Professional Documents
Culture Documents
Respondents-Appellees .
SYLLABUS
DECISION
MONTEMAYOR, J.:
This is an appeal from the decision of the Auditor General denying the claim of
petitioner for the payment of 7,926 boxes of ordnance items and 20 radial engines
withdrawn by the Armed Forces of the Philippines (AFP) from Ordnance Sub-Depot No.
6, located at Isaac Peral, Manila.
Under the Roxaz-Vegelback Agreement signed in Manila on September 11, 1946, and
approved by the Philippine Government by virtue of Republic Act No. 33, vast amounts
of property, especially war materials, which had been declared suplus to the needs of
the Government of the United States of America and which were found necessary for
the reconstruction and rehabilitation of the Philippines, were transferred to the Philippine
Government, and the President of the Philippines was authorized to administer said
surplus property and to sell or dispose of so much of the same as may not be needed
by the Government, its subdivisions, and instrumentalities.
Part of said surplus property was the fixed installations and movable goods located at
Ordnance Sub-Depot No. 6, Isaac Peral, Manila. It was the intention and policy of the
Government of first satisfy and meet the needs of its agencies and instrumentalities,
such as the Armed Forces of the Philippines, before disposing of said surplus property.
And so on October 6, 1948, the defunct Government Enterprises Council (GEC)
approved and turned over to the AFP, all combat materials located in said depot.
Subsequently, on February 6 to 25, 1949, the property in said depot was placed on
negotiated offers. In said offers, the following clause was specifically inserted:
jgc:chanrobles.com.ph
"Excluded: All combat materials (military weapons, gun parts and accesories) that may
be found." cralaw virtua1aw library
Pursuant to said clause, representatives of the AFP were authorized by the Chairman of
the Surplus Property Commission (SPC) on March 18, 1949 to earmark and take
delivery by means of memorandum receipts all such combat materials as they needed
from said depot, in addition to military weapons, gun parts, and accesories; and on
March 25, 1949, the SPC Chairman ordered the said depot closed for customers’
inspection until the AFP had completed withdrawal of combat materials located therein.
Two months later, or on May 3, 1949, the AFP was requested by the SPC to issue a
certificate of release for the said depot in order to facilitate the early liquidation and
disposition of the remaining contents thereof. However, the AFP representatives found
that about 70% of the items located at the depot fell under the category of combat
materials; that the ear-marking and withdrawal of the same would require a longer
period of time; and so, the then Chief of the Ordnance Service, Col. Benjamin C.
Molina, informed the SPC in his 5th endorsement dated May 5, 1949, that the AFP
would offer no objection to the release of Sub-Depot No. 6, subject to the condition
imposed in the 2nd indorsement dated March 24, 1949, namely: jgc:chanrobles.com.ph
". . . the AFP retains the exclusive right to screen all the items as soon as the buyer
starts hauling them from the depot. The AFP representative will require the buyer to
open the boxes and inspect the contents before they are hauled from the depot. Any
combat material which is found to be within the AFP requirements and which may be
considered dangerous to public safety will be segregated by the AFP representative and
will be withdrawn by the AFP. ( Emphasis supplied ; Exhibit N, Annex A)
Thereafter, or on July 12, 1949, the Control Committee of the GEC, upon
recommendation of the SPC, approved the negotiated sale of the remaining fixed
installation and movable property located at Ordnance Sub-Depot No. 6, Isaac Peral,
Manila, to the Fil-American Irregular Troops, represented by petitioner Sixto Celestino
for the sum of P42,000, plus compensating tax, or a total of P44,100. After the approval
of the negotiated sale, Invoice No. 10644, dated July 15, 1949, covering the property
sold was issued to the vendee, and possession of the depot was delivered to it under
Tally-out Sheet, dated August 26, 1949.
In this connection, it should be stated that before the sale, the condition imposed by Col.
Benjamin C. Molina, contained in his indorsement of March 24, 1949, as already
reproduced, was called to the attention of Celestino, representative of the vendee, and
he signified his written conformity thereto in the very same 5th indorsement, as follows:
jgc:chanrobles.com.ph
"We hereby agree to the condition set in the 5th indorsement above by Benjamin C.
Molina dated May 5, 1949.
"Excluded: All combat materials (military weapons, gun parts and accesories) that may
be found." cralaw virtua1aw library
This same clause also appears in the Tally-Out Sheet, (Exh. W, Annex A) signed by
petitioner, evidencing the delivery to petitioner of the installations and articles found
therein.
About three months after the sale of the depot in question or on October 19 to
December 6, 1949, authorized representatives of the Ordnance Service, AFP, withdrew
certain items therefrom, among them, 7,926 boxes of ordnance materials and 20 radial
engines. Petitioner demanded payment for the same, but the AFP refused to pay on the
ground that ownership over said materials never passed to the petitioner, the same
having been expressly exclude from the sale. Petitioner appealed to the Secretary of
National Defense took the case to the President of the Philippines who, on December 7,
1951, denied petitioner’s claim. A motion for reconsideration was equally denied on April
28, 1955. Petitioner requested the President to give his consent to the filing of a suit
against the AFP, which request was referred to the Secretary of Justice for comment. In
view of the recommendation of the Secretary of Justice that the provisions of
Commonwealth Act No. 327 be brought to the attention of the petitioner, the latter filed
his claim with the Auditor General on June 21, 1955. After due hearing the Auditor
General on February 6, 1957, rendered a decision disallowing the claim. Petitioner is
now appealing from said denial to us.
