ROBLES v. HERMANOS

G.R. No. L-26173 July 13, 1927

Street, J.

Doctrine:

• The lessee may prove an independent verbal agreement on the part of the landlord to put the leased premises in a

safe condition.

• The appraised value of the property may be used to determine the price.

Facts:

A parcel of land was originally owned by the parents of the present plaintiff, Zacarias Robles. Upon the death of his

father, plaintiff leased the parcel of land from the administrator with the stipulation that any permanent improvements

necessary to the cultivation and exploitation of the hacienda should be made at the expense of the lessee without

right to indemnity at the end of the term. As the place was in a run-down state, and it was foreseen that the lessee

would be put to much expense in bringing the property to its productive capacity, the annual rent was fixed at the

moderate amount of P2,000 per annum.

The plaintiff made various improvements and additions to the plant. The firm of Lizarraga Hermanos was well aware

of the nature and extent of these improvements.

When the plaintiff’s mother died, defendant came forward with a proposal to buy the heirs’ portion of the property. In

consideration that the plaintiff should shorten the term of his lease to the extent stated, the defendant agreed to pay

him the value of all betterments that he had made on the land and furthermore to purchase from him all that belonged

to him personally on the land. The plaintiff agreed to this.

On the ensuing instrument made, no reference was made to the surrender of the plaintiff’s rights as lessee, except in

fixing the date when the lease should end; nor is anything said concerning the improvements which the plaintiff had

placed. At the same time the promise of the defendant to compensate for him for the improvements was wanting.

Accordingly, the representative of the defendant explained that this was unnecessary in view of the confidence

existing between the parties.

On the part of the defendant it was claimed that the agreement with respect to compensating the plaintiff for

improvements and other things was never in fact made.

Issue:

1. Whether or not the lessee may contest the validity of a written contract with oral evidence

2. Whether or not the appreciation value can be used to determine the price

Held:

1. Yes. In case of a written contract of lease, the lessee may prove an independent verbal agreement on the part of

the landlord to put the leased premises in a safe condition. The verbal contract which the plaintiff has established in

this case is therefore clearly independent of the main contract of conveyance, and evidence of such verbal contract is

admissible under the doctrine above stated. In the case before us the written contract is complete in itself; the oral

agreement is also complete in itself, and it is a collateral to the written contract, notwithstanding the fact that it deals

with related matters.

2. Yes. The stipulation with respect to the appraisal of the property did not create a suspensive condition. The true

sense of the contract evidently was that the defendant would take over the movables and the improvements at an

appraised valuation, and the defendant obligated itself to promote the appraisal in good faith. As the defendant

partially frustrated the appraisal, it violated a term of the contract and made itself liable for the true value of the things

contracted about, as such value may be established in the usual course of proof. Furthermore, an unjust enrichment

of the defendant would result from allowing it to appropriate the movables without compensating the plaintiff thereof.

G.R. No. 4348           September 12, 1908

MAURICIA MAJARABAS, ET AL., plaintiffs-appellees, vs.INOCENCIO LEONARDO, defendant-appellant.

Crispin Oben for appellant.Benito Gimenez-Zoboli for appellees.

MAPA, J.:

The defendant and appellant in this case set up a question by means of a demurrer relative to the legal nature of the contract upon which the complaint was based. It is alleged therein that the plaintiff had rendered services as wet nurse and governess to an infant daughter of the defendant by virtue of a verbal agreement entered into with the now deceased parents of the defendant, who, to use the language of the complaint, " promised to liberally compensate the services of the plaintiff, providing the maintenance of herself, her husband and their child, during all  the time that the services of the plaintiff where required as such wet nurse and governess."

It is maintained in the demurrer that the obligation contracted by the parents of the defendant was to support the plaintiff and her family, and that the reason of the death of the former, as stated in the complaint, under the provision of article 150 of the Civil Code, the said obligation has been extinguished in fact and in law, and the plaintiff can not therefore, bring suit for compliance herewith. The demurrer was overruled by the court below on the ground that aforesaid agreement constituted a contract for services, although the price was to be measured by the cost of the maintenance of the plaintiff. This ruling has been assigned as error by the appellant in his brief.

The objection made by the latter to holding of the court below on the contract set out in the complaint, is that the fixed price for the services required of the plaintiff is not stipulated therein, and that without specified price no lease of services can exist, said requirement being essential to such contract. Article 1544 of the Civil code provides as follows:

In a lease of works or services, one of the parties binds himself to execute a work or to render a service to the other for a specified price.

According to this definition, a  fixed price  is a requisite in a contract for services, and, as is justly maintained by the appellant, is therefore an essential part thereof. The question is reduced to determining what, in a legal sense, is understood by a fixed price.

In the matter of contracts of purchase and sale wherein the said requisite is also a necessary and indispensable condition, article 1447 of the said code provides:

In order that the price may be considered fixed, it shall be sufficient that it be fixed with regard to another determinate thing also specific, or that the determination of the same be left to the judgment of a special person.

According to this it is not necessary that the certainty of the price be actual or determined at the time of executing the contract, but that it is sufficient compliance with the law if the same can be determined by the speculations of the contract made by the party thereto. In the present case the contracting parties fixed the maintenance of the plaintiff and her family as the price for the services

required of her. Said maintenance is the specific and determinate thing that in its turn fixes the price, inasmuch as its cost determines the price according to the agreement of the parties to the contract. There might be a question as to the actual cost of the plaintiffs maintenance, but this is a matter of fact which in such a case would have to be proven. Be it as it may, whatever might be the cost of said subsistence, it would constitute the price for the services rendered by the plaintiff; said price is unquestionably the specified one since it refers to a specified thing designated by the parties as the rate regulating the amount thereof. therefor, the appellant's allegation is unfounded, and the order of the court below overruling the demurrer must be affirmed.

The second error assigned by the appellant refers to the fact, duly considered by the court below that the defendant and his father had entered with the plaintiff into the agreement alleged in the complaint. The finding of the court below is supported by the testimony of several witnesses, who attest that the said agreement was made in their presence, and that it was made on the morning of the 8th of January 1901 at the house of the plaintiff, in the barrio of Sto. Angel, municipality of Sta. Cruz Province of La Laguna. The appellant endeavored to show that as vice-president of the municipality of Santa Cruz, during the insurrection, a town already occupied by the American forces, it was absolutely impossible for him at the time to reach the aforesaid barrio of St. Angel, because as were all revolutionists, he was the subject of active pursuit on the part of said forces. It appears, however, from the testimony of a witness, that in those days the defendant used to visit his family, who resided in the barrio of Calios, or so within the jurisdiction of Santa Cruz; that he paid his visit in the afternoons and also very early in the morning. According to the testimony of the appellant on folio 18 of the record, the barrio of Calios is the nearest in the town of Santa Cruz. If he was able to enter Calios, it is difficult to understand why it was impossible for him to reach the barrio of Sto. Angel, which is farther away from the town of Santa Cruz where the American forces were encamped. This being the case, and as the impossibility alleged by the appellant did not exist, the finding of the court below, supported has been stated by the testimony of the plaintiff, does not in any manner appear to be contrary to the weight of the evidence.

Neither does the other finding in the judgment, the daughter of the defendant was nursed by the plaintiff from January, 1901, to the end of June, 1903, that is, during a period of two year and a half; the pretention of the appellant so far as it sustains the contrary is therefore unfounded. It is true that the testimony of the witnesses of the plaintiff and those of the defendant conflict on this point, that the judge below, taking into consideration all the circumstances of the case, gave more credit to the former than to the latter, we can hardly say that in so doing he acted against the weight of the evidence.

Finally, the appellant assigns as error the declaration made by the judge below to the effect that the defendant is obliged to refund the plaintiffs for the expense they have been put to in caring for defendant's daughter, at the rate of P15 per month or P0.50 a day. The appellant states that the record contains no data whereby the amount of the expenditure incurred by the plaintiff in nursing the child may be reckoned, and that in any case the rate of P0.50 per day is manifestly excessive. According to the statement of the defendant, the remuneration agreed upon for the services of the plaintiff was the cost of her maintenance and that of her family, and it was alleged in the complaint that she spent P0.50 a day for this purpose. This was the point disputed in the matter of the amount that the defendant should pay for the care of his child, and the one that should in consequence have been proven by the plaintiff. And, as a matter of fact, the latter testified that she spent the said some everyday as living expenses for herself and her family; her testimony was confirmed by another witness and the testimony of both has not been weakened or contradicted by any proof to the contrary. Inasmuch as the defendant bound himself to bare the cost of the plaintiff's maintenance, in exchange for the care of his child, and since such maintenance cost P0.50 per day, it may well be said that the expense occasioned by the care of the child amounted to the aforesaid sum. In our opinion, the judgment appealed from should thus be understood in so far as it refers to this point. At all events the diversity of expression or the more or less precision thereof does not affect, nor can it

affect in any manner the existence of the facts discussed and proven, nor the essential rights of the contending parties.

The judgment appealed from is hereby affirmed with the costs of this instance against the appellant. So ordered.

Arellano, C.J., Torres, Carson, Willard and Tracey JJ., concur.

G.R. No. L-28496             March 31, 1928

ASIA BANKING CORPORATION, plaintiff-appellant, vs.MARIA LUISA CORCUERA, for herself and as guardian of the persons and property of Lina, German, andRamon N. F. Lichauco y Corcuera, minors, JOSE PASCUAL, JULIO LICHAUCO Y FONSECA, MARIA VICTORIA LICHAUCO Y FONSECA and LICHAUCO & CO., INC., defendants-appellees.

Gibbs and McDonough for appellant.Faustino Lichauco for Lichauco & Co.Jose Varela Calderon and Jose A. Espiritu for the other appellees.Ross, Lawrence & Selph as amicus curiæ.

STATEMENT

The plaintiff is a foreign corporation duly licensed to transact business in the Philippine Islands. Lichauco & Co., Inc., is a domestic corporation, and the defendant, Maria Luisa Corcuera, is the widow of Galo Lichauco, deceased, and the mother of the minor heir defendants. She was also administratrix of the estate of Galo Lichauco from October 15, 1921, to April 23, 1923, when she was discharged. The allegations in the complaint as to the real estate are identical with those made by the plaintiff in G. R. No. 28495,1 and the same is true as to the execution of Exhibit A.

It is then alleged that on January 16, 1922, the Lichauco Corporation, conspiring with the defendant, Maria Luisa Corcuera, et al., and for the purpose of defrauding and delaying the plaintiff in the collection of its indebtedness against the Lichauco Corporation, executed and caused to be recorded an illegal and fictitious deed of conveyance from the Lichauco Corporation to the defendant, Maria Luisa Corcuera, as administratrix, of that portion of the property described in clauses 4, 5 and 6 of paragraph IV of the complaint, a copy of which deed is attached to, and made a part of, the complaint, in which it was falsely recited that there was a consideration of P24,000, with interest from January 20, 1920, at 12 per cent per annum due and owing from the Lichauco Corporation to the estate of Galo Lichauco; that the Lichauco Corporation was not indebted to the estate in that or any other amount; that the conveyance was not included, in, and made a part of, the assets of the estate of Galo Lichauco. That the property conveyed had a reasonable value of at least P100,000, with a yearly income of P7,000, and that the consideration of P24,000, was grossly inadequate, even if it had never been paid; that even though the deed was not legally executed, it was on August 12, 1922, registered with the registry of property for the Province of Pampanga, and certificate of title No. 455 was issued in favor of the Galo Lichauco Estate. Like allegations are made as to obtaining of the judgment against the Lichauco Corporation, the sale of the property by the sheriff, and the binding in by the bank for P16,000, as those made in G. R. No. 28495, and the refusal of the register of property to receive and record plaintiff's sheriff's deed because the deed to Maria Luisa Corcuera was previously recorded. Plaintiff prays that the deed to her be declared fraudulent and void, and the certificate of title No. 455 be ordered cancelled, and that the sheriff's deed to plaintiff be ordered registered in the registry of property for the Province of Pampanga. As in G. R. No. 28495, the corresponding Exhibits A and B are attached to, and made a part of, the complaint.

