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[No. 32958. November 8, 1930]

BLOSSOM & COMPANY, INC., plaintiff and appellant, vs.


MANILA GAS CORPORATION, defendant and appellee.

1. WHEN FORMER JUDGMENT is A BAR.In its


complaint of March 3, 1927, plaintiff seeks to recover
damages accrued since November 23, 1923, for a wilful
breach of a contract for the sale and delivery of water gas
and coal gas tar at stipulated prices, and for answer
defendant alleges that in the former action in the Court of
First Instance of the City of Manila, in which plaintiff
here was the plaintiff, and the defendant here was the
defendant, and founded upon the same cause of action
alleged in the complaint that plaintiff recovered judgment
against the defendant on the merits, decreeing a breach of
the same contract and awarding damages in favor of the
plaintiff in the sum of P26,119.08 with legal interest from
November 23, 1923, which judgment became and is now
final. Held, That the judgment which the plaintiff
obtained in the former action founded upon a breach of the
same contract is a bar to this action.

2. ONLY ONE CAUSE OF ACTION WHEN CONTRACT is


ENTIRE.As a general rule, a contract to do several
things at several times is divisible, and a judgment for a
single breach of a continuing contract is not a bar to a suit
for a subsequent breach. But where the contract is .entire,
and the breach total, there can be only one action in which
plaintiff must recover all damages.

3. WHEN CONTRACT is INDIVISIBLE.When the


defendant terminated a continuing contract by absolute
refusal In bad faith to perform, a claim for damages for a
breach is an indivisible demand, and where, as in this
case, a former final judgment was rendered, it is a bar to
any damages which plaintiff may thereafter sustain.

4. WHAT PLAINTIFF SHOULD PROVE.In an indivisible


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contract plaintiff should prove in the first action not only


such. damages as it has then actually sustained, but also
such prospective damages as it may be legally entitled to
recover by reason of the breach.

APPEAL from a judgment of the Court of First Instance of


Manila. Block, J.
The facts are stated in the opinion of the court.
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VOL. 55, NOVEMBER 8, 1930 227


Blossom & Co. vs. Manila Gas Corporation

Harvey & O'Brien for appellant.


Ross, Lawrence & Selph and John B. Miller for appellee.

STATEMENT

In its complaint filed March 3, 1927, the plaintiff alleges


that on September 10, 1918, it entered into a contract with
the defendant in which the plaintiff promised and
undertook to purchase and receive from the defendant, and
the defendant agreed to sell and deliver to the plaintiff, for
a period of four years, three tons of water gas tar per
month from September to January 1, 1919, and twenty
tons per month after January 1, 1919, for the remaining
period of the contract onehalf ton of coal gas tar a month
from, September to January 1, 1919, and six tons per
month after January 1, 1919, for the remainder of the
contract, delivery to be made at the plant of the defendant
in the City of Manila, without containers, and at the price
of P65 per ton for each kind of gas tar, it being agreed that
this price should prevail only so long as the raw materials
coal and crude oilused by the defendant in the
manufacture of gas should cost the defendant the same
price as that prevailing at the time of the contract, and that
in the event of an increase or decrease in the cost of raw
materials, there would be a corresponding increase or
decrease in the price of the tar. That on January 31, 1919,
this contract was amended so that it should continue to
remain in force for a period of ten years from January 1,
1919, and it was agreed that the plaintiff should not be
obliged to take the quantities of the tars required during
the year 1919, but that it might purchase tars in such
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quantities as it could use to advantage at the stipulated


price. That after the year 1919, the plaintiff would take at
least the quantities specified in the contract of September
10, 1918, to be taken from and after January 1, 1919, and
that at its option it would have the right to take any
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228 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila Gas Corporation

quality of water gas tar in excess of the minimum quatity


specified in that contract, and up to the total amount of
output of that tar of defendant's plant, and also to take any
quantity of coal gas tar in excess of the minimum quantity
specified in that contract and up to 50 per cent of
defendant's entire output of coal gas tar, and that by giving
the defendant ninety days' notice, it would have the right
at its option to take the entire output of defendant's coal
gas tar, except such as it might need for its own use in and
about its plant. That in consideration of this modification of
the contract of September 10, 1918? plaintiff agreed to
purchase from the defendant a certain piece of land lying
adjacent to its plant at the price of P5 per square meter,
the proof of which is evidenced by Exhibit C. That pursuant
to Exhibit C, defendant sold and conveyed the land to the
plaintiff which in turn executed a mortgage thereon to the
defendant for P17,140.20, to secure the payment o the
balance of the purchase price.
It is then alleged:
"VIII. That about the last part of July, 1920, the
defendant herein, the Manila Gas Corporation, willfully
and deliberately breached its said contract, Exhibit C, with
the plaintiff by ceasing to deliver any coal and water gas
tar to it thereunder solely because of the increased price of
its tar products and its desire to secure better prices
therefor than plaintiff was obligated to pay to it,
notwithstanding the frequent and urgent demands made
by the plaintiff upon it to comply with its aforesaid contract
by continuing to deliver the coal and water gas tar to the
plaintiff thereunder, but the said defendant flatly refused
to make any deliveries under said contract, and finally on
November 23, 1923, the plaintiff was forced to commence
action against the defendant herein in the Court of First
Instance of Manila, being case No. 25352, of that court,
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entitled 'Blossom & Co., plaintiff, vs. Manila Gas