Pending appeal in this Court and before the parties had filed their briefs, the Solicitor
General filed a motion to dismiss the appeal, claiming that the same was perfected
beyond the 30-day period prescribed by law for the reason that a copy of the Auditor
General’s decision was received by the petitioner on February 12, 1957 and the notice
of appeal was filed with the Auditor General only on March 27, 1957, while the petition
for review was filed with us on March 28, 1957. By resolution of May 29, 1957 said
motion of to dismiss the appeal was denied. The said resolution was presumably based
on the fact that the petitioner’s motion for reconsideration of the Auditor General’s
decision suspended the running of the period for appeal. The Solicitor General in his
brief reiterates his motion for dismissal of the appeal, contending that a motion or
petition for reconsideration of the Auditor General’s decision does not suspend the
running of the period for appeal; and in support of his contention, he cites I Moran,
Rules of Court, 1952 Ed., p. 949, citing the case of Jalandoni v. Sison, G. R. No. 48884.
Unless we set aside our resolution of May 29, 1957, denying the motion to dismiss the
appeal which we see no reason or occasion for doing, the present appeal stands. And
because of the view we take of his result would be the same. However, for the
satisfaction of counsel for the Government, we wish to say that in the relatively recent
case of Pedro M. Libuet v. The Auditor General, G. R. No. L-10160, June 28, 1957, the
same legal point was involved, and even this case of Jalandoni v. Sison was cited.
There we decided that a petition for reconsideration of the decision of the Auditor
General suspends the running of the period for perfecting an appeal. Through Mr.
Justice Labrador, we said: jgc:chanrobles.com.ph
"A point raised by the company is that the appeal is late, because petitioner had filed a
motion for reconsideration of the decision of the Auditor General, and such motion does
not suspend the period for perfecting an appeal to this Court. A decision of this Court
(Jalandoni v. Sison, G. R. No. 48884) cited in I Moran’s Comments on the Rules of
Court p. 949, has been cited by the respondent in support of the argument. We have
tried to check up the supposed source to the supposed ruling but have not been able to
find that the ruling has been laid down by us. On the other hand, we find that in
proceeding before the courts as well as in those before administrative officials, the
constant practice has been to permit motions for reconsiderations and to deduct the
time used in the consideration thereof from the period for perfecting an appeal. We have
found the Auditor General; as a matter of fact the practice is in consonance with the
principle of exhaustion of administrative remedies. The claim of the respondent that the
appeal was perfected out of time can not, therefore, be sustained." cralaw virtua1aw
library
On the basis of the facts of the case narrated by us particularly those based on the
documents presented in evidence as exhibits, the case appears to us quite clear as to
require no extended discussion. From the very beginning, petitioner was given to
understand in clear and unmistakable terms and he expressed his conformity thereto,
that all combat materials found in the depot were to be excluded from the sale. Those
materials were not only those had been remove from the depot by the AFP before the
negotiated sale before the vendee took possesion of the depot but also those materials
which were later removed by the AFP as being combat materials. As matter of fact the
AFP, with the conformity of petitioner, has reserved the right to even open the boxes
and cases in which the materials were contained before they were hauled away by the
vendee in order to examine the contents and remove therefrom all combat materials. In
all probability, the reason why the vendee had agreed to this was the relatively low price
at which the sale was made materials which had a procurement cost of over a million
pesos, sold at the price of about P44,000 including compensating tax. In this
connection, we reproduce with favor pertinent portions of the well written and well-
prepared decision of the Auditor General: jgc:chanrobles.com.ph
"The records show that the original procurement cost of the depot in question was
P3,620,568.00 but inasmuch as 70% of the items therein were found to be combat
materials and reversed for the AFP, said procurement cost was revised and lowered (for
purposes of determining the selling price) to P1,086,170.00 which is approximately 30%
of the original procurement costs. It is noteworthy that the negotiated sale of said depot
to the claimant was deemed accept able and same was awarded to him by the GEC
because his offer offer of P42,000.00 would yield a recovery of 3.86%. (Resolution of
the SPC dated June 20, 1949, marked as Exhibit "R" and letter of the Chairman, GEC,
supra). By simple mathematical computation, we arrive at the incontrovertible fact that
the amount of P42,000.00 paid by the claimant is approximately 3.86% of
P1,086170.00, the revised procurement costs representing 30% of the contents of the
depot. In other words, in determining whether the offer of the claimant would be a
satisfactory selling price of the depot in question, the Surplus Property Commission took
into consideration the fact that 70% of the contents of the depot was already reserved
for the AFP and cannot be included in the sale. The inescapable inference flowing from
these circumstances is that during the negotiation of the sale it was understood and
believed by the parties that the Surplus Property Commission was selling and the
claimant was buying only non-combat materials which comprised more or less 30% of
the original contents of Ordnance Sub Depot No. 6, because the combat materials or
the remaining 70% were already reserved for the AFP." cralaw virtua1aw library
"Finally, it seems incredible that the Surplus Property Commission would sell the depot
in question for only P42,000.00 if it were its intention to include in such sale the
materials in question, for if we were to believe the claimant, said materials would
command a price of P2,919,600.00, the amount he is claiming from the AFP. Such a
deal would be patently unreasonable and against the provision of Republic Act No. 33
directing the Surplus Property Commission to sell or dispose of the surplus properties
‘under such terms and conditions as may be deemed advantageous’ (Sec. 2m supra).