For answer the defendants made a general and specific denial, and as an affirmative defense alleged the execution of the deed to the land in question on January 16, 1922, for a consideration of P24,000 which was then due and owing from the Lichauco Corporation to the Galo Lichauco estate, the recording of the deed as alleged, and that the heirs of Galo Lichauco are the sole and exclusive owners of the property.

The defendant Lichauco & Co., Inc., made a default.

The evidence was taken upon such issues, and the lower court first rendered judgment that the conveyance of the Matabig hacienda  to Maria Luisa Corcuera, as administratrix, was null and void, and ordered that transfer certificate No. 455 issued in her name be cancelled, and that a certificate of title be issued in favor of the plaintiff bank, and dismissed the counterclaim of Maria Luisa Corcuera, with costs against her. Upon the rendition of the judgment, Maria Luisa Corcuera filed a motion for consideration which the court granted and set aside its judgment against her, and entered another in which she was absolved from the complaint, and declared her to be the sole and exclusive owner of 23/25 parts of the hacienda Matabig, from which the bank appeals and contends in substance that the deed from the Lichauco Corporation to Maria Luisa Corcuera, administratrix, was without consideration, is null and void, and a fraud upon the creditors of the Lichauco Corporation, and the bank, in particular.

JOHNS, J.:

The underlying basic facts in this case are almost identical with those in G. R. No. 28494. There, as here, the deed in question was executed on January 16, 1922, and the evidence is conclusive that the Lichauco Corporation was then insolvent. The deed is also signed and acknowledged in the same manner and by the same persons as the deed to Asuncion Nable Jose and in the instant case, as the appellant contends, it appears from Exhibit PP, the account book of the corporation, on page 39, under the head of "suspense," that there is a charge against Galo Lichauco of P86,707.30, and on page 43 of the same book, there is an entry which shows that Galo Lichauco has a balance of P34,819.01. The deed in question among other things recites that on January 9, 1920, the Lichauco Corporation received from the late Galo Lichauco P24,000 in cash as a loan, with interest at 12 per cent per annum as shown by a deed acknowledged on January 20, 1920, and to secure its payment, the corporation executed a mortgage on sixteen of its bancas in favor of Galo Lichauco, and that with the consent of Galo Lichauco, the mortgage in his favor was released, so that the bancas in question could be given as security to the China Banking Corporation. The release having been executed, and on January 16, 1922, for a purported consideration of P24,000, the deed in question was executed and accepted and the mortgage of January 9, 1920, in favor of Galo Lichauco was released. That is to say, by the terms and provisions of the deed, the property in question was conveyed to secure a preexisting debt of P24,000, which Galo Lichauco loaned to the corporation on January 9, 1920. Be that as it may, there is a very important distinction between the remaining facts. The amount of land conveyed for the consideration of P24,000 in the instant case was 88 hectares. In the other case the true consideration for the deed was P34,000, and the amount of land conveyed was 410 hectares.

In the instant case, outside of the fact that the 88 hectares was carried on the corporate books at a valuation of P50,000 there is but little other evidence as to its value.

As stated in Ruling Case Law, volume 12, page 479:

The courts will not weight the value of the goods sold and the price received in very nice scales, but all circumstances considered, there should be reasonable and fair proportion between the one and the other. Inadequacy of price does not mean a honest difference of opinion as to price, but a consideration so far short of the real value of the property as to startle a correct mind.

The amount of land involved in the instant case being 88 hectares only, and the consideration for the deed being P24,000, in view of the findings of fact made by the lower court, and for want of any other evidence as to the actual value of the land, all things considered, we cannot say, as a matter of law, that the consideration of P24,000 was inadequate or that the conveyance was a fraud upon the creditors of the Lichauco Corporation.

There is another important distinction between the two cases. Although in this case it is also true that the consideration for the deed was a preexisting debt, yet the record is conclusive that the debt was due and owing and enforcible at the time the deed in question was executed, and, hence, the conveyance does not come under the terms and provisions of article 1292 of the Civil Code.

The appellant vigorously contends that the original judgment in the lower court in this case was right, and that the last and final judgment was wrong. But the record is conclusive that the consideration for the deed of the Lichauco Corporation was P24,000, and the fact that thereafter Faustino Lichauco conveyed other and different properties to the estate of Galo Lichauco for a consideration of P22,500 would not impair or destroy the validity of the deed made by the Lichauco Corporation to the Galo Lichauco estate on January 16, 1922.

We freely admit that this case is not free from doubt, but in this case the question of inadequacy of consideration is not so clear or convincing as in G. R. No. 28495; neither do the facts bring it within article 1292 of the Civil Code.

All things considered, the judgment of the lower court is affirmed, with costs. So ordered.

Avanceña, C.J., Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur.

Vda. De Chua vs. CAG.R. No. 116835 March 5, 1998

Facts:Roberto Chua was the common-law husband of Florita A. Vallejo and had two illegitimate

sons with her. On 28 May 1992, Roberto Chua died intestate inDavao City. Upon the death of Roberto, Vallejo filed with the Regional Trial Court ofCotabato City a petition for the guardianship and administration over the persons and properties of the two minors. Herein petitioner filed for its dismissal, claiming that she was the sole surviving heir of the decedent being his wife; and that the decedent was a resident of Davao City and not Cotabato City, which means that the said court was not the proper forum to settle said matters. The petitioner failed to submit the original copy of the marriage contract and the evidences that she used were: a photocopy of said marriage contract, Transfer Certificate of Title issued in the name of Roberto L. Chua married to Antonietta Garcia, and a resident of Davao City; Residence Certificates from 1988 and 1989 issued at Davao City indicating that he was married and was born in Cotabato City; Income Tax Returns for 1990 and 1991 filed in Davao City where the status of the decedent was stated as married; passport of the decedent specifying that he was married and his residence was Davao City. The trial court ruled that she failed to establish the validity of marriage, and even denied her petition. This was latter appealed to the appellate court, but it decided in favor of herein respondents.

Issue:Whether or not the trial and appellate court is correct on their ruling on the validity of

marriage of Antonietta Garcia to Roberto Chua.

Ruling:             The Supreme Court held that the lower court and the appellate court are correct in holding that petitioner herein failed to establish the truth of her allegation that she was the lawful wife of the decedent. The best evidence is a valid marriage contract which the petitioner failed to produce. Transfer Certificates of Title, Residence Certificates, passports and other similar documents cannot prove marriage especially so when the petitioner has submitted a certification from the Local Civil Registrar concerned that the alleged marriage was not registered and a letter from the judge alleged to have solemnized the marriage that he has not solemnized said alleged marriage. The lower court correctly disregarded the Photostat copy of the marriage certificate which she presented, this being a violation of the best evidence rule, together with other worthless pieces of evidence. A valid, original marriage contract would be the best evidence that the petitioner should have presented. Failure to present it as evidence would make the marriage dubious.

Gardner v. CA DigestG.R. No. L-59952 August 31, 1984Ponente: Melencio-Herrera, J.:

Facts:

1. The case involve several transfers of the subject real property. It appears that petitioners the Gardner spouse enter into an agreement with Respondent spouses, the Santoses to subdivide 2 parcels of land and executed an absolute deed of sale in favor of the latter. The real truth is that what occurred was a sale ‘in trust’ since the petitioner obtained an amount of money  from the respondents, who inturn promised to improve the land.

2. Apparently, the Santoses transferred the properties to the Cuencas who in turn transferred it to the Verroyas who executive a mortgage over the lot. Then Verroya executed a deed of transfers to the Natividads.  Note that from the titles of the Cuencas (the Second Transferees) to the titles of the Natividads (the Fourth Transferee), the Adverse Claim of the Gardners continued to be carried, and that throughout the successive transfers, the petitioners continued to remain in possession, cultivation and occupation of the disputed properties.

3. In their Answer, the Santoses claimed that the sale to them was conditional in the sense that the properties were to be considered as the investment of the petitioners in the subdivision venture and that in the event that this did not materialize they were to reconvey the lots to petitioners upon reimbursement by the latter of all sums advanced to them; and that the deed of sale was to be registered for the protection of the Santoses considering the moneys that the latter would be advancing.

4. Hence, the Gardners filed an action for declaration of Nullity, Rescission and damages against the 5 transferres and mortgagees. The RTC ruled in favor of petitioners declaring the transfers null and void. The CA affirmed in toto the RTC but reconsidered it decision and ruled that the sale of land to Natividad’s are valid.

Issue: Whether or not the admissions made by Santos in the pleadings are admissible

NO.

The testimony of Ariosto Santos is at variance with the allegations in his Answer. As a general rule, facts alleged in a party's pleading are deemed admissions of that party and binding upon it, but this is not an absolute and inflexible rule. An Answer is a mere statement of fact which the party filing it expects to prove, but it is not evidence. 

1. Santos himself, in open Court, had repudiated the defenses raised in his answer and against his own interest, his testimony is deserving of weight and credence. Both the Trial Court and the Appellate Court believed in his credibility and we find no reason to overturn their findings thereon. Santos likewise admitted against his own interest that the petitioners did not receive from him any consideration, which corroborated the declarations of the petitioners. The Subdivision Joint Venture Agreement and the

Supplemental Agreement express that the true and real nature of the agreement between the parties, which was for a subdivision and not a sale transaction.

2. All Five Transfers were absolutely simulated and fictitious and were, therefore, void ab initio and inexistent. Contracts of sale are void and produce no effect whatsoever where the price, which appears therein as paid, has, in fact, never been paid by the purchaser to the vendor.

G.R. No. L-56451 June 19, 1985

JUAN LAO and CANDELARIA C. LAO, petitioners, vs.HON. MELECIO A. GENATO, as Presiding Judge, Court of First Instance, Branch 1, Misamis Occidental, SOTERO A. DIONISIO, JR., as Administrator of the Intestate Estate of ROSENDA ABUTON, SOTERO B. DIONISIO III, WILLIAM L. GO, ERLINDA DIAZ, represented by RESTITUTO N. ABUTON Attorney-In-Fact, ESTER AIDA D. BAS, Heirs of ROSALINDA D. BELLEZA, represented by FELICENDA D, BELLEZA, Attorney- In-Fact, LUZMINDA D. DAJAO ADELAIDA D. NUEZA, represented by Atty. MAURICIO O. BAS SR., Attorney-In-Fact, and FLORIDA A. NUQUI, respondents.

Felipe G. Tac-an for petitioners.

Alaric P. Acosta for private respondent as Administrator.

Eligio O. Dajao for respondent Ester Aida D. Bas.

Ramon C. Berenquel for respondent William L. Go.

 

CUVEAS J.:

Petition for certiorari with prayer for the declaration of nullity of the Order 1 1 dated February 18, 1981 of the then Court of First Instance of Misamis Occidental-Branch I which confirmed and approved the two Deeds of Sale, both dated August 15, 1980, involving a commercial property belonging to the estate of the deceased Rosenda Abuton.

Petitioner spouses were promisees in a Mutual Agreement of Promise to Sell executed between them and private respondent Sotero B. Dionisio III, son of respondent Sotero A. Dionisio, Jr., heir and administrator of the intestate estate of the deceased, whereby the promisor bound himself to sell the subject property to petitioners, Private respondents, except Sotero Dionisio III and William Go, are the children and only compulsory heirs of the deceased.

On June 25, 1980, respondent administrator Sotero Dionisio, Jr., with due notice to all his co-heirs, filed with the Probate Court in Special Proceedings No. 842 a Motion for Authority to Sell certain properties of the deceased to settle the outstanding obligations of the estate.

On July 8, 1980, after hearing, there being no opposition, the lower court issued an Order 2 2 authorizing the administrator to sell the therein described properties of the estate and such other properties under his administration at the best price obtainable, and directing him to submit to the court for approval the transaction made by him

On August 15, 1980, respondent-administrator pursuant to said authorization, sold to his son, Sotero Dionisio III, the subject property for P75,000.00 per deed of sale 3 3 acknowledged before Notary Public Triumfo R. Velez. On the same date, Sotero Dionisio III executed a deed of sale 4 of the same property in favor of respondent William Go for a consideration of P80.000.00. On August 18, 1980, title was transferred to respondent Go.

