Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-30442 September 30, 1983

HONORABLE CORNELIO BALMACEDA, now LEONIDES VIRATA, in his capacity as Secretrary of Commerce and Industry, petitioner, vs. UNION CARBIDE PHILIPPINES, INC., HONORABLE FEDERICO C. ALIKPALA, Presiding Judge, Branch XXII, Court of First Instance of Manila, respondents.

G.R. No. L-30409 September 30, 1983

HONORABLE MARCELO BALATBAT, in his capacity as Secretary of Commerce and Industry, petitioner, vs. UNION CARBIDE PHILIPPINES, INC., respondent.

The Solicitor General for petitioner.

Gil R. Carlos for respondents.

FERNANDO, C.J.:

The question raised in this petition filed by the Solicitor General to review the decision of then respondent Judge, the late Federico C. Alikpala declaring that private respondent Union Carbide of the Philippines is not engaged in the retail business does not pose any difficulty. The answer is supplied by the case of B. F. Goodrich Philippines, Inc. v. Teofilo Reyes, Sr., 1 Goodyear Tire and Rubber Co. v. Teofilo Reyes, Sr., 2 and Mobil Oil Philippines, Inc. v. Teofilo Reyes, Sr. 3 The doctrine therein announced applying the Presidential Decree 4 amending the Retail Trade Act 5 is directly in point. The decision calls for affirmance.

The amendatory Presidential Decree added two more paragraphs, the first of which was the basis for the three previous decisions of this Court. The entire section 4 was reproduced. The Section starts with an opening statement as to what the term "retail business" shall mean, namely, 6 "occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption." 6 It excludes, according to the amendment, "(c) a manufacturer or processor selling to the industrial and commercial users or consumers who use the products bought by them to render service to the general public and/or produce or manufacture goods which are in turn sold to them;... " 7 The appealed decision, which is quite comprehensive and scholarly, could be commended for in the main anticipating that the above category should be excluded from "retail business." Thus: "In the field of economics, in the area of marketing, the interpretation given by Government agencies, and by common acceptation the term 'retail', is associated with and limited to goods for personal, family or household use, consumption and utilization. This is also in accord with the ruling of the Supreme Court in the Ichong case regarding the nature and kind of goods a retailer handles. Under the situation, the Court is persuaded to hold that the goods for consumption mentioned in Republic Act No. 1180 should be construed to refer to the final and end [uses] of a

product which directly satisfy human wants and desires and are needed for home and daily life. Accordingly, the goods which petitioner's Industrial Products Division handle (commonly referred to as intermediate goods), do not fall and cannot be classified as consumption goods." 8

There was a need for such clarification. Private respondent has two divisions, the Consumer Products Division and the Industrial Products Division. As to the former, it effected its sales through retail outlets, dealers and distributors. Thus there was no question as to the character of its business. It was not embraced in the category of retail. As to the Industrial Products Division, its Agricultural Chemicals Department sold its products through exclusive distributors. Again, it could be concluded that such Department was not covered by the Act even before its amendment. The products handled by the five other departments of the Industrial Products Division, namely, the Metals and Carbide; Plastics; Industrial Chemicals; Linde, Haynes Stellite and Carbon Products and Polyethylene Bags were generally sold to producers, processors, fabricators and to industries. While these departments had a limited fixed clientele, still there was no prohibition as to the general public malting similar purchases from them. What removed these departments from the operation of the Retail Trade Act was pointed out in the appealed decision in these words: "The goods handled by the five remaining departments of petitioner's Industrial Products Division are generally raw materials used in the manufacture of other goods, or if not, as one of the component raw materials, or at the least as elements utilized in the process of production or manufacturing." 9 After considering the statutory definition in the Retail Trade Act itself, its definition by economists, and in judicial opinions, as well as the view of former Central Bank Governor Cuaderno as to the adverse consequences in terms of increased cost to consumers, loss of official assistance from producers, elimination of much needed foreign capital and loss of technical assistance, the lower court held it was not engaged in the retail business. The amendatory Decree removes whatever doubt there could have been as to the correctness of the conclusion reached by the lower court.

WHEREFORE, the Court affirms the lower court decision holding that Union Carbide Philippines, Inc. is not engaged in the "retail business" as this term is defined in Section 4 of Republic Act No. 1180 and malting permanent the restraining order of June 22, 1964 issued in this case. No costs.

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-30067 April 19, 1983

B. F. GOODRICH PHILIPPINES, INC., petitioner, vs. HON. TEOFILO REYES, SR., in his capacity as Secretary of Commerce and Industry, respondent.

FERNANDO, C.J.:

Relying on the equal protection clause 1 as interpreted in the leading case of Inchong v. Hernandez, 2 petitioner B.F. Goodrich Philippines, Inc. contends in this declaratory relief proceeding, with the then Secretary of Commerce and Industry Teofilo Reyes, Sr. as respondent, that it does not fall within the ban. It is engaged in the business of manufacturing and selling rubber products, principally automotive tires and tubes, batteries, conveyor belts, heels and soles for shoes and tiles to dealers who in turn sells it to others. 3 Under the statute, it cannot engage in retail business, namely to sell direct to the general public, merchandise, commodities or goods for consumption. 4 It admitted that it sold directly to the government and all its instrumentalities and/or agencies; public utilities; agricultural enterprises; logging, mining, and natural resources exploration firms; automotive assembly plants who buy its products in large bulk; industrial enterprises; and employees and officers of its company. 5

There was a plea for a preliminary injunction. It was set for hearing. Upon its being heard, the Office of the Solicitor General manifested that it was not ready to formulate its stand on the matter in view of the fact that the question involved was of great importance. Accordingly, a restraining order was issued. Subsequently, the answer was duly filed, the principal affirmative defenses being that the petitioner should not be considered exempt as it is not a corporation wholly owned by citizens of the Philippines and that even on the assumption that such was the case, it being alleged in the petition that only 1.46% of its capital stock was owned by aliens, non-Filipinos or non-Americans, the Parity Amendment being still in force and effect at the time of the filing of this petition, still Republic Act 1180 is quite clear as to its not being applicable to petitioner considering the allegations of the petition. The plea was for dismissal.

