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Auyong Hian Vs. Court of Tax Appeals, et. al.

Fact: On December 30, 1961, 600 hogsheads of Virginia leaf tobacco arrived in the Port of Manila. As the Import
Control Law was already expired, the Collector of Customs in Manila refused to release the shipment of the subject
goods. The shipment was then, declared illegal upon the ground that the importation was made long after the
expiration of the effectivity of the Import Control Law and that the importation contravened the government policy as
declared in Republic Acts 698 and 1194. The goods were declared forfeited to the government and its sale was
ordered for public auction which the CTIP took advantage of. The petitioner prayed for several errors by the CTA.
One of them is the petitioner’s contention that the sale to the CTIP was invalid on ground that the amount paid by the
CTIP was insufficient in respect with the petitioner’s claim that the goods’ value was Php 7,000,000 and what CTIP
paid was only Php 1,500,000.

Issue: Whether the sale of the tobacco from the public auction to STIP was invalid?

Ruling: No. The sale of the tobacco from the public auction to CTIP was valid. Even if the consideration paid for the
forfeited tobacco was inadequate, such inadequate consideration is not a ground for the invalidity of a contract.
Article 1355 of the Civil Code provides the law for this matter. It was not shown that the instant sale is a case
exempted by law from the operation of the aforementioned Article; neither has the petitioner shown that there was
fraud, mistake or undue influence in the sale. Therefore, the SC can only conclude with the CTA that “In these
circumstances, we find no reason to invalidate the sale of said tobacco to CTIP.”

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