On August 27, 1980, respondent-heir Florida Nuqui, filed a Motion for Annulment/Revocation of the Deeds of Absolute Sale for the reasons that the sale and subsequent transfer of title of the property were made in violation of the court's order of July 8, 1980 and that the consideration of the two sales were grossly inadequate as in fact many are willing to buy the pr property for P400,000.00 since it is located along the corner of two main streets in the commercial center of Oroquieta City.

The respondent-administrator filed an opposition to said motion of co-heir Nuqui alleging that the actual consideration f the sale made by him is P200,000.00 and that it is the agreement of the heirs that if any of the heirs or close relatives is interested in buying the property, preference will be given to him or her in order to keep the property within the family of the deceased.

On September 9, 1980, respondent Nuqui filed a Reply to said Opposition, stating that the two sales were but a single transaction simultaneously hatched and consummated in one occasion as shown by the Notary Public's document Nos. 56 & 57 and with the same witnesses; that the sales were in reality a single deal between the administrator and William Go, because Sotero Dionisio III is without means or income and so has no capacity to buy the property; and that the transaction is an evidence of the administrator's intent to defraud the estate and his co-heirs, for had it not been for the Motion for Annulment, he would not have disclosed the true and actual consideration of the sale.

On September 10, 1980, all the co-heirs of respondent-administrator filed a Manifestation to Adopt the Motion for Annulment/Revocation of Deeds of Absolute Sale. They likewise filed a Manifestation on February 5, 1981 alleging that the Court order merely authorized the sale of the subject property but did not approve the same, Thus, their prayer for the cancellation of the registration of sale transaction between respondent- administrator and his son, and that between the latter and respondent William Go.

Respondent Go filed a Motion for Leave to Intervene to protect his rights, manifesting that he paid Sotero Dionisio III the actual consideration of P225,000.00 and being a purchaser in good faith and for value, his title to the property is indefeasible pursuant to law.

On February 6, 1981, petitioner spouses filed a "Manifestation In Intervention of Interest to Purchase Property Authorized by the Court to be Sold", wherein they alleged that respondent-administrator, without revealing that the property had already been sold to William Go, entered into a Mutual Agreement of Promise to Sell 5 5 to herein petitioners, for the amount of P270,000 which was reduced to P220,000.00; that immediately upon the execution of the agreement, petitioners paid the earnest money in the amount of P70,000.00 by IBAA Check No. OQT-40063026 drawn out in favor of Sotero Dionisio III, as requested by respondent-administrator; that it was agreed upon that the balance of P150,000.00 shall immediately be paid upon the production of the Transfer Certificate of Title and the execution of the final Deed of Sale; that although the agreement was executed in the name of Sotero Dionisio III the 'latter, was merely a nominal party, for technically according to the administrator, he executed a Deed of Absolute Sale in favor of his son, but the negotiation and transactions were directly and personally entered into between the administrator and petitioners; that the contract of sale has been perfected considering that the earnest money was already paid; that despite repeated demands the administrator refused to execute a final Deed of Sale in favor of petitioners, who later found out that the subject property was sold to William GO; that both contracts of sale were made to defraud the estate and the other heirs; that assuming the consideration of P200,000.00 supplied by William Go to Sotero Dionisio III who was not gainfully employed, then the contract of sale to Go would be without consideration, hence, it would become fictitious and simulated and there is no other recourse left to the court but to declare the sale null and void. Petitioners also manifested that in the event that the court should finally declare the sale null and void, they ares till interested to purchase the property for the same amount of P200,000.00 as previously agreed.

At th hearing of the said incident involving the questioned sales petitioners submitted a copy of the Contract of mortgage 66 dated July 18, 1980 executed by respondent-administrator in favor of Juan Lao, one of the petitioners, whereby the former mortgaged "all his undivided interest in the estate of his deceased mother, Rosenda Abuton Vda. de Nuqui, subject matter of this intestate Estate No. 842, now pending before the Court of First Instance of Oroquieta City, Branch I."

Respondent heir Florida A. Nuqui filed an Opposition to William Go's Motion to Intervene averring therein that the deed of sale executed by Sotero Dionisio, Jr. in favor of Sotero Dionisio III created no legal force and effect, since the validity of the sale absolutely depended on its approval by the court; that it therefore follows that the succeeding sale to Go and consequent issuance of the title to him are also null and void from their inception and that the admission by William Go of the actual and true consideration of the sale at his stage, hardly bespeaks of "innocence" or "good faith".

After several ,days of hearing, respondent Judge allowed all the interested parties to bid for the property at the highest obtainable price pursuant to his Order of July 8, 1980.

On February 16, 1981, in open court, respondent Go offered to buy the property in the amount of P280,000.00. Petitioners counter-offered at P282,000.00, spot cash. On that same day, all the heirs, except the administrator, filed a Motion Ex Parte 77 stating among other things, that the offer of William Go appears the highest obtainable price and that the offer of petitioners is not well taken as the same has not been made within a reasonable period of five (5) days from February 11, 1981.

On February 17, 1981, all the parties, with the exception. of the Lao spouses and Sotero Dionisio III, submitted for approval an Amicable Settlement 88 stating:

xxx xxx xxx

That after the administrator, Sotero A. Dionisio, Jr., had accounted for the actual price received by him out of the transaction between him and Sotero B. Dionisio III in the amount of Two Hundred thousand (P200,000.00) Pesos and that in the interest of a peaceful settlement William L. Go has offered and is ready, able and to pay to the heirs an additional amount of Eighty Thousand (P80,000.00 ) Pesos an arrangement which is most advantageous to the heirs and which they willingly accept to their satisfaction. the heirs of Rosenda Abuton hereby declare that they have no objection to the confirmation and approval of the sales/transactions executed by Sotero A. Dionisio, Jr., in favor of Sotero B. Dionisio III and that executed by Sotero B. Dionisio III in favor of the intervenor, William L. Go, and they likewise have no more objection to the lifting and cancellation of the notice of lis pendens from TCT No. 8807.

WHEREFORE, it is most respectfully prayed that an order issued by this Hon. Court confirming and approving the transaction executed by Sotero A. Dionisio, Jr., in favor of Sotero B. Dionisio III and that between the latter and William L. Go, and to direct the Register of Deeds of the Province of Misamis Occidental at Oroquieta City, for the cancellation of the notice of lis pendens annotated on Transfer Certificate of Title No. 8807, and to finally consider the matter treated in the Motion of Florida A. Nuqui dated August 27, 1980 and adopted by all the other heirs forever closed and terminated.

Oroquieta City, February 17, 1981.

xxx xxx xxx

On February 18, 1981, petitioners filed an opposition to the approval of the Amicable Settlement on the following grounds:

(a) They have an interest in the property as vendees in a promise to sell and as Mortgagee, of an undivided share of one of the heirs but they were not signatories to the amicable settlement, hence it is contrary to Article 2028 of the Civil Code providing that "A compromise is a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced";

(b) The Amicable Settlement seeks the confirmation and approval of the questioned transactions but as borne out by the pleadings and oral arguments, the Deed of Absolute Sale executed by the administrator in favor of his son is without consideration, therefore, it is fictitious and simulated hence it cannot be confirmed or ratified pursuant to Article 1409 of the New Civil Code;

(c) The Amicable Settlement is a device to defraud the Government of Capital Gains Tax, charges and other fees because the Deeds of Sales do not reflect the true consideration; and

(d) The Deeds of Sale sought to be confirmed included the undivided share of Sotero A. Dionisio, Jr. which is presently mortgaged to herein' spouses, which was executed prior to the sale, thus, if approved, the Court would abet the commission of the crime of estafa as the mortgage has not yet been paid and released.

Petitioners likewise pointed out in their opposition that respondent Judge had intimated in open court that somebody offered to buy the property for the price of P300,000.00 but since there was no formal offer in writing, they (petitioners) are ready and willing to buy the property at that amount, which definitely is the best price obtainable in the market and most beneficial to all the heirs.

Despite said opposition, respondent Judge issued an Order 99 on February 18, 1981 approving the Amicable Settlement, confirming and ratifying the two questioned Deeds of Sale. Petitioners' motion for reconsideration having been denied, they now come before Us through the instant petition raising the issue of whether or not respondent Judge is guilty of grave abuse of discretion in 1) approving the amicable settlement and confirming the two (2) Deeds of Sale in question; and 2) in not accepting the offer of the petitioners in the amount of P300,000.00 for the purchase of the lot in question.

Sotero Dionisio, Jr. is the Administrator of the estate of his deceased mother Rosenda Abuton. As such Administrator, he occupies a position of the highest trust and confidence, He is required to exercise reasonable diligence and act in entire good faith in the performance of that trust, Although he is not a guarantor or insurer of the safety of the estate nor is he expected to be infallible yet the same degree of prudence, care and judgment which a person of a fair average capacity and ability exercises in similar transactions of his own, serves as the standard by which his conduct is to be judged.

In the discharge of his functions, the administrator should act with utmost circumspection in order to preserve the estate and guard against its dissipation so as not to prejudice its editors and the heirs of the decedents who are entitled to the net residue thereof. In the case at bar, the sale was made necessary "in order to settle other existing obligations of the estate. This purpose is clearly manifested in the Motion for to Sell 1010 filed by Dionisio, Jr. The subsisting obligation referred to, although not specified, must be those due and owing to the creditors of the estate and also the taxes due the government. In order to guarantee faithful compliance with the authority granted 1111 respondent Judge, through the aforesaid Order made it an emphatic duty on the part of the administrator Dionisio." . . . to submit to this Court for approval the transactions made by him."

The sale was made. But of all people, to his very son Sotero Dionisio III and for the grossly low price of only P75,000,00, That sale was indubitably shown to be fictitious, it clearly appearing that Dionisio III has no income whatsoever. In fact, he is still a dependent of his father, administrator Dionisio, Jr. On top of that, not a single centavo, of the P75,000.00 stated consideration was ever accounted for nor reported by Dionisio, Jr. to the probate court. Neither did he submit said transaction as mandated by the order authorizing him to sell, to the probate court for its approval and just so its validity and fairness may be passed upon and resolved. It was only upon the filing by one of the heirs, Florida A. Nuqui, of the "Motion for Annulment/Revocation of Deeds of Absolute Sale" 12 12 questioning the genuineness aid validity of the transactions, that Dionisio, Jr. was compelled to admit that the actual consideration for the sale made by him was P200,000.00. 13 13 This sale is one of the illegal and irregular transactions that was confirmed and legalized by His HONOR's approval of the assailed Amicable Settlement. No doubt, respondent Judge's questioned approval violates Article 1409 of the New Civil Code and cannot work to confirm nor serve to ratify a fictitious contract which is non-existent and void from the very beginning. The fact that practically all the heirs are parties-signatories to the said Compromise Agreement is of no moment. Their assent to such an illegal scheme does not legalize the same nor does it impose any obligation upon respondent Judge to approve the same to the prejudice not only of the creditors of the estate, and the government by the non-payment of the correct amount of taxes legally due from the estate.

The offer by the petitioner of P300,000.00 for the purchase of the property in question does not appear seriously disputed on record. As against the price stated in the assailed Compromise Agreement the former amount is decidedly more beneficial and advantageous not only to the estate, the heirs of the descendants, but more importantly to its creditors, for whose account and benefit the sale was made. No satisfactory and convincing reason appeared given for the rejection and/or non-acceptance of said offer thus giving rise to a well-grounded suspicion that a collusion of some sort exists between the administrator and the heirs to defraud the creditors and the government.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the assailed Order dated February 18, 1981 of the respondent Judge approving the questioned Amicable Settlement is declared NULL and VOID and hereby SET ASIDE. Consequently, the sale in favor of Sotero Dionisio III and by the latter to William Go is likewise declared NULL and VOID, The Transfer Certificate of Title issued to the latter is hereby CANCELLED.

