1.

G.R. No. L-11491            August 23, 1918

ANDRES QUIROGA, plaintiff-appellant,
vs.
PARSONS HARDWARE CO., defendant-appellee.

Alfredo Chicote, Jose Arnaiz and Pascual B. Azanza for appellant.

Crossfield & O'Brien for appellee.

AVANCEÑA, J.:

On January 24, 1911, in this city of manila, a contract in the following tenor was entered into by and
between the plaintiff, as party of the first part, and J. Parsons (to whose rights and obligations the
present defendant later subrogated itself), as party of the second part:

CONTRACT EXECUTED BY AND BETWEEN ANDRES QUIROGA AND J.

PARSONS, BOTH MERCHANTS ESTABLISHED IN MANILA, FOR THE
EXCLUSIVE SALE OF "QUIROGA" BEDS IN THE VISAYAN ISLANDS.

ARTICLE 1. Don Andres Quiroga grants the exclusive right to sell his beds in the Visayan
Islands to J. Parsons under the following conditions:

(A) Mr. Quiroga shall furnish beds of his manufacture to Mr. Parsons for the latter's
establishment in Iloilo, and shall invoice them at the same price he has fixed for sales, in
Manila, and, in the invoices, shall make and allowance of a discount of 25 per cent of the
invoiced prices, as commission on the sale; and Mr. Parsons shall order the beds by the
dozen, whether of the same or of different styles.

(B) Mr. Parsons binds himself to pay Mr. Quiroga for the beds received, within a period of
sixty days from the date of their shipment.

(C) The expenses for transportation and shipment shall be borne by M. Quiroga, and the
freight, insurance, and cost of unloading from the vessel at the point where the beds are
received, shall be paid by Mr. Parsons.

(D) If, before an invoice falls due, Mr. Quiroga should request its payment, said payment
when made shall be considered as a prompt payment, and as such a deduction of 2 per cent
shall be made from the amount of the invoice.

The same discount shall be made on the amount of any invoice which Mr. Parsons may
deem convenient to pay in cash.

(E) Mr. Quiroga binds himself to give notice at least fifteen days before hand of any alteration
in price which he may plan to make in respect to his beds, and agrees that if on the date
when such alteration takes effect he should have any order pending to be served to Mr.
Parsons, such order shall enjoy the advantage of the alteration if the price thereby be
lowered, but shall not be affected by said alteration if the price thereby be increased, for, in
this latter case, Mr. Quiroga assumed the obligation to invoice the beds at the price at which
the order was given.
 (F) Mr. Parsons binds himself not to sell any other kind except the "Quiroga" beds.

ART. 2. In compensation for the expenses of advertisement which, for the benefit of both
contracting parties, Mr. Parsons may find himself obliged to make, Mr. Quiroga assumes the
obligation to offer and give the preference to Mr. Parsons in case anyone should apply for
the exclusive agency for any island not comprised with the Visayan group.

ART. 3. Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga"
beds in all the towns of the Archipelago where there are no exclusive agents, and shall
immediately report such action to Mr. Quiroga for his approval.

ART. 4. This contract is made for an unlimited period, and may be terminated by either of the
contracting parties on a previous notice of ninety days to the other party.

Of the three causes of action alleged by the plaintiff in his complaint, only two of them constitute the
subject matter of this appeal and both substantially amount to the averment that the defendant
violated the following obligations: not to sell the beds at higher prices than those of the invoices; to
have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public
exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the
dozen and in no other manner. As may be seen, with the exception of the obligation on the part of
the defendant to order the beds by the dozen and in no other manner, none of the obligations
imputed to the defendant in the two causes of action are expressly set forth in the contract. But the
plaintiff alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said
obligations are implied in a contract of commercial agency. The whole question, therefore, reduced
itself to a determination as to whether the defendant, by reason of the contract hereinbefore
transcribed, was a purchaser or an agent of the plaintiff for the sale of his beds.

In order to classify a contract, due regard must be given to its essential clauses. In the contract in
question, what was essential, as constituting its cause and subject matter, is that the plaintiff was to
furnish the defendant with the beds which the latter might order, at the price stipulated, and that the
defendant was to pay the price in the manner stipulated. The price agreed upon was the one
determined by the plaintiff for the sale of these beds in Manila, with a discount of from 20 to 25 per
cent, according to their class. Payment was to be made at the end of sixty days, or before, at the
plaintiff's request, or in cash, if the defendant so preferred, and in these last two cases an additional
discount was to be allowed for prompt payment. These are precisely the essential features of a
contract of purchase and sale. There was the obligation on the part of the plaintiff to supply the beds,
and, on the part of the defendant, to pay their price. These features exclude the legal conception of
an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not
pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the
plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their
price within the term fixed, without any other consideration and regardless as to whether he had or
had not sold the beds.

It would be enough to hold, as we do, that the contract by and between the defendant and the
plaintiff is one of purchase and sale, in order to show that it was not one made on the basis of a
commission on sales, as the plaintiff claims it was, for these contracts are incompatible with each
other. But, besides, examining the clauses of this contract, none of them is found that substantially
supports the plaintiff's contention. Not a single one of these clauses necessarily conveys the idea of
an agency. The words commission on sales used in clause (A) of article 1 mean nothing else, as
stated in the contract itself, than a mere discount on the invoice price. The word agency, also used in
articles 2 and 3, only expresses that the defendant was the only one that could sell the plaintiff's
beds in the Visayan Islands. With regard to the remaining clauses, the least that can be said is that
they are not incompatible with the contract of purchase and sale.

The plaintiff calls attention to the testimony of Ernesto Vidal, a former vice-president of the defendant
corporation and who established and managed the latter's business in Iloilo. It appears that this
witness, prior to the time of his testimony, had serious trouble with the defendant, had maintained a
civil suit against it, and had even accused one of its partners, Guillermo Parsons, of falsification. He
testified that it was he who drafted the contract Exhibit A, and, when questioned as to what was his
purpose in contracting with the plaintiff, replied that it was to be an agent for his beds and to collect
a commission on sales. However, according to the defendant's evidence, it was Mariano Lopez
Santos, a director of the corporation, who prepared Exhibit A. But, even supposing that Ernesto
Vidal has stated the truth, his statement as to what was his idea in contracting with the plaintiff is of
no importance, inasmuch as the agreements contained in Exhibit A which he claims to have drafted,
constitute, as we have said, a contract of purchase and sale, and not one of commercial agency.
This only means that Ernesto Vidal was mistaken in his classification of the contract. But it must be
understood that a contract is what the law defines it to be, and not what it is called by the contracting
parties.

The plaintiff also endeavored to prove that the defendant had returned beds that it could not sell;
that, without previous notice, it forwarded to the defendant the beds that it wanted; and that the
defendant received its commission for the beds sold by the plaintiff directly to persons in Iloilo. But
all this, at the most only shows that, on the part of both of them, there was mutual tolerance in the
performance of the contract in disregard of its terms; and it gives no right to have the contract
considered, not as the parties stipulated it, but as they performed it. Only the acts of the contracting
parties, subsequent to, and in connection with, the execution of the contract, must be considered for
the purpose of interpreting the contract, when such interpretation is necessary, but not when, as in
the instant case, its essential agreements are clearly set forth and plainly show that the contract
belongs to a certain kind and not to another. Furthermore, the return made was of certain brass
beds, and was not effected in exchange for the price paid for them, but was for other beds of another
kind; and for the letter Exhibit L-1, requested the plaintiff's prior consent with respect to said beds,
which shows that it was not considered that the defendant had a right, by virtue of the contract, to
make this return. As regards the shipment of beds without previous notice, it is insinuated in the
record that these brass beds were precisely the ones so shipped, and that, for this very reason, the
plaintiff agreed to their return. And with respect to the so-called commissions, we have said that they
merely constituted a discount on the invoice price, and the reason for applying this benefit to the
beds sold directly by the plaintiff to persons in Iloilo was because, as the defendant obligated itself in
the contract to incur the expenses of advertisement of the plaintiff's beds, such sales were to be
considered as a result of that advertisement.

In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the
contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the
defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his
right and cannot complain for having acted thus at his own free will.

For the foregoing reasons, we are of opinion that the contract by and between the plaintiff and the
defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a
cause of action are not imposed upon the defendant, either by agreement or by law.

The judgment appealed from is affirmed, with costs against the appellant. So ordered.

Arellano, C.J., Torres, Johnson, Street and Malcolm, JJ., cconcur.

