Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No.

L-61623 December 26, 1984 PEOPLE'S HOMESITE HO!SING "ORPOR#TION, petitioner-appellant, vs. "O!RT O$ #PPE#LS, RI%#LINO L. MENDO%# &'( #DEL#ID# R. MENDO%#, respondents-appellees. Manuel M. Lazaro, Pilipinas Arenas Laborte and Antonio M. Brillantes for petitioner PHHC. Tolentino, Cruz, Reyes, Lava and Manuel for private respondents.

#)!INO, J.: The question in this case is whether the People's Homesite & Housing Corporation bound itself to sell to the endo!a spouses "ot # $%oad& Pcs- #'(# of the revised consolidation subdivision plan with an area of 2,6, !." #2,$ %."& s'uare (eters located at )iliman, *ue!on Cit+. The PHHC board of directors on ,ebruar+ -., -/(0 passed %esolution 1o. '-2 wherein it stated 3that sub)e*t to t+e approval of t+e ,uezon City Coun*il of the abovementioned Consolidation 4ubdivision Plan, "ot #. containing -,.!2.2 s'uare (eters be, as it is hereb+ awarded to 4pouses %i!alino endo!a and 5delaida endo!a, at a price of twent+-one pesos $P6-.00& per square meter3 and /t+at t+is a0ard s+all be sub)e*t to t+e approval of t+e 12C #PHHC& 3aluation Co((ittee and +i4+er aut+orities/ . The cit+ council disapproved the proposed consolidation subdivision plan on 5ugust 60, -/(- $78h. 6&. T+e said spouses 0ere advised by re4istered (ail of t+e disapproval of t+e plan $78h. 6-PHHC&. 5nother subdivision plan was prepared and submitted to the cit+ council for approval. The revised plan, which included "ot #, with a reduced area of 6,(0..9, was approved b+ the cit+ council on ,ebruar+ 6', -/(# $78h. H&. :n 5pril 6(, -/(' the PHHC board of directors passed a resolution re*allin4 all a0ards of lots to persons who failed to pa+ the deposit or down pa+ment for the lots awarded to them $78h. '&. The endo!as never paid the price of the lot nor made the 60; initial deposit.

:n :ctober -., -/(' the PHHC board of directors passed %esolution 1o. 6-., withdrawing the tentative award of "ot # to the endo!a -spouses under %esolution 1o. '-2 and re-awarding said lot <ointl+ and in equal shares to iguela 4to. )omingo, 7nrique 7steban, =irgilio Pin!on, "eonardo %edublo and >ose ,ernande!, sub<ect to e8isting PHHC rules and regulations. The prices would be the same as those of the ad<oining lots. The awardees were required to deposit an amount equivalent to 60; of the total selling price $78h. ,&. The five awardees made the initial deposit. The corresponding deeds of sale were e8ecuted in their favor. The subdivision of "ot # into five lots was approved b+ the cit+ council and the ?ureau of "ands. :n arch -(, -/(( the endo!a spouses as@ed for reconsideration of the withdrawal of the previous award to them of "ot # and for the cancellation of the re-award of said lot to 4to. )omingo and four others. ?efore the request could be acted upon, the spouses filed the instant action for specific performance and damages. The trial court sustained the withdrawal of the award. The endo!as appealed. The 5ppellate Court reversed that decision and declared void the re-award of "ot # and the deeds of sale and directed the PHHC to sell to the endo!as "ot # with an area of 6,(02.9 square meters at P6- a square meter and pa+ to them P#,000 as attorne+'s fees and litigation e8penses. The PHHC appealed to this Court. The issue is whether there was a perfected sale of "ot #, with the reduced area, to the endo!as which the+ can enforce against the PHHC b+ an action for specific performance. Ae hold that there was no perfected sale of "ot #. Bt was conditionall+ or contingentl+ awarded to the endo!as sub<ect to the approval b+ the cit+ council of the proposed consolidation subdivision plan and the approval of the award b+ the valuation committee and higher authorities. The cit+ council did not approve the subdivision plan. The endo!as were advised in -/(- of the disapproval. Bn -/(#, when the plan with the area of "ot # reduced to 6,(0..9 square meters was approved, the endo!as should have manifested in writing their acceptance of the award for the purchase of "ot # <ust to show that the+ were still interested in its purchase although the area was reduced and to obviate all+ doubt on the matter. The+ did not do so. The PHHC board of directors acted within its rights in withdrawing the tentative award. 3The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the ob<ect of the contract and upon the price. ,rom that moment, the parties ma+ reciprocall+ demand performance, sub<ect to the law governing the form of contracts.3 $5rt. -#9', Civil Code&.

34on, sin embargo, e8cepcion a esta regla los casos en que por virtud de la voluntad de las partes o de la le+, se celebra la venta ba<o una condicion suspensiva, y en los *uales no se perfe**iona la venta +asta el *u(pli(iento de la *ondi*ion/ $# Castan Tobenas, )erecho Civil 7spaCol .th ed. p. .-&. 3Bn conditional obligations, the acquisition of rights, as well as the e8tinguishment or loss of those alread+ acquired, shall depend upon the happening of the event which constitutes the condition. $5rt. --.-, Civil Code&. 34e llama suspensive la condicion de la que depende la perfeccion, o sea el principio del contrato3. $/ Diorgi, Teoria de las :bligaciones, p. '9&. Ender the facts of this case, we cannot sa+ there was a meeting of minds on the purchase of "ot # with an area of 6,(0..9 square meters at P6- a square meter. The case of Lapini4 vs. Court of Appeals, --' 4C%5 6-2 is not in point because the awardee in that case applied for the purchase of the lot, paid the -0; deposit and a conditional contract to sell was e8ecuted in his favor. The PHHC could not re-award that lot to another person. AH7%7,:%7, the decision of the 5ppellate Court is reversed and set aside and the <udgment of the trial court is affirmed. 1o costs. 4: :%)7%7). Ma5asiar #C+air(an&, Con*ep*ion, 6r., Abad 7antos, 2s*olin and Cuevas, 66., *on*ur. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 173856 November 20, 2008

D O !ENG " N#, INC., $o% " NCO DE ORO UNIVERS & " N#, petitioner vs. SPS. &I&I '$( RE)N &DO & IGO, respondent. DECISION C RPIO MOR &ES, J.* The Spouses ilia and Re!naldo ai"o #respondents$ obtained loans fro% Dao &en" 'an() Inc. #Dao &en"$ in the total a%ount of P** Million) to secure the pa!%ent of +hich the! for"ed on October ,-) *../) Nove%ber *-) *../ and 0pril *-) *..1 three Real Estate Mort"a"es coverin"

t+o parcels of land re"istered in the na%e of respondent 2 ilia D. ai"o) . . . %arried to Re!naldo ai"o)2 one containin" 3/. s4uare %eters and the other containin" 351 s4uare %eters. The %ort"a"es +ere dul! re"istered in the Re"istr! of Deeds of 6ue7on Cit!. The loans +ere pa!able +ithin *, %onths fro% the e8ecution of the pro%issor! notes coverin" the loans. 0s of ,999) respondents failed to settle their outstandin" obli"ation) dra+in" the% to verball! offer to cede to Dao &en" one of the t+o %ort"a"ed lots b! +a! of dacion en pago. To appraise the value of the %ort"a"ed lands) Dao &en" in fact co%%issioned an appraiser +hose fees +ere shouldered b! it and respondents. There appears to have been no further action ta(en b! the parties after the appraisal of the properties. Dao &en" +as later to de%and the settle%ent of respondents: obli"ation b! letter of 0u"ust *-) ,999* +herein it indicated that the! had an outstandin" obli"ation of P*9)5-3)*9..., inclusive of interests and other char"es. Respondents failed to heed the de%and) ho+ever. Dao &en" thereupon filed in Septe%ber ,999 an application to foreclose the real estate %ort"a"es e8ecuted b! respondents. The properties sub;ect of the %ort"a"e +ere sold for P*9)11/),<, at a public auction conducted on Dece%ber ,9) ,999 to 'anco de Oro =niversal 'an( #hereafter petitioner$ +hich +as the hi"hest bidder. It appears that respondents ne"otiated for the rede%ption of the %ort"a"es for b! a >une ,.) ,99* letter, to the%) petitioner) to +hich Dao &en" had been %er"ed) throu"h its Vice President on Propert! Mana"e%ent ? Credit Services Depart%ent) advised respondent ilia ai"o as follo+s@ This is to for%all! advise !ou of the ban(:s response to !our proposal pertainin" to the rede%ption of the t+o #,$ foreclosed lots located in Aairvie+) 6ue7on Cit! as has been rela!ed to !ou last >une *5) ,99* as follo+s@ *. Rede%ption price shall be P11.5MM plus *,B interest based on di%inishin" balance pa!able in sta""ered pa!%ents up to >anuar! ,) ,99, as follo+s@ a. P5MM C i%%ediatel! upon receipt of this approval b. 'alance pa!able in sta""ered pa!%ents #plus interest$ up to >anuar! ,) ,99, ,. Release Values for Partial Rede%ption@ a. TCT No. .,,31 #alon" Co%%on+ealth$ P1.399 MMD b. TCT No. NC*</,-. #alon" Re"alado$ P<.999 MMD D e8cludin" *,B interest

5. Other Conditions@ a. Pa!%ents shall be covered b! post dated chec(s b. TCT No. .,,31 shall be the first propert! to be released upon pa!%ent of the first P1.3MM plus interest c. 0rran"e%ent to be covered b! an 0"ree%ent If !ou are a"reeable to the fore"oin" ter%s and conditions) please affi8 !our si"nature sho+in" !our confor%it! thereto at the space provided belo+. #E%phasis and underscorin" in the ori"inalE italics supplied$ Nothin" +as heard fro% respondents) hence) petitioner b! its Mana"er) Propert! Mana"e%ent ? Credit Services Depart%ent) advised her b! letter of Dece%ber ,/) ,99*5 that in vie+ of their failure to confor% to the conditions set b! it for the rede%ption of the properties) it +ould proceed to consolidate the titles i%%ediatel! after the e8piration of the rede%ption period on >anuar! ,) ,99,. Si8 da!s before the e8piration of the rede%ption period or on Dece%ber ,1) ,99*) respondents filed a co%plaint before the Re"ional Trial Court #RTC$ of 6ue7on Cit!) for 0nnul%ent) In;unction +ith Pra!er for Te%porar! Restrainin" Order #TRO$) pra!in" for the annul%ent of the foreclosure of the properties sub;ect of the real estate %ort"a"es and for the% to be allo+ed 2to deliver b! +a! of Fdacion en pago: one of the %ort"a"ed properties as full pa!%ent of GtheirH %ort"a"ed obli"ation2 and to) in the %eanti%e) issue a TRO directin" the defendantCherein petitioner to desist fro% consolidatin" o+nership over their properties. '! respondents: clai%) Dao &en" verball! a"reed to enter into a dacion en pago. In its Opposition to respondents: 0pplication for a TRO)< petitioner clai%ed that there +as no %eetin" of the %inds bet+een the parties on the settle%ent of respondents: loan via dacion en pago. 0 hearin" on the application for a TRO +as conducted b! 'ranch ,*3 of the RTC of 6ue7on Cit! follo+in" +hich it denied the sa%e. Petitioner thereupon filed a Motion to Dis%iss the co%plaint on the "round that the clai% on +hich respondents: action is founded is unenforceable under the Statute of Arauds and the co%plaint states no cause of action. Respondents opposed the %otion) contendin" that their deliver! of the titles to the %ort"a"ed properties constituted partial perfor%ance of their obli"ation under the dacion en pago to ta(e it out fro% the covera"e of the Statute of Arauds. The trial court "ranted petitioner:s Motion to Dis%iss in this +ise@ GPHlaintiffs: clai% %ust be based on a docu%ent or +ritin" evidencin" the alle"ed dacion en pago) other+ise) the sa%e cannot be enforced in an action in court. The Court is not

persuaded b! plaintiffs: contention that their case is an e8ception to the operation of the rule on statute of frauds because of their partial perfor%ance of the obli"ation in the dacion en pago consistin" of the deliver! of the titles of the properties to the defendants. 0s correctl! pointed out b! the defendants) the +,+-e. %ere $o+ (e-,vere( +o +/em 01r.1'$+ +o +/e dacion en pago b1+ b2 re'.o$ o3 +/e e4e51+,o$ o3 +/e mor+6'6e -o'$ '6reeme$+. If indeed a dacion en pago a"ree%ent +as entered into bet+een the parties) it is inconceivable that a +ritten docu%ent +ould not be drafted considerin" the %a"nitude of the a%ount involved.3 #E%phasis and underscorin" supplied$ Respondents assailed the dis%issal of their co%plaint via Petition for Revie+ before this Court +hich referred it to the Court of 0ppeals for disposition. Reversin" the trial court:s dis%issal of the co%plaint) the appellate court) b! Decision of >anuar! ,/) ,99/)/ reinstated respondents: co%plaint.1 In orderin" the reinstate%ent of respondents: co%plaint) the appellate court held that the co%plaint states a cause of action) respondents havin" alle"ed that there +as partial perfor%ance of the a"ree%ent to settle their obli"ation via dacion en pago +hen the! a"reed to have the properties appraised to thus place their a"ree%ent +ithin the e8ceptions provided under 0rticle *<95- of the Civil Code on Statute of Arauds. Thus the appellate court ratiocinated@ Particularl!) in see(in" e8ception to the application of the Statute of Arauds) petitionersGC herein respondentsH averred partial perfor%ance of the supposed verbal dacion en pago. In para"raph 3 of their co%plaint) the! stated@ 20s part of the a"ree%ent) defendant Dao &en" 'an( had the %ort"a"ed propert! appraised to deter%ine +hich of the t+o shall be delivered as full pa!%ent of the %ort"a"e obli"ationE 0lso as part of the deal) plaintiffs for their part paid P3)999.99 for the appraisal e8pense. 0s reported b! the appraiser co%%issioned b! Defendant Dao &en") the appraised value of the %ort"a"ed properties +ere as follo+s@ 8 8 82 &avin" done so) petitioners are at least entitled to a reasonable opportunit! to prove their case in the course of a full trial) to +hich the respondents %a! e4uall! present their evidence in refutation of the for%ers: case. #=nderscorin" supplied$ Petitioner:s Motion for Reconsideration havin" been denied b! the appellate court b! Resolution of >ul! *.) ,99/) the present petition +as filed faultin" the appellate court in rulin"@ I. . . . T&0T T&E COMP 0INT 0 EIED 0 S=AAICIENT C0=SE OA 0CTION DESPITE T&E 0 EI0TIONS) 0S JE 0S 0DMISSIONS AROM T&E RESPONDENTS) T&0T T&ERE J0S NO PERAECTED DACION EN PAGO CONTR0CTE II.

. . . T&0T T&E 0 EIED DACION EN PAGO IS NOT =NENAORCE0' E =NDER T&E ST0T=TE OA AR0=DS) DESPITE T&E 0'SENCE OA 0 JRITTEN ? 'INDINI CONTR0CTE III. . . . T&0T T&E COMP 0INT S=AAICIENT K ST0TED 0 C0=SE OA 0CTION. . Ienerall!) the presence of a cause of action is deter%ined fro% the facts alle"ed in the co%plaint. In their co%plaint) respondents alle"ed@ 8888 <. So%eti%e in the %iddle of the !ear ,999) defendant Dao &en" 'an( as the creditor ban( a"reed to the full settle%ent of plaintiffs: %ort"a"e obli"ation of P. Million throu"h the assi"n%ent of one of the t+o #,$ %ort"a"ed propertiesE G3H 0s part of the a"ree%ent) defendant Dao &en" 'an( had the %ort"a"ed properties appraised to deter%ine +hich of the t+o #,$ %ort"a"ed properties shall be delivered as full pa!%ent of the %ort"a"e obli"ationE 0lso as part of the deal) plaintiffs for their part paid P3)999.99 for the appraisal e8penseE 0s reported b! the appraiser co%%issioned b! defendant Dao &en") the appraised value of the %ort"a"ed properties +ere as follo+s@ #a$ Propert! No. * C T.C.T. No. .,,31@ P*,)3*-)999.99 ,0 'l( *, Don Mariano Marcos 0ve.) Aairvie+) 6C #b$ Propert! No. , C T.C.T. No. *</,-.@ P-)933)999.99 5/ 'l( -1 Re"alado 0ve. Cor. Ipil St.) Neopolitan) 6C G/H So%eti%e in Dece%ber) !ear ,999) the protest of plaintiffs not+ithstandin" and in blatant breach of the a"reed 2Dacion en pa"o2 as the %ode of full pa!%ent of plaintiffs: %ort"a"e obli"ation) defendant Dao &en" 'an( proceeded to foreclose the %ort"a"ed properties aboveCdescribed and sold said properties +hich +ere a""re"atel! valued at %ore than P,9 Million for onl! P*9)11/),<,.99) an unconscionabl! ver! lo+ priceE #=nderscorin" supplied$ Even if a co%plaint states a cause of action) ho+ever) a %otion to dis%iss for insufficienc! of cause of action %a! be "ranted if the evidence discloses facts sufficient to defeat the clai% and enables the court to "o be!ond the disclosures in the co%plaint. In such instances) the court can dis%iss a co%plaint on this "round) even +ithout a hearin") b! ta(in" into account the discussions in said %otion to dis%iss and the disposition thereto.*9

In its Opposition to respondents: application for the issuance of a TRO)** petitioner) respondin" to respondents: alle"ation that it a"reed to the settle%ent of their obli"ation via the assi"n%ent of one of the t+o %ort"a"ed properties) alle"ed that there +as no %eetin" of the %inds thereon@ <. Plaintiffs: clai% that defendant Dao &en" 'an(GsH foreclosure sale of the %ort"a"ed properties +as i%proper because there +as an a"ree%ent to dacion one of the t+o #,$ %ort"a"ed properties as full settle%ent of the loan obli"ation and that defendant Dao &en" 'an( and 'anco de Oro +ere alread! ne"otiatin" and colludin" for the latter:s ac4uisition of the %ort"a"ed GpropertiesH for the unsconscionabl! lo+ price of P*9)11/.,<,.99 are clearl! 7IT!OUT " SIS. 6uite to the contrar!) there +as no %eetin" of the %inds bet+een defendant Dao &en" 'an( and the plaintiffs to dacion an! of the %ort"a"ed properties as full settle%ent of the loan. 0lthou"h there +as a PROPOS0 and NEIOTI0TIONS to settle the loan b! +a! of dacion) nothin" ca%e out of said proposal) %uch less did the ne"otiations %ature into the e8ecution of a dacion en pago instru%ent. Defendant Dao &en" 'an( found the offer to settle b! +a! of dacion not acceptable and thus) it opted to foreclose on the %ort"a"e. The la+ clearl! provides that 2the debtor of a thin" cannot co%pel the creditor to receive a different one) althou"h the latter %a! be of the sa%e value) or %ore valuable than that +hich is due2 #0rticle *,<<) Ne+ Civil Code$. 2The obli"e is entitled to de%and fulfill%ent of the obli"ation or perfor%ance as stipulated2 #Pal%ares v. Court of 0ppeals) ,-- SCR0 <,, at p. <<< G*..-H$. 2The po+er to decide +hether or not to foreclose on the %ort"a"e is the sole prero"ative of the %ort"a"ee2 #Rural 'an( of San Mateo) Inc. vs. Inter%ediate 0ppellate Court) *</ SCR0 ,93) at ,*5 G*.-/H$ Defendant Dao &en" 'an( %erel! opted to e8ercise such prero"ative.*, #E%phasis in the ori"inalE capitali7ation and underscorin" supplied$ Dacion en pago as a %ode of e8tin"uishin" an e8istin" obli"ation parta(es of the nature of sale +hereb! propert! is alienated to the creditor in satisfaction of a debt in %one!. *5 It is an ob;ective novation of the obli"ation) hence) co%%on consent of the parties is re4uired in order to e8tin"uish the obli"ation. . . . In dacion en pago) as a special %ode of pa!%ent) the debtor offers another thin" to the creditor +ho accepts it as e4uivalent of pa!%ent of an outstandin" debt. The underta(in" reall! parta(es in one sense of the nature of sale) that is) the creditor is reall! bu!in" the thin" or propert! of the debtor) pa!%ent for +hich is to be char"ed a"ainst the debtor:s debt. 0s such the ele%ents of a contract of sale) na%el!) consent) ob;ect certain) and cause or consideration %ust be present. In its %odern concept) +hat actuall! ta(es place in dacion en pago is an ob;ective novation of the obli"ation +here the thin" offered as an accepted e4uivalent of the perfor%ance of an obli"ation is considered as the ob;ect of the contract of sale) +hile the debt is considered the purchase price. In an! case) 5ommo$ 5o$.e$+ is an essential prere4uisite) be it sale or novation) to have the effect of totall! e8tin"uishin" the debt or obli"ation.2*< #E%phasis) italics and underscorin" suppliedE citation o%itted$ 'ein" li(ened to that of a contract of sale) dacion en pago is "overned b! the la+ on sales.*3 The partial e8ecution of a contract of sale ta(es the transaction out of the provisions of the Statute of

Arauds so lon" as the essential re4uisites of consent of the contractin" parties) ob8e5+ and 5'1.e of the obli"ation concur and are clearl! established to be present.*/ Respondents clai% that petitioner:s co%%issionin" of an appraiser to appraise the value of the %ort"a"ed properties) his services for +hich the! and petitioner paid) and their deliver! to petitioner of the titles to the properties constitute partial perfor%ance of their a"ree%ent to ta(e the case out of the provisions on the Statute of Arauds. There is no concrete sho+in") ho+ever) that after the appraisal of the properties) petitioner approved respondents: proposal to settle their obli"ation via dacion en pago. The deliver! to petitioner of the titles to the properties is a usual condition sine qua non to the e8ecution of the %ort"a"e) both for securit! and re"istration purposes. Aor if the title to a propert! is not delivered to the %ort"a"ee) +hat +ill prevent the %ort"a"or fro% a"ain encu%berin" it also b! %ort"a"e or even b! sale to a third part!. Ainall!) that respondents did not den! proposin" to redee% the %ort"a"es)*1 as reflected in petitioner:s >une ,.) ,99* letter to the%) doo%s their clai% of the e8istence of a perfected dacion en pago. 7!ERE9ORE, the Court of 0ppeals Decision of >anuar! ,/) ,99/ is REVERSED '$( SET SIDE. The Resolution of >ul! ,) ,99, of the Re"ional Trial Court of 6ue7on Cit!) 'ranch ,*3 dis%issin" respondents: co%plaint is REINST TED. SO ORDERED. CONC!IT C RPIO MOR &ES 0ssociate >ustice

JE CONC=R@

&EON RDO . :UISUM"ING 0ssociate >ustice Chairperson D NTE O. TING 0ssociate >ustice PRES"ITERO ;. VE& SCO, ;R. 0ssociate >ustice RTURO D. "RION 0ssociate >ustice

TTEST TION

I attest that the conclusions in the above Decision had been reached in consultation before the case +as assi"ned to the +riter of the opinion of the Court:s Division. &EON RDO . :UISUM"ING 0ssociate >ustice Chairperson

CERTI9IC TION Pursuant to Section *5) 0rticle VIII of the Constitution) and the Division Chairperson:s 0ttestation) it is hereb! certified that the conclusions in the above Decision +ere reached in consultation before the case +as assi"ned to the +riter of the opinion of the Court:s Division. RE)N TO S. PUNO Chief >ustice

9oo+$o+e.
*

Records) p. ,.. Id. at 5-. Id. at 5.C<9. Id. at *5C*-. Id. at *,9.

