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    Laidziii: Case Digest in Oblicon A

    Extin uishment of Obli ations: Loss of the Thin Due #1G.R. No. L-17819 March31, 1962

    FEDERATION OF UNITED NAMARCODISTRIBUTORS , INC., JUSTO MANALO,ET AL. vs. NATIONAL MARKETINGCORPORATION

    -----------------------------

    G.R. No. L-17768 March31, 1962

    NATIONAL MARKETING CORP vs. THEHON. BIENVENIDO TAN, Judge ofBranch XIII of the CFI of Manila;FEDERATION OF UNITED NAMARCODISTRIBUTORS, INC., JUSTO MANALO,ET AL.

    BARRERA,J.:

    FACTS:

    Sometime in 1959, the prices of commodities had gone up to such anextent that the President sought means toforce down such prices. One solution wasfor the national Marketing Corporation

    (NAMARCO) to procure, buy, and distributesuch commodities as were in short supply,with a special non-recurring dollarallocation from the Central Bank. Butunfortunately at the time, the activities ofthe NAMARCO who were paralyzed by thepicketing of its workers who were on strike,of the movement of NAMARCO goods.(LARU: Wrong grammar ang SC, wa qkasabot if unsay sumpay ani hehe)

    The goods discharged on the Manila piersas well as those in NAMARCO warehousescould not be removed, so much so, thatthe NAMARCO was unable to distributethem. Should the strike continue, thegoods to be imported under said dollarallocation to the NAMARCO would, upontheir arrival, be in the same predicament,and the plan to force down the prices of

    commodities would be frustrated. Toforestall such an eventuality, NAMARCOGeneral Manager Benjamin F. Estrellaproposed to the President that theimportation of commodities be effected forin the names of various associationscomposed of regular NAMARCO distributorsand/or retailers, to be previously arrangedas the beneficiaries of said commoditiesby way of trade assistance to each group

    Thus, when the goods would arrive, thelabor union in the NAMARCO would notprevent their movement, as they would notbe NAMARCO goods but of the beneficiaryassociations.

    Various associations of NAMARCO

    distributors and retailers learned of saidplan, which had been concurred in by thePresident. One of these associations is theFederation of United NAMARCODistributors, Inc., a non-stock corporationwholly composed of recognized regulardistributors and retailers of the NAMARCO.

    On August 8, 1959, the FEDERATIONthrough its directors, addressed a letter to

    the President, soliciting his intervention forthe importation, out of the aforementioneddollar allocation of the NAMARCO, and thenthe allocation to the FEDERATION, of thecommodities specified in the annex to saidletter, in the aggregate value of$2,001,031.00. In the same letter, theFEDERATION proposed that it would pay oncash basis the cost of the commoditiesplus 5% mark-up payable to the NAMARCO

    Acting on said request, the President, onOctober 27, 1959 noted on top of saidletter his approval. The NAMARCO Board ofDirector, taking cognizance of the letteand of the notation thereon of thePresident, adopted on November 3, 1959Resolution No. 24 reading as follows:

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    Extin uishment of Obli ations: Loss of the Thin Due #1RESOLUTION NO. 524

    WHEREAS the President of the Philippines,in his desire to bring down the prices ofcommodities, especially during the comingChristmas season, issued a directive to theChairman of the Monetary Board urgingthat an additional allocation of 10 milliondollars be made available for us by theNAMARCO;

    And directing the NAMARCO to expeditethe utilization of 4 million dollars for tradeassistance and 6 million dollars forfoodstuffs;

    President Garcia expressed his desire thatthe NAMARCO Board approve thecorresponding Resolution. In pursuance tothis resolution, the NAMARCO (through itsPresident Manalo), executed the Contractof Sale on November 16, 1959.