In the stipulation of facts, the allegations set forth above were admitted as to its selling to dealers and distributors primarily but likewise selling directly to certain entities and individuals named. Paragraph XX of the stipulation of facts made mention of the opinion of the then Secretary of Justice, Pedro Tuason, who ruled that a corporation whose capital stock was 99.99% Filipino and 0.01% alien was exempt from the provisions of Republic Act No. 1180, based on the doctrine of "de minimis non curat lex"; hence, the said corporation could retail. 6

On such stipulation of facts, the lower court rendered its decision making permanent the restraining order issued although holding that petitioner is not exempt from the provisions of Republic Act No. 1180. The reason for such a decision was set forth thus: "It has been stipulated that the rubber products of the petitioner desired to be sold in bulk

to automotive assembly plants will be resold by the latter to their own customers at a profit without changing the form of said rubber products, together with assembled units which are being sold; that the rubber products desired to be sold by the petitioner to public utilities, power and communication companies, agricultural enterprises, proprietary planters, agricultural processing plants, agricultural cooperatives, industrial and commercial enterprises, logging, mining and persons engaged in the exploitation of natural resources are to be used by the latter in their operations to produce and to render goods and services to third parties and to the general public: and that the other products desired to be sold to the Government and all its instrumentalities and/or agencies, public utilities, agricultural enterprises, proprietary planters, agricultural processing plants, agricultural cooperatives, logging, mining, and other entities and persons engaged in the exploitation of natural resources, and industrial and commercial enterprises are to be sold at prices lower than at which they are sold to the general consuming public by dealers and distributors of said rubber products. An examination of the types or classes of customers to which the petitioner desires to sell its rubber products will reveal that in the great majority of such customers, the sale to them may not be classified as the sale of consumer goods or merchandise for the satisfaction of human, personal or household wants so as to be considered as retail in the sense already discussed above. Nonetheless, it is observed that some of the listed customers would easily fall within the purview of a final consumer of the product who buys the same for the satisfaction of a personal want. Among these customers are 'proprietary planters,' 'persons engaged in the exploitation of natural resources,' and 'employees and officers of the petitioner.' 7

Both petitioner and respondent appealed to this Court. A ruling on the question raised as to the precise meaning of retail business is obviated by the issuance of Presidential Decree No. 714 8 amending Republic Act No. 1180. Under the former, which took effect without presidential approval on June 19, 1954, the term "retail business" covers "any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption, but shall not include: (a) a manufacturer, processor, laborer or worker selling to the general public the products manufactured, processed or produced by him if his capital does not exceed five thousand pesos, or (b) a farmer or agriculturist selling the product of his farm." 9 Under the aforesaid Presidential Decree, which took effect on May 28, 1975, two more paragraphs were included. They are: "(c) a manufacturer or processor selling to the industrial and commercial users or consumers who use the products bought by them to render service to the general public and/or to produce or manufacture goods which are in turn sold to them; (d) a hotel- owner or keeper operating a restaurant irrespective of the amount of capital, provided that the restaurant is necessarily included in, or incidental to, the hotel business." 10 It is clear from the above that proprietary planters and persons engaged in the exploration of natural resources are included within the aforesaid amendment. The lower court decision, however, is in accordance with law insofar as employees and officers of petitioners are concerned. As thus modified, the decision calls for affirmance.

In view of the above, there is no need to pass upon the allegation that there is a denial of equal protection. At any rate, the ponencia of the late Justice Labrador in Ichong v. Hernandez, 11 upholding the validity of Republic Act No. 1180, both scholarly and comprehensive, leaves no room for doubt as to the futility of relying on the equal protection guarantee. This Act was conceived and is being implemented conformably to the nationalistic spirit which underlies both the 1935 and the present Constitutions.

WHEREFORE, the lower court decision is affirmed declaring that petitioner is not engaged in retail business within the purview of Section 4 of Republic Act No. 1180 in accordance with Presidential Decree No. 714, except as to its sales to its employees and offices. The restraining order issued is likewise made permanent but subject to the above modification. No costs.

Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION

G.R. No. L-39841 June 20, 1988

MARSMAN & COMPANY, INC., petitioner, vs. FIRST COCONUT CENTRAL COMPANY, INC., respondent.

Sycip, Salazar, Feliciano, Hernandez & Castillo Law Office for petitioner.

GANCAYCO, J.:

Is the sale of industrial machinery covered by the Anti-Dummy Law and the Retail Trade Nationalization Law? This is the issue in this petition for review on certiorari assailing the decision of the Court of Appeals dated September 16, 1974 which reversed the decision of the Court of First Instance and the denial of a motion for reconsideration thereof.

The facts of the case as narrated in the decision of the Court of Appeals are as follows:

On January 26, 1967, the First Coconut Central Co., Inc. purchased on installment one diesel generating unit worth P21,000.00 from Madrid Trading. As down payment, the defendant company paid the amount of P4,000.00 to Madrid Trading which issued official receipt No. 02248. The diesel generating unit was received by the defendant company on January 27, 1967 as shown by Invoice No. 214 (Exhibit C), where it also provided for the payment of the balance of P17,000.00 in three (3) equal monthly installments to begin from date of delivery with usual clause on interests and attorney's fees. As security for the satisfaction of the said obligation, a chattel mortgage (Exhibit H) over the same diesel generating unit was constituted by the defendant First Coconut Central Co., Inc. in favor of Madrid Trading. On January 26, 1967, Madrid Trading assigned all its rights under the chattel mortgage to the herein plaintiff, Marsman & Company, Inc. by virtue of a Deed of Assignment (Exhibit B). On March 28, 1967, the defendant company paid Marsman & Company, Inc. the sum of P2,000.00, leaving a balance of P15,000.00.

On September 13, 1967, the plaintiff company notified the defendant First Coconut Central Company, lnc. of its "long overdue and outstanding account" in the amount of P15,000. 00. On September 25, 1967, the defendant company wrote Marsman & Company, Inc., appealing that they be given thirty (30) days to settle the obligation, and enclosing in said letter a check for One Thousand Pesos (P1,000.00). On October 30, 1967, after repeated failure by the defendant company to meet its obligation, plaintiff Marsman & Company, Inc. brought this action to recover the balance of defendant company's account in the sum of Fourteen Thousand Pesos (P14,000.00).