<

Penned b! >ustice Monina 0revaloCLenarosa) +ith the concurrence of >ustices 0ndres '. Re!es) >r. and Ros%ari D. Carandan". C0 rollo) pp. **5C*,<.
1

Id. at *,<. 0rticle *<95. The follo+in" contracts are unenforceable unless the! are ratified@ 8 8 8 #,$ Those that do not co%pl! +ith the Statute of Arauds as set forth in this nu%ber. In the follo+in" cases an a"ree%ent hereafter %ade shall be unenforceable b! action) unless the sa%e) or so%e note or %e%orandu% thereof be in +ritin") and subscribed b! the part! char"ed) or b! his a"entE evidence) therefore) of the a"ree%ent cannot be received +ithout the +ritin") or a secondar! evidence of its contents@ 8 8 8

#e$ 0n a"ree%ent for the leasin" for a lon"er period than one !ear) or for the sale of real propert! or of an interest thereinE 8 8 8
.

Rollo) p. 5,.

*9

Aloren7 D. Re"alado) Re%edial a+ Co%pendiu%) Vol. * #,993$) citin" Tan v. Director of Aorestr!) et al.) C,<3<-) Oct. ,1) *.-5) ,*9 Phil. ,<<.
**

Supra note <. Records) pp. *3C*/. Civil Code) 0rticle *,<3.

*,

*5

*<

Ailinvest Credit 0ssociation v. Philippine 0cet!lene Co.) *.1 Phil. 5.<) <9,C<95 #*.-,$.
*3

Supra note *5 at 0rticle *,<3.

*/

Vda. de Jo oc v. Court o! Appeals) I.R. No. .,-1*) 0u"ust ,) *..*) ,99 SCR0 1<) 11C1-.
*1

Supra note , SUPREME COURT Manila AIRST DIVISION

G.R. No. 118342 *&'+&r, -, 1998 DE.ELOPMENT /#N0 O$ THE PHILIPPINES, petitioner, vs. "O!RT O$ #PPE#LS &'( L1DI# "!/#, respondents. G.R. No. 118362 *&'+&r, -, 1998 L1DI# P. "!/#, petitioner, vs. "O!RT O$ #PPE#LS, DE.ELOPMENT /#N0 O$ THE PHILIPPINES &'( #GRIPIN# P. "#PER#L, respondents.

D#.IDE, *R., J.:

These two consolidated cases stemmed from a complaint 1 filed against the )evelopment ?an@ of the Philippines $hereafter )?P& and 5gripina Caperal filed b+ "+dia Cuba $hereafter CE?5& on 6- a+ -/.' with the %egional Trial Court of Pangasinan, ?ranch '#. The said complaint sought $-& the declaration of nullit+ of )?P's appropriation of CE?5's rights, title, and interests over a ##-hectares fishpond located in ?olinao, Pangasinan, for being violative of 5rticle 60.. of the Civil CodeF $6& the annulment of the )eed of Conditional 4ale e8ecuted in her favor b+ )?PF $2& the annulment of )?P's sale of the sub<ect fishpond to CaperalF $#& the restoration of her rights, title, and interests over the fishpondF and $'& the recover+ of damages, attorne+'s fees, and e8penses of litigation. 5fter the <oinder of issues following the filing b+ the parties of their respective pleadings, the trial court conducted a pre-trial where CE?5 and )?P agreed on the following facts, which were embodied in the pre-trial orderG 2
-. Plaintiff "+dia P. Cuba is a grantee of a ,ishpond "ease 5greement 1o. 60.2 $new& dated a+ -2, -/9# from the DovernmentF 6. Plaintiff "+dia P. Cuba obtained loans from the )evelopment ?an@ of the Philippines in the amounts of P-0/,000.00F P-0/,000.00F and P/.,900.00 under the terms stated in the Promissor+ 1otes dated 4eptember (, -/9#F 5ugust --, -/9'F and 5pril #, -/99F 2. 5s securit+ for said loans, plaintiff "+dia P. Cuba e8ecuted two )eeds of 5ssignment of her "easehold %ightsF #. Plaintiff failed to pa+ her loan on the scheduled dates thereof in accordance with the terms of the Promissor+ 1otesF '. Aithout foreclosure proceedings, whether <udicial or e8tra-<udicial, defendant )?P appropriated the "easehold %ights of plaintiff "+dia Cuba over the fishpond in questionF (. 5fter defendant )?P has appropriated the "easehold %ights of plaintiff "+dia Cuba over the fishpond in question, defendant )?P, in turn, e8ecuted a )eed of Conditional 4ale of the "easehold %ights in favor of plaintiff "+dia Cuba over the same fishpond in questionF 9. Bn the negotiation for repurchase, plaintiff "+dia Cuba addressed two letters to the anager )?P, )agupan Cit+ dated 1ovember (, -/9/ and )ecember 60, -/9/. )?P thereafter accepted the offer to repurchase in a letter addressed to plaintiff dated ,ebruar+ -, -/.6F .. 5fter the )eed of Conditional 4ale was e8ecuted in favor of plaintiff "+dia Cuba, a new ,ishpond "ease 5greement 1o. 60.2-5 dated arch 6#, -/.0 was issued b+ the inistr+ of 5griculture and ,ood in favor of plaintiff "+dia Cuba onl+, e8cluding her husbandF /. Plaintiff "+dia Cuba failed to pa+ the amorti!ations stipulated in the )eed of Conditional 4aleF -0. 5fter plaintiff "+dia Cuba failed to pa+ the amorti!ation as stated in )eed of Conditional 4ale, she entered with the )?P a temporar+ arrangement whereb+ in consideration for the deferment of the 1otarial %escission of )eed of Conditional 4ale,

plaintiff "+dia Cuba promised to ma@e certain pa+ments as stated in temporar+ 5rrangement dated ,ebruar+ 62, -/.6F --. )efendant )?P thereafter sent a 1otice of %escission thru 1otarial 5ct dated -2, -/.#, and which was received b+ plaintiff "+dia CubaF arch

-6. 5fter the 1otice of %escission, defendant )?P too@ possession of the "easehold %ights of the fishpond in questionF -2. That after defendant )?P too@ possession of the "easehold %ights over the fishpond in question, )?P advertised in the 4E1)5H PE1CH the public bidding dated >une 6#, -/.#, to dispose of the propert+F -#. That the )?P thereafter e8ecuted a )eed of Conditional 4ale in favor of defendant 5gripina Caperal on 5ugust -(, -/.#F -'. Thereafter, defendant Caperal was awarded ,ishpond "ease 5greement 1o. 60.2-5 on )ecember 6., -/.# b+ the inistr+ of 5griculture and ,ood.

)efendant Caperal admitted onl+ the facts stated in paragraphs -# and -' of the pretrial order. 3 Trial was thereafter had on other matters. The principal issue presented was whether the act of )?P in appropriating to itself CE?5's leasehold rights over the fishpond in question without foreclosure proceedings was contrar+ to 5rticle 60.. of the Civil Code and, therefore, invalid. CE?5 insisted on an affirmative resolution. )?P stressed that it merel+ e8ercised its contractual right under the 5ssignments of "easehold %ights, which was not a contract of mortgage. )efendant Caperal sided with )?P. The trial court resolved the issue in favor of CE?5 b+ declaring that )?P's ta@ing possession and ownership of the propert+ without foreclosure was plainl+ violative of 5rticle 60.. of the Civil Code which provides as followsG
5rt. 60... The creditor cannot appropriate the things given b+ wa+ of pledge or mortgage, or dispose of them. 5n+ stipulation to the contrar+ is null and void.

Bt disagreed with )?P's stand that the 5ssignments of "easehold %ights were not contracts of mortgage because $-& the+ were given as securit+ for loans, $6& although the 3fishpond land3 in question is still a public land, CE?5's leasehold rights and interest thereon are alienable rights which can be the proper sub<ect of a mortgageF and $2& the intention of the contracting parties to treat the 5ssignment of "easehold %ights as a mortgage was obvious and unmista@ableF hence, upon CE?5's default, )?P's onl+ right was to foreclose the 5ssignment in accordance with law. The trial court also declared invalid condition no. -6 of the 5ssignment of "easehold %ights for being a clear case of pa*tu( *o((issoriu( e8pressl+ prohibited and declared null and void b+ 5rticle 60.. of the Civil Code. Bt then concluded that since

)?P never acquired lawful ownership of CE?5's leasehold rights, all acts of ownership and possession b+ the said ban@ were void. 5ccordingl+, the )eed of Conditional 4ale in favor of CE?5, the notarial rescission of such sale, and the )eed of Conditional 4ale in favor of defendant Caperal, as well as the 5ssignment of "easehold %ights e8ecuted b+ Caperal in favor of )?P, were also void and ineffective. 5s to damages, the trial court found 3ample evidence on record3 that in -/.# the representatives of )?P e<ected CE?5 and her careta@ers not onl+ from the fishpond area but also from the ad<oining big houseF and that when CE?5's son and careta@er went there on -' 4eptember -/.', the+ found the said house unoccupied and destro+ed and CE?5's personal belongings, machineries, equipment, tools, and other articles used in fishpond operation which were @ept in the house were missing. The missing items were valued at about P''0,000. Bt further found that when CE?5 and her men were e<ected b+ )?P for the first time in -/9/, CE?5 had stoc@ed the fishpond with 6'0,000 pieces of bangus fish $mil@fish&, all of which died because the )?P representatives prevented CE?5's men from feeding the fish. 5t the conservative price of P2.00 per fish, the gross value would have been P(/0,000, and after deducting 6'; of said value as reasonable allowance for the cost of feeds, CE?5 suffered a loss of P'-9,'00. Bt then set the aggregate of the actual damages sustained b+ CE?5 at P-,0(9,'00. The trial court further found that )?P was guilt+ of gross bad faith in falsel+ representing to the ?ureau of ,isheries that it had foreclosed its mortgage on CE?5's leasehold rights. 4uch representation induced the said ?ureau to terminate CE?5's leasehold rights and to approve the )eed of Conditional 4ale in favor of CE?5. 5nd considering that b+ reason of her unlawful e<ectment b+ )?P, CE?5 3suffered moral shoc@, degradation, social humiliation, and serious an8ieties for which she became sic@ and had to be hospitali!ed3 the trial court found her entitled to moral and e8emplar+ damages. The trial court also held that CE?5 was entitled to P-00,000 attorne+'s fees in view of the considerable e8penses she incurred for law+ers' fees and in view of the finding that she was entitled to e8emplar+ damages. Bn its decision of 2- >anuar+ -//0, 4 the trial court disposed as followsG
AH7%7,:%7, <udgment is hereb+ rendered in favor of plaintiffG -. )7C"5%B1D null and void and without an+ legal effect the act of defendant )evelopment ?an@ of the Philippines in appropriating for its own interest, without an+ <udicial or e8tra-<udicial foreclosure, plaintiff's leasehold rights and interest over the fishpond land in question under her ,ishpond "ease 5greement 1o. 60.2 $new&F 6. )7C"5%B1D the )eed of Conditional 4ale dated ,ebruar+ 6-, -/.0 b+ and between the defendant )evelopment ?an@ of the Philippines and plaintiff $78h. 7 and 78h. -& and the acts of notarial rescission of the )evelopment ?an@ of the Philippines relative to said sale $78hs. -( and 6(& as void and ineffectiveF 2. )7C"5%B1D the )eed of Conditional 4ale dated 5ugust -(, -/.# b+ and between the )evelopment ?an@ of the Philippines and defendant 5gripina Caperal $78h. , and 78h.

6-&, the ,ishpond "ease 5greement 1o. 60.2-5 dated )ecember 6., -/.# of defendant 5gripina Caperal $78h. 62& and the 5ssignment of "easehold %ights dated ,ebruar+ -6, -/.' e8ecuted b+ defendant 5gripina Caperal in favor of the defendant )evelopment ?an@ of the Philippines $78h. 6#& as void ab initioF #. :%)7%B1D defendant )evelopment ?an@ of the Philippines and defendant 5gripina Caperal, <ointl+ and severall+, to restore to plaintiff the latter's leasehold rights and interests and right of possession over the fishpond land in question, without pre<udice to the right of defendant )evelopment ?an@ of the Philippines to foreclose the securities given b+ plaintiffF '. :%)7%B1D defendant )evelopment ?an@ of the Philippines to pa+ to plaintiff the following amountsG a& The sum of :17 B""B:1 4BITH-47=71 TH:E451) ,B=7 HE1)%7) P74:4 $P-,0(9,'00.00&, as and for actual damagesF b& The sum of :17 HE1)%7) TH:E451) $P-00,000.00& P74:4 as moral damagesF c& The sum of ,B,TH TH:E451) $P'0,000.00& P74:4, as and for e8emplar+ damagesF d& 5nd the sum of :17 HE1)%7) TH:E451) $P-00,000.00& P74:4, as and for attorne+'s feesF (. 5nd :%)7%B1D defendant )evelopment ?an@ of the Philippines to reimburse and pa+ to defendant 5gripina Caperal the sum of :17 B""B:1 ,B=7 HE1)%7) THB%TH-TA: TH:E451) 4BI HE1)%7) T71 P74:4 51) 47=71TH-,B=7 C71T5=:4 $P-,'26,(-0.9'& representing the amounts paid b+ defendant 5gripina Caperal to defendant )evelopment ?an@ of the Philippines under their )eed of Conditional 4ale.

CE?5 and )?P interposed separate appeals from the decision to the Court of 5ppeals. The former sought an increase in the amount of damages, while the latter questioned the findings of fact and law of the lower court. Bn its decision - of 6' a+ -//#, the Court of 5ppeals ruled that $-& the trial court erred in declaring that the deed of assignment was null and void and that defendant Caperal could not validl+ acquire the leasehold rights from )?PF $6& contrar+ to the claim of )?P, the assignment was not a cession under 5rticle -6'' of the Civil Code because )?P appeared to be the sole creditor to CE?5 J cession presupposes pluralit+ of debts and creditorsF $2& the deeds of assignment represented the voluntar+ act of CE?5 in assigning her propert+ rights in pa+ment of her debts, which amounted to a novation of the promissor+ notes e8ecuted b+ CE?5 in favor of )?PF $#& CE?5 was estopped from questioning the assignment of the leasehold rights, since she agreed to repurchase the said rights under a deed of conditional saleF and $'& condition no. -6 of the deed of assignment was an e8press authorit+ from CE?5 for )?P to sell whatever right she had over the fishpond. Bt also ruled that CE?5 was not entitled to loss of profits for lac@ of evidence, but agreed with the trial court as to the actual damages of P-,0(9,'00. Bt, however, deleted the amount of e8emplar+ damages and reduced the

award of moral damages from P-00,000 to P'0,000 and attorne+'s fees, from P-00,000 to P'0,000. The Court of 5ppeals thus declared as valid the followingG $-& the act of )?P in appropriating Cuba's leasehold rights and interest under ,ishpond "ease 5greement 1o. 60.2F $6& the deeds of assignment e8ecuted b+ Cuba in favor of )?PF $2& the deed of conditional sale between CE?5 and )?PF and $#& the deed of conditional sale between )?P and Caperal, the ,ishpond "ease 5greement in favor of Caperal, and the assignment of leasehold rights e8ecuted b+ Caperal in favor of )?P. Bt then ordered )?P to turn over possession of the propert+ to Caperal as lawful holder of the leasehold rights and to pa+ CE?5 the following amountsG $a& P-,0(9,'00 as actual damagesF P'0,000 as moral damagesF and P'0,000 as attorne+'s fees. 4ince their motions for reconsideration were denied, 6 )?P and CE?5 filed separate petitions for review. Bn its petition $D.%. 1o. --.2#6&, )?P assails the award of actual and moral damages and attorne+'s fees in favor of CE?5. Epon the other hand, in her petition $D.%. 1o. --.2(9&, CE?5 contends that the Court of 5ppeals erred $-& in not holding that the questioned deed of assignment was a pa*tu( *o((issoriu( contrar+ to 5rticle 60.. of the Civil CodeF $b& in holding that the deed of assignment effected a novation of the promissor+ notesF $c& in holding that CE?5 was estopped from questioning the validit+ of the deed of assignment when she agreed to repurchase her leasehold rights under a deed of conditional saleF and $d& in reducing the amounts of moral damages and attorne+'s fees, in deleting the award of e8emplar+ damages, and in not increasing the amount of damages. Ae agree with CE?5 that the assignment of leasehold rights was a mortgage contract. Bt is undisputed that CE?5 obtained from )?P three separate loans totalling P22',000, each of which was covered b+ a promissor+ note. Bn all of these notes, there was a provision thatG 3Bn the event of foreclosure of the (ort4a4e securing this notes, BKAe further bind m+selfKourselves, <ointl+ and severall+, to pa+ the deficienc+, if an+.3 2 4imultaneous with the e8ecution of the notes was the e8ecution of 35ssignments of "easehold %ights3 8 where CE?5 assigned her leasehold rights and interest on a ##hectare fishpond, together with the improvements thereon. 5s pointed out b+ CE?5, the deeds of assignment constantl+ referred to the assignor $CE?5& as 3borrower3F the assigned rights, as mortgaged propertiesF and the instrument itself, as mortgage contract. oreover, under condition no. 66 of the deed, it was provided that 3failure to compl+ with the terms and condition of an+ of the loans shall cause all other loans to become due and demandable and all (ort4a4es s+all be fore*losed.3 5nd, condition no. 22 provided that if /fore*losure is actuall+ accomplished, the usual -0; attorne+'s fees and -0; liquidated damages of the total obligation shall be imposed.3 There is, therefore, no shred of doubt that a mortgage was intended.

?esides, in their stipulation of facts the parties admitted that the assignment was b+ wa+ of securit+ for the pa+ment of the loansF thusG
2. 5s securit+ for said loans, plaintiff "+dia P. Cuba e8ecuted two )eeds of 5ssignment of her "easehold %ights.

Bn People8s Ban5 9 Trust Co. vs. 1do(, 9 this Court had the occasion to rule that an assignment to guarantee an obligation is in effect a mortgage. Ae find no merit in )?P's contention that the assignment novated the promissor+ notes in that the obligation to pa+ a sum of mone+ the loans $under the promissor+ notes& was substituted b+ the assignment of the rights over the fishpond $under the deed of assignment&. 5s correctl+ pointed out b+ CE?5, the said assignment merel+ complemented or supplemented the notesF both could stand together. The former was onl+ an accessor+ to the latter. Contrar+ to )?P's submission, the obligation to pa+ a sum of mone+ remained, and the assignment merel+ served as securit+ for the loans covered b+ the promissor+ notes. 4ignificantl+, both the deeds of assignment and the promissor+ notes were e8ecuted on the same dates the loans were granted. 5lso, the last paragraph of the assignment statedG 3The assignor further reiterates and states all ter(s, *ovenants, and *onditions stipulated in t+e pro(issory note or notes covering the proceeds of this loan, ma@ing said promissor+ note or notes, to all intent and purposes, an inte4ral part hereof.3 1either did the assignment amount to pa+ment b+ *ession under 5rticle -6'' of the Civil Code for the plain and simple reason that there was onl+ one creditor, the )?P. 5rticle -6'' contemplates the e8istence of two or more creditors and involves the assignment of all the debtor's propert+. 1or did the assignment constitute dation in pa+ment under 5rticle -6#' of the civil Code, which readsG 3:ation in pa+ment, whereb+ propert+ is alienated to the creditor in satisfaction of a debt in mone+, shall be governed b+ the law on sales.3 Bt bears stressing that the assignment, being in its essence a mortgage, was but a securit+ and not a satisfaction of indebtedness. 13 Ae do not, however, bu+ CE?5's argument that condition no. -6 of the deed of assignment constituted pa*tu( *o((issoriu(. 4aid condition readsG
-6. That effective upon the breach of an+ condition of this assignment, the 5ssignor hereb+ appoints the 5ssignee his 5ttorne+-in-fact with full power and authorit+ to ta@e actual possession of the propert+ above-described, together with all improvements thereon, sub<ect to the approval of the 4ecretar+ of 5griculture and 1atural %esources, to lease the same or an+ portion thereof and collect rentals, to ma@e repairs or improvements thereon and pa+ the same, to sell or otherwise dispose of whatever rights the 5ssignor has or might have over said propert+ andKor its improvements and perform an+ other act which the 5ssignee ma+ deem convenient to protect its interest. 5ll e8penses advanced b+ the 5ssignee in connection with purpose above indicated which shall bear the same rate of interest aforementioned are also guaranteed b+ this 5ssignment. 5n+ amount received from rents, administration, sale or disposal of said propert+ ma+ be supplied b+ the 5ssignee to the pa+ment of repairs, improvements,

ta8es, assessments and other incidental e8penses and obligations and the balance, if an+, to the pa+ment of interest and then on the capital of the indebtedness secured hereb+. Bf after disposal or sale of said propert+ and upon application of total amounts received there shall remain a deficienc+, said 5ssignor hereb+ binds himself to pa+ the same to the 5ssignee upon demand, together with all interest thereon until full+ paid. The power herein granted shall not be revo@ed as long as the 5ssignor is indebted to the 5ssignee and all acts that ma+ be e8ecuted b+ the 5ssignee b+ virtue of said power are hereb+ ratified.