Corporation, defendant to recover the damages which it
had up to that time suffered by reason of such flagrant
violation
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VOL. 55, NOVEMBER 8, 1930 229


Blossom & Co. vs. Manila Gas Corporation

of said contract on the part of the defendant herein, and to


obtain the specific performance of the said contract, and
after due trial of that action, judgment was entered therein
in favor of the plaintiff herein and against the said
defendant, the Manila Gas Corporation, for the sum of
P26,119.08, as the damages suffered by this plaintiff by the
defendant's breach of said contract from July, 1920, up to
and including September, 1923, with legal interest thereon
from November 23, 1923, and for the costs but the court
refused to order the said defendant to resume the delivery
of the coal and water gas tar to the plaintiff under said
contract, but left the plaintiff with its remedy for damages
against said defendant for the subsequent breaches of said
contract, which said decision, as shown by the copy
attached hereto as Exhibit G, and made a part hereof, was
affirmed by our Supreme Court on March 3, 1926
"IX. That after the defendant had willfully and
deliberately violated its said contract, as hereinbefore
alleged, and the plaintiff had suffered great damage by
reason thereof, the plaintiff claimed the right to offset its
damages against the balance due from it to said defendant
on account of the purchase of said land from the defendant,
and immediately thereupon and notwithstanding said
defendant was justly indebted to the plaintiff at that time,
as shown by the judgment of the court, Exhibit G, in more
than four times the amount due to it from the plaintiff, the
said defendant caused to be presented against the plaintiff
a foreclosure action, known as the Manila Gas Corporation
versus Blossom & Company, No. 24267, of the Court of
First Instance of Manila, and obtained judgment therein
ordering that Blossom & Company pay the last installment
and interest due on said land or else the land and
improvements placed thereon by the plaintiff would be
sold, as provided by law in such cases to satisfy the same,
and the said defendant proceeded with the sale of said
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property under said judgment and did everything in its


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Blossom & Co. vs. Manila, Gas Corporation

power to sell the same for the sole purpose of crushing and
destroying the plaintiff's business and thus rendering it
impossible for the plaintiff herein to continue with its said
contract in the event that said defendant might in the
future consider it more profitable to resume performance of
the same, but fortunately the plaintiff was able to redeem
its property, as well as to comply with its contract, and
continued demanding that the defendant perf ormed its
said contract and deliver to it the coal and water gas tar
required thereby."
That the defendant made no deliveries under its
contract, Exhibit C, from July, 1920, to March 26, 1926, or
until after the Supreme Court affirmed the judgment1
of the
lower court for damages in the sum of P26,119.08.
It is then alleged that:

"* * * On March 26, 1926, the said defendant offered to resume


delivery to the plaintiff from that date of the minimum monthly
quantities of tars stated in its contract, and the plaintiff believing
that the said defendant was at least going to try to act in good
faith in the further performance of its said contract, commenced
to accept deliveries of said tars from it, and at once ascertained
that the said defendant was deliberately charging it prices much
higher than the contract price, and while the plaintiff accepted
deliveries of the minimum quantities of tars stated in said
contract up to and including January, 1927, (although it had
demanded deliveries of larger quantities thereunder, as
hereinafter alleged) and paid the increased pHces demanded by
the defendant, in the belief that it was its duty to minimize the
damages as much as possible which the defendant would. be
required to pay to it by reason of its violation of said contract, it
has in all cases done so under protest and with the express
reservation of the right to demand from the said defendant an
adjusfr

_____________

1 48 PhiL, 848.

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ment of the prices charged in violation of its contract, and the


right to the payment of the losses which it had and would suffer
by reason of its refusal to make additional deliveries under said
contract, and it also has continuously demanded that the said
defendant furnish to it statements supported by its invoices,
showing the cost prices of its raw materialscoal and crude oil
upon which the contract price of the tars in question is fixed,
which is the only way the plaintiff has to calculate the true price
of said tars, but said defendant has and still refuses to furnish
such information, and will continue to refuse to do so, unless
ordered to furnish such information to the plaintiff by the court,
and the plaintiff believes from the information which it now has
and so alleges that the said defendant has overcharged it on the
deliveries of said tars mentioned in the sum of at least P10,000,
all in violation of the rights of the plaintiff under its said contract
with the defendant."