The proper Regional trial Court of Misamis Occidental to whom this case is now assigned is hereby ordered to conduct new proceedings for the sale of the property involved in this case.

No pronouncement as to costs.

SO ORDERED.

Makasiar, Concepcion Jr., Abad Santos and Escolin JJ., Concur.

Aquino, J., concur in the result.

G.R. No. L-23497             April 26, 1968

J.M. TUASON and CO., INC., petitioner, vs.ESTRELLA VDA. DE LUMANLAN and the COURT OF APPEALS (FIFTH DIVISION), respondents.

Tuason and Sison for petitioner.Jose Chuico and Wilfredo E. Dizon for respondents.

REYES, J.B.L., Actg. C.J.:

J. M. Tuason & Co., Inc. petitioned for a review by certiorari of the decision issued by the Court of Appeals (Fifth Division) in its case CA-G.R. No. 27259-R, reversing the judgment rendered by the Court of First Instance of Rizal (Civil Case No. Q-4243) that ordered defendant (now respondent) Estrella Vda. de Lumanlan to vacate the lot occupied by her in Sta. Mesa Heights Subdivision, barrio Tatalon, Quezon City, and to remove therefrom the house and other structures constructed thereon, paying P240.00 a month until restoration of the premises to plaintiff.

The facts are stated in the decision of the Court of Appeals (accepted by both parties) in this wise: 1äwphï1.ñët

. . . That in the complaint filed in this case by plaintiff, J. M. Tuason & Co., Inc., hereinafter called Tuason, on 30 April, 1969, the basis is that it being the registered owner of the property known as Santa Mesa Heights Subdivision, situated at Barrio North Tatalon, Quezon City, herein defendant sometime in April, 1949 unlawfully entered into possession of 800 square meters, and therein constructed his house so that plaintiff prayed for ejectment and damages for the occupancy; and defendant in her answer set forthaffirmative defense that on 12 March, 1949, she had bought the property she was occupying from one Pedro Deudor, and that in a compromise agreement between Pedro and Tuason on 16 March 1953, approved by the Court of First Instance of Quezon City, she was one of the buyers therein recognized, so that she asked that her rights be recognized and the complaint dismissed; but on the basis of the evidence presented by both parties in the trial, Lower Court sustained plaintiff, holding that Tuason being the registered owner, and the question being purely one of possession, therefore, defendant's said evidence was "completely immaterial". . . . (Page 2 of Decision, Annex "A" of Petition.)

Upon the facts thus stated, the Fifth Division of the Court of Appeals held that, pursuant to this Supreme Court's ruling in Evangelista vs. Deudor, L-12826, September 10, 1959, the Compromise Agreement (Exh. 2) between the petitioner Tuason & Co. and the Deudors constituted a valid defense against the possessory action filed by Tuason & Co.; that under paragraph 7 of said Compromise Agreement, petitioner bound and committed itself to sell to respondent Lumanlan the lot occupied by her at a reasonable price; that said respondent had a right to compel petitioner to accept payment for the lot in question; and that the compromise agreement legalized the possession of respondent.

These pronouncements are assailed by the petitioner in this appeal as legally incorrect and contrary to the decisions of this Court.

The terms of the compromise agreement between the heirs of Telesforo Deudor and J. M. Tuason & Co. have been taken cognizance of in many decisions of this Court (Evangelista vs. Deudor,  jam. cit;

Deudor vs. J. M. Tuason & Co., L-18768, May 30, 1961, and L-20105, Oct. 31, 1963; J. M. Tuason vs. Jaramillo, et al., L-18932-34, Sept. 30, 1963; J. M. Tuason vs. Macalindong, L-15398, Dec. 29, 1962 and others). The Deudors had therein recognized the registered title of Tuason & Co. over the lands claimed by them, and received payment of certain sums of money; but as the Deudors had, prior to the compromise, sold their possessory rights to various persons, paragraph seventh of the compromise agreement (case Q-135 of the court of origin) provided:

That the sales of the possessory rights claimed by the DEUDORS, are described in the lists submitted by them to the OWNERS which are attached hereto marked Annexes "B" and "C" and made part hereof. Whatever amounts may have been collected by the DEUDORS on account thereof, shall be deducted from the total sum of P1,201,063.00 to be paid to them. It shall be the joint and solidary obligation of the DEUDORS to make the buyer of the lots purportedly sold by them to recognize the title of the OWNERS over the property purportedly bought by them, and to make them sign, whenever possible, new contracts of purchase for said property at the current paces and terms specified by the OWNERS in their sales of lots in their subdivision known at "Sta. Mesa Heights Subdivision." The DEUDORS HEREBY advised the OWNERS that the buyer listed in Annex "B" herein with the annotation "continue" shall buy the lots respectively occupied by them and shall sign contracts, but the sums already paid by them to the DEUDORS amounting to P134,922.84 (subject to verification by the Court) shall be credited to the buyers and shall be deducted from the sums to be paid to the DEUDORS by the OWNERS. The DEUDORS also advise the OWNERS that, the buyers listed in Annex "C" herein with the annotation "Refund" have decided not to continue with their former contracts or purchases with the DEUDORS and the sums already paid by them to the DEUDORS TOTALLING P101,182.42 (subject to verification by the Court) shall be refunded to them by the OWNERS and deducted from the sums that may be due to the DEUDORS from the OWNERS (J.M. Tuason & Co., Inc. vs. Jaramillo, L-18932, Sept. 30, 1963);

Careful analysis of this paragraph of the compromise agreement will show that while the same created "a sort of contractual relation" between the J. M. Tuason & Co., Inc., and the Deudor vendees (as ruled by this Court in Evangelista vs. Deudor, ante), the same in no way obligated Tuason & Co. to sell to those buyers the lots occupied by them at the price stipulated with the Deudors, but at "the current prices and terms specified by the OWNERS (Tuason) in their sales of lots in their subdivision known as 'Sta. Mesa Heights Subdivision'". This is what is expressly provided. Further, the paragraph plainly imports that these buyers of the Deudors must "recognize the title of the OWNERS (Tuason) over the property purportedly bought by them" from the Deudors, and "sign, whenever possible, new contracts of purchase for said property"; and, if and when they do so, "the sums paid by them to the Deudors . . . shall be credited to the buyers." All that Tuason & Co. agreed to, therefore, was to grant the Deudor buyers preferential right to purchase "at current prices and terms" the lots occupied by them, upon their recognizing the title of Tuason & Co., Inc., and signing new contracts therefor; and to credit them for the amounts they had paid to the Deudors.

Nowhere in her answer did the respondent Estrella Vda. de Lumanlan claim that she had signed a new contract with J. M. Tuason & Co., Inc. for the purchase of the lot occupied. What is worse, instead of recognizing the title of the owners (Tuason & Co.) as required by the aforementioned compromise agreement, she charged in paragraph 6 of her special defense (Rec. on Appeal, p. 10) that "Pedro Deudor and his co-owners and the plaintiff herein . . .conspired together and helped each other . . . by entering into a supposed Compromise" whereby "Pedro Deudor and his co-owners renounced, ceded, waived and quitclaimed all their rights, title and interest in the property including the land sold to herein defendant, in favor of the plaintiff J. M. Tuason & Co., Inc., in consideration of the sum of P1,201,063.00, without the knowledge and consent, and much less the intervention of the herein defendant." In other words, the respondent Lumanlan in her answer

repudiated and assailed the compromise between the Deudors and J. M. Tuason & Co. How then can she now claim to take advantage and derive rights from that compromise?

Without the compromise agreement, Lumanlan must justify her possession on the basis of a pretended superiority of the Deudors' old Spanish informacion posesoria over Tuason's Certificate of Title No. 1267, traceable back to the original Certificate of Title No. 735 of Rizal, issued under the Registration Act No. 496. But, as ruled by this Court in previous cases, Lumanlan is by now barred from assailing the decree of registration in favor of Tuason & Co., Inc.'s predecessors twenty years after its issuance (Tiburcio vs. PHHC, L-13429, Oct. 31, 1959; Tuason & Co. vs. Bolaños, 95 Phil. 107; Tuason & Co. vs. Santiago, 99 Phil. 622-623; Tuason & Co. vs. Macalindong, supra; Tuason & Co. vs. Jaramillo, L-16827, Jan. 31, 1963).

It is thus apparent that no legal basis exists for the pronouncement in the appealed decision that Tuason & Co. had committed itself to sell to Lumanlan the lot occupied by her at a reasonable price, or that the compromise agreement legalized the possession of the respondent, since the latter does not rely on the compromise but, on the contrary, she assails it.

The Court of Appeals ruled that the price to be paid by Lumanlan to Tuason & Co., Inc., is governed by Article 1474 of the new Civil Code of the Philippines, which provides that:

Where the price cannot be determined in accordance with the preceding articles, or in any other manner, the contract is inefficacious. However, if the thing or any part thereof has been delivered to and appropriated by the buyer, he must pay a reasonable price therefor. What is a reasonable price is a question of fact dependent on the circumstances of each particular case.

Since there has been no contract between petitioner Tuason & Co. and respondent Lumanlan for the sale of the lot occupied by the latter, and by paragraph 7 of the Compromise Agreement (assuming that respondent-appellee still has the right to invoke the same, and seek refuge thereunder), Tuason & Co. did not consider itself bound by the sales made by the Deudors, but demanded that the Deudor buyers should sign new contracts with it at current prices specified for the sales of lots in "Sta. Mesa Heights Subdivision" (ante) the aforequoted Article 1474 can have no bearing on the case, Lumanlan not being a buyer from Tuason & Co.

As to Lumanlan's allegation in her counterclaim that she should be deemed a builder in good faith, a similar contention has been rejected in Tuason & Co. vs. Macalindong, L-15398, December 29, 1962, where we ruled that there being a presumptive knowledge of the Torrens titles issued to Tuason & Co. and its predecessors-in-interest since 1914, the buyer from the Deudors (or from their transferees) can not, in good conscience, say now that she believed her vendor had rights of ownership over the lot purchased. The reason given by the Court is that —

Had he investigated before buying and before building his house on the questioned lot, he would have been informed that the land is registered under the Torrens system in the name of J. M. Tuason & Co., Inc., If he failed to make the necessary inquiry, appellant is now bound conclusively by appellee's Torrens title (Sec. 51, Act 496; Emas vs. Zuzuarregui, 35 Phil. 144) (Tuason & Co., Inc. vs. Macalindong, ante).

Lumanlan had chosen to ignore the Torrens title of Tuason & Co., Inc. and relied instead upon the Deudors' claim of ownership, perhaps because such course appeared to her as more advantageous; hence, she has only herself to blame for the consequences now that the Deudors' claim has been abandoned by the Deudors themselves, and can not pretend good faith. The Court of First Instance, therefore, did not err in holding that she was not a rightful possessor and sentencing her to vacate.

Respondent could have asked that she recover or be credited with the amounts paid by her to the Deudors, but as no claim to such credit was ever advanced by her in the trial Court, no pronouncement can be made thereon in this appeal. Equity demands, however, that her right to claim such return, or to have the amount offset against the sums she was sentenced to pay, should be, as it is, reserved.

WHEREFORE, the decision of the Court of Appeals is reversed and that of the Court of First Instance reinstated. Costs against respondent, Estrella Vda. de Lumanlan.

Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro and Fernando, JJ., concur.Angeles, J., took no part.Concepcion, C.J., is on leave.

G.R. No. L-25732             February 27, 1969

VARGAS PLOW FACTORY, INC., plaintiff-appellee, vs.THE CENTRAL BANK OF THE PHILIPPINES, defendant-appellant.

De Santos and Delfino for plaintiff-appellee. F. E. Evangelista, Gilberto C. Diaz and G. S. Gamo, Jr. for defendant-appellant.

REYES, J.B.L., J.:

          Appeal from the decision of the Court of First Instance of Manila (in Civil Case No. 57582) on the legal issue of when the imposable margin levy on foreign exchange purchased from the Central Bank is collectible.