The elements of pa*tu( *o((issoriu( are as followsG $-& there should be a propert+ mortgaged b+ wa+ of securit+ for the pa+ment of the principal obligation, and $6& there should be a stipulation for automatic appropriation b+ the creditor of the thing mortgaged in case of non-pa+ment of the principal obligation within the stipulated period. 11 Condition no. -6 did not provide that the ownership over the leasehold rights would automaticall+ pass to )?P upon CE?5's failure to pa+ the loan on time. Bt merel+ provided for the appointment of )?P as attorne+-in-fact with authorit+, among other things, to sell or otherwise dispose of the said real rights, in case of default b+ CE?5, and to appl+ the proceeds to the pa+ment of the loan. This provision is a standard condition in mortgage contracts and is in conformit+ with 5rticle 60.9 of the Civil Code, which authori!es the mortgagee to foreclose the mortgage and alienate the mortgaged propert+ for the pa+ment of the principal obligation. )?P, however, e8ceeded the authorit+ vested b+ condition no. -6 of the deed of assignment. 5s admitted b+ it during the pre-trial, it had 3LwMithout foreclosure proceedings, whether <udicial or e8tra<udicial, . . . appropriated the LlMeasehold LrMights of plaintiff "+dia Cuba over the fishpond in question.3 Bts contention that it limited itself to mere administration b+ posting careta@ers is further belied b+ the deed of conditional sale it e8ecuted in favor of CE?5. The deed statedG
AH7%754, the =endor L)?PM by virtue of a deed of assi4n(ent e8ecuted in its favor b+ the herein vendees LCuba spousesM the former a*'uired all t+e ri4+t and interest of the latter over the above-described propert+F 888 888 888 The title to the real estate propert+ Lsi*M and all improvements thereon s+all re(ain in t+e na(e of t+e 3endor until after the purchase price, advances and interest shall have been full+ paid. $7mphasis supplied&.

Bt is obvious from the above-quoted paragraphs that )?P had appropriated and ta@en ownership of CE?5's leasehold rights merel+ on the strength of the deed of assignment. )?P cannot ta@e refuge in condition no. -6 of the deed of assignment to <ustif+ its act of appropriating the leasehold rights. 5s stated earlier, condition no. -6 did not provide that CE?5's default would operate to vest in )?P ownership of the said rights. ?esides, an assignment to guarantee an obligation, as in the present case, is virtuall+ a mortgage and not an absolute *onveyan*e of title which confers ownership on the assignee. 12

5t an+ rate, )?P's act of appropriating CE?5's leasehold rights was violative of 5rticle 60.. of the Civil Code, which forbids a credit or from appropriating, or disposing of, the thing given as securit+ for the pa+ment of a debt. The fact that CE?5 offered and agreed to repurchase her leasehold rights from )?P did not estop her from questioning )?P's act of appropriation. 7stoppel is unavailing in this case. 5s held b+ this Court in some cases, 13 estoppel cannot give validit+ to an act that is prohibited b+ law or against public polic+. Hence, the appropriation of the leasehold rights, being contrar+ to 5rticle 60.. of the Civil Code and to public polic+, cannot be deemed validated b+ estoppel. Bnstead of ta@ing ownership of the questioned real rights upon default b+ CE?5, )?P should have foreclosed the mortgage, as has been stipulated in condition no. 66 of the deed of assignment. ?ut, as admitted b+ )?P, there was no such foreclosure. Het, in its letter dated 6( :ctober -/9/, addressed to the inister of 5griculture and 1atural %esources and coursed through the )irector of the ?ureau of ,isheries and 5quatic %esources, )?P declared that it 3had fore*losed t+e (ort4a4e and enforced the assignment of leasehold rights on arch 6-, -/9/ for failure of said spouses LCuba spoucesM to pa+ their loan amorti!ations.3 14 This onl+ goes to show that )?P was aware of the necessit+ of foreclosure proceedings. Bn view of the false representation of )?P that it had alread+ foreclosed the mortgage, the ?ureau of ,isheries cancelled CE?5's original lease permit, approved the deed of conditional sale, and issued a new permit in favor of CE?5. 4aid acts which were predicated on such false representation, as well as the subsequent acts emanating from )?P's appropriation of the leasehold rights, should therefore be set aside. To validate these acts would open the floodgates to circumvention of 5rticle 60.. of the Civil Code. 7ven in cases where foreclosure proceedings were had, this Court had not hesitated to nullif+ the consequent auction sale for failure to compl+ with the requirements laid down b+ law, such as 5ct 1o. 2-2', as amended. 1- Aith more reason that the sale of propert+ given as securit+ for the pa+ment of a debt be set aside if there was no prior fore closure proceeding. Hence, )?P should render an accounting of the income derived from the operation of the fishpond in question and appl+ the said income in accordance with condition no. -6 of the deed of assignment which providedG 35n+ amount received from rents, administration, . . . ma+ be applied to the pa+ment of repairs, improvements, ta8es, assessment, and other incidental e8penses and obligations and the balance, if an+, to the pa+ment of interest and then on the capital of the indebtedness. . .3 Ae shall now ta@e up the issue of damages. 5rticle 6-// providesG

78cept as provided b+ law or b+ stipulation, one is entitled to an adequate compensation onl+ for such pecuniar+ loss suffered b+ him as he has dul+ proved. 4uch compensation is referred to as actual or compensator+ damages.

5ctual or compensator+ damages cannot be presumed, but must be proved with reasonable degree of certaint+. 16 5 court cannot rel+ on speculations, con<ectures, or guesswor@ as to the fact and amount of damages, but must depend upon competent proof that the+ have been suffered b+ the in<ured part+ and on the best obtainable evidence of the actual amount thereof. 12 Bt must point out specific facts which could afford a basis for measuring whatever compensator+ or actual damages are borne. 18 Bn the present case, the trial court awarded in favor of CE?5 P-,0(9,'00 as actual damages consisting of P''0,000 which represented the value of the alleged lost articles of CE?5 and P'-9,'00 which represented the value of the 620,000 pieces of bangus allegedl+ stoc@ed in -/9/ when )?P first e<ected CE?5 from the fishpond and the ad<oining house. This award was affirmed b+ the Court of 5ppeals. Ae find that the alleged loss of personal belongings and equipment was not proved b+ clear evidence. :ther than the testimon+ of CE?5 and her careta@er, there was no proof as to the e8istence of those items before )?P too@ over the fishpond in question. 5s pointed out b+ )?P, there was not 3inventor+ of the alleged lost items before the loss which is normal in a pro<ect which sometimes, if not most often, is left to the care of other persons.3 1either was a single receipt or record of acquisition presented. Curiousl+, in her complaint dated -9 a+ -/.', CE?5 included 3losses of propert+3 as among the damages resulting from )?P's ta@e-over of the fishpond. Het, it was onl+ in 4eptember -/.' when her son and a careta@er went to the fishpond and the ad<oining house that she came to @now of the alleged loss of several articles. 4uch claim for 3losses of propert+,3 having been made before @nowledge of the alleged actual loss, was therefore speculative. The alleged loss could have been a mere afterthought or subterfuge to <ustif+ her claim for actual damages. Aith regard to the award of P'-9,000 representing the value of the alleged 620,000 pieces of bangus which died when )?P too@ possession of the fishpond in arch -/9/, the same was not called for. 4uch loss was not dul+ provedF besides, the claim therefor was dela+ed unreasonabl+. ,rom -/9/ until after the filing of her complaint in court in a+ -/.', CE?5 did not bring to the attention of )?P the alleged loss. Bn fact, in her letter dated 6# :ctober -/9/, 19 she declaredG
-. That from ,ebruar+ to a+ -/9., B was then seriousl+ ill in anila and within the same period B neglected the management and supervision of the cultivation and harvest of the produce of the aforesaid fishpond thereb+ resulting to the irreparable loss in the produce of the same in the amount of about P'00,000.00 to m+ great damage and pre<udice due to fraudulent acts of some of m+ fishpond wor@ers.

1owhere in the said letter, which was written seven months after )?P too@ possession of the fishpond, did CE?5 intimate that upon )?P's ta@e-over there was a total of

620,000 pieces of bangus, but all of which died because of )?P's representatives prevented her men from feeding the fish. The award of actual damages should, therefore, be struc@ down for lac@ of sufficient basis. Bn view, however, of )?P's act of appropriating CE?5's leasehold rights which was contrar+ to law and public polic+, as well as its false representation to the then inistr+ of 5griculture and 1atural %esources that it had 3foreclosed the mortgage,3 an award of moral damages in the amount of P'0,000 is in order conformabl+ with 5rticle 66-/$-0&, in relation to 5rticle 6-, of the Civil Code. 78emplar+ or corrective damages in the amount of P6',000 should li@ewise be awarded b+ wa+ of e8ample or correction for the public good. 23 There being an award of e8emplar+ damages, attorne+'s fees are also recoverable. 21 AH7%7,:%7, the 6' a+ -//# )ecision of the Court of 5ppeals in C5-D.%. C= 1o. 6('2' is hereb+ %7=7%47), e8cept as to the award of P'0,000 as moral damages, which is hereb+ sustained. The 2- >anuar+ -//0 )ecision of the %egional Trial Court of Pangasinan, ?ranch '#, in Civil Case 1o. 5--'9# is :)B,B7) setting aside the finding that condition no. -6 of the deed of assignment constituted pa*tu( *o((issoriu( and the award of actual damagesF and b+ reducing the amounts of moral damages from P-00,000 to P'0,000F the e8emplar+ damages, from P'0,000 to P6',000F and the attorne+'s fees, from P-00,000 to P60,000. The )evelopment ?an@ of the Philippines is hereb+ ordered to render an accounting of the income derived from the operation of the fishpond in question. "et this case be %7 51)7) to the trial court for the reception of the income statement of )?P, as well as the statement of the account of "+dia P. Cuba, and for the determination of each part+'s financial obligation to one another. 4: :%)7%7). Bellosillo, 3itu4 and ;apunan, 66., *on*ur. $oo4'o4e5
- :riginal %ecord $:%&, --9. 6 :%, -(.--90. 2 7ee :%, -(/. # Per >udge 5rtemio %. Corpu!, :%, (.(-90'. ' Per anuel C. Herrera, 6., with 5rtemon ). "una and 5lfredo >. "agamon, 66., concurring, Rollo, D.%. 1o. --.2#6, 6--#-F Rollo, D.%. 1o. --.2(9, 2'-'2.

( Rollo, D.%. 1o. --.2#6, #2F Rollo, D.%. 1o. --.2(9, ''. 9 78hibits 3?,3 3C,3 and 3)3F :%, 29-2/. . 78hibits 3?--,3 3C--3 and 3)--.3 / (# Phil. -6(, -26 L-/29M. -0 Philippine ?an@ of Commerce v. )e =era, ( 4C%5 -06(, -06/ L-/(6M. -- = T:"71TB1:, 5%TE%: ., C: 71T5%B74 & >E%B4P%E)71C7 :1 TH7 CB=B" C:)7 :, TH7 PHB"BPPB174 '2(-'29 L-//6M *itin4 E+ Tong v. Court of 5ppeals, -(4C%5 2.2 L-/..M. -6 Philippine ?an@ of Commerce v. )e =era, supra note -0. -2 7ugenio v. Perdido, /9 Phil. #-, ## L-/''MF %epublic v. Do ?on "ee, - 4C%5 --((, --90 L-/(-MF Hian v. Court of Ta8 5ppeals, '/ 4C%5 --0, -6# L-/9#M. -# 78hibit 31---53F :%, #'#. -' %o8as v. Court of 5ppeals, 66- 4C%5 96/ L-//2MF 4empio v. Court of 5ppeals, 6(2 4C%5 (-9 L-//(M. -( )el undo v. Court of 5ppeals, 6#0 4C%5 2#. L-//'MF "ufthansa Derman 5irlines v. Court of 5ppeals, 6#2 4C%5 (00 L-//'MF )evelopment ?an@ of the Philippines v. Court of 5ppeals, 6#/ 4C%5 22- L-//'MF )el %osario v. Court of 5ppeals, D.%. 1o. --.26', 6/ >anuar+ -//9. -9 "ufthansa Derman 5irlines v. Court of 5ppeals, supra note -(F People v. %osario, 6#( 4C%5 ('. L-//'MF )el %osario v. Court of 5ppeals, supra note -(F 4umalpong v. Court of 5ppeals, D.%. 1o. -62#0#, 6( ,ebruar+ -//9. -. )el undo v. Court of 5ppeals, supra note -(.

-/ 78hibit #, :%, '(0. 60 5rticle 666/, Civil Code. 6- 5rticle 660.$-&, Civil Code.

Republic of the Philippines SUPREME COURT Manila EN '0NC G.R. No. &<11=>1 161.+ 23, 1>18

NDRES :UIROG , plaintiffCappellant) vs. P RSONS ! RD7 RE CO., defendantCappellee. Al!redo Chicote" Jose Arnai# and Pascual $. A#an#a !or appellant. Cross!ield % O&$rien !or appellee. V NCE? , J.* On >anuar! ,<) *.**) in this cit! of %anila) a contract in the follo+in" tenor +as entered into b! and bet+een the plaintiff) as part! of the first part) and >. Parsons #to +hose ri"hts and obli"ations the present defendant later subro"ated itself$) as part! of the second part@ CONTR0CT EMEC=TED 'K 0ND 'ETJEEN 0NDRES 6=IROI0 0ND >. P0RSONS) 'OT& MERC&0NTS EST0' IS&ED IN M0NI 0) AOR T&E EMC =SIVE S0 E OA 26=IROI02 'EDS IN T&E VIS0K0N IS 0NDS. 0RTIC E *. Don 0ndres 6uiro"a "rants the e8clusive ri"ht to sell his beds in the Visa!an Islands to >. Parsons under the follo+in" conditions@ #0$ Mr. 6uiro"a shall furnish beds of his %anufacture to Mr. Parsons for the latter:s establish%ent in Iloilo) and shall invoice the% at the sa%e price he has fi8ed for sales) in Manila) and) in the invoices) shall %a(e and allo+ance of a discount of ,3 per cent of the invoiced prices) as co%%ission on the saleE and Mr. Parsons shall order the beds b! the do7en) +hether of the sa%e or of different st!les. #'$ Mr. Parsons binds hi%self to pa! Mr. 6uiro"a for the beds received) +ithin a period of si8t! da!s fro% the date of their ship%ent. #C$ The e8penses for transportation and ship%ent shall be borne b! M. 6uiro"a) and the frei"ht) insurance) and cost of unloadin" fro% the vessel at the point +here the beds are received) shall be paid b! Mr. Parsons. #D$ If) before an invoice falls due) Mr. 6uiro"a should re4uest its pa!%ent) said pa!%ent +hen %ade shall be considered as a pro%pt pa!%ent) and as such a deduction of , per cent shall be %ade fro% the a%ount of the invoice. The sa%e discount shall be %ade on the a%ount of an! invoice +hich Mr. Parsons %a! dee% convenient to pa! in cash. #E$ Mr. 6uiro"a binds hi%self to "ive notice at least fifteen da!s before hand of an! alteration in price +hich he %a! plan to %a(e in respect to his beds) and a"rees that if on the date +hen such alteration ta(es effect he should have an! order pendin" to be served to Mr. Parsons) such order shall en;o! the advanta"e of the alteration if the price thereb! be lo+ered) but shall not be affected b! said alteration if the price thereb! be increased)

for) in this latter case) Mr. 6uiro"a assu%ed the obli"ation to invoice the beds at the price at +hich the order +as "iven. #A$ Mr. Parsons binds hi%self not to sell an! other (ind e8cept the 26uiro"a2 beds. 0RT. ,. In co%pensation for the e8penses of advertise%ent +hich) for the benefit of both contractin" parties) Mr. Parsons %a! find hi%self obli"ed to %a(e) Mr. 6uiro"a assu%es the obli"ation to offer and "ive the preference to Mr. Parsons in case an!one should appl! for the e8clusive a"enc! for an! island not co%prised +ith the Visa!an "roup. 0RT. 5. Mr. Parsons %a! sell) or establish branches of his a"enc! for the sale of 26uiro"a2 beds in all the to+ns of the 0rchipela"o +here there are no e8clusive a"ents) and shall i%%ediatel! report such action to Mr. 6uiro"a for his approval. 0RT. <. This contract is %ade for an unli%ited period) and %a! be ter%inated b! either of the contractin" parties on a previous notice of ninet! da!s to the other part!. Of the three causes of action alle"ed b! the plaintiff in his co%plaint) onl! t+o of the% constitute the sub;ect %atter of this appeal and both substantiall! a%ount to the aver%ent that the defendant violated the follo+in" obli"ations@ not to sell the beds at hi"her prices than those of the invoicesE to have an open establish%ent in IloiloE itself to conduct the a"enc!E to (eep the beds on public e8hibition) and to pa! for the advertise%ent e8penses for the sa%eE and to order the beds b! the do7en and in no other %anner. 0s %a! be seen) +ith the e8ception of the obli"ation on the part of the defendant to order the beds b! the do7en and in no other %anner) none of the obli"ations i%puted to the defendant in the t+o causes of action are e8pressl! set forth in the contract. 'ut the plaintiff alle"ed that the defendant +as his a"ent for the sale of his beds in Iloilo) and that said obli"ations are i%plied in a contract of co%%ercial a"enc!. The +hole 4uestion) therefore) reduced itself to a deter%ination as to +hether the defendant) b! reason of the contract hereinbefore transcribed) +as a purchaser or an a"ent of the plaintiff for the sale of his beds. In order to classif! a contract) due re"ard %ust be "iven to its essential clauses. In the contract in 4uestion) +hat +as essential) as constitutin" its cause and sub;ect %atter) is that the plaintiff +as to furnish the defendant +ith the beds +hich the latter %i"ht order) at the price stipulated) and that the defendant +as to pa! the price in the %anner stipulated. The price a"reed upon +as the one deter%ined b! the plaintiff for the sale of these beds in Manila) +ith a discount of fro% ,9 to ,3 per cent) accordin" to their class. Pa!%ent +as to be %ade at the end of si8t! da!s) or before) at the plaintiff:s re4uest) or in cash) if the defendant so preferred) and in these last t+o cases an additional discount +as to be allo+ed for pro%pt pa!%ent. These are precisel! the essential features of a contract of purchase and sale. There +as the obli"ation on the part of the plaintiff to suppl! the beds) and) on the part of the defendant) to pa! their price. These features e8clude the le"al conception of an a"enc! or order to sell +hereb! the %andator! or a"ent received the thin" to sell it) and does not pa! its price) but delivers to the principal the price he obtains fro% the sale of the thin" to a third person) and if he does not succeed in sellin" it) he returns it. '! virtue of the contract bet+een the plaintiff and the defendant) the latter) on receivin" the beds) +as necessaril! obli"ed to pa! their price +ithin the ter% fi8ed) +ithout an! other consideration and re"ardless as to +hether he had or had not sold the beds.

It +ould be enou"h to hold) as +e do) that the contract b! and bet+een the defendant and the plaintiff is one of purchase and sale) in order to sho+ that it +as not one %ade on the basis of a co%%ission on sales) as the plaintiff clai%s it +as) for these contracts are inco%patible +ith each other. 'ut) besides) e8a%inin" the clauses of this contract) none of the% is found that substantiall! supports the plaintiff:s contention. Not a sin"le one of these clauses necessaril! conve!s the idea of an a"enc!. The +ords co ission on sales used in clause #0$ of article * %ean nothin" else) as stated in the contract itself) than a %ere discount on the invoice price. The +ord agenc') also used in articles , and 5) onl! e8presses that the defendant +as the onl! one that could sell the plaintiff:s beds in the Visa!an Islands. Jith re"ard to the re%ainin" clauses) the least that can be said is that the! are not inco%patible +ith the contract of purchase and sale. The plaintiff calls attention to the testi%on! of Ernesto Vidal) a for%er viceCpresident of the defendant corporation and +ho established and %ana"ed the latter:s business in Iloilo. It appears that this +itness) prior to the ti%e of his testi%on!) had serious trouble +ith the defendant) had %aintained a civil suit a"ainst it) and had even accused one of its partners) Iuiller%o Parsons) of falsification. &e testified that it +as he +ho drafted the contract E8hibit 0) and) +hen 4uestioned as to +hat +as his purpose in contractin" +ith the plaintiff) replied that it +as to be an agent !or his beds and to collect a co ission on sales. &o+ever) accordin" to the defendant:s evidence) it +as Mariano ope7 Santos) a director of the corporation) +ho prepared E8hibit 0. 'ut) even supposin" that Ernesto Vidal has stated the truth) his state%ent as to +hat +as his idea in contractin" +ith the plaintiff is of no i%portance) inas%uch as the a"ree%ents contained in E8hibit 0 +hich he clai%s to have drafted) constitute) as +e have said) a contract of purchase and sale) and not one of co%%ercial a"enc!. This onl! %eans that Ernesto Vidal +as %ista(en in his classification of the contract. 'ut it %ust be understood that a contract is +hat the la+ defines it to be) and not +hat it is called b! the contractin" parties. The plaintiff also endeavored to prove that the defendant had returned beds that it could not sellE that) +ithout previous notice) it for+arded to the defendant the beds that it +antedE and that the defendant received its co%%ission for the beds sold b! the plaintiff directl! to persons in Iloilo. 'ut all this) at the %ost onl! sho+s that) on the part of both of the%) there +as %utual tolerance in the perfor%ance of the contract in disre"ard of its ter%sE and it "ives no ri"ht to have the contract considered) not as the parties stipulated it) but as the! perfor%ed it. Onl! the acts of the contractin" parties) subse4uent to) and in connection +ith) the e8ecution of the contract) %ust be considered for the purpose of interpretin" the contract) +hen such interpretation is necessar!) but not +hen) as in the instant case) its essential a"ree%ents are clearl! set forth and plainl! sho+ that the contract belon"s to a certain (ind and not to another. Aurther%ore) the return %ade +as of certain brass beds) and +as not effected in e8chan"e for the price paid for the%) but +as for other beds of another (indE and for the letter E8hibit C*) re4uested the plaintiff:s prior consent +ith respect to said beds) +hich sho+s that it +as not considered that the defendant had a ri"ht) b! virtue of the contract) to %a(e this return. 0s re"ards the ship%ent of beds +ithout previous notice) it is insinuated in the record that these brass beds +ere precisel! the ones so shipped) and that) for this ver! reason) the plaintiff a"reed to their return. 0nd +ith respect to the soCcalled co%%issions) +e have said that the! %erel! constituted a discount on the invoice price) and the reason for appl!in" this benefit to the beds sold directl! b! the plaintiff to persons in Iloilo +as because) as the defendant obli"ated itself in the contract to incur the e8penses of advertise%ent of the plaintiff:s beds) such sales +ere to be considered as a result of that advertise%ent.

In respect to the defendant:s obli"ation to order b! the do7en) the onl! one e8pressl! i%posed b! the contract) the effect of its breach +ould onl! entitle the plaintiff to disre"ard the orders +hich the defendant %i"ht place under other conditionsE but if the plaintiff consents to fill the%) he +aives his ri"ht and cannot co%plain for havin" acted thus at his o+n free +ill. Aor the fore"oin" reasons) +e are of opinion that the contract b! and bet+een the plaintiff and the defendant +as one of purchase and sale) and that the obli"ations the breach of +hich is alle"ed as a cause of action are not i%posed upon the defendant) either b! a"ree%ent or b! la+. The ;ud"%ent appealed fro% is affir%ed) +ith costs a"ainst the appellant. So ordered. Arellano" C.J." (orres" Johnson" )treet and *alcol " JJ." concur. Republic of the Philippines SUPREME COURT Manila EN '0NC

G.R. No. L-23821 #6r78 33, 1921 0ER "O., LTD., petitioner, vs. *OSE /. LING#D, &5 #c47'9 "omm7557o'er o: I'4er'&8 Re;e'+e, respondent. Ross, 7elp+ and Carras*oso for petitioner. 1ffi*e of t+e 7oli*itor <eneral Arturo A. Alafriz, 7oli*itor Ale)andro B. Afuron4 and 7pe*ial Atty. Balbino <atdula, 6r. for respondent.

