BOARD OF LIQUIDATORS, PETITIONER AND APPELLANT VS. EXEQUIEL FLORO, ET AL., OPPOSITORS AND APPELLEES.

From the order of the Court of First Instance of Manila, dated August 10,
1955, denying its petition to exclude certain pieces of steel matting from the
assets of the insolvent M. P. Malabanan; the Board of Liquidators appealed to
the Court of Appeals. The latter certified the case to this Court on the ground
that only questions of law are involved.

The Board of Liquidators (hereinafter referred to as the Board) is an agency
of the Government created under Executive Order No. 372 (November 24, 1950),
and, pursuant to Executive Order No. 377 (December 1, 1950), took over the
functions of the defunct Surplus Property Liquidating Committee.

On June 14, 1952 Melecio Malabanan entered into an agreement with the Board
for the salvage of surplus properties sunk in territorial waters off the
provinces of Mindoro, La Union, and Batangas (Exhibit “A”). By its terms,
Malabanan was to commence operations within 30 days from execution of said
contract, which was to be effective for a period of one (1) year from the start
of operations, extendible for a total period of not more than six (6) months. On
June 10, 1953, Malabanan requested for an extension of one (1) year for the
salvage in waters of Mindoro and Batangas; and the Board extended the contract
up to November 30, 1953. On November 18, 1953, Malabanan requested a second
extension of one (1) more year for the waters of Occidental Mindoro, and the
Board again extended the contract up to August 31, 1954. Malabanan submitted a
recovery report dated July 26, 1954, wherein it is stated that he had recovered
a total of 13,107 pieces of steel mattings, as follows:

1. December, 1953-April 30, 1951 ……….	2,655
2. May 1, 1954-June 30, 1954 ……………	10,552
	13,107 (pieces)

Four months previously, Malabanan had entered into an agreement with Exequiel
Floro, dated March 31, 1954 (Exhibit 1, Floro), in which, among other things, it
was agreed that Floro would advance to Malabanan certain sums of money, not to
exceed P25,000.00, repayment thereof being secured by quantities of steel
mattings which Malabanan would consign to Floro; that said advances were to be
paid within a certain period, and upon default at the expiration thereof, Floro
was authorized to sell whatever steel mattings were in his possession under said
contract, in an amount sufficient to satisfy the advances. Pursuant thereto,
Floro claims to have made total advances to the sum of P24,224.50.

It appears that as Malabanan was not able to repay Floro’s advances, the
latter, by a document dated August 4, 1954, sold 11,047 pieces of steel mattings
to Eulalio Legaspi for the sum of P24,303.40.

Seventeen days later, on August 21, 1954, Malabanan filed in the Court of
First Instance of Manila a petition for voluntary insolvency, attaching thereto
a Schedule of Accounts, in which the Board was listed as one of the creditors
for P10,874.46, and Exequiel Floro for P24,220.50, the origin of the obligations
being described as “Manila Royalty” and “Salvaging Operations”, respectively.
Also attached was an Inventory of Properties, listing certain items of personal
property allegedly aggregating P33,707.00 in value. In this list were included
11,167 pieces of steel mattings with an alleged estimated value of
P33,501.00.

Soon after, the Board, claiming to be the owner of the listed steel matting,
filed a petition to exclude them from the inventory; and to make the insolvent
account for a further 1,940 pieces of steel matting, the difference between the
number stated in the insolvent’s recovery report of July 26, 1954 and that
stated in the inventory. Exequiel Floro opposed the Board’s petition and claimed
that the steel matting listed had become the property of Eulalio Legaspi by
virtue of a deed of sale in his favor, executed by Floro pursuant to the
latter’s contract with Malabanan on March 31, 1954. The court below, after
reception of evidence as to the genuineness and due execution of the deed of
sale to Legaspi, as well as of the contract between Malabanan and Floro, denied
the Board’s petition, declaring that Malabanan had acquired ownership over the
steel mattings under his contract with the Board; that Exequiel Floro was
properly authorized to dispose of the steel mattings under Floro’s contract with
Malabanan; and that the sale to Eulalio Legaspi was valid and not contrary to
the Insolvency Law.

In this appeal, the Board contends that Malabanan did not acquire ownership
over the steel mattings due to his failure to comply with the terms of the
contract, allegedly constituting conditions precedent for the transfer of title,
namely: payment of the price; audit and check as to the nature, quantity and
value of properties salvaged; weighing of the salvaged properties to be
conducted jointly by representatives of the Board and of Malabanan;
determination of the site for storage; audit and verification of the recovery
reports by government auditors; and filing of a performance bond.

We are of the opinion, and so hold, that the contract (Exhibit “A”) between
Malabanan and the Board had the effect of vesting Malabanan with title to, or
ownership of, the steel mattings in question as soon as they were brought up
from the bottom of the sea. This is shown by pertinent provisions of the
contract as follows:

“10. For and in consideration of the assignment by the Board of Liquidators
to the Contractor (Malabanan) of all right, title and interest in and to all
surplus properties salvaged by the Contractor under this contract, the
Contractor shall pay to the Government Ninety Pesos (P90.00) per long ton (2,240
lbs.) of surplus properties recovered.

“11. Payment of the agreed price shall be made monthly during the first ten
(10) days of every-month on the basis of recovery reports of sunken surplus
properties salvaged during, the preceding month, duly verified and audited by
the authorized representative of the Board of Liquidators.”

That Malabanan was required under the contract to post a bond of P10,000.00
to guarantee compliance with the terms and conditions of the contract; that the
operations for salvage were entirely at Malabanan’s expense and risks; that
gold, silver, copper, coins, currency, jewelry, precious stones, etc. were
excepted from the contract, and were instead required to be turned over to the
Board for disposition; that the expenses for storage, including guard service,
were for Malabanan’s account—all these circumstances indicated that ownership of
the goods passed to Malabanan as soon as they were recovered or salvaged (i.e.,
as soon as the salvor had gained effective possession of the goods), and not
only after payment of the stipulated price.

