G.R. No. L-5416. July 26, 1954

Parties plaintiffs and defendant appeal from a judgment of the Court
of First Instance of Negros Occidental dismissing plaintiff’s complaint
for the recovery of P4, 712,501.89, representing the value of sugar
alleged to belong to them and existing in defendant’s warehouse at the
time of the liberation, and ordering plaintiff Alfredo Montelibano to
pay defendant the sum of P35,163.06, plus legal interest thereon from
April, 1945, until fully paid. Plaintiffs appeal from the judgment of
dismissal, and defendant from the judgment in so far as it fixes at
P35,163.06 as the amount defendant is entitled to recover from
plaintiff Alfredo Montelibano.

Plaintiffs are sugar planters, members of the Bacolod-Murcia
Planters’ Association, Inc., or assignees of sugar planters. The former
have contracts with the defendant corporation, hereinafter known as the
Central, for the delivery of their sugar cane to the sugar mill of the
defendant for milling and processing into sugar. In accordance with the
contracts, which the planters had signed with the defendant, the sugar
processed from the sugar cane delivered by each planter was to be
divided between the planter and the Central in the following
proportion, namely, 60% for the planter and 40 c/o for the Central. The
Central was to furnish the planter, from time to time as the milling
progressed, with information as to the share of sugar that the planter
was entitled to receive, furnishing the planter with quedans or
warehouses receipts therefor. After the milling, and for a period of 90
days, the Central was to keep the sugar in its warehouse free of
charge; thereafter the planter was to pay five centavos per picul per
month for storage, aside from such expenses of conservation and
repacking as may be incurred in relation to the sugar upon presentation
of his warehouse receipt (Exhibit KK).

At the time of the occupation of Negros Occidental by the Japanese
forces on May 21, 1942, there were on deposit at the Central’s
warehouse 664,091.22 piculs of sugar, of which 128,452.24 belonged to
the plaintiffs, 284,425.81 to the defendant Central, and the balance to
planters not parties to the action (Exhibits C, C-1, C-2, and C-3. On
February 10, 1943 (18th year of Shows February 10), the Japanese
Military Administration, Visayan Branch, designated Fidel Henares,
president of the Sugar Planters’ Association, with the following
authority:

* * * hereby authorized to sell and dispose of all
sugar to the Mitsui Bussan Kaisha, the authorized purchaser of the
Philippine Military Administration, and in ‘addition granting the
following powers:

To contract, deliver, to
receive payments, to pay various accounts to the members of the
Planters’ Association; and to open accounts, to contract overdraft
accounts with the Bank of Taiwan, and perform such other powers as may
be necessary in the premises. (Exhibit RH, Annex A, Annex A-1, Exhibit
19)

Thereafter the Japanese Military Administration issued a regulation
governing purchases of sugar by the Military Administration (Exhibit
JJ) by virtue of which, upon purchase of sugar by the Military
Administration, any claim of the Philippine National Bank or of any
other enemy corporation thereto shall be automatically cancelled, and
the sugar thus purchased deposited as new “Regenesis a/c” in the name
of the vendee, the Bank of Taiwan, Ltd. Planters or owners of the sugar
were authorized, if they chose, to borrow funds from the Bank of
Taiwan, Ltd. According to regulations issued by the Executive
Commission under the Military Administration, the checks in payment of
the sugar purchased shall be Bank of Taiwan checks which, however, were
to be deposited with said bank and set-off against the mortgages on old
crop loans of the planters as Farmer Rehabilitation Funds. New crop
loans could be granted within the limits of the proceeds of their sugar
sold (Exhibit 23).

As early as February 24, 1943, the Mitsui Bussan Kaisha, Ltd.,
notified the president of the Planters’ Association that it was buying
all the sugar of the planters, whether they could be located or not
(Exhibit II). Warehouse orders for release of sugar he had sold were
issued at the request of the president of the Planter’s Association on
the following dates and for the following amounts:

February 17, 1943	22,724.09 piculs (Exhibit 62)
March 6, 1943	275,580.35 piculs (Exhibit 22)
March 27, 1943	575.84 piculs (Exhibit 63)
April 20, 1943	14,105.92 piculs (Exhibit 54)
May 17, 1943	22,698.31 piculs (Exhibit 65 C)
May 18, 1943	6,240.92 piculs (Exhibit 6 B)

As for the share of the Central in the sugar, Exhibit E shows that
as early as April 21, 1943, as much as a total of 272,601 piculs had
been sold to the Mitsui Bussan Kaisha, and by the end of December,
1943, a full total of 272,801.07 piculs. There was, however, still a
balance of 12,153.05 piculs as of December, 1943 (Exhibit 1, p. 3).