Thus, the Supreme Court in the similar case of Celestino M. Dizon v. the Board of
Liquidators, Etc., (G. R. No. L-8416, Feb. 17, 1956) stated: jgc:chanrobles.com.ph
"‘. . . . But what makes the claim of the plaintiff unconscionable and unreasonable is the
fact that said materials are worth more than P60,000.00, without including the other
machineries, or, if we are to believe what plaintiff himself said, they could have been
sold for P281,250.00, and yet he only paid for the whole deal the paltry sum of
P9,450.00. Such a deal defies reason and common sense. We doubt if the officials in
charge of liquidating the surplus property would have countenanced such deal knowing
it to be not only unreasonable but in contravention of the purpose for which that property
was turned over to our Government." cralaw virtua1aw library
As to the 7,926 boxes of ordnance materials, as shown by the tally sheets, they
contained among other things magazine accesories for carbines, garands, grease guns,
Thompsons; brush bore; staff cleaning rods; assorted spare parts for carbines, garands,
grease guns; stock buts; sight launcher grenade; oil accessory for Cal. .30 M-I, etc.,
articles, which were purely combat materials; and as to the 20 radial engines which
were used for tanks, we are convinced that they can be considered war materials. We
also reproduce pertinent portions of the decision of the Auditor General on this same
point: jgc:chanrobles.com.ph
"The term ‘combat materials’ as used in the aforestated conditions and in the Sales
Invoice (Exhibit "T") was given a definite meaning. It was deemed to include military
weapons, gun parts and accesories’. Guided by this concept, a perusal of the list
submitted (Annex B-3) by the claimant describing the ordnance items withdrawn by the
AFP, would readily show that said items fall within the category of combat materials
excluded from the sale. Likewise, the radial engines in question would fall within the
purview of combat materials contemplated in the contract of sale since as represented
by the AFP, and this has not been impugned by the claimant, they are spare parts of
tanks. One can hardly doubt that a tank is a military weapon.
"The claimant seems to rely on the information given to the Office of Senator Zulueta,
former Chairman of the Suplus Property Commission, to the effect that combat
materials are classified into ‘essentially combat materials and non-essentially combat
materials and that what has been reserved for the AFP are only essentially combat
materials (t.s.n. Conference on April 17, 1956, pp. 9-11). With all due respect to the
Senator, and without necessarily holding that the materials in question are ‘non-
essentially combat materials’. We cannot apply this classification is only to the instant
case. Apart from the fact that such classification is only his personal opinion — it is not
backed up by authorities nor by existing rules and regulations of the Surplus Property
Commission, at the time — the stipulations in the award of sale and in the sale invoice
of what are deemed included in the phrase ‘combat materials’ are quite clear and need
no further interpretation." cralaw virtua1aw library
In view of the foregoing, the appealed decision of the Auditor General is hereby
affirmed, with costs.
Paras, C.J. , Reyes, A., Labrador, Concepcion and Endencia, JJ. , concur.
People’s Homesite & Housing Corp. v. Court of Appeals
Facts: Resolution №.513 of the People’s Homesite & Housing Corp. (PHHC) board of
directors awarded to respondent Spouses Rizalino and Adelaida Mendoza, subject to
the Quezon City Council’s approval of the Consolidation Subdivison Plan, Lot 4,
containing 4, 182.2 sq.m. at a price of P 21 per sq.m. and that such award is subject to
the approval of the OEC (PHHC) Valuation COmmittee and higher authorities. The city
council disapproved the plan with due notice sent to the respondents. A revised plan
which included Lot 4 with reduced area of 2,608.7 was, however,approved by the same.
The PHHC board recalled all awards of lots to persons who failed to pay deposit or
downpayment including the respondents. The board’s Resolution №. 218 officially
withdrew the tentative award of Lot 4 from the respondents and reawarded said lot
jointly and in equal shares to 5 awardees who all made the initial deposit.
Corresponding deeds of sale were executed in their favor and the subdivision was
approved by the city council and Bureau of Lands. Respondents filed the instant action
for specific performance and damages for the reconsideration of the withdrawal and
cancellation of the re-award. The trial court sustained the withdrawal while the public
respondent Court of Appeals reversed hence, this petition.
Issue: WON there was a perfected sale of Lot 4, with the reduced area, to the
respondents which they can enforce against PHHC via action for specific performance.
Held: The Court held in the negative. There was no perfected sale of Lot 4 as it was
conditionally or contingently awarded to the respondents subject to the approvals of the
city council and valuation committee and higher authorities.
When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved,
the Mendozas should have manifested in writing their acceptance of the award for the
purchase of Lot 4 just to show that they were still interested in its purchase although the
area was reduced and to obviate any doubt on the matter. They did not do so. The
PHHC board of directors acted within its rights in withdrawing the tentative award.
“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. From that moment, the
parties may reciprocally demand performance, subject to the law governing the form of
contracts.” (Art. 1475, Civil Code).
Under the facts of this case, we cannot say there was a meeting of minds on the
purchase of Lot 4 with an area of 2,608.7 square meters at P 21 a square meter.
Decision reversed.
Issue: WON the Compromise Agreement and the subsequent Deed of Sale are valid?
Held: The general rule is that whoever alleges fraud or mistake must substantiate his
allegation, since the presumption is that a person takes ordinary care of his concerns
and that private transactions have been fair and regular. The rule admits of an exception
in Article 1332 of the Civil Code, which provides: “When one of the parties is unable to
read, or if the contract is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms thereof have been
fully explained to the former.”
For the proper application of said provision, it has first to be established convincingly
that the illiterate or the party at a disadvantage could not read or understand the
language in which the contract was written. The burden of proof, therefore, shifted to the
Corporation to show that the compromise agreement had been fully explained to the
plaintiffs.
However, the Court is not convinced that indeed appellees were victims of a fraudulent
scheme employed upon them by their former counsel by reason of their alleged illiteracy
and ignorance. The evidence discloses that appellees, although unschooled, are
intelligent, well-informed and intelligent people. They could not have been misled by
their former counsel into signing the compromise agreement, taking into account as well
the acts of the appellees and their children subsequent to the execution of the
compromise agreement.
Although the petitioners were not misled into signing the Compromise Agreement, the
Court held that there has been violation of the Public Land Act. The sale of a homestead
lot within the five-year prohibitory period is illegal and void. The law does not distinguish
between executory and consummated sales.
The bilateral promise to buy and sell, and the agency to sell, entered into within five
years from the date of the homestead patent, was in violation of section 118 of the
Public Land Law, although the executed sale was deferred until after the expiration of
the five-year prohibitory period.
