Case Digest (G.R. No. 66944)
Facts:
The case involves Alliance Tobacco Corporation, Inc. (petitioner) against the Philippine Virginia Tobacco Administration (PVTA), Farmer's Virginia Tobacco Redrying Company, Inc. (FVTR), and the Intermediate Appellate Court (respondents). The events leading to the case began in June 1963 when the PVTA, a government corporation established under Republic Act No. 2265 to support the tobacco industry, entered into a merchandising loan agreement with the petitioner. Under this agreement, the PVTA lent the petitioner P25,500 to purchase flue-cured Virginia tobacco from legitimate Virginia tobacco farmers. Subsequently, the petitioner delivered a total of 263 bales of tobacco to FVTR, which was contracted by the PVTA for redrying services. The shipments included 96 bales covered by Guia No. 1 and 167 bales covered by Guia No. 2.
Before the shipment, the petitioner secured a clearance from the Tobacco Inspector, allowing the tobacco to be sent to FVTR's redrying plant in B...
Case Digest (G.R. No. 66944)
Facts:
Background of the Parties and Agreements
- The Philippine Virginia Tobacco Administration (PVTA), a government corporation created under Republic Act No. 2265, was tasked with promoting the tobacco industry.
- PVTA entered into a contract with Farmer's Virginia Tobacco Redrying Company, Inc. (FVTR) for the 1963 tobacco trading operations.
- In June 1963, PVTA entered into a merchandising loan agreement with Alliance Tobacco Corporation, Inc. (petitioner), lending P25,500 to the petitioner for the purchase of flue-cured Virginia tobacco from farmer-producers.
Delivery of Tobacco
- In July 1963, petitioner shipped 96 bales of tobacco (covered by Guia No. 1) and 167 bales (covered by Guia No. 2) to FVTR.
- The shipments were accompanied by necessary documents, including a BIR clearance, clearance from the Regional Tobacco Inspector, and the guias.
- Upon arrival, the tobacco was logged into FVTR's records and brought into the redrying compound.
Grading and Weighing Issues
- Only 89 bales from Guia No. 2 were graded, weighed, and accepted by FVTR.
- The remaining 174 bales (96 from Guia No. 1 and 78 from Guia No. 2) were not graded or weighed due to demands for money by FVTR personnel.
- Petitioner's business manager, Aldegunda Villanueva, sought assistance from FVTR and PVTA to resolve the issue but was told the tobacco was considered accepted.
Loss of Tobacco
- The ungraded and unweighed 174 bales, valued at P28,382, were lost while in FVTR's possession.
- Petitioner demanded payment for the lost bales and requested that the amount be applied to its loan with PVTA, but both PVTA and FVTR refused.
Legal Proceedings
- Petitioner filed a complaint in the Court of First Instance of La Union, seeking payment for the 89 accepted bales (P4,443), the lost 174 bales (P28,382), and attorney's fees.
- FVTR was declared in default, and petitioner and PVTA submitted a stipulation of facts.
- The lower court ruled in favor of petitioner for the 89 bales but dismissed the claim for the lost 174 bales, citing the Santiago Virginia Tobacco Planters Association vs. PVTA case.
- The Intermediate Appellate Court affirmed the lower court's decision, prompting petitioner to file a petition for review on certiorari.
Issue:
- Whether the delivery of 174 bales of tobacco to FVTR perfected the contract of sale between petitioner and PVTA.
- Whether PVTA should be held liable for the loss of the 174 bales of tobacco while in FVTR's possession.
Ruling:
The Supreme Court ruled in favor of the petitioner:
- The delivery of the 174 bales to FVTR constituted effective delivery to PVTA, perfecting the contract of sale.
- PVTA is liable for the loss of the 174 bales of tobacco, valued at P28,382, and must pay this amount to the petitioner.
- The amount awarded to the petitioner shall be offset against any outstanding balance under the merchandising loan agreement with PVTA.
Ratio:
- Perfection of Contract of Sale: Under Article 1475 of the Civil Code, a contract of sale is perfected upon the meeting of the minds on the object and price. The delivery of the tobacco to FVTR, as PVTA's representative, constituted constructive delivery to PVTA, thereby perfecting the contract.
- Liability for Loss: Since PVTA had virtual control over the tobacco through FVTR, the loss of the 174 bales while in FVTR's custody rendered PVTA liable. The Court emphasized equity and fair dealing, noting that strict adherence to procedural requirements would unfairly disadvantage small planters.
- Equity and Fair Dealing: The Court applied the principles of equity and fair dealing, as established in PVTA vs. De los Angeles, to prevent unjust outcomes for traders and planters. The ruling sought to balance the strict procedural requirements of tobacco trading with the need to protect the interests of those involved in the industry.