G.R. No. L-11491; 23 August 1918

Avanceña, J.
CONTRACT OF SALE, CONCEPTS | Agency to Sell
FACTS:

A contract was entered into between Andres Quiroga and J. Parsons, who were
both merchants, which granted the exclusive right to sell his beds in the
Visayan Islands to Parsons under the following conditions: 1) There be a
discount of 2.5% as commission for the sale; 2) Parsons shall order the beds by
the dozen, whether of the same or of different styles; 3) Expenses for
transportation and shipment shall be borne by Quiroga; 4) Parsons is bound
to pay Quiroga for the beds received within 60 days from the date of their
shipment; 5) If Quiroga should request payment before the invoice falls due, it
shall be considered as prompt payment with 2% deduction; 6) 15-day notice
must at least be given by Quiroga before any alteration in price of beds; and 7)
Parsons binds himself to only sell Quiroga beds. Quiroga alleged that Parsons
breached its contract by selling the beds at a higher price, not having an open
establishment in Iloilo, not maintaining a public exhibition, and for not
ordering the beds by the dozen. Only the last imputation was provided for by
the contract, the others were not stipulated. Quiroga argued that since there
was a contract of agency between them, such obligations were necessarily
implied.

ISSUE:

Is the contract between them one of agency, not of sale?

HELD:

No. The agreement between Quiroga and Parsons was that of a simple
purchase and sale — not an agency. Quiroga supplied the beds, while Parsons
had the obligation to pay their purchase price. These features exclude the legal
conception of an agency or order to sell whereby the mandatory or agent
received the thing to sell it, and does not pay its price, but delivers to the
principal the price he obtains from the sale of the thing to a third person, and
if he does not succeed in selling it, he returns it. By virtue of the contract
between the plaintiff and the defendant, the latter, on receiving the beds, was
necessarily obliged to pay their price within the term fixed, without any other
consideration and regardless as to whether he had or had not sold the beds.
There was mutual tolerance in the performance of the contract in disregard of
its terms; and it gives no right to have the contract considered, not as the
parties stipulated it, but as they performed it. Only the acts of the contracting
parties, subsequent to, and in connection with, the execution of the contract,
must be considered for the purpose of interpreting the contract, when such
interpretation is necessary.
2.

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G.R. No. L-20871 April 30, 1971

KER & CO., LTD., petitioner,

vs.
JOSE B. LINGAD, as Acting Commissioner of Internal Revenue, respondent.

Ross, Selph and Carrascoso for petitioner.

Office of the Solicitor General Arturo A. Alafriz, Solicitor Alejandro B. Afurong and Special Atty. Balbino Gatdula, Jr. fo
respondent.
FERNANDO, J.:

Petitioner Ker & Co., Ltd. would have us reverse a decision of the Court of Tax Appeals, holding it liable as a comme
under Section 194 (t) of the National Internal Revenue Code. Its plea, notwithstanding the vigorous effort of its couns
sufficiently persuasive. An obstacle, well-nigh insuperable stands in the way. The decision under review conforms to
accordance with the controlling doctrine announced in the recent case of Commissioner of Internal Revenue v. Const
decisive test, as therein set forth, is the retention of the ownership of the goods delivered to the possession of the de
herein petitioner, for resale to customers, the price and terms remaining subject to the control of the firm consigning s
The facts, as found by respondent Court, to which we defer, unmistakably indicate that such a situation does exist. T
consequences must inevitably follow. We affirm.

It was shown that petitioner was assessed by the then Commissioner of Internal Revenue Melecio R. Domingo the su
P20,272.33 as the commercial broker's percentage tax, surcharge, and compromise penalty for the period from July
December 31, 1953. There was a request on the part of petitioner for the cancellation of such assessment, which req
turned down. As a result, it filed a petition for review with the Court of Tax Appeals. In its answer, the then Commissio
Domingo maintained his stand that petitioner should be taxed in such amount as a commercial broker. In the decision
review, promulgated on October 19, 1962, the Court of Tax Appeals held petitioner taxable except as to the comprom
of P500.00, the amount due from it being fixed at P19,772.33.

Such liability arose from a contract of petitioner with the United States Rubber International, the former being referred
Distributor and the latter specifically designated as the Company. The contract was to apply to transactions between
and petitioner, as Distributor, from July 1, 1948 to continue in force until terminated by either party giving to the other
notice.  The shipments would cover products "for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, a
2

Mindanao except [the] province of Davao", petitioner, as Distributor, being precluded from disposing such products e
than in the above places unless written consent would first be obtained from the Company.  Petitioner, as Distributor,
3

to exert every effort to have the shipment of the products in the maximum quantity and to promote in every way the s
thereof.  The prices, discounts, terms of payment, terms of delivery and other conditions of sale were subject to chan
4

discretion of the Company. 5

Then came this crucial stipulation: "The Company shall from time to time consign to the Distributor and the Distributo
receive, accept and/or hold upon consignment the products specified under the terms of this agreement in such quan
the judgment of the Company may be necessary for the successful solicitation and maintenance of business in the te
the Distributor agrees that responsibility for the final sole of all goods delivered shall rest with him. All goods on consi
shall remain the property of the Company until sold by the Distributor to the purchaser or purchasers, but all sales ma
Distributor shall be in his name, in which the sale price of all goods sold less the discount given to the Distributor by t
Company in accordance with the provision of paragraph 13 of this agreement, whether or not such sale price shall ha
collected by the Distributor from the purchaser or purchasers, shall immediately be paid and remitted by the Distributo
Company. It is further agreed that this agreement does not constitute Distributor the agent or legal representative 4 o
Company for any purpose whatsoever. Distributor is not granted any right or authority to assume or to create any obl
responsibility, express or implied, in behalf of or in the name of the Company, or to bind the Company in any manner
whatsoever." 6

All specifications for the goods ordered were subject to acceptance by the Company with petitioner, as Distributor, re
accept such goods shipped as well as to clear the same through customs and to arrange for delivery in its warehouse
City. Moreover, orders are to be filled in whole or in part from the stocks carried by the Company's neighboring branc
subsidiaries or other sources of Company's brands.  Shipments were to be invoiced at prices to be agreed upon, with
7

customs duties being paid by petitioner, as Distributor, for account of the Company.  Moreover, all resale prices, lists,
8

and general terms and conditions of local resale were to be subject to the approval of the Company and to change fro
time in its discretion.  The dealer, as Distributor, is allowed a discount of ten percent on the net amount of sales of me
9

made under such agreement.   On a date to be determined by the Company, the petitioner, as Distributor, was requir
10
to it data showing in detail all sales during the month immediately preceding, specifying therein the quantities, sizes a
together with such information as may be required for accounting purposes, with the Company rendering an invoice o
described to be dated as of the date of inventory and sales report. As Distributor, petitioner had to make payment on
invoice or invoices on due date with the Company being privileged at its option to terminate and cancel the agreemen
upon the failure to comply with this obligation.   The Company, at its own expense, was to keep the consigned stock
11

against loss or damage by fire or as a result of fire, the policy of such insurance to be payable to it in the event of loss
as Distributor, assumed full responsibility with reference to the stock and its safety at all times; and upon request of th
at any time, it was to render inventory of the existing stock which could be subject to change.   There was furthermor
12

equally tell-tale covenant: "Upon the termination or any cancellation of this agreement all goods held on consignment
held by the Distributor for the account of the Company, without expense to the Company, until such time as provision
made by the Company for disposition."  13

The issue with the Court of Tax Appeals, as with us now, is whether the relationship thus created is one of vendor an
of broker and principal. Not that there would have been the slightest doubt were it not for the categorical denial in the
that petitioner was not constituted as "the agent or legal representative of the Company for any purpose whatsoever.
be, however, to impart to such an express disclaimer a meaning it should not possess to ignore what is manifestly the
assigned to petitioner considering the instrument as a whole. That would be to lose sight altogether of what has been
upon. The Court of Tax Appeals was not misled in the language of the decision now on appeal: "That the petitioner K
Ltd. is, by contractual stipulation, an agent of U.S. Rubber International is borne out by the facts that petitioner can di
products of the Company only to certain persons or entities and within stipulated limits, unless excepted by the contra
Rubber Company (Par. 2); that it merely receives, accepts and/or holds upon consignment the products, which remai
of the latter company (Par. 8); that every effort shall be made by petitioner to promote in every way the sale of the pro
3); that sales made by petitioner are subject to approval by the company (Par. 12); that on dates determined by the ru
company, petitioner shall render a detailed report showing sales during the month (Par. 14); that the rubber company
invoice the sales as of the dates of inventory and sales report (Par. 14); that the rubber company agrees to keep the
goods fully insured under insurance policies payable to it in case of loss (Par. 15); that upon request of the rubber co
any time, petitioner shall render an inventory of the existing stock which may be checked by an authorized representa
former (Par. 15); and that upon termination or cancellation of the Agreement, all goods held on consignment shall be
petitioner for the account of the rubber company until their disposition is provided for by the latter (Par. 19). All these
circumstances are irreconcilably antagonistic to the idea of an independent merchant."   Hence its conclusion: "Howe
14

analysis of the contract, as a whole, together with the actual conduct of the parties in respect thereto, we have arrived
conclusion that the relationship between them is one of brokerage or agency."   We find ourselves in agreement, not
15

the able brief filed on behalf of petitioner by its counsel. As noted at the outset, we cannot heed petitioner's plea for re

