G.R. No. L-27905. December 28, 1970
REPUBLIC OF THE PHILIPPINES, AND/OR NATIONAL MARKETING CORPORATION, PETITIONERS, VS. HON. GAUDENCIO CLORIBEL, AS JUDGE OF THE COURT OF FIRST INSTANCE OF MANILA, BRANCH VI, JOSE …
VILLAMOR, J.:
Original action of certiorari, with prayer for a writ of
preliminary injunction, to annul the order of July 5, 1967, issued by
respondent Judge in Civil Case No. 38224 of the Court of First Instance of
Manila, as well as all processes in connection with the said order. On August 15, 1967, this Court issued a
restraining order temporarily enjoining respondents and their agents or
representatives from enforcing the above-mentioned order of July 5th and the
writ of execution or other processes issued in pursuance thereof, more particularly
from implementing the NAMARCO-Aguilar Trade Assistance Agreement.
On October 24, 1958, a petition for prohibition and injunction,
amended on January 5, 1959, to include damages, was filed by the Republic of
the Philippines and/Or the Central Bank of the Philippines against Pedro
Hernaez, as Secretary of Commerce and Industry, several other government
officials, and Bienvenido Y. Aguilar, in Civil Case No. 38224 of the Court of
First Instance of Manila, seeking to enjoin the respondents and all persons
actively under their direction from releasing the consumers and producers goods
and commodities imported by respondent Aguilar under a license issued to him
by the No-Dollar Import Office of petitioner Central Bank of the
Philippines. The petitioners’ claims
against Aguilar were ‘as follows:
“(a) Declaring that the shipments of Philippines
commercial coconut oil in the quantity of approximately 4,801 long tons and
with a negotiated value of approximately $823,405.76 and the importation of
collateral imports consisting of consumers and producers goods as listed and
described in Annex ‘P’ hereof, were done, executed and made by respondent
Bienvenido Aguilar thru fraudulent, illegal, malicious and/or criminal means
and misrepresentations;
“(b) That by reason of said fraudulent, malicious,
illegal and/or criminal acts, transactions and misrepresentations of respondent
Bienvenido Aguilar, the petitioners have suffered irreparable prejudice and damages
and losses in the total sum of Six Million Pesos (P6,000,000.00) which said
respondent Bienvenido Aguilar should be liable for and must pay to the
petitioners;
“(c) That since the abovementioned collateral
imports, consisting of consumers and producers goods as listed in Annex ‘P’
hereof, are constitutive of or equivalent to the dollar proceeds which have
been unlawfully, maliciously, fraudulently and/or criminally withdrawn from
the disposition of the petitioners, said goods should be declared belonging
and accruing to and shall be taken, seized, and confiscated by petitioners;
“(d) Declaring that the Memo-directive of
respondent Secretary of Commerce Pedro C. Hernaez dated October 21, 1958 (Annex
‘U’) and the letter dated October 22, 1958 of respondent Carlos Quirino (Annex
‘V’) have been issued in clear violation of the law and/or without jurisdiction
or with grave abuse of discretion and therefore illegal and void; and
“(e) To perpetually restrain any and/or all of
respondents from releasing or committing any act or acts tending or leading to
the release to respondent Bienvenido Y. Aguilar or to his agents, employees; representatives
and/or other persons under respondents’ direction, the above-mentioned imported
collateral producers and consumers goods which must be delivered to the
petitioners.”
Subsequently, however, the petitioners
agreed to the release of the goods on the undertaking of surety bonds in the total
amount of P135,000.00, the approximate value of the goods so imported.
After trial, the court rendered judgment on July 1, 1965, the
dispositive portion of which reads:
“WHEREFORE, premises considered, the petition and/or amended
petition is hereby DISMISSED, and on the counterclaim, the petitioner Central
Bank of the Philippines is adjudged to pay to the respondent Bienvenido Y.