As the contract is void from the beginning, for being expressly prohibited by law, the
action for the declaration of its inexistence does not prescribe. Being absolutely void, it
is entitled to no authority or respect, the sale may be impeached in a collateral
proceeding by any one with whose rights and interest it conflicts. There is no
presumption of its validity. The approval of the sale by the Secretary of Agriculture and
Natural Resources after the lapse of five years from the date of the patent would neither
legalize the sale.
SYLLABUS
DECISION
This is an action for declaratory relief filed in the Court of First Instance of Manila for the
purpose of determining if petitioner is liable to pay the municipal license tax upon his
sales of flour to bakeries under Ordinance No. 2723 of the City of Manila, as amended.
Petitioner is the owner of a duly licensed grocery store located in the City of Manila and
an importer of flour who sells it either to bakeries or to retail dealers for purposes of
resale. Sometime in September 1948, the Treasurer of the City of Manila assessed
against him the sum of P566.50 which, it is claimed, represents the alleged deficiency
municipal license tax due from him on his gross sales of flour to bakeries after
deducting the sales made to retail dealers for purposes of resale. Petitioner, instead of
honoring the demand, filed the present action for declaratory relief.
In his answer, respondent admitted all the factual allegations of the complaint, but
contended that the sales in question are sales at retail and in this sense are subject to
the provisions of Ordinance No. 2723, as amended. As the pleadings only raised
questions of law, the case was submitted for decision after the parties had submitted
their respective memoranda. And on March 4, 1949, the court rendered judgment
upholding the contention of the petitioner and declaring that he is not liable to pay the
tax in question. From this decision respondent appealed.
The only issue involved in this appeal is whether the sales of flour made by petitioner to
bakeries to be manufactured into bread are retail or wholesale. If retail, they are subject
to tax; if wholesale, they are not.
In the case of City of Manila v. Manila Blue Printing Co., 74 Phil. 317, this Court had
occasion to determine when a sale of a commodity should be considered retail or
wholesale. It was there said that there are two criteria by which this can be determined.
"One is by the quantity, whether small or large; and the other is by the nature of the
buyer, whether he is a consumer or a merchant who resells at a profit."The Court
followed the second criterion and held that it is the character of the purchaser and not
the quantity of the commodity sold that determines if the sale is wholesale or retail. If
the purchaser buys the commodity for his own consumption, the sale is considered
retail, irrespective of the quantity of the commodity sold. If the purchaser buys the
commodity for resale, the sale is deemed wholesale regardless of the quantity of the
transaction.
Now, having this criterion in mind, the next question to be determined is, is the sale of
flour to a bakery retail or wholesale? Is a bakery who purchases flour to be
manufactured into bread a consumer? Can a sale of flour to a bakery be considered
wholesale for the simple reason that the flour after its conversion into bread is resold to
the public? The answer to these questions will depend largely upon the consideration
that may be given to the incidence touching on the manufacture of flour into bread
before it is resold to the public. This is the main point that should be determined in order
that we may have a basis for the determination of this novel controversy.
The Ordinance under which the municipal license tax in question has been assessed
does not contain any definition of what is retail gross sale. Said ordinance merely
provides that the retail gross sales of a grocery store shall be subject to a license fee to
be fixed by the City Treasurer in accordance with certain schedule therein specified, but
is silent as to what are considered "retail gross sales."The National Internal Revenue
Code does not also furnish any lead as regards the nature of a retail sale for purposes
of taxation. It does not give any definition nor pattern as to how a sale to a bakery or a
manufacturer should be considered. This is a loophole that our Congress has not
foreseen.
But we find one lead that may guide us in the case of Buenaventura v. Collector of
Internal Revenue (50 Phil. 875) wherein a similar question was raised and decided. In
that case this Court ruled that the sale of fish to a hotel by a vendor in a public market
during certain period of time and for a certain value is a sale at retail and, therefore, is
subject to the retail sales tax law. And then the Court added: "even the isolated case of
those made to the Hotel de Francia cannot be considered as transactions for resale of
fish, because it has not been proved, nor is it probable, that said hotel, as such,
although it supplies food for payment and among it fish, cannot be said or considered to
be a reseller of fish."The implication of this ruling is that the sale of fish to a hotel is retail
even if the same is to be sold later in the form of food.
We believe this ruling to be in point and one of persuasive force in the present case in
the absence of any express provisions of law on the matter. The parallelism between
that case and the one we are considering is apparent. In one case, the fish is converted
into food through certain physical process, and, therefore, it suffers an alteration in form
before it is sold. In such case the fish is resold in different form. A similar situation
obtains in the case of a bakery. The flour is converted into bread through a physical or
chemical process and later is sold to the public in the form of bread.
We have taken notice of the fact that in many states of the American Union, sales of
tangible property to manufacturers, producers or processors, or "sales of goods which
as ingredients or constituents go into and form part of tangible personal property sold by
the buyer are not taxable"as retail transactions because they are considered wholesale
transactions upon the theory that they have to be resold even in a different form or
condition. But we have noted that if these transactions are so treated it is not by judicial
interpretation but by express statutory provisions. As well stated by counsel for the
appellee, these transactions are considered wholesale either because they are so
declared by retail sales statutes of different American States, by administrative rules
and regulations promulgated thereunder, or by judicial decisions construing and
applying them. If there is an express provision of the law on the matter, there is no room
for judicial interpretation. Our duty is to apply the law. But, as we have already pointed
out, such is not the situation obtaining in the Philippines. Our law on the point is silent,
and being silent we do not feel justified to extend the force and effect of American
statutes to our jurisdiction. To do so would be to incorporate into our statutes some
legislative matter by judicial ruling which is certainly beyond our province to do.
The decision appealed from should be reversed, with costs against the appellee.