From the time of Mitsui Bussan Kaisha made purchases, it began
withdrawing sugar from the Central in sacks. Withdrawals were made
during the years 1943 and 1944 (Exhibit 72, 73, 74), but without
indication as to whose sugar each withdrawal was being made. As the
sugar belonging to the planters and that of the Central were mixed up,
and there being nothing to show what the vendee was withdrawing, it
could not be determined whose sugar had been actually sold or
withdrawn. It is a fact admitted by both parties, however, that at the
time of the liberation, notwithstanding the sales and withdrawals,
there were around 150,000 piculs of sugar in the warehouse of the
Central. This sugar was impounded by the U. S. Enemy Property
Custodian, but upon representation of the parties the same was finally
released. And upon resolution of the majority of the planters, it was
agreed that 60 per cent thereof would be provisionally assigned to
them, to be prorated among them according to the sugar they had on
deposit in the Central prior to the military occupation, irrespective
of whether they had been paid their sugar or not during the occupation,
and the balance of 40 per cent to be assigned to the Central to be
disposed by it, but the proceed were to be kept by it in trust subject
to the results of this litigation. The share of the defendant in this
distribution was 93,66360 piculs (Exhibit H) and that of the plaintiffs
35,405.35 piculs.

After liberation (around March to June, 1945) and before the
proration above set forth, plaintiff Alfredo Montelibano withdrew from
the warehouse some 12,789 piculs. Of these around 5,115.60 piculs were
the share of the defendant Central. Montelibano received a bill of
P45,273,06 for the value of this sugar, and he proposed to pay the said
amount in installments. A first payment of P10,000 was made. The
amount of the bill was based on a basic price of P8.85 per picul. The
balance of the price has not yet been paid by plaintiff Alfredo
Montelibano.

The present action of plaintiffs is predicated on the claim that the
defendant has already been fully paid for its share of the sugar in the
warehouse, as it had sold during the period from April, 1943, to March,
1945, some 284,601 piculs, in excess of around 175.19 piculs of its own
share, and had received the total price of this amount (P2,410,790,03),
so that the sugar remaining at the time of the liberation pertained and
belonged exclusively to plaintiffs and the other planters. It is
contended that of the 129,452.24 piculs that plaintiffs owned at the
time of the military occupation, only 35,405.35 piculs had actually
been taken advantage of by them (that which they received by the
proration), so that the remaining 94,046.89 piculs should be charged
against the balance of the sugar and which was adjudicated to the
Central as its share in the proration, the value of which was
P4,712,501.89. Moral justification for this claim of the plaintiffs is
sought for in the fact that the defendant Central had actually sold its
share and received in full the price therefor, which is not the case
with the plaintiffs, who have not been paid for, or credited with, the
value of their own. The defense is that all the sugar that plaintiffs
had in the Central’s warehouse at the time of the military occupation
was ordered by the Japanese Military Administration to be sold by and
through the president, which it did itself appoint, in the same manner
that the defendant was obliged to sell its own sugar to the buyer of
the Military Administration, and that all the sugar that plaintiffs had
in the warehouse had, therefore, been sold and delivered through said
president of the plaintiffs, so that the latter had no more sugar in
the warehouse at the time of the liberation. The defendant presented a
counterclaim against plaintiff Alfredo Montelibano for the value of the
5,115.60 piculs of the defendant which he appropriated and which they
claim to be valued at P248,337. The right of the defendant to said
sugar is denied, and instead plaintiff Montelibano demands the return
of the Pl0,000 which he claims was erroneously paid to defendant.