Aguilar the sum of P815,418.79, representing storage charges due to delay in
the delivery of the goods in view of their continued detention; the sum of
P18,183.980 representing demurrage expenses; the sum of P744,000.00,
representing damages due to pilferage during detention of goods; the sum of
P1,512,000.00, representing unrealized profits; the sum of P67,021.34, representing
premiums on the surety bonds filed by respondent Aguilar to discharge the
writ of preliminary injunction; the sum of P300,000.00 as attorney’s fees; plus
the sum of P100,000.00 as exemplary damages, and to pay the costs.
“The counterclaim insofar as the Republic of the Philippines
is concerned is dismissed for lack of merit.
“The bonds given by respondent Bienvenido Y. Aguilar are
ordered cancelled, and the sureties thereon discharged from further liability.
“SO ORDERED.”
In due time, a notice of appeal to the Supreme Court was filed
with the lower court by petitioners Republic and Central Bank. Prior, however, to the transmittal of the
record of the case to this Court, the parties arrived at an amicable settlement,
and submitted to the court below the following Compromise Agreement:
“COME NOW the parties in the above-entitled case, thru their
respective attorneys and to this Honorable Court, respectfully show:
“1. That on July 8, 1966, the Central Bank of
the-Philippines and Bienvenido Y. Aguilar entered into an amicable settlement,
as evidenced by a resolution of the Monetary Board dated July 8, 1966, the
contents of which read as follows:
‘The Board approved the following terms of a proposed amicable
settlement of Civil Case No. 38224, CFI, Manila, entitled “Central Bank of
the Philippines vs. Bienvenido Y. Aguilar, et al.”:
1)
The parties, on joint motion, shall ask for the
dismissal of the said case. In
consideration therefor, Mr. Bienvenido Y. Aguilar shall release the Central
Bank from any and all claims as adjudicated to him by the Court of First
Instance of Manila (Branch VI) in the total amount of P3,556.624.11 in its
decision dated July 1, 1965; and
2)
Mr. Bienvenido Y. Aguilar shall reimburse the
Central Bank for all expenses incurred by the Bank in the investigation and
prosecution of the above-entitled case and the other cases (seizure proceeding
and criminal case) involving coconut paring oil.
‘With regard to the proposal of Mr. Bienvenido Y. Aguilar to import
P15 million worth of consumer and producer commodities through the National
Marketing Corporation (NAMARCO) trading assistance program, pursuant to
Administrative Order No. 16 dated August 31, 1966, the Board decided to inform
Mr. Aguilar that the Central Bank does not have jurisdiction thereon and,
therefore, the same may not be the object of an agreement between him and the
Bank.’ Annex ‘A’ hereof)
“2. That in connection with the proposal of
defendant Bienvenido Y. Aguilar to import, on November 17, 1966, a trade
assistance agreement was entered into between him and the National Marketing
Corporation, copy of which is hereto attacked as Annex ‘B’ and made as an
integral part hereof;
“3. That as per letter of the Deputy Governor dated
July 14, 1966 to Mr. Bienvenido Y. Aguilar, the Central Bank of the Philippines
incurred expenses in the total sum of P4,925.33 (Annex ‘C’ hereof), and that on
November 21, 1966, Mr. Aguilar paid the said amount, as evidenced by Central
Bank Official Receipt No. 035235, dated November 21, 1966, copy of which is
hereto attached as Annex ‘D’ hereof;
“4. It is expressly agreed by and between the
parties that Seizure Cases Nos. 5677 and 5678 of the Bureau of Customs
initiated by the plaintiffs-appellants are likewise terminated, and the
parties hereto mutually waive, quit-claim and abandon unto and in favor of each
other, any and all claims and counterclaims asserted by and/or adjudicated to
them in all the cases involving the subject matter of defendant-appellee’s
exportations and importations questioned therein and in this case.
“WHEREFORE, it is respectfully prayed that judgment be
rendered approving the amicable settlement; dismissing the Amended Petition
dated January 5, 1959 and the Amended Supplemental Counterclaim dated January
16, 1959; and ordering the cancellation of the surety bonds and undertaking
filed in connection with the case, without pronouncement as to costs.
