Topic False Representation distinguished from Express Warranty

Case No. GR No. L-24256; Jan. 21, 1926

Case Name Philippine Manufacturing Company v. Go Jocco
Ponente Justice Ostrand

RELEVANT FACTS

 Go Jocco (seller) and PMC (buyer) entered into a contract of sale stating that Go Jocco sold 500
tons of coconut oil for the price of twenty- seven and a half centavos per kilo ex tanque.The state
or class of the oil’s only express warranty was that it should not contain more than 5% of free
fatty acid.
 Plaintiff’s secretary and chemist, Mr. Mason, took a sample from the oil tanks and examined
such, advising that if he finds the quality satisfactory, full payment will be made. After
examination, full payment was made by plaintiff.
 Plaintiff then sold the oil to Portsmouth Cotton Oil Refining Corporation for $7.5 per 100 lbs.
During the transfer of the oil tanks from Defendant’s location to Portsmouth, Mason was present.
 Portsmouth also did its own examination, and eventually refused to accept it. Portsmouth averred
that the oil was contaminated with cottonseed oil. In accordance with the contract between the
parties, the matter was submitted to the New York Produce Exchange Arbitration Committee for
arbitration. Such finding was confirmed
 After arbitration, plaintiff was able to find a new seller: Proctor and Gamble. The oil was sold at
$.9 per lb., a price relatively higher than what was agreed upon with Portmouth.
 The present action was filed by plaintiff praying for damages worth PHP21k, which was the
alleged amount of loss it suffered due to the incident (xpenses for rend of cars, transportation,
brokerage, etc.)
 CFI decided in favor of defendant claiming that the contamination was not proven to have
existed at the time of delivery from defendant to plaintiff supported by the fact that Mr. Mason
was even able to examine the oil.

ISSUE
W/N there was a violation of an express/implied warranty
W/N there was fraud / false representation

RATIO DECIDENDI

Issue Ratio
W/N there was a violation NO
of an express/implied
warranty
1. It cannot be an action based on an express warranty. The only
express warranty provided for in the contract was that the oil
should not contain more than 5% of free fatty acid. The contract
of sale between the plaintiff and the defendant contains no
express warranty against impurities aside from the stipulation
 that not more than 5 per cent of free fatty acid would be allowed.
It was not stipulated that the oil could not contain any amount of
cottonseed oil.
2. It cannot be an action based on an implied warranty as well
because of Article 336 of the Code of Commerce, which in part
reads as follows:

A purchaser who, at the time of receiving the merchandise, fully

examines the same, shall not have a right of action against the
vendor, alleging a defect in the quantity or quality of the
merchandise.

As it appears that the plaintiff examined the oil to his

satisfaction, implied warranty cannot be a cause of action
anymore.

w/n there was false NO

representation

1. The concealment which shall amount to a false representation is

that only which may properly be designated as active. Mere
passive non-disclosure which, as been seen, may suffice to
vitiate a contract uberrimae fidei, will not be sufficient here;
'there must be an active attempt to deceive, either by a statement
which is false or which is true so far as tit goes, but is
accompanied with such a suppression of facts as to convey a
misleading impression. "There must be some active
misstatement of fact, or, at all events, such a partial and
fragmentary statement of fact as that the withholding of that
which is not stated makes that which is stated absolutely false."
2. The plaintiff failed to show that defendants had an intent to
deceive them into buying the goods. Actually, they were even
able to sell the goods to P&G at its market value.
3. The plaintiff, before purchasing, was given full opportunity to
examine the oil and actually did so, it seems obvious that the
evidence is not sufficient to overcome the presumption of good
faith and to establish fraud on the part of the vendor. In
commercial sales, the fact that the vendor does not volunteer
detailed statements of all he knows, whether important or not, in
regard to the goods sold by him, is not fraud per se.

RULING

Decision of lower court affirmed. Defendants are not liable.