    CONTRACT OF SALE

    WITNESSETH:

    That, WHEREAS, by virtue of NAMARCOBoard Resolution dated November 3, 1959,the Management of NAMARCO wasauthorized to import the following itemswith the corresponding dollar valuetotalling $2,001,031.00, to wit: ... (herefollows the list)

    That, WHEREAS, for and in consideration ofthe sum of P200,000.00 as part payment ofthe items and or merchandise above-mentioned, and deposited by theFEDERATION with the NAMARCO uponsigning of this contract, and the balance ofthe enumerated items and/or merchandiseshall be paid on cash basis upon delivery ofthe duly indorsed negotiable shippingdocuments covering the same, the

    NAMARCO agrees to sell the said itemsand/or merchandise subject to thefollowing terms and conditions:

    1. That the FEDERATION shall pay the

    NAMARCO the value of the goodsequivalent to the procurement cost plus5% mark-up, provided, however, thatshould there be any adjustment in theprocurement cost, the same shall berefunded to the FEDERATION;

    2. That all handling and storage chargesof the goods sold shall be for theaccount of the FEDERATION;

    3. That the FEDERATION waives its right toclaim for any loss or damage that maybe suffered due to force majeure suchas war, riots, strikes, etc., except whensuch incident is directly or indirectlydue to the negligence of the NAMARCOor its representative;

    4. That the items and/or merchandise soldby NAMARCO to the FEDERATION shalbe distributed among its members andretailers in accordance with NAMARCO'sexisting rules and regulations governingthe distribution of NAMARCO goods andat wholesale and retail prices to bedetermined by NAMARCO;

    5. That if it should be necessary to file asuit for the violation of any of the termsand conditions of this Contract, suchaction shall be presented only in theCourt of First Instance of Manila.

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    Extin uishment of Obli ations: Loss of the Thin Due #1Three days later, or on November 19,1959, the NAMARCO Board of Directorsapproved the Resolution No. 530 to wit:

    RESOLVED thatthe Board, amends, as ithereby amends said Resolution by addingto the same the following provision:

    RESOLVED FURTHER that:

    1. In the procurement and distribution ofthe goods to be imported, the forwardsales method or any other similarmethod shall not be used;

    2. This importation shall be a regularimportation of the NAMARCO; and

    3. The goods shall be distributed andallocated only to regular NAMARCOoutlets in accordance with regularpractices and rules and regulations ofthe NAMARCO governing distributorsand allocation of goods.

    In implementation of #2 of said Contract of

    Sale, the latter on the same date (Nov 19)made arrangements with the owner of thePasig River Bodegas for such purpose. TheFEDERATION submitted to the NAMARCO asigned copy of the agreement with therequest that the NAMARCO give its consentthereto and to inform the warehouse ofthat fact.

    On December 8, 1959, the NAMARCO, byletter addressed to the Pasig RiverBodegas, copies of which were furnishedthe FEDERATION and the NAMARCO's

    Traffic Storage Department, signified itsconfirmation of said agreement anddirected the Pasig River Bodegas not torelease any of the commodities "withoutthe approval of the proper authoritieswhich in this case will be the receipt of

    payment made by the above-mentionedFederation" to the NAMARCO.

    On December 17, 1959, the Federationpursuant to the terms of the contract of

    sale, deposited with the NAMARCO the sumof P200,000.00 as part payment of thepurchase price of the commodities. On thatsame date, General Manager Estrellaendorsed to NAMARCO Auditor Liboro "forexamination and review, the Contract ofSale entered into between the NAMARCO"and the FEDERATION. In a 1stEndorsement dated December 21, 1959 tothe NAMARCO Board of Directors, Libororequested for information . . . as towhether Resolution No. 530, nullifies the

    attached contract of sale executed inaccordance with Resolution No. 524 inrelation to the directive of the Presidentdated October 27, 1959, approving thepetition of the Federation, if not, then it isrequested that the contract be firstapproved by the Board before it isforwarded to the Auditor-General forexamination and review, pursuant to OfficeMemorandum No. 140, of the GeneraAuditing Office, dated February 5, 1959.