$ERN#NDO, J.: Petitioner Ner & Co., "td. would have us reverse a decision of the Court of Ta8 5ppeals, holding it liable as a commercial bro@er under 4ection -/# $t& of the 1ational Bnternal %evenue Code. Bts plea, notwithstanding the vigorous effort of its counsel, is not sufficientl+ persuasive. 5n obstacle, well-nigh insuperable stands in the wa+. The decision under review conforms to and is in accordance with the controlling doctrine announced in the recent case of Co((issioner of =nternal Revenue v. Constantino . 1 The decisive test, as therein set forth, is the retention of the ownership of the goods delivered to the possession of the dealer, li@e herein petitioner, for resale to customers, the price and terms remaining sub<ect to the control of the firm consigning such goods. The facts, as found b+ respondent Court, to which we defer, unmista@abl+ indicate that

such a situation does e8ist. The <uridical consequences must inevitabl+ follow. Ae affirm. Bt was shown that petitioner was assessed b+ the then Commissioner of Bnternal %evenue elecio %. )omingo the sum of P60,696.22 as the commercial bro@er's percentage ta8, surcharge, and compromise penalt+ for the period from >ul+ -, -/#/ to )ecember 2-, -/'2. There was a request on the part of petitioner for the cancellation of such assessment, which request was turned down. 5s a result, it filed a petition for review with the Court of Ta8 5ppeals. Bn its answer, the then Commissioner )omingo maintained his stand that petitioner should be ta8ed in such amount as a commercial bro@er. Bn the decision now under review, promulgated on :ctober -/, -/(6, the Court of Ta8 5ppeals held petitioner ta8able e8cept as to the compromise penalt+ of P'00.00, the amount due from it being fi8ed at P-/,996.22. 4uch liabilit+ arose from a contract of petitioner with the Enited 4tates %ubber Bnternational, the former being referred to as the )istributor and the latter specificall+ designated as the Compan+. The contract was to appl+ to transactions between the former and petitioner, as )istributor, from >ul+ -, -/#. to continue in force until terminated b+ either part+ giving to the other si8t+ da+s' notice. 2 The shipments would cover products 3for consumption in Cebu, ?ohol, "e+te, 4amar, >olo, 1egros :riental, and indanao e8cept LtheM province of )avao3, petitioner, as )istributor, being precluded from disposing such products elsewhere than in the above places unless written consent would first be obtained from the Compan+. 3 Petitioner, as )istributor, is required to e8ert ever+ effort to have the shipment of the products in the ma8imum quantit+ and to promote in ever+ wa+ the sale thereof. 4 The prices, discounts, terms of pa+ment, terms of deliver+ and other conditions of sale were sub<ect to change in the discretion of the Compan+. Then came this crucial stipulationG 3The Compan+ shall from time to time consign to the )istributor and the )istributor will receive, accept andKor hold upon consignment the products specified under the terms of this agreement in such quantities as in the <udgment of the Compan+ ma+ be necessar+ for the successful solicitation and maintenance of business in the territor+, and the )istributor agrees that responsibilit+ for the final sole of all goods delivered shall rest with him. 5ll goods on consignment shall remain the propert+ of the Compan+ until sold b+ the )istributor to the purchaser or purchasers, but all sales made b+ the )istributor shall be in his name, in which the sale price of all goods sold less the discount given to the )istributor b+ the Compan+ in accordance with the provision of paragraph -2 of this agreement, whether or not such sale price shall have been collected b+ the )istributor from the purchaser or purchasers, shall immediatel+ be paid and remitted b+ the )istributor to the Compan+. Bt is further agreed that this agreement does not constitute )istributor the agent or legal representative # of the Compan+ for an+ purpose whatsoever. )istributor is not granted an+ right or authorit+ to assume or to create an+ obligation or responsibilit+, e8press or implied, in behalf of or in the name of the Compan+, or to bind the Compan+ in an+ manner or thing whatsoever.3 6

5ll specifications for the goods ordered were sub<ect to acceptance b+ the Compan+ with petitioner, as )istributor, required to accept such goods shipped as well as to clear the same through customs and to arrange for deliver+ in its warehouse in Cebu Cit+. oreover, orders are to be filled in whole or in part from the stoc@s carried b+ the Compan+'s neighboring branches, subsidiaries or other sources of Compan+'s brands. 2 4hipments were to be invoiced at prices to be agreed upon, with the customs duties being paid b+ petitioner, as )istributor, for account of the Compan+. 8 oreover, all resale prices, lists, discounts and general terms and conditions of local resale were to be sub<ect to the approval of the Compan+ and to change from time to time in its discretion. 9 The dealer, as )istributor, is allowed a discount of ten percent on the net amount of sales of merchandise made under such agreement. 13 :n a date to be determined b+ the Compan+, the petitioner, as )istributor, was required to report to it data showing in detail all sales during the month immediatel+ preceding, specif+ing therein the quantities, si!es and t+pes together with such information as ma+ be required for accounting purposes, with the Compan+ rendering an invoice on sales as described to be dated as of the date of inventor+ and sales report. 5s )istributor, petitioner had to ma@e pa+ment on such invoice or invoices on due date with the Compan+ being privileged at its option to terminate and cancel the agreement forthwith upon the failure to compl+ with this obligation. 11 The Compan+, at its own e8pense, was to @eep the consigned stoc@ full+ insured against loss or damage b+ fire or as a result of fire, the polic+ of such insurance to be pa+able to it in the event of loss. Petitioner, as )istributor, assumed full responsibilit+ with reference to the stoc@ and its safet+ at all timesF and upon request of the Compan+ at an+ time, it was to render inventor+ of the e8isting stoc@ which could be sub<ect to change. 12 There was furthermore this equall+ tell-tale covenantG 3Epon the termination or an+ cancellation of this agreement all goods held on consignment shall be held b+ the )istributor for the account of the Compan+, without e8pense to the Compan+, until such time as provision can be made b+ the Compan+ for disposition.3 13 The issue with the Court of Ta8 5ppeals, as with us now, is whether the relationship thus created is one of vendor and vendee or of bro@er and principal. 1ot that there would have been the slightest doubt were it not for the categorical denial in the contract that petitioner was not constituted as 3the agent or legal representative of the Compan+ for an+ purpose whatsoever.3 Bt would be, however, to impart to such an e8press disclaimer a meaning it should not possess to ignore what is manifestl+ the role assigned to petitioner considering the instrument as a whole. That would be to lose sight altogether of what has been agreed upon. The Court of Ta8 5ppeals was not misled in the language of the decision now on appealG 3That the petitioner Ner & Co., "td. is, b+ contractual stipulation, an agent of E.4. %ubber Bnternational is borne out b+ the facts that petitioner can dispose of the products of the Compan+ onl+ to certain persons or entities and within stipulated limits, unless e8cepted b+ the contract or b+ the %ubber Compan+ $Par. 6&F that it merel+ receives, accepts andKor holds upon consignment the products, which remain properties of the latter compan+ $Par. .&F that ever+ effort shall be made b+ petitioner to promote in ever+ wa+ the sale of the products $Par. 2&F that sales made b+ petitioner are sub<ect to approval b+ the compan+ $Par. -6&F that on dates determined b+ the rubber compan+, petitioner shall render a detailed

report showing sales during the month $Par. -#&F that the rubber compan+ shall invoice the sales as of the dates of inventor+ and sales report $Par. -#&F that the rubber compan+ agrees to @eep the consigned goods full+ insured under insurance policies pa+able to it in case of loss $Par. -'&F that upon request of the rubber compan+ at an+ time, petitioner shall render an inventor+ of the e8isting stoc@ which ma+ be chec@ed b+ an authori!ed representative of the former $Par. -'&F and that upon termination or cancellation of the 5greement, all goods held on consignment shall be held b+ petitioner for the account of the rubber compan+ until their disposition is provided for b+ the latter $Par. -/&. 5ll these circumstances are irreconcilabl+ antagonistic to the idea of an independent merchant.3 14 Hence its conclusionG 3However, upon anal+sis of the contract, as a whole, together with the actual conduct of the parties in respect thereto, we have arrived at the conclusion that the relationship between them is one of bro@erage or agenc+.3 1- Ae find ourselves in agreement, notwithstanding the able brief filed on behalf of petitioner b+ its counsel. 5s noted at the outset, we cannot heed petitioner's plea for reversal. -. 5ccording to the 1ational Bnternal %evenue Code, a commercial bro@er 3includes all persons, other than importers, manufacturers, producers, or bona fide emplo+ees, who, for compensation or profit, sell or bring about sales or purchases of merchandise for other persons or bring proposed bu+ers and sellers together, or negotiate freights or other business for owners of vessels or other means of transportation, or for the shippers, or consignors or consignees of freight carried b+ vessels or other means of transportation. The term includes commission merchants.3 16 The controlling decision as to the test to be followed as to who falls within the above definition of a commercial bro@er is that of Co((issioner of =nternal Revenue v. Constantino . 12 Bn the language of >ustice >. ?. ". %e+es, who penned the opinionG 34ince the compan+ retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were sub<ect to the compan+'s control, the relationship between the compan+ and the dealer is one of agenc+, ... .3 18 5n e8cerpt from 4alisbur+ v. ?roo@s 19 cited in support of such a view followsG 3 'The difficult+ in distinguishing between contracts of sale and the creation of an agenc+ to sell has led to the establishment of rules b+ the application of which this difficult+ ma+ be solved. The decisions sa+ the transfer of title or agreement to transfer it for a price paid or promised is the essence of sale. Bf such transfer puts the transferee in the attitude or position of an owner and ma@es him liable to the transferor as a debtor for the agreed price, and not merel+ as an agent who must account for the proceeds of a resale, the transaction is a saleF while the essence of an agenc+ to sell is the deliver+ to an agent, not as his propert+, but as the propert+ of the principal, who remains the owner and has the right to control sales, fi8 the price, and terms, demand and receive the proceeds less the agent's commission upon sales made.' 3 23 The opinion relied on the wor@ of echem on 4ales as well as echem on 5genc+. Ailliston and Tiedman both of whom wrote treatises on 4ales, were li@ewise referred to. 7quall+ relevant is this portion of the 4alisbur+ opinionG 3Bt is difficult to understand or appreciate the necessit+ or presence of these mutual requirements and obligations on an+ theor+ other than that of a contract of agenc+. 4alisbur+ was to furnish the mill and

put the timber owned b+ him into a mar@etable condition in the form of lumberF ?roo@s was to furnish the funds necessar+ for that purpose, sell the manufactured product, and account therefor to 4alisbur+ upon the specific terms of the agreement, less the compensation fi8ed b+ the parties in lieu of interest on the mone+ advanced and for services as agent. These requirements and stipulations are in tent with an+ other conception of the contract. Bf it constitutes an agreement to sell, the+ are meaningless. ?ut the+ cannot be ignored. The+ were placed there for some purpose, doubtless as the result of definite antecedent negotiations therefore, consummated b+ the final written e8pression of the agreement.3 21 Hence the Constantino opinion could categoricall+ affirm that the mere disclaimer in a contract that an entit+ li@e petitioner is not 3the agent or legal representative for an+ purpose whatsoever3 does not suffice to +ield the conclusion that it is an independent merchant if the control over the goods for resale of the goods consigned is pervasive in character. The Court of Ta8 5ppeals decision now under review pa+s fealt+ to such an applicable doctrine. 6. 1o merit therefore attaches to the first error imputed b+ petitioner to the Court of Ta8 5ppeals. 1either did such Court fail to appreciate in its true significance the act and conduct pursued in the implementation of the contract b+ both the Enited 4tates %ubber Bnternational and petitioner, as was contended in the second assignment of error. Petitioner ought to have been aware that there was no need for such an inquir+. The terms of the contract, as noted, spea@ quite clearl+. There is lac@ing that degree of ambiguit+ sufficient to give rise to serious doubt as to what was contemplated b+ the parties. 5 reading thereof discloses that the relationship arising therefrom was not one of seller and purchaser. Bf it were thus intended, then it would not have included covenants which in their totalit+ would negate the concept of a firm acquiring as vendee goods from another. Bnstead, the stipulations were so worded as to lead to no other conclusion than that the control b+ the Enited 4tates %ubber Bnternational over the goods in question is, in the language of the Constantino opinion, 3pervasive3. The insistence on a relationship opposed to that apparent from the language emplo+ed might even +ield the impression that such a mode of construction was resorted to in order that the applicabilit+ of a ta8ing statute might be rendered nugator+. Certainl+, such a result is to be avoided. 1or is it to be lost sight of that on a matter left to the discretion of the Court of Ta8 5ppeals which has developed an e8pertise in view of its function being limited solel+ to the interpretation of revenue laws, this Court is not prepared to substitute its own <udgment unless a grave abuse of discretion is manifest. Bt would be to frustrate the ob<ective for which administrative tribunals are created if the <udiciar+, absent such a showing, is to ignore their appraisal on a matter that forms the staple of their speciali!ed competence. Ahile it is to be admitted that counsel for petitioner did scrutini!e with care the decision under review with a view to e8posing what was considered its flaws, it cannot be said that there was such a failure to appl+ what the law commands as to call for its reversal. Bnstead, what cannot be denied is that the Court of Ta8 5ppeals reached a result to which the Court in the recent Constantino decision gave the imprimatur of its approval.

AH7%7,:%7, the Court of Ta8 5ppeals decision of :ctober -/, -/(6 is affirmed. Aith costs against petitioner. Con*ep*ion C.6., Reyes, 6.B.L., :izon, Ma5alintal, >aldivar, Castro, Tee+an5ee, Barredo, 3illa(or and Ma5asiar, 66., *on*ur.

$oo4'o4e5
- "-6'/6(, ,ebruar+ 69, -/90, 2- 4C%5 99/. 6 Contract between the Enited 4tates %ubber Bnternational and petitioner, par. - quoted in the )ecision of the Court of Ta8 5ppeals, 5nne8 5 to Petition, p. 6. 2 =bid., par. 6, p. 6. # =bid., par. 2, p. 6. ' =bid., par. 9, p. 2. ( =bid., par. ., pp. 2 and #. 9 =bid., par. /, to #. . =bid., par. -0, p. #. / =bid., par. -6, p. #. -0 =bid., par. -2, p. #. -- =bid., par. -#, p. '. -6 =bid., par. -', p. '. -2 =bid., par. -/, p. (. -# )ecision, 5nne8 5 to the Petition, pp. -0---. -' =bid., p. -0. -( 4ection -/#$t&. -9 "-6'/6(, ,ebruar+ 69, -/90, 2- 4C%5 99/. -. =bid., p. 9.'. -/ /# 47 --9 $-/-9&. 60 "-6'/6(, ,ebruar+ 69, -/90, 2- 4C%5 99/, 9/(. 6- /# 47 --9, --. $-/-9&.

Republic of the Philippines SUPREME COURT Manila AIRST DIVISION G.R. No. L-34338 No;ember 21, 1984 LO!RDES .#LERIO LIM, petitioner, vs. PEOPLE O$ THE PHILIPPINES, respondent. RELO.#, J.: Petitioner "ourdes =alerio "im was found guilt+ of the crime of estafa and was sentenced 3to suffer an imprisonment of four $#& months and one $-& da+ as minimum to two $6& +ears and four $#& months as ma8imum, to indemnif+ the offended part+ in the amount of P''/.'0, with subsidi!e imprisonment in case of insolvenc+, and to pa+ the costs.3 $p. -#, %ollo& ,rom this <udgment, appeal was ta@en to the then Court of 5ppeals which affirmed the decision of the lower court but modified the penalt+ imposed b+ sentencing her 3to suffer an indeterminate penalt+ of one $-& month and one $-& da+ of arresto (ayor as minimum to one $-& +ear and one $-& da+ of prision *orre**ional as ma8imum, to indemnif+ the complainant in the amount of P''0.'0 without subsidiar+ imprisonment, and to pa+ the costs of suit.3 $p. 6#, %ollo& The question involved in this case is whether the receipt, 78hibit 353, is a contract of agenc+ to sell or a contract of sale of the sub<ect tobacco between petitioner and the complainant, aria de Du!man =da. de 5+roso, thereb+ precluding criminal liabilit+ of petitioner for the crime charged. The findings of facts of the appellate court are as followsG
... The appellant is a businesswoman. :n >anuar+ -0, -/((, the appellant went to the house of aria 5+roso and proposed to sell 5+roso's tobacco. 5+roso agreed to the proposition of the appellant to sell her tobacco consisting of (-' @ilos at P-.20 a @ilo. The appellant was to receive the overprice for which she could sell the tobacco. This agreement was made in the presence of plaintiff's sister, 4alud D. ?antug. 4alvador ?antug drew the document, 78h. 5, dated >anuar+ -0, -/((, which readsG To Ahom Bt a+ ConcernG This is to certif+ that B have received from rs. aria de Du!man =da. de 5+roso. of Dapan, 1ueva 7ci<a, si8 hundred fifteen @ilos of leaf tobacco to be sold at Pl.20 per @ilo. The proceed in the amount of 4even Hundred 1inet+ 1ine Pesos and '0K-00 $P 9//.'0& will be given to her as soon as it was sold.

This was signed b+ the appellant and witnessed b+ the complainant's sister, 4alud ?antug, and the latter's maid, Denoveva %ui!. The appellant at that time was bringing a <eep, and the tobacco was loaded in the <eep and brought b+ the appellant. :f the total value of P9//.'0, the appellant had paid to 5+roso onl+ P6#0.00, and this was paid on three different times. )emands for the pa+ment of the balance of the value of the tobacco were made upon the appellant b+ 5+roso, and particularl+ b+ her sister, 4alud ?antug. 4alud ?antug further testified that she had gone to the house of the appellant several times, but the appellant often eluded herF and that the 3camarin3 the appellant was empt+. 5lthough the appellant denied that demands for pa+ment were made upon her, it is a fact that on :ctober -/, -/((, she wrote a letter to 4alud ?antug which reads as followsG )ear 4alud, Hindi a@o na@apunta dian noon a -9 nitong na@araan, dahil @o@onte pa ang nasisingil @ong pera, maginta+ @a hanggang dito sa linggo ito at tia@ na a@o a+ magdadala sa i+o. Dosto @o 4alud a+ ma@apagbiga+ man lang a@o ng marami para hindi masiadong @ahi+ahi+a sa i+o. 1ga+on @ung gosto mo a+ @ahit @onte muna a+ bibig+an @ita. Pupunta lang @ami ni ina sa a+nila nga+on. 4alud @ung talagang @ailangan mo a+ bu@as a+ dadalhan @ita ng pera. edio mahirap ang maningil sa paleng@e ng Cabanatuan dahil nagsisilipat ang mga su@i @o ng puesto. Huwag @ang mabahala at ti+a@ na baba+aran @ita. Patnuba+an ta+o ng mahal na panginoon )ios. $78h. ?&. "ud+ Pursuant to this letter, the appellant sent a mone+ order for P-00.00 on :ctober 6#, -/(9, 78h. #, and another for P'0.00 on arch ., -/(9F and she paid P/0.00 on 5pril -., -/(9 as evidenced b+ the receipt 78h. 6, dated 5pril -., -/(9, or a total of P6#0.00. 5s no further amount was paid, the complainant filed a complaint against the appellant for estafa. $pp. -#, -', -(, %ollo&

Bn this petition for review b+ certiorari, "ourdes =alerio "im poses the following questions of law, to witG
-. Ahether or not the Honorable Court of 5ppeals was legall+ right in holding that the foregoing document $78hibit 353& 3fi8ed a period3 and 3the obligation was therefore, immediatel+ demandable as soon as the tobacco was sold3 $)ecision, p. (& as against the theor+ of the petitioner that the obligation does not fi8 a period, but from its nature and the circumstances it can be inferred that a period was intended in which case the onl+ action that can be maintained is a petition to as@ the court to fi8 the duration thereofF 6. Ahether or not the Honorable Court of 5ppeals was legall+ right in holding that 35rt. --/9 of the 1ew Civil Code does not appl+3 as against the alternative theor+ of the petitioner that the fore. going receipt $78hibit 353& gives rise to an obligation wherein the duration of the period depends upon the will of the debtor in which case the onl+ action that can be maintained is a petition to as@ the court to fi8 the duration of the periodF and

2. Ahether or not the honorable Court of 5ppeals was legall+ right in holding that the foregoing receipt is a contract of agenc+ to sell as against the theor+ of the petitioner that it is a contract of sale. $pp. 2-#, %ollo&

Bt is clear in the agreement, 78hibit 353, that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold, or, that the obligation was immediatel+ demandable as soon as the tobacco was disposed of. Hence, 5rticle --/9 of the 1ew Civil Code, which provides that the courts ma+ fi8 the duration of the obligation if it does not fi8 a period, does not appl+. 5nent the argument that petitioner was not an agent because 78hibit 353 does not sa+ that she would be paid the commission if the goods were sold, the Court of 5ppeals correctl+ resolved the matter as followsG
... 5side from the fact that aria 5+roso testified that the appellant as@ed her to be her agent in selling 5+roso's tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco she would be given something. The appellant is a businesswoman, and it is unbelievable that she would go to the e8tent of going to 5+roso's house and ta@e the tobacco with a <eep which she had brought if she did not intend to ma@e a profit out of the transaction. Certainl+, if she was doing a favor to aria 5+roso and it was 5+roso who had requested her to sell her tobacco, it would not have been the appellant who would have gone to the house of 5+roso, but it would have been 5+roso who would have gone to the house of the appellant and deliver the tobacco to the appellant. $p. -/, %ollo&

The fact that appellant received the tobacco to be sold at P-.20 per @ilo and the proceeds to be given to complainant as soon as it was sold, strongl+ negates transfer of ownership of the goods to the petitioner. The agreement $78hibit 35'& constituted her as an agent with the obligation to return the tobacco if the same was not sold. 5CC:%)B1D"H, the petition for review on certiorari is dismissed for lac@ of merit. Aith costs. 4: :%)7%7). Tee+an5ee #C+air(an&, Melen*io?Herrera, Plana, <utierrez, 6r. and :e la @uente, 66., *on*ur. Republic of the Philippines SUPREME COURT Manila EN '0NC G.R. No. &<8506 161.+ 31, 1>56