After hearing, the Court of First Instance of Manila, Branch II, handed down its decision, ordaining in its dispositive portion:

WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendant in the amount of P14,000.00, with interest at the rate of 12% per annum from September 25, 1967, and to pay attorney's fees in the amount of P2,000.00 and the costs of the suit.

SO ORDERED. 1

Defendant First Coconut Central Co., Inc., not satisfied with the decision of the trial court appealed to the Court of Appeals. On September 16, 1974, the Court of Appeals rendered the decision now sought to be reviewed in the instant petition. The decision stated that the sale in question violated Republic Act No. 1180 (the Retail Trade Nationalization Law), the dispositive portion of which reads as follows:

WHEREFORE, the appealed judgment is hereby set aside, and another one entered, dismissing the plaintiff-appellee's complaint and the defendant- appellant's counterclaim; and ordering the defendant-appellant to return the diesel generating unit in question to the plaintiff-appellee, and on the part of the defendant-appellant to return the amount of P7,000.00 to the plaintiff-appellee. NO PRONOUNCEMENT AS TO COSTS. 2

The above-quoted dispositive portion was, upon motion of respondent First Coconut Central Co., Inc., modified by the Court of Appeals in its resolution of October 15, 1974 so as to correct alleged clerical errors contained therein. The dispositive portion of the said resolution, as modified, reads as follows:

WHEREFORE, the dispositive portion of our decision of September 16, 1974 in the above-entitled case is hereby AMENDED to read as follows:

"WHEREFORE, the appealed judgment is hereby set aside, and another one entered, dismissing the plaintiff-appellee's complaint and the defendant- appellant's counterclaim; and ordering the defendant-appellant to return the diesel generating unit in question to the plaintiff-appellee, and on the part of the PLAINTIFF-APPELLEE to return the amount of P7,000.00 to the DEFENDANT- APPELLANT. NO PRONOUNCEMENT AS TO COSTS. " 3

A motion for reconsideration was filed by petitioner on October 10, 1974 but was denied by the Court of Appeals for lack of merit in its resolution of November 26, 1974. 4 Hence, the instant petition.

Specifically, petitioner assigns the following errors:

1. THE SALE OF INDUSTRIAL MACHINERY FOR USE BY THE INDUSTRIAL PLANT DOES NOT CONSTITUTE ENGAGING IN THE RETAIL BUSINESS WITHIN THE CONTEMPLATION OF REPUBLIC ACT NO. 1180. ACCORDINGLY, THE COURT OF APPEALS ERRED IN HOLDING THAT THE SALE OF A DIESEL GENERATING SET TO RESPONDENT WAS NULL AND VOID FOR HAVING BEEN MADE IN VIOLATION OF REPUBLIC ACT NO. 1180.

II. ASSUMING ARGUENDO THAT PETITIONER IS PROHIBITED BY LAW FROM ENGAGING IN DIRECT SELLING OF MACHINERY TO INDUSTRIAL USERS, THE CONTRACT OF SALE IN QUESTION IS NOT, BY THAT FACT ALONE, NULL AND VOID, AND THAT, ACCORDINGLY, PETITIONER IS ENTITLED TO RECOVER FROM

RESPONDENT THE BALANCE OF THE PURCHASE PRICE OF THE SAID DIESEL GENERATING SET. 5

We find merit in the petition.

The Court of Appeals held that petitioner violated the Retail Trade Nationalization Law and the Anti-Dummy Law 5a in its decision. Its ruling was based upon the following assumptions:

(1) The petitioner was illegaly engaged in the retail business; and

(2) The sale of a generating unit to respondent constituted retail business as defined by Republic Act No. 1180.

The said assumptions do not have any cogent basis in law. Section 4 of Republic Act No. 1180 defines retail business as follows:

Sec. 4. As used in this Act, the term "retail business" shall mean any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or good for consumption, but shall not include:

(a) a manufacturer, processor, laborer or worker selling to the general public the products manufactured, processed, or produced by him if his capital does not exceed five thousand pesos.

(b) a farmer or agriculturist selling the product of his farm.

(c) a manufacturer or processor selling to industrial and commercial users or consumers who use the products bought by them to render service to the general public and /or to produce or manufacture goods which are in turn sold by them.

(d) a hotel-owner or keeper operating a restaurant, irrespective of the amount of capital, provided that the restaurant is necessarily included in, or incidental to, the hotel business. 6 (emphasis supplied.)

For a sale to be considered as retail, the following elements should concur:

(1) The seller should be habitually engaged in selling;

(2) The sale must be direct to the general public; and

(3) The object of the sale is limited to merchandise, commodities or goods for consumption.

In this case, the first two elements are present. It is the presence of the third element that must be determined. The last element refers to the subject of the retailer's activities or what he is selling, i.e., consumption goods or consumer goods. Consumer goods may be defined as "goods which are used or bought for use primarily for personal, family or household purposes. Such goods are not intended for resale or further use in the

production of other products." 7 In other words, consumer goods are goods which by their very nature are ready for consumption.

Producer goods have been defined as "goods (as tools and raw material) that are factors in the production of other goods and that satisfy wants only indirectly- called also auxiliary goods, instrumental goods, intermediate goods." 8 They are by their very nature not sold to the public for consumption. As such, the sale of producer goods used for industry or business is classified as a wholesale transaction. Wholesaling has been defined as "selling to retailers or jobbers rather than to consumers or a sale in large quantity to one who intends to resell." 9

In the case at bar, the article in controversy is a piece of industrial machinery—a diesel generating unit. The said unit was purchased by respondent to be used in its coconut central and as such may be classified as "production or producer goods." Since the diesel generating unit is not a consumer item, it necessarily does not come within the ambit of retail business as defined by Republic Act No. 1180. Hence, herein petitioner Marsman & Company, Inc. may engage in the business of selling producer goods. It necessarily follows that petitioner cannot be guilty of violating the Anti- Dummy Law or of using a dummy since it is not prohibited by the Retail Trade Nationalization Law from selling the diesel generating unit to herein respondent. From the foregoing, there can be no basis in law for declaring the contract of sale as null and void.