1. According to the National Internal Revenue Code, a commercial broker "includes all persons, other than importers,
manufacturers, producers, or bona fide employees, who, for compensation or profit, sell or bring about sales or purch
merchandise for other persons or bring proposed buyers and sellers together, or negotiate freights or other business
of vessels or other means of transportation, or for the shippers, or consignors or consignees of freight carried by vess
means of transportation. The term includes commission merchants."   The controlling decision as to the test to be fol
16

who falls within the above definition of a commercial broker is that of Commissioner of Internal Revenue v. Constantin
language of Justice J. B. L. Reyes, who penned the opinion: "Since the company retained ownership of the goods, ev
delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the compa
the relationship between the company and the dealer is one of agency, ... ."   An excerpt from Salisbury v. Brooks   c
18 19

support of such a view follows: " 'The difficulty in distinguishing between contracts of sale and the creation of an agen
has led to the establishment of rules by the application of which this difficulty may be solved. The decisions say the tr
title or agreement to transfer it for a price paid or promised is the essence of sale. If such transfer puts the transferee
attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merel
agent who must account for the proceeds of a resale, the transaction is a sale; while the essence of an agency to sel
delivery to an agent, not as his property, but as the property of the principal, who remains the owner and has the righ
sales, fix the price, and terms, demand and receive the proceeds less the agent's commission upon sales made.' "    20

relied on the work of Mechem on Sales as well as Mechem on Agency. Williston and Tiedman both of whom wrote tre
Sales, were likewise referred to.

Equally relevant is this portion of the Salisbury opinion: "It is difficult to understand or appreciate the necessity or pres
these mutual requirements and obligations on any theory other than that of a contract of agency. Salisbury was to fur
and put the timber owned by him into a marketable condition in the form of lumber; Brooks was to furnish the funds n
that purpose, sell the manufactured product, and account therefor to Salisbury upon the specific terms of the agreem
compensation fixed by the parties in lieu of interest on the money advanced and for services as agent. These require
stipulations are in tent with any other conception of the contract. If it constitutes an agreement to sell, they are meanin
they cannot be ignored. They were placed there for some purpose, doubtless as the result of definite antecedent neg
therefore, consummated by the final written expression of the agreement."   Hence the Constantino opinion could ca
21

affirm that the mere disclaimer in a contract that an entity like petitioner is not "the agent or legal representative for an
whatsoever" does not suffice to yield the conclusion that it is an independent merchant if the control over the goods fo
the goods consigned is pervasive in character. The Court of Tax Appeals decision now under review pays fealty to su
applicable doctrine.

2. No merit therefore attaches to the first error imputed by petitioner to the Court of Tax Appeals. Neither did such Co
appreciate in its true significance the act and conduct pursued in the implementation of the contract by both the Unite
Rubber International and petitioner, as was contended in the second assignment of error. Petitioner ought to have be
that there was no need for such an inquiry. The terms of the contract, as noted, speak quite clearly. There is lacking t
of ambiguity sufficient to give rise to serious doubt as to what was contemplated by the parties. A reading thereof disc
the relationship arising therefrom was not one of seller and purchaser. If it were thus intended, then it would not have
covenants which in their totality would negate the concept of a firm acquiring as vendee goods from another. Instead,
stipulations were so worded as to lead to no other conclusion than that the control by the United States Rubber Intern
the goods in question is, in the language of the Constantino opinion, "pervasive". The insistence on a relationship opp
that apparent from the language employed might even yield the impression that such a mode of construction was res
order that the applicability of a taxing statute might be rendered nugatory. Certainly, such a result is to be avoided.

Nor is it to be lost sight of that on a matter left to the discretion of the Court of Tax Appeals which has developed an e
view of its function being limited solely to the interpretation of revenue laws, this Court is not prepared to substitute its
judgment unless a grave abuse of discretion is manifest. It would be to frustrate the objective for which administrative
are created if the judiciary, absent such a showing, is to ignore their appraisal on a matter that forms the staple of the
specialized competence. While it is to be admitted that counsel for petitioner did scrutinize with care the decision und
with a view to exposing what was considered its flaws, it cannot be said that there was such a failure to apply what th
commands as to call for its reversal. Instead, what cannot be denied is that the Court of Tax Appeals reached a resul
the Court in the recent Constantino decision gave the imprimatur of its approval.

WHEREFORE, the Court of Tax Appeals decision of October 19, 1962 is affirmed. With costs against petitioner.

Concepcion C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Castro, Teehankee, Barredo, Villamor and Makasiar, JJ.

Footnotes

1 L-25926, February 27, 1970, 31 SCRA 779.

2 Contract between the United States Rubber International and petitioner, par. 1 quoted in the Decisio
Court of Tax Appeals, Annex A to Petition, p. 2.
 3 Ibid., par. 2, p. 2.

4 Ibid., par. 3, p. 2.

5 Ibid., par. 7, p. 3.

6 Ibid., par. 8, pp. 3 and 4.

7 Ibid., par. 9, to 4.

8 Ibid., par. 10, p. 4.

9 Ibid., par. 12, p. 4.

10 Ibid., par. 13, p. 4.

11 Ibid., par. 14, p. 5.

12 Ibid., par. 15, p. 5.

13 Ibid., par. 19, p. 6.

14 Decision, Annex A to the Petition, pp. 10-11.

15 Ibid., p. 10.

16 Section 194(t).

17 L-25926, February 27, 1970, 31 SCRA 779.

18 Ibid., p. 785.

19 94 SE 117 (1917).

20 L-25926, February 27, 1970, 31 SCRA 779, 796.

21 94 SE 117, 118 (1917).

The Lawphil Project - Arellano Law Foundation

Quiroga vs Parsons
G.R. No. L-11491

Subject: Sales
Doctrine: Contract of Agency to Sell vs Contract of Sale
Facts: On Jan 24, 1911, plaintiff and the respondent entered into a contract making the
latter an “agent” of the former. The contract stipulates that Don Andres Quiroga, here in
petitioner, grants exclusive rights to sell his beds in the Visayan region to J. Parsons.
The contract only stipulates that J.Parsons should pay Quiroga within 6 months upon
the delivery of beds.
Quiroga files a case against Parsons for allegedly violating the following stipulations: not
to sell the beds at higher prices than those of the invoices; to have an open
establishment in Iloilo; itself to conduct the agency; to keep the beds on public
exhibition, and to pay for the advertisement expenses for the same; and to order the
beds by the dozen and in no other manner. With the exception of the obligation on the
part of the defendant to order the beds by the dozen and in no other manner, none of
the obligations imputed to the defendant in the two causes of action are expressly set
forth in the contract. But the plaintiff alleged that the defendant was his agent for the
sale of his beds in Iloilo, and that said obligations are implied in a contract of
commercial agency. The whole question, therefore, reduced itself to a determination as
to whether the defendant, by reason of the contract hereinbefore transcribed, was a
purchaser or an agent of the plaintiff for the sale of his beds.

Issue: Whether the contract is a contract of agency or of sale.

Held: In order to classify a contract, due attention must be given to its essential clauses.
In the contract in question, what was essential, as constituting its cause and subject
matter, is that the plaintiff was to furnish the defendant with the beds which the latter
might order, at the price stipulated, and that the defendant was to pay the price in the
manner stipulated. Payment was to be made at the end of sixty days, or before, at the
plaintiff’s request, or in cash, if the defendant so preferred, and in these last two cases
an additional discount was to be allowed for prompt payment. These are precisely the
essential features of a contract of purchase and sale. There was the obligation on the
part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their
price. These features exclude the legal conception of an agency or order to sell whereby
the mandatory or agent received the thing to sell it, and does not pay its price, but
delivers to the principal the price he obtains from the sale of the thing to a third person,
and if he does not succeed in selling it, he returns it. By virtue of the contract between
the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged
to pay their price within the term fixed, without any other consideration and regardless
as to whether he had or had not sold the beds.
In respect to the defendant’s obligation to order by the dozen, the only one expressly
imposed by the contract, the effect of its breach would only entitle the plaintiff to
disregard the orders which the defendant might place under other conditions; but if the
plaintiff consents to fill them, he waives his right and cannot complain for having acted
thus at his own free will.
For the foregoing reasons, we are of opinion that the contract by and between the
plaintiff and the defendant was one of purchase and sale, and that the obligations the
breach of which is alleged as a cause of action are not imposed upon the defendant,
either by agreement or by law.