CE&ESTINO CO @ COMP N), petitioner) vs. CO&&ECTOR O9 INTERN & REVENUE, respondent. O!!ice o! the )olicitor General A brosio Padilla" +isrt Assistant )olicitor General Guiller o E. (orres and )olicitor +ederico V. )ian !or respondent. "ENGAON, J.* 0ppeal fro% a decision of the Court of Ta8 0ppeals. Celestino Co ? Co%pan! is a dul! re"istered "eneral copartnership doin" business under the trade na%e of 2Oriental Sash Aactor!2. Aro% *.</ to *.3* it paid percenta"e ta8es of 1 per cent on the "ross receipts of its sash) door and +indo+ factor!) in accordance +ith section one hundred ei"ht!Csi8 of the National Revenue Code i%posin" ta8es on sale of %anufactured articles. &o+ever in *.3, it be"an to clai% liabilit! onl! to the contractor:s 5 per cent ta8 #instead of 1 per cent$ under section *.* of the sa%e CodeE and havin" failed to convince the 'ureau of Internal Revenue) it brou"ht the %atter to the Court of Ta8 0ppeals) +here it also failed. Said the Court@ To support his contention that his client is an ordinar! contractor . . . counsel presented . . . duplicate copies of letters) s(etches of doors and +indo+s and price 4uotations supposedl! sent b! the %ana"er of the Oriental Sash Aactor! to four custo%ers +ho alle"edl! %ade special orders to doors and +indo+ fro% the said factor!. The conclusion that counsel +ould li(e us to deduce fro% these fe+ e8hibits is that the Oriental Sash Aactor! does not %anufacture read!C%ade doors) sash and +indo+s for the public but onl! upon special order of its select custo%ers. . . . I cannot believe that petitioner co%pan! +ould ta(e) as in fact it has ta(en) all the trouble and e8pense of re"isterin" a special trade na%e for its sash business and then orders co%pan! stationer! carr!in" the bold print ,Oriental )ash +actor' #Celestino Co ? Co%pan!) Prop.$ .,/ Raon St. 6uiapo) Manila) Tel. No. 5591/) *anu!acturers o! all -inds o! doors" .indo.s" sashes" !urniture" etc. used season/dried and -iln/dried lu ber" o! the best qualit' .or- anships, solel! for the purpose of suppl!in" the needs for doors) +indo+s and sash of its special and li%ited custo%ers. One ill note that petitioner has chosen for its tradena%e and has offered itself to the public as a 2Aactor!2) +hich %eans it is out to do business) in its chosen lines on a bi" scale. 0s a "eneral rule) sash factories receive orders for doors and +indo+s of special desi"n onl! in particular cases but the bul( of their sales is derived fro% a read!C%ade doors and +indo+s of standard si7es for the avera"e ho%e. Moreover) as sho+n fro% the investi"ation of petitioner:s boo( of accounts) durin" the period fro% >anuar! *) *.3, to Septe%ber 59) *.3,) it sold sash) doors and +indo+s +orth P*--)13<./.. I find it difficult to believe that this a%ount +hich runs to si8 fi"ures +as derived b! petitioner entirel! fro% its fe+ custo%ers +ho %ade special orders for these ite%s. Even if +e +ere to believe petitioner:s clai% that it does not %anufacture read!C%ade sash) doors and +indo+s for the public and that it %a(es these articles onl! special order

of its custo%ers) that does not %a(e it a contractor +ithin the purvie+ of section *.* of the national Internal Revenue Code. there are no less than fift! occupations enu%erated in the aforesaid section of the national Internal Revenue Code sub;ect to percenta"e ta8 and after readin" carefull! each and ever! one of the%) +e cannot find under +hich the business of %anufacturin" sash) doors and +indo+s upon special order of custo%ers fall under the cate"or! of 2road) buildin") navi"ation) artesian +ell) +ater +or(ers and other construction +or( contractors2 are those +ho alter or repair buildin"s) structures) streets) hi"h+a!s) se+ers) street rail+a!s railroads lo""in" roads) electric lines or po+er lines) and includes an! other +or( for the construction) alterin" or repairin" for +hich %achiner! driven b! %echanical po+er is used. #Pa!ton vs. Cit! of 0nadardo /< P. ,d -1-) --9) *1. O(l. /-$. &avin" thus eli%inated the feasibilit! off ta8in" petitioner as a contractor under *.* of the national Internal Revenue Code) this leaves us to decide the re%ainin" issue +hether or not petitioner could be ta8ed +ith lesser strain and %ore accurac! as seller of its %anufactured articles under section *-/ of the sa%e code) as the respondent Collector of Internal Revenue has in fact been doin" the Oriental Sash Aactor! +as established in *.</. The percenta"e ta8 i%posed in section *.* of our Ta8 Code is "enerall! a ta8 on the sales of services) in contradiction +ith the ta8 i%posed in section *-/ of the sa%e Code +hich is a ta8 on the ori"inal sales of articles b! the %anufacturer) producer or i%porter. #Aor%ille7a:s Co%%entaries and >urisprudence on the National Internal Revenue Code) Vol. II) p. 1<<$. The fact that the articles sold are %anufactured b! the seller does not e8chan"e the contract fro% the purvie+ of section *-/ of the National Internal Revenue Code as a sale of articles. There +as a stron" dissentE but upon careful consideration of the +hole %atter are inclines to accept the above state%ent of the facts and the la+. The i%portant thin" to re%e%ber is that Celestino Co ? Co%pan! habituall' a-es sash) +indo+s and doors) as it has represented in its stationer! and advertise%ents to the public. That it 2%anufactures2 the sa%e is practicall! ad%itted b! appellant itself. The fact that +indo+s and doors are %ade b! it onl! +hen custo%ers place their orders) does not alter the nature of the establish%ent) for it is obvious that it onl! accepted such orders as called for the e%plo!%ent of such %aterialC%ouldin") fra%es) panelsCas it ordinaril! %anufactured or +as in a position habituall! to %anufacture. Perhaps the follo+in" para"raph represents in brief the appellant:s position in this Court@ Since the petitioner) b! clear proof of facts not disputed b! the respondent) %anufacturers sash) +indo+s and doors onl! for special custo%ers and upon their special orders and in accordance +ith the desired specifications of the persons orderin" the sa%e and not for the "eneral %ar(et@ since the doors ordered b! Don Toribio Teodoro ? Sons) Inc.) for instance) are not in e8istence and +hich never +ould have e8isted but for the order of the part! desirin" itE and since petitioner:s contractual relation +ith his custo%ers is that of a contract for a piece of +or( or since petitioner is en"a"ed in the sale of services) it

follo+s that the petitioner should be ta8ed under section *.* of the Ta8 Code and NOT under section *-3 of the sa%e Code.2 #0ppellant:s brief) p. **C*,$. 'ut the ar"u%ent rests on a false foundation. 0n! builder or ho%eo+ner) +ith sufficient %one!) %a! order +indo+s or doors of the (ind %anufactured b! this appellant. Therefore it is not true that it serves special custo%ers onl' or confines its services to the% alone. 0nd an!one +ho sees) and li(es) the doors ordered b! Don Toribio Teodoro ? Sons Inc. %a! purchase fro% appellant doors of the sa%e (ind) provided he pa!s the price. Surel!) the appellant +ill not refuse) for it can easil! duplicate or even %assCproduce the sa%e doorsCit is %echanicall! e4uipped to do so. That the doors and +indo+s %ust %eet desired specifications is neither here nor there. If these specifications do not happen to be of the (ind habituall! %anufactured b! appellant N special for%s for sash) %ouldin"s of panels N it +ould not accept the order N and no sale is %ade. If the! do) the transaction +ould be no different fro% a purchasers of %anufactured "oods held is stoc( for saleE the! are bou"ht because the! %eet the specifications desired b! the purchaser. Nobod! +ill sa! that +hen a sa+%ill cuts lu%ber in accordance +ith the peculiar specifications of a custo%erCsi7es not previousl! held in stoc( for sale to the publicCit thereb! beco%es an e%plo!ee or servant of the custo%er)* not the seller of lu%ber. The sa%e consideration applies to this sash %anufacturer. The Oriental Sash Aactor! does nothin" %ore than sell the "oods that it %assCproduces or habituall! %a(esE sash) panels) %ouldin"s) fra%es) cuttin" the% to such si7es and co%binin" the% in such for%s as its custo%ers %a! desire. On the other hand) petitioner:s idea of bein" a contractor doin" construction ;obs is untenable. Nobod! +ould re"ard the doin" of t+o +indo+ panels a construction +or( in co%%on parlance., 0ppellant invo(es 0rticle *</1 of the Ne+ Civil Code to bolster its contention that in filin" orders for +indo+s and doors accordin" to specifications) it did not sell) but %erel! contracted for particular pieces of +or( or 2%erel! sold its services2. Said article reads as follo+s@ 0 contract for the deliver! at a certain price of an article +hich the vendor in the ordinar! course of his business %anufactures or procures for the "eneral %ar(et) +hether the sa%e is on hand at the ti%e or not) is a contract of sale) but if the "oods are to be %anufactured speciall! for the custo%er and upon his special order) and not for the "eneral %ar(et) it is contract for a piece of +or(. It is at once apparent that the Oriental Sash Aactor! did not %erel! sell its services to Don Toribio Teodoro ? Co. #To ta(e one instance$ because it also sold the %aterials. The truth of the %atter is that it sold %aterials ordinaril! %anufactured b! it N sash) panels) %ouldin"s N to Teodoro ? Co.) althou"h in such for% or co%bination as suited the fanc! of the purchaser. Such ne+ for% does not divest the Oriental Sash Aactor! of its character as %anufacturer. Neither does

it ta(e the transaction out of the cate"or! of sales under 0rticle *</1 above 4uoted) because althou"h the Aactor! does not) in the ordinar! course of its business) %anufacture and (eep on stoc( doors o! the -ind sold to Teodoro) it could stoc( andOor probabl! had in stoc( the sash) %ouldin"s and panels it used therefor #so%e of the% at least$. In our opinion +hen this Aactor! accepts a ;ob that re4uires the use of e8traordinar! or additional e4uip%ent) or involves services not "enerall! perfor%ed b! itCit thereb! contracts for a piece o! .or- N filin" special orders +ithin the %eanin" of 0rticle *</1. The orders herein e8hibited +ere not sho+n to be special. The! +ere %erel! orders for +or( N nothin" is sho+n to call the% special re4uirin" e8traordinar! service of the factor!. The thou"ht occurs to us that if) as alle"edCall the +or( of appellant is onl! to fill orders previousl! %ade) such orders should not be called special +or() but re"ular +or(. Jould a factor! do business perfor%in" onl! special) e8traordinar! or peculiar %erchandiseP 0n!+a!) supposin" for the %o%ent that the transactions +ere not sales) the! +ere neither lease of services nor contract ;obs b! a contractor. 'ut as the doors and +indo+s had been ad%ittedl! 2%anufactured2 b! the Oriental Sash Aactor!) such transactions could be) and should be ta8ed as 2transfers2 thereof under section *-/ of the National Revenue Code. The appealed decision is conse4uentl! affir%ed. So ordered. Paras" C. J." Padilla" *onte a'or" $autista Angelo" Concepcion" 0e'es" J. $. 1." and +eli2" JJ." concur.

9oo+$o+e.
*

Jith all the conse4uences in 0rticle *1,. Ne+ Civil Code and 0ct No. 5.3. #bond of contractor$.
,

Jith all the conse4uences in 0rticle *1,. Ne+ Civil Code and 0ct No. 5.3. #bond of contractor$. Republic of the Philippines SUPREME COURT Manila AIRST DIVISION

G.R. No. L-22344 *+'e 33, 192THE "OMMISSIONER O$ INTERN#L RE.EN!E, petitioner, vs.

ENGINEERING E)!IPMENT #ND S!PPL1 "OMP#N1 #ND THE "O!RT O$ T#< #PPE#LS, respondents. G.R. No. L-224-2 *+'e 33, 192ENGINEERING E)!IPMENT #ND S!PPL1 "OMP#N1, petitioner, ;5. THE "OMMISSIONER O$ INTERN#L RE.EN!E #ND THE "O!RT O$ T#< #PPE#LS, re56o'(e'4. Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete, Solicitor Lolita O. Gal-lang, and Special Attorne Gemaliel !. "ontalino for #ommissioner of $nternal Re%en&e, etc. "el'&ides #. G&tierre(, Jose ). Ong, J&an G. #ollas, Jr., L&is "a. G&errero and J.R. Balon*ita for +ngineering and S&ppl #ompan .

ESG!ERR#, J.: Pe4747o' :or re;7e= o' certiorari o: 4>e (ec757o' o: 4>e "o+r4 o: T&? #66e&85 7' "T# "&5e No. 681, (&4e( No;ember 29, 1966, &55e557'9 & com6e'5&47'9 4&? o: P124,441.62 o' 4>e E'97'eer7'9 E@+76me'4 &'( S+668, "om6&',. #5 :o+'( b, 4>e "o+r4 o: T&? #66e&85, &'( &5 e54&b875>e( b, 4>e e;7(e'ce o' recor(, 4>e :&c45 o: 4>75 c&5e &re &5 :o88o=5A E'97'eer7'9 E@+76me'4 &'( S+668, "o. BE'97'eer7'9 :or 5>or4C, & (ome547c cor6or&47o', 75 &' e'97'eer7'9 &'( m&c>7'er, :7rm. #5 o6er&4or o: &' 7'4e9r&4e( e'97'eer7'9 5>o6, 74 75 e'9&9e(, &mo'9 o4>er5, 7' 4>e (e579' &'( 7'54&88&47o' o: ce'4r&8 4,6e &7r co'(747o'7'9 5,54em, 6+m67'9 68&'45 &'( 54ee8 :&br7c&47o'5. B.o8. I 66. 12-16 T.S.N. #+9+54 23, 1963C O' *+8, 22, 19-6, o'e *+&' (e 8& "r+D, =ro4e 4>e 4>e' "o88ec4or, 'o= "omm7557o'er, o: I'4er'&8 Re;e'+e (e'o+'c7'9 E'97'eer7'9 :or 4&? e;&57o' b, m75(ec8&r7'9 745 7m6or4e( &r47c8e5 &'( :&787'9 4o 6&, 4>e correc4 6erce'4&9e 4&?e5 (+e 4>ereo' 7' co''7;&'ce =74> 745 :ore79' 5+6687er5 BE?>. E2E 6. 1 /IR recor( .o8. IC. E'97'eer7'9 =&5 87Fe=75e (e'o+'ce( 4o 4>e "e'4r&8 /&'F B"/C :or &88e9e( :r&+( 7' ob4&7'7'9 745 (o88&r &88oc&47o'5. #c47'9 o' 4>e5e (e'+'c7&47o'5, & r&7( &'( 5e&rc> =&5 co'(+c4e( b, & Go7'4 4e&m o: "e'4r&8 /&'F, B"/C, N&47o'&8 /+re&+ o: I';e5479&47o' BN/IC &'( /+re&+ o: I'4er'&8 Re;e'+e B/IRC &9e'45 o' Se64ember 22, 19-6, o' =>7c> occ&57o' ;o8+m7'o+5 recor(5 o: 4>e :7rm =ere 5e7De( &'( co':75c&4e(. B66. 123-122 T.S.N.C

O' Se64ember 33, 19-2, re;e'+e e?&m7'er5 )+e5&(& &'( "&4+(&' re6or4e( &'( recomme'(e( 4o 4>e 4>e' "o88ec4or, 'o= "omm7557o'er, o: I'4er'&8 Re;e'+e B>ere7'&:4er re:erre( 4o &5 "omm7557o'erC 4>&4 E'97'eer7'9 be &55e55e( :or P483,912.31 &5 (e:7c7e'c, &(;&'ce 5&8e5 4&? o' 4>e 4>eor, 4>&4 74 m75(ec8&re( 745 7m6or4&47o' o: &7r co'(747o'7'9 +'745 &'( 6&r45 &'( &cce55or7e5 4>ereo: =>7c> &re 5+bGec4 4o 4&? +'(er Sec47o' 18-BmC 1 o: 4>e T&? "o(e, 7'54e&( o: Sec47o' 186 o: 4>e 5&me "o(e. BE?>. E3E 66. -9-63 /IR rec. .o8. IC T>75 &55e55me'4 =&5 re;75e( o' *&'+&r, 23, 19-9, 7' 87'e =74> 4>e ob5er;&47o' o: 4>e ">7e:, /IR L&= D7;757o', &'( =&5 r&75e( 4o P916,362.-6 re6re5e'47'9 (e:7c7e'c, &(;&'ce 5&8e5 4&? &'( m&'+:&c4+rer5 5&8e5 4&?, 7'c8+57;e o: 4>e 2-H &'( -3H 5+rc>&r9e5. B66. 22-83 /IR rec. .o8. IC O' M&rc> 3, 19-9. 4>e "omm7557o'er &55e55e( &9&7'54, &'( (em&'(e( +6o', E'97'eer7'9 6&,me'4 o: 4>e 7'cre&5e( &mo+'4 &'( 5+99e54e( 4>&4 P13,333 be 6&7( &5 com6rom75e 7' e?4r&G+(7c7&8 5e448eme'4 o: E'97'eer7'9'5 6e'&8 87&b7874, :or ;7o8&47o' o: 4>e T&? "o(e. T>e :7rm, >o=e;er, co'4e54e( 4>e 4&? &55e55me'4 &'( re@+e54e( 4>&4 74 be :+r'75>e( =74> 4>e (e4&785 &'( 6&r47c+8&r5 o: 4>e "omm7557o'er'5 &55e55me'4. BE?>. E/E &'( E1-E, 66. 86-88 /IR rec. .o8. IC T>e "omm7557o'er re687e( 4>&4 4>e &55e55me'4 =&5 7' &ccor(&'ce =74> 8&= &'( 4>e :&c45 o: 4>e c&5e. O' *+8, 33, 19-9, E'97'eer7'9 &66e&8e( 4>e c&5e 4o 4>e "o+r4 o: T&? #66e&85 &'( (+r7'9 4>e 6e'(e'c, o: 4>e c&5e 4>e 7';e5479&47'9 re;e'+e e?&m7'er5 re(+ce( E'97'eer7'9'5 (e:7c7e'c, 4&? 87&b78747e5 :rom P916,362.6- 4o P243,-82.86 BE?>5. ERE &'( E9E 66. 162-123, /IR rec.C, b&5e( o' :7'(7'95 &:4er co':ere'ce5 >&( =74> E'97'eer7'9'5 #cco+'4&'4 &'( #+(74or. O' No;ember 29, 1966, 4>e "o+r4 o: T&? #66e&85 re'(ere( 745 (ec757o', 4>e (756o5747;e 6or47o' o: =>7c> re&(5 &5 :o88o=5A
$or #LL THE $OREGOING "ONSIDER#TIONS, 4>e (ec757o' o: re56o'(e'4 &66e&8e( :rom 75 >ereb, mo(7:7e(, &'( 6e4747o'er, &5 & co'4r&c4or, 75 (ec8&re( e?em64 :rom 4>e (e:7c7e'c, m&'+:&c4+rer5 5&8e5 4&? co;er7'9 4>e 6er7o( :rom *+'e 1, 1948. 4o Se64ember 2, 19-6. Ho=e;er, 6e4747o'er 75 or(ere( 4o 6&, re56o'(e'4, or >75 (+8, &+4>or7De( co88ec47o' &9e'4, 4>e 5+m o: P124,141.62 &5 com6e'5&47'9 4&? &'( 2-H 5+rc>&r9e :or 4>e 6er7o( :rom 19-3 4o Se64ember 19-6. I74> co545 &9&7'54 6e4747o'er.

T>e "omm7557o'er, 'o4 5&475:7e( =74> 4>e (ec757o' o: 4>e "o+r4 o: T&? #66e&85, &66e&8e( 4o 4>75 "o+r4 o' *&'+&r, 18, 1962, BG.R. No. L-22344C. O' 4>e o4>er >&'(, E'97'eer7'9, o' *&'+&r, 4, 1962, :78e( =74> 4>e "o+r4 o: T&? #66e&85 & mo47o' :or reco'57(er&47o' o: 4>e (ec757o' &bo;eme'47o'e(. T>75 =&5 (e'7e( o' #6r78 6, 1962, 6rom647'9 E'97'eer7'9 4o :78e &85o =74> 4>75 "o+r4 745 &66e&8, (ocFe4e( &5 G.R. No. L-224-2. S7'ce 4>e 4=o c&5e5, G.R. No. L-22344 &'( G.R. No. L-224-2, 7';o8;e 4>e 5&me 6&r47e5 &'( 755+e5, Ie >&;e (ec7(e( 4o co'5o87(&4e &'( Go7'48, (ec7(e 4>em.

E'97'eer7'9 7' 745 Pe4747o' c8&7m5 4>&4 4>e "o+r4 o: T&? #66e&85 comm744e( 4>e :o88o=7'9 error5A
1. T>&4 4>e "o+r4 o: T&? #66e&85 erre( 7' >o8(7'9 E'97'eer7'9 E@+76me'4 S+668, "om6&', 87&b8e 4o 4>e 33H com6e'5&47'9 4&? o' 745 7m6or4&47o'5 o: e@+76me'4 &'( or(7'&r, &r47c8e5 +5e( 7' 4>e ce'4r&8 4,6e &7r co'(747o'7'9 5,54em5 74 (e579'e(, :&br7c&4e(, co'54r+c4e( &'( 7'54&88e( 7' 4>e b+78(7'95 &'( 6rem75e5 o: 745 c+54omer5, r&4>er 4>&' 4o 4>e com6e'5&47'9 4&? o: o'8, 2HJ 2. T>&4 4>e "o+r4 o: T&? #66e&85 erre( 7' >o8(7'9 E'97'eer7'9 E@+76me'4 S+668, "om6&', 9+784, o: :r&+( 7' e::ec47'9 4>e 5&7( 7m6or4&47o'5 o' 4>e b&575 o: 7'com68e4e @+o4&47o'5 :rom 4>e co'4e'45 o: &88e9e( 6>o4o54&4 co67e5 o: (oc+me'45 5e7De( 788e9&88, :rom E'97'eer7'9 E@+76me'4 &'( S+668, "om6&', =>7c> 5>o+8( 'o4 >&;e bee' &(m744e( 7' e;7(e'ceJ 3. T>&4 4>e "o+r4 o: T&? #66e&85 erre( 7' >o8(7'9 E'97'eer7'9 E@+76me'4 S+668, "om6&', 87&b8e 4o 4>e 2-H 5+rc>&r9e 6re5cr7be( 7' Sec47o' 193 o: 4>e T&? "o(eJ 4. T>&4 4>e "o+r4 o: T&? #66e&85 erre( 7' >o8(7'9 4>e &55e55me'4 &5 'o4 >&;7'9 6re5cr7be(J -. T>&4 4>e "o+r4 o: T&? #66e&85 erre( 7' >o8(7'9 E'97'eer7'9 E@+76me'4 S+668, "om6&', 87&b8e :or 4>e 5+m o: P124,141.62 &5 33H com6e'5&47'9 4&? &'( 2-H 5+rc>&r9e 7'54e&( o: com68e4e8, &b5o8;7'9 74 :rom 4>e (e:7c7e'c, &55e55me'4 o: 4>e "omm7557o'er.