That the sales to industrial or commercial users do not fall within the scope of the Retail Trade Nationalization Law is further confirmed by Presidential Decree No. 714 promulgated on May 28, 1975 amending said law when the latter provided in its preamble that "Whereas, it is believed to be not within the intendment of said nationalization law to include within its scope sales made to industrial or commercial users or consumers; ...."

The finding, therefore, of the respondent court and of the lower court that the petitioner was guilty of violating the Anti-Dummy Law and the Retail Trade Nationalization Law is without lawful basis. By the same token its conclusion that the contract of sale with the respondent is void must be overturned. Petitioner's suit for the recovery of the unpaid balance of the sale of the machinery to respondent must be upheld.

WHEREFORE, the instant petition is hereby GRANTED. The decision of the Court of Appeals is set aside. The decision of the trial Court in favor of the petitioner and against the respondent for the amount of P14,000.00, with interest at the rate of 12% per annum from September 25, 1967, and to pay attorney's fees in the amount of P2,000.00, and the costs of the suit, is hereby AFFIRMED. This decision is immediately executory and no motion for extension of time to file motion for reconsideration shall be entertained.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

EN BANC

G.R. No. L-30063 July 2, 1983

THE GOODYEAR TIRE AND RUBBER CO. OF THE PHILIPPINES, LTD., petitioner-appellant, vs. THE HONORABLE TEOFILO REYES, SR., in his capacity as Acting Secretary of Commerce and Industry, respondent-appellee, FIRESTONE TIRE & RUBBER CO. OF THE PHILIPPINES, intervenor-appellant.

Siguion Reyna, Montecillo, Belo & Ongria Law Office for petitioner- appellant.

The Solicitor General for Acting Secretary of Commerce and Industry.

Ortigas & Ortigas Law Office for Firestone Tire & Rubber Co. of the Phils.

FERNANDO, C.J.:

In this appeal by both petitioners Goodyear Tire and Rubber Co. of the Philippines and intervenor Firestone Tire and Rubber Co. of the Philippines, 1 the lower court holding that as to certain customers, "proprietory planters, persons engaged in the exploitation of natural resources," and "employees and officers of the petitioner," they are engaged in retail business, the legal question raised was set at rest by Presidential Decree No. 714 2 amending the Retail Trade Nationalization Law which took effect without presidential approval. 3 As originally worded, the term "retail business" covers "any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption, but shall not include: (a) a manufacturer, processor, laborer or worker selling to the general public the products manufactured, processed or produced by him if his capital does not exceed five thousand pesos, or (b) a farmer or agriculturist selling the product of his farm." 4 Under the aforesaid Presidential Decree, which took effect on May 28, 1975, two more paragraphs were included. They are: "(c) a manufacturer or processor selling to the industrial and commercial users or consumers who use the products bought by them to render service to the general public and/or to produce or manufacture goods which are in turn sold to them; (d) a hotel-owner or keeper operating a restaurant irrespective of the amount of capital, provided that the restaurant is necessarily included in, or incidental to, the hotel business." 5

Petitioner Goodyear Tire and Rubber Company of the Philippines as well as intervenor Firestone Tire and Rubber Company of the Philippines, as noted in the decision now on appeal, sold their rubber products to certain types or class of customers as follows: "(a) The Government of the Republic of the Philippines and all its instrumentalities and/or agencies, who use the Rubber Products to render essential services to the country and to the general public. (b) Public utilities, such as bus fleets, taxi fleets, jeepney fleets, freight lines, etc., and power and communications companies, who use Rubber Products to render essential services to third parties and the general public for compensation. (c) Agricultural enterprises, proprietary planters, agricultural processing plants, and agricultural cooperatives, who use the Rubber Products to perform essential services to

third parties and to the general public for valuable consideration and profit. (d) Logging, mining, and other entities and persons engaged in the exploitation of natural resources. (e) Automotive assembly plants, who buy the Rubber Products in bulk for use in the assembly of automotive equipment, and who resell the same to third parties and to the general public without alteration or change at a profit as the assembled automotive equipment and vehicles are sold. (f) Industrial and Commercial enterprises, engaged in manufacturing and sales of prime and essential commodities to third parties and the general public for a profit, who buy the Rubber Products for use in their manufacturing and sales operations. (g) Employees and officers of the petitioner-intervenor." 6

To repeat as to the above-named customers, the court a quo held that petitioner and intervenor were not exempt from the provisions of Republic Act No. 1180, although ruling in their favor insofar as the other customers were concerned, thus making permanent the preliminary injunction issued. Respondent Acting Secretary of Commerce and Industry likewise appealed.

As the facts in Goodrich are not dissimilar both as to the nature of the business and the customers, a similar conclusion is indicated. This Court in that decision categorically stated: "It is clear from the above that proprietary planters and persons engaged in the exploration of natural resources are included within the aforesaid amendment. The lower court decision, however, is in accordance with law insofar as employees and officers of petitioner are concerned. As thus modified, the decision calls for affirmance." 7 We do so again.

WHEREFORE, the lower court decision is affirmed declaring that petitioner and intervenor are not engaged in retail business within the purview of Section 4 of Republic Act No. 1180 and Presidential Decree No. 714, except as to its sales to its employees and officers. The injunction issued is likewise made permanent but subject to the above qualification. No costs.

Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION

G.R. No. L-37704 January 30, 1989

ERLINDA TALAN and YAP O. TECK alias ANTONIO YAP petitioners, vs. THE PEOPLE OF THE PHILIPPINES and THE HON. COURT OF APPEALS, respondents.

Francisco E. Antonio for petitioners.

The Solicitor General for respondents.

GRINO-AQUINO, J.:

This is a petition for review of the Court of Appeals' decision dated September 7, 1973 in CA-G.R. No. 11863, affirming the conviction of the petitioners Erlinda Talan and Yap O. Teck alias Antonio Yap, who are common-law spouses, for violation of the Retail Trade Nationalization Law (Section 2-A, Commonwealth Act 108, as amended by Section 1, Republic Act 1180).

On February 16, 1955, Erlinda Talan was granted a permit by the Office of the Mayor of Basilan City, to engage in the sari-sari store business, with a capital of P500, principally to sell cigarettes at Balobo, Lamitan, Basilan City.