3.
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Manila

EN BANC

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
EASTERN VIGAN VTPA, INC, SAN NICOLAS FACOMA, INC., ILOCOS SUR TOBACCO INDUSTRIES CORP., TA
FACOMA, INC., SAN JUAN TOBACCO PLANTERS, INC., STA. MONICA TOBACCO PLANTERS ASSN., NORFE
VILLAVICIOSA, BOUNDARY VTPA, BADOC TOBACCO PLANTERS, INC., LUZON PRODUCERS CORP. BALAO
FACOMA, INC., BANGUED NORFEX BANGUED TOBACCO PROD. ASSN., ARINGAY FACOMA, INC., SOUTHW
SAN QUINTIN TOBACCO PLANTERS, INC., BANGUED FACOMA, INC., CENTRAL RELIANCE TOBACCO FARM
CORP., LIDLIDDA VTPA, INC., FILIPINO AGRICULTURAL PRODUCERS, INC., LA UNION AGRICULTURAL
DEVELOPMENT CORP., UNITED SAN ILDEFONSO VTG ASSOCIATION, INC., ASINGAN FACOMA, INC., and A
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 W
los Angeles of the Court of First Instance of Rizal Branch IV, Quezon City, arose from a fire that destroyed the redryin
petitioner Philippine Virginia Tobacco Administration, hereinafter referred to as the PVTA, at Agoo, La Union, as a res
private respondents   suffered losses arising from the sale and delivery of tobacco to Central Cooperative Exchange,
1
subsequently referred to as the CCE, the authorized agent of petitioner. It was named defendant in the lower court bu
party to this appeal. The decisive point at issue is thus the liability of petitioner for the damage incurred by private res
The lower court, according to the facts as found by respondent Judge, entitled to respect by this Tribunal only a ques
being properly before it,   decided the case in favor of private respondents. The affirmance of the decision, as will be
2

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 p
allege that they are private corporations; that they were recognized by the defendants as trading entities of the defen
Philippine Virginia Tobacco Administration (PVTA) in connection with the trading and buying of locally grown Virginia
1963; that pursuant to Section 4 of Republic Act No. 2265, under which the defendant PVTA has the power and duty
supervise and control all functions and operations with respect, among other things, to the trading of Virginia tobacco
locally grown Virginia tobacco, the PVTA entered into a management contract with its co-defendant Central Cooperat
Exchange, Inc. (CCE); that under this contract, the CCE obligated itself to procure, redry and service Virginia tobacco
PVTA and to advance the payment of tobacco to the trading entities at the government price support plus transportat
overhead and other specified expenses; that on various dates in 1963, the plaintiffs delivered to the PVTA through th
the latter's redrying plant at Agoo, La Union, certain quantities of tobacco under particular BIR Guias; that the shipme
those enumerated in Annex 'B' of the second amended complaint (some of which however were later dropped upon p
motion); that the payment of these tobacco shipments was refused by defendants without reason; hence this suit. Th
pray for the value of their respective shipment plus legal interests computed 48 hours from date of acceptance thereo
damages, attorney's fees, and the costs."   After noting that the defendants, now petitioners, filed their answer contain
3

denials and special defenses, it went on thus: "In its answer the defendant PVTA alleged that the shipments were no
by it and the CCE; that if they were accepted, they were not properly accounted for by the CCE and 'were in fact repo
in the fire that razed down the plant on or about July 24, 1963, brought about by the carelessness and negligence of
defendant CCE.' It alleged a counterclaim against plaintiffs Allied Tobacco Planters, Inc. and San Juan Planters, Inc.
balances in the respective amounts of P14,162.47 and P 2,683.38 of their merchandizing loans from the PVTA. It als
cross-claim against the CCE to the effect that the latter should be held liable to pay whatever amount the PVTA may
plaintiffs. On its part, defendant CCE alleged the special defense that it only acted as agent of the PVTA in the transa
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 ad
the answers of the defendants, and in their answers to plaintiffs' request for admission, they admitted that the plaintiff
recognized in 1963 as trading entities of the PVTA. They also admitted their management contract in 1963 for procur
and servicing, they also admitted that the 1963 tobacco trading started in April 1963, and that on July 24, 1963, a fire
the redrying plant of the CCE, destroying tobacco shipments therein of various trading entities and that this fact was r
the PVTA. Under the aforesaid management contract, the CCE was given by the PVTA an allocation of a million kilos
tobacco to procure, redry, store and service for the PVTA. The CCE was supposed to advance payment of the shipm
hours from acceptance, but from the evidence in this case it appears that actually the payments were made by the PV
evidently in order to control disbursements more effectively. The PVTA had rules and regulations, among them Circu
to govern the tobacco trading operations. It assigned men to the provinces to supervise these operations and enforce
observance of these rules and regulations."   Plaintiffs in the lower court, now respondents, through their officers, "tes
5

after the fire and even in the next following years, they made demands for the payment of their shipments but these d
were ignored. Mention should be made of the testimony of Constante Somera who in 1963, besides being the manag
plaintiff Tagudin Facoma, was President of the National Federation of Facoma's, Vice-President of the Ilocos Sur Fed
Facoma's, and a member of the Board of Directors of defendant CCE. He testified that in about five occasions, office
plaintiffs went to him for assistance in the collection of their claims, and he headed delegations to the defendants and
PVTA Chairman Balmaceda and PVTA General Manager Bananal but that the latter gave all sorts of excuses such a
of further study of the matter and the lack of money. So after many attempts proved futile, Somera advised his collea
they go to court. As already stated, the PVTA had men in the field to implement its rules and regulations, who were h
the PVTA provincial tobacco agents. During the trading in 1963, these agents were Jose Singson, Antonio Florendo,
Torrijos, Jorge Peneras, Manuel Festejo and Alfredo Cajigal. The plaintiffs presented Bernardo Navarrette, the head
Services Department of the PVTA, and he Identified the signatures and initials of the said PVTA provincial tobacco a
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 th
satisfactory proof that the plaintiffs delivered the tobacco shipments in question to the defendants at the CCE redrying
1963, and that the same were unloaded and awaiting inspection and grading when they were burned on July 24, 196
matter of fact, these facts were testified to by no less than the CCE Trading Officer at the plant, Benjamin Bello, whos
was to exercise general supervision over the receiving and storage of Virginia tobacco in the CCE redrying plant in a
with the PVTA regulations and procedures. Among other things, he declared that he prepared periodic lists of shipme
scheduled or unloaded for inspection in order for the CCE plant to know the expected volume of tobacco to be redrie
serviced, and he Identified the last lists, those dated July, 17 and 22, 1963, which indeed include the shipments in qu
Romeo Ballesil, PVTA Tobacco Plant Manager in the CCE who testified for the PVTA, in effect confirmed this when h
there were several inventories made after he assumed the position on July 12, 1963. He also confirmed the fact, as t
Bello, that there were many shipments in the CCE receiving ramps and bays which were authorized to be unloaded a
inspection when the plant was destroyed by fire on July 24, 1963; there were in fact piles of tobacco up almost to the
some places, and there were piles even in the corridors of the receiving ramps."   There were "separate certifications
7

to the effect that according to the records of the redrying plant, the plaintiffs had specified quantities of tobacco under
Guias ready for inspection and grading at the receiving ramps before July 24, 1963. These certifications are exhibits
case." 8

