G.R. No. L-17392 December 17, 1966
JOSE SORIANO, plaintiff-appellant, vs. COMPAÑIA GENERAL DE TABACOS DE FILIPINAS, defendant-appellant.

FACTS

Plaintiff Jose Soriano obtained crop loans from defendant Compañia General de Tabacos de Filipinas, secured by mortgages on his sugar plantations and crops. For the 1941-42 crop year, an agreement was executed wherein plaintiff mortgaged his sugar cane crops and the sugar produced, and obligated himself to assign and deliver the quedans to defendant for sale, with proceeds to be credited to his account. Plaintiff produced 65,787.53 piculs of export sugar and delivered it to defendant. Plaintiff’s indebtedness, after deducting proceeds from a partial sale, amounted to P648,806.06 as of December 29, 1941. After liberation, defendant informed plaintiff that his sugar was destroyed during the war and assisted him in filing a war damage claim, for which plaintiff received P130,000.00. Plaintiff later discovered that 51,528.01 piculs of his sugar had actually been shipped and sold by defendant in the United States in 1941 before the war, and defendant had retained the proceeds without crediting plaintiff’s account. Defendant admitted the sale but claimed the price was P5.508 per picul, while plaintiff contended for a higher price. After negotiations, defendant proposed a price of P6.20 per picul, which plaintiff accepted, but defendant refused to pay. Plaintiff filed a complaint seeking the value of the sugar sold, moral and exemplary damages, and attorney’s fees. Defendant alleged that plaintiff only ordered the sale of 16,000 piculs, and the rest was shipped in defendant’s name and account, and that the remaining sugar was burned. Defendant also raised defenses of automatic compensation and argued for a lower sugar price.

ISSUE

The main issues involve the determination of: (1) whether defendant is liable to account for and pay plaintiff the proceeds from the sale of the 51,528.01 piculs of sugar; (2) the correct price at which the sugar should be valued; (3) whether plaintiff is entitled to moral and exemplary damages; and (4) whether plaintiff is entitled to attorney’s fees.

RULING

The Supreme Court modified the lower court’s decision. It held defendant liable to pay plaintiff the value of the 51,528.01 piculs of sugar at the agreed price of P6.20 per picul, totaling P319,473.66, with legal interest at 6% per annum from the filing of the complaint until full payment. The Court rejected defendant’s claim of automatic compensation, as defendant’s fraud in concealing the sale and misrepresenting the sugar as destroyed precluded such compensation. The Court denied plaintiff’s claim for moral and exemplary damages, as the fraud occurred prior to the effectivity of the New Civil Code, which expressly recognized such damages, and under the old Civil Code, moral damages were not generally awarded. However, the Court awarded plaintiff attorney’s fees in the amount of P15,000.00 due to defendant’s evident bad faith in refusing to satisfy plaintiff’s valid claim. The Court also ordered plaintiff, upon obtaining full satisfaction of the judgment, to consign P130,000.00 with the proper court for return to the United States Government, as the war damage compensation was obtained based on defendant’s false representation.