Paras, C.J., Feria, Pablo, Bengzon, Padilla and Jugo, JJ., concur.
Office of the Solicitor General Ambrosio Padilla, and Solicitor Frine C. Zaballero for
petitioner.
PADILLA, J.:
This is a petition under Rule 46 to review a judgment rendered by the Court of
Appeals,in CA-GR No. 15767-R, Philippine Resources Development Corporation vs.
The Hon. Judge Magno Gatmaitan et al.
It appears that on May 6, 1955, the Republic of the Philippines in representation of the
Bureau of Prisons instituted against Macario Apostol and the Empire Insurance Co. a
complaint docketed as Civil Case No. 26166 of the Court of First instance of Manila.
The complaint alleges as the first cause of action, that defendant Apostol submitted the
highest bid the amount P450.00 per ton for the purchase of 100 tons of Palawan
Almaciga from the Bureau of Prisons; that a contract therefor was drawn and by virtue
of which, Apostol obtained goods from the Bureau of Prisons valued P15,878.59; that of
said account, Apostol paid only P691.10 leaving a balane obligation of P15,187.49. The
complaint further averes, as second cause of action, that Apostol submitted the best bid
with the Bureau of Prisons for the purchase of three million board feet of logs at P88.00
per 1,000 board feet; that a contract was executed between the Director of Prisons and
Apostol pursuant to which contract Apostol obtained deliveries of logs valued at
P65.830.00, and that Apostol failed to pay a balance account Of P18,827.57. All told, for
the total demand set forth in complaint against Apostol is for P34,015.06 with legal
interests thereon from January 8, 1952. The Empire lnsurance Company was included
in the complaint having executed a performance bond of P10,000.00 in favor of Apostol.
In his answer, Apostol interposed payment as a defense and sought the dismissal of the
complaint.
As aforestated, His Honor denied the motion for intervention and thereby issued an
order to this effect on July 23, 1955. A motion for the reconsideration of said order was
filed by the movant corporation and the same was likewise denied by His Honor on
August 18, 1955 . . . (Annex L.).
On 3 September 1955, in a petition for a writ of certiorari filed in the Court of Appeals,
the herein respondent corporation prayed for the setting aside of the order of the Court
of First Instance that had denied the admission of its complaint-in-intervention and for
an order directing the latter Court to allow the herein respondent corporation to
intervene in the action (Annex G). On 12 December 1955 the Court of Appeals set aside
the order denying the motion to intervene and ordered the respondent court to admit the
herein respondent corporation's complaint-in-intervention with costs against Macario
Apostol.
On 9 January 1956 the Republic of the Philippines filed this petition in this Court for the
purpose stated at the beginning of this opinion.
The Goverment contends that the intervenor has no legal interest in the matter in
litigation, because the action brought in the Court of First Instance of Manila against
Macario Apostol and the Empire Insurance Company (Civil Case No. 26166, Annex A) is
just for the collection from the defendant Apostol of a sum of money, the unpaid balance
of the purchase price of logs and almaciga bought by him from the Bureau of Prisons,
whereas the intervenor seeks to recover ownership and possession of G. I. sheets,
black sheets, M. S. plates, round bars and G. I. pipes that it claims its owns-an
intervention which would change a personal action into one ad rem and would unduly
delay the disposition of the case.
Petitioner refers to the particulars recited in Apostol's answer dated July 12, 1955 to the
effect that Apostol had paid unto the Bureau of Prisons his accounts covered, among
others, by BPPO 1077 for the sum of P4,638.40 and BPPO 1549 for the amount of
P4,398.54. Petitioner moreover, points to the State of Paid and Unpaid accounts of
Apostol dated January 16, 1954 prepared by the accounting of officer of the Bureau of
Prisons (Annex B. Complaint in Intervention), wherein it appears that the
aforementioned accounts covered respectively by BPPO Nos. 1077 for 892 pieces of GI
sheets and 1549 for 399 pieces of GI pipes in the total sum of P9,036.94 have not been
credited to Apostol's account in view of lack of supporting papers; and that according to
the reply letter of the Undersecretary of Justice, said GI sheets and pipes were
delivered by Macario Apostol to the Bureau of Prisons allegedly in Apostol's capacity as
owner and that the black iron sheets were delivered by Apostol as President of the
petitioner corporation.
Respondents, on the other hand, assert that the subject matter of the original litigation is
a sum of money allegedly due to the Bureau of Prisons from Macario Apostol and not
the goods or the materials reportedly turned over by Apostol as payment of his private
debts to the Bureau of Prisons and the recovery of which is sought by the petitioner;
and that for this reason, petitioner has no legal interest in the very subject matter in
litigation as to entitle it to intervene.
We find no merit in respondents' contention. It is true that the very subject matter of the
original case is a sum of money. But it is likewise true as borne out by the records, that
the materials purportedly belonging to the petitioner corporation have been assessed
and evaluated and their price equivalent in terms of money have been determined; and
that said materials for whatever price they have been assigned by defendant now
respondent Apostol as tokens of payment of his private debts with the Bureau of
Prisons. In view of these considerations, it becomes enormously plain in the event the
respondent judge decides to credit Macario Apostol with the value of the goods
delivered by the latter to the Bureau of Prisons, the petitioner corporation stands to be
adversely affected by such judgment. The conclusion, therefore, is inescapable that the
petitioner possesses a legal interest in the matter in litigation and that such interest is of
an actual, material, direct and immediate nature as to entitle petitioner to intervene.
Section 3 of Rule 13 of the Rules of Court endows the lower Court with discretion to
allow or disapprove the motion for intrvention (Santarromana et al. vs. Barrios, 63 Phil.
