prices
charged by the plaintiffs for the goods covered by the orders which gave rise to this
litigation were expressed in American currency, and it was agreed that on the shipment
of the goods the plaintiffs should draw in the defendant in Manila for the amount due.
As we have already seen the defendant in Manila for the amount to arrange the
necessary credit, through proper banking channels, to enable the plaintiffs to negotiate
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 the drafts, and it was the duty of the defendant to accept and pay said drafts in Manila.
The goods covered by the orders which are the subject of action in case No. 20321
were never shipped to Manila, and in the complaint in said case the plaintiffs did not
ask to be allowed "Exchange". As a consequences the court did not there allow this
item, and the question which we are now to consider is not in any wise involved in that
case. In case No. 19917 and 20637 the goods were shipped and drafts drawn on the
defendant in Manila for the value thereof. All of the drafts so drawn were expressed in
dollars, United States currency, and some were stamped as "Payable at the bank's
selling rate for sight drafts on New York." In accordance with banking practice it would
have been necessary of course for the defendant, in case it had accepted the drafts, to
have satis ed the same by paying an amount of Philippine currency equivalent to the
value to the drafts expressed in dollars, as of the date of payment.
It well known fact in our economic history that during the period when these
transactions occurred, Philippine currency had become depressed, owing to the
depletion of our gold-standard fund; and it was proved by the plaintiffs at the hearing of
this cause, and not questioned by the defendant, that at the time when the defendant's
default occurred American currency commanded a premium of thirteen and one-half
per centum above parity in relation to Philippine pesos. In the liquidation submitted by
the plaintiffs, in connection with its complaints in the two causes above mentioned, the
plaintiffs' claims for damages in dollars, as of the date of the defendant's defaults, are
converted into Philippine currency upon the basis of the premium then commanded by
American currency.
It further appears that when the drafts drawn by the plaintiffs' representative, Mr.
Kummer, took up at the banks in Manila some of these drafts. amounting to twenty
thousand dollars ($20,000), for which he paid in Philippine currency at the rate of
premium for dollars as above indicated. The depression in Philippine currency is now
past, and the court takes judicial notice of the fact that Philippine pesos have again
returned to parity with American gold, which means that the Philippine peso is now
worth fifty cents gold in Manila.
Upon the foregoing facts the defendant-appellant contends that there is error in
the judgment of the court below, in that, in the liquidation of the account, as submitted
by the plaintiffs and adopted by the lower court, the defendant is charge, in the
conversion of American currency into Philippine currency, with a premium at the rate of
thirteen and one-half centum; and it is insisted for the defendant that the plaintiffs can
only be allowed a judgment which should either be expressed in American currency or
which should be expressed in Philippine currency at the rate now current of two pesos
for one dollar.
Thus question thus presented has certain perplexing aspects, but two
propositions seem to be clear beyond the possibility of dispute. The rst is that the
judgment of this court should be expressed in Philippine currency, which is the lawful
currency of these Islands and the only currency in universal use. The circumstance that
gold coins of the United States are by law made a legal tender in these Islands for all
debts, public and private, at the rate of one dollar for two pesos (Admin. Code 1612)
does not effect the proposition that the judgments of the courts here should be
expressed in our own currency. When the sheriff is dispatched with execution in hand to
make money in satisfaction of a judgment, he is commanded to collect the debt or
make the money in Philippine currency and not in dollars or in the money of any other
country.
The second obvious thing is that the questions now before us is not a question
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 of exchange, or reexchange, in the sense merely of a charge for the transmission of
money between manila and New York. The question is chie y one of monetary
equivalence, and although this equivalence would be commonly determined by the rate
of exchange for drafts, nevertheless, it is not the cost of transmitting this money from
Manila to New York which the plaintiffs is primarily entitled to recover, by the equivalent
of the plaintiffs' claim stated in Philippine currency. This conducts us to the real point
which is to be decided, which is whether, in converting the plaintiffs' claim from dollars
to pesos, we shall take the value prevailing at the time of defendant's breach or that
prevailing supposedly at the date of this judgment.
It should be explained here that on September 26, 1924, this court promulgated
an opinion , written by this ponente, in which the decision of the lower court in the cases
now before us was in all respects a rmed, but a petition for a reconsideration was
led by the appellant and the court was so far impressed with the merit of the petition
that it caused the cases to be set for reargument upon this point only; and the majority
of the Justices participating in the decision of those cases are now of the opinion that
the plaintiffs' claim for damages will be properly satis ed of the exchange allowed by
the lower court be eliminated from the judgment. Our former decision will therefore be
modi ed to this extent and the exchange disallowed. The author of the opinion is
compelled to record his dissent for the judgment of the court on this point, upon which
he is in accord with the view expressed in the dissenting opinion of Mr. Justice Johns.