“Manila, Philippines, November 24,
1966.
“(Sgd.) BIENVENIDO Y. AGUILAR (Sgd. ANTONIO P. BARREDO
Defendant-Appellee Solicitor General
Counsel for the
Republic
of the Philippines
“J.B. LAUREL, JR. and (Sgd.)
FILOTEO E. EVANGELISTA
GREGORIO R. PURUGANAN Legal Counsel
Counsel for Defendant- Counsel for Central Bank
Appellee of the Philippines
Corner Gen. Solana & Real
Sts., Intramuros, Manila
(Sgd.)
ANDRES V. CASTILLO
By: Governor
(Sgd.) GREGORIO R. PURUGANAN Central Bank of the
“With our conformity: Philippines
Plaintiffs-Appellants
NATIONAL MARKETING CORPORATION
By:
(Sgd.) JOVENAL D. ALMENDRAS
General Manager”
On December 2, 1966, the court rendered judgment approving the Compromise
Agreement in the following tenor:
“WHEREFORE, finding the above-quoted Compromise Agreement to
be in order and not contrary to law, morals and public policy, this Court
hereby renders judgment approving the same; dismissing the Amended Petition
dated January 5, 1959 and the Amended and Supplemental Counter- claim dated
January 16, 1959; and ordering the cancellation of the surety bonds and
undertaking filed in connection with the case, without pronouncement as to
costs.”
The Trade Assistance Agreement mentioned in the above-quoted
Compromise Agreement was executed on November 7, 1966, although notarized on
November 17th, by and between the NAMARCO, thru Jovenal D. Almendras, General
Manager thereof, and Bienvenido Y. Aguilar.
On its face, it appears that one of the considerations for the said
Trade Assistance Agreement was the projected filing of a joint motion to
dismiss Civil Case No. 38224 by Aguilar and the Central Bank, as well as the
waiver by Aguilar of his rights (which in terms of money amounted to
P3,556,624.11) under the July 1, 1965 decision.
It was stipulated therein that the implementation of the Agreement
would be suspended pending the dismissal of Civil Case No. 38224, and that in
the event the said case was not dismissed, the Agreement would be deemed
rescinded and of no further force and effect.
Under the terms thereof, the NAMARCO agreed to allow and authorize
Aguilar to finance the importation of certain commodities not exceeding
$15,000,000.00 U.S. currency.
Alleging that the Trade Assistance Agreement was being assailed
in certain quarters as immoral, illegal and ultra vires on the part of
the NAMARCO, thereby placing him in a bad light, on February 22, 1967, Aguilar
filed with the court below a petition praying that the December 2, 1966
decision approving the Compromise Agreement be set aside; that the Trade
Assistance Agreement be declared as without effect; that the original decision
dated July 1, 1965, be reinstated; and that the Central Bank be ordered to reimburse
to him the sum of P4,925.33 paid by him to the Bank for the expenses it had
incurred in the investigation and prosecution of that case and other related
cases. On February 25, 1967, the
Republic and the Central Bank filed an opposition to Aguilar’s petition,
stating that the Trade Assistance Agreement was not a cause or consideration in
the amicable settlement; that the NAMARCO is not a party to the case; and that
the parties agreed to the dismissal of their respective Amended Petition and
Counterclaim separately from the Trade Assistance Agreement.
In an order dated February 28, 1967, the court denied Aguilar
petition on the ground that the decision of December 2, 1966, approving the
Compromise Agreement had already become final and executory upon its promulgation;
hence, the court no longer had jurisdiction to set aside the said decision, its
authority being limited to its enforcement upon motion.
In view of the denial of his petition to set aside the December
2, 1966 decision, Aguilar filed with the lower court a motion for execution
praying that court, among others, to command the petitioners in the case and
the NAMARCO to take the necessary steps to comply with the terms of the
Compromise Agreement by implementing the Trade Assistance Agreement. On May 29, 1967, the petitioners filed an
opposition, arguing that the Trade Assistance Agreement was a separate matter,
and was not the cause or consideration of the amicable settlement, even if
respondent Aguilar might have been motivated by it; hence, execution thereof
could not be compelled by mere motion.