Yap O. Teck alias Antonio Yap, is a permanent immigrant in the Philippines. He arrived here in 1947, and resided at Davao City. Later, he moved to Zamboanga and still later to Lamitan, Basilan City. He holds an I.C.R. No. 22406 issued at Davao on December 19,1947, and an A.C.R. No. 52653 which was issued in Zamboanga City on December 21, 1950. He appears to have returned briefly to China in 1951 and married a Chinese woman named Ang Siok Chin in Amoy, China. However, on February 20, 1955, or only five (5) days after Erlinda Talan obtained a mayor's permit to open her sari-sari store, she and Yap O. Teck began living as husband and wife without the benefit of marriage.

On January 14, 1969, Erlinda Talan applied for, and was granted, a permit to engage in business as a general merchant, with a capital of P2,000.00 in the public market of Lamitan.

Shortly after it opened in 1957, Erlinda's store and other stores in Lamitan were placed under surveillance by the police of Basilan on suspicion of being operated in violation of the Retail Trade Nationalization Law.

During the investigation of Erlinda Talan on February 2, 1957, she signed an affidavit or sworn statement (Exh. B) admitting:

1. That Antonio Yap, a chinese national, is her common-law husband;

2. That they had been living together since February 20, 1955, and that they have one child named Norma Yap, and another on the way, she being pregnant at the time;

3. That she had a license for her store: Permit No. 33; O.R. No. 5537308 for Mpl. License; O.R. No. 0966081 for G.R.; O.R. No. 0966083 for B-9(a) 1957; O.R. 0553709 for Mpl. license, salted fish; Medical Certificate No. 18, all in the name of MISS ERLINDA TALAN;

4. That she bad been occupying a stall in the public market of Lamitan since February 1955, before she became the common-law wife of ANTONIO YAP;

5. That when she was single, her store (a sari-sari store) was at Campo Tres (Bolingan), Lamitan District, this city. Later she transferred her store to the public market; and

6. That her sari-sari store became a general merchandise store because "my common-law husband helped already in putting more goods in this store" (p. 29, Appellants' Brief; p. 28, Rollo). Her original capital of P500 increased to "more or less two thousand (P2,000.00) pesos." (Ibid.)

Based on the report of the Secret Service, the affidavit of the accused Erlinda Talan, and the evidence gathered by the field investigator, the Prosecutor of the Anti-Dummy Board filed an information against the petitioners alleging:

... between January 20, 1959, up to the present in the District of Lamitan, Basilan City and within the jurisdiction of this Honorable Court, the above-named accused ERLINDA TALAN, a Filipino citizen, and having in her name a license for a retail store in Lamitan Market Site, did then and there wilfully, unlawfully, and feloniously allowed and permitted and still allows and permits her common-law husband and co-accused YAP O. TECK alias ANTONIO YAP, a Chinese citizen, and therefore disqualified under Section 1 of Republic Act 1180, to engage directly or indirectly in the retail business; as in fact said accused YAP O. TECK without falling within the exception provided in Section 2-A of Commonwealth Act 108, wilfully, feloniously, unlawfully, and knowingly aided, assisted or abetted in the planning, consummation or perpetration of the act of his co-accused ERLINDA TALAN, by then and there managing or otherwise taking part in the management, operation or control of the retail business. (pp. 13-14, Rollo.)

After trial, the court rendered judgment on October 20, 1970 finding the petitioners guilty beyond reasonable doubt of the crime charged and sentencing each of them to suffer the penalty of imprisonment for five (5) years, with the accessory penalties of the law, and each to pay a fine of P5,000. It also ordered the deportation of the accused Yap O. Teck immediately after the service of his sentence.

The decision was appealed by the petitioners to the Court of Appeals which on September 7, 1973 affirmed it. The accused filed a petition for review in this Court.

After deliberating on the petition, We find no reversible error in the finding of the Court of Appeals that:

... There is enough evidence of record showing that Erlinda Talan allowed Yap O. Teck to engage, at least indirectly, in the retail business, and that Yap O. Teck took part in its

operation.

It appears from his own evidence that Yap O. Teck has been jobless; and that although he was only 38 years old in 1958, he never exerted effort to look for a job. These and the fact that the sari-sari store of Erlinda Talan became a General Merchant store soon after she and Yap O. Teck had started living together, lend weight to the theory of the prosecution that he did engage directly or indirectly in the retail business for the main support of his family. (p. 25, Rollo.)

Section 2(c) of RA 1180, as amended by RA 6084, August 4, 1969 provides that "the exercise, possession or control by a Filipino citizen having a common-law relationship with an alien, of a right, privilege, property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the Philippines, constitutes a prima facie evidence of violation of the provisions of Sec. 2-A of the Act."

While the Filipino common-law wife of a Chinese national is not barred from engaging in the retail business provided she uses capital exclusively derived from her paraphernal property (Opinion No. 201, Series of 1961, Secretary of Justice), it was, however, shown in this case that the capital used in the sari-sari store was not exclusively derived from petitioner Talan's paraphernal property. It was shown that petitioner Yap O. Teck contributed much to the retail business of Talan, by not only providing more capital but also actively managing the business, all in violation of the Retail Trade Nationalization Act.

On the basis of all the foregoing considerations, the Court of Appeals correctly found petitioner Erlinda Talan guilty of having unlawfully permitted her non-Filipino common-law husband Yap O. Teck to engage directly or indirectly in the retail trade business, and the latter, of having unlawfully aided, assisted or abetted the planning, consummation and perpetration of the act of his co-accused Erlinda Talan by managing or taking part in the management, operation and control of her retail trade business, contrary to Section 2-A of R.A. No. 1180.

WHEREFORE, the petition for review is denied. The appealed decision of the Court of Appeals in CA-G.R. No. 11863 is affirmed. Costs against the petitioners.

SO ORDERED.

Republic of the Philippines SUPREME COURT Manila

FIRST DIVISION

G.R. No. 102013 October 8, 1993

DOMINGO R. DANDO, petitioner, vs. NORMAN JAMES FRASER, MARITA S. CAYMO and COURT OF APPEALS, respondents.

Domingo R. Dando for petitioner.

Roberto B. Arca for private respondent Norman James Fraser.

Manuel B. Tomacruz for private respondent Marita S. Caymo.