The ground upon which the court rules against the allowance of exchange may be
brie y expressed as follows: As The actions before us are actions for the recovery of
damages the plaintiffs are entitled to recover a sum of money which, with the interest
allowed . will constitute indemnity for the damage occasioned by the defendant's
breach of contract. the obligation assumed by the defendant was to pay to the
plaintiffs a sum of money expressed in American currency; and the indemnity to be
allowed should be expressed in Philippine currency at the present rate of exchange
rather than at the rate prevailing on the date if the defendant's breach. Otherwise the
plaintiffs upon collecting the judgment would be able to convert the amount received
into a larger sum of American money than would have been received by them if the
contract had been in all respects fulfilled by the defendant.
Authority to the effect that in cases of this kind the conversion is to be effected
at the rate prevailing at the time of judgment is found in the following cases: Hawes vs.
Woolcock (26 Wis., 629); Lee vs. Wilcocks (5 Serg. & R. [Pa.], 48); Marburg (26 Md.,
8;90 Am., Dec., 84); The Saigon Maru (267 Fed., 881); The Hurona (268 Fed., 910);
Liberty National Bank of New York vs. Burr (270 Fed., 251); Kirsch & Co. vs. Allen, H. &
Co. ([1920], 89 L.J.K.B.N.S., 265).
In Hawes vs. Woolcock (26 Wis., 629, 635), the court said:
"Perhaps a strict application of logical reasoning to the question would
lead to the result that the premium should be estimated at the rate when the note
fell due. That was when the money should have been paid, and when the default
in performing the contract occurred. This conclusion would be supported by the
analogy derived from the rule of damages on contracts to deliver specific articles,
fixing the market price at the time when they ought to have been delivered as the
criterion. This rule might sometimes be to the advantage of the holder of the note,
as in the present case. In other cases where the premium was less at the time the
note became due than at the time of trial, it would be to his detriment. And in view
of these uncertainties and fluctuations in the rate, upon grounds of policy as well
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 as for its tendency to do as complete justice between the parties as is possible,
we have come to the conclusion that the true rule in such cases is to give
judgment for such an amount as will, at the time of the judgment, purchase in
which it is payable. To accomplish this, of course, the premium should be
estimated at the rate prevailing at the time of trial. By this rule the holder would
neither gain nor lose by the fluctuations in the rate, but when ever he obtained a
judgment would obtain it for a sum which would then procure him the exact
amount to which he was entitled in the proper currency. This does complete
justice between the parties and seems, therefore, to indicate the true extent to
which the difference of exchange in such cases should affect the amount of
recovery."
The reasoning contained in the passage above quoted not only approves itself to
the sense of justice but appears to be more in harmony with the rule expressed in
article 1170 of the Civil Code than the contrary doctrine.
The cause will therefore be returned to the lower court with instructions to enter
a judgment eliminating the premium of thirteen and one-half per centum charged
against the defendant in the plaintiffs liquidation of the claims contained in actions
Nos. 19917 and 20637. In all other respects the judgment is affirmed.
Avanceña and Villamor, JJ, concur.