          There is no controversy as to the facts of this case.

          To cover the cost of steel blades, bolts and rivets it was importing from Germany, the Vargas Plow Factory, Inc., applied with the Philippine National Bank for free market letters of credit, which were granted, as follows:

L/C Number Date Face Value

613457-FM Sept. 22, 1961 $10,820.00

614728-FM Dec. 22, 1961 3,580.00

615103-FM Jan. 15, 1962 10,820.00

615104-FM Jan. 15, 1962 10,820.00

          The Philippine National Bank, on behalf of the Vargas Plow Factory, in turn, applied with the Central Bank to purchase the "forward exchange" necessary to cover the above-mentioned letters of credit. The applications having been duly approved, the Philippine National Bank and the Central Bank executed Forward Exchange Contracts No. 10593, on December 15, 1961; No. 11018, on December 26, 1961; and No. 12576, on January 19, 1962.

          Against the free market letters of credit opened by the Philippine National Bank, the foreign beneficiary (Stahlkontor Hahn Aktiengesellschaft of Dusseldorf Germany) drew the following drafts:

L/C Number Date Face Value

613457-FM Dec. 30, 1961 $ 566.78

614728-FM Mar. 22, 1962 3,512.80

615103-FM Mar. 30, 1962 3,939.14

615103-FM Apr. 11, 1962 6,880.86

615104-FM Mar. 30, 1962 3,971.81

Apr. 11, 1962 6,848.19

          which drafts were accepted (by the importer) on January 30, 1962, June 4, 1962, May 25, 1962, July 3, 1962, December 6, 1962 and December 6, 1962, respectively.

          The Central Bank thereupon charged and collected from the importer the sum of P11,642.65, as 15% margin levy on the foreign exchange covered by the drafts. The importer accordingly paid, but later demanded for the refund of, the aforestated amount of P11,642.65, claiming that its collection was not in accordance with law. And when it was denied, the importer raised the question of the validity of the collection of the margin levy on the involved foreign exchange before the Court of First Instance of Manila (Civil Case No. 57582).

          On November 11, 1965, the court rendered judgment sustaining plaintiff's claim and ordering the defendant, Central Bank, to pay to the former the sum of P11,642.65, with legal interest thereon from the filing of the complaint until full payment of the obligation, plus attorney's fees and costs. Defendant Central Bank thus interposed the present appeal.

          There is here no dispute as to the legality and validity of Central Bank Circular No. 122, 1 imposing 15% margin fee on all sales of foreign exchange purchased to any bank or importer by the Central Bank. The controversy in this case, however, arose from the fact that, on January 21, 1962, the Central Bank issued its Circular No. 133. suspending the collection of margin fee on foreign exchange. The effect is that, while the letters of credit in question opened by the Philippine National Bank, as well as the contracts to purchase forward exchange (between the Philippine National Bank and the Central Bank), were issued or executed during the effectivity of Circular No. 122, or when the margin levy is still imposable, the drafts against said letters of credit were drawn and accepted by the importer when the collection of the margin fee had already been suspended. The point at issue, therefore, is whether the imposable margin fee becomes collectible upon the execution of the contract to purchase the foreign exchange, as claimed by appellant Central Bank, or upon payment of the creditor by the correspondent bank, as ruled by the court below. lawphi1.nêt

          The lower court, relying on the ruling in Belman Cia, Inc. vs. Central Bank, 104 Phil. 877, that there was no consummated sale of foreign exchange until payment of the amount in foreign currency to the creditor, held that the sales here in question occurred during the period of suspension of the margin levy by the Central Bank, and that, therefore, no margin fee was payable thereon.

          At the time the decision of the court a quo was rendered (on November 11, 1965), the same was in accord with the prevailing jurisprudence. Subsequently, however (though the court below could not have anticipated it), this Court had occasion to re-examine the doctrine of the Belman case and allied adjudications, and overruled the same, on March 1, 1968, in the case of Pacific Oxygen & Acetylene Co. vs. Central Bank, L-21881, 22 SCRA 917. Therein, this Court reached the conclusion that Republic Act No. 2609, empowering the Central Bank to collect a margin fee "in respect of all sales of foreign exchange by the Central Bank and its authorized agent banks (section 1. Republic Act 2609), as well as the Central Bank circulars implementing said law, made no distinction between perfected and consummated, or between executory and executed, sales. Under our Civil and Commercial Codes, a sale comes into existence upon its perfection by mutual consent, 2 even if the subject matter or the consideration has not been delivered, 3 barring law or stipulation to the contrary, that in this case, does not exist. Additionally, the only sales of foreign exchange by the Central Bank, or its agent banks, are the ones made to the appellee herein (Vargas Plow Factory, Inc.), the acceptance of the exporter's drafts being in the nature of a recognition of the importer's act of assigning to the exporter, Stahlkontor Hahn Aktiengesellschaft, which issued said drafts, all or part of the foreign exchange previously sold to the appellant, Vargas Plow Factory, and paid for by the latter. Otherwise stated, in honoring the drafts issued by the exporter, the local bank did not sell dollars to said party, but merely caused the delivery to it of dollars previously sold to the appellee.

The foreign exchange having been applied for by the appellee and sold to him by the bank, as shown by the documents, the opening of a letter of credit in favor of Stahlkontor Hahn Aktiengesellschaft becomes ultimately but the result of a stipulation pour autruithat is in no way incompatible with the original sale of the foreign exchange to appellee herein. It follows that the true sale took place when the forward exchange contracts were executed in December, 1961, before the margin levy was suspended. Hence the margin fee was properly collected.

          PREMISES CONSIDERED, the decision under appeal is reversed, and the complaint ordered dismissed. No costs.

Concepcion, C.J. Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano, Teehankee and Barredo, J.J. concur.

G.R. No. L-48436 January 30, 1986

JOSE MATIAS, CLARO APOSTOL, TEOFILO NAVARRA, JEREMIAS DEL ROSARIO, FELICIDAD SANTOS, MAXIMA

SY JUECO, and ROMANA AQUINO, petitioners,

vs.

HONORABLE COURT OF APPEALS, CARLOS GOCO, LEONILA SIOCHI, and A.M. RAYMUNDO & COMPANY, respondents.

FACTS:

CUEVAS, J.:

Petitioners alleged that they were bonafide tenants of Hacienda de Tulay in Malabon, Rizal, originally belonging to the Archbishop of Manila. They claim that they have been continuously occupying the lot for more than 30 years, and have constructed their own dwellings and made necessary improvements. They later decided to purchase the lot from the Archbishop and designated Carlos Goco as their official representative for the negotiation regarding the sale. After that, Goco collected money from the tenants (as deposit) as required by the Archbishop during the negotiations.

In 1954, the Archbishop sold the hacienda to Leonila Siochi, through the intervention of her husband, Carlos Goco with the understanding of reselling the same to the tenants without profit, subject to the condition that "the vendee shall recognize and respect the rights of the present bonafide tenants listed" in the deed of absolute sale.

Later, Carlos Goco organized a partnership under the name of A.M. Raymundo & Company and convinced his wife to sell the hacienda to the partnership without notifying the tenants of such sale. The partnership is now offering to sell the lots to the tenants at exorbitant prices, which the poor tenants cannot afford to pay.

Petitioners prayed that judgment be rendered in their favor ordering defendants to:

(1) recognize their rights as bonafide tenants to lease the property from the defendants with option to purchase the same;

(2) fix the purchase price of each lot in accordance with the schedule rates in paragraph 10 of their complaint (NOTE:

The amount they suggested in the said “paragraph 10 of their complaint” is not in the case, but the idea is they suggested a price for the lot) or at such reasonable price as the court may deem fit; and

(3) jointly and severally pay them moral damages plus attorney's fees.

Petitioners admitted that they ignored the letter of A.M. Raymundo & Company giving them top priority to purchase the lots respectively occupied by them and inviting them to visit its office to discuss the price acceptable by all concerned.

ISSUE:

W/N the defendants are obliged to sell the lot to the petitioner at the latter’s suggested price

HELD:

NO. WHEREFORE, the decision under review is hereby AFFIRMED without pronouncement as to costs.

RATIO:

During the early stages of the negotiations, petitioners have already been in arrears in the payment of rentals, which delinquency lasted up to the time of the consummation of the sale of the Hacienda. In spite of such failure, the new owner of the Hacienda gave them top priority to purchase their respective lots. This is a clear indication that the partnership complied with the conditions attached to the sale; otherwise, it could have right then and there demanded the ejectment of petitioners as delinquent tenants. Instead of discussing with the new owner the terms and conditions they wish to impose on the projected sale, petitioners insist on their claim that the price of the lots are exorbitant; and that their right to purchase the lot at a price fixed in the complaint was disregarded. Petitioners' insistence as to the price of the lot rests on the false assumption that the fixing of the price of the lot they wanted to purchase is one of the rights granted to them by law. To sustain such Idea would run counter to the provision of Article 1321 of the New Civil Code which states that—

“The person making the offer may fix the time, place and manner of acceptance, all of which must be complied with.

The tenants under condition number (1) of the Deed of Sale, can continue enjoying their leasehold rights even though the Hacienda has been transferred to a new owner and should not be disturbed in the possession of their respective premises, provided however that they religiously pay their rentals. Such a condition should not be interpreted to mean that the new owner is under obligation to sell the lots to the tenants at a price dictated by the latter.

YUVIENCO V. DACUYCUY (May 27, 1981)

FACTS:

Petitioners own a property in Tacloban City which they intend to sell for 6.5M. They gave the respondents

the right to purchase the property nut only until July 31, 1978. Respondents replied that they agree to buy

the property and they will negotiate for details. Petitioner sent another telegram informing respondents

that their proposal is accepted and a contract will be prepared.

Lawyer of defendant, Mr.Gamboa, arrived bringing a contact with an altered mode of payment which says

that the balance payment should be paid withing 30 days instead of the former 90 days. (Otiginal terms:

2M payment upon execution. 4.5M after 90 days)

ISSUE:

WON there was already a perfected contract of sale between the parties.

HELD:

There was no perfected contract of sale yet because both parties are still under negotiation and hence, no

meeting of the minds. Mr.Gamboa even went to the respondents to negotiate for the sale. Even though

there was an agreement on the terms of payment, there was no absolute acceptance because

respondents still insisted on further details.

With regard to the alleged violation of terms of payment, there was no written document to prove that the

respondents agreed to pay not in cash but in installment. In sale of real property, payment of installment

must be in requisite of a note under the statute of frauds.

G.R. No. L-33079 December 11, 1978

PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION, petitioner, vs.HON. WALFRIDO DE LOS ANGELES, as Judge of the Court of First Instance of Rizal, Branch IV, Quezon City, and EASTERN VIGAN VTPA, INC, SAN NICOLAS FACOMA, INC., ILOCOS SUR TOBACCO INDUSTRIES CORP., TAGUDIN FACOMA, INC., SAN JUAN TOBACCO PLANTERS, INC., STA. MONICA TOBACCO PLANTERS ASSN., NORFEX-VILLAVICIOSA, BOUNDARY VTPA, BADOC TOBACCO PLANTERS, INC., LUZON PRODUCERS CORP. BALAOAN FACOMA, INC., BANGUED NORFEX BANGUED TOBACCO PROD. ASSN., ARINGAY FACOMA, INC., SOUTHWESTERN SAN QUINTIN TOBACCO PLANTERS, INC., BANGUED FACOMA, INC., CENTRAL RELIANCE TOBACCO FARMERS CORP., LIDLIDDA VTPA, INC., FILIPINO AGRICULTURAL PRODUCERS, INC., LA UNION AGRICULTURAL DEVELOPMENT CORP., UNITED SAN ILDEFONSO VTG ASSOCIATION, INC., ASINGAN FACOMA, INC., and ALLIED TOBACCO PLANTERS, INC., respondents.