That on January 31, 1926, and pursuant to Exhibit C,


plaintiff notified the defendant in writing that commencing
with the month of August, 1926, it desired to take delivery
of 50 per cent of defendant's coal tar production for that
month, and that on November 1, 1926, it desired to take
the entire output of defendant's coal gas tar, but that the
defendant refused and still refuses to make such deliveries,
unless plaintiff would take all of its water gas tar
production with the desired quantity of coal gas tar, which
ref usal was a plain violation of the contract, That on
January 29, 1927, and in accord with Exhibit C, plaintiff
notified the defendant in writing that within ninety days
after the initial delivery to it of its total coal gas tar
production, or in February, 1927, it would require 50 per
cent of its total water gas tar production, and that in April,
1927, it would require the total output of the defendant of
both coal and water gas tars, and that it refused to make
either of such deliveries.

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Blossom & Co. vs. Manila Gas Corporation
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It is then alleged:

"XIV. That as shown by the foregoing allegations of this


complaint, it is apparent that notwithstanding the plaintiff in this
case has at all times faithfully performed all the terms and
conditions of said contract, Exhibit C, on its part to be performed,
and has at all times and is now ready, able and willing to accept
and pay for the deliveries of said coal and water gas tars required
by said contract and the notices given pursuant thereto, the said
defendant, the Manila Gas Corporation, does not intend to comply
with its said contract, Exhibit C, and deliver to the plaintiff at the
times and under the terms and conditions stated therein the
quantities of coal and water gas tars required by said contract,
and the several notices given pursuant thereto, and that it is
useless. for the plaintiff to insist further upon its performance of
the said contract, and for that reason the only feasible course for
the plaintiff to pursue is to ask the court for the rescission of said
contract and for the full damages which the plaintiff has suffered
from September, 1923, and will suffer for the remainder of said
contract by reason of the defendant's failure and refusal to
perform the same, and the plaintiff has so notified the said
defendant."

That since September, 1923, by reason of the bad faith of


the defendant, the plaintiff has been damaged in the sum
of P300,000, for which it prays a corresponding judgment,
and that the contract, Exhibit C, be rescinded and declared
void and without force and effect.
After the filing and overruling of its demurrer, the
defendant filed an answer in the nature of a general and
specific denial, and on April 10, 1928, and upon stipulation
of the parties, the court appointed W. W. Larkin referee, "to
take the evidence and, upon completion of the trial, to
report his findings of law and fact to the court."
July 18, 1928, the defendant filed an amended answer in
which it alleged as an affirmative defense, first, that the
complaint does not state facts sufficient to constitute a .

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Blossom & Co. vs. Manila Gas Corporation

cause of action for the reason that a prior adjudication has


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been had of all the issues involved in this action, and,


second, "that on or about the 16th day of June, 1925, in an
action brought in the Court of First Instance of the City of
Manila, Philippine Islands, before the Honorable Geo. R.
Harvey, Judge, by Blossom & Company, plaintiff, vs.
Manila Gas Corporation, defendant, being civil case No.
25352, of said court, f or the same cause of action as that
set forth in the complaint herein, said plaintiff recovered
judgment upon the merits thereof, against said defendant,
decreeing a breach of the contract sued upon herein, and
awarding damages therefor in the sum of P26,119.08 with
legal interest from November 23, 1923, and costs of suit,
which judgment was upon appeal affirmed by the Supreme
Court of the Philippine Islands, in case G. R. No. 24777 of
said court, on the 3d day of March, 1926, and reported in
volume 48 Philippine Reports at page 848," and it prays
that plaintiff's complaint be dismissed, with costs.
After the evidence was taken, the referee made an
exhaustive report of sixtysix pages in which he found that
the plaintiff was entitled to P56,901.53 damages, with legal
interest from the date (of the filing of the complaint, to
which both parties filed numerous exceptions.
In its decision the court says:

"Incidental references have been made to the referee's report. It


was admirably prepared. Leaving aside the question of damages
and the facts upon which the referee assessed them, the facts are
not in disputeat least not in serious dispute. They appear in the
documentary evidence and this decision is based upon documents
introduced into evidence by plaintiff. If I could have agreed with
the referee in respect to the question of law, I should have
approved his report in toto. If defendant is liable for the damages
accruing from November 23, 1923, the date the first complaint
was filed, to April 1st, 1926, the date of resumption of relations
and if defendant, after such resumption of relations, again
violated the contract,

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234 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila Gas Corporation

the damages assessed by the referee, are, to my way of thinking,


as fair as could be estimated. He went to tremendous pains in
figuring out the details upon which he based his decision.

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Unfortunately, I cannot agree with his legal conclusions and the


report is set aside except wherein specifically approved.
"It is unnecessary to resolve specifically the many exceptions
made by both parties to the referee's report. It would take much
time to do so. Much time has already been spent in preparing this
decision. Since both parties have informed me that in case of
adverse judgment, an appeal would be taken, I desire to conclude
the case so that delay will be avoided.
"Let judgment be entered awarding damages to plaintiff in the
sum of P2,219.60, with costs."

