G.R. No. 38810 - Tan Senguan and Co., Inc. vs. Philippine Trust Co.

Tan Sen Guan & Co., Inc. (plaintiff/appellant) and Philippine Trust Company (defendant/appellee) entered into an agreement on June 27, 1924, in Manila.
The agreement involved the assignment of a judgment by Tan Sen Guan & Co. against the Mindoro Sugar Co. amounting to P21,426.
Philippine Trust Company, already acting as trustee by virtue of a prior deed of trust (Exhibit A dated December 21, 1917), was to secure certain bonds issued by the Mindoro Sugar Co. by holding its assets, including real estate, franchises, and personal property.

The agreement stipulated that upon signing, the Philippine Trust Company was to pay Tan Sen Guan & Co., an immediate sum of P5,000 pesos.
An additional sum of P10,000 pesos was to be paid immediately upon the sale or transfer of the Mindoro Sugar Co., regardless of the price paid.
A further obligation was provided: if any other creditor received a payment greater than the proportionate amount (70% of the original judgment) received by Tan Sen Guan & Co. for their claim, then the Philippine Trust Company was to compensate Tan Sen Guan & Co. so that both parties received equal proportionate amounts.
A condition was also contained which specified that if the creditors received no more than 70% of their respective claims from the sale, then merely the additional P10,000 payment would be required.

After the execution of the contract, a public auction was held on November 4, 1929, where, by virtue of a notice of sale (Exhibit C) and a subsequent certificate (Exhibit D) by Justice of the Peace Modesto Manahan in San Jose, Mindoro, all properties of the Mindoro Sugar Co. were sold to the Roman Catholic Archbishop of Manila (a corporation sole).
The certificate detailed that the sale encompassed all of the Mindoro Sugar Co.’s assets, including real estate, personal property, and accounts receivable, with the only exception being the standing crops, which were presumed to have been sold later.

Tan Sen Guan & Co., Inc. subsequently filed suit in the Court of First Instance of Manila for the sum of P10,000 based on the contractual agreement (Exhibit B).
The trial court, relying on an agreed statement of facts, absolved the defendant on two grounds:

The defendant acted solely in its capacity as trustee and not in an individual capacity, thus negating personal liability.
It was held that there had not been a proven sale of all the properties of the Mindoro Sugar Co. (interpreting the omission of a comma in the facts as indicating a partial sale).

Tan Sen Guan & Co. appealed from the trial court decision, contesting both findings.

Whether the Philippine Trust Company, having executed the contract in its role as trustee, is personally liable for the contractual obligations, or whether its liability is confined solely to its trustee capacity.

Did the contractual framework—particularly the assignment of judgment—bind the defendant in its individual capacity even though it appeared in the contract as trustee?
Was there any express clause limiting personal liability by virtue of the trust arrangement?

Whether the omission of a comma between “Mindoro Sugar Company” and the clause “which appear described” in the agreed statement of facts affects the interpretation as to whether all the properties of the Mindoro Sugar Company were sold.

Does the punctuation (or lack thereof) make the clause restrictive, thereby implying only a partial sale of the properties?
Should the evidence in the certificate of sale (Exhibit D) prevail in establishing that all assets were indeed sold?