Then came a detailed appraisal of the evidence by the lower court: "From the evidence, it appears that, pursuant to it
and duties under Republic Act No. 2265, the PVTA issued rules and regulations,in respect to its tobacco trading oper
assigned men to its recognized trading entities among them the plaintiffs, to see that these rules and regulations wer
The entities even had to apply with the PVTA and were screened before PVTA accepted them as its trading entities.
by the witnesses of the PVTA, notably Ballesil and Millan these PVTA men supervised the grading, weighing, baling o
and other activities in the buying station of the trading entities to which they were assigned. These PVTA men, Identif
Ballesil as PVTA Field Inspectors, signed the documents covering tobacco, such as the pre-sales invoices showing n
farmer sellers, the quantity and grade of tobacco received from these farmers; the abstracts of tobacco purchased; th
progressive stock and shipment control form showing the status of stocks after each shipment to the PVTA; the comm
waybill and other documents pertaining to shipments. They saw to it that the tobacco was properly graded and in fact
tobacco inspector saw to it that the tobacco was classified according to the standards provided by the PVTA. They al
that the tobacco was properly weighed and baled, and loaded on trucks for transhipment duly sealed. They saw to it
shipping documents were complete and in order. These obviously are not the usual acts of an ordinary buyer of a com
Among the shipping documents may be mentioned PVTA Form 30, entitled Request for Tobacco Clearance, address
PVTA Provincial Tobacco Agent. According to the defendant's answers to plaintiffs' request for admission, it was the
this PVTA agent to process the said request and the supporting documents before giving him clearances to the shipm
recommending its acceptance. It was he alone who could decide to what redrying plant the shipment should be sent.
indicates the extensive intervention of the PVTA in the buying and shipping activities at the level of the trading entities
made, the clearance given by the PVTA provincial tobacco agent was an indication that the required shipping docum
complete and in order and that the shipment; was strictly in accordance with the PVTA regulations. Upon arrival of th
at the redrying plant designated by the PVTA, the shipping documents were delivered to the PVTA traffic officer there
processed. The shipment was then given by the PVTA a gate pass, ' an unloading permit, and a priority slip stating th
would be unloaded and graded in the plant. The presence of the shipment is actually verified by the PVTA Plant Man
shipment could not be brought inside the plant and unloaded at the receiving ramps without prior authority of the PVT
inside the plant, it could no longer be withdrawn without proper application by the entity concerned addressed to the P
general manager. It is thus clear that the PVTA had virtual control over the shipments after they had left the hands of
entities. It is also clear that the PVTA, in the implementation of its contract with the CCE, did not delegate to the latter
powers and duties under the law to buy Virginia tobacco. In fact Bello testified that PVTA controlled, directed and sup
CCE in the performance by the latter of all activities in the tobacco trading operations in 1963."   Further on this point:
9

stated, the plaintiffs' shipments had long been in the CCE ramps waiting to be inspected when they were burned. Acc
Ballesil, PVTA Tobacco Plant Manager assigned to the CCE, there was only redrying of tobacco from July 13 until the
occurred; there was no inspection or acceptance of tobacco shipments. Inspection of shipments was suspended; and
as the reason the alleged lack of space in the transit area where inspected tobacco would be stored to await redrying
as a result of delays and suspensions of operations, there arose a backlog of shipments waiting to be inspected at th
ramps. But there is no explanation why, considering these suspensions, the PVTA kept on authorizing the unloading
shipments which were not being inspected fast enough. It is also significant that the PVTA states in its answer that th
redrying plant and facilities 'caught fire and burned down due and owing to its (CCE) carelessness or negligence or it
and employees;' and the PVTA accuses these officials and employees with being 'grossly and inexcusably careless a
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 respondent
prevail: "In the light of the foregoing, the denial of liability on the part of the defendant PVTA cannot be sustained. It h
control of the shipments even at the plaintiffs' stations and specially after they had been cleared and sent to the CCE
unloaded for inspection at the CCE ramps. It is reasonable to say that these shipments, pursuant to the scheduling a
established by the defendants themselves, should have been inspected before July 24, 1963 since they were shippe
CCE as early as May and June 23, 1963, as shown in the shipping documents. But they were not inspected early eno
this evidently because of delays and suspension of operations in the CCE plant. This Court wonders whether the cau
delays and suspensions could have been avoided Or ed by the defendants considering that the trading operations st
early as April 1963, indicating that they had had enough experience and know- how to enable them to cope with the s
Moreover, there is the allegation of the PVTA, which may be considered as an admission against interest vis-a-vis the
the plaintiffs, to the effect that its own agent and contractor, the CCE, was careless and negligent in causing the fire a
Preventing and arresting the spread of the fire. When an the fault clearly lies with the defendants, it would be the heig
injustice to deny the plaintiffs' claims. Their shipments which had long been in the ramps for inspection were not insp
time and the delay is traceable to the fault of the defendants, whereas the plaintiffs themselves had done everything
required of them by the PVTA regulations in order to have their tobacco inspected and paid for. The value of the toba
incidentally, stated in the shipping documents. This Court believes that the PVTA already had the legal control and cu
said shipments and that it should be considered as having accepted them as of the fire and therefore should bear the

Judgment was, therefore, rendered by the lower court ordering PVTA to pay to the plaintiffs the amount of their respe
claims, as follows: ... Eastern Vigan VTPA Inc., Guia No. 38-P26,936.68; San Nicolas Facoma, Inc., Guia No. 76-P21
Ilocos Sur Tobacco Industries Corp., Guia No. 109-P15,922.08; Tagudin Facoma, Inc., Guia No. 445-P27,743.56; Ta
Facoma, Inc., Guia No. 450-P27,284.84; Tagudin Facoma, Inc., Guia No. 439-P23.669.44; Tagudin Facoma, Inc., Gu
P43,725.64; San Juan Tobacco Planters. Inc., Guia No. 30-P28,351.19; Sta. Monica Tobacco Planters Assn., Inc., G
P29,677.59; Sta. Monica Tobacco Planters Assn. Inc., Guia No. 18-P30,980.31; Norfex- Villaviciosa, Guia No. 653-P
Norfex-Villaviciosa, Guia No. 661-P19,074.79; Boundary VTPA Guia No. 20-P28,494.10; Boundary VTPA Guia No. 2
10; Boundary VTPA Guia No. 25-P33,998.74; Luzon Producers Corporation, Guia No. 2-P18,978.51; Central Relianc
Farmers Corp., Guia No. 12-P12,150.00; Lidlidda VTPA Inc., Guia No. 42-P21,444.17; Lidlidda VTPA Inc., Guia No.
P22,590.00; Filipino Agricultural Producers Inc., Guia No. 21-P23,851.00; Allied Tobacco Planters, Inc., Guia No. 36-
Allied Tobacco Planters, Inc., Guia No. 38-P30,165.00; Allied Tobacco Planters, Inc., Guia No. 40-P33,966.00; La Un
Development Corp., Guia No. 13- P27,475.00; Asingan Facoma, Inc., Guia No. 183-P36.000.00 United San Ildefonso
Assn., Inc., Guia No. 8-P31,750.00 with legal interest thereon from August 1, 1963 until fully paid; plus the sum equiv
10% of the total amount based on the principal obligation as and by way of attorneys fees, and the costs of suit. The
of the PVTA against the CCE is hereby dismissed. The plaintiff Allied Tobacco Planters, Inc. is ordered to pay to 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 redryin
petitioner agent, the CCE. It was also found by it that the PVTA directed supervised and controlled the CCE in receiv
shipments of tobacco and in the performance of its activities, and that the tobacco, once received from the trading en
under its control, not subject to withdrawal without its authority. The procedure was so carefully designed that the sup
it could be rendered most effective. Thus any attempt to exculpate itself thereafter on alleged deficiencies could succ
the evidence offered by petitioner were of such a nature as to justify evasion of what is required by law no less than b
Clearly Proof of such character was lacking in this case. Hence the way the decision turned. It had to be- adverse to
pretension. As a matter of fact, in the brief of petitioner, the Solicitor General made the following admission: "It may b
for purposes of this appeal, that plaintiffs brought the tobacco shipments in question to the CCE redrying plant at Ago
in 1963, to be sold to the PVTA, thru CCE, and that the same were unloaded and awaiting inspection, grading and w
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 liabi
most, as with some debtors, the delay in payment was sought to be justified for the need for further study or the lack
As put by the trial court, "the aforesaid officers also testified that after the fire and even in the next following years, the
demands for the payment of their shipments but these demands were ignored. Mention should be made of the testim
Constants Somera who in 1963, besides being the manager of plantiff Tagudin Facoma, was President of the Nation
Federation of Facoma's, Vice-President of the Ilocos Federation of Facoma's, and a member of the Board of Director
defendant CCE. He testified that in about five occasions, officers of all the plaintiffs went to him for assistance in the c
their claims, and he headed delegations to the defendants and notably to PVTA Chairman Balmaceda and PVTA Ge
Manager Bananal, but that the latter gave all sorts of excuses such as the need of further study of the matter and the
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 d
this petition for review, the PVTA would assail the judgment reached on the allegation that the contract of sale was no
Such an assertion, on the face of the facts as found, would appear to be clearly untenable. Nonetheless, it was sough
plausibility in the eight-page brief of petitioner by the argument that the shipments of the tobacco in question "were st
inspected, graded and weighed."   Such a contention certainly cannot suffice to overturn the decision. For one thing,
15

issue of fact, the ruling on which, as could be expected, was adverse to petitioners. For its own fieldmen had the resp
such tobacco being graded, weighed, baled and loaded on trucks duly sealed for transportation to its redrying plant. T
responsibility was fulfilled as found by the trial court. The grading was done according to the standards on samples p
petitioner. The shipping documents were in order. The weight and grades of such tobacco were certified by such field
thereafter processed by its provincial tobacco agent. It was only then that clearance was given, the PVTA requiremen
been met. The futility of the effort to deny the perfection of the contract of sale is thus rather apparent. So it has been
v. Tambunting,   a 1902 decision. All that was required was that there be an agreement on the thing which is the sub
16

contract and upon the price. So it was provided by Article 1450 of the Civil Code of Spain of 1889 then in force. There
difference in phraseology but not in meaning under the present-Civil Code: "The contract of sale is perfected at the m
is a meeting of minds upon the thing which is the object of the contract and upon the price."   It remains to be noted t 17