QUIASON, J.:

This is an appeal by certiorari under Rule 45 of the Revised Rules of Court from the decision of the Court of Appeals in CA-G.R. C.V No. 264050, entitled "DOMINGO R. DANDO v. NORMAN JAMES FRASER, et. al, reversing the decision of the Regional Trial Court, Branch 33, Siniloan, Laguna, in Civil Case No. 5-423.

It appears that on November 15, 1983, Cornelia F. Carlos sold Amelia Gayon the Argentina Club and Disco (CLUB) located at No. 2110 Roxas Boulevard, Pasay City and housed in a building leased from Dominador S. Luz.

On the same day, Gayon also executed a Deed of Trust, attesting that Gayon, as trustee, bought the CLUB, including the improvements found therein for and in behalf of respondent Norman J. Fraser from Cornelia F. Carlos for the sum of P370,000.00. The said Dead of Trust stated that respondent Fraser furnished all the funds for the purchase and operation of the said CLUB and that Gayon was administering, operating and holding the aforesaid CLUB for and in behalf of respondent Fraser.

On April 9, 1984, respondent Fraser sold on installment basis the said CLUB to Silverio V. Puno, Arnaldo L. Domingo and Ronald Clifton Vercoe as evidenced by a "Sale of Nightclub on Installment Basis" (Records, Vol. II, p. 235; Annex "F") for the sum of P510,000.00. However, the buyers were allowed to operate and take possession of the said CLUB earlier or on April 1, 1984.

On or about April 10, 1984, Gayon consulted petitioner for legal advise about the moves being taken by Puno and Domingo to get the CLUB from her (TSN, June 18, 1986, p. 4). She was advised by petitioner that she had a right to possess the CLUB and must file a case against Puno, Domingo and respondent Fraser ( TSN, June 18, 1986, p. 4). Furthermore, she was advised to get the CLUB by force since litigations are usually protracted (TSN, p. 5; ibid).

Acting on petitioner's advice, Gayon, together with ten policemen, proceeded to the CLUB on April 18, 1984 and succeeded in evicting Puno and his partners (TSN, p. 6; ibid).

In anticipation of a case to be filed by Puno against Gayon, petitioner prepared a Deed of Sale (Records, Vol. I, p. 13; Exhibit "A") whereby Gayon allegedly sold the said CLUB to him for P350,000.00 on April 2, 1984. Said date was antedated to make it appear that the sale was made earlier than the one made by respondent Fraser to Puno and his partners. A receipt for the amount of P350,000.00 was likewise prepared by petitioner and signed by Gayon.

Petitioner succeeded in convincing Gayon to allow one Mr. Fujiwara, who was supposedly interested in buying the CLUB, to operate it for one month on a trial basis. However, it turned out that it was petitioner himself, not Mr. Fujiwara, who operated the said CLUB

Because of their forcible eviction from the CLUB, Puno and his partners filed a complaint for forcible entry with damages and preliminary mandatory injunction against Gayon and one "Atty. Yam" with the Metropolitan Trial Court of Pasay City. Atty. Yam happened to be a law partner of petitioner. When petitioner Puno, he misrepresented himself as "Atty. Yam" by presenting Atty. Yam's calling card.

On December 10, 1986, the Metropolitan Trial Court of Pasay City rendered its decision ordering: (1) Gayon and all persons claiming rights under her to vacate the premises known as the Argentina Club and Disco; (2) to pay the plaintiffs the sum of P20,000.00 a month as reasonable compensation for the use and occupation of the aforesaid premises, starting April 18, 1984 until she and all persons claiming possession under her finally vacate the premises and possession thereof was restored to plaintiffs; and (3) the sum of P5,000.00 as attorney's fees (Original Records, Vol. I, p. 98).

On December 14, 1984, pursuant to the Order of Execution issued by the Metropolitan Trial Court of Pasay City, Gayon and "Atty. Yam" (petitioner) were evicted from the Club (Original Records, Vol. I, p. 22).

Aggrieved by his eviction, petitioner filed a criminal case for estafa against respondent Fraser with the Office of the City Fiscal of Pasay City. He alleged that Gayon sold to him the Club and that respondent Fraser, by falsely pretending to be the owner of the CLUB, was able to sell the same to the group of Puno, who in turn succeeded in having him evicted from the CLUB to the Order of Execution issued by the Metropolitan Trial Court of Pasay City. The criminal case was, however, dismissed on August 22, 1986. After the reinvestigation, the complaint was , likewise dismissed on June 11, 1985 (Rollo, p. 74; Annex "1"). A petition for review was dismissed by the Department of Justice (Rollo. p. 79; Annex "2").

On or about February 12, 1985, petitioner filed an "Amended Complaint for Ownership, Possession, Annulment of Contract and Damages with prayer for Preliminary Mandatory Injunction and/or Restraining Order" against respondents Fraser, Puno, Domingo, Gayon, and Vercoe docketed as Civil Case No. 2588-P with the Regional Trial Court, Pasay City, Metro Manila.

On February 12, 1985, the Regional Trial Court, Pasay City, Metro Manila granted the prayer for a writ of preliminary mandatory injunction. However, on March 11, 1985, the said trial court approved the counterbond filed by respondents Fraser, et al. and dissolved the writ of preliminary mandatory injunction. Puno and his partners were authorized to resume the operation and management of the CLUB, subject to the conditions set forth in the Order (Original Records, Vol. I, p. 173).

From the order denying his motion for reconsideration of the order dissolving the writ of preliminary mandatory injunction, petitioner appealed to the Court of Appeals (CA-G.R. No. 0618-SP).

The appellate court dismissed the petition on October 24, 1986.

Undaunted, petitioner filed on September 26, 1985, a complaint for a sum of money and damages with preliminary attachment against respondents Fraser and Marita S. Caymo with the Regional Trial Court of Siniloan, Laguna, Branch 33 and docketed as Case No. 5-423. Respondent Caymo was impleaded for allegedly being the wife of respondent Fraser.