FERNANDO,  J:

The controversy that gave rise to this petition for review by certiorari from a decision of the then respondent Judge Walfrido de los Angeles of the Court of First Instance of Rizal Branch IV, Quezon City, arose from a fire that destroyed the redrying plant of petitioner Philippine Virginia Tobacco Administration, hereinafter referred to as the PVTA, at Agoo, La Union, as a result of which private respondents 1 suffered losses arising from the sale and delivery of tobacco to Central Cooperative Exchange, Inc., to be subsequently referred to as the CCE, the authorized agent of petitioner. It was named defendant in the lower court but is not a party to this appeal. The decisive point at issue is thus the liability of petitioner for the damage incurred by private respondents. The lower court, according to the facts as found by respondent Judge, entitled to respect by this Tribunal only a question of law being properly before it, 2 decided the case in favor of private respondents. The affirmance of the decision, as will be explained more in detail, is indicated.

The decision now sought to be reviewed stated the nature of the case thus: "In their second amended complaint the plaintiffs allege that they are private corporations; that they were recognized by the defendants as trading entities of the defendant Philippine Virginia Tobacco Administration (PVTA) in connection with the trading and buying of locally grown Virginia tobacco in 1963; that pursuant to Section 4 of Republic Act No. 2265, under which the defendant PVTA has the power and duty to direct, supervise and control all functions and operations with respect, among other things, to the trading of Virginia tobacco and to buy locally grown Virginia tobacco, the PVTA entered into a management contract with its co-defendant Central Cooperative Exchange, Inc. (CCE); that under this contract, the CCE obligated itself to procure, redry and service Virginia tobacco for the PVTA and to advance the payment of tobacco to the trading entities at the government price support plus transportation, overhead and other specified expenses; that on various dates in 1963, the plaintiffs delivered to the PVTA through the CCE in the latter's redrying plant at Agoo, La Union, certain quantities of tobacco under particular BIR Guias; that the shipments are those enumerated in Annex 'B' of the second amended complaint (some of which however were later dropped upon proper motion); that the payment of these tobacco shipments was refused by defendants without reason; hence this suit. The plaintiffs pray for the value of their respective shipment plus legal interests computed 48 hours from

date of acceptance thereof, and damages, attorney's fees, and the costs." 3 After noting that the defendants, now petitioners, filed their answer containing specific denials and special defenses, it went on thus: "In its answer the defendant PVTA alleged that the shipments were not accepted by it and the CCE; that if they were accepted, they were not properly accounted for by the CCE and 'were in fact reported burned in the fire that razed down the plant on or about July 24, 1963, brought about by the carelessness and negligence of the said defendant CCE.' It alleged a counterclaim against plaintiffs Allied Tobacco Planters, Inc. and San Juan Planters, Inc. for the balances in the respective amounts of P14,162.47 and P 2,683.38 of their merchandizing loans from the PVTA. It also filed a cross-claim against the CCE to the effect that the latter should be held liable to pay whatever amount the PVTA may pay to the plaintiffs. On its part, defendant CCE alleged the special defense that it only acted as agent of the PVTA in the transactions subject matter of the case." 4

The matter in issue was further clarified in the decision in this manner: "The juridical personality of the plaintiffs are admitted in the answers of the defendants, and in their answers to plaintiffs' request for admission, they admitted that the plaintiffs were recognized in 1963 as trading entities of the PVTA. They also admitted their management contract in 1963 for procuring, redrying and servicing, they also admitted that the 1963 tobacco trading started in April 1963, and that on July 24, 1963, a fire occurred in the redrying plant of the CCE, destroying tobacco shipments therein of various trading entities and that this fact was reported to the PVTA. Under the aforesaid management contract, the CCE was given by the PVTA an allocation of a million kilos of Virginia tobacco to procure, redry, store and service for the PVTA. The CCE was supposed to advance payment of the shipments 48 hours from acceptance, but from the evidence in this case it appears that actually the payments were made by the PVTA itself evidently in order to control disbursements more effectively. The PVTA had rules and regulations, among them Circulars 2 and 4, to govern the tobacco trading operations. It assigned men to the provinces to supervise these operations and enforce observance of these rules and regulations." 5 Plaintiffs in the lower court, now respondents, through their officers, "testified that after the fire and even in the next following years, they made demands for the payment of their shipments but these demands were ignored. Mention should be made of the testimony of Constante Somera who in 1963, besides being the manager of plaintiff Tagudin Facoma, was President of the National Federation of Facoma's, Vice-President of the Ilocos Sur Federation of Facoma's, and a member of the Board of Directors of defendant CCE. He testified that in about five occasions, officers of all the plaintiffs went to him for assistance in the collection of their claims, and he headed delegations to the defendants and notably to PVTA Chairman Balmaceda and PVTA General Manager Bananal but that the latter gave all sorts of excuses such as the need of further study of the matter and the lack of money. So after many attempts proved futile, Somera advised his colleagues that they go to court. As already stated, the PVTA had men in the field to implement its rules and regulations, who were headed by the PVTA provincial tobacco agents. During the trading in 1963, these agents were Jose Singson, Antonio Florendo, Angel Torrijos, Jorge Peneras, Manuel Festejo and Alfredo Cajigal. The plaintiffs presented Bernardo Navarrette, the head of the Field Services Department of the PVTA, and he Identified the signatures and initials of the said PVTA provincial tobacco agents in the shipping documents exhibited in this case." 6

As for the facts found by the lower court, the following was set forth in such decision: "This Court is convinced that there is satisfactory proof that the plaintiffs delivered the tobacco shipments in question to the defendants at the CCE redrying plant in 1963, and that the same were unloaded and awaiting inspection and grading when they were burned on July 24, 1963. As a matter of fact, these facts were

testified to by no less than the CCE Trading Officer at the plant, Benjamin Bello, whose duty it was to exercise general supervision over the receiving and storage of Virginia tobacco in the CCE redrying plant in accordance with the PVTA regulations and procedures. Among other things, he declared that he prepared periodic lists of shipments scheduled or unloaded for inspection in order for the CCE plant to know the expected volume of tobacco to be redried and serviced, and he Identified the last lists, those dated July, 17 and 22, 1963, which indeed include the shipments in question Romeo Ballesil, PVTA Tobacco Plant Manager in the CCE who testified for the PVTA, in effect confirmed this when he said that there were several inventories made after he assumed the position on July 12, 1963. He also confirmed the fact, as testified to by Bello, that there were many shipments in the CCE receiving ramps and bays which were authorized to be unloaded and awaiting inspection when the plant was destroyed by fire on July 24, 1963; there were in fact piles of tobacco up almost to the ceiling in some places, and there were piles even in the corridors of the receiving ramps." 7 There were "separate certifications [from Bello] to the effect that according to the records of the redrying plant, the plaintiffs had specified quantities of tobacco under specified Guias ready for inspection and grading at the receiving ramps before July 24, 1963. These certifications are exhibits in this case." 8

Then came a detailed appraisal of the evidence by the lower court: "From the evidence, it appears that, pursuant to its powers and duties under Republic Act No. 2265, the PVTA issued rules and regulations,in respect to its tobacco trading operations, and assigned men to its recognized trading entities among them the plaintiffs, to see that these rules and regulations were observed. The entities even had to apply with the PVTA and were screened before PVTA accepted them as its trading entities. As admitted by the witnesses of the PVTA, notably Ballesil and Millan these PVTA men supervised the grading, weighing, baling of tobacco, and other activities in the buying station of the trading entities to which they were assigned. These PVTA men, Identified by Ballesil as PVTA Field Inspectors, signed the documents covering tobacco, such as the pre-sales invoices showing names of the farmer sellers, the quantity and grade of tobacco received from these farmers; the abstracts of tobacco purchased; the progressive stock and shipment control form showing the status of stocks after each shipment to the PVTA; the commercial waybill and other documents pertaining to shipments. They saw to it that the tobacco was properly graded and in fact, the PVTA tobacco inspector saw to it that the tobacco was classified according to the standards provided by the PVTA. They also saw to it that the tobacco was properly weighed and baled, and loaded on trucks for transhipment duly sealed. They saw to it also that the shipping documents were complete and in order. These obviously are not the usual acts of an ordinary buyer of a commodity. Among the shipping documents may be mentioned PVTA Form 30, entitled Request for Tobacco Clearance, addressed to the PVTA Provincial Tobacco Agent. According to the defendant's answers to plaintiffs' request for admission, it was the function of this PVTA agent to process the said request and the supporting documents before giving him clearances to the shipment and recommending its acceptance. It was he alone who could decide to what redrying plant the shipment should be sent. An this indicates the extensive intervention of the PVTA in the buying and shipping activities at the level of the trading entities. Once made, the clearance given by the PVTA provincial tobacco agent was an indication that the required shipping documents were complete and in order and that the shipment; was strictly in accordance with the PVTA regulations. Upon arrival of the shipment at the redrying plant designated by the PVTA, the shipping documents were delivered to the PVTA traffic officer thereat and were processed. The shipment was then given by the PVTA a gate pass, ' an unloading permit, and a priority slip stating the time it would be unloaded and graded in the plant. The presence of the shipment is actually verified by the PVTA Plant Manager. A shipment could not be

brought inside the plant and unloaded at the receiving ramps without prior authority of the PVTA, and once inside the plant, it could no longer be withdrawn without proper application by the entity concerned addressed to the PVTA general manager. It is thus clear that the PVTA had virtual control over the shipments after they had left the hands of the trading entities. It is also clear that the PVTA, in the implementation of its contract with the CCE, did not delegate to the latter any of its powers and duties under the law to buy Virginia tobacco. In fact Bello testified that PVTA controlled, directed and supervised the CCE in the performance by the latter of all activities in the tobacco trading operations in 1963." 9 Further on this point: "As above stated, the plaintiffs' shipments had long been in the CCE ramps waiting to be inspected when they were burned. According to Ballesil, PVTA Tobacco Plant Manager assigned to the CCE, there was only redrying of tobacco from July 13 until the fire occurred; there was no inspection or acceptance of tobacco shipments. Inspection of shipments was suspended; and he claimed as the reason the alleged lack of space in the transit area where inspected tobacco would be stored to await redrying. Obviously, as a result of delays and suspensions of operations, there arose a backlog of shipments waiting to be inspected at the CCE ramps. But there is no explanation why, considering these suspensions, the PVTA kept on authorizing the unloading of shipments which were not being inspected fast enough. It is also significant that the PVTA states in its answer that the CCE redrying plant and facilities 'caught fire and burned down due and owing to its (CCE) carelessness or negligence or its officials and employees;' and the PVTA accuses these officials and employees with being 'grossly and inexcusably careless and negligent in not preventing and arresting the spread of the fire.'" 10

From the above recital, it is easy to understand why, as decided by the lower court, plaintiffs, now private respondents, should prevail: "In the light of the foregoing, the denial of liability on the part of the defendant PVTA cannot be sustained. It has virtual control of the shipments even at the plaintiffs' stations and specially after they had been cleared and sent to the CCE plant and unloaded for inspection at the CCE ramps. It is reasonable to say that these shipments, pursuant to the scheduling and priorities established by the defendants themselves, should have been inspected before July 24, 1963 since they were shipped to the CCE as early as May and June 23, 1963, as shown in the shipping documents. But they were not inspected early enough, and this evidently because of delays and suspension of operations in the CCE plant. This Court wonders whether the causes of the delays and suspensions could have been avoided Or ed by the defendants considering that the trading operations started as early as April 1963, indicating that they had had enough experience and know- how to enable them to cope with the situation. Moreover, there is the allegation of the PVTA, which may be considered as an admission against interest vis-a-vis the claims of the plaintiffs, to the effect that its own agent and contractor, the CCE, was careless and negligent in causing the fire and in not Preventing and arresting the spread of the fire. When an the fault clearly lies with the defendants, it would be the height of injustice to deny the plaintiffs' claims. Their shipments which had long been in the ramps for inspection were not inspected in due time and the delay is traceable to the fault of the defendants, whereas the plaintiffs themselves had done everything that was required of them by the PVTA regulations in order to have their tobacco inspected and paid for. The value of the tobacco is, incidentally, stated in the shipping documents. This Court believes that the PVTA already had the legal control and custody of said shipments and that it should be considered as having accepted them as of the fire and therefore should bear the loss." 11