    Acting on the above endorsement of theNAMARCO Auditor, the NAMARCO Board ofDirectors, on January 12, 1960, approvedResolution No. 14 (Exh. II), which states:

    RESOLUTION No. 14

    Resolved that the Board of Directors

    approve, as it hereby approves, thecontract entered into by and between theNAMARCO and the Federation for the saleof $2,001,031.00 worth of NAMARCOcommodities, executed on November 161959, which contract is the subject of aninquiry of the Auditor in his 1stEndorsement dated December 21, 1959the approval hereof to be subject to theterms and conditions laid down by the

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    Extin uishment of Obli ations: Loss of the Thin Due #1Board in Resolution No. 524 and inResolution No. 530.

    Subsequently, on January 22, 1960, thecontract of sale in question was forwarded

    to the Auditor General for examination andreview, in accordance with the provisionsof Administrative Order No. 290 datedFebruary 3, 1959 of the President.

    In the meantime, beginning on December12, the commodities started to arrive andthe FEDERATION, in compliance with theterms of the contract of sale proceeded topay to the NAMARCO all through the

    months of December and January the fullvalue of the merchandise that had beenarriving, the total amount of whichpayments aggregated to P2,452,020.00.

    In consideration of such payments, theNAMARCO also in accordance with thecontract of sale invoiced to theFEDERATION such items as had been paidfor, setting forth in each invoice the items

    covered, the purchase price due to theNAMARCO, and the amount appliedthereto, with indication of the numbers ofthe latter's official receipt of the respectivedeposits from which that amount wastaken. On the faith of these invoices, upontheir presentation to the Pasig RiverBodegas, and in accordance with priordirection by the NAMARCO to said bodegasthat the approval of the Namarco torelease the commodities stored would bethe receipt of the payment made to the

    NAMARCO by the FEDERATION, the PasigRiver Bodegas released to the FEDERATIONthe commodities covered by the above-mentioned invoices.

    On January 25, 1960, new Board ofDirectors and General Manager took overthe management of the NAMARCO, and hisnew management decided to discontinue

    compliance by NAMARCO of the contract ofsale with respect to the commodities notactually delivered, and it so notified theFEDERATION.

    The FEDERATION, therefore, on March 21960 filed a complaint (Civil Case No42684) in the CFI of Manila against theNAMARCO, to compel the latter to performthe Contract of Sale as to what was left ofthe commodities subject matter thereofafter the aforementioned releases of nearlyover one-half of the entire quantity of thecommodities to the FEDERATION by theNAMARCO.

    On March 26, 1960, the trial court, uponmotion of the FEDERATION, ordered therelease to the latter of, among others"2,400 cases of mandarin orangesprovided they are in good condition, oonly so much thereof that are in goodcondition" against payment already madeby the FEDERATION to the NAMARCO. Afterexamination by a disinterested third partyas directed by the trial court, wherein itwas found that only 445 cases of the

    oranges ordered delivered to theFEDERATION were in good condition, thetrial court allowed the FEDERATION to takedelivery of such 445 cases only, and madethe corresponding adjustments in theapplication of the payments made by theFEDERATION to the NAMARCO.

    After trial, the court rendered judgment onOctober 15, 1960, the dispositive part of

    which reads:

    XXX

    IN VIEW OF ALL THE FOREGOINGCONSIDERATIONS, the defendant(NAMARCO) is hereby sentenced:

    To specifically perform the contract of saleExhibit 'O', by delivering the followingcommodities:

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    Extin uishment of Obli ations: Loss of the Thin Due #1