456); and that in the exercise of such discretion, the court shall consider whether or not
the intervention will unduly delay or prejudice the adjudicatio of the rights of the original
parties and whether or not the intervenors the rights may be fully protected in a
separate proceeding. The petitioner in the instant case positively authorized to a
separate action against any of all the respondents. But considering that the resolution of
the issues raised in and enjoined by the pleadings in the main case, would virtally affect
the rights not only the original parties but also of the berein petitioner: that far from
unduly delaying or prejudicing the adjudication of the rights of the original parties or
bringing about confusion in the original case, the adnission of the complaint in
intervention would help clarify the vital issue of the true and real ownership of the
materials involved, besides preventing an abhorrent munltiplicity of suit, we believe that
the motion to intervene should be given due to cause.
The Government reiterates in its original stand that counsel appearing for the
respondent corporation has no authority to represent it or/and sue in its behalf, the
Court of Appeals held that:
Respondents aver also that petitioner lacks legal capacity to sue and that its counsel is
acting merely in an individual capacity without the benefit of the corporate act
authorizing him to bring sue. In this connection, respondents invoked among others
section 20 of Rule 127 which provision, in our opinion, squarely disproves their claim as
by virtue thereof, the authority of petitioner's counsel is pressumed. Withal, the claim of
the counsel for the petitioner that a resolution to proceed against Apostol, had been
unanonimously adopted by the stockholders of the corporation, has not been refuted.
The power of a corporation to sue and be sued in any court1 is lodged in the board of
directors which exercises it corporater powers,2 and not in the president, as contended
by the Government. The "motion for admission of complaint in intervention"(Annex C)
and the "complaint in intervention"attached thereto, signed by counsel and filed in the
Court of First Instance begin with the following statement: "COMES NOW the above-
name Intervenor, by its undersigned counsel, . . . , "and underneath his typewritten
name is affixed the description"Counsel for the Intervenor."As counsels authority to
appeal for the respondent corporation was newer questioned in the Court of First
Instance, it is to be pressumed that he was properly authorized to file the complaint in
intervention and appeal for his client.1 It was only in the Court of Appeals where his
authority to appear was questioned. As the Court of Appeals was satisfied that counsel
was duly authorized by his client to file the complaint does in intervention and to appear
in its behalf, hte resolution of the Court of Appeals on this point should not be disturbed.
Granting that counsel has not been actually authorized by the board of directors to
appear for and in behalf of the respondent corporation, the fact that counsel is the
secretary treasurer of the respondent corporation and member of the board of directors;
and that the other members of the board, namely, Macario Apostol, the president, and
his wife Pacita R. Apostol, who shuold normally initiate the action to protect the
corporate properties and in interest are the ones to be adversely affected thereby, a
single stockholder under such circumstances may sue in behalf of the corporation.2
Counsel as a stockholder and director of the respondent corporation may sue in its
behalf and file the complaint in intervention in the proper court.
Bengzon, Paras, C.J., Montemayor, Reyes, A., Bautista Angelo, Labrador, Concepcion,
Reyes, J.B.L., Endencia, and Felix, JJ., concur.
G.R. No. L-36098 (Ortigas &Company, Limited Partnership vs. Judge Jose B. Herrera,
City Court of Manila, Branch II, and Emiliano Samson). — On August 14, 1969,
petitioner and private respondent entered into an agreement whereby for and in
consideration of P55,430.00, the former agreed to sell to the latter a parcel of land with
a special condition that should private respondent as purchaser complete the
construction including the painting of his residential house on said lot within two (2)
years from August 14, 1969, petitioner, as owner, has agreed to refund to private
respondent the amount of P10.00 per square meter. When the aforesaid special
condition was fulfilled, private respondent on May 17, 1971 accordingly notified in
writing the petitioner of the same and requested for his refund amounting to P4,820.00.
Upon failure of petitioner to pay his obligation, private respondent on May 6, 1972 filed a
complaint for sum of money and damages with the City Court of Manila, Branch II,
against petitioner docketed as Civil Case No. 211673. A motion to dismiss was filed by
petitioner on grounds of lack of jurisdiction, failure of the complaint to state a cause of
action and improper venue. City Court Judge Jose B. Herrera in his order dated June
27, 1972 held in abeyance the resolution on the motion until after the trial of the case on
the merits. A reconsideration of the said order having been denied, petitioner on
October 12, 1972 filed with the Court of First Instance of Manila, Branch XXVII, a
special civil action for certiorari and prohibition with preliminary injunction docketed as
Civil Case No. 88510. A motion to dismiss was filed by private respondent, and on
November 17, 1972, the petition was dismissed on the ground that the claim of private
respondent in his complaint, being less than P10,000.00, is within the exclusive
jurisdiction of the city court. Petitioner thus filed the present petition and argues among
others that: (a) as detriment from the allegations of the complaint, the action is for
specific performance of contract; and (b) actions in which the subject of litigation is not
capable of pecuniary estimation such as complaints for specific performance of contract
are exclusively cognizable by the Court of First Instance. Hence, the decisive question
to be resolved in this present petition is whether or not the City Court of Manila, Branell
II, has jurisdiction over the complaint. The action involved in this case is one for specific
performance and not for a sum of money and therefore incapable of pecuniary
estimation because what private respondent seeks is the performance of petitioner's
obligation under a written contract to make a refund but under certain specific conditions
still to be proven or established. In a case for the recovery of a sum of money, as the
collection of a debt, the claim is considered capable of pecuniary estimation (Lapitan vs.
