Facts:

This case titled "Ban Kiat & Company vs. Atkins, Kroll & Company" arose from a commercial dispute between two mercantile partnerships. The plaintiff, Ban Kiat & Co., based in Singapore, filed a suit against the defendant, Atkins, Kroll & Co., a partnership operating in the Philippines with a branch in Zamboanga. The action was initiated on November 7, 1922, in the Court of First Instance of Zamboanga to recover an amount of $5,623.77 in Singapore currency, representing the purchase price of galvanized iron roofing sold to the defendant. The transaction began when the Manila branch of Atkins sent a request to its Zamboanga branch for price quotations for galvanized, corrugated roofing iron. The Zamboanga branch subsequently contacted Ban Kiat & Co., which cabled a price offer of $4.30 per sheet for sheets measuring 8 feet by 3 feet. After negotiations, Atkins, Kroll & Co. accepted the offer and confirmed an order for 5,000 sheets.

Delivery eventu

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Facts:

Parties and Nature of the Transaction

• Plaintiff: Ban Kiat & Company, a mercantile partnership based in Singapore engaged in the sale of galvanized iron roofing.
• Defendant: Atkins, Kroll & Company, a mercantile partnership doing business in the Philippine Islands and maintaining an agency in Zamboanga.
• The dispute arose from a contract for the purchase of galvanized, corrugated iron roofing.

Formation of the Contract and Communications

• In the latter part of April 1920, the Manila branch of Atkins, Kroll & Co. requested quotations on galvanized, corrugated roofing iron.
• The Zamboanga branch, lacking the commodity in stock, contacted Ban Kiat & Co. in Singapore to send its price quotation directly to the Manila branch.
• Ban Kiat & Co. offered the roofing at “$4.30 per sheet c.i.f. Zamboanga, for 8 by 3 feet corrugations” via cable.
• Atkins, Kroll & Co. accepted the offer in a telegram dated May 1, 1920, confirming specifications and shipment details.

Orders and Shipments

• On May 6, 1920, Ban Kiat & Co. confirmed acceptance of the order and promised shipment within the week.
• Communication details:

- A cable four days later confirmed that the shipment had been made by a specific steamer due to arrive on May 25. - A subsequent letter on May 13, 1920, acknowledged receipt of an order for “5,000 sheets 8 feet by 3 feet, 28 gauge corrugated iron.” - A second order for an additional 2,000 sheets was finalized at a price of $4.50 per sheet. - A third order was placed on June 3, 1920, for 500 sheets, of which 472 sheets were shipped.

Delivery Anomalies and Subsequent Notice

• Although the contract clearly stated the roofing was to be 8 feet by 3 feet and of 28 gauge, discrepancies were observed upon arrival in Manila:

- The second shipment of 1,999 sheets was inspected and found to be 8 feet by 26 inches and 29 gauge. - Similar non-conformities in dimensions and gauge were found in the first and third shipments. - The deviation in width (26 inches instead of 3 feet) and in gauge (29 instead of 28). - The severity of the mistake, emphasizing the material loss as a consequence of the dimensional deficiency.

Computation of Damages and Business Impact

• Atkins, Kroll & Co. prepared a statement of account on June 22, 1920, computing damages:

- The loss was primarily based on the difference in area between the sheets ordered and those delivered. - Additional costs included a survey fee and reconditioning expenses, summing to $6,308.40, Singapore currency. - The delivery of non-conforming sheets forced the defendant to make price concessions, resulting in a proven loss of approximately P10,000. - The Court of First Instance ruled in favor of Ban Kiat & Co. for the sum of $5,623.77, Singapore currency. - Simultaneously, damages were awarded to Atkins, Kroll & Co. only to the extent of P1,999.50 on their counterclaim. - Both parties appealed on issues relating to the allowance and computation of the cross-complaint (damage claim).

Procedural Posture and the Legal Challenge on Notice Requirement

• A central matter of dispute was the application of the second paragraph of article 336 of the Code of Commerce.

- This provision mandated that a purchaser must bring an action within four days after receipt of the goods. - Sustained Atkins, Kroll & Co.’s counterclaim for the second shipment where the written notice was provided within the stipulated period. - Disallowed the counterclaim for the first and third shipments on the grounds of non-compliance with the four-day notice rule.

Issue:

Validity and Effect of the Notice Requirement

• Whether the second paragraph of article 336 of the Code of Commerce, which required filing an action within four days of delivery, is still in force in the Philippine jurisdiction.
• Whether this provision should bar Atkins, Kroll & Co.’s cross-claim for shipments not subject to timely notice.

Measure and Computation of Damages

• The proper legal measure of damages: Is it limited to the difference in market value between the roofing as contracted (8 ft. by 3 ft., 28 gauge) and as delivered (8 ft. by 26 inches, 29 gauge)?
• Whether the damages computed and claimed by Atkins, Kroll & Co. in its statement of account should be the maximum allowable recovery.

The Role of Market Price in Assessing Damages

• How the market price of the roofing, influenced by the dimensions of the product in stock, affects the determination of damages.
• Whether the initial quotation and subsequent market behavior of Ban Kiat & Co. negate additional claims beyond those calculated in the defendant’s statement.

Procedural and Substantive Aspects of the Cross-Claim

• Whether the delayed action to claim damages for non-conformity (beyond the four-day period) is permissible under the principles of the Code of Civil Procedure.
• The appropriateness of allowing a set-off in the counterclaim given the commercial circumstances and communication between the parties.

Ruling:

• (Subscriber-Only)

Ratio:

• (Subscriber-Only)

Doctrine:

• (Subscriber-Only)