Separate Opinions
MALCOLM , J., concurring :

I concur but wish to explain my viewpoint with reference to defendant's liability

for exchange at the rate of thirteen and one-half per cent.
The contract of the parties called for payment in United States dollars. The
mechanizes was to be delivered by plaintiffs to defendant at New York. The court is
powerless to vary the terms of the contract in the slightest.
Section 1612 of the Administrative Code makes United States currency legal
tender for all debts. Section 1613 of the same Code makes Philippine currency legal
tender for all debts "unless otherwise specially provided by contract". Article 1170 of
the Civil Code provides that payments of debts of money shall be made in the specie
stipulated. The court is powerless to vary the terms of the law in the slightest.
The decision in Clemon vs. Nolting ([1922], 42 Phil., 702), is in point. It was there
held: "When the dollar sign ($) is used in a written contract made in the United States, it
signi es dollars in the money of the United States, and the contract can be discharged
only by the payment of the required amount in United States money or in Philippine
pesos of an equivalent commercial value, unless otherwise speci cally provided in the
contract. It would be ruinous to the commercial interests of the Philippine Islands to
declare that the payment of debts of money could be made in other specie than that
stipulated in the contract." (Syllabus.) The court should not depart from the doctrines
announced in the Clemons vs. Nolting case.
It would be remarkable condition of affairs if under the American ag, parties
may not pay their debts, as stipulated in the contract, in American currency. United
States currency cannot be classi ed as foreign in the Philippines. United States cannot
be treated as a commodity in the Philippines. The Philippine Islands is not a foreign
country but is an integral part of the United States.
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 When the court enforces the contract as made by the parties and when the court
enforces the law as made by the legislature, it merely performs a simple duty which
does exact justice to the litigants.

OSTRAND, J., with whom concurs ROMUALDEZ , J., concurring and dissenting:

In the main I agree with the majority of the court, but I think the defendant has
fully established its rst cause of action in the cross-complaint and is entitled to a
recovery thereon.
There is very little dispute as to the facts of the transaction which forms the
subject-matter of this cause of action. On February 12, 1920, the defendant ordered by
sample from the plaintiff for the account of one Chua Soco, 20 cases of coco blanco to
be shipped as soon as possible. The same was designated "Quality No. 5119" and
called for "cambric nish". On April 1, 1920, the plaintiff accepted the order and agreed
to deliver the merchandise to Chua Soco in June, 1920, or sooner as possible. On
August 7, 1920, the plaintiffs shipped 13 of the 20 cases ordered. Upon the arrival of
the shipment in Manila it was found that the cloth was of "Madapolan" instead of
cambric nish and Chua Soco refused to accept the goods. The defendant was
compelled to pay the draft accompanying the bill of lading to a total amount of
P20,154.36 and there upon wrote the plaintiff letter Exhibit 203 in which ut stated:
"Referring to our Order No. 566 for 20 cases Coco Blanco quality No. 5119,
36, which arrived here per s/s Jason, please note that our Customer, Mr. Chua
Soco, refused acceptance of the 20 (13) case, claiming, that the Coco is not up to
sample.
"There is no doubt in our mind, that there is a great difference between the
original sample and the goods furnished; the original sample is very fine and
smooth in finish whereas the merchandise delivered is very starchy, giving the
Coco a cheap appearance.
"We are doing our best to get Chua Soco to accept the 20 (13) cases but
we doubt that we will succeed without giving a decided reduction in price."
In answer to this letter the plaintiffs referred the defendant to Mr. Kummer who
was them on his way to Manila. No settlement was reached with Mr. Kummer and the
goods received were sold at the best price then obtainable, P6,933.20, or P13,221.16
less than the amount of the draft paid by the defendant.
The rule is well known that unless goods ordered by sample correspond to the
sample they may be rejected by the buyer. Though it is argued that the merchandise
shipped was of equal quality and value with that shown in the sample, it is admitted that
they were of different nish and appearance, the cambric being a glazed and the
madapolan a rough nish. There is also some evidence to the effect that the cambric
finish is more saleable in this country and commands a slightly higher price.
The plaintiffs explain that they were led to give the cloth a madapolan nish by
the circumstance that the defendant sent them a design of a label to be placed on the
outside of the bolts of cloth, which design bore the words "Extra Madapolan" in large
letters and that they therefore concluded that the defendant desired a madapolan
nish. The majority of the court accepts this explanation and regards it as su cient
justi cation for the substitution of madapolan for cambric nish. It is upon this point
that I feel constrained to dissent.
In effect, the court holds that, under the circumstances, the plaintiff had a right to
assume that there was a novation of the original contract. Novations are not favored by
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 the law and it is an old and wholesome rule that they are never presumed. It would
therefore seem that the plaintiffs should have been cautious in accepting the
circumstances mentioned as a manifestation of an intention on the part of the
defendant to change the very de nite original agreement. The order was a large one
and laid down in Manila the goods ordered would have cost the buyer some P30,000. In
these circumstances, it would not be unreasonable to require or expect the plaintiffs
before acting upon their, to my mind, rather far-fetched conclusions, should have cabled
the defendant and de nitely ascertained the latter's intentions. They had plenty of time
to do so and expense and trouble would have been comparatively tri ing. They could
also, with perfect safety, have adhered to the original agreement and shipped goods
with cambric nish. I cannot for a moment imagine that we would have entertained with
patience a refusal on the defendant's part to accept the goods on the ground that its
action in asking that they be marked "Extra Madapolan" constituted a change in the
contract of purchase. incidentally, I may say that it is a poor rule that does not work
both ways.