    1,059 bags of Cocoa Beans

    17 bales of Khaki Twill

    350 cases of Transformers

    1,400 cases of Oranges

    1,000 cases of Oranges

    73 bales of Blue Denims

    17 bales of Textiles

    113 cases Cotton Khaki Twill

    14,200

    cases Verified Tiles

    999,071

    yards Blue Denims

    236,700

    yards De Luxe Khaki

    200,000

    yards Bostann Khaki

    128 cases of Flashlight cases

    and bulbs80,000

    yards Halcoluxe Khaki

    637,755

    Labs. Jalco Petrolatum

    235,800

    pcs. Electric Transformers

    3,000 kilos Monofilament Lines

    to plaintiff FEDERATION, upon the payment

    of the procurement cost, plus 5% mark-up,of such commodities;

    To pay to the plaintiffs the sum equivalentto 5% of said procurement cost, inPhilippine Currency, as attorney's fees andthe costs of this suit;

    To reimburse plaintiff FEDERATION thestorage charges at the rate agreed uponunder Exhibit "P" from March 2, 1960 untilthe date or dates of deliveries thereof tosaid plaintiff under this decision.

    The writ of preliminary prohibitiveinjunction issued in this case is herebydeclared permanent.

    SO ORDERED. XXX

    Within the reglementary period, theNAMARCO perfected its appeal from saiddecision to this Court (docketed as G.R. No

    L-17819).

    On October 31, 1960, the FEDERATIONfiled a motion for execution of saiddecision, invoking Section 2, Rule 39 of theR of C, alleging that the commoditiessubject matter of said decision wildeteriorate by mere lapse of time & maybe destroyed by elements of nature andinsect pests during the pendency of the

    appeal; that marketing of the commoditieswould help stabilize the selling pricesthereof; that the public service function ofthe NAMARCO will be accomplished if thecommodities would be sold to the publicthrough the FEDERATION; and that deliveryof the commodities to the FEDERATIONpending appeal would not cause injury tothe NAMARCO, because payment thereofwould be made, thereby enabling theNAMARCO, to utilize the proceeds of thesale for the duration of the appeals.

    Notwithstanding said opposition by theNAMARCO the trial judge issued a speciaorder denying the NAMARCO's offer to filesupersedeas bond and directing the speciaexecution of the judgment. Said speciaorder reads, in part, as follows:

    Regarding G.R. No. L-17768 :

    ISSUES AND RULING:

    1. Will the release to and marketing by theFEDERATION of said commoditiespending appeal, defeat the purpose forwhich the NAMARCO was organized?

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    Extin uishment of Obli ations: Loss of the Thin Due #1A: The ground of the opposition that toallow plaintiffs to distribute the goods inquestion now will defeat the purpose forwhich defendant was created, is withoutmerit.

    2. Are the commodities in question wouldby their very nature not deterioratethrough storage during the pendency ofthe appeal?

    A: The goods subject matter of thejudgment will deteriorate during thependency of the appeal.

    3. Will damages be sustained bydefendant and by the public, if the

    judgment is executed and reversed onappeal?

    A: On the contrary, the public will bebenefited by the immediate executionof the judgment because such goods

    will be made available to them at thetime of their greatest need; and willgreatly assist in keeping the prices ofsuch commodities at reasonable levels.

    HELD:

    This Court takes judicial notice of the factthat the President had declared the

    existence of a state of public calamity inManila, Quezon City, Pasay City, and theprovinces of Rizal, Bulacan, Nueva Ecija,

    Tarlac, and a few other provinces. Evenassuming that the plaintiffs (hereinrespondent FEDERATION, et al.) have theirplaces of business in Manila, as defendant(herein petitioner NAMARCO) claims, theconsumers, not only in Manila, but also inthe neighboring cities and provincesmentioned will be benefited by the

    marketing of the goods subject matter ofthe judgment, because of the proximity ofthose cities and provinces to Manila.

    1. The ground of the opposition that to

    allow plaintiffs to distribute the goods inquestion now will defeat the purpose forwhich defendant was created, iswithout merit.

    By law, the defendant must market itsmerchandise through duly appointeddistributors or retailers. There is noquestion that the plaintiffs (other thanplaintiff corporation) and the other

    members of the plaintiff corporation, areduly appointed Filipino distributors oretailers of the defendant, and no othershave made any claim to participate in thedistributions of such goods. The publicservice which the defendant is required torender by the law will thus beaccomplished by the distribution of saidgoods through the plaintiffs.