From which plaintiff only appealed and assigns twentyfour


different errors, of which the following are material to this
opinion:

"I. The trial court erred in holding that this suit in so


far as the damages from November, 1923, to March
31, 1926, are concerned, is res adjudicata.
"II. The trial court erred in holding that the defendant
repudiated the contract in question as a whole, and
that the plaintiff when it brought its first suit to
collect damages had already elected and consented
to the dissolution of the contract, and its choice once
made, being final, it was estopped to claim that the
contract was alive when that suit was brought.
* * * * * * *
"VII . The trial court erred in refusing to sustain
plaintiff's third exception to the legal interpretation
placed on the contract in this case by the referee
with reference to quantity of tars and his conclusion
with respect to the terms thereof that:

" 1. Plaintiff must take and defendant must deliver


either the minimum or maximum quantity of water
gas

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VOL. 55, NOVEMBER 8, 1930 235


Blossom & Co. vs. Manila Gas Corporation

tar and not any quantity from the minimum to the


maximum and/or
" '2 . Plaintiff must take either the minimum and any quantity

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up to fifty per cent of entire output of coal gas tar.


" '3. With ninety days' notice by plaintiff to defendant the
former must take and the latter must deliver total output
of both tars, except such as might be needed by defendant
for use in and about its plant and not any quantity from
the minimum up to total output of both tars.' (See page 47,
Referee's report.)

"And in holding that the option contained in said contract, taking


into consideration the purposes of both parties in entering into
the contract, was as claimed by defendant: all the water gas tar
and 50 per cent of the coal gas tar upon immediate notice, and all
tars upon ninety days' notice.

"VIII . The trial court erred in refusing to sustain plaintiff's


fourth exception to the finding and conclusion of the
referee that from the correspondence between the parties,
it was apparent that plaintiff did not make a right use of
its option, and that the letter of June 25, 1926, and the
subsequent demands, with exception of the letter of July
31, 1926, were not made in pursuance to the terms of the
contract, and that defendant had no liability in refusing to
comply therewith, and in allowing plaintiff damages only
for the failure of the defendant to deliver quantities shown
in Exhibits Ref. 21 and 22. (See pages 51, 52, Referee's
report.)
"IX. The trial court erred in finding and holding that the
demands of plaintiff for additional tars under its contract
with the defendant were extravagant and not made in
good faith, and that when it wrote to defendant that it
desired maximum quantities of coal gas tars and only
minimum of water gas tars, but with the reservation of
going back to minimum quantities of both at any time it

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236 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila Gas Corporation

chose, it announced its intention of breaching the contract,


and defendant was under no obligation to deliver
maximum quantities of either tars, and since this was the
efficient cause of the failure of defendant to deliver or
plaintiff to accept tars, the blame is attributable to

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plaintiff, and it cannot recover for a rescission.

* * * * * * *

"XXIII . The trial court erred in refusing to sustain plaintiff's


seventeenth exception to the finding and conclusion of the
referee that the plaintiff is entitled to recover from the
defendant only the following sums:

Water gas tar (Exhibit Ref. 21) P38,134.60


............................................................. ...
Coal gas tar (Exhibit Ref. 22) 16,547.33
....................................................................
Overcharges on deliveries (Exhibit Ref. 23) 2,219.60
..............................................
or a total of..................................................... 56,901.53
................................ ...

with interest, and in not awarding to the plaintiff as damages


in this case the sum of P319,253.40, with legal interest thereon
from the date of filing the complaint in this case, in the manner
and form computed by it, and in awarding damages to the
plaintiff for the sum of only P2,219.60, with costs."
* * * * * * *

JOHNS, J.:

In this action plaintiff seeks to recover damages from the


defendant which it claims to have sustained after
September, 1923, arising from, and growing out of, its
original contract of September 10, 1918, as modified on
January 1, 1919, to continue for a period of ten years from
that date. In paragraph VIII of its complaint, plaintiff
alleges that about the last part of July, 1920, the defendant
"willfully and deliberately breached its said contract," and
that it "flatly refused to make any deliveries under said
contract, and finally on November 23, 1923," it was forced
to commence action in the Court of First Instance against
the
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VOL. 55, NOVEMBER 8, 1930 237