After the parties had filed their respective rejoinder and
sur-rejoinder, respondent Judge issued an order on July 5, 1967, for the
issuance of a writ of execution as prayed for by herein respondent Aguilar,
i.e., including the implementation of the Trade Assistance Agreement. Hence, the present petition.
The issue in this case is whether respondent Judge acted in
excess of jurisdiction or with grave abuse of discretion amounting to excess of
jurisdiction in issuing the order of July 5, 1967, for the issuance of a writ
of execution insofar as it concerns the implementation of the NAMARCO-Aguilar
Trade Assistance Agreement.
Petitioners Republic and NAMARCO, in adopting the affirmative
view, argue in this wise: The quitclaim
of the respective claims and counterclaim of the parties, and not the Trade
Assistance Agreement, was the cause or consideration of the amicable
settlement. The Central Bank, with the
Republic as nominal party, was the petitioner in the case. As can be seen from Item I of the Compromise
Agreement, “on July 8, 1966, the Central Bank of the Philippines and
Bienvenido Y. Aguilar entered into an amicable settlement, as evidenced by a
resolution of the Monetary Board dated July 8, 1966;” and at this time and
on this date, the Trade Assistance Agreement (which was executed on November
17, 1966) was only a mere proposal, not yet executed, and, therefore, mould not
have entered into the picture as consideration in the amicable settlement. When, on November 24, 1966, the Compromise
Agreement was submitted to the court below, the Central Bank had already
dissociated itself from the NAMARCO-Aguilar Trade Assistance Agreement.
Petitioners further argue that with the amicable settlement of
the case, the Central Bank secured the dismissal of Aguilar’s counterclaim and
the reimbursement of expenses incurred by the Bank in the investigation and
prosecution of the case; while Aguilar regained his former credit standing in
the business community which had been seriously impaired by the suit (Amended
and Supplemental Answer with Counterclaim) and freed himself of the
possibility that he could have been found liable for damages asked by the
petitioners.
Petitioners also add that it cannot be contended that the signing
of the Compromise Agreement by the General Manager of the NAMARCO had the
effect of submitting the NAMARCO to the jurisdiction of the court in the suit
between the Republic and/or the Central Bank and respondent Aguilar, because
the Board of Directors of that corporation had never authorized him to do
so. All that the General Manager did was
give his conformity. At any rate,
assuming that the Trade Assistance Agreement was the cause or consideration of
respondent Aguilar’s entering into the Compromise Agreement with the Central
Bank, the same not having been approved by the President pursuant to Executive
Order No. 298, Series of 1940, and Memorandum Circular No. 150, Series of 1955,
was not a fully perfected and binding contract.
In reply, respondent Aguilar argues that the Trade Assistance
Agreement was the cause or consideration of the amicable settlement, because
the entire transaction, which is a triangular arrangement between the Republic
(acting through the NAMARCO, the chosen agency), the Central Bank, and
respondent Aguilar – and not merely parts of the transaction – must be
considered. That the Central Bank and
the Republic are not parties to the Trade Assistance Agreement, is of no moment,
for both are parties to the Compromise Agreement, a document signed by the
Solicitor General himself. The Trade Assistance
Agreement was not a matter separate and distinct from the Compromise Agreement,
for the former is a part of the latter, hence, both must be considered
together. The Republic was a real party
in interest in Civil Case No. 38224, because the said case was a customs
seizure case, and in cases of this nature it is the Republic which is the real
papty in interest. The NAMARCO’s not
being an original party litigant is of no significance. In signing the Compromise Agreement, the
NAMARCO General Manager was acting in behalf of the government instrumentality
chosen by the Republic as a conduit for the grant of consideration running from
the Republic to Aguilar. Thus, at the
time of the filing with, and the approval of the Compromise Agreement by, the
court below, the NAMARCO was a party to the compromise, not merely because at
submitted itself to the jurisdiction of the court, but primarily because it
was part and parcel of the Republic of the Philippines, itself a party
litigant, whose acts are binding upon it.