    2. The goods subject matter of thejudgment will deteriorate during thependency of the appeal.

    Even a relatively slight deterioration wouldundoubtedly, be sufficient to impair theirmarket value as first-hand goods, hencekeeping these goods in storage whiledefendant's appeal is pending will renderthe judgment in favor of plaintiffs

    ineffectual, as their interest in such goodsis not that of consuming, but of marketingthem.

    3. Defendant also contends that damageswill be sustained by it and by the publicif the judgment is executed and it isreversed on appeal. It appears

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    Extin uishment of Obli ations: Loss of the Thin Due #1however, that the only pecuniaryinterest of the defendant in the goodssubject matter of the judgment is therecovery of the landed cost, plus 5%mark-up.

    This amount will, by the terms of thejudgment, be paid to defendant upondelivery of the goods to the plaintiffs. As tothe damage that will allegedly be causedto the public, defendant has not shownwhat such damage would be. On thecontrary, the public will be benefited bythe immediate execution of the judgment,as stated in plaintiff's motion because suchgoods will be made available to them atthe time of their greatest need; and will

    greatly assist in keeping the prices of suchcommodities at reasonable levels.

    It appears to the Court that the appeal isfrivolous and is being taken only for thepurpose of delay. Admittedly, thedefendant had already taken advantage ofthe benefits of said contract of sale,namely, the receipt by the defendant ofthe payment in the amount of P830,000.00

    and P1,628,242.96 from plaintiff FEDERATION prior to the institution of thisaction, and the defendant's agreementthat the handling and storage charges ofthe commodities are for the account ofplaintiff FEDERATION as stipulated in thecontract of sale, which the latter has beenpaying. Admittedly also, the contract ofsale had been formally approved bydefendant's board of directors and,therefore, the defendant's challenge thatsaid contract is without approval of that

    body is gratuitous. This is another goodand sufficient reason for the specialexecution of the judgment regarding thespecific performance of the contract.

    Finding the reasons given by plaintiffs intheir motion which are reproduced aboveto be well-taken, the Court, therefore,

    considers the special execution of thejudgment (of October 15, 1960) justified.

    Regarding G.R. No. L-17819

    From said special order of execution (ofNovember 15, 1960), the NAMARCOinstituted in this Court a petitionfor certiorari with preliminary injunction. Indue time, we issued the preliminaryinjunction prayed for, enjoining respondent

    Judge from carrying out said special orderof execution and respondent Sheriff oManila from executing the judgment oOctober 15, 1960, upon the NAMARCO's

    filing R bond of P50,000.00.

    SC LEVEL

    ISSUE:

    G.R. No. L-17819:

    The principal issue to be resolved in thisappeal is whether the Contract of Sale inquestion is binding on appellant NAMARCO

    G.R. No. L-17768:

    The sole issue for determination in thiscase is whether respondent Judge actedwith grave abuse of discretion amounting

    to lack of jurisdiction in issuing the speciaorder of execution in question.

    RULING:

    G.R. No. L-17819:

    The General Manager, the auditor andBoard of Directors itself, of appellant

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    Extin uishment of Obli ations: Loss of the Thin Due #1NAMARCO, all understood the contract ofsale to be in accordance with theresolutions of its governing body and is,binding upon it.

    G.R. No. L-17768:

    For all the foregoing, we are of the opinionand so hold, that the trial Judge, in issuingthe special execution of its decision did notact with grave abuse of discretionamounting to lack of jurisdiction.

    (LARU:Ang first issue ra man gyud angrelated, but I included the other issues

    para masabtan ug ayo ang case. Libogman gud kayo ni pag kasulat nga case ui;

    pangit mu sulat ang ponencia hehe)

    HELD:

    G.R. No. L-17819:

    There is no dispute that on January 12,1960, appellant's Board of Directorsadopted Resolution No. 14, formallyapproving said contract.