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 persuasivene
contention that the contract was not perfected because of an alleged technical defect. Smith Bell and Company v.
Jimenez,   decided in 1963, comes to mind. In that case, there was a delivery by petitioner of a typewriter upon requi
19

Municipality of Paniqui, Tarlac, but ten days thereafter, the municipal building was totally razed by a fire. Notwithstand
that the Municipal Treasurer, as well as the Provincial Treasurer of Tarlac recommended payment, respondent Audito
disapproved the claim on the ground that the article in question was never presented for inspection and verification, J
Barrera, speaking for the Court, after noting that there was indeed such delivery, stated that even on the assumption
not all the terms of the contract as to inspection were fully complied with, "yet upon the facts obtaining in this case, w
that injustice would be done the petitioner if we apply said principle to the present claim ." 20 He stressed both "the law and equ
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 he
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 del
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 pe
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 agree
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
now.

5. It is understandable for petitioner as custodian of public lands to see to it that only valid and legitimate claims shou
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
for the view that no failure in the performance of public duty could be imputed to any official if on the tacts as found, t
the required delivery and there being no question yet as to the fire having been the cause of loss, the payments could
made after its investigation. Only thus, to follow the Smith Bell decision, would there be an avoidance of injustice and
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 b
occured.

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

Antonio, J., took no part.

CERTIFICATION

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

FRED RUIZ CASTRO

Chief Justice

Separate Opinions

AQUINO, J., dissenting:

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

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

At the time the tobacco was burned, the ownership thereof had not yet passed to the PVTA. The tobacco was still ow
sixteen plaintiffs or sellers. The CCE was merely an agent of the PVTA. Even as agent, it had not yet accepted delive
tobacco before it was lost during the fire. There was no acceptance of delivery because the tobacco, at the time it wa
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 bet
PVTA and the CCE, provides that the CCE's responsibility, as agent of the PVTA, begins from the moment the tobac
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
thereof, the loss should be borne by them, not by the PVTA. Res perit domino. Hence, the PVTA was not obligated to
tobacco (Roman vs. Grimalt, 6 Phil. 96; Yu Tek & Co. vs. Gonzalez, 29 Phil. 384). Plaintiffs' cause of action was reall
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 pa
the tobacco delivered to the CCE (par. 2). The PVTA would then reimburse the CCE for its advances (par. 22). No su
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 gr
they were burned on July 24, 1963", that the tobacco shipments of twenty-four trading entities were not entered in the
or ledgers because they had not yet been inspected nor were their values computed before they were burned, and th
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 judg
be reversed:

At the hearing (the reception of evidence was delegated to a commissioner named by the court) the d
and testimonial evidence adduced by plaintiffs failed to show that the shipments of tobacco were duly
weighed and graded by the PVTA or its authorized representative, before the fire that gutted the prem
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
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 wa
and on the part of petitioner Assistant Government Corporate Counsel Romualdo Valera wrote in his
handwriting and under his sole signature, at the reverse side of the order that he had no objection to t
Commissioner's Report, even though said counsel had absolutely nothing to do with this case as he w
one assigned to handle the case, but on December 29, 1970, the lower court rendered decision ruling
tobaccos in question were deemed delivered to petitioner PVTA, and, therefore, PVTA is liable to pay
value of the said tobaccos shipped to the CCE redrying plant at Agoo, La Union, even though they ha
weighed and graded, and that the PVTA should bear the loss when the tobaccos were burned before
inspection, grading and weighing.

xxx xxx xxx

It may be conceded, for purposes of this appeal, that plaintiffs brought the tobacco shipments in ques
CCE redrying plant at Agoo, La Union, in 1963, to be sold to the PVTA, thru the CCE and that the sam
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 th
tobacco shipments were still to be inspected, graded, and weighed to determine the class and compe
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
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 de
him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreem
possession is transferred from the vendor to the vendee (Art, 1496, Civil Code). The thing sold shall b
understood as delivered when it is placed in the control and possession of the vendee (Art. 1497, Civ

The contract of sale is perfected at the moment there is a meeting of minds upon the thing Which is th
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 C
redrying plant at Agoo, La Union, for sale to the PVTA, there was meeting of the mind to perfect the s
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
several stages, the last of which was the grading and weighing at the ramps after the tobaccos were '
(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
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, rece
accepted from the trading entities and the same has been properly graded and weighed; (par. 9, Anne
second amended complaint, Annex B, Petition).

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

Consequently, the PVTA cannot be liable to pay for the burned tobaccos never legally deemed delive
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
inspected, graded, and weighed, are considered not delivered and sold, in legal contemplation, until a
and weighing where the 'meeting of minds' takes place because the price or consideration is determin
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 p
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
which were burned before actual or constructive delivery and acceptance thereof by petitioner, as ind
evidence of delivery is sorely wanting (Santiago PVTA. et al. vs. PVTA, L-26292, February 18, 1970,
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
(plaintiffs below) the total sum of P1,036,717.09, plus legal rate of interest from August 1, 1963 and 10% of the princi
obligation as attorney's fees.

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

At the time the tobacco was burned, the ownership thereof had not yet passed to the PVTA. The tobacco was still ow
sixteen plaintiffs or sellers. The CCE was merely an agent of the PVTA. Even as agent, it had not yet accepted delive
tobacco before it was lost during the fire. There was no acceptance of delivery because the tobacco, at the time it wa
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 bet
PVTA and the CCE, provides that the CCE's responsibility, as agent of the PVTA, begins from the moment the tobac
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
thereof, the loss should be borne by them, not by the PVTA. Res perit domino. Hence, the PVTA was not obligated to
tobacco (Roman vs. Grimalt, 6 Phil. 96; Yu Tek & Co. vs. Gonzalez, 29 Phil. 384). Plaintiffs' cause of action was reall
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 pa
the tobacco delivered to the CCE (par. 2). The PVTA would then reimburse the CCE for its advances (par. 22). No su
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 gr
they were burned on July 24, 1963", that the tobacco shipments of twenty-four trading entities were not entered in the
or ledgers because they had not yet been inspected nor were their values computed before they were burned, and th
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 judg
be reversed:

At the hearing (the reception of evidence was delegated to a commissioner named by the court) the d
and testimonial evidence adduced by plaintiffs failed to show that the shipments of tobacco were duly
weighed and graded by the PVTA or its authorized representative, before the fire that gutted the prem
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
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 wa
and on the part of petitioner Assistant Government Corporate Counsel Romualdo Valera wrote in his
handwriting and under his sole signature, at the reverse side of the order that he had no objection to t
Commissioner's Report, even though said counsel had absolutely nothing to do with this case as he w
one assigned to handle the case, but on December 29, 1970, the lower court rendered decision ruling
tobaccos in question were deemed delivered to petitioner PVTA, and, therefore, PVTA is liable to pay
value of the said tobaccos shipped to the CCE redrying plant at Agoo, La Union, even though they ha
weighed and graded, and that the PVTA should bear the loss when the tobaccos were burned before
inspection, grading and weighing.

xxx xxx xxx

It may be conceded, for purposes of this appeal, that plaintiffs brought the tobacco shipments in ques
CCE redrying plant at Agoo, La Union, in 1963, to be sold to the PVTA, thru the CCE and that the sam
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 th
tobacco shipments were still to be inspected, graded, and weighed to determine the class and compe
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
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 de
him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreem
possession is transferred from the vendor to the vendee (Art, 1496, Civil Code). The thing sold shall b
understood as delivered when it is placed in the control and possession of the vendee (Art. 1497, Civ

The contract of sale is perfected at the moment there is a meeting of minds upon the thing Which is th
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 C
redrying plant at Agoo, La Union, for sale to the PVTA, there was meeting of the mind to perfect the s
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
several stages, the last of which was the grading and weighing at the ramps after the tobaccos were '
(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
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, rece
accepted from the trading entities and the same has been properly graded and weighed; (par. 9, Anne
second amended complaint, Annex B, Petition).