At any rate, with or without the NAMARCO as a signatory to the
Compromise Agreement, it would have been bound just the same by the act of the
President in authorizing the compromise.
The Trade Assistance Agreement is a perfected and binding contract,
although its performance and implementation entail compliance with certain
conditions stated in the contract itself, because the entire transaction, i.e.,
the Compromise Agreement and its annexes (including the Trade Assistance
Agreement) and the decision of the court approving it (which is now final and
executory) must be taken into consideration.
Petitioners’ view would isolate the NAMARCO-Aguilar contract from the
entire compromise of which it is a part, treat it independently and take it
away from the effects of the decision approving the Compromise Agreement,
things which cannot be done unilaterally.
Besides, the President is not required by the Constitution or by any
statute to approve contracts like the Trade Assistance Agreement between the
NAMARCO and respondent Aguilar.
After examining carefully the record of the case and weighing the
arguments of the parties, we have come to the conclusion that respondent Judge
exceeded his jurisdiction in including the implementation of the Trade
Assistance Agreement among the matters which should be executed. The following are the considerations that
have led us to this conclusion:
1.
The Trade Assistance Agreement entered into by
and between the NAMARCO and respondent Bienvenido Y. Aguilar on November 17,
1966, is not a binding and perfected contract.
While it is true that the NAMARCO Board of Directors approved the
extension of trade assistance to Aguilar Enterprises and authorized the
General Manager to enter into the said agreement, approval thereof by the
President of the Philippines was still necessary to make it binding on the
government, pursuant to Executive Order No. 298, Series of 1940, and
Memorandum Circular No. 150, Series of 1955.
Indeed, in the petition filed by him with the lower court praying that
the decision of December 2, 1966, approving the Compromise Agreement, be set
aside, respondent Aguilar in effect admitted that the Trade Assistance Agreement
should still be submitted to the President for approval. The said agreement not having been approved
by the President, it stands to reason that the same is not a perfected and
operative contract.
2.
The General Manager of the NAMARCO did not have
the authority to submit the NAMARCO to the jurisdiction of the court in Civil
Case No. 38224, or to sign the Compromise Agreement which was later approved
by the court in its December 2, 1966 decision.
As we have already stated above, the only authority given by the
NAMARCO Board of Directors to the General Manager was co enter into a trade
assistance agreement with Aguilar Enterprises.
The General Manager was not authorized to sign any compromise agreement
in Civil Case No. 38224. Although the
text of the Trade Assistance Agreement shows that one of the considerations for
its execution was the filing by the Central Bank and respondent Aguilar of a
joint motion to dismiss, the NAMARCO was not in a position to legally bind the
Central Bank, which, in spite of the terms of the Trade Assistance Agreement,
was still free to decide for itself whether or not to enter into an amicable
settlement of the case, as well as the terms of such settlement. Consequently, the signing of the Compromise
Agreement by the NAMARCO General Manager was an exercise in futility. Viewed from all angles, his conformity to the
Compromise Agreement did not make the NAMARCO a party to the case. Note that the Compromise Agreement opens with
the statement “Come now the parties in the above entitled case x x
x.” NAMARCO is not a party to the case; hence, it could not be a party to
the Agreement. The conformity of the
General Manager merely attests to the existence of the Trade Assistance Agreement,
and expressed no objection to its objectives and purposes; but in no way did it
bind the NAMARCO to the subject matter of the Compromise Agreement. Above all, such conformity could not have
made the NAMARCO a party to the suit, for it did not have the opportunity to
exercise the rights granted to a party – to set up defenses and present
evidence in support thereof. It cannot
be said that the NAMARCO did not have any defense, for, as the facts,
circumstances and issues of this case show, the NAMARCO could very well have
set up the invalidity or unenforceability of the Trade Assistance Agreement as
a valid defense.
3.