T>e "omm7557o'er o' 4>e o4>er >&'( c8&7m5 4>&4 4>e "o+r4 o: T&? #66e&85 erre(A
1. I' >o8(7'9 4>&4 4>e re56o'(e'4 com6&', 75 & co'4r&c4or &'( 'o4 & m&'+:&c4+rer. 2. I' >o8(7'9 re56o'(e'4 com6&', 87&b8e 4o 4>e 3H co'4r&c4or'5 4&? 7m6o5e( b, Sec47o' 191 o: 4>e T&? "o(e 7'54e&( o: 4>e 33H 5&8e5 4&? 6re5cr7be( 7' Sec47o' 18-BmC 7' re8&47o' 4o Sec47o' 194B?C bo4> o: 4>e 5&me "o(eJ 3. I' >o8(7'9 4>&4 4>e re56o'(e'4 com6&', 75 5+bGec4 o'8, 4o 4>e 33H com6e'5&47'9 4&? +'(er Sec47o' 193 o: 4>e T&? "o(e &'( 'o4 4o 4>e 33H &(;&'ce 5&8e5 4&? 7m6o5e( b, 5ec47o' 183 BbC, 7' re8&47o' 4o 5ec47o' 18-BmC bo4> o: 4>e 5&me "o(e, o' 745 7m6or4&47o'5 o: 6&r45 &'( &cce55or7e5 o: &7r co'(747o'7'9 +'745J 4. I' 'o4 >o8(7'9 4>e com6&', 87&b8e 4o 4>e -3H :r&+( 5+rc>&r9e +'(er Sec47o' 183 o: 4>e T&? "o(e o' 745 7m6or4&47o'5 o: 6&r45 &'( &cce55or7e5 o: &7r co'(747o'7'9 +'745, 'o4=74>54&'(7'9 4>e :7'(7'9 o: 5&7( co+r4 4>&4 4>e re56o'(e'4 com6&', :r&+(+8e'48, m75(ec8&re( 4>e 5&7( 7m6or4&47o'5J -. I' >o8(7'9 4>e re56o'(e'4 com6&', 87&b8e :or P124,141.62 &5 com6e'5&47'9 4&? &'( 2-H 5+rc>&r9e 7'54e&( o: P243,-82.86 &5 (e:7c7e'c, &(;&'ce 5&8e5 4&?, (e:7c7e'c, m&'+:&c4+rer5 4&? &'( 2-H &'( -3H 5+rc>&r9e :or 4>e 6er7o( :rom *+'e 1, 1948 4o December 31, 19-6.

T>e m&7' 755+e re;o8;e5 o' 4>e @+e547o' o: =>e4>er or 'o4 E'97'eer7'9 75 & m&'+:&c4+rer o: &7r co'(747o'7'9 +'745 +'(er Sec47o' 18-BmC, s&pra, 7' re8&47o' 4o

Sec47o'5 183BbC &'( 194 o: 4>e "o(e, or & co'4r&c4or +'(er Sec47o' 191 o: 4>e 5&me "o(e. T>e "omm7557o'er co'4e'(5 4>&4 E'97'eer7'9 75 & m&'+:&c4+rer &'( 5e88er o: &7r co'(747o'7'9 +'745 &'( 6&r45 or &cce55or7e5 4>ereo: &'(, 4>ere:ore, 74 75 5+bGec4 4o 4>e 33H &(;&'ce 5&8e5 4&? 6re5cr7be( b, Sec47o' 18-BmC o: 4>e T&? "o(e, 7' re8&47o' 4o Sec47o' 194 o: 4>e 5&me, =>7c> (e:7'e5 & m&'+:&c4+rer &5 :o88o=5A
Sec47o' 194. K Ior(5 &'( P>r&5e5 De:7'e(. K I' &668,7'9 4>e 6ro;757o'5 o: 4>75 T748e, =or(5 &'( 6>r&5e5 5>&88 be 4&Fe' 7' 4>e 5e'5e &'( e?4e'57o' 7'(7c&4e( be8o=A ??? ??? ??? B?C EM&'+:&c4+rerE 7'c8+(e5 e;er, 6er5o' =>o b, 6>,57c&8 or c>em7c&8 6roce55 &84er5 4>e e?4er7or 4e?4+re or :orm or 7''er 5+b54&'ce o: &', r&= m&4er7&8 or m&'+:&c4+re( or 6&r47&88, m&'+:&c4+re( 6ro(+c45 7' 5+c> m&''er &5 4o 6re6&re 74 :or & 56ec7&8 +5e or +5e5 4o =>7c> 74 co+8( 'o4 >&;e bee' 6+4 7' 745 or797'&8 co'(747o', or =>o b, &', 5+c> 6roce55 &84er5 4>e @+&874, o: &', 5+c> m&4er7&8 or m&'+:&c4+re( or 6&r47&88, m&'+:&c4+re( 6ro(+c4 5o &5 4o re(+ce 74 4o m&rFe4&b8e 5>&6e, or 6re6&re 74 :or &', o: 4>e +5e5 o: 7'(+54r,, or =>o b, &', 5+c> 6roce55 comb7'e5 &', 5+c> r&= m&4er7&8 or m&'+:&c4+re( or 6&r47&88, m&'+:&c4+re( 6ro(+c45 =74> o4>er m&4er7&85 or 6ro(+c45 o: 4>e 5&me or o: (7::ere'4 F7'(5 &'( 7' 5+c> m&''er 4>&4 4>e :7'75>e( 6ro(+c4 o: 5+c> 6roce55 o: m&'+:&c4+re c&' be 6+4 4o 56ec7&8 +5e or +5e5 4o =>7c> 5+c> r&= m&4er7&8 or m&'+:&c4+re( or 6&r47&88, m&'+:&c4+re( 6ro(+c45 7' 4>e7r or797'&8 co'(747o' co+8( 'o4 >&;e bee' 6+4, &'( =>o 7' &((747o' &84er5 5+c> r&= m&4er7&8 or m&'+:&c4+re( or 6&r47&88, m&'+:&c4+re( 6ro(+c45, or comb7'e5 4>e 5&me 4o 6ro(+ce 5+c> :7'75>e( 6ro(+c45 :or 4>e 6+r6o5e o: 4>e7r 5&8e or (754r7b+47o' 4o o4>er5 &'( 'o4 :or >75 o=' +5e or co'5+m647o'.

I' &'5=er 4o 4>e &bo;e co'4e'47o', E'97'eer7'9 c8&7m5 4>&4 74 75 'o4 & m&'+:&c4+rer &'( 5e44er o: &7r-co'(747o'7'9 +'745 &'( 56&re 6&r45 or &cce55or7e5 4>ereo: 5+bGec4 4o 4&? +'(er Sec47o' 18-BmC o: 4>e T&? "o(e, b+4 & co'4r&c4or e'9&9e( 7' 4>e (e579', 5+668, &'( 7'54&88&47o' o: 4>e ce'4r&8 4,6e o: &7rco'(747o'7'9 5,54em 5+bGec4 4o 4>e 3H 4&? 7m6o5e( b, Sec47o' 191 o: 4>e 5&me "o(e, =>7c> 75 e55e'47&88, & 4&? o' 4>e 5&8e o: 5er;7ce5 or 8&bor o: & co'4r&c4or r&4>er 4>&' o' 4>e 5&8e o: &r47c8e5 5+bGec4 4o 4>e 4&? re:erre( 4o 7' Sec47o'5 184, 18- &'( 186 o: 4>e "o(e. T>e &r9+me'45 o: bo4> 4>e E'97'eer7'9 &'( 4>e "omm7557o'er c&88 :or & c8&r7:7c&47o' o: 4>e 4erm co'4r&c4or &5 =e88 &5 4>e (7547'c47o' be4=ee' & co'4r&c4 o: 5&8e &'( co'4r&c4 :or :+r'75>7'9 5er;7ce5, 8&bor &'( m&4er7&85. T>e (7547'c47o' be4=ee' & co'4r&c4 o: 5&8e &'( o'e :or =orF, 8&bor &'( m&4er7&85 75 4e54e( b, 4>e 7'@+7r, =>e4>er 4>e 4>7'9 4r&'5:erre( 75 o'e 'o4 7' e?754e'ce &'( =>7c> 'e;er =o+8( >&;e e?754e( b+4 :or 4>e or(er o: 4>e 6&r4, (e57r7'9 4o &c@+7re 74, or & 4>7'9 =>7c> =o+8( >&;e e?754e( &'( >&5 bee' 4>e 5+bGec4 o: 5&8e 4o 5ome o4>er 6er5o'5 e;e' 7: 4>e or(er >&( 'o4 bee' 97;e'. 2 I: 4>e &r47c8e or(ere( b, 4>e 6+rc>&5er 75 e?&c48, 5+c> &5 4>e 68&7'47:: m&Fe5 &'( Fee65 o' >&'( :or 5&8e 4o &',o'e, &'( 'o c>&'9e or mo(7:7c&47o' o: 74 75 m&(e &4 (e:e'(&'4'5 re@+e54, 74 75 &

co'4r&c4 o: 5&8e, e;e' 4>o+9> 74 m&, be e'47re8, m&(e &:4er, &'( 7' co'5e@+e'ce o:, 4>e (e:e'(&'45 or(er :or 74. 3 O+r Ne= "7;78 "o(e, 87Fe=75e (7547'9+75>e5 & co'4r&c4 o: 5&8e :rom & co'4r&c4 :or & 67ece o: =orF 4>+5A
#r4. 1462. # co'4r&c4 :or 4>e (e87;er, &4 & cer4&7' 6r7ce o: &' &r47c8e =>7c> 4>e ;e'(or 7' 4>e or(7'&r, co+r5e o: >75 b+57'e55 m&'+:&c4+re5 or 6roc+re5 :or 4>e 9e'er&8 m&rFe4, =>e4>er 4>e 5&me 75 o' >&'( &4 4>e 47me or 'o4, 75 & co'4r&c4 o: 5&8e, b+4 7: 4>e 9oo(5 &re 4o be m&'+:&c4+re( 56ec7&88, :or 4>e c+54omer &'( +6o' >75 56ec7&8 or(er &'( 'o4 :or 4>e 9e'er&8 m&rFe4, 74 75 & co'4r&c4 :or & 67ece o: =orF.

T>e =or( Eco'4r&c4orE >&5 come 4o be +5e( =74> 56ec7&8 re:ere'ce 4o & 6er5o' =>o, 7' 4>e 6+r5+74 o: 4>e 7'(e6e'(e'4 b+57'e55, +'(er4&Fe5 4o (o & 56ec7:7c Gob or 67ece o: =orF :or o4>er 6er5o'5, +57'9 >75 o=' me&'5 &'( me4>o(5 =74>o+4 5+bm7447'9 >7m5e8: 4o co'4ro8 &5 4o 4>e 6e44, (e4&785. B#r&L&5, #''o4&47o'5 &'( *+r756r+(e'ce o' 4>e N&47o'&8 I'4er'&8 Re;e'+e "o(e, 6. 318, 6&r. 191 B2C, 1923 E(.C T>e 4r+e 4e54 o: & co'4r&c4or &5 =&5 >e8( 7' 4>e c&5e5 o: L&(on Ste%edoring #o., %s. ,rinidad, 43, P>78. 833, 832-838, &'( La #arlota S&gar #entral %s. ,rinidad, 43, P>78. 816, 819, =o+8( 5eem 4o be 4>&4 >e re'(er5 5er;7ce 7' 4>e co+r5e o: &' 7'(e6e'(e'4 occ+6&47o', re6re5e'47'9 4>e =788 o: >75 em68o,er o'8, &5 4o 4>e re5+84 o: >75 =orF, &'( 'o4 &5 4o 4>e me&'5 b, =>7c> 74 75 &ccom6875>e(. I74> 4>e :ore9o7'9 cr74er7& &5 9+7(e6o545, Ie 5>&88 'o= e?&m7'e =>e4>er E'97'eer7'9 re&88, (7( Em&'+:&c4+reE &'( 5e88, &5 &88e9e( b, 4>e "omm7557o'er 4o >o8( 74 87&b8e 4o 4>e &(;&'ce 5&8e5 4&? +'(er Sec47o' 18-BmC, or 74 o'8, >&( 745 5er;7ce5 Eco'4r&c4e(E :or 7'54&88&47o' 6+r6o5e5 4o >o8( 74 87&b8e +'(er 5ec47o' 198 o: 4>e T&? "o(e. I #:4er 9o7'9 o;er 4>e 4>ree ;o8+me5 o: 54e'o9r&6>7c 'o4e5 &'( 4>e ;o8+m7'o+5 recor( o: 4>e /IR &'( 4>e "T# &5 =e88 &5 4>e e?>7b745 5+bm744e( b, bo4> 6&r47e5, Ie :7'( 4>&4 E'97'eer7'9 (7( 'o4 m&'+:&c4+re &7r co'(747o'7'9 +'745 :or 5&8e 4o 4>e 9e'er&8 6+b87c, b+4 7m6or4e( 5ome 74em5 B&5 re:r79er&47o' com6re55or5 7' com68e4e 5e4, >e&4 e?c>&'9er5 or co785, 4.5.'. 6. 39C =>7c> =ere +5e( 7' e?ec+47'9 co'4r&c45 e'4ere( 7'4o b, 74. E'97'eer7'9, 4>ere:ore, +'(er4ooF 'e9o47&47o'5 &'( e?ec+47o' o: 7'(7;7(+&8 co'4r&c45 :or 4>e (e579', 5+668, &'( 7'54&88&47o' o: &7r co'(747o'7'9 +'745 o: 4>e ce'4r&8 4,6e B4.5.'. 66. 23-36J E?>5. E$E, EGE, EHE, EIE, E*E, E0E, ELE, &'( EMEC, 4&F7'9 7'4o co'57(er&47o' 7' 4>e 6roce55 5+c> :&c4or5 &5 4>e &re& o: 4>e 56&ce 4o be &7r co'(747o'e(J 4>e '+mber o: 6er5o'5 occ+6,7'9 or =o+8( be occ+6,7'9 4>e 6rem75e5J 4>e 6+r6o5e :or =>7c> 4>e ;&r7o+5 &7r co'(747o'7'9 &re&5 &re 4o be +5e(J &'( 4>e 5o+rce5 o: >e&4 9&7' or coo87'9 8o&( o' 4>e 68&'4 5+c> &5 5+' 8o&(, 879>47'9, &'( o4>er e8ec4r7c&8 &6687&'ce5 =>7c> &re or m&, be 7' 4>e 68&'. B4.5.'. 6. 34, .o8. IC E'97'eer7'9 &85o 4e547:7e( (+r7'9 4>e >e&r7'9 7' 4>e "o+r4 o: T&? #66e&85 4>&4 re8&47;e 4o 4>e 7'54&88&47o' o: &7r co'(747o'7'9 5,54em, E'97'eer7'9 (e579'e( &'( e'97'eere( com68e4e e&c>

6&r47c+8&r 68&'4 &'( 4>&4 'o 4=o 68&'45 =ere 7(e'47c&8 b+4 e&c> >&( 4o be e'97'eere( 5e6&r&4e8,. #5 :o+'( b, 4>e 8o=er co+r4, =>7c> :7'(7'9 4 Ie &(o64 K
E'97'eer7'9, 7' & '+45>e88, :&br7c&4e5, &55emb8e5, 5+6687e5 &'( 7'54&885 7' 4>e b+78(7'95 o: 745 ;&r7o+5 c+54omer5 4>e ce'4r&8 4,6e &7r co'(747o'7'9 5,54emJ 6re6&re5 4>e 68&'5 &'( 56ec7:7c&47o'5 4>ere:or =>7c> &re (7547'c4 &'( (7::ere'4 :rom e&c> o4>erJ 4>e &7r co'(747o'7'9 +'745 &'( 56&re 6&r45 or &cce55or7e5 4>ereo: +5e( b, 6e4747o'er &re 'o4 4>e =7'(o= 4,6e o: &7r co'(747o'er =>7c> &re m&'+:&c4+re(, &55emb8e( &'( 6ro(+ce( 8oc&88, :or 5&8e 4o 4>e 9e'er&8 m&rFe4J &'( 4>e 7m6or4e( &7r co'(747o'7'9 +'745 &'( 56&re 6&r45 or &cce55or7e5 4>ereo: &re 5+6687e( &'( 7'54&88e( b, 6e4747o'er +6o' 6re;7o+5 or(er5 o: 745 c+54omer5 co':orm&b8, =74> 4>e7r 'ee(5 &'( re@+7reme'45.

T>e :&c45 &'( c7rc+m54&'ce5 &:ore@+o4e( 5+66or4 4>e 4>eor, 4>&4 E'97'eer7'9 75 & co'4r&c4or r&4>er 4>&' & m&'+:&c4+rer. T>e "omm7557o'er 7' >75 /r7e: &r9+e5 4>&4 E74 75 more 7' &ccor( =74> re&5o' &'( 5o+'( b+57'e55 m&'&9eme'4 4o 5&, 4>&4 &',o'e =>o (e57re5 4o >&;e &7r co'(747o'7'9 +'745 7'54&88e( 7' >75 6rem75e5 &'( =>o 75 7' & 6o5747o' &'( =7887'9 4o 6&, 4>e 6r7ce c&' or(er 4>e 5&me :rom 4>e com6&', BE'97'eer7'9C &'(, 4>ere:ore, E'97'eer7'9 co+8( >&;e m&55 6ro(+ce( &'( 54ocF678e( &7r co'(747o'7'9 +'745 :or 5&8e 4o 4>e 6+b87c or 4o &', c+54omer =74> e'o+9> mo'e, 4o b+, 4>e 5&me.E T>75 75 +'4e'&b8e 7' 4>e 879>4 o: 4>e :&c4 4>&4 &7r co'(747o'7'9 +'745, 6&cF&9e(, or =>&4 =e F'o= &5 5e8:-co'4&7'e( &7r co'(747o'7'9 +'745, &re (7547'c4 :rom 4>e ce'4r&8 5,54em =>7c> E'97'eer7'9 (e&84 7'. To O+r m7'(, 4>e (7547'c47o' &5 e?68&7'e( b, E'97'eer7'9, 7' 745 /r7e:, @+o47'9 :rom booF5, 75 'o4 &' 7(8e 68&, o: =or(5 &5 c8&7me( b, 4>e "omm7557o'er, b+4 & 579'7:7c&'4 :&c4 =>7c> Ie G+54 c&''o4 79'ore. #5 @+o4e( b, E'97'eer7'9 E@+76me'4 S+668, "o., :rom &' E'97'eer7'9 >&'(booF b, L.". Morro=, &'( =>7c> Ie re6ro(+ce >ere+'(er :or e&5, re:ere'ceA
... 4>ere 75 & 9re&4 ;&r7e4, o: e@+76me'4 7' +5e 4o (o 4>75 Gob Bo: &7r co'(747o'7'9C. Some (e;7ce5 &re (e579'e( 4o 5er;e & 56ec7:7c 4,6e o: 56&ceJ o4>er5 4o 6er:orm & 56ec7:7c :+'c47o'J &'( 54788 o4>er5 &5 com6o'e'45 4o be &55emb8e( 7'4o & 4&78orm&(e 5,54em 4o :74 & 6&r47c+8&r b+78(7'9. Ge'er&88,, >o=e;er, 4>e, m&, be 9ro+6e( 7'4o 4=o c8&557:7c&47o'5 K +'74&r, &'( ce'4r&8 5,54em. T>e +'74&r, e@+76me'4 c8&557:7c&47o' 7'c8+(e5 4>o5e (e579'5 5+c> &5 room &7r co'(747o'er, =>ere &88 o: 4>e :+'c47o'&8 com6o'e'45 &re 7'c8+(e( 7' o'e or 4=o 6&cF&9e5, &'( 7'54&88&47o' 7';o8;e5 o'8, m&F7'9 5er;7ce co''ec47o' 5+c> &5 e8ec4r7c74,, =&4er &'( (r&7'5. "e'4r&8-54&47o' 5,54em5, o:4e' re:erre( 4o &5 &6687e( or b+784-+6 5,54em5, re@+7re 4>e 7'54&88&47o' o: com6o'e'45 &4 (7::ere'4 6o7'45 7' & b+78(7'9 &'( 4>e7r 7'4erco''ec47o'. T>e room &7r co'(747o'er 75 & +'74&r, e@+76me'4 (e579'e( 56ec7:7c&88, :or & room or 57m78&r 5m&88 56&ce. I4 75 +'7@+e &mo'9 &7r co'(747o'7'9 e@+76me'4 7' 4=o re56ec45A I4 75 7' 4>e e8ec4r7c&8 &6687&'ce c8&557:7c&47o', &'( 74 75 m&(e b, & 9re&4 '+mber o: m&'+:&c4+rer5.