Blossom & Co. vs. Manila Gas Corporation

defendant, known as case No. 25352, to recover the


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damages which it had then sustained by reason of such


flagrant violation of said contract on the part of the
defendant, in which judgment was rendered in favor of the
plaintiff and against the defendant for P26,119.08, as
damages "suffered by this plaintiff by the defendant's
breach of said contract from July, 1920, up to and including
September, 1923, with legal interest thereon from
November 23, 1923, and for the costs," in which the court
refused to order the defendant to resume the delivery of the
coal and water gas tar to the plaintiff, in accord with said
contract, but left it with its remedy for damages against the
defendant for any subsequent breaches of the contract. A
copy of that judgment, which was later affirmed by this
court, is attached to, marked Exhibit G, and made a part
of, the complaint in this action.
In their respective briefs, opposing counsel have much to
say about the purpose and intent of that judgment, and it
is vigorously asserted that it was never intended that it
should be or become a bar to another action by the plaintiff
to recover any damages it may have sustained after
September, 1923, during the remainder of the tenyear
period of that contract. Be that as it may, it must be
conceded that the question as to what would be the legal
force and effect of that judgment in that case was never
presented to, or decided by, the lower court or this court. In
the very nature of things, neither court in that case would
have the power to pass upon or decide the legal force and
effect of its own judgment, for the simple reason that it
would be premature and outside of the issues of any
pleading, and could not be raised or presented until after
the judgment became final, and then only by an
appropriate plea, as in this case.
Plaintiff specifically alleges that the defendant willfully
and deliberately breached the contract, and "flatly refused
to make any deliveries under said contract," by reason of

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238 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila, Gas Corporation

which it was forced to and commenced its former action in


which it was awarded P26,119.08 damages against the
defendant by reason of its breach of the contract from July,
1920, to September, 1923.
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In the final analysis, plaintiff in this action seeks to


recover damages growing out of, and arising from, other
and different breaches of that same contract after
November, 1923, for the remainder of the tenyear period,
and the question is thus squarely presented as to whether
the rendition of the former judgment is a bar to the right of
the plaintiff to recover damages from and after September,
1923, arising from, and growing out of, breaches of the
original contract of September 10, 1918, as modified on
January 1, 1919. That is to say, whether the plaintiff, in a
former action, having recovered judgment for the damages
which it sustained by reason of a breach of its contract by
the defendant up to September, 1923, can now in this
action recover damages it may have sustained after
September, 1923, arising from, and growing out of, a
breach of the same contract, upon and for which it
recovered its judgment in the former action.
In the former action in which the judgment was
rendered, it is alleged in the complaint:

" '7. That about the last part of July or the first part of August,
1920, the Manila Gas Corporation, the defendant herein, without
any cause ceased delivering coal and water gas tar to the plaintiff
herein and that from that time up to the present date, the
plaintiff corporation, Blossom & Company, has frequently and
urgently demanded of the defendant, the Manila Gas Corporation,
that it comply with its aforesaid contract Exhibit A by continuing
to deliver coal and water gas tar to this plaintiffbut that the
said defendant has refused, and still refuses, to deliver to the
plaintiff any coal and water gas tar whatsoever under the said
contract Exhibit A, since the said month of July, 1920.
*******

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Blossom & Co. vs. Manila Gas Corporation

"'9. That owing to the bad faith of the said Manila Gas
Corporation, defendant herein, in not living up to its said contract
Exhibit A, made with this plaintiff, and ref using now to carry out
the terms of the same, by delivering to this plaintiff the coal and
water gas tar mentioned in the said Exhibit A, has caused to this
plaintiff great and irreparable damages amounting to the sum
total of one hundred twentyfour thousand eight hundred
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fortyeight pesos and seventy centavos (P124,848.70) and that the


said defendant corporation has refused, and still refuses, to pay to
this plaintiff the whole or any part of the aforesaid sum.
" '10. That the said contract Exhibit A, was to be in force until
January 1, 1929, that is to say, for ten (10) years counted from
January 1, 1919 and that, unless the defendant again commence
to furnish and supply this plaintiff with coal and water gas tar, as
provided for in the said contract Exhibit A, the damages already
suffered by this plaintiff will continually increase and become
larger and larger in the course of years preceding the termination
of the said contract on January 1, 1929.'"

In that action plaintiff prays for judgment against the def


endant:

" ' (a) That upon trial of this cause judgment be rendered
in favor of the plaintiff and against the defendant
for the sum of P124,848.70, with legal interests
thereon from November 23, 1923
"'(b) That the court specifically order the defendant to
resume the delivery of the coal and water gas tar to
the plaintiff under the terms of the said contract
Exhibit A of this complaint.' "

In the final analysis, plaintiff must stand or fall on its own


pleadings, and tested by that rule, it must be admitted that
the plaintiff's original cause of action, in which it recovered
judgment for damages, was founded on the tenyear
contract, and that the damages which it then recovered
were recovered for a breach of that contract.