Judgment was, therefore, rendered by the lower court ordering PVTA to pay to the plaintiffs the amount of their respective claims, as follows: ... Eastern Vigan VTPA Inc., Guia No. 38-P26,936.68; San Nicolas

Facoma, Inc., Guia No. 76-P21,622.73; Ilocos Sur Tobacco Industries Corp., Guia No. 109-P15,922.08; Tagudin Facoma, Inc., Guia No. 445-P27,743.56; Tagudin Facoma, Inc., Guia No. 450-P27,284.84; Tagudin Facoma, Inc., Guia No. 439-P23.669.44; Tagudin Facoma, Inc., Guia No. 438- P43,725.64; San Juan Tobacco Planters. Inc., Guia No. 30-P28,351.19; Sta. Monica Tobacco Planters Assn., Inc., Guia No. 17-P29,677.59; Sta. Monica Tobacco Planters Assn. Inc., Guia No. 18-P30,980.31; Norfex- Villaviciosa, Guia No. 653-P22,174.22; Norfex-Villaviciosa, Guia No. 661-P19,074.79; Boundary VTPA Guia No. 20-P28,494.10; Boundary VTPA Guia No. 24-P28,494. 10; Boundary VTPA Guia No. 25-P33,998.74; Luzon Producers Corporation, Guia No. 2-P18,978.51; Central Reliance Tobacco Farmers Corp., Guia No. 12-P12,150.00; Lidlidda VTPA Inc., Guia No. 42-P21,444.17; Lidlidda VTPA Inc., Guia No. 18-P22,590.00; Filipino Agricultural Producers Inc., Guia No. 21-P23,851.00; Allied Tobacco Planters, Inc., Guia No. 36-P30,300.00; Allied Tobacco Planters, Inc., Guia No. 38-P30,165.00; Allied Tobacco Planters, Inc., Guia No. 40-P33,966.00; La Union Agri. Development Corp., Guia No. 13- P27,475.00; Asingan Facoma, Inc., Guia No. 183-P36.000.00 United San Ildefonso VTG Assn., Inc., Guia No. 8-P31,750.00 with legal interest thereon from August 1, 1963 until fully paid; plus the sum equivalent to 10% of the total amount based on the principal obligation as and by way of attorneys fees, and the costs of suit. The cross-claim of the PVTA against the CCE is hereby dismissed. The plaintiff Allied Tobacco Planters, Inc. is ordered to pay to the PVTA the sum of P14,162.47 with legal interest thereon from August 1, 1963." 12

As noted at the outset, the appealed decision is entitled to affirmance.

1. It bears repeating that the trial court was satisfied as to the fact of delivery of the tobacco in question at the redrying plant of petitioner agent, the CCE. It was also found by it that the PVTA directed supervised and controlled the CCE in receiving shipments of tobacco and in the performance of its activities, and that the tobacco, once received from the trading entities, were under its control, not subject to withdrawal without its authority. The procedure was so carefully designed that the supervision by it could be rendered most effective. Thus any attempt to exculpate itself thereafter on alleged deficiencies could succeed only if the evidence offered by petitioner were of such a nature as to justify evasion of what is required by law no less than by morality. Clearly Proof of such character was lacking in this case. Hence the way the decision turned. It had to be- adverse to its pretension. As a matter of fact, in the brief of petitioner, the Solicitor General made the following admission: "It may be conceded, for purposes of this appeal, that plaintiffs brought the tobacco shipments in question to the CCE redrying plant at Agoo, La Union, in 1963, to be sold to the PVTA, thru CCE, and that the same were unloaded and awaiting inspection, grading and weighing, when they were burned on July 24, 1963." 13

2. It is likewise worth mentioning That for sometime after the conflagration there was no question raised as to its liability. At the most, as with some debtors, the delay in payment was sought to be justified for the need for further study or the lack of money. As put by the trial court, "the aforesaid officers also testified that after the fire and even in the next following years, they made demands for the payment of their shipments but these demands were ignored. Mention should be made of the testimony of Constants Somera who in 1963, besides being the manager of plantiff Tagudin Facoma, was President of the National Federation of Facoma's, Vice-President of the Ilocos Federation of Facoma's, and a member of the Board of Directors of defendant CCE. He testified that in about five occasions, officers of all the plaintiffs went to him for assistance in the collection of their claims, and he headed delegations to the defendants and notably to PVTA Chairman Balmaceda and PVTA General Manager Bananal, but that the latter gave all sorts of excuses such as the need of further study of the matter and

the lack of money. So after many attempts proved futile, Somera advised his colleagues that they go to court." 14

3. It would thus appear that the merit of the case for private respondents is impressed with merit. So the lower court decided. In this petition for review, the PVTA would assail the judgment reached on the allegation that the contract of sale was not perfected. Such an assertion, on the face of the facts as found, would appear to be clearly untenable. Nonetheless, it was sought to lend it plausibility in the eight-page brief of petitioner by the argument that the shipments of the tobacco in question "were still to be inspected, graded and weighed." 15 Such a contention certainly cannot suffice to overturn the decision. For one thing, it raised an issue of fact, the ruling on which, as could be expected, was adverse to petitioners. For its own fieldmen had the responsibility of such tobacco being graded, weighed, baled and loaded on trucks duly sealed for transportation to its redrying plant. That responsibility was fulfilled as found by the trial court. The grading was done according to the standards on samples provided by petitioner. The shipping documents were in order. The weight and grades of such tobacco were certified by such fieldmen and thereafter processed by its provincial tobacco agent. It was only then that clearance was given, the PVTA requirements having been met. The futility of the effort to deny the perfection of the contract of sale is thus rather apparent. So it has been from Irureta v. Tambunting, 16 a 1902 decision. All that was required was that there be an agreement on the thing which is the subject of the contract and upon the price. So it was provided by Article 1450 of the Civil Code of Spain of 1889 then in force. There is difference in phraseology but not in meaning under the present-Civil Code: "The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price." 17 It remains to be noted that the Tambunting doctrine was followed in subsequent cases. 18

4. It suffices to recall the relevant facts as found by the trial court to render unmistakable how lacking in persuasiveness is the contention that the contract was not perfected because of an alleged technical defect. Smith Bell and Company v. Jimenez, 19 decided in 1963, comes to mind. In that case, there was a delivery by petitioner of a typewriter upon requisition of the Municipality of Paniqui, Tarlac, but ten days thereafter, the municipal building was totally razed by a fire. Notwithstanding the fact that the Municipal Treasurer, as well as the Provincial Treasurer of Tarlac recommended payment, respondent Auditor disapproved the claim on the ground that the article in question was never presented for inspection and verification, Justice Barrera, speaking for the Court, after noting that there was indeed such delivery, stated that even on the assumption then that not all the terms of the contract as to inspection were fully complied with, "yet upon the facts obtaining in this case, we believe that injustice would be done the petitioner if we apply said principle to the present claim ." 20 He stressed both "the law and equity of the case [in holding that] the municipality of Paniqui is legally bound to pay for the price of the typewriter involved herein and, therefore, the decision of the Auditor General is hereby reversed ." 21 In La Fuerza, Inc. v. Court of Appeals, 22 this Court, through the then Chief Justice Concepcion, stressed the doctrine that the decisive factor is the delivery of the thing sold. So that it is placed in the control and possession of the vendee. This was what happened in this case. The liberality with which this Court views the stage of perfection in a contract of sale is likewise manifest in Republic v. Lichauco, 23 where this Court, with Justice Zaldivar as ponente, held that there could be a valid and binding agreement providing for sale of property yet to be adjudicated by the court. Only thus may the law be infused with the highest concept of equity and fair dealing. As it was in those cases, so it should be now.

5. It is understandable for petitioner as custodian of public lands to see to it that only valid and legitimate claims should be honored. In that light, the appeal from the lower court decision cannot be viewed unfavorably. Nonetheless, when it is remembered that the adverse effects of the failure to pay for the tobacco would be a number of small planters, there is warrant for the view that no failure in the performance of public duty could be imputed to any official if on the tacts as found, there being the required delivery and there being no question yet as to the fire having been the cause of loss, the payments could have been made after its investigation. Only thus, to follow the Smith Bell decision, would there be an avoidance of injustice and conformity with "the law and equity of the case."

WHEREFORE, the decision of the lower court of December 28, 1970 is affirmed. No costs.

Castro, C.J., Concepcion, Jr., Santos, Fernandez and Guerrero, JJ., concur.

Teehankee, J., concurs in the dissenting opinion of Mr. Justice Aquino.

Barredo, J., concurs. I believe private respondents had already done what was incumbent upon then when the loss by fire occured.

Makasiar, J., concurs in the dissent of Justice Aquino.

Antonio, J., took no part.

C E R T I F I C A T I O N

There being an insufficient number of votes to reverse the judgment a quo (seven votes for affirmance and three votes to reverse), I hereby certify that the judgment a quo is affirmed.

FRED RUIZ CASTROChief Justice

Separate Opinions

AQUINO, J., dissenting:

The trial court erred in ordering the Philippine Virginia Tobacco Administration (PVTA) to pay the sixteen respondent corporations (plaintiffs below) the total sum of P1,036,717.09, plus legal rate of interest from August 1, 1963 and 10% of the principal obligation as attorney's fees.

That judgment is erroneous because the sale of plaintiffs' tobacco to defendant (now petitioner) PVTA was not consummated. It was not consummated because there was no tradition or delivery of the tobacco to the PVTA. The tobacco was lost when the redrying plant of the Central Cooperative Exchange (CCE) at Agoo, La Union, where the tobacco was delivered, was burned on July 24, 1963.

At the time the tobacco was burned, the ownership thereof had not yet passed to the PVTA. The tobacco was still owned by the sixteen plaintiffs or sellers. The CCE was merely an agent of the PVTA. Even as agent, it had not yet accepted delivery of the tobacco before it was lost during the fire. There was no acceptance of delivery because the tobacco, at the time it was lost, had not yet been properly inspected, graded and weighed.

Paragraph 9 of the contract February 22, 1963 for procuring, redrying and servicing of Virginia tobacco, executed between the PVTA and the CCE, provides that the CCE's responsibility, as agent of the PVTA, begins from the moment the tobacco has been delivered, received and accepted from the trading entities and the same has been properly graded and weighed.

Those requirements had not yet been satisfied at the time the tobacco was lost in the CCE's redrying plant.

Inasmuch as the PVTA did not become the owner of the lost tobacco and as the sixteen trading entities were still the owners thereof, the loss should be borne by them, not by the PVTA. Res perit domino. Hence, the PVTA was not obligated to pay for the tobacco (Roman vs. Grimalt, 6 Phil. 96; Yu Tek & Co. vs. Gonzalez, 29 Phil. 384). Plaintiffs' cause of action was really against the CCE They did not appeal from the lower court's judgment absolving the CCE.

Under the contract between the PVTA and the CCE, the latter was supposed to advance to the trading entities the payment for the tobacco delivered to the CCE (par. 2). The PVTA would then reimburse the CCE for its advances (par. 22). No such advances were made by the CCE a circumstance which may signify that the sale was not consummated.

The trial court found that the tobacco shipments delivered to the CCE "were unloaded and awaiting inspection and grading when they were burned on July 24, 1963", that the tobacco shipments of twenty-four trading entities were not entered in the CCE lists or ledgers because they had not yet been inspected nor were their values computed before they were burned, and that inspection or acceptance of tobacco shipments was suspended (P. 18, Decision, Appendix of petitioner's brief).

The following excerpts from the brief of the Solicitor General for the PVTA reinforce the view that the trial court's judgment should be reversed:

At the hearing (the reception of evidence was delegated to a commissioner named by the court) the documentary and testimonial evidence adduced by plaintiffs failed to show that the shipments of tobacco were duly accepted, weighed and graded by the PVTA or its authorized representative, before the fire that gutted the premises of the CCE redrying plant at Agoo, La Union.