The trial court found that the sugar remaining in the central’s
warehouse at the time of the liberation was already purchased by the
Military Administration, but it could not withdraw the same by reason
of the advent of the liberation; that as the sugar of the parties were
all mixed up, none of the owners could claim exclusive ownership of
those remaining in the warehouse, and their rights thereto should be
governed by the provision of Article 381 of the Spanish Civil Code.
This, the court said, the parties had already accepted and carried out
by the proration. The court, also held that the taking of the sugar
belonging to both plaintiffs and defendant was an act of confiscation
by the Japanese Military Government, which was legal and valid in
accordance with the ruling in the case of Hodges vs. Lacson, 46
Official Gazette (No. 3) 1148, from which no recourse may be had by the
parties against the Japanese Government or against the defendant. The
plaintiffs’ action was, therefore, dismissed and the defendant absolved
therefrom,

As to the counterclaim, the court found the same to be justified,
and it sentenced Montelibano to pay for its value, which the court,
however, fixed at P8.80 per picul only. It, therefore, rendered
judgment against Montelibano, ordering him to pay defendant the balance
of its value, i.e., P35,163.06

Plaintiffs have appealed from the judgment dismissing their action,
while defendant has also appealed from the amount adjudged on its
counterclaim, asserting that the price of the sugar taken by
Montelibano should have been fixed at P256,291.56 at the rate of P50.10
per picul.

Plaintiffs-appellants rely on the following legal propositions: that
the purchase of plaintiffs’ sugar during the Japanese Military
Occupation was neither an act of confiscation nor of requisition, but a
voluntary sale, but as there was no consent of the plaintiffs thereto
or consideration paid for the sugar, none of plaintiffs’ sugar should
be considered as sold; that, on the other hand, defendant’s sale of its
sugar was validly made and it had received in full the value thereof,
hence the sugar remaining in the Central’s warehouse at the time of the
liberation should belong to plaintiffs, to the exclusion of the Central.

In our opinion, the determination of the nature or validity of the
act of the Japanese Military Administration in purchasing plaintiffs’
sugar from the president of the planters, whom it appointed without the
planters or owners consent, is absolutely immaterial; whether the act
of purchase was an act of confiscation of enemy property by the
military occupant, or one of requisition, or one of voluntary sale, is
beside the fundamental issue, which we find to be: Who are the legal
owners of the sugar existing in the Central’s warehouse at the time of
the liberation? Irrespective of the legality or illegality of the
purchase of plaintiffs’ sugar (by the Japanese Military Administration,
for which defendant may not certainly be made responsible, the fact
remains that in consequence thereof of warehouse orders for the release
of plaintiffs’ sugar were issued and sugar actually taken from the
warehouse. Also by the sale of defendant’s sugar, release were
authorized to the purchaser and withdrawals made. But evidently the
delivery of all the sugar sold by both was not completed, as some
150,000 piculs remained thereafter. As to this sugar (remaining), we
hold that title thereto remained in the original owners, because
ownership of personal property sold is not transferred until actual
delivery—non nudis pactis, sed traditione dominia return transferuntur. (Fidelity and Deposit Co. vs. Wilson, 8 Phil., 51; Crusado vs. Bustos, 34 Phil., 17.)

It also follows that as the sugar of the plaintiffs and of the other
planters and of the Central were stored together in one single mass,
without separation or identification, and as it appears that the Mitsui
Bussan Kaisha made withdrawals of sugar from the Central’s warehouse
without express statement as to whose sugar was being withdrawn,
whether the planters’ or the Central’s, it is absolutely impossible,
physically or legally, to determine whose sugar it was that remained
after the withdrawals. There is no legal basis for plaintiffs’
proposition that as the taking of their sugar was without their
consent, and that of the defendant’s with its consent, all that
remained is theirs. The only legal solution is, as the mass of sugar in
the warehouse was owned in common, and as it is not possible to
determine whose sugar was withdrawn and whose was not, the mass
remaining must pertain to the original owners in the proportion of the
original amounts owned by each of them. This is the solution expressly
indicated by the law (article 381, Spanish Civil Code), and the one
most consistent with justice and equity.