Scandia, Inc., 24 SCRA 479) because the obligation to pay the debt is not conditioned
upon any specific fact or matter. But when a party to a contract has agreed to refund to
the other party a sum of money upon compliance by the latter of certain conditions and
only upon compliance therewith may what is legally due him under the written contract
be demanded, the action is one not capable of pecuniary estimation. The payment of a
sum of money is only incidental which can only be ordered after a determination of
certain acts the performance of which being the more basic issue to be inquired into.llcd
Although private respondent's complaint in the court a quo is designated as one CD
Technologies Asia, Inc. © 2016 cdasiaonline.com for a sum of money and damages, an
analysis of all the factual allegations of the complaint patently shows that what private
respondent seeks is the performance of petitioner's obligation under the written contract
to make the refund of the rate of P10.00 per square meter or in the total amount of
P4,820.00, but only after proof of having himself fulfilled the conditions that will give rise
to petitioner's obligation, a matter clearly incapable of pecuniary estimation. In view of
the foregoing, the Court RESOLVED to reverse the order appealed from and the
complaint filed with the City Court of Manila, Branch II, docketed as Civil Case No.
211673 is hereby ordered dismissed for lack of jurisdiction.
G.R. No. L-27289 April 15, 1985 JUAN AGUINALDO, Substituted by MARINA and
PRIMITIVO AGUINALDO,
plaintiffs-appellants, vs.
JOSE ESTEBAN and FRANCISCA SARMIENTO,
defendants-appellees.
RELOVA, J .:
In Civil Case No. 6977, the Court of First Instance of Rizal declared the contract,
entitled: "Sanglaan ng Isang Lupa na Patuluyan Ipaaari,"valid and binding contract of
sale and dismissed the complaint as well as the counterclaim with costs against the
plaintiff. From said judgment of the lower court, appeal was taken to this Court, "the
same involving, as it does, a question of law."(p. 25, Rollo) Plaintiff Juan Aguinaldo in
his complaint alleged, among others, that on June 23, 1958, defendants, through fraud,
deceit and misrepresentations and exercising undue pressure, influence and
advantage, procured the thumbmark of Jose Aguinaldo, father of plaintiff, to be affixed
on subject contract; that defendants caused the cancellation of Tax Declaration No.
4004, Rizal (1948) in the name of Jose Aguinaldo and the issuance in lieu thereof of Tax
Declaration No. 10725-Rizal in the names of defendant spouses; that the document in
question on which Jose Aguinaldo affixed his thumbmark is not true and genuine, as the
thumbmark appearing thereon is a forgery; that it contains terms and conditions which
partake the nature of "pacto comisario"which render same null and void; that it does not
fix a period for the payment of the loan nor does it state the duration of the mortgage;
that plaintiff is the sole successor-in-interest and legal heir of Jose Aguinaldo who died
intestate in October 1960; that defendants having no right to win and possess the
property in question are withholding the possession thereof from plaintiff and
consequently deprived plaintiff of the fruits of said property; and that by reason of the
willfull and malevolent acts of defendants, plaintiff suffered moral and actual damages in
the amount of P4,000.00. In their answer, defendants claim absolute ownership of
subject property upon the death of Jose Aguinaldo in October 1960 on the theory that
the document in controversy is one of sale and not one of mortgage. The parties,
through their respective counsels, agreed to submit the case for decision solely on
whether the contract in question, Annex "A"of the complaint, is one of mortgage or of
sale. When plaintiff Juan Aguinaldo died intestate on August 6, 1965, his heirs, namely:
Marina and Primitivo, both surnamed Aguinaldo, petitioned the trial court that they be
substituted as party plaintiffs in lieu of their deceased father. It is the position of
plaintiffs-appellants that the document in question, Annex "A"of the complaint, is null
and void because it contains stipulations which partake of the nature of "pacto
comisario."On the other hand, the defendants contend that the contract is a valid sale
and, as such, it passed the title to them. Hereunder is the contract in question:
SANGLAAN NG ISANG LUPA-CANAVERAL NA PATULOYAN IPAAARI HAYAG SA
SINO MAN MAKAKABASA: Na, ako JOSE AGUINALDO, Pilipino, balo, may
karampatan gulang, tubo at naninirahan sa Bo. Bambang, Tagig, Rizal, Kapuluan
Pilipinas, sa pamamagitan nito ay ISINASAYSAY KO AT PINAGTITIBAY: 1. Na, sarili at
tunay kong pagaari dahil sa ipinagkaloob sa akin ng aking amain Martin Concepcion
(patay) ang isang parcelang lupa-canaveral, at ang lupang ito ay napagkikilala at
nauligiran ng mga pagaaring lupa ng mga kahangganan kagaya ng mga sumusunod:
Isang parcelang lupa-canaveral na nasa pook ng Bo. Bambang, Tagig, Rizal, at siyang
lupang nakatala sa Tax Declaration No. 4004-Rizal (1948), sa Tanggapan ng Tasador
ng lupa sa lalawigan ng RizaL Pasig, RizaL at valor ameliarado ng P70.00 at napaloob
sa mga pagaaring lupa ng mga kahangganan kagaya ng mga sumusunod: Sa Norte,
Antonio Silvestre at Pedro Sarmiento; sa Este, Don-lingo Luga; sa Sur, Dionisio Dionisio
at Pedro Sarmiento, at sa Weste, Tomas Cruz 2. Na, alang-alang sa halagang LIMANG
DAAN AT APATNAPUNG PISO (P540.00), salaping Pilipino na sa kasalukuyan ay ating
ginagamit, ay natanggap ko na, sa hindi biglaan kung hindi LIMANGPUNG SENTIMOS