It is suggested in the majority opinion that it would be a misrepresentation for

any seller of textiles to put on the market cambric goods under a madapolan brand and
that the plaintiffs could not suppose that the defendant intended to practice deception
of that sort upon the public. Inasmuch as the cambric nish appears to be in nowise
inferior to the madapolan nish and the sheeting was of the same quality, such a
deception, if any, would be harmless and could hardly be due t a desire to mislead. Just
what may have been the reason for the purchaser's desire to have the cloth marked
"Madapolan" does not appear in the record, but madapolan being a Spanish term, there
may be localities in these Islands where textiles of that grade, irrespective of nish, are
known by that name. Spanish names for textiles are still extensively used in this country
and the nave have been more suitable for Chua Soco's trade than would the English
mark "Cambric".
But that is neither here nor there. It was the plaintiff's duty to abide by the
express contract and execute the order according to instructions. If they had any
objections to so doing they should have advised the defendant. It is a wholesale
purchaser's privilege to determine what marks are to be put on the goods and there is
nothing illegal about it as long as the use of the mark does not constitute unfair
competition or an infringement of trade-marks. In this case it does not appear that
anyone would have been prejudiced by having the goods marked "Madapolan" and there
was not necessarily any moral obliquity involved in so using that mark.
It is also intimated that Chua Soco might have rejected the goods on the ground
that they were stamped "Madapolan", and that, therefore, as far as the defendant was
concerned the result or loss would have been the same whether a cambric or a
madapolan nish had been given the cloth. But how do we know that the design in
question originated with the defendant? It is not more reasonable to suppose that Chua
Soco, the purchaser suggested the design?
But assuming for the sake of argument that the defendant had designed the label
without consulting Chua Soco, it is to be observed that the label was placed on the
outside of each bolt and that if Chua Soco, upon the receipt of the goods should have
objected to the label it would have been an easy matter to meet the objection by
removing the stamped portion of each piece of cloth and relabeling the bolts. The
reduction in the length of the pieces through this process would have been insigni cant
and would not, under the rule laid down elsewhere in this case., have constituted a valid
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 ground for the rejection of the shipment.
The decision of the court tends to establish an embarrassing precedent.
Merchants ordering goods from other countries have a right to demand that care be
exercised in executing their orders. The distance and expense of shipment renders it
di cult to correct errors after the goods have reached their destination. Sellers or
shippers should under these circumstances be held strictly to their contracts and the
courts should not encourage carelessness on their part by unwarranted leniency in
applying the law.
In the present case the plaintiffs, through their carelessness and unwarranted
assumptions, shipped goods which admittedly were not in accordance with samples,
thereby breaching their contract with the defendant and furnishing the latter's customer
a valid excuse for rejecting the goods. The defendant not only lost its commission on
the sale but is in addition mulcted to the extent of over thirteen thousand pesos. I
apprehend that the court will experience considerable di culty in nding a precedent
for its judgment upon the cause of action here discussed.