ART. 381. If, by the will of their owners, two
things of identical or dissimilar nature are mixed, or if the mixture
occurs accidentally, and in the latter case the things can not be
separated without injury each owner shall acquire a right in the
mixture proportionate to the part belonging to him, according to the
value of the things mixed or commingled. (Spanish Civil Code)

The
778 cavans and 38 kilos of palay belonging to the plaintiff Urbano
Santos, having been mixed with 1,026 cavans and 9 kilos of palay
belonging to the defendant Pablo Tiongson in Jose C. Bernabe’s
warehouse; the sheriff having found only 924 cavans and 31% kilos of
palay in said warehouse at the time of the attachment thereof; and
there being no means of separating from 924 cavans and 31% kilos of
palay belonging to Urbano Santos and those belonging to Pablo Tiongson,
the following rule prescribed in article 381 of the Civil Code for
cases of this nature, is applicable.

ART.
381. If, by the will of their owners, two things of identical or
dissimilar nature are mixed or if the mixture occurs accidentally, if
in the latter case the things can not be separated without injury, each
owner shall acquire a right in the mixture proportionate to the part
belonging to him according to the value of the things mixed or
commingled.

The number of kilos in a cavan
not having been determined, we will take the proportion only of the 924
cavans of palay which were attached and sold, thereby giving Urbano
Santos, who deposited 778 cavans, 398.49 thereof, and Pablo Tiongson,
who deposited 1,026 cavans, 525.51, or the value thereof at the rate of
P3 per cavan. (Santos vs. Bernabe, 54 Phil., 19, 22)

Lastly,
article 393 of the Civil Code, referring to common ownership, provides
that the share of the participants in the benefits, as well as in the
charges, shall be proportionate to their respective interests.

This
being the rule, it is obvious that whenever an undivided property gains
an increase in its area, all the co-owners shall be entitled to
participate in the benefits to be proportionate to their shares; if it
suffers diminution they shall have to share, too, the charges in
accordance with their interests. (Tarnate vs. Tarnate. 46 Off. Gaz.
{No. 9) 4397, 4403-4404).

If goods of the same kind owned by
various persons are so mixed with the mutual consent of the owners that
the portions or shares of the various owners in the mixture are
indistinguishable, the owners become tenants in common of the mixture,
each having an interest in common in proportion to his respective
shares. This is the rule of the civil law. The doctrine finds its most
frequent application where several owners deposit grain in a warehouse
although it of course exists wherever the goods of two or more parties
are indistinguishably mingled by common consent, as where quantities of
oil belonging to different persons are stored in a tank. In such cases,
in the event of partial loss, there will be prorated distribution of
the loss. Where such a confusion arises it seldom causes inconvenience,
embarrassment, or dispute, for the separation of the intermingled goods
into the aliquot shares of the owners is merely a matter of measuring,
weighing, counting, or selecting, and in all such cases it is certain
that he is entitled to receive back a like quantity. Since they are
tenants in common, however, the co-owners are subject to stand their
pro rata share of any loss which may accrue to the general property
from diminution, decay, or other causes. (11 Am. Jur. 532-533.).

There
can be no doubt that, where the volume of grain, stored in an elevator,
or of oil stored in a tank, is made up of contributions from different
owners, and becomes “common stock.” its partial destruction by fire,
resulting from lightning or other fortuitous cause must necessitate a
pro rata distribution of the loss., * * * (Jennings-Heywood Oil
Syndicate vs. Houssiere-Latrelle Oil Co., et al., Ann. Cas. 1913 E.
679, 690.)

With respect to defendant’s counterclaim, we agree with the trial
court that the evidence submitted shows that P8.85 is the fair price of
the sugar taken by plaintiff Alfredo Montelibano. Defendant’s own
original bill fixed this as a price for said sugar (Exhibit 49), and
sales made to third persons at the time the sugar was withdrawn were at
prices fluctuating around this sum. We find no reason, therefore, for
disturbing the judgment in relation thereto.

For the foregoing consideraions, the judgment appealed from is
hereby affirmed, both in so far as it dismisses the complaint and in so
far as it awards the sum of P35,163.06 on defendant’s counterclaim
against plaintiff Alfredo Montelibano, with costs against the
plaintiffs-appellants.

Paras, C. J., Pablo, Bengzon, Montemayor, Reyes, A., Jugo and Bautista Angelo, JJ., concur.