    Appellant, however, maintains that saidresolution did not approve said contract,because the latter is inconsistent with theterms and conditions laid down by theBoard of Directors in its Resolution No. 530adopted on November 19, 1959. The

    alleged inconsistency lies in the fact thatwhile Resolution No. 530, prohibits"forward sales", as it is a sale ofmerchandise before its arrival; and underparagraph 3 of Resolution No. 530, it isappellant that should distribute andallocate the merchandise in question toregular NAMARCO outlets, whereas underparagraph 4 of said contract, appelleeFEDERATION is the one authorized to

    distribute the merchandise among itsmembers and retailers.

    It is to be noted that precisely because ofthis seeming discrepancy, the NAMARCO's

    own Auditor Liboro requested clarificationfrom appellant's Board of Directors in hiscommunication of December 21, askingspecifically if Resolution No. 530 "nullifiesthe attached contract of sale executed inaccordance with Resolution No. 524 inrelation to the directive of the Presidentdated October 27, 1959, approving thepetition of the Federation of UnitedNAMARCO Distributors, Inc., if not, then itrequested that the contract be firstapproved by the Board before it is

    forwarded to the Auditor General forexamination and review, pursuant to OfficeMemorandum No. 140, of the GeneraAuditing Office, dated February 5, 1959."Acting upon this inquiry, appellant's Boardof Directors approved and adopted, asheretofore stated, a Resolution No. 14specifically approving the contract sale.

    As a result of a resolution, appellant's

    Auditor Liboro, on January 22, 1960forwarded the contract of sale to theAuditor General, with the comment that

    On January 12, 1960, the Board, in itsResolution No. 14, approved the saidcontract of sale subject to the terms andconditions laid down by the Board in itsResolution No. 530 dated November 19,1959. In other words, the Board believesthat instead of being conflicting, ResolutionNo. 530 compliments only Resolution No

    524."

    In other words, the General Manager,the auditor and Board of Directorsitself, of appellant NAMARCO, alunderstood the contract of sale to bein accordance with the resolutions ofits governing body and is, bindingupon it.

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    Extin uishment of Obli ations: Loss of the Thin Due #1

    To subscribe to appellant's theory that itsthen Board of Directors had not, byResolution No. 14 approved said contractbecause of its inconsistencies with theconditions laid down in Resolution No. 530,to which the approval was made subject,would be to ascribe to said board a grossinconsistency and a meaningless andinutile act. For, it is illogical andunreasonable to suppose that the boardwould, in the last part of Resolution No. 14,impliedly take away what in the first part ofthe same resolution it has expressly given,namely, its approval of the contract of sale.Conformably to the rule in interpretation ofcontracts, Resolution No. 14 should beconstrued in such a manner as to render

    effectual its approval of the contract(Art.1373, Civil Code).

    The provision of paragraph 1 of ResolutionNo. 530 which prohibits "forward sales"should be considered applicable only to thedistribution of the goods to the retailers. Inother words, appellee FEDERATION shouldnot allocate or distribute the merchandisecovered by the contract of sale to its

    members-retailers prior to the arrival ofthe merchandise in the Philippines. As thisrequirement was complied with, theNAMARCO had no reason to suspendcarrying out the contract on thisscore.

    As to the other contention of appellant thatunder paragraph 3 of Resolution No. 530,the distribution of the goods should be

    made by the NAMARCO and not by theFEDERATION, a reading of this paragraphwill readily show that the only requirementis that, "the goods shall be distributed andallocated in accordance with regularpractices, rules and regulations of theNAMARCO governing distribution andallocation of goods." There is no mentionas to who will allocate them. Thisrequirement is satisfied by the fact that allthe members of appellee FEDERATION are

    regular outlets of appellant in goodunderstanding, as the latter itself hadadmitted.