Petitioner sought to collect the amount of P510,000.00, representing the purchase price of the CLUB sold by respondent Fraser to Puno and his partners. Furthermore, petitioner sought to attach the property of respondent Caymo located at San Lorenzo Village, Makati alleging that the latter was a mere dummy of respondent Fraser. In addition thereto, petitioner sought to recover damages for his eviction from the CLUB pursuant to the decision of the Metropolitan Trial Court of Pasay City, alleging that not being a party to the said case, he was not given his day in court (Original Records, Vol. I, pp. 1-9).

In his complaint, petitioner alleged that he was the owner of the CLUB, having bought the same from Gayon on April 2, 1984 as evidenced by a Deed of Sale (Original Records, Vol. I, p. 13) and a receipt (Original Records, Vol. I, p. 15).

On September 30, 1985, the trial court ordered the attachment of respondent Caymo's property located at San Lorenzo Village, Makati (Records, Vol. I, p. 39).

On June 22, 1987, the trial court rendered the questioned decision, the dispositive portion of which reads as follows :

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendants, ordering the latter to pay jointly and severally the plaintiff the following amounts :

a) Five Hundred Ten Thousand (P510,000.00) pesos as an indemnity for the investment of plaintiff in the Argentina Club and Disco.

b) One Million (1,000,000.00) pesos by way of moral damages.

c) Thirty Four Thousand (P34,000.00)) pesos monthly for compensatory damages from December 14, 1984 up to the date of actual indemnification.

d) Seven Hundred Fifty Thousand (750,000.00) pesos as exemplary damages arising from the fraud committed by the defendants against the plaintiff.

e) One Hundred Thousand (P100,000.00) pesos as attorney's fees; and;

f) To pay the costs of the suit.

SO ORDERED. (Records, Vol. III, pp. 534- 535).

On July 7, 1987, respondents Fraser and Caymo filed a notice of Appeal which was granted by the trial court on July 15, 1987 (Original Records, Vol. III, pp. 538-539). On the same day, petitioner filed a Motion for Issuance of Writ of Execution (Original Records, Vol. III, p. 543). Both respondents filed an opposition to the Motion for Issuance of Writ of Execution Pending Appeal (Original Records, Vol. III, pp. 553-579).

On August 21, 1987, the trial court issued an Omnibus Order granting petitioner's motion for issuance of writ of execution and denying respondents' opposition thereto and recalled its Order dated July 15, 1987 elevating the records of the case to the Court of Appeals (Original Records, Vol. IV, p. 603).

On August 31, 1987, the trial court issued a writ of execution (Original Records, Vol. IV, p. 607).

Respondent Fraser and Caymo filed with the Court of Appeals separate petitions for certiorari with prohibition and mandamus and restraining order docketed as CA-G.R. No. 12713 and 12718 respectively. On December 15, 1987, the Court of Appeals rendered its decision, affirming the trial court's Omnibus Order granting execution pending appeal but ordered petitioner to file a good and sufficient bond in the amount of P2,000.00 in order to answer for any damage which the respondents may suffer in the event the decision was reversed on appeal (Original Records, Vol. IV, p. 643).

On January 11, 1988, respondent Caymo filed a motion for reconsideration of the appellate court's order, granting execution pending appeal (Original Records, Vol. IV, pp. 657-659).

On January 20, 1988, a notice of sheriff's sale over the property of respondent Caymo was issued (Original Records, Vol. IV, p. 672).

On January 21, 1988, respondent Caymo filed an urgent motion for status quo and motion for leave to file counterbond (Original Records, Vol. IV, pp. 676-677).

In its Resolution dated January 22, 1988, the Court of Appeals ordered the parties to maintain the status quo until the motion for reconsideration was resolved by it (Original Records, Vol. IV, pp. 684-685).

On April 22, 1988, the Court of Appeals resolved the motion for reconsideration ordering petitioner to increase the bond from P2,000,000.00 to 2,800,000.00 (Original Records, Vol. IV, pp. 702-703).

On April 12, 1989, petitioner filed with the trial court a "Motion for Issuance of Order to Enforce the Writ of Execution dated August 31, 1987" (Original Records, Vol. IV, p. 730).

On April 28, 1989 respondent Fraser filed an opposition to the aforesaid motion (Records, Vol. IV, p. 734). On the other hand, respondent Caymo filed a "Motion to Disapprove Bond of Plaintiff or To Allow Defendant to File a Counterbond or Supersedeas Bond" (Original Records, Vol. IV, p. 736).

On March 14, 1990, the trial court issued an order, granting petitioner's motion, which ordered the Provincial Sheriff to enforce the writ of execution dated August 31, 1987 and to proceed with the auction sale (Original Records, Vol. V, p. 921).

On April 30, 1990, petitioner as the highest bidder in the auction sale of respondent Caymo's property was issued a Certificate of Sale (Original Records, Vol. V, p. 995).

On May 5, 1990, respondent Caymo filed a motion to elevate the records to the Court of Appeals (Original Records, Vol. V, p. 992).

On May 14, 1990, petitioner filed a motion for the issuance of writ of possession, which was denied by the trial court on May 15, 1990. The trial court ordered the elevation of the case to the Court of Appeals (Original Records, Vol. V, p. 1112).

On July 3, 1991, the Court of Appeals rendered its decision, reversing the trial court's decision and declaring null and void the execution sale of respondent Caymo's property. The dispositive portion of said decision reads :

IN VIEW OF THE FOREGOING PREMISES, the decision appealed from is hereby REVERSED and SET ASIDE and the execution sale of Marita Caymo's property covered by T.C.T. No. 135563 is declared null and void. The complaint filed by plaintiff-appellee is hereby dismissed. Costs against plaintiff-appellee (Rollo, p. 47).

On September 23, 1991, petitioner's motion for reconsideration was denied (Rollo, p. 52).

Hence, this petition.

Petitioner raises the following assignment of errors:

I

THE COURT OF APPEALS ERRED IN CONSIDERING A MATTER NOT STATED AS AN ASSIGNED ERROR AND NOT PROPERLY ARGUED BEFORE IT.

II

THE COURT OF APPEALS ERRED IN CONSIDERING THE VALIDITY OF THE EXECUTION SALE OF THE PROPERTY OF DEFENDANT-RESPONDENT CAYMO ALTHOUGH SUCH MATTER HAD ALREADY BEEN RESOLVED WITH FINALITY BY THE SAME COURT IN ANOTHER CASE.