JOHNS , J., with whom concurs STREET , J., dissenting :

The undersigned was not present when this cause was rst submitted and took
part only in the determination of the motion for reconsideration. The present opinion is
therefore con ned to a single point, namely, whether upon converting the plaintiff's
claim into Philippine currency, the plaintiffs are entitled to recover exchange computed
as of the date of default or whether the conversion must be effected at the rate now
prevailing.
All of the legal learning that is of much value on the subject is collected in the
annotation found in 11 A.L.R., 363, appended to the case of Di Fernando vs. Simon
Smits & Co. (89 L.J.K.B.N.S., 1039). This case comes from the English Court of Appeals
and is very instructive, having been decided in the light of numerous decisions dealing
with the extraordinary uctuations of the currency of different countries in the last few
years.
The position sustained in said decision is that in an action brought in England for
breach of contract to be performed abroad, the measure of damages is the loss in
English currency to the plaintiffs at the time and place where the contract ought to have
been performed. Where, therefore, the plaintiff, a merchant in Italy, obtained judgment
against the defendants in London, for damages for nondelivery and conversion of
goods entrusted to them for carriage to the plaintiff at Milan, it was declared that the
damages ought to be assessed in such a sum in sterling as would give the plaintiff the
proper compensation in Italian lire, at the rate of exchange prevailing at the date of
when the goods ought to have been delivered to the plaintiff, and not at the rate
prevailing at the date of the judgment. In conformity with this doctrine are the decisions
in Barry vs. Van Den Hurk (1920], 2 K.B., 709; 89 L.J.K.B.N.S., 899), and Lebeaupin vs.
Crispin ([1920], 2 K.B., 714; 89 L.J.K.B.N.S., 1024). In this connection it should be noted
that the earlier case of Kirsch & Co. vs. Allen, H. & Co., ([1920], 89 L.J.K. B.N.S., 265,)
which adopted the view now sustained by this court, was in effect overruled in Di
Fernando vs. Simon Smits & Co., supra.
The reasoning contained in these English cases appears to me to be not only
sound but in harmony with all legal analogies; and the exchange should in my opinion be
computed as of the date of the defendant's breach. As was said by the English court in
Lebeaupin vs. Crispin, supra:
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 "To hold otherwise would produce extraordinary results. The damages
payable would depend partly on the date when the plaintiff issued his writ, partly
on the length of the interlocutory proceedings, partly on the illness or good health
of the parties as the trial approached, partly on the number of prior cases which
occupied the time of the court, and partly on whether the judge reserved his
decision or not. They might depend also on whether judgment was entered for the
plaintiff by the judge of First Instance, or by the court of appeal, or the House of
Lords. Such a state of things would, I think, be most unsatisfactory. It would
encourage a plaintiff to hasten or postpone the trial according to his view of the
money market, and he might gamble on the rate of exchange. If the damages are
fixed as at the date of breach where the contract is wholly to be performed in
England, such also, I think, I should be the result where the breach is out of
England. There should not be varying rules in such a case. If the damages are
once crystallized at the date of breach, then a definite date is given for the
ascertainment of exchange, and the amount found payable at the hearing is
awarded without regard to the fluctuations of the possible date of trial."
It can be admitted that if a contract were made in this country for the payment of
a sum certain in particular kind of currency, as, e.g ., American gold coin, the creditor, if
he should so elect, would be entitled to have the value of the stipulated coin computed
in the lawful currency of this country at the rate prevailing at the time of judgment. But
the cases now before us are damage suits, in which the plaintiffs seek to recover
damages by reason of the defendant's default in failing to accept and pay for
merchandise. Where the action takes this form the idea of giving speci c performance
in American currency, — which seems to underlie the decision of the court — is
inappropriate. The obligation of the defendant should be considered fixed at the time of
the breach and the equivalent of the two currencies should be computed as of that
date.
The mistake of the court upon the point which is the subject of criticism appears
to be due to a desire to relieve the defendant from the effect of an adverse uctuation
in Philippine currency between the date of the default and the date of the judgment, — a
uctuation resulting from a rise in the fundamental value of the peso. But courts have
never consciously attempted to relieve debtors from rises in the value of currency any
more than they have attempted to relieve creditors from the effects of depreciation;
and a little re ection will, I think, show that the idea is fallacious. Certainly, if the case
were one of a domestic creditor suing a local debtor upon an obligation created while
pesos were depreciated, it would never occur to anybody that the debt could now be
scaled in order to relieve the debtor from the effects of the rise in the value of our
money. But because the creditor in this case is a resident of a country whose currency
has remained on a gold basis, and the uctuation of pesos is thus made visible by
reference to the external standard, the damages must, according to the present
decision, be reduced. In my opinion this is erroneous. The original judgment, a rming
the appealed decision was, upon this point, correct.

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