    Resolution No. 530 does not require that

    the commodities subject matter of saidcontract of sale should be distributed to alregular outlets of the defendant; it statesthat "the goods shall be distributed andallocated only to regular NAMARCOoutlet ...", meaning that, considering thefact that Resolution No. 530 is butamendatory to Resolution No. 524, onlythe FEDERATION's members who aredefendant's regular outlets shouldparticipate in the distribution of saidcommodities.

    The requirement is satisfied by the factthat all the FEDERATION' members aredefendant's regular outlets as thedefendant itself has admitted. At any ratethe contract of sale in question havingbeen formally approved by defendant'sboard of directors and the defendantthereby is bound, the provisions of saidcontract should be followed, one of which

    provides "that the items and/ormerchandise sold by NAMARCO to theFEDERATION shall be distributed among itsmembers and retailers in accordance withNAMARCO's existing rules and regulationsgoverning the distribution of NAMARCOgoods . . ."

    Moreover, at the time the new Board ofDirectors refused to recognize the validity

    of the contract of sale, more than half ofthe goods had already been deliveredNAMARCO to the FEDERATION who alreadydisposed of them, and for which NAMARCOhas accepted partial payments of thepurchase price of the commoditiesamounting to P2,452,020.00. All these tookplace before and after the adoption oResolution No. 14 on January 12, 1960Appellant's acceptance of said benefitunder the contract of sale, constitutes an

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    Extin uishment of Obli ations: Loss of the Thin Due #1implied ratification by its board of directorsof the contract in question, and precludesthe rejection of the binding effect of saidcontract.

    Appellant next contends that the contractof sale in question has not yet beenperfected or consummated, because it hadnot been approved by the Auditor General,in accordance with Administrative OrderNo. 290, dated Feb 3, 1959.

    There seems to be no basis for thiscontention. In the first place, theadministrative order appears to refer to

    contracts, in general, ordinarily enteredinto by government offices and GOCCs.

    The contract here involved is for a specialpurpose, to meet a special situation andentered into in implementation of aPresidential directive issued to solve anemergency created by rising prices ofcommodities. In other words, it was apreviously authorized specifictransaction already bearing, as itdoes, the approval of the Presidentwho, under the administrative order

    invoked, has the final say.

    In the second place, there appears noreason for the rejection of the contract, asthe NAMARCO Auditor himself, in his 3rdendorsement of January 22, 1960 found noobjection to the same.

    Thirdly, as already stated, payments to anaggregate of over P2,000,000.00 had beengranted with the evident approval of theAuditor, in compliance with the contract.Appellant also claims that the trial courterred in allowing appellee to take deliveryof 445 cases of oranges only, instead of2,400 cases, in effect, charging it for theloss of 1,955 cases.

    The claim is unmeritorious. Let it beremembered that as early as January 251960, appellant had refused to deliver theimported commodities to appellee.

    It is true that on March 2, 1960, theFEDERATION, upon filing its complaintobtained a writ of preliminary injunction toprevent NAMARCO from disposing of thesegoods through other distributors orretailers, but the FEDERATION was willingto accept, and in fact had been requesting,the delivery of the same to it or itsmembers for sale to the general public, butNAMARCO refused to make such deliveryIt was only on March 26, 1960, that thetrial court upon appellee's motion, ordered

    the release to it of, among others, "2,400cases of mandarin oranges provided theyare in good condition, or only so muchthereof that are in good condition"Consequently, the FEDERATION could notbe blamed for refusing to take delivery ofthe oranges that had in the meantimebecome spoiled during the period of from

    January 25 to March 26. In thecircumstances, it is but proper thatappellant must bear the loss occasioned byits own fault.

    Appellant asserts that the trial courtlikewise erred in holding it liable forstorage charges from March 2, 1960 (dateof filing of appellee's complaint in thelower court) of the commodities coveredby the contract of sale in question.