While there can be reservation of title in the seller until full payment of
the price (Article 1478, N.C.C.), or, until fulfillment of a condition (Article
.1605, N.C.C.); and while execution of a public instrument amounts to delivery
only when from the deed the contrary does not appear or cannot clearly be
inferred (Article 1498, supra), there is nothing in the said contract
which may be deemed a reservation of title, or from which it, may clearly be
inferred that delivery was not intended.

The contention that there was no delivery is incorrect; While there was no
physical tradition, there was one by agreement (traditio longa manu) in
conformity with Article 1499 of the Civil Code, .

“Article 1499—The delivery of movable property may likewise be made
by the mere consent or agreement of the contracting parties, if the thing sold
cannot be transferred to the possession of the vendee at the time of the sale. *
* *”

As observed earlier, there is nothing in the terms of the public instrument
in question from which an intent to withhold delivery or transfer of title may
be inferred.

The Board also contends that as no renewal of the bond required was filed for
the extension of the contract, it ceased to have any force and effect; and, as
the steel mattings were recovered during the extended period of the contract,
Malabanan did not acquire any rights thereto. The pertinent portion of the
contract provides:

“12. Jointly with the execution of this contract, the Contractor shall file a
bond in the amount of Ten Thousand (P10,000.00) Pesos to guarantee his faithful
compliance with the terms and conditions herein; Provided, that this contract
shall not be considered to have been executed notwithstanding the signing hereof
by the parties until said bond” shall have been properly
filed.”

Malabanan filed a bond dated June 10, 1952, effective for one (1) year, or up
to June 10, 1953. The principal contract, executed on June 14, 1952, was first
extended to November 30, 1953, and finally, to August 31, 1954. As can be seen,
there was no longer any bond from June 11, 1953 to August 31, 1954.

The lapse of the bond did not extinguish the contract between Malabanan and
the Board. The requirement that a bond be posted was already complied with when
Malabanan filed the bond dated June 10, 1952. A bond merely stands as guaranty
for a principal obligation which may exist independently of said bond, the
latter being merely an accessory contract (Valencia vs. RFC & C.A.,
103 Phil., 444). Significantly, its purpose, as per the terms of the contract,
was “to guarantee his (Malabanan’s) faithful compliance with the terms and
conditions herein”; and, for violation of the contract, the Board may declare
“the bond forfeited” (par. 13). Being for its benefit, the Board could legally
waive the bond requirement (Valencia vs. RFC, et al., supra.),
and it did so when, the bond already having expired, it extended the contract
not only once, but twice. In none of the resolutions extending the contract
(Annexes “C” & “E”, pp. 108-112, Record on Appeal) was there a requirement
that the bond be renewed, in the face of the first indorsement by the Executive
Officer of the Board (Annex “F”, pp. 112-113, Record on Appeal) recommending
that Malabanan’s request for a second extension be granted “provided the bond be
originally posted should continue.”

There is no merit to the suggestion that there being a novation, Article 1299
of the Civil Code should govern. Novation is never presumed, it being required
that the intent to novate be expressed clearly and unequivocally, or that the
terms of the new agreement be incompatible with the old contract (Article 1292,
N.C.C.; Martinez vs. Cavives, 25 Phil. 581; Tiu Siuce vs.
Habana, 45 Phil. 707; Pablo vs. Sapungan, 71 Phil. 145; Young
vs. Villa, 93 Phil., 21; 49 Off. Gaz., [5] 1818.) Here there was
neither express novation nor incompatibility from which it could be implied.
Moreover, a mere extension of the term (period) for payment or performance is
not novation (Inchausti vs. Yulo, 34 Phil. 978; Zapanta vs. De
Rotaeche, 21 Phil. 154; Pablo vs. Sapungan, supra) ; and,
while the extension covered only some of the areas originally agreed upon, this
change did not alter the essence of the contract (cf. Ramos vs. Gibbon,
67 Phil., 371; Bank of P.I. vs. Herridge, 47 Phil., 57).

It is next contended that the sale by Floro to Legaspi on August 4, 1954
(within 30 days prior to petition for insolvency) was void as a fraudulent
transfer under Section 70 of the Insolvency Law. The court below held that the
sale to Legaspi was valid and not violative of Section 70; but there having been
no proceedings to determine whether the sale was fraudulent, we think it was
premature for the court below to decide this point, especially because under
section 36, No. 8, of the Insolvency Act, all proceedings to set aside
fraudulent transfers should be brought and prosecuted by the assignee, who can
legally represent all the creditors of the insolvent (Maceda, et al.,
vs. Hernandez, et al., 70 Phil., 261). To allow a single creditor to
bring such a proceeding would invite a multiplicity of suits, since the
resolution of his case would not bind the other creditors, who may refile the
same claim independently, with diverse proofs, and possibly give rise to
contradictory rulings by the courts.

The order appealed from is hereby affirmed in so far as it declares the
disputed goods to be the property of the insolvent; but without prejudice to the
right of the assignee in insolvency to take whatever action may be proper to
attack the alleged fraudulent transfer of the steel matting to Eulalio Legaspi,
and to make the proper parties account for the difference between the number of
pieces of steel matting stated in the insolvent’s recovery report, Annex “B”
(13,107), and that stated in his inventory (11,167). Costs against
appellant.

Paras, C. J., Bengzon, Bautista Angela, Labrador, Barrera, Gutierrez
David, Paredes, and Dizon, JJ., concur.

Order affirmed without prejudice.