On December 28, 1970, the lower court notified the parties of the filing of the Commissioner's Report and granted them a period of ten (10) days therefrom within which to file their comment thereon.

However, without waiting for the respondents tobacco trading entities' comments, as indeed, none was submitted and on the part of petitioner Assistant Government Corporate Counsel Romualdo Valera wrote in his own handwriting and under his sole signature, at the reverse side of the order that he had no objection to the Commissioner's Report, even though said counsel had absolutely nothing to do with this case as he was not the one assigned to handle the case, but on December 29, 1970, the lower court rendered decision ruling that the tobaccos in question were deemed delivered to petitioner PVTA, and, therefore, PVTA is liable to pay for the value of the said tobaccos shipped to the CCE redrying plant at Agoo, La Union, even though they had riot been weighed and graded, and that the PVTA should bear the loss when the tobaccos were burned before its inspection, grading and weighing.

xxx xxx xxx

It may be conceded, for purposes of this appeal, that plaintiffs brought the tobacco shipments in question to the CCE redrying plant at Agoo, La Union, in 1963, to be sold to the PVTA, thru the CCE and that the same were unloaded and awaiting inspection, grading and weighing, when they were burned on July 24, 1963.

The question that arises is whether the PVTA is liable to pay therefor and bear the loss considering that the said tobacco shipments were still to be inspected, graded, and weighed to determine the class and compensation therefor. In other words, were the tobaccos legally delivered to and accepted by the PVTA?

It is well to ponder that the transaction involved herein is one of oral sale of locally grown Virginia leaf tobacco by plaintiffs-herein respondents-to the PVTA, thru the CCE.

In the law of sale, the ownership of the things sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee (Art, 1496, Civil Code). The thing sold shall be understood as delivered when it is placed in the control and possession of the vendee (Art. 1497, Civil Code).

The contract of sale is perfected at the moment there is a meeting of minds upon the thing Which is the object of the contract, and upon the price (Art. 1475, Civil Code).

Thus, the question is whether at the moment the tobacco shipments in question were brought to the CCE redrying plant at Agoo, La Union, for sale to the PVTA, there was meeting of the mind to perfect the sale even before the tobaccos were inspected, graded, and weighed to determine the price to be paid therefor.

The tobacco trading process is peculiar to this industry. As involved herein, the sales process was to undergo several stages, the last of which was the grading and weighing at the ramps after the tobaccos were 'delivered' (brought would be the more appropriate word) thereat for redrying at the CCE redrying plant.

Thus, the contract of procuring, redrying, and servicing between the PVTA and the CCE, under which the tobaccos in question were to be procured for the PVTA provided among others, that:

9. The CORPORATION's responsibility begins from the moment the tobacco has been delivered, received and accepted from the trading entities and the same has been properly graded andweighed; (par. 9, Annex A of second amended complaint, Annex B, Petition).

Accordingly, the CCE never became obligated to the plaintiff trading entities because the tobaccos in question were burned before the same were graded and weighed.

Consequently, the PVTA cannot be liable to pay for the burned tobaccos never legally deemed delivered to its trading arm, the CCE, much less considered sold to the PVTA.

Viewed thus, the conclusion, is inescapable that the tobacco shipments brought to the redrying plant to be inspected, graded, and weighed, are considered not delivered and sold, in legal contemplation, until after grading and weighing where the 'meeting of minds' takes place because the price or

consideration is determined by the grade and weight thereof. And without agreement as to price, the sale is not perfected.

It is worth emphasizing that before the tobacco shipments were graded and weighed, they remained properties of the respondent trading entities, subject to their control and possession, and at their risk; consequently, respondents shall bear the loss which occurred prior to the grading and weighing of the tobaccos.

Thus, it is inescapable conclusion that respondents should bear the loss of the tobacco shipments in question which were burned before actual or constructive delivery and acceptance thereof by petitioner, as indeed, evidence of delivery is sorely wanting (Santiago PVTA. et al. vs. PVTA, L-26292, February 18, 1970, 31 SCRA 528).

I vote for the reversal of the lower court's judgment and the dismissal of the complaint as to the PVTA.

Separate Opinions

AQUINO, J., dissenting:

The trial court erred in ordering the Philippine Virginia Tobacco Administration (PVTA) to pay the sixteen respondent corporations (plaintiffs below) the total sum of P1,036,717.09, plus legal rate of interest from August 1, 1963 and 10% of the principal obligation as attorney's fees.

That judgment is erroneous because the sale of plaintiffs' tobacco to defendant (now petitioner) PVTA was not consummated. It was not consummated because there was no tradition or delivery of the tobacco to the PVTA. The tobacco was lost when the redrying plant of the Central Cooperative Exchange (CCE) at Agoo, La Union, where the tobacco was delivered, was burned on July 24, 1963.

At the time the tobacco was burned, the ownership thereof had not yet passed to the PVTA. The tobacco was still owned by the sixteen plaintiffs or sellers. The CCE was merely an agent of the PVTA. Even as agent, it had not yet accepted delivery of the tobacco before it was lost during the fire. There was no acceptance of delivery because the tobacco, at the time it was lost, had not yet been properly inspected, graded and weighed.

Paragraph 9 of the contract February 22, 1963 for procuring, redrying and servicing of Virginia tobacco, executed between the PVTA and the CCE, provides that the CCE's responsibility, as agent of the PVTA, begins from the moment the tobacco has been delivered, received and accepted from the trading entities and the same has been properly graded and weighed.

Those requirements had not yet been satisfied at the time the tobacco was lost in the CCE's redrying plant.

Inasmuch as the PVTA did not become the owner of the lost tobacco and as the sixteen trading entities were still the owners thereof, the loss should be borne by them, not by the PVTA. Res perit domino. Hence, the PVTA was not obligated to pay for the tobacco (Roman vs. Grimalt, 6 Phil. 96; Yu Tek & Co. vs. Gonzalez, 29 Phil. 384). Plaintiffs' cause of action was really against the CCE They did not appeal from the lower court's judgment absolving the CCE.

Under the contract between the PVTA and the CCE, the latter was supposed to advance to the trading entities the payment for the tobacco delivered to the CCE (par. 2). The PVTA would then reimburse the CCE for its advances (par. 22). No such advances were made by the CCE a circumstance which may signify that the sale was not consummated.

The trial court found that the tobacco shipments delivered to the CCE "were unloaded and awaiting inspection and grading when they were burned on July 24, 1963", that the tobacco shipments of twenty-four trading entities were not entered in the CCE lists or ledgers because they had not yet been inspected nor were their values computed before they were burned, and that inspection or acceptance of tobacco shipments was suspended (P. 18, Decision, Appendix of petitioner's brief).

The following excerpts from the brief of the Solicitor General for the PVTA reinforce the view that the trial court's judgment should be reversed:

At the hearing (the reception of evidence was delegated to a commissioner named by the court) the documentary and testimonial evidence adduced by plaintiffs failed to show that the shipments of tobacco were duly accepted, weighed and graded by the PVTA or its authorized representative, before the fire that gutted the premises of the CCE redrying plant at Agoo, La Union.

On December 28, 1970, the lower court notified the parties of the filing of the Commissioner's Report and granted them a period of ten (10) days therefrom within which to file their comment thereon.

However, without waiting for the respondents tobacco trading entities' comments, as indeed, none was submitted and on the part of petitioner Assistant Government Corporate Counsel Romualdo Valera wrote in his own handwriting and under his sole signature, at the reverse side of the order that he had no objection to the Commissioner's Report, even though said counsel had absolutely nothing to do with this case as he was not the one assigned to handle the case, but on December 29, 1970, the lower court rendered decision ruling that the tobaccos in question were deemed delivered to petitioner PVTA, and, therefore, PVTA is liable to pay for the value of the said tobaccos shipped to the CCE redrying plant at Agoo, La Union, even though they had riot been weighed and graded, and that the PVTA should bear the loss when the tobaccos were burned before its inspection, grading and weighing.

xxx xxx xxx

It may be conceded, for purposes of this appeal, that plaintiffs brought the tobacco shipments in question to the CCE redrying plant at Agoo, La Union, in 1963, to be sold to the PVTA, thru the CCE and that the same were unloaded and awaiting inspection, grading and weighing, when they were burned on July 24, 1963.

The question that arises is whether the PVTA is liable to pay therefor and bear the loss considering that the said tobacco shipments were still to be inspected, graded, and weighed to determine the class and compensation therefor. In other words, were the tobaccos legally delivered to and accepted by the PVTA?

It is well to ponder that the transaction involved herein is one of oral sale of locally grown Virginia leaf tobacco by plaintiffs-herein respondents-to the PVTA, thru the CCE.

In the law of sale, the ownership of the things sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying

an agreement that the possession is transferred from the vendor to the vendee (Art, 1496, Civil Code). The thing sold shall be understood as delivered when it is placed in the control and possession of the vendee (Art. 1497, Civil Code).

The contract of sale is perfected at the moment there is a meeting of minds upon the thing Which is the object of the contract, and upon the price (Art. 1475, Civil Code).

Thus, the question is whether at the moment the tobacco shipments in question were brought to the CCE redrying plant at Agoo, La Union, for sale to the PVTA, there was meeting of the mind to perfect the sale even before the tobaccos were inspected, graded, and weighed to determine the price to be paid therefor.

The tobacco trading process is peculiar to this industry. As involved herein, the sales process was to undergo several stages, the last of which was the grading and weighing at the ramps after the tobaccos were 'delivered' (brought would be the more appropriate word) thereat for redrying at the CCE redrying plant.

Thus, the contract of procuring, redrying, and servicing between the PVTA and the CCE, under which the tobaccos in question were to be procured for the PVTA provided among others, that:

9. The CORPORATION's responsibility begins from the moment the tobacco has been delivered, received and accepted from the trading entities and the same has been properly graded andweighed; (par. 9, Annex A of second amended complaint, Annex B, Petition).

Accordingly, the CCE never became obligated to the plaintiff trading entities because the tobaccos in question were burned before the same were graded and weighed.

Consequently, the PVTA cannot be liable to pay for the burned tobaccos never legally deemed delivered to its trading arm, the CCE, much less considered sold to the PVTA.

Viewed thus, the conclusion, is inescapable that the tobacco shipments brought to the redrying plant to be inspected, graded, and weighed, are considered not delivered and sold, in legal contemplation, until after grading and weighing where the 'meeting of minds' takes place because the price or consideration is determined by the grade and weight thereof. And without agreement as to price, the sale is not perfected.

It is worth emphasizing that before the tobacco shipments were graded and weighed, they remained properties of the respondent trading entities, subject to their control and possession, and at their risk; consequently, respondents shall bear the loss which occurred prior to the grading and weighing of the tobaccos.

Thus, it is inescapable conclusion that respondents should bear the loss of the tobacco shipments in question which were burned before actual or constructive delivery and acceptance thereof by petitioner, as indeed, evidence of delivery is sorely wanting (Santiago PVTA. et al. vs. PVTA, L-26292, February 18, 1970, 31 SCRA 528).

I vote for the reversal of the lower court's judgment and the dismissal of the complaint as to the PVTA.

Article 1499Board of Liquidators vs. Exequiel Floro. Et. Al

Gr No. L- 15155December 29, 1960

Reyes, J.B.L., J.:

Facts: M entered into agreement with B for salvage of surplus properties. M borrowed money from F. M consigned the steel mattings which were included in the salvaged properties to F. M was not able to pay F. F sold the steel mattings to L. M filed a petition for voluntary insolvency attaching inventory of properties which includes the steel mattings. B claimed that the steel mattings should be excluded from the inventory because M did not acquire ownership of the steel mattings.

Issue: Whether or not the ownership of the steel mattings was transferred to M.

Held: Yes. There is nothing in the contract which may be deemed a reservation of title, or from which it may clearly be inferred that delivery was not intended. While there was no physical tradition, there was one by agreement (tradition longa manu) as provided by article1499: the delivery of movable property may likewise be made by mere consent or agreement of contracting parties, if thing sold cannot be transferred to the possession of vendee at the time of the sale.