(P0.50) lamang araw-araw magbuhat pa nuong Marzo 26, 1955, at ang kabuuang
halaga ng halagang nabanggit sa itaas nito, sa oras na ito, ay kusang loob kong
tinanggap sa magasawang JOSE ESTEBAN at FRANCISCA SARMIENTO, mga
Pilipino, may karampatan gulang, naninirahan at may padalahan sulat sa Bo. Bambang,
Tagig, Rizal, ay ISINASANGLA AT PATULOYAN IPAARI KO sa nasabing magasawa
ang lupang nobanggit ko sa itaas, sa aming mga kasunduan kagaya ng mga
sumusunod: NA AKO, JOSE AGUINALDO AY PAKAKANIN HABANG NABUBUHAY NG
MAGASAWANG JOSE ESTEBAN AT FRANCISCA SARMIENTO, 0 NG KANILANG
KAHALILI AT TAGAPAGMANA, AT BILANG KABAYARAN NAMAN SA HALAGANG
LIMANG DAAN AT APATNAPUNG PISO (P540.00) AT PAGPAPAKAIN SA AKIN NG
MAGASAWANG JOSE ESTEBAN AT FRANCISCA SARMIENTO, ORAS NA AKO AY
MAMATAY SILA (JOSE ESTEBAN AT FRANCISCA SARMIENTO) NA ANG LUBOSAN
MAGMAMAYARI NG AKING LUPANG
ISINANGLANG ITO SA KANILA, SAPAGKAT ANG LAHAT NG AKING KARAPATAN SA
LUPA, NGAYON PA AY IPINAGKAKALOOB KO SA KANILA SA ILALIM NG
KASUNDUAN. 3. Na, ang lupa-canaveral na isinasangla ko sa pamamagitan ng
kasulatan ito na ipaaring patuluyan ay pinamomosiyonan ng mag-asawang Jose
Esteban at Francisco Sarmiento, nuong pang Marzo 26, 1955. 4. Na, ang lupang akin
binabanggit sa kasulatan ito, ay hindi ko ipinagkakautang sa kanino man tao, na
maliban sa magasawang Jose Esteban at Francisca Samiento. 5. Na, ang lupa kong ito
na siyang nakatala sa Tax Declaration No. 4004-Rizal (1948), ay hindi nakatala sa bisa
ng Batas Blg. 496 o maging sa Hipotecaria Espanola, at napagkasunduan ang
kasulatan ito, ay nais ipatala sa bisa ng Batas Blg. 3344, at sinusugan. SA KATUNAYAN
NG LAHAT KONG IPINAHAYAG SA DOKUMENTONG ITO, ay inilagda ko ang aking
pangalan at apelyedo dito sa Lunsod ng Maynila, Pilipinas, ngayong ika ______ ng
Hunyo 1958, sa harap ng dalawang saksi. (Thumbmark) JOSE AGUINALDO Nagsangla
SUMASANGAYON SA MGA ALITUNTUNIN: (Sgd.) JOSE ESTEBAN Pinagsanglaan
(Sgd.) FRANCISCA SARMIENTO Pinagsanglaan MGA SAKSI: (Sgd.) Illegible (Sgd.)
Eugenia S. Relon ACKNOWLEDGMENT (pp. 7-1 0, Record on Appeal) There is merit
in the appeal. On the issue as to whether or not the subject contract is one of sale or of
mortgage, an inquiry into the surrounding facts would disclose the intention of the
parties and thereby determine the truth of plaintiff-appellant's allegation that his father,
Jose Aguinaldo, was misled into affixing his thumbmark on the said contract. Plaintiff-
appellant, Juan Aguinaldo, is the son of Jose and it is indeed intriguing why defendants-
appellees, who are not related at all to the old man, would give him fifty centavos
(P0.50) everyday beginning May 26, 1955. The contract in question was executed in
June 1958, or after three (3) years from the time the daffy amount of half-a-peso was
given the old man. Thereafter, the defendants-appellees' saw to it that the recipient of
the money would execute the contract, entitled: ."Sanglaan ng isang lupang-canaveral
na Patuluyang Ipaaari. "It is significant to note that herein plaintiff-appellant was not
even a witness in the document when his father who is of low intelligence, illiterate and
could not even sign his name, affixed his thumbmark in the document in question. It
would appear that the execution of the contract was made behind his back and/or
without giving notice to him. Stated differently, if the transaction was on the level, why
was not plaintiff-appellant asked to sign as a witness to the document. It may be true
that the contract was read to the old man but it is doubtful if he understood the meaning
of its contents. The contract was so written that anyone could believe he was only giving
his property by way of mortgage, not as a sale. For instance, in paragraph 2 thereof, it
reads "... ay isinasangla at patuloyan ipaaari ko sa nasabing magasawa ang lupang
nabanggit ko sa itaas, ... ."In some Tagalog provinces the word "Sangla"means "Bilihan
Mabibiling Muli"or "Pacto de Retro."By this contract, the vendee-a-retro takes
possession of the property as owner until the same is repurchased or redeemed. On the
other hand, mortgage is understood as "Prenda."In the case at bar, defendants-
appellees took possession of the property on March 26, 1955 when they started giving
Jose Aguinaldo the fifty centavos (P0.50) a day. It would appear then that the money
which he has been receiving from the Estebans come from his own property. In effect,
there was no consideration for the transfer of the property-be it sale, mortgage or Pacto
Comisario. WHEREFORE, the decision of the trial court, dated August 16, 1966, is
REVERSED and the contract "Sanglaan ng Isang Lupa-Canaveral na Patuluyan
Ipaaari"is declared null and void, and the deceased plaintiff Juan Aguinaldo is declared
as the true and lawful owner of subject property. Further, defendants-appellees are
hereby ordered to transfer and deliver the possession of subject property to the said
deceased plaintiff Juan Aguinaldo's heirs, Marina Aguinaldo and Primitive Aguinaldo,
who substituted him as plaintiffs in this case and/or their respective heirs and
successors; and the Provincial Assessor of Rizal is directed to cancel Tax Declaration
No. 10725 (Rizal) in the name of defendants-appellees, Jose Esteban and Francisco
Sarmiento, and in lieu thereof issue another in the name of the deceased plaintiff Juan
Aguinaldo's heirs, Marina Aguinaldo and Primitivo Aguinaldo. SO ORDERED.
Teehankee (Chairman), Plana, Gutierrez, Jr., De la Fuente and Alampay, JJ., concur.