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240 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila Gas Corporation

Both actions are founded on one and the same contract. By


the terms of the original contract of September 10, 1918,
the defendant was to sell and the plaintiff' was to purchase
three tons of water gas tar per month from September to
January 1, 1919, and twenty tons of water gas tar per
month after January 1, 1919, onehalf ton of coal gas tar
per month from September to January 1, 1919, and six tons
of coal gas tar per month after January 1, 1919. That from
and after January 1, 1919, plaintiff would take at least the
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quantities specified in the contract of September 10, 1918,


and that at its option, it would have the right to take the
total output of water gas tar of defendant's plant and 50
per cent of the gross output of its coal gas tar, and upon
giving ninety days' notice, it would have the right to the
entire output of coal gas tar, except such as the defendant
might need for its own use. That is to say, the contract
provided for the delivery to the plaintiff from month to
month of the specified amounts of the different tars as
ordered and requested by the plaintiff. In other words,
under plaintiff's own theory, the defendant was to make
deliveries from month to month of the tars during the
period of ten years, and it is alleged in both complaints that
the defendant broke its contract, and in bad faith refused to
make any more deliveries.
In 34 Corpus Juris, p. 839, it is said:

"As a general rule a contract to do several things at several times


is divisible in its nature, so as to authorize successive actions and
a judgment recovered for a single breach of a continuing contract
or covenant is no bar to a suit for a subsequent breach thereof.
But where the covenant or contract is entire, and the breach total,
there can be only one action, and plaintiff must therein recover all
his damages."

In the case of Roehm vs. Horst, 178 U. S., 1 44 Law. ed.,


953, that court said:

"An unqualified and positive refusal to perform a contract, though


the performance thereof is not yet due, may,

241

VOL. 55, NOVEMBER 8, 1930 241


Blossom & Co. vs. Manila Gas Corporation

if the renunciation goes to the whole contract, be treated as a


complete breach which will entitle the injured party to bring his
action at once."

15 Ruling Case Law, 966, 967, sec. 441, says:

"Similarly if there is a breach by the vendor of a contract for the


sale of goods to be delivered and paid for in installments, and the
vendee maintains an action therefor and recovers damages, he
cannot maintain a subsequent action to recover for the failure to

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deliver later installments."

In Pakas vs. Hollingshead, 184 N. Y., 211 77 N. E., 40 3 L.


R. A. (N. S.), 1042, the syllabus says:

"Upon refusal, by the seller, after partial performance, longer to


comply with his contract to sell and deliver a quantity of articles
in installments, the buyer cannot keep the contract in force and
maintain actions for breaches as they occur, but must recover all
his damages in one suit."

And on page 1044 of its opinion, the court says:

"The learned counsel for the plaintiff contends that the former
judgment did not constitute a bar to the present action, but that
the plaintiff had the right to elect to waive or disregard the
breach, keep the contract in force, and maintain successive
actions for damages from time to time as the installments of goods
were to be delivered, however numerous these actions might be. It
is said that this contention is supported in reason and justice, and
has the sanction of authority at least in other jurisdictions. We do
not think that the contention can be maintained. There is not, as
it seems to us, any judicial authority in this state that gives it any
substantial support. On the contrary, we think that the cases, so
far as we have been able to examine them, are all the other way,
and are to the effect that, inasmuch as there was a total breach of
the contract by the defendants' refusal to deliver, the plaintiff
cannot split up his demand and maintain successive actions, but
must either recover all his damages in the first suit

242

242 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila Gas Corporation

or wait until the contract matured or the time for the delivery of
all the goods had arrived. In other words, there can be but one
action for damages for a total breach of an entire contract to
deliver goods, and the fact that they were to be delivered in
installment from time to time does not change the general rule."

The case of L. Bucki & Son Lumber Co. vs. Atlantic


Lumber Co. (109 Federal, 411), of the United States Circuit
Court of Appeals for the Fifth Circuit, is very similar.
The syllabus says:
"1. CONTRACTSCONSTRUCTIONENTIRE

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CONTRACT.A contract was made for the sale of a large


quantity of logs to be delivered in monthly installments
during a period of eight years, payments to be made also in
installments at times having relation to the deliveries. It
contained stipulations as to such payments, and guaranties
as to the average size of the logs to be delivered in each
installment. Held, that it was an entire contract, and not a
number of separate and independent agreements for the
sale of the quantity to be delivered and paid for each
month, although there might be breaches of the minor
stipulations and warranties with reference thereto which
would warrant suits without a termination of the contract.
"2. JUDGMENTSMATTERS CONCLUDED
ACTION ?OR BREACH OF INDIVISIBLE CONTRACT.
The seller declared the contract terminated for alleged
breaches by the purchaser, and brought suit for general
and special damages, the latter covering payments due for
installments of logs delivered. By way of setoff and
recoupment against this demand, the purchaser pleaded
breaches of the warranty as to the size of the logs delivered
during the months for which payment had not been made.
Held, that the judgment in such action was conclusive as to
all claims or demands of either party against the other
growing out of the entire contract, and was a bar to a
subsequent suit brought by the purchaser to recover for
other breaches of the same warranty in relation to
deliveries made in previous months."
243

VOL. 55, NOVEMBER 8, 1930 243


Blossom & Co. vs. .Manila, Gas Corporation

On page 415 of the opinion, the court says:

"When the contract was ended, the claims of each party for
alleged breaches and damages therefor constituted an indivisible
demand and when the same, or any part of the same, was
pleaded, litigation had, and final judgment rendered, such suit
and judgment constitute a bar to subsequent demands which were
or might have been litigated. (Baird vs.U. S., 96 U. S., 430 24 L.
ed., 703.)"