T>ere 75 &85o 4>e 4e547mo', o: o'e "&r8o5 N&;&rro, & 87ce'5e( Mec>&'7c&8 &'( E8ec4r7c&8 E'97'eer, =>o =&5 o'ce 4>e ">&7rm&' o: 4>e /o&r( o: E?&m7'er5 :or Mec>&'7c&8 E'97'eer5 &'( =>o =&5 &88e9e(8, re56o'57b8e :or 4>e 6re6&r&47o' o: 4>e re:r79er&47o' &'( &7r co'(747o'7'9 co(e o: 4>e "74, o: M&'78&, =>o 5&7( 4>&4 E4>e ce'4r&8 4,6e &7r co'(747o'7'9 5,54em 75 &' e'97'eer7'9 Gob 4>&4 re@+7re5 68&''7'9 &'( me47c+8o+5 8&,o+4 (+e 4o 4>e :&c4 4>&4 +5+&88, &rc>74ec45 &5579' (e:7'74e 56&ce &'( +5+&88, 4>e 56&ce5 4>e, &5579' &re ;er, 5m&88 &'( o: ;&r7o+5 57De5. "o'47'+7'9 :+r4>er, >e 4e547:7e(A
I (o''4 4>7'F I >&;e 5ee' ce'4r&8 4,6e o: &7r co'(747o'7'9 m&c>7'er, room 4>&4 &re e?&c48, &87Fe bec&+5e &88 o+r b+78(7'95 >ere &re (e579'e( b, &rc>74ec45 (7557m78&r 4o e?7547'9 b+78(7'95, &'( +5+&88, 4>e, (o''4 coor(7'&4e &'( 9e4 4>e &(;7ce o: &7r co'(747o'7'9 &'( re:r79er&47'9 e'97'eer5 5o m+c> 5o 4>&4 =>e' =e come 4o (e579', =e >&;e 4o m&Fe +5e o: 4>e &;&78&b8e 56&ce 4>&4 4>e, &re &5579'7'9 4o +5 5o 4>&4 =e >&;e 4o (e579' 4>e (7::ere'4 com6o'e'4 6&r45 o: 4>e &7r co'(747o'7'9 5,54em 7' 5+c> & =&, 4>&4 =788 be &ccommo(&4e( 7' 4>e 56&ce &5579'e( &'( &:4er=&r(5 4>e 5,54em m&, be co'57(ere( &5 & (e:7'74e 6or47o' o: 4>e b+78(7'9. ... De:7'74e8, 4>ere 75 @+74e & b79 (7::ere'ce 7' 4>e o6er&47o' bec&+5e 4>e =7'(o= 4,6e &7r co'(747o'er 75 & 5or4 o: com6rom75e. I' :&c4 74 c&''o4 co'4ro8 >+m7(74, 4o 4>e (e57re( 8e;e8J r&4>er 4>e m&'+:&c4+rer5, b, >74 &'( m755, =ere &b8e 4o 5&475:, 4>em5e8;e5 4>&4 4>e (e57re( com:or4 =74>7' & room co+8( be m&(e b, & (e:7'74e 5e447'9 o: 4>e m&c>7'e &5 74 come5 :rom 4>e :&c4or,J =>ere&5 4>e ce'4r&8 4,6e 5,54em (e:7'74e8, re@+7re5 &' 7'4e8879e'4 o6er&4or. B4.5.'. 66. 331-33-, .o8. IIC

T>e 6o7'4, 4>ere:ore, 75 4>75 K E'97'eer7'9 (e:7'74e8, (7( 'o4 &'( =&5 'o4 e'9&9e( 7' 4>e m&'+:&c4+re o: &7r co'(747o'7'9 +'745 b+4 >&( 745 5er;7ce5 co'4r&c4e( :or 4>e 7'54&88&47o' o: & ce'4r&8 5,54em. T>e c&5e5 c74e( b, 4>e "omm7557o'er B#(;er4757'9 #55oc7&4e5, I'c. ;5. "o88ec4or o: "+54om5, 92, P>78. 636J "e8e547'o "o "o. ;5. "o88ec4or o: I'4er'&8 Re;e'+e, 99 P>78. 841 &'( M&'78& Tr&(7'9 S+668, "o. ;5. "74, o: M&'78&, -6 O.G. 3629C, &re 'o4 7' 6o7'4. Ne74>er &re 4>e, &6687c&b8e bec&+5e 4>e :&c45 7' &88 4>e c&5e5 c74e( &re e'47re8, (7::ere'4. T&Fe :or 7'54&'ce 4>e c&5e o: "e8e547'o "o =>ere 4>75 "o+r4 >e8( 4>e 4&?6&,er 4o be & m&'+:&c4+rer r&4>er 4>&' & co'4r&c4or o: 5&5>, (oor5 &'( =7'(o=5 m&'+:&c4+re( 7' 745 :&c4or,. I'(ee(, :rom 4>e ;er, 54&r4, "e8e547'o "o 7'4e'(e( 745e8: 4o be & m&'+:&c4+rer o: (oor5, =7'(o=5, 5&5>e5 e4c. &5 74 (7( re9754er & 56ec7&8 4r&(e '&me :or 745 5&5> b+57'e55 &'( or(ere( com6&', 54&47o'er, c&rr,7'9 4>e bo8( 6r7'4 EORIENT#L S#SH $#"TOR1 B"ELESTINO "O #ND "OMP#N1, PROP.C 926 R&o' S4., )+7&6o, M&'78&, Te8. No. e4c., M&'+:&c4+rer5 o: #88 07'(5 o: Door5, I7'(o=5 ... .E L7Fe=75e, "e8e547'o "o 'e;er 6+4 +6 & co'4r&c4or'5 bo'( &5 re@+7re( b, #r47c8e 1229 o: 4>e "7;78 "o(e. #85o, &5 & 9e'er&8 r+8e, 5&5> :&c4or7e5 rece7;e or(er5 :or (oor5 &'( =7'(o=5 o: 56ec7&8 (e579' o'8, 7' 6&r47c+8&r c&5e5, b+4 4>e b+8F o: 4>e7r 5&8e5 75 (er7;e( :rom re&(,-m&(e (oor5 &'( =7'(o=5 o: 54&'(&r( 57De5 :or 4>e &;er&9e >ome, =>7c> E5&8e5E =ere re:8ec4e( 7' 4>e7r booF5 o: &cco+'45 4o4&887'9 P118,2-4.69 :or 4>e 6er7o( :rom *&'+&r,, 19-2 4o Se64ember 33, 19-2, or :or & 6er7o( o: o'8, '7'e B9C mo'4>5. T>75 "o+r4 :o+'( 5&7( 5+m (7::7c+84 4o >&;e bee' (er7;e( :rom 745 :e= c+54omer5 =>o 68&ce( 56ec7&8 or(er5 :or 4>e5e 74em5. #668,7'9 4>e &bo;e54&4e( :&c45 4o 4>e c&5e &4 b&r, Ie :o+'( 4>em 4o >e 7'&66o574e. E'97'eer7'9 &(;er475e( 745e8: &5 E'97'eer7'9 E@+76me'4 &'( S+668,

"om6&',, M&c>7'er, Mec>&'7c&8 S+6687e5, E'97'eer5, "o'4r&c4or5, 124 M&r@+e5 (e "om788&5, M&'78& BE?>. E/E &'( E1-E /IR rec. 6. 186C, &'( 'o4 &5 m&'+:&c4+rer5. I4 87Fe=75e 6&7( 4>e co'4r&c4or5 4&? o' &88 4>e co'4r&c45 :or 4>e (e579' &'( co'54r+c47o' o: ce'4r&8 5,54em &5 4e547:7e( 4o b, Mr. Re, P&rFer, 745 Pre57(e'4 &'( Ge'er&8 M&'&9er. B4.5.'. 6. 132, 133C S7m78&r8,, E'97'eer7'9 (7( 'o4 >&;e re&(,m&(e &7r co'(747o'7'9 +'745 :or 5&8e b+4 &5 6er 4e547mo', o: Mr. P&rFer +6o' 7'@+7r, o: *+(9e L+c7&'o o: 4>e "T# K
) K #57(e :rom 4>e 9e'er&8 com6o'e'45, =>7c> 9o 7'4o &7r co'(747o'7'9 68&'4 or 5,54em o: 4>e ce'4r&8 4,6e =>7c> ,o+r com6&', +'(er4&Fe5, &'( 4>e 6roce(+re :o88o=e( b, ,o+ 7' ob4&7'7'9 &'( e?ec+47'9 co'4r&c45 =>7c> ,o+ >&;e &8re&(, 4e547:7e( 4o 7' 6re;7o+5 >e&r7'9, =o+8( ,o+ 5&, 4>&4 4>e co;er7'9 co'4r&c45 :or 4>e5e (7::ere'4 6roGec45 8754e( ... re:erre( 4o 7' 4>e 8754, E?>. E$E &re 7(e'47c&8 7' e;er, re56ec4M I me&' e;er, 68&' or 5,54em co;ere( b, 4>e5e (7::ere'4 co'4r&c45 &re 7(e'47c&8 7' 54&'(&r( 7' e;er, re56ec4, 5o 4>&4 ,o+ c&' re6ro(+ce 4>emM # K No, 57r. T>e, &re 'o4 &88 54&'(&r(. O' 4>e co'4r&r,, 'o'e o: 4>em &re 4>e 5&me. E&c> o'e m+54 be (e579'e( &'( co'54r+c4e( 4o mee4 4>e 6&r47c+8&r re@+7reme'45, =>e4>er 4>e &6687c&47o' 75 4o be o6er&4e(. B4.5.'. 66. 131-132C

I>&4 Ie co'57(er &5 o' &88 :o+r5 =74> 4>e c&5e &4 b&r 75 4>e c&5e o: S.". La-rence #o. %s. "cFarland, "omm7557o'er o: I'4er'&8 Re;e'+e o: 4>e S4&4e o: Te''e55ee &'( Mc"&'8e55, 3-- SI 2(, 133, 131, E=>ere 4>e c&+5e 6re5e'45 4>e @+e547o' o: =>e4>er o'e e'9&9e( 7' 4>e b+57'e55 o: co'4r&c47'9 :or 4>e e54&b875>me'4 o: &7r co'(747o'7'9 5,54em 7' b+78(7'95, =>7c> =orF re@+7re5, 7' &((747o' 4o 4>e :+r'75>7'9 o: & coo87'9 +'74, 4>e co''ec47o' o: 5+c> +'74 =74> e8ec4r7c&8 &'( 68+mb7'9 :&c78747e5 &'( 4>e 7'54&88&47o' o: (+c45 =74>7' &'( 4>ro+9> =&885, ce787'95 &'( :8oor5 4o co';e, coo8 &7r 4o ;&r7o+5 6&r45 o: 4>e b+78(7'9, 75 87&b8e :or 5&8e or +5e 4&? &5 & co'4r&c4or r&4>er 4>&' & re4&78er o: 4&'97b8e 6er5o'&8 6ro6er4,. #66e88ee 4ooF 4>e Po5747o' 4>&4 &66e88&'4 =&5 'o4 e'9&9e( 7' 4>e b+57'e55 o: 5e887'9 &7r co'(747o'7'9 e@+76me'4 &5 5+c> b+4 7' 4>e :+r'75>7'9 4o 745 c+54omer5 o: com68e4e( &7r co'(747o'7'9 5,54em5 6+r5+&'4 4o co'4r&c4, =&5 & co'4r&c4or e'9&9e( 7' 4>e co'54r+c47o' or 7m6ro;eme'4 o: re&8 6ro6er4,, &'( &5 5+c> =&5 87&b8e :or 5&8e5 or +5e 4&? &5 4>e co'5+mer o: m&4er7&85 &'( e@+76me'4 +5e( 7' 4>e co'5+mm&47o' o: co'4r&c45, 7rre56ec47;e o: 4>e 4&? 54&4+5 o: 745 co'4r&c4or5. To 4r&'5m74 4>e =&rm or coo8 &7r o;er 4>e b+78(7'95, 4>e &66e88&'4 7'54&88e( 5,54em o: (+c45 r+''7'9 :rom 4>e b&57c +'745 4>ro+9> =&885, ce787'95 &'( :8oor5 4o re9754er5. T>e co'4r&c4 c&88e( :or com68e4e( &7r co'(747o'7'9 5,54em5 =>7c> bec&me 6erm&'e'4 6&r4 o: 4>e b+78(7'95 &'( 7m6ro;eme'45 4o 4>e re&84,.E T>e "o+r4 >e8( 4>e &66e88&'4 & co'4r&c4or =>7c> +5e( 4>e m&4er7&85 &'( 4>e e@+76me'4 +6o' 4>e ;&8+e o: =>7c> 4>e 4&? >ere7' 7m6o5e( =&5 8e;7e( 7' 4>e 6er:orm&'ce o: 745 co'4r&c45 =74> 745 c+54omer5, &'( 4>&4 4>e c+54omer5 (7( 'o4 6+rc>&5e 4>e e@+76me'4 &'( >&;e 4>e 5&me 7'54&88e(. #668,7'9 4>e :&c45 o: 4>e &:oreme'47o'e( c&5e 4o 4>e 6re5e'4 c&5e, Ie 5ee 4>&4 4>e 5+668, o: &7r co'(747o'7'9 +'745 4o E'97'eer'5 ;&r7o+5 c+54omer5, =>e4>er 4>e 5&7( m&c>7'er7e5 =ere 7' >&'( or 'o4, =&5 e56ec7&88, m&(e :or e&c> c+54omer &'( 7'54&88e( 7' >75 b+78(7'9 +6o' >75 56ec7&8 or(er. T>e &7r co'(747o'7'9 +'745 7'54&88e( 7' & ce'4r&8 4,6e o: &7r co'(747o'7'9 5,54em =o+8( 'o4 >&;e e?754e( b+4 :or 4>e or(er o: 4>e 6&r4, (e57r7'9 4o &c@+7re 74 &'( 7: 74 e?754e( =74>o+4 4>e 56ec7&8

or(er o: E'97'eer7'9'5 c+54omer, 4>e 5&7( &7r co'(747o'7'9 +'745 =ere 'o4 7'4e'(e( :or 5&8e 4o 4>e 9e'er&8 6+b87c. T>ere:ore, Ie >&;e b+4 4o &::7rm 4>e co'c8+57o' o: 4>e "o+r4 o: T&? #66e&85 4>&4 E'97'eer7'9 75 & co'4r&c4or r&4>er 4>&' & m&'+:&c4+rer, 5+bGec4 4o 4>e co'4r&c4or5 4&? 6re5cr7be( b, Sec47o' 191 o: 4>e "o(e &'( 'o4 4o 4>e &(;&'ce 5&8e5 4&? 7m6o5e( b, Sec47o' 18-BmC 7' re8&47o' 4o Sec47o' 194 o: 4>e 5&me "o(e. S7'ce 74 >&5 bee' 6ro;e( 4o O+r 5&475:&c47o' 4>&4 E'97'eer7'9 7m6or4e( &7r co'(747o'7'9 +'745, 6&r45 or &cce55or7e5 4>ereo: :or +5e 7' 745 co'54r+c47o' b+57'e55 &'( 4>e5e 74em5 =ere 'e;er 5o8(, re5o8(, b&r4ere( or e?c>&'9e(, E'97'eer7'9 5>o+8( be >e8( 87&b8e 4o 6&, 4&?e5 6re5cr7be( +'(er Sec47o' 193 - o: 4>e "o(e. T>75 com6e'5&47'9 4&? 75 'o4 & 4&? o' 4>e 7m6or4&47o' o: 9oo(5 b+4 & 4&? o' 4>e +5e o: 7m6or4e( 9oo(5 'o4 5+bGec4 4o 5&8e5 4&?. E'97'eer7'9, 4>ere:ore, 5>o+8( be >e8( 87&b8e 4o 4>e 6&,me'4 o: 33H com6e'5&47'9 4&? 7' &ccor(&'ce =74> Sec47o' 193 o: 4>e T&? "o(e 7' re8&47o' 4o Sec47o' 18-BmC o: 4>e 5&me, b+4 =74>o+4 4>e -3H m&rF +6 6ro;7(e( 7' Sec47o' 183BbC. II Ie 4&Fe +6 'e?4 4>e 755+e o: :r&+(. T>e "omm7557o'er c>&r9e( E'97'eer7'9 =74> m75(ec8&r&47o' o: 4>e 7m6or4e( &7r co'(747o'7'9 +'745 &'( 6&r45 or &cce55or7e5 4>ereo: 5o &5 4o m&Fe 4>em 5+bGec4 4o & 8o=er r&4e o: 6erce'4&9e 4&? B2HC +'(er Sec47o' 186 o: 4>e T&? "o(e, =>e' 4>e, &re &88e9e(8, 5+bGec4 4o & >79>er r&4e o: 4&? B33HC +'(er 745 Sec47o' 18-BmC. T>75 c>&r9e o: :r&+( =&5 (e'7e( b, E'97'eer7'9 b+4 4>e "o+r4 o: T&? #66e&85 7' 745 (ec757o' :o+'( &(;er5e8, &'( 5&7(E
... Ie &re &m68, co';7'ce( :rom 4>e e;7(e'ce 6re5e'4e( b, re56o'(e'4 4>&4 6e4747o'er (e87ber&4e8, &'( 6+r6o5e8, m75(ec8&re( 745 7m6or4&47o'5. T>75 e;7(e'ce co'57545 o: 8e44er5 =r744e' b, 6e4747o'er 4o 745 :ore79' 5+6687er5, 7'54r+c47'9 4>em o' >o= 4o 7';o7ce &'( (e5cr7be 4>e &7r co'(747o'7'9 +'745 or(ere( b, 6e4747o'er. ... B6. 218 "T# rec.C

De5674e 4>e &bo;e :7'(7'95, >o=e;er, 4>e "o+r4 o: T&? #66e&85 &b5o8;e( E'97'eer7'9 :rom 6&,7'9 4>e -3H 5+rc>&r9e 6re5cr7be b, Sec47o' 183B&C o: 4>e T&? "o(e b, re&5o'7'9 o+4 &5 :o88o=5A
T>e 7m6o5747o' o: 4>e -3H 5+rc>&r9e 6re5cr7be( b, Sec47o' 183B&C o: 4>e T&? "o(e 75 b&5e( o' =788:+8 'e98ec4 4o :78e 4>e mo'4>8, re4+r' =74>7' 23 (&,5 &:4er 4>e e'( o: e&c> mo'4> or 7' c&5e & :&85e or :r&+(+8e'4 re4+r' 75 =788:+88, m&(e, 74 c&' re&(78, be 5ee', 4>&4 6e4747o'er c&''o4 8e9&88, be >e8( 5+bGec4 4o 4>e -3H 5+rc>&r9e 7m6o5e( b, Sec47o' 183B&C o: 4>e T&? "o(e. Ne74>er c&' 6e4747o'er be >e8( 5+bGec4 4o 4>e -3H 5+rc>&r9e +'(er Sec47o' 193 o: 4>e T&? "o(e (e&87'9 o' com6e'5&47'9 4&? bec&+5e 4>e 6ro;757o'5 4>ereo: (o 'o4 7'c8+(e 4>e -3H 5+rc>&r9e. I>ere & 6&r47c+8&r 6ro;757o' o: 4>e T&? "o(e (oe5 'o4 7m6o5e 4>e -3H 5+rc>&r9e &5 :r&+( 6e'&84, =e c&''o4 e':orce & 'o'-e?7547'9 6ro;757o' o: 8&= 'o4=74>54&'(7'9 4>e &55e55me'4 o: re56o'(e'4 4o 4>e co'4r&r,. I'54&'ce5 o: 4>e e?c8+57o' 7' 4>e T&? "o(e o: 4>e -3H 5+rc>&r9e &re 4>o5e (e&87'9 o' 4&? o' b&'F5, 4&?e5 o' rece7645 o: 7'5+r&'ce com6&'7e5, &'( :r&'c>75e 4&?. Ho=e;er, 7: 4>e T&? "o(e 7m6o5e5 4>e -3H 5+rc>&r9e &5 :r&+( 6e'&84,, 74 e?6re558, 5o 6ro;7(e5 &5 7' 4>e c&5e5 o: 7'come 4&?, e54&4e &'( 7'>er74&'ce 4&?e5, 97:4 4&?e5, m7'7'9 4&?, &m+5eme'4 4&? &'( 4>e

mo'4>8, 6erce'4&9e 4&?e5. #ccor(7'98,, =e >o8( 4>&4 6e4747o'er 75 'o4 5+bGec4 4o 4>e -3H 5+rc>&r9e (e5674e 4>e e?754e'ce o: :r&+( 7' 4>e &b5e'ce o: 8e9&8 b&575 4o 5+66or4 4>e 7m6or4&47o' 4>ereo:. B6. 228 "T# rec.C

Ie >&;e 9o'e o;er 4>e e?>7b745 5+bm744e( b, 4>e "omm7557o'er e;7(e'c7'9 :r&+( comm744e( b, E'97'eer7'9 &'( Ie re6ro(+ce 5ome o: 4>em >ere+'(er :or c8&r74,. #5 e&r8, &5 M&rc> 18, 19-3, E'97'eer7'9 7' & 8e44er o: e;e' (&4e =ro4e 4o Tr&'e "o. BE?>. E3-0E 66. 1-2-1--, /IR rec.C %i(:
1o+r 7';o7ce5 5>o+8( be m&(e 7' 4>e '&me o: M&(r79&8 "o., I'c., M&'78&, P>787667'e5, cNo E'97'eer7'9 E@+76me'4 S+668, "o., M&'78&, P>787667'e5 K :or=&r(7'9 &88 corre56o'(e'ce &'( 5>7667'9 6&6er5 co'cer'7'9 4>75 or(er 4o +5 o'8, &'( 'o4 4o 4>e c+54omer. I>e' 7';o7c7'9, ,o+r 7';o7ce5 5>o+8( be e?&c48, &5 (e4&78e( 7' 4>e c+54omer'5 Le44er Or(er (&4e( M&rc> 144>, 19-3 &44&c>e(. T>75 75 7' &ccor(&'ce =74> 4>e P>787667'e 7m6or4 87ce'5e5 9r&'4e( 4o M&(r79&8 "o., I'c. &'( 5+c> (e4&785 m+54 o'8, be 5>o=' o' &88 6&6er5 &'( 5>7667'9 (oc+me'45 :or 4>75 5>76me'4. .o mention of -ords air conditioning e'&ipment sho&ld /e made on an shipping doc&ments as -ell as on the cases. P8e&5e 97;e 4>75 m&44er ,o+r c&re:+8 &44e'47o', o4>er=75e 9re&4 (7::7c+847e5 =788 be e'co+'4ere( =74> 4>e P>787667'e /+re&+ o: "+54om5 =>e' c8e&r7'9 4>e 5>76me'4 o' 745 &rr7;&8 7' M&'78&. #88 7';o7ce5 &'( c&5e5 5>o+8( be m&rFe( ETHIS E)!IPMENT $OR RI%#L "EMENT "O.E

T>e 5&me 7'54r+c47o' =&5 m&(e 4o #cme I'(+54r7e5, I'c., S&' $r&'c75co, "&87:or'7& 7' & 8e44er (&4e( M&rc> 19, 19-3 BE?>. E3-*-1E 66. 1-3-1-1, /IR rec.C O' #6r78 6, 19-3, E'97'eer7'9 =ro4e 4o O=e'5-"or'7'9 $7ber98&55 "or6., Ne= 1orF, !.S.#. BE?>. E3-1E 66. 142-149, /IR rec.C &85o e'Go7'7'9 4>e 8&44er :rom me'47o'7'9 or re:err7'9 4o 4>e 4erm '&7r co'(747o'7'9' &'( 4o (e5cr7be 4>e 9oo(5 o' or(er &5 $7ber98&55 676e &'( 676e :7447'9 7'5+8&47o' 7'54e&(. L7Fe=75e o' #6r78 33, 19-3, E'97'eer7'9 4>re&4e'e( 4o (75co'47'+e 4>e :or=&r(7'9 5er;7ce o: !'7;er5&8 Tr&'5co'47'e'4&8 "or6or&47o' =>e' 74 =ro4e Tr&'e "o. BE?>. E3-HE 6. 146, /IR rec.CA
I4 =788 be 'o4e( 4>&4 4>e !'7;er5&8 Tr&'5co'47'e'4&8 "or6or&47o' 75 'o4 :o88o=7'9 4>ro+9> o' 4>e 7'54r+c47o'5 =>7c> >&;e bee' co;ere( b, 4>e &bo;e corre56o'(e'ce, &'( =>7c> 7'(7c&4e5 4>e 'ece5574, o: (75co'47'+7'9 4>e +5e o: 4>e 4erm E#7r co'(747o'7'9 M&c>7'er, or #7r "oo8er5E. O+r 7'54r+c47o'5 co'cer'7'9 4>75 9e'er&8 574+&47o' >&;e bee' 5e'4 4o ,o+ 7' &m68e 47me 4o >&;e &;o7(e( 4>75 error 7' 4erm7'o8o9,, &'( =e =788 &5F 4>&4 o' rece764 o: 4>75 8e44er 4>&4 ,o+ &9&7' =r74e 4o !'7;er5&8 Tr&'5co'47'e'4&8 "or6. &'( 7':orm 4>em 4>&4, 7: 7' 4>e :+4+re, 4>e, &re +'&b8e 4o coo6er&4e =74> +5 o' 4>75 re@+7reme'4, =e =788 4>ere&:4er be +'&b8e 4o +4787De 4>e7r :or=&r(7'9 5er;7ce. P8e&5e 7':orm 4>em 4>&4 =e =788 'o4 4o8er&4e &'o4>er :&78+re 4o :o88o= o+r re@+7reme'45.