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

Consequently, the PVTA cannot be liable to pay for the burned tobaccos never legally deemed delive
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
 inspected, graded, and weighed, are considered not delivered and sold, in legal contemplation, until a
and weighing where the 'meeting of minds' takes place because the price or consideration is determin
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 p
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
which were burned before actual or constructive delivery and acceptance thereof by petitioner, as ind
evidence of delivery is sorely wanting (Santiago PVTA. et al. vs. PVTA, L-26292, February 18, 1970,
528).

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

Footnotes

1 The private respondents are the Eastern Vigan VTPA, Inc., San Nicolas Facoma, Inc., Ilocos Sur To
Industries Corp., Tagudin Facoma, Inc., San Juan Tobacco Planters, Inc., Sta. Monica Tobacco Plant
Norfex-Villaviciosa, Boundary VTPA, Badoc Tobacco Planters, Inc., Luzon Producers Corp., Balaoan
Inc., Bangued Norfex, Bangued Tobacco Prod. Assn., Aringay Facoma, Inc., Southwestern San Quin
Planters, Inc., Bangued Facoma, Inc., Central Reliance Tobacco Farmers Corp., Lidlidda VTPA, Inc.,
Agricultural Producers, Inc., La Union Agricultural Development Corp., United San Ildefonso VTG Ass
Inc.. Asingan Facoma, Inc., and Allied Tobacco Planters. Inc.

2 Two of the most recent cases as to a review by direct appeal to this Tribunal foreclosing review of fa
by the lower court are Demasiado v. Velasco, L-27844, May 10, 1976, 71 SCRA 105, per Justice Bar
Arguelles v. Timbancaya, L-29052, July 30, 1976, 72 SCRA 193, per Justice Antonio.

3 Decision, Annex A to Petition, 1.

4 Ibid, 1-2.

6 Ibid, 2-3.

6 Ibid, 3-4.

7 Ibid. 4.

8 Ibid, 5.

9 Ibid, 6.7.

10 Ibid, 7-8.

11 Ibid, 8.

12 Ibid, 11-12.
 13 Brief for Petitioner, 5.

14 Decision, Annex A to Petition, 34.

15 Brief for Petitioner, 5.

16 1 Phil. 490.

17 Article 1475 of the Civil Code. Its second paragraph of Article 1475 reads as follows: "From that m
parties may reciprocally demand performance, subject to the provisions of the law governing the form
contracts."

18 Cf. Barretto v. Santa Marina, 26 Phil. 200 (1913); Cruzado v. Bustos and Escaler, 34 Phil. 17 (191
Perez and Co. v. International Banking Corp., 37 Phil. 631 (1918); Warner, Barnes and Co. v. Inza, 43
(1922); Earnshaw Docks v. Collector of Internal Revenue, 54 Phil. 696 (1930); Chua Ngo v. Universa
Co., Inc., 87 Phil. 331 (1950); Soriano v. Latono, 87 Phil. 757 (1950).

19 118 Phil. 417.

20 Ibid, 423.

21 Ibid, 424.

22 L-24069, June 28, 1968, 23 SCRA 1217.

23 L-21436, August 18, 1972, 46 SCRA 305.

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Philippine Supreme Court Jurisprudence > Year 1978 > December 1978 Decisions >
G.R. No. L-45966 December 14, 1978 - PEOPLE OF THE PHIL. v. MARIO A.
MARIANO:

EN BANC

[G.R. No. L-45966. December 14, 1978.]

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, v. MARIO MARIANO Y

ALEJANDRO alias Negro, Defendant-Appellant.

SYNOPSIS

Upon being arraigned and after due information was translated to Tagalog, a
language he understood, the accused assisted by counsel de oficio, manifested
spontaneously his desire to enter a plea of guilty to the offense of rape and
homicide despite the warning of the trial judge that the imposable penalty is death.
Considering the gravity of the offense charged, the trial court set the case for
hearing. During the hearing the accused was assisted by his counsel de parte. The
prosecution presented several witnesses. Again, the lower court took pains in
explaining to the accused in simple words the precise nature of the crime charged.
He still insisted in pleading guilty. The trial court concluded from the evidence that
the accused really committed the offense charged and sentenced him to death and
to indemnify the heirs of the victims.

On automatic review, the Supreme Court noted that independent of the plea of
guilty of the accused, there is sufficient evidence to convict the accused-appellant
 beyond reasonable doubt.

Judgment affirmed.

SYLLABUS

1. CRIMINAL PROCEDURE; PLEA OF GUILTY; REGULARITY OF PROCEEDINGS. —

Where it appears that after the information was read to the accused in Tagalog, a
language which he understands and after the trial court took pains in explaining in
simple words to the accused the precise nature of the crime charged (rape with
homicide) and the effect of his plea of guilty, the accused, then assisted by a
counsel de oficio, entered a plea of guilty; and where it appears furthermore that
when accused was arraigned for the second time, during which he was assisted by
a counsel of his choice, and in spite of the efforts of the trial judge again to explain
the nature of the charges and the effect of a plea of guilty, the accused reiterated
his plea of guilty to the crime charged, it cannot be said that he was sentenced to
death on an improvident plea.

2. CRIMINAL LAW; RAPE WITH HOMICIDE; DEFENSES. — The testimony of the

accused that he was prompted to rape the victim because he was not in his right
senses inasmuch as he was an addict is no defense at all. Drug addiction is
punishable by law. Nobody should profit therefrom.

3. ID.; EVIDENCE; PROOF BEYOND REASONABLE DOUBT. — The accused was

properly convicted of the crime of homicide with rape and sentenced to death.
where independent of his plea of guilty, there is sufficient evidence to convict him
beyond reasonable doubt. He executed an extra-judicial confession the regularity of
which was never assailed. The extra-judicial confession shows that he gave
coherent answer to the question propounded to him. Moreover, the accused re-
enacted the commission of the crime, he could not have recalled the events that
transpired if he was not in his right senses when he committed the crime.

4. ID.; RESPONSIBILITY OF ACCUSED FOR THE CONSEQUENCES OF HIS ACT. —

Where the death of the victim was brought about the by the rape committed by the
accused, it was no moment that he did not intend to kill her. A person who
performs a criminal act is responsible for all consequences of said act regardless of
his intention.

5. ID.; EVIDENCE; EXTRA-JUDICIAL CONFESSION; CORPUS DELICTI. — An extra-

judicial confession fully corroborated by proof of corpus delicti is sufficient to
support conviction.

Makasiar, J., concurring: chanrob1es virtual 1aw library

1. CRIMINAL LAW; MITIGATING CIRCUMSTANCE; LACK OF INTENT TO COMMIT AS

GRAVE A WRONG AS THAT COMMITTED AND ILLNESS WHICH DIMINISHES WILL
POWER. — In the crime of rape with homicide where the accused’s statement after
pleading guilty, that the 6-year old victim died by accident as she hit her head on
the pavement while struggling and that he was not in his right senses because he is
an addict, is not disputed nor contradicted by any evidence, the mitigating
circumstances of lack of intent to commit so grave a wrong as that committed and
illness of the offender which diminishes the exercise of all power may be considered
to warrant a commutation of the sentence by the Chief Executive.

2. ID.; ID.; DRUG. — Our criminal law jurisprudence recognizes that a drug, like
opium, is pernicious and dangerous to a degree in its effect, mental, moral and
physical, upon the individual addicted thereto. . . . Its usual concomitants are
imbecility, pauperism and crime." Opium or any other drug is dangerous, because
"the weak and unwary, unless prevented, may use it to their physical and mental
ruin. . . . indulgence in this unwholesome, disgusting and degrading habit generates
diseases, pauperism and crime. The usual concomitants are degeneration, neglect
of appearance, of family and of duty, abject poverty and criminal propensities."
American jurisprudence regards criminal responsibility where an act in committed
under the influence of drugs the same as when it is committed under the influence
of intoxicating liquor. In some cases, it may lead to acquittal, akin to the exempting
circumstances of compulsion of an irresistible force under paragraph 5 of Article 12
of the Revised Penal Code.
 3. ID.; ID.; COMMUTATION OF SENTENCE. — While under Article 335 of the
Revised Penal Code, as amended, the death penalty for rape with homicide is
mandatory, regardless of the presence of mitigating circumstances, the unusual or
abnormal predicament of the accused who is a drug addict, however, may justify
the interposition of the executive benign prerogative of mercy to commute the
sentence from death to life imprisonment. He can still be rehabilitated and
ultimately rescued from addiction. The fault does not live entirely with the accused
where he is a victim of his own poverty as well as the failure of the government to
completely eliminate all drug pushers and peddlers to effectively control the
smuggling and marketing of narcotics or prohibited drugs.