In Watts vs. Weston (238 Federal, 149), Circuit Court of


Appeals, Second Circuit, the syllabus says:

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"1. JUDGMENT593JUDGMENT AS BARMATTERS


CONCLUDED.Where a continuing contract was terminated by
the absolute refusal of the party whose action was necessary to
further perform, a claim for damages on account of the breach
constituted an indivisible demand, and when the same or any part
of the same was pleaded, litigated, and final judgment rendered,
such suit and judgment constitute a bar to subsequent demands
which were or might have been litigated therein."

And on page 150 of the opinion, the court says:

"It is enough to show the lack of merit in the present contention to


point out as an inexorable rule of law that, when Knevals'
contract was discharged by his total repudiation thereof, Watts'
claims for breaches and damages therefor 'constituted an
indivisible demand, and when the same, or any part of the same,
was pleaded, litigation had and final judgment rendered, such
suit and judgment constitute a bar to subsequent demands which
were or might have been litigated.' (Bucki, etc., Co. vs. Atlantic,
etc., Co., 109 Fed. at page 415 48 C. C. A., 459 Cf. Landon vs.
Bulkley, 95 Fed., 344 37 C. C. A., 96.)
"The rule is usually applied in cases of alleged or supposed
successive breaches, and consequently severable demands for
damages but if the contract has been discharged by breach, if suit
for damages is all that is left, the rule is applicable, and every
demand arising from that contract and possessed by any given
plaintiff must be presented

244

244 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila, Gas Corporation

(at least as against any given defendant) in one action what the
plaintiff does not advance he foregoes by conclusive presumption."

In Abbott vs. 76 Land and Water Co. (118 Pac., 425 161
Cal., 42), at page 428, the court said:

"In Fish vs. Folley, 6 Hill (N. Y.), 54, it was held, in accord with
the rule we have discussed, that, where the defendant had
covenanted that plaintiff should have a continual supply of water
for his mill from a dam, and subsequently totally failed to perform
for nine years, and plaintiff brought an action for the breach and
recovered damages sustained by him to that time, the judgment
was a bar to a second action arising from subsequent failure to

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perform, on the theory that, although the covenant was a


continuing one in one sense, it was an entire contract, and a total
breach put an end to it, and gave plaintiff the right to sue for an
equivalent in damages.
"In such a case it is no warrant for a second action that the
party may not be able to actually prove in the first action all the
items of the demand, or that all the damage may not then have
been actually suffered. He is bound to prove in the first action not
only such damage as has been actually suffered, but also such
prospective damage by reason of the breach as he may be legally
entitled to, for the judgment he recovers in such action will be a
conclusive adjudication as to the total damage on account of the
breach."

It will thus be seen that, where there is a complete and


total breach of a continuous contract for a term of years,
the recovery of a judgment for damages by reason of the
breach is a bar to another action on the same contract for
and on account of the continuous breach.
In the final analysis, there is no real dispute about any
material fact, and the important and decisive question is
the legal construction of the pleadings in the former case
and in this case, and of the contract between the plaintiff
and the defendant of January 1, 1920.

245

VOL. 55, NOVEMBER 8, 1930 245


Blossom & Co. vs. Manila Gas Corporation

The complaint in the former case specifically alleges that


the defendant "has refused, and still refuses, to deliver to
the plaintiff any coal and water gas tar whatsoever under
the said contract Exhibit A, since the said month of July,
1920." "That owing to the bad faith of the said Manila, Gas
Corporation, defendant herein, in not living up to its said
contract Exhibit A, made with this plaintiff, and refusing
now to carry out the terms of the same." That is a specific
allegation not only of a breach of the contract since the
month of July, 1920, but of the bad faith of the defendant
in its continuous refusal to make deliveries of any coal and
water gas tar. That amended complaint was filed on July
11, 1924, or four years after the alleged bad faith in
breaking the contract.
Having recovered damages against it, covering a period
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of four years, upon the theory that the defendant broke the
contract, and in bad faith refused to make deliveries of
either of the tars, hoW can the plaintiff now claim and
assert that the contract is still in force and effect? In the
instant case the plaintiff alleges and relies upon the
tenyear contract of January 1, 1920, which in bad faith was
broken by the defendant. If .the contract was then broken,
how can it be enforced in this action?
It is admitted that the defendant never made any
deliveries of any tar from July, 1920, to April, 1926. Also
that it made nine deliveries to plaintiff of the minimum
quantities of coal and water gas tar from April 7, 1926, to
January 5, 1927.
Plaintiff contends that such deliveries were made under
and in continuation of the old contract.
March 26, 1926, after the decision of this court affirming
the judgment in the original action, plaintiff wrote the
defendant:

"* * * It is our desire to take deliveries of at least the minimum


quantities set forth therein and shall appreciate to have you
advise us how soon you will be in a position to make deliveries * *
*

246

246 PHILIPPINE REPORTS ANNOTATED


Blossom & Co. vs. Manila Gas Corporation

"*** In view of the fact that you have only effected settlement up
to November 23, 1923, please inform us what adjustment you are
willing to make for the period of time that has since elapsed
without your complying with the contract."

In response to which on March 31, 1926, the defendant


wrote this letter to the plaintiff:

"In reply to your letter of March 26th, 1926, in regard to tar, we


beg to advise you that we are prepared to furnish the minimum
quantities of coal and water gas tars as per your letter, viz:
twenty tons of water gas tar and six tons of coal gas tar. The price
figured on present costs of raw materials is P39.01 (Thirtynine
and 01/100 Pesos) per ton of water gas and P33.59 (Thirtythree
and 59/100 Pesos) per ton of coal tar.
"We shall expect you to take delivery and pay for the above

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amount of tars at our factory on or bef ore April 7th prox.


"Thereafter we shall be ready to furnish equal amounts on the
first of each month. Kindly make your arrangements accordingly."

On January 29, 1927, the plaintiff wrote the defendant


that:

"On July 31st last, we made demand upon you, under the terms of
our tar contract, for 50 per cent of your total coal tar production
for that month and also served notice on you that beginning 90
days from August 1st we would require your total output of coal
tar monthly this in addition to the 20 tons of water gas tar
provided for in the contract to be taken monthly.
* * * * * * *
"We are here again calling on you for your total output of coal
tar immediately and the regular minimum monthly quantity of
water gas tar. In this connection we desire to advise you that
within 90 days of your initial delivery to us of your total coal tar
output we will require 50 per

247

VOL. 55, NOVEMBER 8, 1930 247


Blossom & Co. vs. Manila, Gas Corporation

cent of your total water gas tar output, and, further, that two
months thereafter we will require your total output of both tars."

February 2, 1927, the defendant wrote the plaintiff:

"Replying to your letter of Jan. 29, we would say that we have


already returned to you the check enclosed therewith. As we have
repeatedly informed you we disagree with you as to the
construction of your contract and insist that you take the whole
output of both tars if you wi&h to secure the whole of the coal tar.
"With regard to your threat .of further suits we presume that
you will act as advised. If you make it necessary we shall do the
same."
From an analysis of these letters it clearly appears that the
plaintiff then sought to rely upon and enforce the contract of
January 1, 1920, and that defendant denied plaintiff's
construction of the contract, and insisted "that you take the whole
output of both tars if you wish to secure the whole of the coal tar."

February 28, 1927, the plaintiff wrote the defendant:


"In view of your numerous violations of and repeated

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refusal and failure to comply with the terms and provisions


of our contract dated January 3031, 1919, for the delivery
to us of water and coal gas tars, etc., we will commence
action," which it did.
The record tends to show that the tars which the
defendant delivered after April 7, 1926, were not delivered
under the old contract of January 1, 1920, and that at all
times since July, 1920, the defendant has consistently
refused to make any deliveries of any tars under that
contract.
The referee found as a fact that plaintiff was entitled to
f=2,219.60 for and on account of overcharges which the
defendant made for the deliveries of fiftyfour tons of coal
gas tar, and one hundred eighty tons of water gas tar after
April, 1926, and upon that point the lower court says:
248

248 PHILIPPINE REPORTS ANNOTATED


Lim Cuan Sy vs. Northern Assurance Co.

"The fourth charge that plaintiff makes is meritorious. The price


was to be fixed on the basis of raw materials. The charge for
deliveries during 1926 were too high. In this I agree with entirely
with the referee and adopt his findings of fact and calculations.
(See Referee's report, p. 83.) The referee awarded for overcharge
during the period aforesaid, the sum of P2,219.60. The defendant
was trying to discourage plaintiff from buying tars and made the
price of raw material appear as high as possible."

That finding is sustained upon the theory that the


defendant broke its contract which it made with the
plaintiff for the sale and delivery of the tars on and after
April, 1926.
After careful study of the many important questions
presented on this appeal in the exhaustive brief of the
appellant, we are clearly of the opinion that, as found by
the lower court, the plea of res judicata must be sustained.
The judgment of the lower court is affirmed.
It is so ordered, with costs against the appellant.

Johnson, Street, Malcolm, Villamor, Ostrand,


Romualdez, and VillaReal, JJ., concur.

Judgment affirmed.

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