    The argument merits no seriousconsideration. It is true that under thecontract of sale the handling and storagecharges of the commodities coveredthereby are for the account of appelleeFEDERATION. However, the storagecharges that became due from the datethe goods had to remain in the warehousebecause of the refusal of NAMARCO todeliver the same to the FEDERATION whichhad been demanding the surrender thereof

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    Extin uishment of Obli ations: Loss of the Thin Due #1to it, can not be charged to theFEDERATION, but to NAMARCO as the onewho, in the performance of its obligationunder the contract, has been guilty ofdelay in the delivery of the goods subjectmatter thereof. (Arts. 1169 and 1170,Civil Code.)

    G.R. No. L-17768:

    We have repeatedly held that there isgrave abuse of discretion justifying theissuance of the writ ofcertiorari, whenthere is a capricious and whimsicalexercise of judgment as is equivalent tolack of jurisdiction, as where the power isexercised in an arbitrary or despotic

    manner by reason of passion, prejudice, orpersonal hostility amounting to an evasionof positive duty or to a virtual refusal toperform the duty enjoined, or to act at allin contemplation of.

    Under this provision, it is quite clear thatprior to the expiration of the time toappeal, the court may issue execution onmotion of the prevailing party and with

    notice to the adverse party, upon goodreasons to be stated in a special order. Thepower to grant or deny a motion forexecution is discretionary with the court.Accordingly, the appellate court will notinterfere to modify, control, or inquire intothe exercise of this discretion, unless it beshown that there has been an abusethereof.

    In granting the special execution of thejudgment question, respondent Judgestated good reasons, in his special order ofexecution, as required by the above-quoted provision of the Rules of Court,namely:

    1. consumers, not only in Manila, but alsoin the neighboring provinces and citieswill be benefited by the marketing of

    the goods subject matter of thejudgment;

    2. the public service which petitioneNAMARCO is required by law to render,will be accomplished by the distributionof said goods through respondentsFEDERATION, et al.;

    3. the goods subject matter of thejudgment will deteriorate during thependency of the appeal;

    4. a slight deterioration of said goods wilbe sufficient to impair their marketvalue first-hand goods, hence, keepingthem in storage while petitioneNAMARCO's appeal in Civil Case No42684 (G. No. L-17819) will render the

    judgment in favor of respondentsFEDERATION, et al. ineffectual, as theirinterest in such goods is not that ofconsuming, but of marketing them; (5)and the appeal in Civil Case No. 42684(G.R. No. L-17819) is frivolous and isbeing taken only for the purpose ofdelay.

    And, in refusing petitioner NAMARCO'soffer to put up a supersedeas bond to staysaid special execution, the trial courtreasoned out, and we believe correctly

    that there is no way of determining theprices at which respondents FEDERATIONet al. will sell the goods subject matter ofthe judgment, or of determining theirprofits; consequently, there is no waydetermining the amount of damage thatrespondents FEDERATION, et al. may sufferby the stay of the special execution, andno amount can, therefore, be fixed for thesupersedeas bond. The trial court went onto say that "the compelling urgent reasonsfor the special execute of the judgment

    outweigh the stay thereof by asupersedeas bond."

    For all the foregoing, we are of theopinion and so hold, that the tria

    Judge, in issuing the special executionof its decision (of October 15, 1960),did not act with grave abuse of

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    Laidziii: Case Digest in Oblicon A

    Extin uishment of Obli ations: Loss of the Thin Due #1discretion amounting to lack of jurisdiction.

    J U D G M E N T

    G.R. No. L-17819:

    The decision of the trial Judge appealedfrom, except that portion awardingattorney's fees to appellees FEDERATION,et al., is affirmed in all respects, with costsagainst appellant NAMARCO.

    G.R. No. L-17768:

    The special order of execution (ofNovember 15, 1960) is affirmed. Writofcertiorari is denied and the preliminaryinjunction heretofore issued by this Court isordered dissolved. With costs againstpetitioner NAMARCO.

    So ordered.