RESOLUTION

PER CURIAM:

It appearing that the accused has died and this case has been dismissed in so far as
the criminal liability of the accused is concerned, with justice Barredo voting for the
unqualified dismissal thereof, the dispositive part of the decision is modified to read
as follows: jgc:chanrobles.com.ph

"WHEREFORE, the decision appealed from is hereby affirmed with the elimination of
the death penalty imposed. The heirs of the victim, Luningning Mapola y Diwata,
are entitled to recover from the estate of the accused, Mario Mariano y Alejandro
alias Negro, the sum of Twelve Thousand Pesos (P12,000.00) for the death of the
victim and the sum of Eight Thousand Pesos (P8,000.00) as moral damages.

SO ORDERED." cralaw virtua1aw library

Castro, C.J., Fernando, Teehankee, Barredo, Makasiar, Antonio, Concepcion Jr.,

Santos, Fernandez and Guerrero, JJ., concur.
 Separate Opinions

AQUINO, J., concurring: chanrob1es virtual 1aw library

Appellant’s civil liability was not extinguished by his death on July 2, 1978 or during
the pendency of his appeal (People v. Sendaydiego, 81 SCRA 120; Concurring
opinion in People v. Satorre, 72 SCRA 439, 441).

4.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-14475             May 30, 1961

SOUTHERN MOTORS, INC., plaintiff-appellee,

vs.
ANGELO MOSCOSO, defendant-appellant.

Diosdado Garingalao for plaintiff-appellee.

Calixto Zaldivar for defendant-appellant.

PAREDES, J.:

The case was submitted on agreed statement of facts.

On June 6, 1957, plaintiff-appellee Southern Motors, Inc. sold to defendant-appellant Angel Moscoso one Chevrolet t
installment basis, for P6,445.00. Upon making a down payment, the defendant executed a promissory note for the su
P4,915.00, representing the unpaid balance of the purchase price (Annex A, complaint), to secure the payment of wh
chattel mortgage was constituted on the truck in favor of the plaintiff (Annex B). Of said account of P4,915.00, the def
paid a total of P550.00, of which P110.00 was applied to the interest up to August 15, 1957, and P400.00 to the princ
leaving an unpaid balance of P4,475.00. The defendant failed to pay 3 installments on the balance of the purchase p

On November 4, 1957, the plaintiff filed a complaint against the defendant, to recover the unpaid balance of the prom
Upon plaintiff's petition, embodied in the complaint, a writ of attachment was issued by the lower court on the propert
defendant. Pursuant thereto, the said Chevrolet truck, and a house and lot belonging to defendant, were attached by
of San Jose, Antique, where defendant was residing on November 25, 1957, and said truck was brought to the plaint
compound in Iloilo City, for safe keeping.

After attachment and before the trial of the case on the merits, acting upon the plaintiff's motion dated December 23,
the immediate sale of the mortgaged truck, the Provincial Sheriff of Iloilo on January 2, 1958, sold the truck at public
which plaintiff itself was the only bidder for P1,000.00. The case had not been set for hearing, then.

The trial court on March 27, 1958, condemned the defendant to pay the plaintiff the amount of P4,475.00 with interes
of 12% per annum from August 16, 1957, until fully paid, plus 10% thereof as attorneys fees and costs against which
interposed the present appeal, contending that the trial court erred —

(1) In not finding that the attachment caused to be levied on the truck and its immediate sale at public auction
tantamount to the foreclosure of the chattel mortgage on said truck; and

(2) In rendering judgment in favor of the plaintiff-appellee.

Both parties agreed that the case is governed by Article 1484 of the new Civil Case, which provides: —

ART. 1484. In a contract of sale of personal property the price of which is payable in installments, the vendor
exercise any of the following remedies:

(1) Exact fulfillment of the obligation, should the vendee fail to pay; .

(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;

(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should the vendee's failure
two or more installments. In this case, he shall have no further action against the purchaser to recover any un
balance of the price. Any agreement to the contrary shall be void.

While the appellee claims that in filing the complaint, demanding payment of the unpaid balance of the purchase pric
availed of the first remedy provided in said article i.e. to exact fulfillment of the obligation (specific performance); the a
the other hand, contends that appellee had availed itself of the third remedy viz, the foreclosure of the chattel mortga
truck.

The appellant argues that considering history of the law, the circumstances leading to its enactment, the evil that the
intended to correct and the remedy afforded (Art. 1454-A of the old Civil Code; Act No. 4122; Bachrach Motor Co. vs
Phil. 461, 466-469); that the appellee did not content itself by waiting for the judgment on the complaint and then exe
judgment which might be rendered in its favor, against the properties of the appellant; that the appellee obtained a pr
attachment on the subject of the chattel mortgage itself and caused said truck to be sold at public auction petition, in
was bidder for P1,000.00; the result of which, was similar to what would have happened, had it foreclosed the mortga
to the provisions of Sec. 14 of Act No. 1508 (Chattel Mortgage Law) the said appellee had availed itself of the third re
aforequoted. In other words, appellant submits that the matter should be looked at, not by the allegations in the comp
the very effect and result of the procedural steps taken and that appellee tried to camouflage its acts by filing a comp
purportedly to exact the fulfillment of an obligation petition, in an attempt to circumvent the provisions of Article 1484
Civil Code. Appellant concludes that under his theory, a deficiency judgment would be without legal basis.

We do not share the views of the appellant on this matter. Manifestly, the appellee had chosen the first remedy. The
an ordinary civil action for recovery of the remaining unpaid balance due on the promissory note. The plaintiff had no
the procedure or methods outlined by Sec. 14 of the Chattel Mortgage Law but those prescribed for ordinary civil acti
the Rules of Court. Had appellee elected the foreclosure, it would not have instituted this case in court; it would not h
the chattel to be attached under Rule 59, and had it sold at public auction, in the manner prescribed by Rule 39. That
appellee did not intend to foreclose the mortgage truck, is further evinced by the fact that it had also attached the hou
of the appellant at San Jose, Antique. In the case of Southern Motors, Inc. vs. Magbanua, G.R. No. L-8578, Oct. 29,
held:

By praying that the defendant be ordered to pay it the sum of P4,690.00 together with the stipulated interest o
annum from 17 March 1954 until fully paid, plus 10% of the total amount due as attorney's fees and cost of co
plaintiff elected to exact the fulfillment of the obligation, and not to foreclose the mortgage on the truck. Other
would not have gone to court to collect the amount as prayed for in the complaint. Had it elected to foreclose
mortgage on the truck, all the plaintiff had to do was to cause the truck to be sold at public auction pursuant to
of the Chattel Mortgage Law. The fact that aside from the mortgaged truck, another Chevrolet truck and two p
land belonging to the defendant were attached, shows that the plaintiff did not intend to foreclose the mortgag

As the plaintiff has chosen to exact the fulfillment of the defendant's obligation, the former may enforce execu
judgment rendered in its favor on the personal and real property of the latter not exempt from execution suffic
satisfy the judgment. That part of the judgment against the properties of the defendant except the mortgaged
discharging the writ of attachment on his other properties is erroneous.

We perceive nothing unlawful or irregular in appellee's act of attaching the mortgaged truck itself. Since herein appell
chosen to exact the fulfillment of the appellant's obligation, it may enforce execution of the judgment that may be favo
rendered hereon, on all personal and real properties of the latter not exempt from execution sufficient to satisfy such
should be noted that a house and lot at San Jose, Antique were also attached. No one can successfully contest that
attachment was merely an incident to an ordinary civil action. (Sections 1 & 11, Rule 59; Sec. 16, Rule 39). The mortg
creditor may recover judgment on the mortgage debt and cause an execution on the mortgaged property and may ca
attachment to be issued and levied on such property, upon beginning his civil action (Tizon vs. Valdez, 48 Phil. 910-9

IN VIEW HEREOF, the judgment appealed from hereby is affirmed, with costs against the defendant-appellant.

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Dizon, De Leon and Natividad, JJ., concur.
Reyes, J.B.L., J., concurs in a separate opinion.
Padilla and Barrera, JJ., took no part.

Separate Opinions

REYES, J.B.L., J., concurring:

I fully concur in the opinion, and would only add that appellant's argument ignores a substantial difference between th
foreclosing the chattel mortgage and attaching the mortgaged chattel. The variance lies in the ability of the debtor to
possession of the property attached by giving a counterbond and thereby discharging the attachment. This remedy th
does not have in the event of foreclosure. 
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