III

THE COURT OF APPEALS ERRED IN REVERSING THE FINDINGS OF FACT OF THE TRIAL COURT (Rollo, p. 22).

Petitioner contends that the Court of Appeals acted beyond and in excess of its jurisdiction when it ruled on the validity of the execution sale of the property of respondent Caymo. Claiming that such matter was neither stated in the assignment of errors nor properly argued in respondent Caymo's brief, he invokes the rule that "no error which does not affect jurisdiction over the subject matter will be considered unless stated in the assignment of errors and properly argued in the brief, save as the Court, in its option, may notice plain errors not specified, and also clerical errors" (Rule 51, Section 7, Rules of Court).

We disagree. Although as a general rule, the Court of Appeals may determine only such questions as those that have been properly raised in the briefs, this rule, however, admits of exceptions.

In the cases of Maritime Agencies and Services, Inc. v. Court of Appeals, G. R. No. 77638 and Union Insurance Society of Canton, Ltd. v. Court of Appeals, G.R. No. 77674, 187 SCRA 346 [1990] we ruled that:

Besides, an unassigned error closely related to the error properly assigned, or upon which the determination of the question raised by the error properly assigned is dependent, will be considered by the appellate court notwithstanding the failure to assign it as error.

At any rate, the Court is clothed with ample authority to review matters, even if they are not assigned as errors in their appeal, if it finds that their consideration is necessary in arriving at a decision of the case.

In her brief, respondent Caymo raised the issue of her alleged marriage to respondent Fraser as evidenced by a photo-copy of a marriage contract presented by petitioner. Such marriage contract became the basis for the trial court to conclude that respondents Caymo and Fraser were married to each other and therefore the property registered in the name of respondent Caymo is a conjugal property of the spouses which may be attached.

The determination of the existence of marriage between respondent Caymo and Fraser will determine the validity of the attachment and execution sale made on the property registered in the name of respondent Caymo alone. Hence, the issue on the validity of the attachment and execution sale of respondent Caymo's property is closely related to the error properly assigned, that is the existence of the marriage between respondents Caymo and Fraser.

As correctly found by the Court of Appeals, the photo-copy of an alleged marriage contract presented by petitioner is inadmissible for to comply with Rule 132 Sections 25 and 26 of the Rules of Court (now Rule 132, Sections 24 and 25 of the 1987 Rules on Evidence). As between a photo-copy of an alleged marriage contract and a certification issued by the Local Civil Registrar of Pasay City attesting to the fact that no marriage

was officiated by Judge Eriberto V. Loreto of the Metropolitan Trial Court of Pasay City and that no record of such marriage could be found in the Local Civil Registrar, the latter deserves more weight.

Having failed to prove the existence of marriage between respondent Caymo and Fraser, the attachment and eventual execution sale of the property registered in the name of respondent Caymo is therefore invalid.

Anent the second error assigned by petitioner, the petitions for certiorari with writ of prohibition filed by respondents Caymo and Fraser with the Court of Appeals docketed as CA-G.R. nos. 12713 and 12718 respectively, merely questioned the jurisdiction of the Regional Trial Court, Br. 33, Siniloan, Laguna, in granting the motion for execution pending appeal in Civil Case No. 5-423.

A special civil action for certiorari is an original or independent action and not a continuation or a part of the trial resulting in the rendition of the judgment complained of (Perez v. Court of Appeals, 168 SCRA 236 [1988]). Hence, no finality as to the merits of the case was made. The only issue decided by the Court of Appeals in CA-G.R. Nos. 12713 and 12718 was whether the trial court properly issued the writ of advance execution.

The third error assigned by petitioner questions the findings of the Court of Appeals as to the validity of the Deed of Trust executed by Amelia Gayon in favor of respondent Fraser.

Petitioner contends that respondent Fraser, being an Australian citizen, is precluded from owning a retail business pursuant to Republic Act No. 1180, otherwise known as the Nationalization of Retail Trade Law. Indeed under said law, an alien is prohibited from engaging in the retail business (Sec. 1) which includes the operation of a cocktail lounge with a restaurant (Sec. 4).

However, the Mayor's Permit for the operation of the Club as a cocktail lounge with a restaurant (Records, Vol. I, p. 21) was issued in favor of "Amelia Gayon."

Under Section 5 of the Nationalization of Retail Law :

Every license to engage in retail business issued in favor of any citizen of the Philippines or of any association, partnership or corporation wholly owned by citizens of the Philippines shall be conclusive evidence of the ownership by such citizen, association, partnership or corporation of the business for which the license was issued except as against the Government of the State. (Emphasis supplied).

Since the license to engage a cocktail lounge and restaurant was issued in the name of Gayon, who is a citizen of the Philippines, such license shall be conclusive evidence of Gayon's ownership of the said retail business as far as private parties, including petitioner, are concerned.

Gayon testified that the deed of sale and receipt prepared by petitioner and signed by her were simulated, the same having been prepared only in anticipation of the ejectment case filed by Puno against her. She also claims that the deed of sale and receipt were antedated to make it appear that it was made earlier than the deed of sale executed by

respondent Fraser.

The characteristics of simulation is the fact that the apparent contract is not really desired or intended to produce legal effects nor in any way alter the judicial situation of the parties (Carino v. Court of Appeals, 152 SCRA 529 [1987]).

In this case, Gayon was convinced by petitioner that she could be protected from the action to be filed against her by Puno if she would execute a deed of sale in his favor. Thus, she even admitted to have lied in her testimony during the ejectment case filed against her upon the instructions of petitioner.

If it were true as claimed by petitioner that he was in possession of the CLUB as early as April 1, 1984, then it was impossible for him not to have known that Puno and his partners were in actual, physical possession of the CLUB up to April 18, 1984. Why did he not bring an ejectment case against them? If it were true that Gayon sold to him the CLUB on April 2, 1984, why was it Gayon, instead of him, who evicted Puno on April 18, 1984? The truth is, he was not in possession of the CLUB on April 1, 1984 and neither was the said CLUB legally conveyed to him on April 2, 1984. He did not do anything because there was nothing for him to protect for he knew that the contract of sale and the receipt made in his favor were merely simulated for the protection of Gayon.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals is AFFIRMED.

SO ORDERED.