In any event, the Trade Assistance Agreement was
not the cause or consideration of the Compromise Agreement submitted to, and
approved by the court in its decision of December 2, 1966. The cause of a contract is “the essential
or more proximate purpose which the contracting parties have in view at the
time of entering into the contract.” (8 Manresa, 697.) In the Compromise Agreement entered into by
and between the Central Bank and the Republic on one hand, and respondent
Aguilar on the other, the cause is the mutual waiver and abandonment of the
claims and counterclaims of the parties in Seizure Cases Nos. 5677-78 initiated
by the Government against respondent Aguilar, as well as the waiver and
abandonment by respondent Aguilar of his rights under the July 1, 1966 decision
and the reimbursement to the Central Bank by respondent Aguilar of the amount
of P4,925.33. Considering the enormity
of the amount (P3,556,624.11) adjudicated in respondent Aguilar’s favor by the
court in its, original decision, it may be asked why the said respondent would
be willing to forego the said sum in exchange for the dismissal of the seizure
cases against him. In the first place,
we do, not know the exact nature of the said cases and the relative positions
of the parties thereto. And in the
second place, the Central Bank and the Republic had already perfected their
appeal from the July 1, 1965 decision, so that the possibility that respondent
Aguilar might lose in the appeal was still there.
The question leads us to a consideration of the distinction
between cause and motive. Cause is the
essential reason for the contract, while motive is the particular reason of a
contracting party which does not affect the other party and which does not
preclude the existence of a different consideration. (Cf. Gonzales, et al. vs. Trinidad, et al.,
67 Phil., 682.) Article 1351 of the Civil
Code provides that “[t]he particular motives of the parties in entering into
a contract are different from the cause thereof.” It is quite apparent
that in entering into the Compromise Agreement, respondent Aguilar was in large
measure motivated by the Trade Assistance Agreement. Unfortunately for him, however, the
Compromise Agreement is devoid of any provision which will clearly show the
intention of the parties to include the implementation of the Trade Assistance
Agreement as one of the subject matters of the compromise. In deducing the intention of the parties,
courts should necessarily be guided by the terms of their written
agreement. An examination of the terms
of the Compromise Agreement, insofar as they relate to the Trade Assistance
Agreement, shows that the Central Bank had dissociated itself from the said
Trade Assistance Agreement for lack of jurisdiction on the subject matter
thereof; that the existence of the said Agreement was mentioned in, and in fact
a copy thereof was annexed to, the Compromise Agreement; and that the NAMARCO
General Manager, who in the Trade Assistance Agreement had committed the
Central Bank to file a motion to dismiss Civil Case No. 38224 as a consideration
for the agreement, had signified his conformity to the Compromise
Agreement. A reading of the entire
document will show, however, that the only matters on which a compromise was
entered are those mentioned in paragraph 3 (reimbursement by Aguilar of the
expenses incurred by the Central Bank in the investigation and prosecution of
the case) and in paragraph 4 (mutual waiver and abandonment of claims and
counterclaims in Seizure Cases Nos. 5677-78 and in Civil Case No. 38224). That the Trade Assistance Agreement was
mentioned in the Compromise Agreement, would only confirm the belief that one
of the parties – apparently respondent Aguilar – was motivated by it. Considering, however, that no meeting of the
minds between the parties is reflected in the Compromise Agreement insofar as
the Trade Assistance Agreement is concerned, the end result is that no
compromise was entered into on that matter.
If the Trade Assistance Agreement is mentioned at all in the Compromise
Agreement, it is only to state the fact that a trade assistance agreement was
entered into between respondent Aguilar and the NAMARCO. It can be said with certainty that it is this
fact to which the NAMARCO General Manage had given his conformity.
PREMISES CONSIDERED, the order of respondent Judge dated
July 5, 1967, is hereby annulled and set aside, without pronouncement as to
costs.
Concepcion, C.J., in the
result.
Reyes, J.B.L., Zaldivar, Teehankee, and Makasiar, JJ., concur.
Dizon, Castro, Fernando, and Barredo,
did not take part.
Makalintal, J., reserves the
vote.