Smith v. Vicente Sotelo Matti

Summary

A commercial dispute arising from wartime machinery contracts between Smith, Bell & Co., Ltd. and Vicente Sotelo for steel tanks, expellers, and electric motors worth ₱96,000 total. The contracts contained uncertain delivery terms due to WWI restrictions, government regulations, and transportation embargoes. When goods arrived between October 1918 and April 1919, defendant refused acceptance and payment. The Supreme Court applied Civil Code provisions on conditional obligations, holding that when contract performance depends on third parties (government permissions, wartime conditions), the obligor fulfills his duty by exercising all reasonable efforts. The Court found plaintiff had delivered within reasonable time despite wartime delays and ordered defendant to accept all goods and pay the full contract price with interest. The decision established important precedent on conditional obligations and reasonable delivery time in commercial contracts during extraordinary circumstances.