#'( o' *+8, 12, 19-3 BE?>- E3-9E 6. 14-, /IR rec.C E'97'eer7'9 =ro4e Tr&'e "o. &'o4>er 8e44er, %i(:

I' 4>e 6&54, =e >&;e &8=&,5 6&7( 4>e &7r co'(747o'7'9 4&? o' c87m&4e c>&'9er5 &'( 4>&4 m&rF 75 reco9'7De( 7' 4>e P>787667'e5, &5 &7r co'(747o'7'9 e@+76me'4. T>75 m&44er o: &;o7(7'9 &', 47e-7' o' &7r co'(747o'7'9 75 ;er, 7m6or4&'4 4o +5, &'( =e &re &5F7'9 4>&4 :rom >ereo' 4>&4 =>oe;er 4&Fe5 c&re o: 4>e 6roce557'9 o: o+r or(er5 be c&re:+88, 7'54r+c4e( 5o &5 4o &;o7( &9&7' +57'9 4>e 4erm E"87m&4e c>&'9er5E or 7' &', =&, re:err7'9 4o 4>e e@+76me'4 &5 E&7r co'(747o'7'9.E

#'( 7' re56o'5e 4o 4>e &:ore@+o4e( 8e44er, Tr&'e "o. =ro4e o' *+8, 33, 19-3, 5+99e547'9 & 5o8+47o', %i(:
Ie :ee8 4>&4 =e c&' 6rob&b8, 5o8;e &88 4>e 6rob8em5 b, :o88o=7'9 4>e 6roce(+re o+487'e( 7' ,o+r 8e44er o: M&rc> 2-, 19-3 =>ere7' ,o+ 54&4e( 4>&4 7' &88 :+4+re Gob5 ,o+ =o+8( e'c8o5e 6>o4o54&47c co67e5 o: ,o+r 7m6or4 87ce'5e 5o 4>&4 =e m79>4 m&Fe +6 4=o 5e45 o: 7';o7ce5A o'e 5e4 (e5cr7b7'9 e@+76me'4 or(ere( 57m68, &ccor(7'9 4o 4>e =&, 4>&4 4>e, &re 8754e( o' 4>e 7m6or4 87ce'5e &'( &'o4>er &ccor(7'9 4o o+r or(7'&r, re9+8&r me4>o(5 o: or(er =r74e-+6. Ie =o+8( 4>e' 7'c8+(e 4>e 5e4 m&(e +6 &ccor(7'9 4o 4>e 7m6or4 87ce'5e 7' 4>e 5>7667'9 bo?e5 4>em5e8;e5 &'( +5e 4>o5e 74em5 &5 o+r &c4+&8 5>7667'9 (oc+me'45 &'( 7';o7ce5, &'( =e =788 5e'( 4>e o4>er re9+8&r 7';o7ce 4o ,o+, b, 5e6&r&4e corre56o'(e'ce. BE?>- No. E3-$-1E, 6. 144 /IR rec.C

#'o4>er 7'4ere547'9 8e44er o: E'97'eer7'9 75 o'e (&4e( #+9+54 22, 19-- BE?>. E3-"E 6. 141 /IR rec.C
I' 4>e 6roce55 o: c8e&r7'9 4>e 5>76me'4 :rom 4>e 67er5, o'e o: 4>e "+54om5 7'56ec4or5 re@+e54e( 4o 5ee 4>e 6&cF7'9 8754. !6o' 6re5e'47'9 4>e 6&cF7'9 8754, 74 =&5 (75co;ere( 4>&4 4>e 5&me =&5 6re6&re( o' & co6, o: ,o+r 8e44er>e&( =>7c> 7'(7c&4e( 4>&4 4>e Tr&'e "o. m&'+:&c4+re( &7r co'(747o'7'9, >e&47'9 &'( >e&4 4r&'5:er e@+76me'4. #ccor(7'98,, 4>e 7'56ec4or5 7'5754e( 4>&4 4>75 e@+76me'4 =&5 be7'9 7m6or4e( :or &7r co'(747o'7'9 6+r6o5e5. ,o date, -e ha%e not /een a/le to clear the shipment and it is possi/le that -e -ill /e re'&ired to pa hea% ta0es on e'&ipment. ,he p&rpose of this letter is to re'&est that in the f&t&re, no doc&ments of an *ind sho&ld /e sent -ith the order that indicate in an -a that the e'&ipment co&ld possi/l /e &sed for air conditioning. I4 75 re&87De( 4>&4 4>75 & bro&( re@+e54 &'( :&7r8, (7::7c+84 4o &ccom6875> &'( &(m7'754er, b+4 =e be87e;e =74> 6ro6er c&+47o' 74 c&' be e?ec+4e(. 1o+r coo6er&47o' &'( c8o5e 5+6er;757o' co'cer'7'9 4>e5e m&44er5 =788 be &66rec7&4e(. BEm6>&575 5+6687e(C

T>e &:ore@+o4e( comm+'7c&47o'5 &re 54ro'98, 7'(7c&47;e o: 4>e :r&+(+8e'4 7'4e'4 o: E'97'eer7'9 4o m75(ec8&re 745 7m6or4&47o' o: &7r co'(747o'7'9 +'745 &'( 56&re 6&r45 or &cce55or7e5 4>ereo: 4o e;&(e 6&,me'4 o: 4>e 33H 4&?. #'( 57'ce 4>e comm7557o' o: :r&+( 75 &84o9e4>er 4oo 98&r7'9, Ie c&''o4 &9ree =74> 4>e "o+r4 o: T&? #66e&85 7' &b5o8;7'9 E'97'eer7'9 :rom 4>e -3H :r&+( 5+rc>&r9e, o4>er=75e Ie =788 be 97;7'9 6rem7+m 4o & 68&7'8, 7'4o8er&b8e &c4 o: 4&? e;&57o'. #5 &648, 54&4e( b, 4>e' So87c74or Ge'er&8, 'o= *+547ce, #'4o'7o P. /&rre(oA '4>75 c7rc+m54&'ce =788 'o4 :ree 74 :rom 4>e -3H 5+rc>&r9e bec&+5e 7' &', c&5e =>e4>er 74 75 5+bGec4 4o &(;&'ce 5&8e5 4&? or com6e'5&47'9 4&?, 74 75 re@+7re( b, 8&= 4o 4r+8, (ec8&re 745 7m6or4&47o' 7' 4>e 7m6or4 e'4r7e5 &'( 7'4er'&8 re;e'+e

(ec8&r&47o'5 be:ore 4>e 7m6or4&47o'5 m&,be re8e&5e( :rom c+54om5 c+54o(,. T>e 5&7( e'4r7e5 &re 4>e ;er, (oc+me'45 =>ere 4>e '&4+re, @+&'474, &'( ;&8+e o: 4>e 7m6or4e( 9oo(5 (ec8&re( &'( =>ere 4>e c+54om5 (+47e5, 7'4er'&8 re;e'+e 4&?e5, &'( o4>er :ee5 or c>&r9e5 7'c7(e'4 4o 4>e 7m6or4&47o' &re com6+4e(. T>e5e e'4r7e5, 4>ere:ore, 5er;e 4>e 5&me 6+r6o5e &5 4>e re4+r'5 re@+7re( b, Sec47o' 183B&C o: 4>e "o(e.' #'e'4 4>e 2-H (e87'@+e'c, 5+rc>&r9e, Ie :+88, &9ree 4o 4>e r+87'9 m&(e b, 4>e "o+r4 o: T&? #66e&85 &'( >o8( E'97'eer7'9 87&b8e :or 4>e 5&me. #5 >e8( b, 4>e 8o=er co+r4A
#4 :7r54 b8+5> 74 =o+8( 5eem 4>&4 4>e co'4e'47o' o: 6e4747o'er 4>&4 74 75 'o4 5+bGec4 4o 4>e (e87'@+e'c,, 5+rc>&r9e o: 2-H 75 5o+'(, ;&87( &'( 4e'&b8e. Ho=e;er, & 5er7o+5 54+(, &'( cr747c&8 &'&8,575 o: 4>e >754or7c&8 6ro;757o'5 o: Sec47o' 193 o: 4>e T&? "o(e (e&87'9 o' com6e'5&47'9 4&? 7' re8&47o' 4o Sec47o' 183B&C o: 4>e 5&me "o(e, =788 5>o= 4>&4 4>e co'4e'47o' o: 6e4747o'er 75 =74>o+4 mer74. T>e or797'&8 4e?4 o: Sec47o' 193 o: "ommo'=e&84> #c4 466, o4>er=75e F'o=' &5 4>e N&47o'&8 I'4er'&8 Re;e'+e "o(e, &5 &me'(e( b, "ommo'=e&84> #c4 No. -33, e::ec47;e o' Oc4ober 1, 1939, (oe5 'o4 6ro;7(e :or 4>e :787'9 o: & com6e'5&47o' 4&? re4+r' &'( 6&,me'4 o: 4>e 2- H 5+rc>&r9e :or 8&4e 6&,me'4 4>ereo:. !'(er 4>e or797'&8 4e?4 o: Sec47o' 193 o: 4>e T&? "o(e &5 &me'(e( b, "ommo'=e&84> #c4 No. -33, 4>e co'4e'47o' o: 4>e 6e4747o'er 4>&4 74 75 'o4 5+bGec4 4o 4>e 2-H 5+rc>&r9e &66e&r5 4o be 8e9&88, 4e'&b8e. Ho=e;er, Sec47o' 193 o: 4>e T&? "o(e =&5 5+b5e@+e'48, &me'(e( b, 4>e Re6+b87c #c45 No5. 2-3, 361, 1-11 &'( 1612 e::ec47;e Oc4ober 1, 1946, *+8, 1, 1948, *+'e 9, 1949, *+'e 16, 19-6 &'( #+9+54 24, 19-6 re56ec47;e8,, =>7c> 7';&r7&b8, 6ro;7(e5 &mo'9 o4>er5, 4>e :o88o=7'9A ... I: &', &r47c8e =74>(r&=' :rom 4>e c+54om>o+5e or 4>e 6o54 o::7ce =74>o+4 6&,me'4 o: 4>e com6e'5&47'9 4&? 75 5+b5e@+e'48, +5e( b, 4>e 7m6or4er :or o4>er 6+r6o5e5, corre56o'(7'9 e'4r, 5>o+8( be m&(e 7' 4>e booF5 o: &cco+'45 7: &', &re Fe64 or & =r744e' 'o47ce 4>ereo: 5e'4 4o 4>e "o88ec4or o: I'4er'&8 Re;e'+e &'( 6&,me'4 o: 4>e corre56o'(7'9 com6e'5&47'9 4&? m&(e =74>7' 33 (&,5 :rom 4>e (&4e o: 5+c> e'4r, or 'o47ce &'( 7: 4&? 75 'o4 6&7( =74>7' 5+c> 6er7o( 4>e &mo+'4 o: 4>e 4&? 5>&88 be 7'cre&5e( b, 2-H 4>e 7'creme'4 4o be & 6&r4 o: 4>e 4&?.

S7'ce 4>e 7m6or4e( &7r co'(747o'7'9 +'745-&'( 56&re 6&r45 or &cce55or7e5 4>ereo: &re 5+bGec4 4o 4>e com6e'5&47'9 4&? o: 33H &5 4>e 5&me =ere +5e( 7' 4>e co'54r+c47o' b+57'e55 o: E'97'eer7'9, 74 75 7'c+mbe'4 +6o' 4>e 8&44er 4o com68, =74> 4>e &:ore@+o4e( re@+7reme'4 o: Sec47o' 193 o: 4>e "o(e, b, 6o547'9 7' 745 booF5 o: &cco+'45 or 'o47:,7'9 4>e "o88ec4or o: I'4er'&8 Re;e'+e 4>&4 4>e 7m6or4e( &r47c8e5 =ere +5e( :or o4>er 6+r6o5e5 =74>7' 33 (&,5. ... "o'5e@+e'48,J &5 4>e 33H com6e'5&47'9 4&? =&5 'o4 6&7( b, 6e4747o'er =74>7' 4>e 47me 6re5cr7be( b, Sec47o' 193 o: 4>e T&? "o(e &5 &me'(e(, 74 75 4>ere:ore 5+bGec4 4o 4>e 2-H 5+rc>&r9e :or (e87'@+e'c, 7' 4>e 6&,me'4 o: 4>e 5&7( 4&?. B66. 224-226 "T# rec.C III

L&548, 4>e @+e547o' o: 6re5cr7647o' o: 4>e 4&? &55e55me'4 >&5 bee' 6+4 7' 755+e. E'97'eer7'9 co'4e'(5 4>&4 74 =&5 'o4 9+784, o: 4&? :r&+( 7' e::ec47'9 4>e 7m6or4&47o'5 &'(, 4>ere:ore, Sec47o' 332B&C 6re5cr7b7'9 4e' ,e&r5 75 7'&6687c&b8e, c8&7m7'9 4>&4 4>e 6er47'e'4 6re5cr7647;e 6er7o( 75 :7;e ,e&r5 :rom 4>e (&4e 4>e @+e547o'e( 7m6or4&47o'5 =ere m&(e. # re;7e= o: 4>e recor( >o=e;er re;e&85 4>&4 E'97'eer7'9 (7( :78e & 4&? re4+r' or (ec8&r&47o' =74> 4>e /+re&+ o: "+54om5 be:ore 74 6&7( 4>e &(;&'ce 5&8e5 4&? o: 2H. #'( 4>e (ec8&r&47o' :78e( re;e&85 4>&4 74 (7( 7' :&c4 m75(ec8&re 745 7m6or4&47o'5. Sec47o' 332 o: 4>e T&? "o(e =>7c> 6ro;7(e5A
Sec47o' 332. K E?ce647o'5 &5 4o 6er7o( o: 87m74&47o' o: &55e55me'4 &'( co88ec47o' o: 4&?e5. K B&C I' 4>e c&5e o: & :&85e or :r&+(+8e'4 re4+r' =74> 7'4e'4 4o e;&(e 4&? or o: & :&78+re 4o :78e & re4+r', 4>e 4&? m&, be &55e55e(, or & 6rocee(7'9 7' co+r4 :or 4>e co88ec47o' o: 5+c> 4&? m&, be be9+' =74>o+4 &55e55me'4 &4 &', 47me =74>7' 4e' ,e&r5 &:4er 4>e (75co;er, o: 4>e :&8574,, :r&+( or om7557o'.

75 &6687c&b8e, co'57(er7'9 4>e 6re6o'(er&'ce o: e;7(e'ce o: :r&+( =74> 4>e 7'4e'4 4o e;&(e 4>e >79>er r&4e o: 6erce'4&9e 4&? (+e :rom E'97'eer7'9. T>e, 4&? &55e55me'4 =&5 m&(e =74>7' 4>e 6er7o( 6re5cr7be( b, 8&= &'( 6re5cr7647o' >&( 'o4 5e4 7' &9&7'54 4>e Go;er'me'4. IHERE$ORE, 4>e (ec757o' &66e&8e( :rom 75 &::7rme( =74> 4>e mo(7:7c&47o' 4>&4 E'97'eer7'9 75 >ereb, &85o m&(e 87&b8e 4o 6&, 4>e -3H :r&+( 5+rc>&r9e. SO ORDERED. "a*alintal, #.J., #astro, "a*asiar and "artin, JJ., conc&r.

$oo4'o4e5
1 Sec47o' 18-. Perce'4&9e 4&? o' 5&8e5 o: ..., re:r79er&4or5 &'( o4>er5. K T>ere 5>&88 be 8e;7e(, &55e55e(, &'( co88ec4e( o'ce o'8, o' e;er, or797'&8 5&8e, b&r4er, e?c>&'9e, or 57m78&r 4r&'5&c47o' 7'4e'(e( 4o 4r&'5:er o='er5>76 o:, or 4748e 4o, 4>e o4>er &r47c8e5 >ere7' be8o= e'+mer&4e(, & 4&? e@+7;&8e'4 4o 4>7r4, 6erce'4+m o: 4>e 9ro55 5e887'9 6r7ce or 9ro55 ;&8+e 7' mo'e, o: 4>e &r47c8e5 5o8(, b&r4ere(, e?c>&'9e( or 4r&'5:erre(, 5+c> 4&? 4o be 6&7( b, 4>e m&'+:&c4+rer or 6ro(+cer5. Pro;7(e(A T>&4 =>ere 4>e &r47c8e5 e'+mer&4e( >ere7' be8o= &re m&'+:&c4+re( o+4 o: m&4er7&8 5+bGec4 4o 4&? +'(er 4>75 5ec47o', 4>e 4o4&8 co54 o: 5+c> m&4er7&85, &5 (+8, e54&b875>e( 5>&88 be (e(+c47b8e :rom 4>e 9ro55 5e887'9 6r7ce or 9ro55 ;&8+e 7' mo'e, o: 5+c> m&'+:&c4+re( &r47c8e5. ??? ??? ??? BmC #7r co'(747o'7'9 +'745 &'( 6&r45 or &cce55or7e5 4>ereo:. B#5 &me'(e( b, R.#. No. -88, e::ec47;e :rom Se64ember 22, 19-3 +'478 74 =&5 &me'(e( b, R.#. No. 1612 m&(e e::ec47;e #+9+54 14, 19-6.C m&'+:&c4+re( &r47c8e5. ... 2 Gro;e5 ;5. /+cF, 3, M&+8e 5. 128J To=er5 ;. O5bor'e, 1 S4r&'9e -36, /e'G&m7' o' S&8e5 93J &5 c74e( 7' #r&L&5, #''o4&47o'., &'( *+r756r+(e'ce o' 4>e NIR", &5 &me'(e(, 1923 e(. 6. 323, 324. 3 $/id., 6. 324, 6&r. 191 B13C.

4 Dec757o', "o+r4 o: T&? #66e&85, "T# Rec. 6. 212. - ESec47o' 193. "om6e'5&47'9 4&?. K #88 6er5o'5 re57(7'9 or (o7'9 b+57'e55 7' 4>e P>787667'e5, =>o 6+rc>&5e or rece7;e :rom =74>o+4 4>e P>787667'e5 &', commo(747e5, 9oo(5, =&re5 or merc>&'(75e, e?ce64 4>o5e 5+bGec4 4o 56ec7:7c 4&?e5 +'(er 4>e T748e I. o: 4>75 "o(e, 5>&88 6&, o' 4>e 4o4&8 ;&8+e 4>ereo: &4 4>e 47me 4>e, &re rece7;e( b, 5+c> 6er5o'5, 7'c8+(7'9 :re79>4, 6o54&9e, 7'5+r&'ce, comm7557o' &'( 57m78&r c>&r9e5, & com6e'5&47'9 4&? e@+7;&8e'4 4>e 6erce'4&9e 4&?e5 7m6o5e( +'(er 4>75 T748e o' or797'&8 4r&'5&c47o'5 e::ec4e( b, merc>&'45, 7m6or4er5 or m&'+:&c4+rer5, 5+c> 4&? 4o be 6&7( be:ore 4>e =74>(r&=&8 or remo;&8 o: 5&7( commo(747e5, 9oo(5, =&re5 or merc>&'(75e :rom 4>e c+54om >o+5e or 6o54 o::7ce. Pro;7(e(, Ho=e;er, T>&4 merc>&'45, 7m6or4er5, &'( m&'+:&c4+rer5, =>o &re 5+bGec4 4o 4>e 4&? +'(er Sec47o'5 184, 18-, 186 or 189 o: 4>75 T748e, 5>&88 'o4 be re@+7re( 4o 6&, 4>e >ere7' 4&? 7m6o5e( =>ere 5+c> commo(747e5, 9oo(5, =&re5 or merc>&'(75e 6+rc>&5e( or rece7;e( b, 4>em :rom =74>o+4 4>e P>787667'e5 &re 4o be 5o8(, re5o8(, b&r4ere( or e?c>&'9e( or 4o be +5e( 7' 4>e m&'+:&c4+re or 6re6&r&47o' o: &r47c8e5 :or 5&8e, b&r4er or e?c>&'9e &'( &re 4o :orm 6&r4 4>ereo:. #'( Pro;7(e(, $+r4>er, 4>&4 4>e 4&? 7m6o5e( 7' 4>75 5ec47o' 5>&88 'o4 &668, 4o &r47c8e5 4o be +5e( b, 4>e 7m6or4er >7m5e8: 7' 4>e m&'+:&c4+re or 6re6&r&47o' o: &r47c8e5 5+bGec4 4o 56ec7:7c 4&?, or 4>o5e :or co'579'me'4 &bro&( &'( &re 4o :orm 6&r4 4>ereo:. I: &', &r47c8e =74>(r&=' :rom 4>e c+54om>o+5e or 4>e 6o54 o::7ce =74>o+4 6&,me'4 o: 4>e com6e'5&47'9 4&? 75 5+b5e@+e'48, +5e( b, 7m6or4er :or o4>er 6+r6o5e5, corre56o'(7'9 e'4r, 5>o+8( be m&(e 7' 4>e booF5 o: &cco+'45, 7: &', &re Fe64 or =r744e' 'o47ce 4>ereo: 5e'4 4o 4>e "o88ec4or o: I'4er'&8 Re;e'+e &'( 6&,me'4 o: 4>e corre56o'(7'9 com6e'5&47'9 4&? m&(e =74>7' 13 (&,5 :rom 4>e (&4e o: 5+c> e'4r, or 'o47ce. I: 4>e 4&? 75 'o4 6&7( =74>7' 5+c> 6er7o( 4>e &mo+'4 o: 4>e 4&? 5>&88 be 7'cre&5e( b, 2-H, 4>e 7'creme'4 4o be 6&r4 o: 4>e 4&?E.B#5 &me'(e( b, R.#. 2-3, e::ec47;e *+8, 1948C.12-ph31.45t